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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
by Rémy Gerbay.
Published by Kluwer Law International, 2016; xxviii + 246 pages; ISBN 978-90-411-6217-5.
This book provides an in-depth analysis of the role of arbitral institutions in the adjudicative process. Its author, formerly Deputy Registrar of the LCIA and interim Registrar of DIFC-LCIA and now Of Counsel at Enyo Law LLP and a lecturer at the School of International Arbitration, Queen Mary University of London, assesses the role arbitral institutions play in the resolution of disputes on the basis of a unique exposition of theories and practical realities.
The book could not have come at a more opportune time. Last year saw several institutions introduce new set of rules to address the needs of users in the ever-changing environment of dispute adjudication, and this trend seems set to continue in 2017. Many have also published guidance notes in an attempt to open the black box of institutional organization and decision-making. So, a book that analyses the activities of these institutions is most welcome. The author of this review, who is herself a member of the International Board of the Finnish Arbitration Institution, has found the book very valuable and would recommend it to anyone connected with an arbitral institution.
Dr Gerbay begins his book by noting the lack of academic research into the nature of the functions exercised by arbitral institutions when administering proceedings. He sets out to fill this gap by ‘(1) identifying in the literature conventional assumptions as to the functions of arbitral institutions in the institutional arbitration process; (2) critically assessing such conventional assumptions; and (3) offering a novel and more realistic representation of the functions of arbitral institutions’.1
During three years of research, Dr Gerbay systematically compiled information on more than 45 sets of institutional rules, and conducted a survey to seek direct input from arbitral institutions. He also assessed the functions of arbitral institutions through an extensive study of case law.
The book consists of six chapters. It begins by looking at the notion of arbitral institutions through definitions and typologies. It goes on to consider institutional arbitration as a growing phenomenon, both quantitatively and qualitatively, and discusses traditional representations of institutions (administrative/jurisdictional dichotomy; mere purveyor of logistical services with no decision-making power). The author then addresses the reality, through an impressive display of facts and reasoning, to show that arbitral institutions are ancillary participants in the adjudicative process. Finally, the reader is given a useful summary of general conclusions. After navigating the reader through these chapters, Dr Gerbay remains conscious that ‘this book did not aim to dispose of all discussions on its subject matter. To the contrary, [he] would hope that, by clarifying the functions of arbitral institutions, the book might permit to re-invigorate an important debate.’2
Dr Gerbay’s book is unique in providing an exhaustive analysis of the multifaceted activities of arbitral institutions. There is much to attract academic and scholarly attention and a book review cannot do full justice to it all. Below are just some of the book’s virtues in the eyes of this particular reviewer.
Dr Gerbay begins by presenting the traditional view of an arbitral institution’s role as being limited to administrative functions, with all jurisdictional decisions being reserved for the arbitral tribunal. This view, in his opinion, shows a dichotomy between arbitral institutions and tribunals as repositories of administrative and jurisdictional functions. He discusses relevant case law that explains the origins and historical development of this dichotomy, in particular referring to numerous French cases, which have continually endorsed it, including:
• Société Appareils Dragon,3 where the Court of Cassation held that ‘the[ICC] Court of Arbitration, itself lacking the quality of arbitrator, was not bound to provide reasons for its decision of prolongation, which did not have a jurisdictional character’;4
• Société Techni Import Professionnel,5 in which the Paris Court of Appeal followed the aforementioned decision;6
• recent decisions, including a 2009 decision of the Court of Cassation,7 and a 2012 decision of the Paris court of first instance,8 which ‘confirmed the position that the activities of the ICC … are administrative in nature, and that only those of the Tribunal may be jurisdictional’.9
Dr Gerbay challenges this traditional view, arguing, for instance, that parties confer jurisdictional functions on institutions when agreeing to arbitrate through an institution,10 or that, in line with certain Swiss,11 United States,12 and German cases,13 adjudicative functions can be shared between institutions and arbitral tribunals,14 as can the privilege of arbitral immunity. Dr Gerbay dismisses factors such as the lack of finality of decisions by arbitral institutions,15 the timing of such decisions,16 and the organisational character of institutional decisions,17 as not being ‘adequate to support the administrative versus jurisdictional dichotomy’.18
