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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Introduction
ICC offers a range of complementary services to help business partners in different parts of the world resolve the disputes and differences that may arise out of their contracts. The various procedures available are all characterized by their flexibility and their capacity to accommodate the parties' wishes within a secure and effective set of rules. The statistics presented below show that increasing numbers of business partners are turning to ICC for the settlement of their disputes and that in doing so they regularly make use of the freedom of choice ICC dispute resolution offers them.
In terms of caseload, arbitration is the chief method of dispute resolution proposed by ICC. It enables parties to obtain a binding decision settling their dispute through a procedure tailored to their needs and wishes and the specific characteristics of the case. All proceedings are overseen by the ICC International Court of Arbitration to ensure that they are conducted properly and in keeping with the ICC Rules of Arbitration.
Alongside arbitration, ICC offers other methods of dispute resolution, including those based on a consensual approach. The ICC ADR Rules provide a framework for organizing and implementing such methods, which, unlike arbitration, do not lead to a binding decision.
To resolve questions of a specialized nature that may arise in connection with the performance of a contract, ICC's International Centre for Expertise is able to propose and appoint specialists to give expert opinions on technical, legal and financial matters. It also offers expertise in relation to documentary credits, collections and demand guarantees under the ICC DOCDEX Rules.
The following report gives a statistical analysis of these various services in 2001. As ICC's prime dispute resolution service, arbitration will be dealt with first and at greatest length, followed by ADR and expertise. The report ends with a retrospective analysis of DOCDEX cases under the first version of the DOCDEX Rules.
Arbitration
Demand for ICC arbitration was greater in 2001 than in any previous year. 566 requests for arbitration were received, bringing the total number of cases pending at the year-end to 1,058 and the total number of requests received in the history of the ICC Court almost to the 12,000 milestone. To handle this increasing caseload, the Court, which currently comprises members from 77 different countries, now meets more frequently than in the past. During 2001, it met 46 times in committee form and held 12 plenary sessions. It is assisted by the Secretariat of the Court, which follows cases on a day-to-day basis. The Secretariat has a staff of over 50, including 30 lawyers. Its members are of 20 different nationalities and speak a similar number of languages.[Page6:]
The number of cases handled by the ICC Court is matched by their breadth. The scope of ICC arbitration extends to all areas of the economy. The three leading sectors in which it was used in 2001-between them accounting for 38% of all cases-were construction and engineering, energy, and information technology. Cases relating to the latter two sectors have doubled in two years. Increases were also observed in the number of cases relating to the leisure and entertainment and health and pharmaceutical sectors. 2001 also saw ICC arbitration enter the environmental protection sector.
Status of cases filed
Parties to ICC arbitration
The cases registered with the ICC Court in 2001 involved a total of 1,492 parties. This was 94 more than in 2000. The rise is proportionately higher than the increase in the number of cases, which reflects the greater number of cases involving more than two parties. 30% of cases registered in 2001 involved multiple parties, be it several claimants (9.4%), several respondents (15.9%), or several claimants and respondents (4.7%).
Geographical origins of parties
The parties in the cases registered in 2001 came from 116 countries. Although their distribution by continent remains broadly similar to previous years, there are some notable changes within certain continents.
In the Americas, the rise in the number of parties from Latin America and the Caribbean was proportionately higher than that for North America. The number of Brazilian parties rose to exceed the previous high of 1999. Brazil, Mexico and Argentina between them account for approximately half of the parties from the Latin American and Caribbean region.
In Asia, there was a 27.5% rise in the number of parties from South and East Asia. The number of parties from Japan and Korea reached unprecedented highs and there was a significant rise in the number of Indian and Indonesian parties. [Page7:]
[Page8:]
The most remarkable change concerning the origins of parties was in Europe, where the number of parties from Central and East Europe rose by 67.6%. The number of parties from Poland and the Russian Federation returned to their levels of 1999 after a drop in 2000. Parties of Greek origin were more than twice as numerous as in any previous year and there was also an upsurge in the number of Turkish parties. For the first time since ICC Court statistics have been published, a case was registered involving a Moldovan party.
