‘4. The Tribunal’s jurisdiction to order interim measures

……..

4.2. The standard required for jurisdiction to order interim measures

According to Article 183 of the PIL Act, an arbitral tribunal sitting in Geneva in an international case may order interim measures, unless the parties have agreed otherwise. In the present case the Parties have agreed on the ICC Arbitration Rules. Article 23(1) of these rules grants to an arbitral tribunal proceeding under the Rules the power “to order any interim or conservative measure it deems appropriate”, unless the parties have provided otherwise. No agreement to the contrary has been invoked by the Respondents.

When granting this power, both the PIL Act and the ICC Rules obviously presume that they are conferred on arbitrators to which the PIL Act and the ICC Rules apply and which otherwise have jurisdiction over the dispute between the parties called to appear before them. The provisions just referred to do not state expressly how to proceed in case the jurisdiction of the Arbitral Tribunal is contested by one of the parties.

Since the jurisdiction of arbitral tribunals normally depends on the agreement of the parties, there are reasons to argue that the powers of such tribunals can be exercised only when it is established that there is indeed a binding agreement to arbitrate. Insofar the situation before arbitral tribunals differs from that before state courts where statute and not agreement is the principal basis for jurisdiction. Depending on the relevant statutory provisions, state courts may order interim measures even in situations where they do not have jurisdiction over the merits of the dispute.

The situation is different before international tribunals where consent remains the principal if not the only basis for jurisdiction. The most important of these international tribunals, the International Court of Justice (ICJ) and its predecessor, the Permanent Court of International Justice, had to consider at repeated occasions the question whether, in cases where its jurisdiction on the merits was contested, it could order interim measures. The jurisprudence of the ICJ has been summarized by Lawrence Collins in his seminal lecture on “Provisional and Protective Measures in International Litigation” where he stated:

the International Court has adopted an approach that it has jurisdiction to grant interim remedies if the absence of jurisdiction is not manifest and if the instrument said by the claimant to confer jurisdiction on the Court prima facie does so.1

Collins also mentions voices on the Court which, to varying degrees, differ from this approach and, referring to the Court’s decision in the Anglo­Iranian Oil Co. case of 1951, he concludes that

the now prevailing opinion is the prima facie test first expressed by the majority in that case.2

The Court itself has expressed the principle in a number of its decisions, for instance in the case concerning Military and Paramilitary Activities in and against Nicaragua where it held:

on a request for provisional measures the Court need not, before deciding whether or not to indicate them, finally satisfy itself that it has jurisdiction on the merits of the case, or as the case may be, that an objection taken to jurisdiction is well-founded yet it ought not to indicate such measures unless the provisions invoked by the Applicant appear, prima facie, to afford a basis on which the jurisdiction of the Court might be founded.3

The principle has been confirmed in a number of subsequent cases, for instance in the Court’s Order of 3 March 1999 in the Walter LaGrand case between Germany and the United States of America:

13. Whereas, on a request for the indication of provisional measures the Court need not, before deciding whether or not to indicate them, finally satisfy itself that it has jurisdiction on the merits of the case, but whereas it may not indicate them unless the provisions invoked by the Applicant appear, prima facie, to afford a basis on which the jurisdiction of the Court might be founded.4

This approach is eminent good legal sense. Indeed, interim measures of protection which, by their nature require an urgent decision, can hardly be dealt with adequately, if the court or tribunal would first have to examine and decide in a final and binding manner any objections to its jurisdiction on the merits which may be raised by the opponents to the application. These considerations apply with equal force to other tribunals which, just like the ICJ, depend for their jurisdiction on the consent of the parties.

In the light of these considerations it comes as no surprise that those authors who have considered the question of an arbitral tribunal’s jurisdiction on the merits apply the same criterion as the ICJ. Thus, Klaus Peter Berger writes:

The basic and indispensable prerequisite for any arbitral interim measure of protection is a request by one party to the arbitrators and the prima facie competence of the tribunal for the underlying dispute. ... In judging its competence for the case, the tribunal has to strike a difficult balance between the urgency of the measures requested which prohibits a complex investigation into the jurisdictional intricacies of the case and the necessity to verify the jurisdictional basis for its decision and avoid decisions extra petita.5

In the context of a discussion of the practice of the International Centre for Investment Disputes (ICSID), and referring to the Holiday Inns case,6 Antonio Parra writes:

In its affirmation of the tribunal’s power to recommend provisional measures before it had definitively ruled on its jurisdiction over the dispute, the decision of the Holiday Inns tribunal conforms with what seems to be the well-settled position in international law, that an international tribunal may decide on provisional measures prior to establishing its jurisdiction over the dispute if it appears that there is, prima facie, a basis for asserting such jurisdiction.7

In a more general manner beyond the specific situation of ICSID arbitration, Lew, Mistelis and Kroll state:

The arbitration tribunal must at least have prima facie jurisdiction in the main action. Otherwise it also lacks jurisdiction to order the interim relief. The mere existence of a challenge to the jurisdiction of a tribunal does not prevent a tribunal from ordering interim relief. If the Tribunal considers that there is at least some basis for its jurisdiction it can order the required measures.8

In Switzerland this position has been confirmed by Poudret and Besson who list among the conditions under which interim measures can be ordered by an arbitral tribunal

prima facie jurisdiction of the arbitral tribunal for deciding the claims on the merits which the provisional measures are intended to protect.9

Similarly von Segesser and Kurth write:

A defence of lack of jurisdiction raised by one party does not prevent the arbitral tribunal from ordering interim measures once the file has been transmitted to it, provided that the arbitral tribunal is satisfied that it has prima facie jurisdiction.10

This also seems to be the position adopted by the ICC Rules which provide in Article 23(1) that the Arbitral Tribunal may order interim or conservatory measures “as soon as the file has been transmitted to it”, without there being a requirement of a prior decision on its jurisdiction, apart from the finding of the ICC Court which, according to Article 6(2), must be “prima facie satisfied that an arbitration agreement under the Rules may exist”.