In clear and concise terms, Dr Gerbay explains why there are no grounds for believing that decisions rendered by arbitral institutions and arbitral tribunals are qualitatively different. As he points out, ‘many of the decisions that are made by institutions (in an institutional context) are decisions which would be made by an arbitral tribunal or by the domestic courts in an ad hoc arbitration. For instance, decisions on the seat or the language of an arbitration, or on consolidation, joinder or costs, are all decisions which could be made by an arbitral tribunal or a judge in an ad hoc context.’19 To illustrate this point, he refers to the ICC Rules of Arbitration 2012, which ‘contain no less than fifteen instances in which the word "decide" (or a derivative thereof) is used in conjunction with the role of the [ICC] Court’.20
Dr Gerbay further states that characterising a decision on the basis of the decision-maker – i.e. institution, arbitral tribunal or court – presupposes a certain uniformity in the role conferred on arbitral institutions and arbitrators, which is a ‘rather parochial’21 belief, as arbitral institutions vary considerably as to the roles they assume in arbitral proceedings.
In the author’s opinion, endorsing the traditional perception of the jurisdictional/administrative dichotomy would lend credence to the proposition that institutions are not bound by due process requirements when making decisions. This, he describes as ‘counterintuitive’,22 and the author of this book review agrees: arbitral institutions, just like arbitrators, cannot operate in a vacuum free of any obligation to respect fundamental procedural rights of due process.
In the same vein, Dr Gerbay challenges another related traditional conception of arbitral institutions, which represents these institutions as participants whose decisions are immaterial to the adjudication of the dispute,23 or as ‘mere purveyor[s] of logistical services with no decision-making power at all’.24 For Dr Gerbay, arbitral institutions have decision-making powers, as illustrated when they:
• fix the seat;25
• determine the language of an arbitration;26
• determine the costs of the arbitration;27
• decide on a challenge made by one party against an arbitrator;28
• select arbitrators when parties fail to nominate them or whenever they confirm or refuse party nominations.29
One may also add the arbitral institutions’ power to fix the deadline for rendering the award.
He takes his argument further by pointing out that some of those decisions, such as determining a challenge to an arbitrator, ‘involve interpreting legal norms and applying such legal norms to factual situations’ based on the parties’ submissions, and that most of those decisions also have a ‘"binding character" in the sense that they are not open to acceptance or refusal by the parties’.30 He backs up his argument by citing relevant rules of leading institutions such as SCC, LCIA, ICDR, SIAC and HKIAC,31 remarking that ‘it is perhaps unsurprising that the arbitral institutions which, like the ICC, have opted to describe their role as a purely non-decisional one, remain rare’.32
In the fifth chapter Dr Gerbay puts forward four propositions to substantiate his ‘realistic representation’ of the role of institutions as ‘ancillary participants in the adjudicative process’:33 (i) the decisional character of certain institutional measures;34 (ii) the ancillary nature of the role of the institution, i.e. ancillary to the arbitrator as principal decision-maker;35 (iii) the materiality of institutional decisions, insofar as such decisions impact on the arbitration by disposing of a discrete issue or determining part of the legal framework applicable to the arbitration;36 and (iv) the rejection of the dichotomic approaches, which follows if ‘[t]he level of materiality of a given decision is not primarily dependent on the identity of the decision-maker’.37
When discussing these propositions, Dr Gerbay raises some interesting points concerning the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’), namely that arbitral awards may be refused recognition and enforcement:
• under Article V(1)(b), if the party against whom the award is invoked was unable to present its case, not only before the arbitral tribunal but also before the institution;38
• under Article V(1)(d), if the institution appoints a tribunal in a manner that is inconsistent with the parties’ agreement,39 or issues a procedural decision that is inconsistent with its own rules;40
• under Article V(2), on grounds of violation of public policy, if, for instance, an institution undermines the equality of the parties in the appointment of arbitrators.41
Dr Gerbay’s realistic (as opposed to traditional) representation of arbitral institutions and their decision-making powers leads him to insist on the desirability of applying due process when institutions play an adjudicative role.42 In his view, such due process should consist of the fundamental guarantees of independence and impartiality, equality, reasoned decisions, and giving parties the opportunity to present their case and seek judicial review.43 He sees a connection between the materiality of a decision and application of due process standards, the more material decisions requiring the application of stricter standards of due process by arbitral institutions.