Amounts in dispute
The amounts in dispute in the cases registered with ICC in 2001 ranged from less than US$ 50,000 to over US$ 1 billion. There were more cases in the higher end of the range than ever before, confirming ICC's capacity to handle cases of considerable financial magnitude.
In 8.6% of the cases registered in 2001 at least one of the parties was a state or parastatal entity. There was a wide variation in the numbers of state/parastatal parties from different parts of the world, as shown in the table below.
The arbitral tribunal
The total number of arbitrators appointed or confirmed in 2001 was 948. Of these, 729 served as part of a three-member tribunal and 219 as sole arbitrators.
One of the recognized advantages of arbitration is the freedom it gives parties to select arbitrators of their own choice. In 2001, 541 arbitrators were proposed by parties and 109 by co-arbitrators (in the case of three-member tribunals), leaving 298 arbitrators appointed by the ICC Court. Of these 298, 276 were appointed upon a proposal from one of ICC's National Committees (proposals were taken from 40 of ICC's National Committees and Groups) and 22 directly by the Court itself. Proposals of arbitrators are always subject to confirmation by the Court. In 2001, the confirmation of an arbitrator was refused on 17 occasions.
Sole arbitrators: 17% of sole arbitrators were proposed by parties and subsequently confirmed by the Secretary General or the Court, 80% were appointed upon proposals from ICC National Committees, and 3% were appointed directly by the Court.
Co-arbitrators: 96% of co-arbitrators were proposed by parties and then confirmed by the Secretary General or the Court, and approximately 2% were appointed by each of the alternative methods (i.e. upon a proposal from a National Committee, or directly by the ICC Court).
Chairmen: 9% of chairmen were proposed by the parties, 48% were appointed upon a proposal from the other two members of the arbitral tribunal, 39% upon proposals by ICC National Committees and 4% were appointed directly by the Court.
In the course of proceedings, arbitrators are occasionally challenged by parties for alleged lack of independence or other reasons. In 2001, 33 challenges were made, of which two were accepted by [Page10:] the Court. Although the annual number of challenges introduced over the last ten years has increased, the number of those accepted has remained stable at an average of two per year.
The Court accepted the resignation of an arbitrator on 17 occasions and decided to replace an arbitrator on two occasions.
The 948 arbitrators appointed in 2001 came from 61 different countries, including, for the first time in the history of ICC Court statistics, Jamaica and the Ukraine. Just over two thirds of all arbitrators appointed came from Europe, including an increasing proportion from Central and East Europe. Although, overall, the proportion of arbitrators from South and East Asia fell back slightly, the number of Indian arbitrators more than doubled in comparison with 2000.
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Place of arbitration
Parties choose their own places of arbitration in the great majority of cases. They did so in 84% of the cases registered in 2001. Their choice is usually made in the arbitration clause (71% of cases) but it may also be made by subsequent agreement between the parties (13% of cases). In the remaining 16% of cases, the place of arbitration was fixed by the ICC Court pursuant to Article 14 of the ICC Rules of Arbitration.
ICC arbitrations took place in 42 different countries in 2001. For the first time in the history of ICC arbitration statistics, an arbitration was seated in Moldova. The most frequently selected country for the place of arbitration was France. This was the choice of the parties in 103 of the 128 cases, all of which were located in Paris. Singapore stands out as the most commonly chosen place of arbitration in South and East Asia. As regards the USA, the place of arbitration was located in 17 different states; New York was by far the most popular choice (20 of the 39 cases). Overall, in comparison with 2001 statistics, there was a slight increase in the number of times European, African and Australasian locations were chosen as places of arbitration.[Page12:]
Applicable law
As far as the rules of law applicable to the merits of the dispute are concerned, here again parties exercised their freedom of choice in the great majority of cases. In 78% of cases registered in 2001, the applicable law was specified in the contact underlying the dispute. This was a national law in 77% of cases. In 1% of cases, the underlying contract referred to other rules or bases for deciding the dispute. These included equity, international public law, amiable composition and ex aequo et bono. In two cases, the contracts specified the United Nations Convention on Contracts for the International Sale of Goods as the governing law. In the remaining 22% of cases, no applicable rules of law were specified in the parties' contracts. It should be noted that these percentages reflect the choices made by the parties in their contracts. They do not fully reflect the rules actually applied by arbitral tribunals in deciding disputes.