From this examination of international cases and legal doctrine one must conclude that for an arbitral tribunal to order interim measures of protection it is sufficient that it determine prima facie jurisdiction for the merits of the dispute.

Do the two cases on which the Respondents rely show that the Swiss Federal Supreme Court takes a position different from that generally applied in international arbitration, a position so different that even the Respondents at the first reading of the decision saw in it a confirmation of the prima facie approach?

The first of these cases, described by the Respondents as the Renault case,11 concerns a situation in which a claim arising out of a contract containing an arbitration clause had been assigned to a third party, the claimant in the arbitration. The respondent, relying on a contractual provision which prohibited the assignment of the contract, denied the validity of the assignment. The arbitral tribunal issued a partial award, holding that the claim in question had been assigned validly and ordering the arbitration to proceed. The award did not consider specifically the issue of jurisdiction. The Supreme Court held that the objections raised by the respondent included an objection to the arbitral tribunal’s jurisdiction ratione personae12 and that, by ordering the continuation of the procedure, the arbitral tribunal had made a decision on its jurisdiction, which was subject to an immediate review by the Supreme Court.13 That court found that the assignment was not valid and that consequently the claimant could not rely on an arbitration clause with the respondent; hence the arbitral tribunal had no jurisdiction.

In the course of its reasoning, the Supreme Court referred to the theory of “faits de double pertinence” (“doppelrelevante Tatsachen’’), i.e. facts that are relevant both for the decision on jurisdiction and on the merits of the claim. According to that theory, the decision on jurisdiction assumes the claimant’s factual allegations as correct. The determination on these allegations is reserved for the decision on the merits which carries a res judicata effect.14 In the Renault case, the Supreme Court explained:

Apart from being of an exceptional nature, this theory shall not be considered when the jurisdiction of the arbitral tribunal is contested, because it is excluded to compel a party to suffer that such a tribunal decide contested rights and obligations if it is not covered by a valid arbitration agreement. (references omitted)15

In other words, the theory of faits de double pertinence is not applicable in arbitration, an arbitral tribunal may make a determination on rights and obligations in dispute only if it has decided that it has jurisdiction with respect to these rights and obligations.

The second case on which the Respondents rely concerned a “Syndicate Contract’’. The claimant in that case alleged that the respondent had become party to the contract by way of succession. The respondent denied that such a succession occurred and objected to the arbitral tribunal’s jurisdiction. The tribunal rejected the objection without taking a position on the merits of the question, explaining that “at the present stage of the proceedings” it was of the opinion that the alleged succession had to be assumed.16 The tribunal’s decision contained no factual determinations, nor any legal reasoning to justify the assumed legal succession.

The Swiss Federal Supreme Court criticized this decision and held as follows:

In the decision subject to review the arbitral tribunal disregarded fundamentally that the question whether the parties to an arbitration agreement are bound by that agreement must be examined in all respects, even if it depends on facts which are relevant also for the decision on the merits of the claim (references). Since it decided the respondent’s capacity as a party merely on the basis of a summary or provisional examination, the arbitral tribunal violated Article 190, para. 2 lit. b PIL Act. Since the arbitral tribunal failed to make the necessary factual determination, this court cannot make a decision on jurisdiction.17

In both cases the Supreme Court had to examine situations where the arbitral tribunal had made decisions concerning the merits of the case without having made a full examination of its jurisdiction. The Court held that, before deciding the merits, an arbitral tribunal had to decide on its jurisdiction and that, in making this decision on jurisdiction, it could not limit itself to a summary or provisional examination but had to decide all relevant matters, even if, in so doing, it also determined issues concerning the merits of the dispute.

Article 186(3) PIL Act provides that the decision on jurisdiction normally is made by a preliminary decision (“Vorentscheid”, “décision incidente”). This does not exclude that, in appropriate cases, the arbitral tribunal joins the proceedings on jurisdiction to the examination of the merits and makes its decision on jurisdiction at the same occasion as it makes its first award on the merits. The tribunal’s discretion in this respect is widely recognized.18 The cases on which the Respondents rely do not affect this discretion and do not restrict it.

The decisions which the present arbitral tribunal has taken in its previous orders and which it now considers once again are not intended to decide the merits of the dispute in whole or in part. Quite to the contrary, as interim measures the decision must not prejudge the outcome of the case on the merits. Therefore, they are fundamentally different from those which the Supreme Court considered in the cases on which the Respondents rely. In the latter group of cases the Supreme Court did not consider the question of interim measures and the manner in which an arbitral tribunal proceeds in such cases when its jurisdiction on the merits is contested.

There is no indication in these decisions of the Supreme Court that it intended to depart from the well-established international practice, recognized in Switzerland, that arbitral tribunals can order interim measures on a provisional examination of their jurisdiction on a prima facie basis. Therefore, the Tribunal limits its examination to a determination of its jurisdiction on a prima facie basis; its decision on jurisdiction for the decision on the merits being reserved for a separate award.

