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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
ARTICLE 1: INTERNATIONAL COURT OF ARBITRATION
Article 1(1)
The International Court of Arbitration (the “Court”) of the International Chamber of Commerce (the “ICC”) is the independent arbitration body of the ICC. The statutes of the Court are set forth in The International Court of Arbitration (the “Court”) of the International Chamber of Commerce (the “ICC”) is the independent arbitration body of the ICC. The statutes of the Court are set forth in Appendix I.
Article 1(2)
The Court does not itself resolve disputes. It administers the resolution of disputes by arbitral tribunals, in accordance with the Rules of Arbitration of the ICC (the “Rules”). The Court is the only body authorized to administer arbitrations under the Rules, including the scrutiny and approval of awards rendered in accordance with the Rules. It draws up its own Internal Rules which are set forth in Appendix II (the “Internal Rules”).
Article 1(3)
The President of the Court (the “President”) or, in the President’s absence or otherwise at the President’s request, one of its Vice-Presidents shall have the power to take urgent decisions on behalf of the Court, provided that any such decision is reported to the Court at its next session.
Article 1(4)
As provided for in its Internal Rules, the Court may delegate to one or more committees composed of its members the power to take certain decisions, provided that any such decision is reported to the Court at its next session.
Article 1(5)
The Court is assisted in its work by the Secretariat of the Court (the “Secretariat”) under the direction of its Secretary General (the “Secretary General”).
3-1 Purpose. Article 1 describes the organization and role of the International Court of Arbitration (“Court”) and clarifies its relationship with the International Chamber of Commerce (“ICC”) and the Secretariat of the Court (“Secretariat”). Article 1 is supplemented by specific provisions on the constitution of the Court and its operation in Appendices I and II to the Rules.
3-2 2012 modifications. A number of minor changes have been made to Article 1. Chief among them is a modification to the description of the Court’s function. The term “disputes” in Article 1(2) has replaced “business disputes of an international character” found in Article 1(1) of the 1998 Rules. This change removes any doubt that all disputes, including, for example, investor-state disputes concerning claims made under a treaty and disputes involving trust instruments, may be resolved by arbitration under the Rules.
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3-3 Certain modifications have also been made to the structure of Article 1 to improve its clarity and concision. Article 1(1) has been recast so that the Court’s role is described separately in Article 1(2). Article 1(1) no longer specifies how members of the Court are appointed. Instead, the relevant provisions are more appropriately found in the Statutes of the Court (Appendix I).
3-4 Article 1(2) contains an important addition specifying that the Court is the only body authorized to administer arbitrations under the Rules. This addition was made for two reasons. First, in certain jurisdictions, it is necessary to specify the institution that administers the rules of arbitration chosen by the parties. Articles 1(2) and Article 6(2) now clearly provide this information. Second, it ensures that the Court is the only body empowered to administer cases under the Rules. The Rules contain certain features that are unique to ICC arbitration and that require the Court to exercise powers that no other body is in a position to exercise. Accordingly, it is not possible for another institution to administer an ICC arbitration properly. Any attempt to do so creates a serious risk that the resulting award will be unenforceable.
3-5 Language from Article 2 of the Statutes of the International Court of Arbitration (Appendix I) has been integrated into Article 1(5) to refer to the Secretariat’s overall role in relation to the Court. Although the descriptive term “assist” is broad, it reflects the Secretariat’s status as subordinate to the Court, despite the fact that certain decision-making powers under the Rules are assigned directly to the Secretariat (e.g. extending certain deadlines), or specifically to the Secretary General or his or her delegate (see e.g. Articles 6(3), 13(2), 36(1)). The modification is aimed at preventing parties from confusing the roles of the Secretariat with those of the Court and vice versa. Parties sometimes do not properly distinguish between the two entities. The Court is an autonomous decision-making body and its members, unlike those of the Secretariat, are not ICC employees.
3-6 Finally, in an effort to render terminology in the English version of the Rules more gender-neutral, the term “President” of the Court has replaced the former term “Chairman” in Article 1(3) and throughout the Rules. This modification has also been made in relation to the Vice-Chairmen of the Court (Article 1(3)), chairmen of committee sessions (Article 4 of the Court’s Internal Rules), and chairmen of arbitral tribunals (e.g. Article 12(5)). Other modifications have been made generally throughout the Rules to make them gender-neutral.
Overview of the structure and function of the ICC and its institutions
The ICC
3-7 The Court, while maintaining considerable independence in its activities, is part of the ICC (Article 1(1)), an organization that has promoted global trade and commerce for over ninety years. At the time of its establishment, there were few international structures or rules to govern international
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trade, investment, finance or commerce. The ICC was conceived to provide a fulcrum for self-regulation. The landscape of international trade and commerce has evolved considerably since 1919 and the ICC’s activities have expanded and diversified to meet changing needs and globalization. Nonetheless, the ICC’s mandate remains essentially the same. It is the largest and most representative organization of its kind in the world. The ICC is an advocate on central issues relating to international trade and investment in key intergovernmental forums, including the United Nations, where it has special consultative status,1the World Trade Organization and the G20 group of countries; it also represents the interests of international business vis-à-vis national policymakers and regulators. The ICC’s activities cover a broad spectrum, from the development of free and open trade to the advancement of arbitration and dispute resolution. The ICC promulgates internationally agreed rules and standards, including rules for dispute resolution, which are adopted voluntarily and incorporated into international commercial transactions throughout the world.
World Council and Executive Board
3-8 The ICC is a French association à but non lucratif, organized under the French law of 1 July 1901. Its governance structure is established by a Constitution. The ICC’s supreme governing body is its World Council, which comprises representatives of the ICC’s National Committees and Groups. The World Council elects the ICC’s officers, including the Chairman of the Executive Board, the Vice-Chairmen, the President of the Court and the Secretary General of the ICC. It also plays a key role in constituting the Court by appointing its members on the recommendations of National Committees and Groups, and appointing its Vice-Presidents on the recommendation of the Court’s President. The World Council meets once a year but may hold extraordinary meetings if necessary. Strategic direction and governance of the ICC is provided by its Executive Board, currently consisting of twenty-three members. The President of the Court is an ex officio member of the Executive Board. The Executive Board may also delegate its powers to various committees.
3-9 In December 2011, the Executive Board resolved to establish a new committee that would act as the governing body of the ICC’s dispute resolution services. The committee is intended to supervise and develop the activities of these services and to ensure greater independence of bodies such as the Court and the International Centre for ADR within the ICC structure. Accordingly, it will enable more agile decision making on matters affecting dispute resolution services, allowing the Court to respond quickly to significant shifts in the market as they occur. The eleven-member committee will consist of several members of the Executive Board, the President and Secretary General of the Court and a range of practitioners, in-house counsel and academics chosen specifically for their extensive knowledge of international commercial dispute resolution.
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National Committees and Groups
3-10 ICC members are local organizations that are representative of the business and professional interests of their respective members. They may be corporations, companies, firms and other legal entities, as well as individuals involved in international commercial activities. When grouped together, they may form an ICC National Committee or Group. In substance, there is little to distinguish a National Committee from a Group, as they share most if not all of the same rights and responsibilities. However, a Group may be formed in territories that are not states, or to bring together organizations in several smaller states sharing common interests (four Groups currently exist, in Hong Kong, Macao, Chinese Taipei and Palestine). National Committees and Groups currently number ninety-four and represent nations from all parts of the globe. They are frequently associated with national chambers of commerce but may also be entirely independent organizations.
3-11 A common misconception among users of ICC dispute resolution services is that National Committees and Groups are only concerned with ICC dispute resolution. In reality, they have much broader rights and responsibilities under the ICC Constitution. Nonetheless, National Committees and Groups serve several important functions in the context of ICC arbitration. First, they make recommendations to the World Council when new Court members are to be appointed. Second, under the ICC Charter, which operates as an adjunct to the ICC Constitution, National Committees and Groups have rights and responsibilities in relation to commenting on proposed rules and policy papers concerning ICC dispute resolution and promoting ICC dispute resolution services. National Committees and Groups are also a focal point for local arbitral communities to exchange talent, hold conferences and in some cases prepare position papers on issues affecting arbitration laws and practices in their jurisdiction(s).
3-12 Within the context of ICC arbitration proceedings, National Committees and Groups also propose arbitrators to the Court where the latter is required to appoint an arbitrator (Article 13(3)). National Committees and Groups bring together arbitrators and dispute resolution specialists who are citizens or long-term residents of the countries they represent, ensuring a diverse pool of arbitrators from which the Court can draw (see paragraphs 3-534–3-536).
The Court
The institution
3-13 The Court is the independent arbitration body of the ICC, with its own Statutes and Internal Rules. Composed of members from over ninety countries, the Court is the world’s most international dispute resolution institution. It was created in 1923 as the arbitration body of the ICC. The ICC’s founders considered international dispute resolution to be essential to the growth of international trade. The dispute resolution services initially offered by the ICC consisted of conciliation and arbitration.
3-14 The Court has a membership that currently totals over 125 individuals, most of whom are proposed for office by ICC National Committees or Groups (Vice-Presidents of the Court are nominated by the President, see below) and all appointed by the ICC’s World Council. Court members are generally arbitration specialists and/or experts in commercial and international investment law.
3-15 The President of the Court is elected by the World Council upon the recommendation of the Executive Board (in practice, a recommendation of the Nominations Subcommittee of the Executive Board) for a term of usually three years. There is no limit on the number of terms the President may serve but renewal is not automatic and depends upon a further recommendation of the Executive Board and re-election. The President of the Court is an ex officio member of the Executive Board and an independent consultant to the ICC, rather than an employee. This distinction is important to ensure the Court’s independence vis-à-vis the ICC and the Secretariat.
3-16 The World Council also appoints Vice-Presidents of the Court from among the Court’s members or otherwise and upon the recommendation of the President. The Vice-Presidents (currently numbering seventeen) come from different legal traditions and from all parts of the globe. Together with the Secretary General, Deputy Secretary General and General Counsel, they form the Bureau of the Court, which is an informal consultative body designed to act as a sounding board and policy-making organ for the Court. Matters such as Court practice and the content of practice notes are debated and settled by the Bureau in consultation with the Secretariat. Functions of the Court
3-17 As specified in Article 1(2), the Court is not a court in the common, judicial sense of the term. Rather, it administers arbitrations pursuant to the Rules and is responsible for overseeing them. It will not under any circumstances make decisions on the substance of a dispute or even on procedural issues (other than those expressly provided for in the Rules). It is restricted to making decisions pursuant to the Rules. However, the parties are free to modify the Rules to a certain degree, so as to grant the Court procedural decision-making responsibilities in addition to those explicitly provided in the Rules (see paragraphs 3-18 and 3-19). Any such modifications must
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respect the spirit of the Rules. The Court has no obligation to administer cases in which the parties wish to avoid certain core features of the Rules. Those core features include, for instance, the independence and impartiality of arbitrators (see paragraphs 3-369–3-375), establishing Terms of Reference (see paragraphs 3-826 and following), the scrutiny of awards (see paragraphs 3-1181 and following) and the Court’s powers to fix fees and expenses (see paragraphs 3-1443 and following).
3-18 The Court’s specific functions include:
Closely related to the above responsibilities is the Court’s function in considering challenges against arbitrators that are brought by parties pursuant to Article 14, as well as the Court’s power to remove arbitrators on its own initiative pursuant to Article 15(2). Where an arbitrator is removed and the parties cannot agree on a replacement or on a method for selecting a replacement, the Court will intervene to determine how to replace the arbitrator and, if need be, to appoint the replacement arbitrator (Article 15(4)).
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be efficient, the Court may also take into consideration the timeliness of their work and the efficiency of the proceedings when fixing their fees (Article 2(2) to Appendix III). Finally, the Court may even remove and replace an arbitrator on its own initiative where the arbitrator is not fulfilling his or her functions in accordance with the Rules or within the prescribed time limits (Article 15(2)).
3-19 The Court is also responsible, and is from time to time called upon, for the following:
The Secretariat
3-20 The “engine room” of the Court is its Secretariat, which performs a large number of functions to assist the Court in its management of cases (Article 1(5)). The Secretariat is based at the ICC’s headquarters in Paris, France. 2008 saw the opening of the Secretariat’s first office outside Paris, in Hong Kong. A second office will open in New York in 2012 and will be operated by a North American affiliate of the ICC. These offices bring the Court’s services closer to users in different global time zones and enable Requests for Arbitration to be filed locally.
