‘C. Counterclaims and set-off pleas: Is exhaustion of adjudication a requirement?

I. The issue

28. … Respondents have brought a number of counterclaims … noting that these counterclaims were to be understood as set-off pleas in the event and to the extent the Arbitral Tribunal should find any of the main claims justified …

29. Claimants have forthwith contested the admissibility of the counterclaims as well as of the set-off pleas and laid out specifically the reasons supporting their concerns …

30. The issue here is as follows: If the dispute resolution clause of a contract provides that any claim arising under the contract must first be referred to adjudication before being filed for arbitration, does the requirement of prior referral to adjudication also apply to counterclaims and set-off pleas?

II. Claimants’ position

31. Claimants first submit that the counterclaims and set-offs are inadmissible because “with one exception, they have not been submitted in accordance with the dispute resolution procedure specified in the Contract” … Claimants contend that the express terms of the Contract provide “for mandatory or compulsory adjudication” and that no principle of contract interpretation allowed to avoid this requirement ...

32. Second, Claimants highlight that the Parties’ real intentions at the time of the execution of the Contract would never have supported the conclusion that the adjudication requirement would not apply to counterclaims or set-off pleas …

33. Third, according to Claimants’ reading of the contractual dispute resolution clause, referral to adjudication was to be understood as a condition precedent to the referral of any claim to arbitration ...

34. Fourth, Claimants argue that the parties have “established a course of conduct between themselves and/or are estopped by conduct or convention from now departing from the contractual terms” …

35. Fifth, Claimants submit that unless the adjudication phase has been run through, the Arbitral Tribunal lacked jurisdiction to entertain any claim arising under the Contract, be it a main claim or a cross-claim, irrespective of whether the latter is brought as a counterclaim or a set-off plea …

36. Finally, Claimants point to the fact that the adjudication phase provided an efficient and cost-effective way of dealing with a variety of claims involving different factual and technical evidence and that, already for this reason, skipping the adjudication phase would deprive the parties of a valuable screening mechanism that could act as a filter for claims eventually submitted to the Arbitral Tribunal.

III. Respondents’ position

37. In their Memorial … Respondents reply that the adjudication phase was never meant to be a formal requirement of admissibility for counterclaims and for set-offs. On the contrary, the requirement of prior referral to adjudication was simply intended to prevent recourse to arbitration in the first place. Hence, in case arbitral proceedings were already under way, the real and common intentions of the Parties was and would have been that counterclaims and set-off pleas should be admissible directly without prior exhaustion of the adjudication phase.

38. This construction of the dispute settlement clause, still according to Respondents, was supported by the idea that “adjudication is not a condition precedent but an ‘amicable settlement clause’ according to the Special Conditions of the Contract”. Moreover, adjudication made little sense once arbitral proceedings were already pending. In conclusion, Respondents submit that there “are no legal basis or economic reasons why [Respondents] should go through adjudication”.

39. Second, Respondents maintain that the Arbitral Tribunal did in any event have jurisdiction over the cross-claims and the set-off pleas by virtue of the old principle “le juge de l’action est le juge de l’exception” . Here, Respondents add a precision in the sense that they request that the cross-claims invoked should be considered and treated as counterclaims in the sense that they should “survive irrespective of the Tribunal settlement on the main claim” …

40. Hence, given the substantive nature of the set-off invoked, according to Respondents, “in order to give a well-grounded and legal ruling, the Arbitral Tribunal is under obligation to examine and find to what extent the claimed rights by the main claim still exist or are extinguished by set-off” ...

41. In support of this contention, Respondents also cite Article 21(5) of the Swiss Rules of International Arbitration as the expression of a standard of best practice in modern international commercial arbitration.