4.3. The Tribunal’s <i>prima facie</i> jurisdiction to order interim measures in the present case

In the present case, the Parties to the arbitration have agreed to settle their disputes by ICC arbitration in Geneva. This in itself is a very strong basis of the Tribunal to accept prima facie jurisdiction. In particular, questions of the precise scope of jurisdiction ratione materiae and the compliance with any requirements of procedures preceding the arbitration are issues that, as a matter of principle, can be reserved for the more careful examination which the Tribunal will conduct when deciding in an award concerning its jurisdiction on the merits. The Tribunal has considered the Respondent’s arguments in this respect and concluded that they do not justify a denial of prima facie jurisdiction.

………

There is, however, one of the Respondents’ objections to jurisdiction which requires that consideration be given to them even at the stage of the prima facie examination for interim measures. This objection concerns the validity of the arbitration agreement.

The Respondents argue that the person on the side of the Purchaser [(Claimant)] who signed the Letter Agreement containing the arbitration clause was not authorized to do so and that therefore that party to the agreement was “under an incapacity” under the law applicable to it.

……..

For the purpose of the Tribunal’s prima facie decision on jurisdiction, it is sufficient to note that the corporate position of [the signatory] was disclosed on the face of the Letter Agreement containing the arbitration clause and that the Respondents’ representatives accepted that [the signatory] validly acted for the Claimant. Prima facie they may not deny in proceedings on interim measures that the arbitration clause was validly concluded by [the signatory] acting for the Claimant.

In light of these considerations the Tribunal concludes that it has jurisdiction to rule on the requests for interim measures sought by the Claimant.

5. Has the Claimant lost its right to seek interim relief by applying for such relief to [state courts]?

The Respondents also object to the Claimant’s requests for interim measures by an argument which may be described by the term “exhaustion of the remedy” … They state that the Claimant addressed itself to [state courts] seeking essentially the same interim relief. In the view of the Respondents the Claimant has exhausted its right to interim relief and is precluded from addressing itself now to the present Arbitral Tribunal.

………

[Three applications had been made to state courts for interim measures. Two of the applications were rejected and no decision was reported on the third.]

5.2. The relationship between courts and arbitral tribunals with respect to interim measures

The Respondents rely on these decisions to argue that the Claimant is estopped from seeking in the arbitration the same measures which it unsuccessfully sought to obtain in the courts. They posit the principle that “[a]n application for interim relief must be denied if the applicant has previously requested the same measure on the same facts before a court and the court has denied the relief” …

The Claimant denies that such a rule applies. It refers to Article 23(2) of the ICC Rules and commentaries on it. It also argues that no such “estoppel effect” exists under [the applicable substantive] law …

In support of their proposition the Respondents rely on two ICC awards19 and two authors commenting these awards.20 In the first of these cases, a contractor had applied to the courts of its place of residence for an order instructing the confirming bank not to make payment under an on-­demand bank guarantee. The application was granted by the commercial court at that place; but on appeal the court’s order was vacated by the court of appeal on the grounds that the law applicable to the guarantees did not admit objections against payment of the kind which the contractor had raised. Two months after the contractor had commenced arbitration proceedings, the employer called on the guarantee and the contractor applied to the arbitral tribunal for a decision ordering the employer to return the funds collected by the call against provision of a new guarantee. The arbitral tribunal took the position that the situation before it was essentially identical to that which the court of appeal had decided and held that the new request was inadmissible.

The Respondents then quote Reiner who, relying on the case just described, writes:

It is indeed hard to see why the party that addressed itself to the state court and which did not obtain the desired measure – not because the state court had no jurisdiction but for substantive reasons – could late obtain satisfaction by presenting the same request once again to an arbitral tribunal.21

A similar position is taken by Wirth who presents it with greater detail and supports it with a decision from his own experience as an arbitrator. A party had first seized a court in New York with a request for interim measures, prior to the constitution of the arbitral tribunal. The court had first admitted and later rejected the request. After the arbitral tribunal had been established that party brought the same request for interim measures before the tribunal which rejected it. Wirth explains that the tribunal did so

in essence for reasons of procedural economy and lack of sufficient protective interest of the petitioner. It was found inopportune to allow a petitioner to repeat the same costly and time-consuming proceedings, which the parties had already gone through before another judicial body. Specifically, the tribunal found that there was no sufficient protective interest (Rechtsschutzinteresse) on the part of the petitioner if (i) the interim measure requested previously from the state court and subsequently from the arbitrators was identical; (ii) the facts and evidence relied upon before the two bodies were essentially the same; (iii) the legal test applied by the state court and the ones to be applied by the arbitrators in deciding the matter were the same; and (iv) the principles of due process were observed in the first proceedings in New York. Under these circumstances, neither the arbitrators nor the petitioner’s opponent could be reasonably asked to go through the same matter again.22

The Respondents do not mention that Reiner refers to other authors who have taken a different position. Fouchard, Gaillard and Goldman, to whose treaties Reiner refers, write:

The jurisdiction of the courts does not deprive the arbitrators of the possibility of ruling in the last resort. The provisional nature of interim orders enables the arbitrators to review measures taken by the courts. Thus, for example, where a court orders the continuation of works, but the arbitral tribunal considers that to be unwarranted, there is nothing to prevent the tribunal from subsequently ordering the works to cease. Where there is a conflict between provisional decisions of this kind, the decision of the arbitral tribunal, which has jurisdiction to rule on the merits of the dispute, should prevail. This is because the only justification for applying to the courts lies in the presumption that they are equipped to take the protective measure required in the circumstances more rapidly.23

These authors quote in support of their position in particular the 1984 ICSID Award by Goldman, Foighel and Rubin in the Amco Asia v. Indonesia case. While it is true that in an ICSID arbitration, governed by the 1965 Washington Convention, the relationship between national courts and an international arbitration tribunal is not in all respects identical to the situation of an ICC tribunal governed by the arbitration law at its seat, the present tribunal is of the view that the conclusions of these authors are to be given preference.

