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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
2005 was another year of intense worldwide activity for ICC arbitration. A total of 521 new cases were registered, bringing the number of cases handled by the International Court of Arbitration (the 'Court') since its creation to over 14,000 and the number of ongoing cases at the end of the year to a record 1,180. These cases are managed on a day-to-day basis by the Secretariat of the Court, while key administrative decisions relating to such matters as the setting in motion of the procedure, the constitution of the arbitral tribunal, the approval of awards and the costs of the arbitration are taken by the Court at its weekly committee sessions and monthly plenary sessions. In 2005, the Court comprised 124 members from 86 different countries. Although administered from Paris, ICC arbitrations are conducted all over the world and in 2005 took place in an unprecedented 50 countries. The Court expanded its outreach in many of these countries through seminars, conferences and collaboration with local players, and strengthened its regional representation by appointing a representative for the Middle East and Africa to complement its representatives already established in North and South America, Asia and the United Kingdom. Another important development in the worldwide services offered by the Court was the launch of NetCase. This new service, which allows procedures to be conducted in a secure online environment, brings ICC arbitration users the benefits of new technology and overcomes the difficulties of communicating over long distances and when travelling.
The following report presents a statistical analysis of ICC arbitration cases and procedure in 2005, and briefly describes the activity of ICC's other dispute resolution services during the year.
Arbitration
Parties to ICC arbitration
The new cases filed with the Court in 2005 involved a total of 1,422 parties.
The parties in the cases filed in 2005 came from 117 different countries throughout the world.
Africa
The proportion of parties from North Africa increased to represent 41% of all African parties, as compared with 26% in 2004. There was a sharp rise in the number of Ghanaian parties, making them the third most frequent users of ICC arbitration in Sub-Saharan Africa over the last five years, after Nigeria and South Africa.
Americas
American parties were almost equally split between North America (52%) and Latin America and the Caribbean (48%).[Page6:] The USA remained the country with the highest number of parties to ICC arbitrations. The increasing involvement of Brazilian and Mexican parties was confirmed with rises of respectively 17% and 35% compared with 2004.
Asia
The number of parties from Central and West Asia rose in 2005 to represent a third of all Asian parties, as compared with a quarter in 2004 and a fifth in 2003. This was due in particular to a twofold increase in the number of cases involving parties from the United Arab Emirates. In South and East Asia, the number of parties from mainland China was for the first time more than three times greater than the number from Hong Kong. This contrasts with the trend in the 1990s when Hong Kong parties almost always outnumbered parties from mainland China.
Europe
French and German parties are traditionally the greatest users of ICC arbitration in Europe. In 2005, German parties accounted for 14% of all European parties and exceeded the number of French parties for the second year running. The proportion of European parties from Central and Eastern Europe rose compared with 2004, returning to a level consistent with the 2001-2005 average of 17.6%.
Oceania
The sharp increase in the number of parties from Oceania, from 5 in 2004 to 27 in 2005, is explained by a multiparty case involving several parties from New Zealand.
Domestic cases
Although the disputes referred to the ICC Court generally involve parties of different nationalities, this is not always the case. In 17.3% of the cases registered in 2005 the parties to the dispute were of the same nationality. Regional differences may be observed, with a preponderance of domestic cases involving parties from Sub-Saharan Africa, Latin America, and South and East Asia.
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Almost a third of the cases registered with the Court in 2005 involved more than two parties. 80% of these cases involved between three and five parties, 18% between six and ten parties, and 2% more than ten parties. The latter included a case with as many as twenty-six parties, twenty-five of which were claimants. The largest number of respondents in a single case was twelve. Such cases were, however, exceptions, as the average number of parties in multiparty cases registered in 2005 was slightly more than three (3.4).[Page8:]
In 2005, 68 (13.1%) of the 521 cases registered with the Court involved States or parastatal entities. The geographical breakdown below reveals a threefold increase in the number of States and parastatal parties from Central and West Asia, compared with 2004. There continued to be large proportions of such parties from Sub-Saharan Africa and Central and East Europe.
ICC arbitrations involving States may be introduced not only pursuant to contract provisions, but also on the basis of bilateral investment treaties.
The arbitral tribunal
Arbitrators in proceedings conducted under the ICC Rules of Arbitration are either nominated by the parties, subject to confirmation by the Court or its Secretary General, or they are appointed by the Court.