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3-21 Structure and composition. The Secretariat currently comprises over eighty full-time staff from more than twenty different countries, who together speak numerous languages and are conversant with all major legal traditions. The Secretariat’s core lies in its case-management teams (currently numbering eight, with plans for a ninth when the Secretariat’s New York office opens). Under the direction of a Counsel, who is assisted by two or more Deputy Counsel, each team has a distinct regional, cultural and linguistic focus. Counsel and Deputy Counsel will in most circumstances be qualified lawyers in a jurisdiction covered by the team. When assigning a case to a team, the intention is to ensure that staff with the most appropriate legal training and cultural background and the requisite language skills handle the case (see paragraph 3-113).
3-22 The resources and structure of the Court and its Secretariat have changed significantly in the past years and will continue to develop in light of its continually expanding caseload. In 2008, for example, a team was established to focus on cases emanating from Eastern Europe, including Russia and CIS countries.
3-23 Management. The operations of the Secretariat are managed by a small number of staff. The Secretary General heads the Secretariat and also holds specific powers under the Rules, some of which he or she may delegate where necessary to the Deputy Secretary General or the General Counsel (see e.g. Articles 6(3), 13(2), 34(2), 36(6)). The Deputy Secretary General assists the Secretary General and is heavily involved on a daily basis in the administration of cases. The General Counsel provides legal advice to the Court and its Secretariat and coordinates any litigation in which the Court may be involved. A position of Managing Counsel was created in 2011 to assist the Secretary General and Deputy Secretary General in light of the Court’s increasing caseload. These four positions together will be referred to in this book as the Secretariat’s management. All members of management share responsibilities in reviewing the output of the Secretariat’s teams and in representing the Secretariat at Court sessions.
3-24 Functions. The Secretariat assists the Court in a number of ways: • It is responsible for managing and overseeing cases on a daily basis. Particularly relevant in this regard are the Secretariat’s responsibilities in notifying the Request for Arbitration, Answer and any Request for Joinder (Articles 4(5), 5(4) and 7(3)); transmitting the case file to the arbitral tribunal, once constituted (Article 16); and notifying an award to
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the parties (Article 34). It also has certain powers to fix or extend time limits for submitting some of the above-mentioned originating documents (Articles 5(2) and Article 7(1)). The Secretariat reviews all correspondence and submissions related to the case (which must be copied to it pursuant to Article 3(3)) and, while maintaining neutrality, is available to answer questions that the parties or the arbitrators may have in regard to their case.
Procedure for decision making by the Court
3-25 The Court makes its decisions at either plenary sessions or committee sessions. Certain decision-making powers are delegated to the President of the Court (see paragraphs 3-35 and 3-36) or the Secretary General of the Court (see paragraph 3-24) acting alone.
3-26 Irrespective of how and by whom a decision is made, the Court relies exclusively on written submissions from the parties and reports prepared by the Secretariat and/or by Court members. Parties cannot make oral submissions to the Court. However, the parties are usually informed by the Secretariat of any upcoming Court sessions and in many instances are
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specifically invited to comment in writing on the issue to be put to the Court before a decision is made. If one party makes comments on a forthcoming decision, all other parties to the dispute will receive a copy of those comments and are normally invited to submit comments of their own.
3-27 The work of the Court and its Secretariat remains confidential. Sessions of the Court are open only to members of the Court and Secretariat employees (Article 1(2) of Appendix II). Parties, arbitrators and other individuals who are not within the Court or its Secretariat cannot attend. Documents submitted to the Court or drawn up by it or the Secretariat in the course of the Court’s decision-making functions will not be provided to any individual who is not permitted to attend the relevant session. Furthermore, the Court and its Secretariat will not communicate any documents relating to the arbitration (e.g. correspondence, party submissions, awards), or even confirm the arbitration’s existence, to persons not involved in the case.
3-28 To ensure full confidentiality and avoid conflicts of interest, Court members and Secretariat staff who may, or could be perceived to, harbour interest in a case (e.g. the law firm to which they belong serves as counsel or one of its lawyers serves as an arbitrator; a spouse or family member is involved in the case) are marked as excused. When that case is discussed at a session of the Court or during an internal meeting of the Secretariat, they are asked to leave the room, and they do not have access to any documents relating to the case.
Plenary sessions
3-29 The plenary session has traditionally been the Court’s primary vehicle for decision making pursuant to the Rules. Plenary sessions are held on a monthly basis and involve approximately thirty to forty Court members. These sessions take place at the ICC’s headquarters, although Court members may participate by video or telephone conference.
3-30 A decision must be approved by a majority of the Court members present. However, decisions are usually made by consensus following a discussion and without the need for a formal vote. In order to direct the discussion, the President of the Court will request a Court member to serve as rapporteur on the case. His or her function is to analyse the background of the case and the issue to be decided, and to recommend a course of action to the Court. The Secretariat will also brief the Court on relevant background material and may provide an analysis of the issues by reference to previous decisions and practices of the Court, but it does not make any recommendation to the Court at a plenary session.
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3-31 The Court’s current practice is to consider only a few select cases at a plenary session. These include, but are not limited to, matters on which a committee of the Court is unable to reach a unanimous decision or where the committee otherwise wishes to refer the decision to the plenary session (although both are rare); policy matters; scrutiny of awards under Article 33 in most cases involving a state or state entity or in which one or more arbitrators have dissented; most challenges to an arbitrator pursuant to Article 14; and any decision to remove an arbitrator pursuant to Article 15(2).
Committee sessions
3-32 Given the Court’s ever-increasing caseload and the unfeasibility of holding a plenary session more than once a month, the Court relies on weekly committee sessions. Article 1(4), reiterated in Article 5 of the Statutes of the Court (Appendix I to the Rules), authorizes the Court to delegate its decision-making powers to such committees. Since 2009, special committee sessions have been held in Spanish and, more recently, in German and Portuguese for the scrutiny of awards in these languages without the need for time consuming translations (see paragraph 3-1200). All decisions made by a committee are reported to the Court at its next plenary session.
3-33 The weekly committee session is held pursuant to Article 4 of the Court’s Internal Rules (Appendix II to the Rules) and is composed of at least three Court members, one of whom acts as president of the committee. The President of the Court must serve as president of the committee, unless he or she designates a Vice-President of the Court to serve as a replacement. It is common practice for the President to serve as committee president whenever he or she is available to do so and for Vice-Presidents to replace the President when necessary. In exceptional circumstances, the President of the Court may designate a regular Court member to perform the function of committee president (Article 4(3) of the Court’s Internal Rules), but in practice this is very rare. Other members of the committee are selected by the Court at the plenary session immediately preceding each committee session (Article 4(3) of the Internal Rules). At certain committee sessions, an additional Court member may participate as an observer with the prior authorization of the president of the committee. This observer status allows less experienced members of the Court to familiarize themselves with the inner workings of a committee session and the practices of the Court. It is the committee president’s responsibility to convene the session.
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3-34 Committee decision making, unlike that of plenary sessions, requires unanimity among committee members (Article 4(5) of the Court’s Internal Rules). Once made, the decisions must be reported to the Court at its next plenary session, in accordance with Article 1(4) of the Rules and Article 4(5), subparagraph (d), of the Court’s Internal Rules. However, committee decisions have the same status as plenary session decisions. Where unanimity cannot be achieved, or where the committee is of the opinion that a matter would be more appropriately considered at a plenary session, the committee will submit the matter to the next plenary session. Article 4(5), subparagraph (c), of the Court’s Internal Rules allows the committee to submit to the Court any written suggestions that it believes would be helpful in considering the issue. Both committee and plenary sessions are very interactive and involve a dialogue between members of the Court and the Secretariat.
Urgent Court decisions
3-35 In certain exceptional circumstances, a decision may need to be taken by the Court before the next committee session or plenary session. Pursuant to Article 1(3), the President of the Court is empowered to render urgent decisions where the delay involved in waiting for the next plenary session or committee session might give rise to difficulty. It is a matter for the President of the Court to decide whether a situation is sufficiently urgent to justify the application of Article 1(3). Situations that have prompted the use of Article 1(3) include those in which (i) one party is on the verge of bankruptcy and requires that an award be approved to remain solvent; (ii) the arbitration is fast-track and a contractual deadline for appointments, establishing the Terms of Reference, rendering the final award, or some other issue, is set to expire within a matter of days, or (iii) an award provides for urgent interim measures of protection pursuant to Article 28(2). However, the power is used most frequently for the internal purpose of constituting committees of the Court to supplement those organized pursuant to Article 4 of the Court’s Internal Rules. Such action may be required where a member of the Court scheduled to sit on a committee session must be replaced because he or she is unable to attend the session or is excused from a particular case. The President of the Court occasionally also organizes additional committee sessions where there is an unexpected upsurge in the number of draft awards awaiting the Court’s scrutiny. Furthermore, where one or more awards written in languages other than English or French are submitted to the Court for scrutiny, the President of the Court in some instances will consider constituting a committee consisting of members who are fluent in that language, thereby avoiding the potentially significant delays and costs associated with translating such awards (see paragraph 3-1200).
3-36 A decision pursuant to Article 1(3) enjoys the same status as a regular decision of the Court and must be reported to the Court at its next session. The obligation to report acts as a check and balance to guard against misuse of the power.
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3-37 The Court is not required to provide reasons for its decisions and will do so only in very rare instances. In some cases, the Secretariat will provide parties, upon request, with an informal explanation of the factors taken into account by the Court and/or explanations as to the nature and consequences of a decision. However, in accordance with Article 11(4), the Court and its Secretariat will not communicate any reasons for decisions on the appointment, confirmation, challenge or replacement of an arbitrator.
3-38 An overview of why the Court does not generally provide reasons for its decisions, as well as a look at the broader issue of Court transparency, is provided in the discussion of Article 11(4) (see paragraphs 3-409–3-415). Reconsideration of Court decisions
3-39 The Court is occasionally requested to reconsider one of its own decisions. However, it is very rare that the Court will change its prior decision, unless a party introduces highly relevant information that was not available when the original decision was taken and could reasonably be expected to have altered the outcome of deliberations. The Court will in no circumstances reconsider decisions on the confirmation, appointment, challenge or replacement of an arbitrator, which are final (Article 11(4)).
The Secretariat’s role in relation to Court decisions
3-40 The Court has no direct contact with parties in practice and does not generally review the documents of the case. Rather, it is the Secretariat’s task to alert the Court to the need for Court action and to provide the Court with the relevant material it requires to make an informed decision.
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3-41 The Secretariat supplies such information and recommendations to the Court in the form of reports, which are prepared for every decision or set of decisions that the Court will be asked to make at a particular committee or plenary session. Each report will contain a substantial amount of information on the features and characteristics of the case, including a summary of the dispute. Where appropriate, the Secretariat may also attach exhibits to these reports, such as copies of relevant contracts, correspondence, submissions from the parties, and other contemporaneous documentation. The Secretariat’s management and the Counsel assigned to the case are on hand at Court sessions to answer any questions Court members may have regarding the case. Where the Court does not feel it has sufficient information at its disposal to make a fair and informed decision, it may ask the Secretariat to retrieve additional information from the file, and occasionally even requests the Secretariat to contact the parties or the arbitral tribunal in cases where the file does not contain the information it needs.
3-42 In many instances, the Secretariat will recommend a particular course of action in the report if the decision is to be made at a committee session. Recommendations by the Secretariat on important or complex decisions are the result of substantial deliberation within the Secretariat. Initially, the team administering a particular case will prepare a draft report and recommendation, which will then be distributed to all other teams and the Secretariat’s management one day prior to the Secretariat staff meeting at which they will be discussed. Secretariat staff meetings are held on a weekly basis and chaired by the Secretariat’s management, who take the meeting through each proposed decision in the draft agendas. The variety of legal and cultural backgrounds on hand means individual matters are analysed from a number of perspectives in a manner that is not dissimilar to a Court session, thereby assuring the quality and consistency of the Secretariat’s work. More informal exchanges of information and views also occur on a regular basis amongst staff members from all teams. The Secretariat puts great care and considerable thought into its recommendations to the Court.