Indeed, the ICC Arbitration Rules apply what is sometimes called the “principle of subsidiarity”.24 Article 23(2), on which the Claimant expressly relied, provides

The application of a party to a judicial authority for [interim or conservatory] measures [...] shall not [...] affect the relevant powers reserved to the Arbitral Tribunal.

This article also provides that, once the file of the case is transmitted to the arbitrators, it is only in exceptional cases that the parties may apply to the courts for interim measures. This clearly shows that, in ICC arbitration, it is for the arbitrator to rule on interim measures.25

With respect to interim measures between the Parties,26 the role of the courts, in particular in ICC arbitration and to some extent in international commercial arbitration in general, is essentially to fill the gap in time before the arbitral tribunal is established. If they have done so by granting the measure requested, the party affected must be given the opportunity to have the matter examined by the body on which the parties agreed for the settlement of the dispute, even if the circumstances were exactly the same and the four conditions described by Wirth were met. Even if the court which was first seized of the matter applied the highest standards of due process, it is the arbitrator’s assessment of the circumstances on which the parties have agreed, not that of a court. The situation is no different in the inverse situation, where, prior to the establishment of the tribunal, a party applied to a court and was denied its application.

Another equally important consideration requires an arbitral tribunal to consider in its own right an application for interim measures, without being bound by the decision of a state court that had previously ruled on a similar or even identical application: when deciding on an application for interim measures, a court applies its own law of civil procedure, while the arbitral tribunal applies the law governing the arbitration. These laws may and indeed in many respects do differ from one another.27

An arbitral tribunal, therefore, has to examine in each case whether, under the law governing the arbitration, the circumstances on which the applicant relies justify granting the measures sought and has to determine whether it has power to grant the specific measures applied for. The findings by a state court previously seized of the same application may be different from those of the arbitral tribunal, precisely because it examined the application by reference to a different law.

This being said, if in a given case interim measures have first been requested of a state court and that court has rendered a decision, an arbitral tribunal will consider carefully that decision and the reasons given by the court for making it. An arbitral tribunal will also be mindful of not admitting abuse by a party repeating applications for interim measures without justification.

………

[The arbitral tribunal found that the Claimant’s three prior applications to state courts did not bar it from exercising its jurisdiction to order interim measures.]

6. Should the requested measures be ordered?

6.1. The conditions for granting interim measures

Neither the arbitration clause and the chosen arbitration rules nor the law applicable to the arbitration, nor that applicable to the merits contain any provisions which regulate the circumstances or conditions under which in the present case the Tribunal can or may order interim measures. The Respondents have pointed this out expressly … and the Claimant has not objected: Article 183 of the PIL Act, dealing with interim measures and applicable as part of the law governing the arbitration, does not contain any such rules and no court decision has identified any. To the extent to which the matter is subject to [the applicable substantive] law, as the law governing the merits of the dispute, no rule is found in that law either. Article 23 of the ICC Arbitration Rules also gives no directions in this respect.

However, the ICC Rules in general and certain of its provisions give some guidance in this respect. First of all, in the absence of a provision in the Rules and in the agreement of the parties, procedural matters have to be settled by the Arbitral Tribunal according to Article 15(1), “whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration”. While the application of the “procedural rules of any national law [...] is not normally appropriate”,28 the rules and practices of courts with respect to interim measures, which are easily accessible, can well serve as guidance for arbitrators in filling the gap in the Rules in this matter, provided, of course, the particularities of international commercial arbitration and of the specific case are duly taken into account.

More generally, Article 35 of the Rules requires the Arbitral Tribunal, in all matters not expressly provided for in the Rules, to “act in the spirit of these Rules and [to] make every effort to make sure that the Award is enforceable at law”. It is a characteristic feature of the ICC arbitration that its proceedings are placed in the general context of international commercial arbitration and the rules and practices that emerge from arbitral proceedings and scholarly writings. The composition of the ICC International Court of Arbitration, with its role in the constitution of ICC Arbitral Tribunals and in the scrutiny of awards, is an aspect of this feature, just as the requirement of Article 17(2) of the Rules. While this provision, requiring the arbitrators “in all cases [to] take account of the contract and the relevant trade usages”, concerns essentially the rules of law applicable to the merits of the dispute and while “trade usages” normally is understood to refer to “a usage that is widely known to and regularly observed in international trade by parties in the particular trade ...”,29 an application of this provision by analogy to usages observed by international arbitrators would certainly be in the spirit of the ICC Rules.

There is indeed a growing body of scholarly writing and arbitral decisions which address the circumstances and conditions for an arbitral tribunal to order interim measures. Both Parties in these proceedings have made reference to some of these texts: In particular the Respondents, especially in their Opposition to Interim Relief, have provided helpful references to many arbitral decisions and writers dealing with this issue. Most recently, the Arbitration Working Group of the United Nations Commission on International Trade Law (UNCITRAL), after several years of deliberations, has prepared a proposal for modifying Article 17 of the Model Law on International Commercial Arbitration by setting out such requirements; this proposal now has been submitted to the Commission.