IV. The Arbitral Tribunal’s determination on the admissibility of the counterclaims and set-off pleas

42. The Arbitral Tribunal preliminarily notes that the Parties have negotiated and entered into rather detailed dispute resolution provisions, reflected in Clause 6 of the General Conditions of Contract (“GCC”) with the following wording:

6. Settlement of Disputes

6.1. Adjudicator

6.1.1. If any dispute of any kind whatsoever shall arise between the Employer and the Contractor in connection with or arising out of the Contract, including without prejudice to the generality of the foregoing, any question regarding its existence, validity or termination, or the execution of the Facilities – whether during the progress of the Facilities or after their completion and whether before or after the termination, abandonment or breach of the Contract – the parties shall seek to resolve any such dispute or difference by mutual consultation. If the parties fail to resolve such a dispute or difference by mutual consultation, then the dispute shall be referred in writing by either party to the Adjudicator, with a copy to the other party.

6.1.2. The Adjudicator shall give its decision in writing to both parties within twenty-eight (28) days of a dispute being referred to it. If the Adjudicator has done so, and no notice of intention to commence arbitration has been given by either the Employer or the Contractor within fifty-six (56) days of such reference, the decision shall become final and binding upon the Employer and the Contractor. Any decision that has become final and binding shall be implemented by the parties forthwith.

6.1.3. The Adjudicator shall be paid an hourly fee at the rate specified in the SCC plus reasonable expenditures incurred in the execution of its duties as Adjudicator, and these costs shall be divided equally between the Employer and the Contractor.

6.1.4. Should the Adjudicator resign or die, or should the Employer and the Contractor agree that the Adjudicator is not fulfilling its functions in accordance with the provisions of the Contract, a new Adjudicator shall be jointly appointed by the Employer and the Contractor. Failing agreement between the two within twenty-eight (28) days, the new Adjudicator shall be appointed at the request of either party by the Appointing Authority specified in the SCC.

6.2. Arbitration

6.2.1. If either the Employer or the Contractor is dissatisfied with the Adjudicator’s decision, or if the Adjudicator fails to give a decision within twenty-eight (28) days of a dispute being referred to it, then either the Employer or the Contractor may, within fifty-six (56) days of such reference, give notice to the other party, with a copy for information to the Adjudicator, of its intention to commence arbitration, as hereinafter provided, as to the matter in dispute, and no arbitration in respect of this matter may be commenced unless such notice is given.

6.2.2. Any dispute in respect of which a notice of intention to commence arbitration has been given, in accordance with GCC Sub-Clause 6.2.1, shall be finally settled by arbitration. Arbitration may be commenced prior to or after completion of the Facilities.

Arbitration proceedings shall be conducted in accordance with the rules of procedure designated in the SCC.

Notwithstanding any reference to the Adjudicator or arbitration herein,

(a) the parties shall continue to perform their respective obligations under the Contract unless they otherwise agree,

(b) the Employer shall pay the Contractor any monies due the Contractor.

43. The Special Contract Conditions (“SCC”) contain the following provisions on the settlement of disputes:

4. Settlement of Disputes (GCC Clause 6)

GC 6.1. Adjudicator

GC 6.1.1. Adjudicator: Mr …

GC 6.1.3. Adjudicator’s hourly fee will be …

GC 6.1.4. Appointing Authority for Adjudicator shall be designated by La Fédération Internationale des Ingénieurs Conseils (FIDIC) of Lausanne, Switzerland. The Adjudicator so designated shall be deemed to be jointly appointed by the Employer and the Contractor.

GC 6.2. Arbitration

If the parties fail to resolve such a dispute or difference by mutual consultation, then the dispute shall be submitted to Arbitration.

(a) in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce.

GC 6.2.1.The party desiring to submit a dispute to arbitration shall notify this in writing to the other party, mentioning the name and address of the arbitrator appointed by it. The party receiving such a notification must appoint an arbitrator within thirty (30) days from receipt of the notification, otherwise the second arbitrator will be appointed at the request of the first party by the Arbitration Court of the International Chamber of Commerce.

GC 6.2.3. Appointing Authority for the third Arbitrator: Shall be designated by, on the request of one of the parties, the Arbitration Court of the International Chamber of Commerce, Paris, France. The Arbitrator so designated shall be deemed to be jointly appointed by the Employer and the Contractor.