3-43 Where a decision is to be made in a committee session, the Secretariat’s agenda will usually be distributed to the three-member panel one week before the session, unless it is a “tabled matter”, in which case it will be distributed two days before the session, or, in extremely urgent cases, on the day before or the morning of the session.
3-44 The Secretariat’s role at a plenary session is different, as the Court will assign one of its members to report on the decision to be taken and make a recommendation. The Secretariat will then assist the rapporteur by providing him or her with the information needed to prepare the report. The Secretariat will also submit an agenda to brief the Court on relevant background material and to provide an analysis of the possible decisions, but it will not include a recommendation.
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ARTICLE 2: DEFINITIONS
In the Rules:
(i) “arbitral tribunal” includes one or more arbitrators;
(ii) “claimant” includes one or more claimants, “respondent” includes one or more respondents, and “additional party” includes one or more additional parties;
(iii) “party” or “parties” include claimants, respondents or additional parties;
(iv) “claim” or “claims” include any claim by any party against any other party; and
(v) “award” includes, inter alia, an interim, partial or final award.
3-45 Purpose. Article 2 establishes the meaning within the Rules of several important and frequently used terms. The provision does not contain capitalized defined terms. Rather, its approach is to specify notable items that fall within the meaning of a term. Some flexibility is preserved in this way by avoiding exclusionary statements that may unduly restrict the Court and arbitral tribunals in their application of the Rules.
3-46 2012 modifications. The terms “party” and “claim” have been added to the definitions. They are discussed below (see paragraphs 3-48 and 3-49). The term “additional party”, which is now used to describe a party to the arbitration that has been joined pursuant to Article 7 (see paragraphs 3-289 and following), is now also mentioned in Article 2(ii).
3-47 On “claimant”, “respondent” and “additional party”. Many ICC arbitrations now include more than two parties or two groups of parties. The clarification in Article 2, subparagraph (ii), to encompass the terms’ plural forms has the effect of formally extending the Rules’ applicability to such cases.
3-48 On “claim”. An entirely new inclusion, this serves to recognize claims other than principal claims (claimant against respondent) and counterclaims (respondent against claimant) as claims under the Rules. Such other claims include those between claimants or respondents (sometimes called “crossclaims”), and claims by or against parties that have been joined to the proceedings but are on neither the claimant’s nor the respondent’s side (see paragraphs 3-324 and following). This addition to Article 2 is particularly relevant to the new Articles 7–10, which authorize parties to join other parties and bring claims against any party and under more than one contract, and the Court to consolidate separate arbitrations where appropriate.
3-49 On “party”. Also new to the 2012 Rules, the definition of “party” distinguishes “additional parties” from “claimants” and “respondents”, thereby formally extending the meaning of the term to parties that are neither claimants nor respondents. This is particularly important in light of the formal recognition of joinder in Article 7. Most parties joined pursuant
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to Article 7 will choose to be recognized as either claimants or respondents, which will determine their involvement in the selection of arbitrators (see Article 12(7)) and the payment of advances on costs (see Article 36(4)), as these matters often relate to parties on one or other side of the dispute. However, in a small number of cases, the designation of a party as either claimant or respondent may be inappropriate given that party’s distinct position in the dispute. Article 2 now envisages an alternative, which is also reflected in new drafting in Articles 12(7) and 36(4).
3-50 On “award”. Article 2’s main purpose in providing a definition for “award” is to clarify that the Rules apply to all types of awards, regardless of the label chosen by the arbitral tribunal (e.g. partial, interim or final). The provision stops short of providing any guidance on whether an arbitral tribunal’s decision should be rendered as an award or whether it can be made as an order. The question is particularly relevant to ICC arbitration as awards (but not orders) must be submitted to the Court in draft form for scrutiny pursuant to Article 33 (see paragraphs 3-1185–3-1190).
ARTICLE 3: INTRODUCTION TO WRITTEN NOTIFICATIONS AND COMMUNICATIONS AND TIME LIMITS IN ICC ARBITRATION
3-51 Purpose. Article 3 contains rules concerning how to send communications, to whom, in how many copies, and to which address. It also defines when communications are deemed to be made for the purpose of calculating time limits under the Rules.
3-52 Article 3 can be and is often superseded or supplemented by other arrangements. Arbitral tribunals and parties will often agree at the beginning of the arbitration on specific methods for making notifications and communications. Failing agreement, the arbitral tribunal is likely to issue directions in this respect. For example, the arbitral tribunal may request that the parties send a hard copy of any lengthy submissions (e.g. over thirty pages) to each arbitrator but allow smaller submissions and regular correspondence to be sent by email only. The arbitral tribunal will often also give directions concerning the running of time limits, compliance with deadlines, and the complexities engendered by the involvement of different time zones.
3-53 2012 modifications. No substantive changes have been made to Article 3. However, the provision may be subsequently amended if and when the Secretariat develops an online submission and case management system. Article 7 of Appendix I permits a formally accelerated procedure for such amendments.
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ARTICLE 3(1): WRITTEN NOTIFICATIONS OR COMMUNICATIONS FROM PARTIES AND ARBITRAL TRIBUNALS
All pleadings and other written communications submitted by any party, as well as all documents annexed thereto, shall be supplied in a number of copies sufficient to provide one copy for each party, plus one for each arbitrator, and one for the Secretariat. A copy of any notification or communication from the arbitral tribunal to the parties shall be sent to the Secretariat.
3-54 Purpose. Article 3(1) specifies the number of copies of pleadings and other written communications to be supplied by the parties. It also clarifies that a copy of any arbitral tribunal correspondence to the parties must be sent to the Secretariat. These requirements ensure, in the interests of due process and efficiency, that all actors in an arbitration are informed at the same time of all matters relevant to the proceedings. Copying all correspondence to the Secretariat enables it to be kept informed about the progress of a case and to maintain a full record of all communications and documents so that it and the Court can fulfil their functions under the Rules.
3-55 2012 modifications. The term “notification” has been added where reference is made to correspondence from the arbitral tribunal to the parties. The addition was made so that the provision mirrors the following three paragraphs of Article 3, which all refer to “notifications and communications”.
Pleadings and other communications from the parties
3-56 Article 3(1) fixes the number of copies of documents that parties should supply.
3-57 Supplying multiple copies of certain documents to the Secretariat. Article 3(1) is referred to in several articles of the Rules (i.e. Articles 4(4), 5(3), 35(2)) in relation to the number of copies to be provided to the Secretariat for distribution to the other parties and the members of the arbitral tribunal and for the Secretariat’s files. The Secretariat is responsible for notifying the Request for Arbitration and insists on receiving a hard copy of the document and its annexes for every other party and every arbitrator, as well as for itself. Pursuant to Article 4(4), it will withhold notification until it has received these hard copies. The Secretariat also requires the respondent to submit hard copies of the Answer pursuant to Article 5(3), although it will recognize any direct transmission of hard copies of the Answer by the respondent to the other parties. Requests for Joinder are also subject to requirements with respect to hard copies (see paragraph 3-299) and notification will be withheld where they are not met.
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3-58 A complicating factor in meeting these requirements is that the exact number of parties and arbitrators may not be known at the time of submitting the Request, Answer or Request for Joinder. The number of arbitrators may still need to be agreed on by the parties or determined by the Court pursuant to Article 12(2). Furthermore, additional parties may be joined pursuant to Article 7(1) at any time prior to the appointment or confirmation of any arbitrator. If the number of arbitrators remains to be determined, the Secretariat will ask to be provided with enough hard copies to cover the proposed number of arbitrators. If an additional party is later joined to the arbitration, the Secretariat will request additional copies of all relevant documents for that additional party.
3-59 Additionally, the number of copies to be circulated may vary depending on the number of party representatives or a party’s specific requirements (e.g. additional courtesy copies). Where a single party is represented by counsel from more than one law firm, the Secretariat will usually request that a hard copy be provided for each firm.
3-60 Copying communications and documents directly to other actors. Aside from those specific instances (explained above) in which multiple copies must be sent to the Secretariat, documents and communications should be addressed or copied directly by the sender to all other relevant actors, always with a copy to the Secretariat. In this respect, ICC arbitration differs from certain other forms of institutional arbitration where the institution distributes all communications.
3-61 Following transmission of the case file to the arbitral tribunal, the arbitral tribunal and the parties are free to agree on any practice for circulating correspondence, provided the Secretariat receives a copy of all communications. Most communications and submissions are nowadays transmitted by email, which simplifies the task of copying them to all involved, including the Secretariat.
3-62 Communications from the arbitral tribunal. Article 3(1) requires that all communications sent by the arbitral tribunal to the parties also be sent to the Secretariat. Article 3(1) does not apply to communications between the arbitrators, which need not be communicated to the Secretariat but in practice sometimes are.
3-63 Communications from the Secretariat. Article 3(1) does not apply to communications from the Secretariat to the parties or the arbitrators. In practice, the Secretariat will almost always send a copy of its correspondence with the parties to all parties, in the interests of due process. It will also usually send a copy of any communication with the arbitral tribunal to all of its members. The Secretariat will send certain communications to the arbitral tribunal only without copying them to the parties, or to the parties only without copying them to the arbitral tribunal (e.g. correspondence between the Secretariat and the arbitral tribunal relating to the scrutiny of a draft award pursuant to Article 33 will not be copied to the parties).
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ARTICLE 3(2): NOTIFICATIONS OR COMMUNICATIONS FROM THE SECRETARIAT OR ARBITRAL TRIBUNALS
All notifications or communications from the Secretariat and the arbitral tribunal shall be made to the last address of the party or its representative for whom the same are intended, as notified either by the party in question or by the other party. Such notification or communication may be made by delivery against receipt, registered post, courier, email, or any other means of telecommunication that provides a record of the sending thereof.
3-64 Purpose. Article 3(2) indicates the address to which communications and notifications from the arbitral tribunal and the Secretariat should be sent. It also describes permissible means of communication for the Secretariat and the arbitrators.
3-65 2012 modifications. The provision now formally recognizes email as a possible means of communication and has removed obsolete means of communication such as telex, which was still mentioned in the 1998 Rules.
3-66 Notification address. Article 3(2) specifies that communications and notifications must be sent to the most recent address that the party being notified has provided for itself, or if the party has not done so, to the address for that party provided by another party. In practice, notifications are generally sent to the addresses of representatives whose contact information has been supplied by the participating parties.
3-67 The Terms of Reference usually contain all relevant addresses for notification (Article 23(1), subparagraph (b)). Therefore, the requirement contained in Article 3(2) will be chiefly of use prior to drawing up the Terms of Reference, provided all parties are participating in the arbitration. The Secretariat relies on the information received from the parties and does not independently verify whether addresses are correct. If notification of the Request for Arbitration fails, the Secretariat will request another address from the claimant and re-notify the document to the new address. If the claimant is unable to provide a new address, the Secretariat leaves it to the claimant to decide whether it wishes to have the arbitration proceed despite the respondent’s not having received the Request. Where the claimant does wish to proceed, the Secretariat will establish a deemed date of receipt pursuant to Article 3(3) (see paragraph 3-73).
3-68 Means of communication. Communications from the Secretariat and the arbitral tribunal must be sent by a means that creates a record of sending. Where postal or courier services are used, this implies registration or delivery against receipt. While the provision now recognizes email as a valid means of communication, it is unlikely in practice that the Secretariat will notify any originating documents, such as a Request for Arbitration or
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an Answer, exclusively by email. The Secretariat generally uses a courier service or registered mail, where available, to notify parties of a Request for Arbitration or a Request for Joinder. Once the proceedings are under way and where all parties are participating, the Secretariat commonly uses email for other notifications (e.g. of Court and Secretariat decisions) and will keep electronic proof of receipt of such emails by the parties and the arbitral tribunal.
ARTICLE 3(3): DATE ON WHICH A NOTIFICATION OR COMMUNICATION IS DEEMED TO BE MADE
A notification or communication shall be deemed to have been made on the day it was received by the party itself or by its representative, or would have been received if made in accordance with Article 3(2).
3-69 2012 modifications. Minor linguistic adjustments.