The national laws chosen by the parties in their contracts reflect to some extent their own nationalities. Laws of European countries were chosen in the great majority of cases. Central and East European, Latin American and Caribbean, and North African laws were chosen more often in 2001 than in 2000, whereas the frequency with which Central and West Asian, North American, and sub-Saharan African laws were chosen fell slightly. As regards the USA, the state law most frequently chosen was that of New York, followed by California and Texas.
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Awards
A total of 341 awards were approved by the ICC Court in 2001. 212 of these were final awards, 94 partial and interim awards and 35 awards by consent. The number of awards by consent has remained relatively stable over the last five years at an average of 33 per year. Although the number of partial and interim awards rendered in 2001 represents a smaller proportion of all awards than in 2000 (28% as opposed to 35%), it still remains high as compared with the average number of such awards in previous years (1990-1994: 39 per year; 1995-1999: 54 per year).
19 of the final awards and three of the partial awards were given by a majority of the members of the arbitral tribunal (when composed of three arbitrators). Dissenting opinions were expressed in 24 cases: seven by the co-arbitrator nominated by or on behalf of the claimant(s), 14 by the co-arbitrator nominated by the respondent(s), one by both co-arbitrators, and in two cases the author of the dissenting opinion was not identified. One award in 2001 was made by the chairman of the tribunal alone, failing a majority decision, as permitted under Article 25(1) of the ICC Rules of Arbitration.
Article 27 of the ICC Rules of Arbitration requires all awards to be submitted to the ICC Court for approval before being signed and notified to the parties. When approving an award, the Court may lay down modifications as to form and, without affecting the tribunal's freedom of decision, may draw its attention to points of substance. To the extent practicable, consideration will be given to the requirements of mandatory law at the place of arbitration, in accordance with Article 6 of Appendix II of the ICC Rules of Arbitration. The Court laid down modifications as to form and/or drew attention to points of substance when approving 160 of the awards submitted to it in 2001. In order for the awards in a further 19 cases to be approved, they were referred back to the arbitrators for resubmission at a later date after certain aspects had been reworked.
As in 2000, six different languages were used for the awards rendered in 2001. In decreasing order of frequency, these were: English (72%), French (17%), German (5%), Spanish (4%), Italian and Portuguese.
Article 29 of the ICC Rules of Arbitration, which provides for the correction and interpretation of awards, was used in 38 cases in 2001. It gave rise to Addenda (a decision by the arbitral tribunal to correct or interpret its award) in 27 cases and Decisions (a finding by the arbitral tribunal that no correction or interpretation is needed) in 11 cases. In two cases the correction was made on the tribunal's own initiative under Article 29(1). In the remaining 25 Addenda, the request for correction or interpretation was made by the parties pursuant to Article 29(2). In 10 cases the applicant was the claimant(s), in 10 cases the respondent(s), and in five cases corrections or interpretation were requested by both parties. As far as the Decisions are concerned, the application for correction or interpretation was made by the claimant on five occasions and by the respondent(s) on six occasions. The vast majority of Article 29(2) applications related to the correction of clerical, computational or typographical errors. Requests for interpretation or clarification were relatively rare and even rarer were those that actually led to an Addendum. Like the awards themselves, Addenda and Decisions are subject to the scrutiny of the ICC Court.[Page14:]
Dates of contracts
The table [below] shows that the number of disputes referred to ICC arbitration in 2001 that arose from contracts less than 10 years old was twelve times the number arising from contracts that were between 10 and 20 years old. The second year of a contract appears to be the most critical moment as far as the risk of disputes is concerned.
In 2001, two applications were made for urgent provisional measures under ICC's pre-arbitral referee procedure.
The number of requests received by ICC for appointments of arbitrators in ad hoc proceedings remained stable at 13, of which seven were for appointments under the UNCITRAL Rules of Arbitration.[Page15:]
ADR
2001 saw the launch of the ICC ADR Rules, which offer a framework for settling disputes on an amicable basis with the assistance of a neutral. These rules encompass a variety of techniques, such as mediation, mini-trials, neutral evaluation or indeed any other consensual method that the parties may choose, including a combination of techniques. The ICC ADR Rules supersede ICC's former rules relating to amicable dispute resolution - the Rules of Optional Conciliation of 1988.