GC 6.2.6 (i) Rules of procedure for arbitration proceedings: Shall be conducted in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce (ICC), as in force on the date of this Contract.

GC 6.2.6(ii) The place of arbitration shall be: Zurich, Switzerland.

GC 6.2.7. The Arbitration shall decide by majority vote in accordance with the wording and spirit of the Contract and laws of the Employer’s country, and in the award they shall give the reasons of their decision. They will endeavour to give their award with three (3) months from the appointment of the Arbitration Panel.

44. As to the hierarchy of the several contract documents (all of which forming “the Contract”), and forming an “integral part” of the Parties’ agreement, Respondents very correctly draw the Tribunal’s attention to Article 1.1 of the document headed “Contract Agreement” … which lists the SCC as number two, and the GCC as number three; and Article 1.2 then determines that the “order of precedence” (in case of ambiguity or conflict) should be the same as the order in which the various documents are listed in Article 1.1. Hence, in case of ambiguity or conflict, the provision in the immediately preceding paragraph (para. 43) is to take precedence over the provision cited in para. 42.

45. A careful reading of these clauses, however, does not reveal an ambiguity or conflict: As it appears from the texts regarding the dispute resolution procedures, Article 4 SCC simply provides more and further details regarding Clause 6 of the GCC, for instance by naming the adjudicator in person …, by settling his fees, by determining the appointing authority. It is true, as Respondents remark, that the provision of Article 4 SCC (quoted above) only refers to the Parties’ failure to resolve a dispute or difference “by mutual consultation” (and not: “by mutual consultation and adjudication”); however, Article 4 and its reference to Clause 6.2 GCC must be read in its context and purpose, namely to therein determine the applicable institutional arbitration rules (i.e. making reference to the ICC Rules), which had not been referred to in the much more detailed dispute resolution provisions according to Clause 6 GCC. In other words, the Tribunal does not read into Article 4 SCC a waiver in respect of the adjudication procedure as per Article 6 GCC. Any other reading or understanding would indeed have deprived the adjudication-mechanism of any meaning.

46. Hence, on the basis of what is before the Tribunal, the requirement of adjudication as per the GCC had not been discarded or waived by the SCC.

47. Clause 6 of the GCC and Clause 4 of the Contract do not explicitly address the question of whether the adjudication phase of the dispute resolution mechanism should automatically cease to apply in case a claim is brought as a cross-claim (be it as a counterclaim or a plea for set-off) in the framework of already pending arbitral proceedings.

48. In the view of the Arbitral Tribunal, Clause 6.1 of the Contract (regarding the adjudication proceeding) is too elaborate and too precise for this Arbitral Tribunal to accept the notion that the mere fact that proceedings are pending before the arbitrators should open the arbitration stage for whatever further claims there may exist between the Parties. Such an exception to the adjudication phase is not provided for by the Contract, and the Arbitral Tribunal has no reason to find an implicit waiver.

49. Basically, it would indeed be quite striking to interpret the arbitration clause in a way so as to provide for a different solution depending on whether or not a claim is raised by a claimant party (where a prior adjudication process is required), or raised by a responding party (where no such process would be required). Certainly, any such solution would – in principle – be conceivable, and the Parties could indeed have drafted the dispute resolution clause by inserting some specific language in the arbitration clause, for instance: “Once a claim is pending before the arbitral tribunal, the responding party will be free to raise cross-claims, either by way of set-off, or as independent counterclaims, without first submitting such cross-claims to the adjudication process described above.”

50. Obviously, such a provision – had it been inserted – would create a significant imbalance and inégalité as between the Parties, in that a claimant, in order to reach the arbitration stage, first has to “suffer through” the adjudication process (which can be complex and onerous), whereas the responding party would have an immediate “entry-ticket” to submit any of its cross-claims to arbitration. Hence, by such a provision access to arbitral justice would be entirely different for the Parties. This Tribunal does not say that a provision, in the arbitration clause, providing for such different treatment would be illegal or otherwise inconceivable, or would be invalid, for instance by applying a rather strict notion of the fundamental notion of equal treatment; all this Tribunal says is: such a provision is not contained in the dispute resolution clause as concluded between the present Parties.