3-70 Article 3(3) fixes the date on which a notification or communication is deemed to have been made (the “notification date”). While it does not specify which notifications or communications it covers, the reference to Article 3(2) is interpreted as limiting its scope to communications from the Secretariat and the arbitral tribunal. Therefore, the parties and the arbitral tribunal are encouraged to decide early in the proceedings how the dates of parties’ communications and submissions will be established.
3-71 The notification date can be important as it may trigger a time limit under the Rules. For example, Article 5(1) grants the respondent thirty days from receipt of the Request for Arbitration to submit its Answer, while Article 35(2) grants a party thirty days from receipt of an award to submit an application for correction or interpretation of that award (for a discussion of time limits under the Rules, see paragraphs 3-75–3-79).
3-72 The use of receipt as the criterion for notification places a requirement on the Secretariat to use means of communication for which a date of receipt may be determined. This requirement is recognized in Article 3(2), which lists means of communication that allow for proof of receipt (see paragraph 3-68).
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3-73 In certain cases, proving actual receipt may be impossible. Accordingly, Article 3(3) enables the notification date to be fixed by reference to the date on which the notification or communication would have been received if made in accordance with Article 3(2), that is to say at the party’s last known address and using a permitted means of communication. The Secretariat then preserves a record of its attempt to make the notification or communication and of when and why such an attempt ultimately failed (e.g. the intended recipient had moved; the address was invalid; the intended recipient refused delivery).
3-74 However, the notion of deemed receipt is not without risks, particularly for notification of the Request for Arbitration. Under Article V(1), subparagraph (b), of the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), a state court may refuse to enforce an award where a party did not receive proper notice of the arbitration proceedings. Notification is therefore an aspect of arbitration procedure that the Secretariat performs with considerable care. If it is unable to obtain proof of actual receipt of the Request by the respondent, it will contact the claimant to request an alternative address or determine how it should proceed (see paragraph 3-67).
ARTICLE 3(4): CALCULATION OF TIME LIMITS
Periods of time specified in or fixed under the Rules shall start to run on the day following the date a notification or communication is deemed to have been made in accordance with Article 3(3). When the day next following such date is an official holiday, or a non-business day in the country where the notification or communication is deemed to have been made, the period of time shall commence on the first following business day. Official holidays and non-business days are included in the calculation of the period of time. If the last day of the relevant period of time granted is an official holiday or a non-business day in the country where the notification or communication is deemed to have been made, the period of time shall expire at the end of the first following business day.
3-75 2012 modifications. Minor linguistic adjustments.
3-76 Article 3(4) is concerned with the calculation of periods of time fixed either in the Rules or pursuant to them. The Rules fix a number of time limits. For example, Article 5(1) provides that the respondent must submit its Answer to the Secretariat within thirty days of receiving the Request. Other provisions establishing specific time limits include Articles 5(6), 7(4), 8(3), 12(2), 12(3), 12(5), 14(2), 23(2), 30(1), 35(1) and 35(2). Furthermore, the Court and its Secretariat have the authority to fix additional time limits when administering proceedings under the Rules.
3-77 Arbitrators are empowered to fix time limits for submissions, document production, parties’ comments and any other matters enabling them to carry out their functions, and they regularly use this power. Parties, too, are free to modify time limits contained in the Rules or to establish new time limits as they see fit. All such time limits are “fixed under the Rules” and accordingly come within the scope of Article 3(4), as do time limits provided in the Emergency Arbitrator Rules in Appendix V (see paragraph 3-1058).
3-78 The period within which the notified party or arbitral tribunal must respond or act runs from the date on which the notification is deemed to have been made in accordance with Article 3(3). That period is adjusted to take account of holidays or non-business days at the place where the notification or communication is deemed to have been made. If parties wish to diverge from this rule, they may agree to do so but must specify clearly how they wish time limits to be applied.
3-79 Occasionally, parties refer to Article 3(4) to argue that responses to communications and notifications made after the expiry of the relevant time limit should be excluded. The Court and its Secretariat will normally accept late communications and transmit them to the arbitral tribunal, leaving it free to decide on their admissibility.
ARTICLE 4: REQUEST FOR ARBITRATION
Article 4(1)
A party wishing to have recourse to arbitration under the Rules shall submit its Request for Arbitration (the “Request”) to the Secretariat at any of the offices specified in the Internal Rules. The Secretariat shall notify the claimant and respondent of the receipt of the Request and the date of such receipt.
Article 4(2)
The date on which the Request is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of the arbitration.
Article 4(3)
The Request shall contain the following information:
The claimant may submit such other documents or information with the Request as it considers appropriate or as may contribute to the efficient resolution of the dispute.
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Article 4(4)
Together with the Request, the claimant shall:
In the event that the claimant fails to comply with either of these requirements, the Secretariat may fix a time limit within which the claimant must comply, failing which the file shall be closed without prejudice to the claimant’s right to submit the same claims at a later date in another Request.
Article 4(5)
The Secretariat shall transmit a copy of the Request and the documents annexed thereto to the respondent for its Answer to the Request once the Secretariat has sufficient copies of the Request and the required filing fee.
3-80 Purpose. An ICC arbitration is commenced by submitting a Request for Arbitration (“Request”) to the Secretariat. While the claimant has considerable freedom to determine how detailed the Request will be, Article 4 requires more than mere “notice” of the commencement of an arbitration. The information required by Article 4 enables the respondent to familiarize itself with the substantive and procedural aspects of the dispute and may assist the parties in arriving at agreements on procedural matters. It also equips the Court, where necessary, to make decisions during the initial stages of the arbitration (e.g. relating to the constitution of the arbitral tribunal, the place of the arbitration and the fixing of the advance on costs).
3-81 2012 modifications. Changes to Article 4(3) include minor linguistic improvements and a number of substantive modifications concerning the content of the Request for Arbitration. These changes are discussed below (see paragraphs 3-93 and following). Another important modification is found in Article 4(1): the Rules themselves now explicitly recognize the possibility of submitting Requests to the Secretariat’s regional offices and not only to its headquarters in Paris. Further, Article 4(6) of the 1998 Rules has been deleted and replaced by Article 10, which provides for the consolidation of two or more arbitration proceedings.
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Who may submit a Request
3-82 Any person, whether an individual, company, partnership or other entity, as well as any state or state entity, may submit a Request for Arbitration in accordance with Article 4 and taking into account Article 6. In practice, the vast majority of Requests are submitted by lawyers acting on behalf of parties, rather than by the parties themselves. However, this is not a requirement of the Rules.
3-83 The Rules permit parties to submit a Request for Arbitration jointly. Such
Requests can be of two kinds:
How to submit a Request
3-84 Submission. The claimant must submit the Request to the Secretariat rather than communicate it directly to the respondent. Under the Rules, the Secretariat is responsible for notifying the Request (see paragraphs 3-115–3-117). Parties should check their arbitration agreement, as arbitration agreements occasionally require the claimant also to send a copy of the Request directly to the respondent.
3-85 The Rules do not require that the claimant use a particular means of communication to submit a Request to the Secretariat. As a practical matter, a Request will usually be sent by courier, fax or email, or occasionally be delivered by hand. When the Request is submitted by fax or email, the claimant must nonetheless provide hard copies of the Request to the Secretariat, which will withhold notification until it receives them (see paragraphs 3-120 and 3-121).
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3-86 Additional requirements. According to Article 4(4), the claimant must also (i) pay a filing fee and (ii) submit a sufficient number of hard copies where required.
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3-87 Where the claimant fails to satisfy these additional requirements, the Secretariat will withhold notification of the Request to the respondent and may, after a period of time, administratively close the case (see paragraphs 3-120–3-122). Before doing so, the Secretariat in practice sets the claimant a time limit within which to pay the filing fee in full and/or provide any missing hard copies (see paragraph 3-121).
3-88 Form of the Request. The Rules do not lay down any specific requirements regarding the form of a Request. While the Request must contain the information listed in Article 4(3) (see paragraphs 3-91 and following), the claimant is free to determine how to present this information. It should of course endeavour to submit a clear and well-organized document.
3-89 Language. The claimant should submit its Request in the language of the arbitration. If the language of the arbitration is not determined, the Request should be submitted in what the claimant considers as the most likely language of the arbitration (see paragraphs 3-728 and following).
Content of the Request
3-90 The claimant enjoys considerable freedom in determining how to present its Request. The nature, style and format of Requests therefore vary from case to case. Some Requests contain a full statement of claim, setting out the case in great detail; others are very short, limited to the strict minimum required by the Rules. Usually, a combination of cultural factors and pragmatic and tactical considerations will influence the form and content of the Request, including the manner in which the claimant presents its case and supporting documentary evidence. A claimant may have good reason to initiate the arbitration without setting out its claims in great
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detail. For instance, where the primary purpose of the Request is to encourage settlement, it may be premature and unnecessarily costly to set out the claims in detail. Otherwise, more detailed Requests are generally to be encouraged in the interests of time and cost efficiency.
3-91 Specific content requirements. Article 4(3) specifies that the Request must contain the following information:
3-92 (a) The names in full, description, address and other contact details of each of the parties. Although the Rules contain no restriction as to who or what may be named as a party to the arbitration, the claimant should carefully consider the potential implications of naming a party to the arbitration. Relevant considerations include whether all named parties have the legal capacity to sue or be sued and in relation to the claims brought in the arbitration.
3-93 The obligation to provide “other contact details” is a 2012 addition and includes, for instance, email addresses. The claimant is encouraged, where possible, to provide the name of a contact person (e.g. a manager or inhouse counsel) for the respondent if that party is not itself an individual, as well as a telephone number and email address for that contact person.
3-94 Although the Rules also require a description of each party, considerable flexibility is left to the claimant in determining what the description may include. The claimant should consider providing a description of the parties’ operations or business, as well as information regarding each party’s country of origin. For entities, additional information may be relevant, such as ownership and control, the country of registration and the seat of the entity. The claimant should also identify any entities that are closely related to one or more parties or are substantially involved in the dispute without being named as parties. Information of this sort may be relevant in determining, among other matters, the independence of arbitrators in accordance with Article 11(1) and will be provided to any potential arbitrator in advance of that arbitrator’s confirmation or appointment (for a discussion of independence, see paragraphs 3-373–3-375).
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3-95 (b) The names in full, address and other contact details of any person(s) representing the claimant in the arbitration. This requirement is new to the 2012 Rules, although in practice this information was almost always provided in Requests. The Secretariat will communicate exclusively with designated counsel, unless a party expressly requests otherwise. The Secretariat does not require counsel to provide proof of authority with the Request, but is empowered to request such authority pursuant to Article 17. Once constituted, the arbitral tribunal may also request proof of authority pursuant to Article 17.
3-96 (c) A description of the nature and circumstances of the dispute giving rise to the claims and of the basis upon which the claims are made. Of particular importance to the respondent, the Secretariat and the arbitral tribunal (once constituted) is a clear and accurate description of three different elements: (i) the claims themselves, (ii) the nature and circumstances of the dispute giving rise to those claims, and (iii) the basis upon which the claims are made, i.e. the specific instrument or legal rule under which the claims are brought (e.g. contract, treaty or non-contractual claims). Reference to the “basis” upon which the claims are made is new to the 2012 Rules, although it was often provided in Requests.
3-97 (d) A statement of the relief sought, together with the amounts of any quantified claims and, to the extent possible, an estimate of the monetary value of other claims. The claimant must specify the type of relief it is seeking from the respondent and in all instances must provide some indication of its monetary value. In this regard, it must not only provide the amounts of quantified claims but also estimate the monetary value of any other claims to the extent possible. The latter represents a change from the 1998 Rules, which only required “to the extent possible, an indication
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of any amounts claimed”. Suitably accurate information on the monetary value of claims, whether quantified or unquantified, is relevant when fixing the provisional advance (see paragraphs 3-1332–3-1334) and the advance on costs (see paragraphs 3-1347–3-1355), as well as any decisions on the number of arbitrators (see paragraphs 3-437–3-440). The division between quantified claims and “other claims” is intended to elicit an estimate of the value of the dispute where there are claims for injunctive relief, specific performance or declaratory relief. As the provision makes clear, only an estimate is required. It may subsequently be amended, which is also the case with quantified claims.