A total of 948 arbitrators were appointed or confirmed during 2005. Of these, 171 served as sole arbitrators and 777 as members of a tribunal comprising three arbitrators (251 as chairmen, 526 as co-arbitrators).
Of the <i>sole arbitrators</i> , 28 (16.4%) were nominated by the parties and confirmed by the Secretary General or the Court; 138 (80.7%) were appointed by the Court upon the proposal of an ICC national committee; and five (2.9%) were appointed directly by the Court.
Of the <i>co-arbitrators</i>, 497 (94.5%) were nominated by the parties and confirmed by the Secretary General or the Court; 19 (3.6%) were appointed by the Court upon a proposal from an ICC national committee; and 10 (1.9%) were appointed directly by the Court.
Of the <i>chairmen</i>, 20 (8%) were nominated by the parties and subsequently confirmed by the Secretary General or the Court; 115 (45.8%) were nominated by the two co-arbitrators; 104 (41.4%) were appointed by the Court upon the proposal of an ICC national committee; and 12 (4.8%) were appointed directly by the Court.
When appointing arbitrators in 2005, the Court took proposals from 45 ICC national committees.
During 2005, a total of 24 arbitrators nominated by parties were not confirmed by the Court.[Page9:]
The arbitrators confirmed or appointed in 2005 came from a total of 68 different countries. The proportion of Asian arbitrators rose in comparison with previous years, due to increases in the numbers from several countries. The biggest of these concerned Chinese and Sri Lankan arbitrators, who were more numerous than in any previous year. Elsewhere, there was a sharp rise in the number of Polish arbitrators from three in 2004 to 10; the increase in the number of Spanish arbitrators observed in 2004 was confirmed in 2005; and the number of Mexican arbitrators reached an unprecedented high. The year 2005 also saw arbitrators from Costa Rica, Georgia and Togo take up office in ICC proceedings for the first time since statistics have been kept.
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Under the ICC Rules of Arbitration it is possible to challenge an arbitrator after his or her appointment for such reasons as a lack of independence. In 2005, although the total number of challenges introduced rose slightly to 40, they concerned only 21 cases. This was due to multiple or repeated challenges in six cases, including one where the respondent challenged all three members of the tribunal on three separate occasions and the chairman alone on an additional occasion.
During the year, arbitral chairmen were challenged 14 times, co-arbitrators 21 times and sole arbitrators five times. Sixteen of the 40 challenges introduced during the year were made by claimants: four of these were directed against tribunal chairmen, nine against co-arbitrators and three against sole arbitrators. Twenty-four challenges were made by respondents: ten of these were against tribunal chairmen, 12 against co-arbitrators and two against sole arbitrators. Of the 21 challenges made against co-arbitrators, seven were made by claimants against the arbitrator nominated by the respondent(s), eight by respondents against the arbitrator nominated by the claimant(s), and two by claimants and four by respondents against the arbitrator they had nominated themselves.
All challenges are submitted to the Court, which decides whether they should be accepted after giving the arbitrator concerned, the party or parties and any other member of the tribunal an opportunity to submit comments. In 2005, only two of the 40 challenges introduced were accepted by the Court. This figure is in keeping with the average number of challenges accepted each year over the last ten years.
The Court accepted the resignations of 19 arbitrators, and a further six arbitrators were replaced (four upon the Court's initiative and two at the parties' request).
Place of arbitration
In 87.4% of the cases introduced in 2005, the parties had chosen the place of arbitration either in the arbitration clause or by subsequent agreement. In the remaining 12.6% of cases, the Court was required to fix the place of arbitration either because the parties had not been sufficiently specific (e.g. they had merely specified a country without specifying a city, had expressed no choice at all, or had been unclear in their choice), or because they disagreed over the place of arbitration.
Most frequently selected cities
The places of arbitration chosen by the parties or fixed by the Court in 2005 were situated in 85 cities in 50 different countries. They included Croatia, Tanzania and Guatemala for the first time since statistics have been kept.