51. The question then remains whether such understanding had otherwise been reached as between the Parties, in the sense of a tacit understanding to the effect that, once an arbitration is pending, the adjudication requirement would no longer be in place, and the parties (or: the responding party) would be free to raise any cross-claims arising out of or in relation to the project, whether or not they have formed part of any prior adjudication. Indeed, this is the way Respondents understand the sense of the dispute resolution clause.

52. In the latter respect, the Tribunal would not categorically rule out any possibility that a non-expressed understanding (i.e. an understanding as to the meaning of a contractual clause, which understanding however is not evidenced in black letters contained in the Contract) could be relevant so as to properly construe and apply the Contract. All the Tribunal wishes to remark is the following:

• First, a mere personal understanding (for instance in the mind of Respondents, or of those who had participated in the discussions leading to the Contract) would obviously not be sufficient; hence, it is of no avail to argue that Respondents, or those acting for them, had the understanding as per the preceding paragraph ...

• Second, Respondents have not even offered specific means of proof for such an understanding.

• Third, even if such a proof of Respondents own understanding had been furnished – for instance an internal Memo of those involved in the drafting of the Contract which describes such an understanding, corroborated by oral testimony and the like – it would be insufficient for such one-sided understanding to step up to the level of a mutually shared understanding.

• Fourth, what would indeed be required for Respondents (or, better: would have been required) is to share and communicate such internal understanding – had it indeed existed at the time of entering into the Contract and the dispute resolution provisions, which however has in no way been shown – with the other Parties, i.e. with Claimants’ negotiators, for instance in a discussion at the occasion of contract negotiations in which Respondents’ negotiators explained their own understanding in the sense that the adjudication mechanism only serves the purpose to avoid arbitration but that, once an arbitration has been initiated, the parties would be free to directly submit all claims or cross-claims to the arbitral tribunal, and that the prior adjudication requirement would be considered inapplicable.

• Fifth: Therefore, as long as any such internal understanding – had it at all existed, for which proposition no evidence has been shown – is not communicated to the other Parties, it remains legally irrelevant under any legal system known to the Arbitrators (unless one would have to conclude that a true bona fide understanding of the contractual provision would suggest that the true meaning of the provision could not be construed other than in the sense Respondents understand it – but again, such exception is clearly not in place here).

• Sixth: Even such communication – had it existed – would not be sufficient: Claimants reaction would have had to be positive, in the sense of an agreement from their side; or, at least, their silence, under the circumstances, would have been such as to amount to a tacit acceptance.

53. The above is indeed a reflection of basics of law. In the case at hand none of the requirements for backing up the understanding now given to the meaning of the dispute resolution provision by Respondents’ counsel is in place. Respondents have not shown to this Tribunal that their understanding had been the real and common intention (see para. 37 above) of the Parties when entering into and agreeing to the two-tier dispute resolution mechanism.

54. Hence, the Tribunal can do no more than to apply the dispute resolution clause in the way as it is written in its black letter text.

55. Hence, the mere existence of a pending proceeding does not strip the adjudication phase of its meaning, intended role and function. Indeed, the adjudication phase continues to be fully justified in terms of the adjudicator’s greater proximity to the relevant facts of the case and his greater expertise in the given field.

56. Moreover, the adjudication phase may continue to serve as a screening mechanism to thin out the claims that should eventually reach the arbitration stage.

57. Finally, an independent reading of the Clause 6 reveals that the adjudication process is not conceived as a mere preliminary stage to arbitration, but rather as the core dispute resolution mechanism agreed as between the Parties. The terms of the dispute resolution clause make it very clear that any subsequent arbitration proceeding is only meant to provide a remedy against the adjudicator’s decision, and to offer a procedural guarantee in case the adjudicator fails or refuses to render a decision.