3-98 (e) Any relevant agreements and particular, the arbitration agreement(s)., in It is not necessary to attach supporting documents when submitting a Request, although a claimant is free to provide any documents it considers relevant (see paragraph 3-106). However, the Rules do require the claimant to submit “any relevant agreements and, in particular, the arbitration agreement(s)”. It should therefore at least include a copy of the agreement, contract or treaty that contains the arbitration agreement. Most claimants will also include any other relevant agreement or clause. As Article 9 now formally recognizes, claims made within a single arbitration may involve multiple contracts. In such a case, a copy of each relevant contract should be submitted with the Request.
3-99 The claimant should also provide a copy of the full text of the arbitration agreement(s) under which its claims are made. It is not sufficient simply to quote the arbitration agreement(s) in the Request. The arbitration agreement will usually be contained in the contract, treaty or other agreement between the parties. Where it is contained in a separate document or set of documents (e.g. a subsequent agreement to arbitrate, exchange of emails, acceptance of an open offer to arbitrate), the claimant must submit these additional documents.
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3-100 (f) Where claims are made under more than one arbitration agreement, an indication of the arbitration agreement under which each claim is made. Article 9 explicitly allows claims under more than one arbitration agreement within the same proceedings. In such cases the claimant must indicate clearly which claim or claims fall under which arbitration agreement. This information may become relevant if the Court is required to make a decision pursuant to Article 6(4) (see paragraphs 3-238 and following). If it is not provided, this may delay the arbitration.
3-101 (g) All relevant particulars and any observations or proposals concerning the number of arbitrators and their choice in accordance with the provisions of Articles 12 and 13, and any nomination of an arbitrator required thereby. Article 4(3), subparagraph (g), is to be read in conjunction with Articles 12 and 13 concerning the constitution of the arbitral tribunal. Its purpose is to obtain information relevant to the constitution of the arbitral tribunal at an early stage in the proceedings. The claimant should specify how it interprets any parts of the arbitration agreement relating to the constitution of the arbitral tribunal.
3-102 The 2012 Rules have added that the claimant may submit “observations or proposals”, in order to clarify the type of information sought. The claimant is encouraged to make proposals in relation to any undecided matters, as this may significantly assist the parties in reaching agreements on processes for selecting arbitrators or even on specific candidates. The Secretariat will highlight any such proposals in the letter it sends to the respondent when notifying the Request and will invite the respondent to comment on them. If the parties subsequently fail to reach agreement, the Secretariat will inform the Court of any relevant observations or proposals they have made when inviting it to make any decision necessary for constituting the arbitral tribunal.
3-103 The information required by Article 4(3), subparagraph (g), will vary depending on the circumstances:
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3-104 (h) All relevant particulars and any observations or proposals as to the place of the arbitration, the applicable rules of law and the language. The Request is an opportunity to express preferences on these matters. The Secretariat will bring any proposals regarding the language and the place of arbitration to the respondent’s attention when notifying the Request. If the parties do not reach agreement, any relevant particulars, observations or proposals may help the Court when deciding on the place of the arbitration pursuant to Article 18. Here, as in Article 4(3), subparagraph (g), the 2012 Rules have replaced the wording “any comments” used in the 1998 Rules with “all relevant particulars and any observations or proposals” (see paragraph 3-102).
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3-105 If an agreement has already been reached among all parties concerning the place of the arbitration, the applicable law or the language of the arbitration, the claimant should confirm or specify what has been agreed upon and indicate the source of the agreement, especially where it is not contained in the arbitration agreement. If no agreement exists, the claimant should express its preferences, giving reasons. Alternatively, it may make any observations it considers relevant.
3-106 Additional documents or information. The 2012 Rules have added a final sentence to Article 4(3) explicitly inviting the claimant to submit any additional documents or information that it considers appropriate or that would help to ensure that the dispute from which its claims arise is resolved efficiently. To support their claims, parties frequently submit core documentary evidence as exhibits to the Request. Such evidence may highlight the strength of the claimant’s case to the respondent at an early stage, potentially prompting the parties to engage in settlement negotiations earlier rather than later, when a significant amount of time and money will have been expended on the case. Where one of the parties has not signed a contract on which the claimant bases its claims, the claimant should also consider providing documentary evidence in support of its argument that such party is nevertheless bound by the relevant arbitration agreement. Such evidence is essential where the Court is required to decide on whether and to what extent the arbitration should
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proceed pursuant to Article 6(4). The Court will generally not allow the arbitration to proceed in respect of a respondent where the claimant does not proffer any evidence suggesting that the respondent in question is bound by the arbitration agreement. A claimant may also consider including proposals relating to case management or the arbitration procedure.
Procedure following submission of the Request
3-107 Case registration. Upon receiving a Request, the Secretariat will first record the arbitration in its electronic database and assign it a reference number.
3-108 Acknowledgement of receipt by the Secretary General. On either the day of receipt of the Request or the next business day, the Secretary General (or another member of the Secretariat’s management) will acknowledge in writing the receipt of a new Request and indicate the date of receipt as required by Article 4(1).
3-109 The letter acknowledging receipt will in most instances contain all relevant contact information for the team to which the case has been assigned (see paragraph 3-113). The letter will be sent even if the claimant has not yet met the requirements of Article 4(4) (e.g. where a sufficient number of copies of the Request has not been received or the filing fee has not been paid). In such instances, the letter will fix a time limit for the claimant either to pay the filing fee or provide any missing hard copies. It will also inform the claimant that the Request will not be notified to the respondent until the requirements of Article 4(4) have been fully met.
3-110 If a party asks for different or additional proof of receipt such as a signature on an additional copy of the Request, the Secretariat will normally accede to its request.
3-111 Where it is not clear whether a request is a Request for Arbitration or another type of request, such as a request for the Court to act as an appointing authority pursuant to its Rules of the ICC as Appointing Authority in UNCITRAL or Other Ad Hoc Arbitration Proceedings, or an application for emergency measures pursuant to Article 29, the Secretariat will seek clarification from the claimant.
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3-112 Occasionally, the Secretariat’s management may consider that the Court is unable to administer the case at all, at least without further clarification from the claimant. Such situations are rare but may arise when the arbitration agreement relied upon by the claimant provides for a radical departure from the fundamental requirements of the Rules. In these rare situations, the Secretariat will usually contact the claimant for clarification and may decline to administer the case.
3-113 Assignment to a case management team. The decision on which case management team the Request is assigned to lies with the Secretariat’s management. The following factors are usually taken into account: whether the team includes one or several members who are qualified as attorneys in the country of the place of the arbitration or the applicable law, or in a jurisdiction that has a similar legal tradition; the team members’ fluency in the language(s) of the arbitration; the prospective team’s caseload; and whether any member of the Secretariat must be excluded from working on the case by reason of a prior association with the case or with one of the parties or their representatives. Where a Request is related to a previously initiated arbitration (ongoing or closed), it will usually be assigned to the case management team that is or was in charge of the related arbitration, unless there are strong reasons for assigning the case to another team.
3-114 The Secretary General may at any time re-assign the case to a different team. Although rare in practice, this might be necessitated by new developments in the case (e.g. with respect to the languages that are relevant to the arbitration) or for internal reasons. Such reasons include a change of circumstance that requires a team member to be excluded from the case, the need to redistribute work more effectively among the teams, or changes in the composition of the Secretariat.
3-115 Notification by the Secretariat. The team in charge of the case will notify the Request to the respondent pursuant to Article 4(5). It will endeavour to do so as quickly as possible, typically within one to two days of having the case assigned to it, or once the claimant has complied with Article 4(4) if this occurs later. The Secretariat will send both a hard copy of the Request
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and hard copies of all annexed documents to each respondent. It will send the Request to the respondent itself, even where the claimant mentions the respondent’s legal representative, unless the respondent informs the Secretariat in writing of a representative to which the Request should be notified.
3-116 Article 3(2) allows the Secretariat to use any means of communication that “provides a record of the sending”. The Secretariat will generally seek to obtain evidence of actual delivery of a Request. In practice, it normally uses a special courier service.
3-117 Where notification cannot be effected owing to incomplete or inaccurate contact information for the respondent, the Secretariat will contact the claimant. In many cases, the courier service used by the Secretariat may simply lack a telephone number, email address or contact person. Where notification remains impossible, the Secretariat may invite the claimant to provide an alternative address. In situations where the respondent refuses delivery of the Request or where notification cannot be completed for any other reason despite the Secretariat’s repeated attempts, the Secretariat will contact the claimant and enquire as to how it intends to proceed (see paragraph 3-67).
3-118 4(3 Compliance with Article) requirements. When a document labelled “Request for Arbitration” is received, the Secretariat will review its contents to determine whether it contains the information required by Article 4(3). The Secretariat will not systematically verify compliance with all of the requirements of Article 4(3). It will focus primarily on the information that is relevant to notification and leave it to the arbitral tribunal to make any determinations relating to the validity or admissibility of the Request under Article 4(3) or the provisions of any applicable law. The party submitting a Request is responsible for ensuring its validity and admissibility.
3-119 Accordingly, the Secretariat will not normally reject a Request and will proceed with notification unless information essential to the notification itself is missing (e.g. the respondent’s full contact details). Where important but not immediately essential information is omitted, the Secretariat can simply request it when informing the claimant that the Request has been notified to the respondent.
3-120 Compliance with Article 4(4) requirements. Article 4(5) effectively requires the Secretariat to withhold notification of the Request to the respondent where the claimant has not paid the filing fee or provided a sufficient number of copies of the Request pursuant to Article 4(4).
3-121 If the claimant fails to meet either of the requirements of Article 4(4), the Secretariat will notify it of this failure in its letter acknowledging receipt of the Request and generally will set a time limit for it to comply with these requirements, which will usually be no more than ten days from receipt of the Request. Where this time limit is not respected, Article 4(4) permits the Secretariat to close the file and terminate the arbitral proceedings. Article 4(4) notes that such termination is without prejudice to the claimant’s right to resubmit a Request for the same claims at a later date. However, parties should bear in mind that limitation periods may apply to their claims.
3-122 The Secretariat considers payment to have been made once it has received the funds directly in its accounts, or upon receipt of a bank cheque. It will promptly acknowledge receipt of payments. A party that has made a payment for which receipt has not been acknowledged by the Secretariat should contact the team in charge of the case.
Date of commencement
3-123 Article 4(2) fixes the date of commencement of the arbitration and thereby seeks to provide certainty in cases where the arbitration needs to be commenced by a particular date (e.g. to enable compliance with a limitation period fixed by law or in the contract). Whether this requirement has been complied with will be determined with reference to the applicable law or the contract.
3-124 The date of commencement of the arbitration is deemed to be the date on which the Secretariat receives the Request rather than the date on which it is received by the respondent. Article 4(2) intentionally refers only to the submission of the Request. For administrative purposes, such as assigning a reference number to the case, the Secretariat will consider the mere submission of the Request as sufficient, without regard to receipt of the filing fee and the requisite number of copies or any information omitted from the Request.
Amendments to the Request
3-125 Neither Article 4 nor any other provision of the Rules mentions whether the claimant may submit amendments to the Request. The claimant, and indeed any other party, is generally free to amend its claims until the Terms of Reference are established, unless the arbitral tribunal orders otherwise (see paragraph 3-892). It can do so by means of an ordinary submission; an amended Request is not required. If the claimant chooses to submit an amended Request, the respondent will be granted a new thirty-day time limit pursuant to Article 5(1) for submitting its Answer.
3-126 Additional parties. Where the “amendment” involves the addition of a new party to the proceedings, Article 7 applies. Accordingly, the claimant must submit a Request for Joinder and meet all requirements set forth in Articles 7(1)–7(3). As a result, a claimant wishing to bring claims against a new party after the confirmation or appointment of any arbitrator has no choice but to commence a new arbitration against the third party, unless all existing parties and the third party agree that the third party should be joined (see paragraphs 3-304–3-307). Where a claimant simply indicated a wrong address (e.g. the party’s former business address rather than its current address) or even modifies the respondent’s name slightly, such an error may not affect the identity of the party and may therefore be rectified through an amendment to the Request or a mere submission clarifying the issue. In case of doubt, the parties should contact the team in charge of the file at the Secretariat to determine the best way to proceed.