During 2001, ICC received a total of 14 requests relating to amicable dispute resolution. Twelve of these requests were for conciliation under the 1988 rules and the remaining two were made pursuant to the new ADR Rules. One of the conciliation cases has been converted into an ICC ADR procedure and another converted into an ICC arbitration. Nine of the conciliation cases have been withdrawn without agreement and one case remains in abeyance.
The 14 cases of amicable dispute resolution registered in 2001 involved 35 parties from 19 countries. Approximately half of the parties came from Europe, but there was a marked shift in the balance between the numbers from North and West Europe and those from Central and East Europe. This reflects the tendency observed elsewhere in this report.
Expertise
The ICC International Centre for Expertise proposes and appoints experts at the request of parties and arbitral tribunals in need of an expert opinion on a matter requiring specialized knowledge, be it technical, legal or financial. Eight such requests were received in 2001. They involved parties from Brazil, China, Colombia, Finland, France, Italy, Mauritius, Poland, Portugal, Spain, Sweden and the United States of America, and experts from France, Germany, Italy, Mexico, Poland and the United Kingdom.
Expert opinions were sought in relation to accounting matters, share evaluation, defective industrial processes, delays in a construction project, the condition of machinery with a view to its buy-back price, the standard of a road construction, the supply of spare parts and the adequacy of a machine's production capacity.[Page16:]
Three of the requests for expertise were made in conjunction with ICC arbitration proceedings. In two cases the request was made by the arbitrators and in the third case by one of the parties prior to the constitution of the arbitral tribunal.
In one case in 2001, the parties decided that the expert's opinion would be binding upon them, as they are entitled to do under article 8(3) of the ICC Rules for Expertise.
DOCDEX
The ICC Rules for Documentary Credit Dispute Resolution Expertise were drawn up by ICC's Commission on Banking Technique and Practice in 1997 to provide a relatively inexpensive procedure for rapidly obtaining an informed opinion on how to resolve a dispute relating to documentary credits incorporating the ICC Uniform Customs and Practice for Documentary Credits (UCP) or a dispute relating to UCP or the ICC Uniform Rules for Bank-to-Bank Reimbursement under Documentary Credits (URR). The procedure, which is administered by the ICC International Centre for Expertise, provides for a document-based expert decision made by three independent experts appointed from a list of experts kept by the Commission on Banking Technique and Practice. The decision is submitted to the Commission's technical adviser who, if necessary, may suggest amendments.
In March 2002, the 1997 DOCDEX Rules were revised: their scope was broadened to cover collections and demand guarantees as well as documentary credits; the threshold for charging the Additional Fee provided for in the Appendix to the Rules was raised; and certain changes were made to facilitate the implementation of the Rules by the International Centre for Expertise. The revised DOCDEX Rules are reproduced after this report.
The first version of the DOCDEX Rules was effective for four and a half years, from October 1997 to March 2002. During this period, 22 applications for a DOCDEX decision were received. These applications involved a total of 54 parties from 22 countries widely spread throughout the world (Austria, Belgium, Canada, China (including Hong Kong), El Salvador, France, Hungary, India, Indonesia, Italy, Japan, Korea, Lebanon, Malaysia, Moldavia, Netherlands, Panama, Switzerland, Tunisia, Turkey, the United Arab Emirates and the United States of America). The nationalities of the experts appointed in connection with these applications were similarly widespread: they came from a total of 23 different countries (Argentina, Australia, Austria, Belgium, Canada, China, Cyprus, Denmark, France, Germany, Greece, India, Italy, Korea, Malaysia, Mexico, Morocco, Singapore, Sweden, Switzerland, Syria, Turkey and the United Kingdom). The amounts of the letters of credit at issue in these 22 cases ranged from less than US$ 100,000 to over US$ 10,000,000, as shown in the table [below].
The average duration of the procedure from the initial request to the issuance of the decision was between two and two and a half months. In none of the cases brought under the first version of the DOCDEX Rules did the parties provide that the decision should be binding upon them.