58. Arbitration, therefore, seems to have been conceived as a subsidiary means of dispute resolution only. Moreover, the Contract leaves no doubt that the object of the arbitration proceeding is not the claims of the Parties, but the decision of the adjudicator. Again, the language of Clause 6.2 is unambiguous: “no arbitration ... may be commenced unless such notice is given”.

59. In order to be admissible for this Arbitral Tribunal, counterclaims must hence first be submitted to the adjudication process, and the Tribunal, at this time, can only consider counterclaims which indeed had been filed within the prior adjudication proceedings.

60. For quite the same reasons, the Arbitral Tribunal’s conclusion is no different concerning the admissibility of set-off:

61. The Arbitral Tribunal preliminarily notes that the Parties have not addressed the issue of set-off in their Contract. The [applicable law], which governs the issue in the absence of an agreement by the Parties to the contrary, makes set-­off a substantive defence (as typically civil law systems do, in contrast to the common law understanding where set-off tends to be a merely procedural defence). This means that set-off is a full defence to a monetary claim which reduces or extinguishes the main claim depending on the magnitude of the cross-claim invoked for set-off purposes.

62. However, it is clear that parties to a contract are entirely free to contractually limit, waive or exclude set-offs.

63. In the case at issue, the Contract (GCC) makes the adjudication proceeding an important dispute resolution mechanism. The adjudication phase must hence be exhausted prior to submitting any claim to arbitration. If set-off pleas were directly admitted to arbitration, this would allow any party to skip the contractually agreed adjudication proceeding. While it is obvious that the Parties indeed could have agreed on such an exception to the adjudication requirement, the Respondents have, as discussed above, not shown that such an agreement has actually been reached between the Parties.

64. To the contrary, in the case at issue, the Parties’ very specific dispute resolution mechanism as per Clause 6 of the General Conditions of Contract (GCC), which literally refers to “any dispute of any kind whatsoever...”, requires a two-tier submission. It thereby evidences an explicit waiver to invoke a set-off defence before the arbitral tribunal (as second tier) for claims/pleas that have not first undergone the required first-tier adjudication phase. Such a waiver overrides the general civil law notion (and [applicable] law notion) of set-off, in the sense that the invoking of any set-off plea must likewise first comply with the two-tier dispute resolution clause agreed upon by the Parties.

65. The reference by Respondents to Article 21.6 of the Swiss Rules does not suggest a different answer or solution: first, the Swiss Rules are not applicable; second, they simply recall the notion (best expressed in French) “le juge de

l’action est le juge de l’exception”. However, if a party has waived the right of operating a set-off, or if – as in the present case – a particular requirement has to be fulfilled (in casu the submittal to the adjudication process), then the parties agreement must prevail.1

66. The Tribunal therefore finds that, for a set-off claim to be admissible in the present arbitral proceedings, it first must have been submitted to the adjudication process.

67. It follows from the above that the cross-claims, insofar as they are inadmissible as counterclaims, cannot be brought as set-off pleas either. Respondents’ cross-claims (either as counterclaims or as mere set-off pleas) will be admissible in arbitral proceedings only insofar as they have been submitted in the framework of the prior adjudication phase.2

68. On the other hand, the Tribunal has carefully studied Respondents’ reasoning and concerns regarding the usefulness of, and bona fide approach towards, the adjudication process …

• It is the Tribunal’s view that the adjudication process requires – from both sides – a genuine good faith approach and good faith endeavour to accomplish the goal of a meaningful procedure, i.e. a procedure which not only requires time and money, but which will be conducive for a settlement.

• In other words, Claimants’ insistence on the adjudication process should not merely serve as a shield or additional hurdle so as to make Respondents’ cross-claims more burdensome or more costly to pursue; the latter would indeed appear to amount to an abuse of rights would not deserve protection by this Tribunal.