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ARTICLE 5: ANSWER TO THE REQUEST FOR ARBITRATION AND THE MAKING OF COUNTERCLAIMS
Article 5(1)
Within 30 days from the receipt of the Request from the Secretariat, the respondent shall submit an Answer (the “Answer”) which shall contain the following information:
The respondent may submit such other documents or information with the Answer as it considers appropriate or as may contribute to the efficient resolution of the dispute.
Article 5(2)
The Secretariat may grant the respondent an extension of the time for submitting the Answer, provided the application for such an extension contains the respondent’s observations or proposals concerning the number of arbitrators and their choice and, where required by Articles 12 and 13, the nomination of an arbitrator. If the respondent fails to do so, the Court shall proceed in accordance with the Rules.
Article 5(3)
The Answer shall be submitted to the Secretariat in the number of copies specified by Article 3(1).
Article 5(4)
The Secretariat shall communicate the Answer and the documents annexed thereto to all other parties.
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Article 5(5)
Any counterclaims made by the respondent shall be submitted with the Answer and shall provide:
The respondent may submit such other documents or information with the counterclaims as it considers appropriate or as may contribute to the efficient resolution of the dispute.
Article 5(6)
The claimant shall submit a reply to any counterclaim within 30 days from the date of receipt of the counterclaims communicated by the Secretariat. Prior to the transmission of the file to the arbitral tribunal, the Secretariat may grant the claimant an extension of time for submitting the reply.
3-127 Purpose. Article 5 grants the respondent an opportunity to respond formally to the claims brought against it in the Request for Arbitration and to make its own claims against the claimant. Respondents have an extendable thirty-day period from receipt of the Request to submit an Answer (Article 5(1)).
3-128 Like the Request, the Answer plays an essential function in the arbitral proceedings. It is the respondent’s first opportunity to impress upon the arbitral tribunal its perspective on the dispute. In most instances, the respondent will submit its Answer before the transmission of the case file to the arbitral tribunal pursuant to Article 16. Hence, the Secretariat will usually send all parties’ initial submissions simultaneously to the arbitral tribunal, which may then study them side by side.2
3-129 As with the Request, the Rules grant the respondent considerable freedom to determine the level of detail with which to present its case in its Answer. In practice, this level of detail may be influenced by that of the Request.
3-130 2012 modifications. The modifications made to Article 5 generally reflect those in Article 4. Of particular relevance are the substantive changes to the content requirements found in Articles 5(1) and 5(5), which are outlined in the discussion below (see paragraphs 3-153 and following).
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Who must submit an Answer
3-131 Any respondent is permitted and required to submit an Answer pursuant to Article 5(1). In practice, the vast majority of Answers are submitted by lawyers acting on behalf of parties, rather than the parties themselves. However, legal representation is not a requirement of the Rules. As specified in paragraph 3-155, the respondent need not provide proof of authority with the Answer, although the Secretariat, or the arbitral tribunal once constituted, may request such proof at any time during the proceedings pursuant to Article 17.
3-132 Answers submitted jointly or separately by multiple respondents. In cases involving multiple respondent parties, each respondent may submit a separate Answer if it so chooses. Alternatively, some or all respondents may prepare and submit a single Answer collectively. In such cases, the respondents should ensure that the Answer clearly identifies those parties taking part in the Answer and that it specifies which respondents are making which counterclaims.
How to submit an Answer
3-133 Submission. Article 5(1) requires the respondent to submit its Answer to the Secretariat. It should be addressed to the case management team assigned to the case. The relevant contact information, including the team’s email address, can be found in the Secretariat’s letter notifying the Request. As with the Request, the Rules do not require the respondent to use a particular means of communication to submit its Answer. In practice, an Answer will usually be sent by courier, fax or email. In all instances the party must also provide hard copies, as indicated below.
3-134 Additional requirement of hard copies. Pursuant to Articles 5(3) and Article 3(2), and no matter how the Answer has initially been submitted (e.g. fax or email), the respondent must supply one hard copy of the Answer for each other party (i.e. all parties other than the party or parties submitting the Answer) and for each arbitrator, as well as one for the Secretariat’s records. However, the parties can waive this hard copy requirement if they so agree in writing, either in the relevant contract or elsewhere.
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3-135 Form of the Answer. As with Requests, the Rules do not lay down specific requirements regarding the form of an Answer. While the content requirements listed in Article 5(1) and (where there are counterclaims) Article 5(5) will likely impact upon the form of the Answer, the respondent is free to determine how to present this information. It should of course endeavour to submit a clear and well-organized document.
3-136 Language. The respondent should submit its Answer in the language of the arbitration. If the language of the arbitration is not determined, the Answer should be submitted in what the respondent considers as the most likely language of the arbitration (see paragraphs 3-728 and following).
3-137 Time limit for submitting an Answer. In accordance with Article 5(1), the respondent must submit its Answer within thirty days of being notified of the Request by the Secretariat pursuant to Article 4(5). Receipt of the Request by the respondent directly from the claimant at an earlier date does not trigger the thirty-day time limit (unless the parties have agreed otherwise, for example in their arbitration agreement). Article 5(2) enables the Secretariat to extend the initial time limit pursuant to a request from the respondent (see paragraphs 3-140 and following). In practice, respondents often seek such an extension.
3-138 Pursuant to Article 3(4), the thirty-day time limit begins to run on the day following receipt of the Request for Arbitration (see paragraphs 3-76 and following for more information on calculating time limits). The Secretariat will normally receive confirmation of the date of receipt from the postal or courier service it used to notify the Request. Mere receipt at the respondent’s address is sufficient to trigger the time limit. The identity of the actual recipient is immaterial and the date of any internal dispatch of a Request within a respondent company or government has no bearing on the running of the initial thirty-day time limit. However, the Secretariat may take such
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circumstances into consideration where the respondent raises them in an application for an extension pursuant to Article 5(2) (see immediately below). Respondents may seek clarification from the Secretariat over the exact date on which the initial thirty-day time limit will expire.
3-139 Extension of the time limit. Pursuant to Article 5(2), the Secretariat can grant the respondent an extension of the thirty-day time limit for submitting its Answer. Pursuant to Article 38(2), the Court can extend any modification of the time limit for submitting an Answer that may have been agreed upon by the parties (in the arbitration agreement or otherwise) (see paragraphs 3-1515 and following).
Application for an extension
3-140 To be granted an extension pursuant to Article 5(2), the respondent must apply in writing to the Secretariat before the expiry of the initial thirty-day time limit. The Secretariat will in most instances reject an application for extension that is made outside this time limit. However, a late application will be submitted to the claimant for its comments. In its application, the respondent should specify how long an extension it requests and why. Where it is applying for an extension longer than thirty days, the respondent is encouraged to provide suitably detailed reasons, as the Secretariat will consider them carefully when making a final determination (see paragraphs 3-146–3-147).
3-141 Common reasons why parties may apply for an extension include (but are not limited to) needing additional time to study and analyse a lengthy and complex Request for Arbitration; finding and instructing appropriate legal counsel (in some instances the respondent is required to issue a public tender, which can be a time-consuming process); the claimant’s ongoing failure to pay the provisional advance; and insufficient time allowed for the Request to reach the relevant individual or group within the entity.
3-142 For the Secretariat to consider an application, the respondent must include in the document any observations or proposals it may have on the number of arbitrators and methods for constituting the arbitral tribunal. Where required (see below), it must also nominate a co-arbitrator. These observations or proposals regarding the constitution of the arbitral tribunal would otherwise be contained in the Answer pursuant to Article 5(1), subparagraphs (d) and (e). Providing them at this stage of the proceedings enables the Court and its Secretariat in many instances to take steps towards constituting the arbitral tribunal. Accordingly, the information required in the request for an extension helps to ensure that the extension, if granted, does not unduly delay the proceedings.
3-143 Article 5(2) leaves no discretion for the Secretariat to grant an extension for the Answer unless the application for an extension includes the respondent’s “observations or proposals concerning the number of arbitrators and their choice and, where required by Articles 12 and 13, the nomination of an arbitrator”. However, it is not always clear whether a
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respondent is actually “required” to nominate a co-arbitrator. The Secretariat will exercise its judgment, bearing in mind that the purpose of this requirement is to allow steps to be taken towards constituting the arbitral tribunal. There may be times when the claimant simply agrees to the extension requested by the respondent, which the Secretariat will naturally accept.
3-144 In practice, a respondent must reply to any proposal made by the claimant regarding the constitution of the arbitral tribunal. Depending on the circumstances, it is also required to provide the following information:
However, in situations in which the claimant itself has not yet nominated an arbitrator, or the candidate did not accept the nomination, or the claimant nominated an arbitrator but later than in the Request, respondents often argue that they are not required to make a nomination. Such a position is also frequent in cases involving multiple respondents required to nominate a co-arbitrator jointly pursuant to Article 12(7) but prevented from doing so by conflicting interests. Under the 2012 Rules, a respondent could also inform the Secretariat that it intends to join an additional party pursuant to Article 7(1).
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Secretariat’s decision
3-145 The Rules do not impose limitations on the length of the extension granted by the Secretariat. In practice, the Secretariat routinely grants an extension of thirty days, provided that the respondent meets the requirements set out in paragraphs 3-142–3-144. In all cases, the Secretariat will carefully review any arguments brought forward by the parties on the matter before making its decision.
3-146 Where the respondent requests an extension of more than thirty days, the Secretariat’s usual practice is to seek the claimant’s comments on the matter while granting the respondent a preliminary thirty-day extension. Once the claimant has submitted its comments or the time limit for doing so has expired, the Secretariat makes a final decision on the extension. As discussed further below (see paragraphs 3-150 and following), the Answer can be relatively brief. So, the Secretariat generally considers a thirty-day extension to be sufficient for preparing an Answer that meets the requirements of Article 5, given that the respondent should have ample opportunity to provide an extensive statement of its case later in the proceedings. The content of the Answer is in any event a strategic issue that the respondent must address.
3-147 In light of the above, the Secretariat rarely grants an extension significantly longer than thirty days where the claimant has not agreed to such an extension.3In one case from 2010, the claimant brought claims against a large number of parties, many of which appeared to have only a peripheral role in the dispute. These respondents brought jurisdictional objections. As they expected the Court to remove them from the arbitration pursuant to Article 6(2) of the 1998 Rules (now Article 6(4)), the respondents also requested an extension of sixty days from the Court’s prima facie decision to submit their Answer. In support of their request, the respondents argued that they were expecting to be dismissed from the arbitration and that preparing Answers beforehand was therefore likely be a waste of their resources. In addition, the claimant delayed the Court’s prima facie decision by requesting additional time to submit a further document in reply to the respondents’ jurisdictional objections. As a result, the Secretariat advised the respondents that they would be granted thirty days from notification of the Court’s prima facie decision to prepare their Answers. The extension proved unnecessary as the Court decided that the case could not proceed against the above-mentioned respondents.
3-148 Failure to submit the Answer in a timely manner. There is no explicit sanction under the rules for a respondent’s failure to submit the Answer within the time limit it has been set. If the Secretariat receives an Answer at a later date, it will nevertheless transmit the Answer to the arbitral tribunal along with the rest of the case file pursuant to Article 16.
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3-149 In the past, arbitral tribunals have usually afforded the respondent an opportunity to file a defence even where that respondent failed to submit its Answer.
Content of the Answer
3-150 The respondent has considerable freedom to determine how to present its Answer. Therefore, the nature, style and format of Answers may vary from one case to another. Some Answers contain a full statement of defence, setting out the case in great detail; others are very short, limited to the absolute minimum information required by the Rules. Usually, a combination of cultural, pragmatic and tactical considerations will influence the form and content of the Answer, including the manner in which the respondent presents its case and the supporting documentary evidence. Given that the Answer is a response to the Request, the respondent should also carefully consider the form and content of the Request when preparing its Answer.