As regards the arbitrations situated in the USA, 20 were located in the State of New York, 11 in California, three in Texas, two in New Jersey, and one each in Florida, Kansas, Maryland, Massachusetts and Tennessee.[Page11:]
Applicable rules of law
In 81% of cases registered with the Court in 2005 the parties had specified in their contracts the rules to be applied to the merits of the dispute. National laws had been chosen in 79.3% of the contracts, which is similar to previous years. The most common choices were, in descending order of frequency, the laws of Switzerland, England, States of the USA, France, Germany, Spain, Italy, Netherlands, Brazil and, in equal position, Mexico and Singapore. As far as the USA is concerned, the laws of 16 different States were chosen, the most frequent choice being the laws of the State of New York. In a small number of contracts parties had chosen rules other than national laws, including the United Nations Convention on Contracts for the International Sale of Goods (five contracts), general principles of equity, international law, international commercial law and the 1978 Hague Convention on the Law Applicable to Agency (one contract each).
It should be borne in mind that the above figures reflect the choices made by the parties in their contracts before a dispute arises. It does not take account of the decisions on the applicable law made by arbitrators after the proceedings have begun.[Page12:]
Amounts in dispute
The amounts in dispute specified by parties when filing cases in 2005 ranged from less than 50,000 to over 500 million US dollars. A slight increase was recorded in the number of cases at each end of the range: whilst the proportion of cases involving amounts not exceeding one million US dollars rose to almost a third, there were also more cases than in previous years involving amounts in excess of 100 million US dollars.
Economic sectors
Construction and engineering disputes once again formed the largest single category of cases submitted to ICC arbitration in 2005 (14.4% of all cases). They were followed by energy and information technology disputes (each category representing some 10% of all cases) and disputes relating to finance and insurance, industrial equipment and transportation (each accounting for over 7% of cases). There was a drop in the number of cases from the healthcare and pharmaceutical sector (from 6.2% of all cases in 2004 to 3.6% in 2005) but a rise in cases relating to raw materials (from 3.7% of all cases in 2004 to 6.9% in 2005). Disputes relating to educational and cultural services, previously intermittent, were also more frequent in 2005 than ever before.
Types and dates of contracts
The contracts underlying the disputes referred to ICC arbitration in 2005 were as varied as in previous years. Contracts relating to goods continued to represent half of the caseload. Sales and purchase agreements were the most common kind of contract (22%), followed by construction and engineering contracts (15%) and distribution and franchising contracts (8%). Almost 9% of contracts concerned agreements relating to shareholdings and the purchase or transfer of shares, and some 8% to joint ventures, consortia and cooperation agreements. A similar proportion of contracts related to intellectual property.
As can be seen from the table [below], the majority of these contracts were less than five years old, and almost 90% had been made within the last ten years. Although the risk of a dispute lessens with the passing of time, each year the Court receives requests for arbitration based on arbitration clauses made over twenty years previously.
Awards
The Court approved 325 awards in 2005. Of these, 208 were final awards, 84 partial awards and 33 awards by consent. Awards rendered by a tribunal of three members were in most cases unanimous, [Page13:] although on 27 occasions the award reflected a majority decision. In no cases was the chairman of the tribunal required to render the award alone.
English was the language most frequently used for drafting awards in 2005. Over 75% of the awards rendered in 2005 were in English, some 10% in French and approximately 5% in Spanish. Awards were also rendered in German, Italian, Portuguese and Polish.
Before approving awards, the Court subjects them to scrutiny and may, under Article 27 of the ICC Rules of Arbitration, lay down modifications as to the form of the award or draw the arbitral tribunal's attention to points of substance. It did so when approving 256 awards in 2005. On another 31 occasions the arbitral tribunal was requested to resubmit its award for approval.
A total of 21 addenda correcting and/or interpreting an award were issued by arbitral tribunals in 2005. Of these, one was made on the arbitral tribunal's own initiative and 20 at the request of one or more of the parties. Twenty-two applications for the correction and/or interpretation of an award were rejected by arbitral tribunals.
Pre-Arbitral Referee Procedure
The ICC Rules for a Pre-Arbitral Referee Procedure provide a means of rapidly obtaining an order to deal with an urgent problem in a contractual relationship prior to the constitution of an arbitral tribunal. Two requests were filed under these Rules in 2005. One, between an Italian claimant and a Dutch respondent in the healthcare sector, was entrusted to a Swiss referee, who issued his decision within four weeks of being appointed. The other was between an Algerian claimant and a Spanish respondent and related to a construction contract; the Belgian referee rendered his decision within five weeks of being appointed.