• By Claimants’ insistence on the adjudication process they will, therefore, be taken to have committed themselves to participate in the adjudication process with a serious and bona fide endeavour to achieve the Parties’ intentions and expectations in devising such a first-tier mechanism which, as the very title of Article 6 GCC shows, was devised for the “Settlement of Disputes” (and not for a shielding of one Party from (possibly) legitimate claims of the other).

69. However, if Claimants do not really and bona fide believe – at this time, and after past experiences – in the usefulness of the adjudication process – as it had been provided for in the GCC – in respect of Respondents’ cross-claims, then it would be best for Claimants to say so candidly, in which case two scenarios are conceivable:

• First: If Claimants do not genuinely believe in the usefulness of the adjudication procedure, they should waive that requirement, and should agree that Article 7 GCC does not need to be applied, so that Respondents’ counterclaims can then go forward in the present arbitration, as Respondents request (see Fn above).

• Second: If Claimants’ doubts as to the usefulness of the adjudication process merely relate to the method used in the adjudication, or the procedure, or relate to the personality of [the person nominated as adjudicator] (also considering Respondents’ remarks as to the suitability of [that person] as a non-engineer), then, in the Tribunal’s view, both Parties should sit together and devise a better and more efficient adjudication process; see hereto the next Chapter V.

V. The Tribunal’s observations regarding the adjudication process

70. The above reflections lead the Tribunal to make some further observations and suggestions with a view to assist the Parties in possibly improving the adjudication process:

• The Tribunal, having studied the Parties’ Submissions in respect of the counterclaims raised by Respondents, is of the view, basically, that a carefully administered adjudication process (as indeed contemplated by the Parties) could be extremely useful for the Parties themselves, and helpful for the Arbitral Tribunal (to the extent that a further reference to arbitration would, at all, be deemed necessary).

• Learning from past experience with the adjudication process between the Parties so far, it would seem appropriate for both sides to really and [sic] improve the process.3

• Such improvement of the process, however, requires the Parties to sit together and work out a detailed agenda for the adjudication phase in respect of any and all counterclaims which, so far, have not been submitted to prior adjudication.4

• As a first and most important matter, the Parties would have to consider and agree on whether or not [the person nominated as adjudicator] should again serve as the adjudicator. In this regard, the Tribunal expects the Parties to take a totally fresh look on such nomination. Basically, the Tribunal is of the view that utmost neutrality of the adjudicator will be a core requirement, without which the adjudication process would again risk to be a waste of time.

• Moreover, the adjudicator must have specific expertise, knowledge, capability and case management experience and qualifications.

• In the Tribunal’s view, the adjudicator – if the process should have real credibility and weight – should be an internationally recognized specialist, with the highest reputation and expertise in the specific field.

• It really goes without saying that such adjudicator should come from a neutral background, must be totally independent from any of the Parties, and certainly should be of a nationality distinct of those of the Parties here involved.

• Instead of naming one specific individual, the nomination could be for a particular engineering firm which will delegate a small team (for instance 2 or 3 persons). However, the engineering firm will have to assign the duty to some specific persons.

• Hence, the Parties should each establish a shortlist of (say) five outstanding internationally recognized and independent candidates (or firms) to serve as adjudicator; the shortlist can be exchanged via the Chairman (who would forward the shortlists once he had received the same from both sides); counsel representing the present Parties are well experienced in handling such nomination procedures, and no further suggestions at this time seem to be required; however, should the Parties ultimately be unable to reach a consensus, they could contemplate to refer the nomination to the ICC Centre for Expertise.5

• The Parties themselves should identify, by name, their own competent teams which will be responsible for presenting the matter to the (new) adjudicator. The most competent persons should be mandated for such procedure.

• Once a candidate or team to serve as adjudicator is identified, the Tribunal would strongly recommend that a first Kick-Off Meeting should take place6 between the delegations of the Parties and the (new) adjudicator so as to discuss the most essential parameters of the adjudication process, at which time the more detailed Terms of Reference of the adjudicator should be laid down in a document.

• The adjudicator’s Terms of Reference will contain a detailed schedule and agenda (timetable) for the adjudication process, and of course an arrangement regarding fees and expenses.