3-151 As a direct response to any information or arguments contained in the Request, the required content of an Answer, as outlined in Article 5(1), is very similar to that listed for Requests in Article 4(3). However, the Answer will frequently serve a broader purpose in further shaping the dispute and the proceedings. Three concrete options are noteworthy in this regard. First, the respondent may present its own case against the claimant by bringing counterclaims in the Answer (see paragraphs 3-167 and following). Where counterclaims are made, the respondent must ensure it meets the requirements relating to their content listed in Article 5(5) (see paragraphs3-169 and following). Second, the respondent may include in its Answer a Request for Joinder pursuant to Article 7. In such instances, it must ensure that the Answer contains all the items required in a Request for Joinder (see paragraph 3-301). Third, in multiparty cases, the respondent can make claims pursuant to Article 8 against other respondents and/or counterclaims against some but not all claimants. In this case, the Answer will need to comply with the content requirements mentioned in Article 8(2) (see paragraph 3-335).
3-152 When preparing its Answer, the respondent should keep in mind that there must be jurisdiction over any claim it makes. In addition, when the respondent considers making claims under an arbitration agreement that is different from the arbitration agreement under which the principal claims are made, it should have regard to the requirements of Articles 9 and 6(4), subparagraph (ii).
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3-153 Specific content requirements. In all instances, the Answer must contain the following information:
3-154 (a) The respondent’s name in full, description, address and other contact details. The Answer allows the respondent parties to review and, where necessary, correct or complete the contact information and description provided for them by the claimant in the Request. Where an Answer is submitted collectively, the names and contact information of all respondents should be clearly provided. The obligation to provide “other contact details” is a 2012 addition and includes, for instance, email addresses. Respondents are encouraged to provide the name of a contact person (e.g. a manager or in-house counsel) if they are not physical individuals and that person’s telephone number and email address.
3-155 (b) The name in full, address and other contact details of any person(s) representing the respondent in the arbitration. This requirement is new to the 2012 Rules, although in practice this information was regularly provided in Answers. In many cases, the respondent’s counsel will inform the Secretariat and the claimant of its involvement in the case in initial correspondence before submitting the Answer. The Secretariat will communicate exclusively with designated counsel, unless the respondent specifically requests otherwise. The Secretariat does not require that counsel provide proof of authority with the Answer. However, it will copy the letter in which it first acknowledges the respondent’s representatives to the respondent itself. Proof of authority may be requested by the arbitral tribunal, once constituted, and by the Secretariat pursuant to Article 17 (see paragraphs 3-663 and following).
3-156 (c) Comments as to the nature and circumstances of the dispute giving rise to the claims and the basis upon which the claims are made; (d) the respondent’s response to the relief sought. The respondent should provide an account of the dispute in response to that given in the Request. It should comment on the claims brought against it and clarify its position regarding those claims (e.g. complete refutation, agreement on some facts). The respondent should also provide a response to the type and extent of the relief that the claimant is seeking against the respondent.
3-157 The reference to the “basis” upon which the claims are made is new to the 2012 Rules and mirrors a similar change in Article 4(3) (see paragraph 3-96). The respondent should comment on the instrument or legal rule relied upon in the Request and clarify whether that instrument or rule satisfactorily grounds the claims made against it.
3-158 Parties generally have freedom to determine what to disclose regarding the dispute and in what level of detail. Determining what the Answer should contain will usually be a tactical matter, with the respondent taking into account the degree of detail provided by the claimant and its own duties under Article 22(1).
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3-159 (e) All relevant particulars and any observations or proposals concerning the number of arbitrators and their choice in light of the claimant’s proposals and in accordance with the provisions of Articles 12 and 13, and any nomination of an arbitrator required thereby. The respondent should comment on the claimant’s interpretation of the arbitration clause, if any. It should also identify whether it agrees with or objects to any proposals made by the claimant. The Secretariat will bring such proposals to the respondent’s attention in its letter notifying the Request. If the respondent requested an extension of the time limit to submit its Answer, that information will already have been provided when applying for the extension pursuant to Article 5(2).
3-160 The 2012 Rules clarify that the respondent may also submit “observations or proposals” if such information has not yet been provided. This addition was made to clarify the type of information sought. The respondent is encouraged to make proposals in relation to any undecided matters, as this may significantly assist the parties in reaching agreements on processes for selecting arbitrators or even on specific candidates. The Secretariat will highlight any such proposals in its letter to the parties acknowledging receipt of the Answer and will invite the claimant’s comments. Where no agreement is reached by the parties, the Secretariat will inform the Court of any relevant observations or proposals when inviting it to make any decision that is necessary to constitute the arbitral tribunal.
3-161 Specifically, the respondent should consider commenting on or providing the following elements:
3-162 (f) All relevant particulars and any observations or proposals as to the place of the arbitration, the applicable rules of law and the language of the arbitration. The respondent should comment on the claimant’s statements regarding prior agreements of the parties on the above matters, whether in the arbitration clause or elsewhere. It should also agree with or object to any proposal made by the claimant and, where it objects, consider providing an alternative proposal, on which the Secretariat will then seek the claimant’s comments. The 2012 Rules replaced the wording “any comments” in the 1998 Rules with “all relevant particulars and any observations or proposals” (see paragraph 3-104).
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3-163 If an agreement has already been reached among all parties concerning the place of the arbitration, the applicable law or the language of the arbitration, the respondent should confirm or specify what has been agreed upon and indicate the source of the agreement, especially where it is not contained in the arbitration agreement. If no agreement has been reached, the respondent should comment on the claimant’s proposals, if any, or express its preferences, giving reasons. Alternatively, it may make any observations it considers relevant.
3-164 Additional documents. The 2012 Rules have added a final sentence to Article 5(1) explicitly inviting the respondent to submit any additional documents or information that it considers appropriate or that would contribute to resolving the dispute efficiently. Parties frequently submit as exhibits core documentary evidence supporting their defence.
3-165 No requirement relating to jurisdictional objections. Article 5(1) does not require the respondent to present its jurisdictional objections in the Answer. In practice, respondents will often make such objections at an earlier stage of the proceedings, when applying for an extension of the time limit to submit the Answer (see paragraph 3-140). The default rule
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under Article 6(3) is that the arbitral tribunal rather than the Court will decide on these objections. However, the Secretary General may decide, pursuant to Article 6(3), that the case will be referred to the Court under Article 6(4).
3-166 Finally, the failure to raise a jurisdictional objection prior to or in the Answer may under certain arbitration laws prevent the respondent from objecting to jurisdiction at a later time.
3-167 Counterclaims. Respondents are permitted to bring counterclaims against the claimant(s) pursuant to Article 5(5). The Answer may contain claims that are made against parties other than the claimant(s) (e.g. claims against an additional party pursuant to Article 7 or cross-claims pursuant to Article 8). Where such other claims are made in the Answer, the party submitting the Answer must nevertheless meet any additional requirements set forth in Article 7. Respondents are also permitted to make set-off claims, as implicitly recognized in Article 36(7). The discussion that follows applies analogously to set-off claims or set-off defences that are filed with the Answer.
3-168 Specific content requirements. If the respondent makes counterclaims within its Answer, it must provide the following information pursuant to Article 5(5):
3-169 (a) A description of the nature and circumstances of the dispute giving rise to the counterclaims and of the basis upon which the counterclaims are made. Of particular importance to the claimant, the Secretariat and the arbitral tribunal (once constituted) is a clear and accurate description of the following three items: (i) the counterclaims themselves; (ii) the nature and circumstances of the dispute giving rise to those counterclaims; and (iii) the basis upon which the counterclaims are made, i.e. the specific instrument or legal rule under which the claims are brought (e.g. contract, treaty). The reference to the “basis” upon which the claims are made is new to the 2012 Rules, although such basis was generally provided in Requests and Answers submitted under the 1998 Rules.
3-170 The provision does not necessarily require the respondent to describe the legal arguments on which the counterclaims rely. The parties have some freedom to determine the level of detail provided. As already indicated in paragraph 3-150, the content of the Answer may be a tactical matter for
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each party to determine on a case-by-case basis. In any event, the respondent can supplement and amend the information provided or the relief requested in the Answer until the establishment of the Terms of Reference (see paragraphs 3-892), or thereafter pursuant to Article 23(4).
3-171 (b) A statement of the relief sought, together with the amounts of any quantified counterclaims and, to the extent possible, an estimate of the monetary value of any other counterclaims. A respondent must specify the type of relief it is seeking from the claimant and in all instances provide some indication of its monetary value. It must not only provide the amounts of quantified claims but also estimate the monetary value of any other counterclaims to the extent possible. The latter is a new requirement of the 2012 Rules and marks a significant change from the 1998 Rules, which only required “to the extent possible, an indication of any amount(s) counterclaimed”. Suitably accurate information on the monetary value of counterclaims, whether quantified or unquantified, is relevant to fixing the advance on costs and ensuring appropriate remuneration of the arbitrators and the ICC (see paragraphs 3-1345 and following). The division between quantified counterclaims and “other counterclaims” is intended to elicit an estimate of the value of the dispute where there are counterclaims for injunctive relief, specific performance or declaratory relief. As the provision makes clear, only an estimate is required. It may subsequently be amended, which is also the case with quantified counterclaims.
3-172 (c) Any relevant agreements and, in particular, the arbitration agreement(s). Where the respondent bases counterclaims on agreements other than those identified in the Request, it should submit copies of such agreements with the Answer.
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3-173 (d) Where counterclaims are made under more than one arbitration agreement, an indication of the arbitration agreement under which each counterclaim is made. Article 9 explicitly allows claims to be brought under more than one arbitration agreement in the same proceedings. The respondent must clearly indicate which counterclaim falls under which arbitration agreement. Such information may become relevant in the event of a Court decision pursuant to Article 6(4).
3-174 Additional documents or information. As in Articles 4(3) and 5(1), the 2012 Rules have added a final sentence to Article 5(5) explicitly stating that parties may also submit any additional documents or information they consider appropriate or that would contribute to resolving the dispute efficiently. Respondents frequently submit core documentary evidence in support of their counterclaims. They may also consider including any proposals relating to case management or the arbitration procedure.
3-175 Subsequent counterclaims. Although Article 5(5) states that the respondent “shall” submit its counterclaims with the Answer, the respondent is not barred from introducing additional counterclaims at a later date. As discussed in paragraphs 3-892, unless the arbitral tribunal directs otherwise, parties are free to make new claims or amend claims already made at any time until the Terms of Reference are drawn up pursuant to Article 23. The arbitral tribunal may authorize new claims even thereafter pursuant to Article 23(4). However, the parties should bear in mind their general duty under Article 22(1) with respect to conducting the proceedings in an expeditious and cost-effective manner, which may require them to avoid the late introduction of claims.
Procedure following the submission of an Answer
3-176 Notification of the Answer by the Secretariat. As with Requests (see Article 4(2)) and as required in Article 5(4), the Secretariat will acknowledge receipt of the Answer and send a hard copy of it to every other party in the dispute. The Secretariat might need to withhold notification of the Answer pursuant to Article 5(4) until it receives the requisite number of hard copies.
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3-177 Compliance with the requirements of Articles 5(1) and 5(5). The Secretariat will not systematically verify compliance with all of the requirements listed. Instead, it will focus primarily on the information that is relevant for the constitution of the arbitral tribunal and for determining other preliminary questions such as the place of the arbitration. The Secretariat will leave it to the arbitral tribunal to make any determinations relating to the validity or admissibility of the Answer.
3-178 Where important but not immediately essential information is omitted, the Secretariat can simply request it from the respondent in its letter informing the respondent that the Answer has been notified to the claimant. For example, where the respondent fails to nominate an arbitrator when required, the Secretariat will generally invite it to do so within a short period of time (e.g. ten days).
3-179 Claimant’s reply to the counterclaims. Article 5(6) formally provides the claimant with an opportunity to reply to and comment on any of the counterclaims brought against it pursuant to Article 5(5). Where counterclaims are made, the Secretariat will invite the claimant to reply when notifying it of the Answer and counterclaims pursuant to Article 5(4). The claimant is given thirty days from receipt of such notification in which to reply.
3-180 The Secretariat may extend the time allowed for submitting a reply. Its usual practice is to provide an additional thirty days, although it will take into account the particular circumstances of the case and the respondent’s comments on the requested extension. Article 5(6) gives the Secretariat this power only until such time as the case file is transmitted to the arbitral tribunal pursuant to Article 16. Thereafter, the arbitral tribunal gains control of the proceedings and is accordingly empowered to decide itself on any such request for an extension.