Dr Gerbay’s rejection of the traditional perception of arbitral institutions as purely administrative bodies devoid of any material adjudicative function is powerfully argued, and he puts a most persuasive case for a more nuanced and realistic understanding of these institutions. Given the proliferation of institutional arbitrations, it was high time for a detailed study of the actual roles they play. In The Functions of Arbitral Institutions Dr Gerbay has provided this and much more.
1 The Functions of Arbitral Institutions, Preface, p. xix.
2 Ibid., p. 214.
3 Société Appareils Dragon, Cour d’appel de Paris, 22 June 1982 (Revue de l’arbitrage, 1982, p. 91); Société Appareils Dragon, Cour de cassation, 2eme Chambre civile, 8 June 1983 (Revue de l’arbitrage, 1987, p">309).
4 The Functions of Arbitral Institutions, p. 127.
5 Société Techni Import Professionnel v Société Electro Scientific Industries, Cour d’appel de Paris, 17 May 1983 (Revue de l’arbitrage, 1987, p. 309).
6 The Functions of Arbitral Institutions, pp. 129 et seq.
7 Mr X v Trioplast AB, Cour de cassation, 1ere Chambre civile, 11 Mar. 2009.
8 S.A. Fairplus Holding and S.A. La Valaisanne Holding v Chambre de Commerce Internationale, Tribunal de grande instance de Paris, 19 Dec. 2012.
9 The Functions of Arbitral Institutions, p. 145.
10 Ibid., pp. 160 et seq.
11 Ibid., p. 169, n. 770.
12 Austern v Chicago Board Options Exchange, United States Court of Appeals, Second Circuit, 15 Mar. 1990 (898 F.2d 882).
13 Federal Court of Justice Decision, 20 Jan. 1994, Ref. no. III ZR 143/92.
14 The Functions of Arbitral Institutions, pp. 172 et seq.
15 Ibid., pp. 149 et seq.
16 Ibid., pp. 151 et seq.
17 Ibid., pp. 155 et seq.
18 Ibid., p. 157.
19 Ibid., p. 159.
20 Ibid., p. 162.
21 Ibid., p. 160.
22 Ibid., p. 159.
23 Ibid., pp. 118 et seq.
24 Ibid., pp. 173 et seq.
25 Ibid., p. 177.
26 Ibid., p. 177.
27 Ibid., p. 178.
28 Ibid., pp. 178 et seq.
29 Ibid., pp. 179 et seq.
30 Ibid., pp. 178-179.
31 Ibid., pp. 180-181.
32 Ibid., p. 180.
33 Ibid., pp. 185 et seq.
34 Ibid., pp. 187 et seq.
35 Ibid., pp. 188 et seq.
36 Ibid., pp. 190 et seq.
37 Ibid., pp. 196 et seq.
38 Ibid., p. 193, n. 888.
39 Encyclopaedia Universalis S.A. v Encyclopaedia Britannica Inc., United States Court of Appeals, Second Circuit, 31 Mar. 2005 (403 F.3d 85).
40 The Functions of Arbitral Institutions, p. 194 (citing Goldtron Limited v Media Most B.V., Rechtbank of Amsterdam, 27 Aug. 2002 (Yearbook Commercial Arbitration, 2003, at p. 814).
41 The Functions of Arbitral Institutions, p. 195.
42 Ibid., pp. 196 et seq.
43 Ibid., p. 199 et seq.