• Basically, the Tribunal suggests, the Parties should then file comprehensive and fully supported Adjudication Briefs to the adjudicator.

• Thereupon, the adjudicator should have the authority to fully investigate the matter, obtain further information, documents etc. and, of course, should conduct the site visits as deemed necessary (with or without being accompanied by a delegation of the Parties which will require to be discussed at the ToR Meeting).

• Thereafter, the adjudicator should render a detailed opinion with his determinations in respect of any and all claims submitted to him.

71. It is very obvious that the above process will be exacting and time-consuming for both Parties but, in the Tribunal’s view, would be extremely valuable for the Parties themselves, and would moreover be extremely valuable for the Arbitral Tribunal in case the adjudicator’s determination would not be accepted, or not be fully accepted, such that the ultimate decisions will have to be made by the Arbitral Tribunal.

72. To conclude on this point:

In case Claimants continue to insist on the adjudication procedure (and would not be prepared to waive it, in the sense of the above para. 69, first bullet point), then the Tribunal expects the Parties to discuss the adjudication procedure without any further delay, to constitute their delegations responsible for the procedure and, thereafter, to sit together (as expressed above) within the next few weeks at a convenient venue to be agreed by the Parties. In the Tribunal’s expectation, such a meeting should take place [within four to five weeks] (after all, the Parties had both agreed to, and bargained for, a swift dispute resolution procedure).

73. The Tribunal expects to be informed on the adjudication process and progress made therein and, as in other ICC cases recently handled by the Chairman, the Tribunal expects to receive short progress reports on a bi-monthly basis, for the first report to be established as of 31 October …, thereafter 31 December …, 28 February … and so on. A submission within two weeks after these milestone dates would be satisfactory.

74. The Tribunal, however, does not intend to intervene in the adjudication process as such, except that, if the Parties encounter difficulties to agree on the process, the Tribunal will lend its assistance and, to the extent necessary, will provide guidance to the Parties. Typically, for such purpose, and to the extent necessary, the Chairman would organize telephone conferences with all those concerned.’

1
In respect of the Swiss Rules, this is reflected in the Commentary Zuberbühler, Müller, Habegger, Swiss Rules of International Arbitration, 2005, ad Art. 21, N 33, page 194: “It is understood that the parties may agree to limit or waive the rule contained in Art. 21 (5).”

2
Obviously, and it goes without saying, the Parties are at all time free to commonly waive the adjudication phase, by contrarius actus. However, it could also stand to reason to improve the process; for the latter case, the Tribunal offers its reflections and makes a number of proposals hereinbelow.

3
Without having investigated this in more detail, the Tribunal “sensed” that the adjudication processes which so far have taken place, did neither fully satisfy nor “convince” the Parties. If this understanding is right, then the Tribunal will expect the Parties to remedy the situation and to make the process work, as further indicated in the above paragraph.

4
The words “sit together” are to be understood literally: It is, in the Tribunal’s view and experience, impossible to reach a consensus on the adjudication process through the exchange of correspondence. Such exchange risks to result in numerous proposals and counterproposals, with no solution achieved within a reasonable time period. Hence, except in some “miracle-cases” (of which there are very view indeed these days), it is just not possible or productive, and thus a waste of time, to try to settle this by correspondence; it needs much more than that; it needs persons with personality, integrity and experience to sit together, and see into each other’s eyes, for properly devising the process. Hence, if the adjudication process should be improved, then the Tribunal expects delegations of the Parties to physically sit together for at least two full working days so as to agree on all details of the procedure. See also [the following footnote].

5
The Chairman has used the ICC Centre for Expertise for making similar nominations several times in the past, and in each case the Centre was able to identify a truly outstanding specialist of worldwide reputation and with impeccable qualifications and whose determinations were most helpful for the Parties and the Tribunal.

6
Again, the Tribunal stresses the importance of a physical meeting in person. The Chairman’s last experience shows that at least two days are necessary to line this up properly and to then have proper Adjudication-ToR in place.