ICC as Appointing Authority
The ICC Court is increasingly called upon to assist in the constitution of arbitral tribunals in proceedings not conducted under the ICC Rules of Arbitration. When doing so it acts under the Rules of ICC as Appointing Authority in UNCITRAL or Other Ad Hoc Arbitration Proceedings. These Rules cover appointments and challenges and, in addition, allow the Court to provide other services to which the parties may have agreed.
The total number of requests for the Court to act in ad hoc proceedings rose to 21 in 2005, as compared with 14 in 2004.
A total of 18 requests were made for the Court to appoint arbitrators in ad hoc proceedings (eight in proceedings conducted under the UNCITRAL Arbitration Rules and ten in other ad hoc [Page14:] proceedings). The table [below] shows the breakdown of these requests according to the type of proceedings and the arbitrator whose appointment was sought. In two cases the request was for the appointment of more than one member of the tribunal. The 18 requests involved a total of 54 parties from 22 different countries.
ADR
ICC ADR provides a framework for resolving disputes amicably using whatever settlement technique(s) the parties consider most appropriate. In 2005, ICC received six requests under its ADR Rules. These cases, involving parties from six different countries, related to sales, construction, intellectual property and shareholdings, and covered amounts ranging from less than 50,000 to almost 12 million US dollars.
Expertise
Created in 1976, the ICC International Centre for Expertise is regularly requested to propose or appoint experts to make findings in international business matters. The ICC Rules for Expertise, under which it acts, also allow it to administer expertise proceedings if requested.
Eleven applications were made for ICC's expertise services in 2005. Nine were for the proposal and two for the appointment of experts.
The disputes for which these experts were required covered a wide variety of sectors, including accounting and finance, transport, engineering and construction, heavy industry, food processing, and law. The experts were asked to determine issues ranging from the performance of industrial facilities or the quality of foodstuffs to the amount of damages due to lost profits or the legal relationship between a State and its ministries.
The parties to the disputes came from Canada, the Central African Republic, Croatia, France, Germany, Hungary, India, Iran, Iraq, Italy, the Russian Federation, Spain, the USA and Yemen. The experts proposed and appointed in 2005 came from Canada, Croatia, France, Italy, Singapore, Sweden, Switzerland and the United Kingdom.[Page15:]
DOCDEX
ICC DOCDEX is a service specifically designed for resolving disputes relating to letters of credit and other documentary instruments. Each dispute is referred to a panel of three experts drawn from a list kept by the ICC Commission on Banking Technique and Practice. The procedure is conducted solely in writing and is designed to arrive at a determination of the dispute within as short a time as possible. The respondent's failure to answer the initiator's request will not hold up the panel, which, if necessary, will render its decision on the basis of the initiator's arguments only.
In 2005, nine new documentary credit disputes were submitted to ICC under its DOCDEX Rules. These disputes were decided within an average of 80 calendar days of the case being registered and, in two thirds of cases, without the participation of the respondents. The letters of credit at issue ranged in value from less than 500,000 to over 5 million US dollars.
The 22 parties to the new cases registered in 2005 were predominantly banks in Asia and Europe, although they also included three industrial and trading companies. They came from a total of 15 different countries: Bahrain, Belgium, China (including Hong Kong), Chinese Taipei, Denmark, Germany, India, Iran, Korea, Pakistan, Saudi Arabia, Singapore, Spain, Switzerland and the United Kingdom. The experts appointed to resolve these disputes came from 18 different countries: Austria, Belgium, China (including Hong Kong), Chinese Taipei, Czech Republic, Denmark, France, Germany, India, Ireland, Italy, Lebanon, Malaysia, Morocco, the Netherlands, Singapore, Switzerland and the USA.
Dispute Boards
Dispute Boards are standing bodies set up to accompany the performance of a contract and help the parties to resolve any disputes that might arise. Launched in 2004, ICC's Dispute Board Rules have already been successfully used in a number of projects. Such use takes place independently of ICC, which therefore has no statistics relating thereto. The ICC Dispute Board Centre assumes a role in Dispute Board proceedings only if the parties request it to appoint or decide on a challenge of a Dispute Board member, or to review a Dispute Board decision. This has not so far been the case.