While the study of these texts reveals certain trends and a number of criteria which are applied more or less regularly by arbitral tribunals, it would be a difficult task to establish in a general manner the substance of the rules which an ICC tribunal sitting in Switzerland must apply when determining whether a specific measure may or must be ordered. The Tribunal will therefore not attempt such a definition in the abstract but will consider the arguments raised by the Parties in favour of their respective positions.

There is, however, one important consideration which an ICC Tribunal has to observe and which flows from one of the principles in the ICC Rules expressing their “spirit”. Article 35, as quoted above, refers to the enforceability of the award. The term “at law’’ in this provision seems to indicate that it aims primarily at the conformity of the award with legal requirements. However, the rule expresses a more general concern with the effectiveness of the procedure, the enforceability being considered as “the raison d’être of the arbitration process”,30 or at least one of its “raisons d’être”. As Derains and Schwartz explain, “arbitrators should always be concerned about the efficacy of the arbitral process”.31 The concern for the enforceability of the award is “in the spirit” of the ICC Rules and, when filling gaps in the Rules, ICC arbitrators should ensure the effectiveness of their award not only against legal impediments but also impediments of fact.

When deciding the applications for interim measures in this case, the Tribunal therefore had as one of its principal concerns to ensure that its award, once made, could effectively be implemented.

In its principal submission on interim measures … the Claimant identifies the “generally accepted” conditions which an application for interim relief must meet:

(1) a likelihood of success on the merits;

(2) irreparable harm; and

(3) a balance of interest in its favour …

The Respondents rely on “customary rules of international arbitration procedure” and list the “cumulative conditions” of which an applicant seeking interim relief “in essence” must demonstrate that they are met. Apart from the items relating to jurisdiction and estoppel which have been dealt with in a previous section of this Order, the Respondents identify the following conditions:

• Likelihood of success on the merits (prima facie case);

• No prejudging the final decision on the merits;

• Irreparable harm or injury to the applicant and urgency of the measure;

• Appropriate balance of interest of the parties;

• Appropriate security to be posted by the applicant, if the other requirements are satisfied …

As can be seen when comparing the conditions defined by each of the Parties, there is considerable similarity in their respective views about the principles, even if in the formulation of the details some differences can be observed. …

Before considering the conditions for ordering interim measures and their application in the present case, the Tribunal must point out that the appreciation and relative weight of these conditions cannot be determined generally but depend on the specific circumstances of the case. In this respect, it is of critical importance to weigh the impact which the measure requested will or may have on the party against which the order is sought.

………

7. The form of the decision

In the Request for Arbitration, when it first presented its request for interim measures, the Claimant stated that it sought an “interim order or award” … This request was confirmed in subsequent submissions … In the Renewed Request … the Claimant sought an “interim award” preventing the completion of the transfer of the shares … At the Hearing … the Claimant stated that its principal request was for interim measures in the form of an award; alternatively it requested that they be issued in the form of an order …

The Respondents have not expressed a view on this issue. Since the Respondent objects to any interim measures being ordered at all, the Tribunal cannot take the Respondents’ silence as consent to the Claimant’s request for a decision in the form of an award. In the absence of a joint position of the Parties on the form in which the Tribunal’s decision on interim measures is to be made, the issue must be decided by the Tribunal.

The ICC Arbitration Rules leave it to the Arbitral Tribunal to decide the form it wishes to give to its decision on Conservatory or Interim Measures. Article 23(1), last sentence, provides as follows:

Any such measure shall take the form of an order, giving reasons, or of an Award, as the Arbitral Tribunal considers appropriate.

Neither in Article 23 nor in any other provision do the ICC Arbitration Rules define the characteristics of an award and the criteria for distinguishing it from an order. The situation is no different with respect to the New York Convention of 1958, the arbitration legislation in many countries, including the UNCITRAL Model Law on International Commercial Arbitration, and many arbitration rules.32

In Switzerland, the PIL Act, while not spelling out expressly definitions of an order and an award, provides an important indication for the distinction between the two types of decisions by differentiating the enforcement regime. While awards, (a) are final according to Article 190(1), (b) are subject to setting aside proceedings before the Swiss Federal Supreme Court according to Article 190(2) and 191(1) and (c) may be certified enforceable according to Article 193(2), orders for interim measures are subject to a separate regime set out in Article 183(2),33 where assistance may be requested from the courts if the addressee of an order does not comply voluntarily. In other words, orders for interim measures under the PIL Act, contrary to awards, are not directly enforceable;34 and finality is a specified criterion only for awards not for orders of interim measures.

Despite these indications in the PIL Act, the possibility of issuing interim measures not in the form of an order but in an award is not ruled out in Switzerland. In particular, the Swiss Rules of International Arbitration, adopted by the principal Chambers of Commerce and Industry in Switzerland after long preparatory works and in force since 2004, expressly state in their Article 26(2) that “interim measures may be established in the form of an interim award”. Commentators of this provision have expressed doubts about its effectiveness, questioning in particular that such decisions on interim measures qualify as “award” in the sense of the New York Convention.35

The fact remains that a recently adopted important set of arbitration rules in Switzerland has confirmed the possibility for arbitral tribunals to issue interim measures in the form of an award. The Tribunal has, therefore, continued its search for distinguishing criteria beyond the distinction that is suggested by the differences in the PIL Act between the provisions on interim measures and those dealing with awards. It considered the distinction as it has been addressed by a number of legal writers and in some decided cases outside Switzerland.

Poudret and Besson, with the thoroughness which characterizes their treaties, have examined the characteristics of an award and the distinction between awards and procedural orders.36 With respect to awards, they make reference to the lack of precision in legal and regulatory terminology and the confusion of [arbitral] practice.37 However, they identify a prevailing definition, distinguishing procedural orders from awards, on the grounds that

... they are not final, do not acquire res judicata effect, do not bind the arbitrators and may be modified by them.38

For the present decision the decisive criterion, in the Tribunal’s view, is precisely that of finality. The orders which the Tribunal made at various times during recent months had to be modified or altogether revoked, due to the evolution of the factual situation and due to changes in the Claimant’s applications. It is true that at the time of the last hearing on interim measures … a certain stability in the situation had been reached which has lasted until now and which allowed the Tribunal to consider the issues more thoroughly than was possible in the circumstances of extreme urgency that prevailed during the [previous three months] when the Tribunal had to consider successive requests for interim measures in the light of rapidly changing circumstances. However, the evolution of the case in the past and the failure of the Parties to reach an agreed interim arrangement concerning the Shares, makes it well possible that further changes in the circumstances arise which may require modifications or termination of some or all of the measures now ordered. This is indeed, as the Claimant correctly characterized it, a “highly volatile and complicated matter” …

Therefore, it is of paramount importance for the Tribunal to preserve the power to intervene with respect to the subject matter of the measures ordered. It must be in a position to modify its order or revoke it and it must be able to do this urgently. For this reason, the Tribunal considers it essential that the interim measures ordered, while binding on the Parties, should not be final. The Tribunal, therefore, examined further whether and to what extent finality is understood to be an essential feature of an award so that, if that were the case, the form of an award could not be adopted for its decisions regulating the status of the Shares until it had finally decided the substantive claims concerning them.

Finality of the decision, as described by Poudret and Besson, is indeed widely recognized as an essential element in the definition of an award: As explained above, it is expressly mentioned in Article 190(1) PIL Act and, in the present case, the Parties have stipulated it in the arbitration clause, providing:

Any Award of the arbitral tribunal shall be final and binding. …

In the ICC Rules, too, awards were understood to be “final”; prior to the revision of 1998, Article 24(1) provided:

The arbitral award shall be final.

In the 1998 version of the Rules, the word “final” in Article 24(1) of the previous version was replaced by the term “binding” in what became Article 28(6). Derains and Schwartz give two reasons for this change.

The first reason refers to Article 2(iii) of the Rules which includes “interim awards” and “partial awards” in the term of “awards”; the authors conclude that such awards are not necessarily “final”. In this passage the authors seem to employ the term “final” as describing the award that brings the entire procedure to an end; they do not state that interim and partial awards, which are issued in the course of the proceedings, are not final in the sense that they are the tribunal’s last word on the issue and cannot be opened up again by the same arbitral tribunal.

The second reason given by these authors refers to the conditions for enforcement under the New York Convention. They explain that one of the major contributions of this convention was “to eliminate finality as a condition for the enforcement of Awards, as was previously the case under the Geneva Convention of 1927, and to require only that the Award be binding”. Obviously, the “finality’’ which is considered here is the absence of any possibility of reversing the award or setting it aside.

These explanations of Derains and Schwartz show that, when replacing the word “final” by the word “binding’’, the drafters of the revised ICC Rules had in mind different aspects of “finality” and did not intend to include in the definition of awards decisions which are not final in the sense that they can be revised or terminated by the arbitral tribunal which has made them. There is no indication that, since 1998, ICC awards are no longer final in this sense and that the arbitral tribunal can revisit them.

This conclusion with respect to ICC awards is confirmed by many sources, in the context of ICC arbitration practice and generally in international commercial arbitration.

For instance, the Final Report which a Working Party of the ICC Commission on International Arbitration, chaired by Martin Hunter, published in 1990 on Interim and Partial Awards distinguishes decisions on interim measures from awards by stating that

Interim measures of protection are, by definition, not intended to be final and irreversible.39

The Report also refers to other considerations, such as urgency, and the absence of detailed reasoning, which make scrutiny by the Court unfeasible, but also considerations relating to enforcement which may militate in favour of adopting the form of an award. It concludes that

the presumption should be that such orders should not be scrutinised under Article 21 of the Rules, and therefore should not normally by made in the form of an award.40

Hunter and Redfern have confirmed this position in their treatise on the Law and Practice of International Commercial Arbitration, where they state:

In practice, the term “award” should be reserved for decisions that finally determine the substantive issues with which they deal.41

In France, the scope of decisions which can take the form of an award generally is extended beyond substantive issues and includes decisions on jurisdiction and certain procedural matters. Thus, Fouchard, Gaillard and Goldman, quoting almost verbatim from a decision of the Paris Court of Appeals, state that

An arbitral award can be defined as a decision by the arbitrators on all or parts of the dispute submitted to them, whether it concerns the merits of the dispute, jurisdiction, or a procedural issue leading them to end the proceedings.42

A subsequent decision of the same Court of Appeals confirmed both the wider scope which, in the French conception, awards can have and finality of the decision as an essential feature of any award, in the sense that not only the parties but also the tribunal is bound by it and may not reverse it. In the Brasoil case, where the arbitral tribunal had rejected, in the form of an order, an application for the revision of a prior partial award based on allegations of fraud, the Court of Appeal considered the decision to be an award, because it decided a controversial issue “in a final manner”:

This reasoned decision – by which the arbitrators considered the contradictory theories of the parties and examined in detail whether they were founded, and solved, in a final manner, the dispute between the parties concerning the admissibility of Brasoil’s request for review, by denying it and thereby ending the dispute submitted to them – obviously is an exercise of its jurisdictional power by the arbitral tribunal.43

This being said, the Tribunal recognizes that decisions on interim measures in a variety of situations are taken in a final and binding manner, at least for the duration of the proceedings. There is at least some support for the view that such decisions can be made in the form of an award. One of the first to express this view in a systematic manner seems to have been Schlosser who wrote:

To an increasing degree one hears the argument that there are also other interim measures taken by arbitrators which can be subject to recognition and enforcement because they, too, decide in a binding manner a legal situation, albeit limited for the duration of the arbitral proceedings.44

Referring to the decision of a Federal Court in the US in the case of Sperry International Trade Inc. v. Government of Israel,45 which accepted as an enforceable Convention Award an “interim award” ordering payment into a joint escrow account of the parties, Schlosser continues:

This is indeed how one has to proceed when the arbitral tribunal takes measures which, for the duration of the arbitration, are intended to be truly final, that is to say measures which, before the completion of the proceedings, cannot be revoked in cases where the evidentiary situation or the legal evaluation have changed.46

With express reference to Schlosser, Wirth has accepted this view also for arbitration in Switzerland. He prescribes two conditions that must be met for interim measures to be issued as enforceable awards. One of them is that

the decision must be “final” in the sense that it cannot be changed by the arbitrators in the further course of the arbitration until the final decision on the merits.47

………

The Tribunal concludes that finality of an award, its res judicata effect, is a well-established characteristic of an award. Since the Tribunal must reserve the possibility of modifying at any time its present decision, it can only issue it in the form of an order which is binding on the Parties but may be modified or revoked by the Tribunal. The Claimant’s request to have the measure issued in the form of an award is denied.’

1
Recueil des Cours de l’Académie de droit international, vol 234 (1992, III), 9 at 220.

2
Ibid. p. 221.

3
ICJ Reports 1984, 169 at 179.

4
ICJ Reports 1999, 9.

5
Klaus Peter Berger, International Economic Arbitration, Kluwer 1993, at 335(336.

6
Holiday Inns S.A. and Occidental Petroleum Corporation v. The Government of Morocco, unreported but summarized in Pierre Lalive, “The First ‘World Bank’ Arbitration (Holiday Inns v. Morocco) ( Some Legal Problems”, 51, BYIL (1980), [1982], 123(161.

7
Antonio Parra, “The Practices and Experience of the ICSID”, in Conservatory and Provisional Measures in International Arbitration, ICC Paris, 1993, 37 at 42.

8
Lew, Mistelis and Kroll, Comparative International Commercial Arbitration, The Hague, 2003, p. 606, paragraph 23-68.

9
Droit comparé de l’arbitrage international, 2002, at 566 : “compétence prima facie du tribunal arbitral pour connaître des prétentions au fond dont la protection doit être assurée par les mesures provisoires requises”.

10
Kaufmann-Kohler & Stucki (ed.) International Arbitration in Switzerland, Kluwer 2004, Chapter 5, Interim Measures, 69 at 71 FN 4.

11
ATF 128 (2001) III, 50(63.

12
Ibid. p. 60.

13
Ibid. p. 57.

14
ATF 122 (1996) Ill, 249, 252.

15
Loc. cit. 56(57: “outre qu’elle revêt un caractère exceptionnel, cette théorie ne saurait entrer en ligne de compte lorsque la compétence d’un tribunal arbitral est contestée, car il est exclu de contraindre une partie à souffrir qu’un tel tribunal se prononce sur des droits et obligations litigieux, s’ils ne sont pas couverts par une convention d’arbitrage valable (ATF 121 III 495 consid. 6d p. 503).”

16
ASA Bulletin 2005, 525, 527 and 532.

17
Ibid. p. 533: “Das Schiedsgericht hat im angefochtenen Urteil grundlegend verkannt, dass die Bindung der Schiedsvertragsparteien durch die Schiedsvereinbarung als Teil der Zuständigkeitsprüfung mit voller Kognition zu beurteilen ist, auch wenn sie von Tatsachen abhängt, die ebenso für die materielle Beurteilung der Klage erheblich sind (BGE 128 III 50 e. 2B s. 26 F; 121 III 495 e. 6D s. 503). Indem das Schiedsgericht die Frage der Parteifähigkeit nur aufgrund summarischer oder vorläufiger Prüfung als wahrscheinlich bejaht hat, hat es Art. 190 Abs. 2 lit. b IPRG verletzt. Da die erforderlichen tatsächlichen Feststellungen fehlen, kann im vorliegenden Verfahren über die Zuständigkeit nicht entschieden werden.” Translation by the Tribunal …

18
See e.g. Wenger in Basler Kommentar, N46 at Article 186.

19
Partial Award in case No. 4126 of 1984, reported in 111 Journal du droit international [1984], 934(936; and Award in case No. 11613, referred to by Wirth, “Do Arbitral Tribunals Really Have the Courage to Grant Interim Measures?”, 81 IBA International Arbitration Day Conference, 18 March 2005, Geneva, at p. 7.

20
Reiner, “Les mesures provisoires et conservatoires et l’arbitrage international, notamment l’arbitrage CCI”, 125 Journal du droit international [1998], 853 at 881, and Wirth, loc. cit.

21
Op. cit., p. 881: “En effet, on conçoit mal pourquoi la partie qui a saisi le juge national et qui – non pas parce que le juge national s’est déclaré incompétent, mais pour des raisons ‘de fond’ – n’a pas obtenu la mesure provisoire souhaitée, pourrait ensuite obtenir satisfaction en présentant la même requête au tribunal arbitral.”

22
Op. cit. Chapter 2(d).

23
Fouchard Gaillard and Goldman on International Commercial Arbitration, The Hague, 1999, paragraph 1330; Reiner refers to the earlier French edition which in this paragraph is identical to the English edition.

24
Poudret and Besson, op. cit., p. 562, paragraph 618.

25
Poudret and Besson, loc. cit., while recognizing that the ICC Rules express the “principe de subsidiarité” and considering this as an encouraging sign, are more reserved and do not seem to accept that a party seize successively the arbitral tribunal and then the courts with the same application. They say that this should also apply in the reverse sense, but do not explain whether this is the case even in proceedings under rules that express the principle of subsidiarity.

26
Obviously, the situation is different in the relation with third parties to which the arbitration clause is not applicable and where therefore the role of the courts cannot be limited to interventions before the arbitral tribunal is seized.

27
The criterion of the identity of the “legal test ... in deciding the matter”, which Wirth describes as one of the four considerations when deciding whether admitting a new application, thus most likely will be rarely met in international arbitration. Since modern arbitration laws and rules do not require the arbitrators to apply the law of civil procedure at the seat or anywhere else, it is unlikely that in a given case the arbitral tribunal will have to apply the same rules for ordering interim measures: even though, as will be further explained below, there seem to be trends in the development of international arbitral practice with respect to the conditions under which interim measures may or must be ordered, there is still a considerable difference between the tests which a court must apply under its law of civil procedure and the principles which arbitrators apply when deciding on applications for interim measures.

28
Derains and Schwartz, op. cit. p. 226.

29
UNIDROIT Principles of lnternational Commercial Contracts (2004), Article 1.9.

30
Derains and Schwartz, op. cit. p. 385.

31
Ibid.

32
The question is discussed for instance in Fouchard, Gaillard and Goldman op. cit. pp. 735 et seq.

33
Article 183 of the PIL Act uses the terms “provisional or protective measures” (“mesures provisionnelles ou des mesures conservatoires”, “vorsorgliche oder sichernde Massnahmen”, “provvedimenti cautelari o conservative”); in the context of the issue that has to be decided here, the Tribunal sees no need for distinguishing these terms from those of “conservatory and interim measures” as provided by Article 23 of the ICC Rules or “interim measures” as requested by the Claimant in these proceedings.

34
For the distinction see Lalive, Poudret and Reymond, Le droit de l’arbitrage interne et international en Suisse, Lausanne 1989, N2 at Art. 183.

35
Oetiker in Zuberbühler, Müller and Habegger, Swiss Rules of lnternational Arbitration, N19 at Article 26.

36
Poudret and Besson, Droit compare de l’arbitrage international, Zurich etc. 2002, pp. 669(688.

37
Ibid. p. 683: translation from the French by the Tribunal; original text: “imprécision de la terminologie légale ou règlementaire et aux confusions de la pratique”.

38
P. 677: translation by the Tribunal; original text : “... ne sont pas définitives, n’acquièrent pas l’autorité de la chose jugée, ne lient pas les arbitres et peuvent être modifiées par eux”.

39
Final Report on Interim and Partial Awards of the working party on dissenting opinions and interim and partial awards of the ICC Commission on International Arbitration, ICC International Court of Arbitration Bulletin, Vol 1 No. 2 [1990], p. 26, at 29, paragraph 25.

40
Ibid. paragraph 26.

41
Third edition [1999], p. 365, paragraph 8-07.

42
Op. cit. p. 737, paragraph 1353; the authors state that they rely on the decision in Sardisud v. Technip, Paris Court of Appeals 25 March 1994, in [1994] Revue de l’arbitrage, 391, with comments by Jarrosson.

43
Braspetro Oil Services Company (Brasoil) v. GMRA, Paris Court of Appeal (1 July 1999), Revue de I’arbitrage [1999] 834 at 837; quoted (with corrections) from the English Translation in ICCA Yearbook XXIV [1999], 296, at 287.

44
“In zunehmendem Masse hört man die These, auch andere schiedsrichterlichen Massnahmen des einstweiligen Rechtsschutzes seine deshalb anerkennungs- und vollstreckungsfähige Schiedssprüche, weil auch sie verbindlich über eine Rechtslage entschieden, wenn auch beschränkt auf die Dauer des Schiedsverfahrens.” Translation by the Tribunal from: Das Recht der Internationalen privaten Schiedsgerichtsbarkeit, 2nd ed. 1999, p. 566, paragraph 775.

45
532 F. Supp, 901 (1992).

46
Ibid. “So muss man es in der Tat jedenfalls dann halten, wenn ein Schiedsgericht eine Regelung triff, die wirklich für die Dauer des Hauptverfahrens endgültig gemeint ist, also vor Verfahrensende bei einer Änderung der Beweislage oder der rechtlichen Beurteilung nicht wieder aufgehoben werden kann.” Translation by the Tribunal.

47
Enforceability of a Foreign Security Award in Switzerland, in Blessing (ed.), The New York Convention of 1958, Proceedings of the 1996 ASA Conference, ASA Special Series No. 9, [1996], 245 at 252.