Amendments to the Answer or the counterclaims
3-181 Neither in Article 5 nor elsewhere do the Rules indicate whether the respondent may submit amendments to the Answer or the counterclaims. The respondent is normally free to make amendments until the Terms of Reference have been drawn up (see paragraph 3-892). It can do so through an ordinary submission; an amended Answer or counterclaim is not required.
3-182 Additional parties. Where the “amendment” involves the addition of a new party to the proceedings, Article 7 applies. The respondent will normally be required to submit any Request for Joinder with its Answer (see paragraph 3-300). In any event, no additional party can be joined once an arbitrator has been confirmed or appointed (see paragraph 3-304).
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ARTICLE 6(1): APPLICABLE VERSION OF THE RULES Where the parties have agreed to submit to arbitration under the Rules, they shall be deemed to have submitted ipso facto to the Rules in effect on the date of commencement of the arbitration, unless they have agreed to submit to the Rules in effect on the date of their arbitration agreement.
3-183 Purpose. The Court is able to administer arbitrations under any previous version of its Rules. Article 6(1) determines which version of the Rules applies. Accordingly, all arbitrations commenced after 1 January 2012 will be subject to the 2012 Rules, unless the parties have agreed that an earlier version applies.
3-184 2012 modifications. Minor linguistic adjustments.
3-185 Agreements to apply previous versions of the Rules. Parties are advised against agreeing on the application of a previous version of the Rules or the version in force when they make their arbitration agreement. Considerable effort goes into improving the Rules each time they are revised. Existing provisions may be adjusted or new provisions introduced to improve clarity and transparency or, more substantively, to take account of the latest and best practices in international arbitration.
3-186 In practice, it is rare for parties to agree expressly on an earlier version of the Rules. Where an arbitration clause provides for an earlier version, the parties are of course free to modify that agreement at any time in favour of the current Rules. In some cases, at the beginning of an arbitration, the Secretariat will alert the parties to this possibility and invite them to consider agreeing on the current Rules. Sometimes, one or more parties will insist on an earlier version and the Court will respect their choice. For example, in 2010 a Request for Arbitration was submitted on the basis of a contract made in 1986 containing an arbitration clause referring to the 1975 Rules (i.e. the Rules which were then in force). In its Request for Arbitration the claimant proposed that the parties instead agree to conduct the arbitration in accordance with the 1998 Rules. The respondent rejected this proposal and the Court and its Secretariat accordingly proceeded to administer the case under the 1975 Rules.
3-187 Where parties do wish to have an earlier version of the Rules applied, they should ensure that the arbitration agreement specifies this clearly. Where an arbitration agreement is ambiguous as to the applicable version of the Rules, the Secretariat will first seek an agreement between the parties. Disputes occasionally arise over which version of the Rules is referred to in an arbitration agreement. Where the Secretariat is unable to elicit agreement from the parties, such disputes will generally be resolved by the arbitral tribunal and not by the Court.
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3-188 In 2010, two separate Requests for Arbitration were submitted on the basis of a single arbitration clause which referred to the “1993” Rules. The Secretariat informed the parties that there was no 1993 version of the Rules and that the Rules in force in 1993 were those effective as from 1988. The contract containing this arbitration clause had been signed in 2010, and it would have been odd for parties in 2010 to have selected the 1988 Rules, which had been superseded by the 1998 Rules twelve years earlier. In one of the two cases initiated under that clause the parties subsequently agreed on the 1998 Rules. In the other, the respondent refused to agree. In accordance with its usual practice, the Court and its Secretariat left it to the arbitral tribunal to decide which version of the Rules would apply. Prior to the arbitral tribunal’s decision, the Court and its Secretariat proceeded with all preliminary steps, including the constitution of the arbitral tribunal, in a manner that was consistent, so far as possible, with both the 1988 and 1998 Rules. In a partial award made in late 2011, the arbitral tribunal found that the reference in the arbitration clause to the “ICC Rules of conciliation and arbitration 1993” was a mistaken reference to the 1998 Rules and that the latter therefore applied.
3-189 The example just mentioned raises another issue. The last phrase in Article 6(1) empowers the parties to agree “to submit to the Rules in effect on the date of their arbitration agreement”. Yet it does not expressly empower the parties to agree on some other set of Rules, such as a version pre-dating the version in effect when the arbitration agreement was made. In practice, the Court and its Secretariat have applied whatever version the parties have agreed upon. The arbitral tribunal is left to consider, where required, the validity of an agreement to opt for a version of the Rules other than the two possible versions mentioned in Article 6(1).4
3-190 Costs scales. Irrespective of which version of the Rules applies, the Court and its Secretariat will always apply the latest version of the scales to determine the quantum of the arbitral tribunal’s fees and the ICC administrative expenses. Accordingly, Article 4(4), subparagraph (b), requires the “payment of the filing fee required by Appendix III (“Arbitration Costs and Fees”) in force on the date the Request is submitted” (emphasis added). The Appendix, unlike the Rules themselves, can be revised at any time, enabling the ICC to adjust the costs scales as needed without having to amend the Rules. Article 4(1) of Appendix III provides that: “The Scales of Administrative Expenses and Arbitrator’s Fees set forth below shall be effective as of [date] in respect of all arbitrations commenced on or after such date, irrespective of the version of the Rules applying to such arbitrations.”
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ARTICLE 6(2): ADMINISTRATION OF ALL ICC ARBITRATIONS BY THE COURT
By agreeing to arbitration under the Rules, the parties have accepted that the arbitration shall be administered by the Court.
3-191 2012 modifications. New provision.
3-192 Article 6(2) provides that an agreement to arbitrate under the Rules also represents an agreement that the Court will administer the arbitration. It protects parties from jurisdictional objections asserting that the parties, while having agreed on the application of the Rules, did not agree that the Court should administer the arbitration. The provision is also intended to meet the requirement in some jurisdictions that the arbitration agreement specify the body administering the arbitration. In addition, the provision makes clear that, where the arbitration agreement provides for the application of the ICC Rules, the parties accept that only the ICC Court, and no other institution, can administer their dispute.
3-193 The Rules are not suitable for use in ad hoc arbitrations, nor in arbitrations administered by any institution other than the Court. The Rules explicitly require the Court, the Secretariat and the Secretary General to perform certain functions which cannot be delegated to other bodies. Any attempt to have another body administer arbitrations under the Rules is likely to lead to unwanted litigation and significant additional time and costs. More importantly, it will seriously endanger the enforceability of any award.
3-194 Furthermore, an arbitration purportedly conducted under the Rules but not administered by the Court is, quite simply, not an ICC arbitration. The value and benefits of ICC arbitration do not arise solely from the content of its Rules, but also from the ICC’s know-how in applying the Rules and administering arbitrations, the experience of the Court and its Secretariat, the quality of the staff, and the trust placed in arbitration under the ICC banner. The Court and the Secretariat work with parties and arbitral tribunals to ensure, to the greatest extent possible, that arbitrations run smoothly and efficiently and that the resulting award is enforceable.
3-195 Parties preferring ad hoc arbitration should adopt rules that are specifically designed for that purpose, such as those of the United Nations Commission on International Trade Law (UNCITRAL Arbitration Rules). No institutional rules are suitable for ad hoc arbitrations. That is particularly true of the ICC Rules, which provide for a relatively high and specialized degree of supervision by the Court and its Secretariat. Similarly, parties that prefer administration by another arbitral institution should adopt that institution’s own rules, as they will have been designed specifically for that institution’s structure, features, experience and characteristics.
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ARTICLE 6(3): SCREENING BY THE SECRETARY GENERAL PRIOR TO THE APPLICATION OF ARTICLE 6(4)
If any party against which a claim has been made does not submit an Answer, or raises one or more pleas concerning the existence, validity or scope of the arbitration agreement or concerning whether all of the claims made in the arbitration may be determined together in a single arbitration, the arbitration shall proceed and any question of jurisdiction or of whether the claims may be determined together in that arbitration shall be decided directly by the arbitral tribunal, unless the Secretary General refers the matter to the Court for its decision pursuant to Article 6(4).
3-196 Purpose. Articles 6(3)–6(7) concern decisions as to arbitral jurisdiction and whether claims brought under different arbitration agreements may be determined together in a single arbitration. For the purposes of the following discussion, this second aspect is subsumed within the term jurisdiction, although analytically and legally the two concepts may not be the same. In particular, the provisions address the division between the Court’s examination, in certain cases, of the prima facie existence of an ICC arbitration agreement and the arbitral tribunal’s role in fully assessing and ruling upon its own jurisdiction. Two key principles underlie Articles 6(3)– 6(5). The first is that arbitral tribunals, rather than the Court, must determine any dispute as to arbitral jurisdiction. This is consistent with the so-called and well-known principle of “competence-competence”, according to which an arbitral tribunal is empowered to rule on its own jurisdiction. It also recognizes that the Court’s function is limited to acting as an administrative body. The second principle is that if there is clearly no prima facie basis for asserting ICC arbitral jurisdiction, the Court may and should decide that the arbitration cannot proceed, so as to save time and cost.
3-197 2012 modifications. Article 6(3) is partly inspired by Article 6(2) of the 1998 Rules in that it concerns cases in which arbitral jurisdiction is or may be at issue. However, the manner in which such cases are treated is entirely new. Article 6(2) of the 1998 Rules empowered the Court to take a prima facie decision as to the existence of an ICC arbitration agreement in all cases where there was a jurisdictional objection or the respondent had not filed an Answer to the Request for Arbitration. The new Articles 6(3) and 6(4) divide the assessment process into two steps. Article 6(3) establishes an initial screening process whereby the Secretary General identifies those cases that will be referred to the Court for consideration under Article 6(4). All other cases are referred directly to the arbitral tribunal. This screening streamlines the assessment process, given that the proportion of cases likely to result in a negative decision by the Court under Article 6(4) is very small.
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3-198 The Secretary General’s new gatekeeping function addresses the frequent observation that decisions under Article 6(2) of the 1998 Rules often led to unnecessary delays in arbitral proceedings. When the Court is required to make a prima facie determination of jurisdiction, the Secretariat’s practice is to defer any steps towards the constitution of the arbitral tribunal until after that decision has been made, which may lead to a delay of one month or more. In 2011, 42% of new cases required an Article 6(2) decision under the 1998 Rules but in only 4% of those cases (or 1.7% of all new cases during that period) did the Court decide that the arbitration should not proceed at all. Similar rates were found in previous years. This meant that a large number of cases were delayed even though the probability of a negative decision under the former Article 6(2) was slight. This fact, together with the realization that the Court and its Secretariat could use their time more productively, led to the change.
3-199 Besides the screening process, the language defining the exercise of the Court’s power to make a prima facie decision on jurisdiction has also changed. First, the new Article 6(3) applies to jurisdictional objections or the absence of an Answer by “any party”, whereas Article 6(2) of the 1998 Rules referred only to “the respondent”. This adjustment is consistent with the practice adopted by the Court when applying the former Article 6(2). More importantly, it acknowledges the growth of multiparty arbitration and is in keeping with the new joinder provisions contained in Article 7. Second, the new Article 6(3) includes a reference to whether all submitted claims may be decided in a single arbitration. That modification is consistent with Articles 6(4), subparagraph (ii), and 9, containing new provisions on claims brought under multiple arbitration agreements.
3-200 Scope of Article 6(3). Article 6(3) restricts the applicability of Article 6(4) to three situations. The Secretary General may only refer a case to the Court if a party fails to submit its Answer pursuant to Article 5(1); objects to the existence, validity, or scope of an arbitration agreement; or contends that the claims made in the arbitration cannot be determined together in a single arbitration. These three issues are addressed below. The Secretary General should have no need to refer a case to the Court where all respondent parties have submitted their Answers on time and no party has objected to jurisdiction, or where the parties have specifically requested that the jurisdictional objections be submitted directly to the arbitral tribunal. However, an exception may arise in a case involving incompatible arbitration agreements if the parties cannot arrive at an agreement resolving that incompatibility (see paragraphs 3-243–3-247).
3-201 Failure to submit an Answer to the Request for Arbitration; incomplete or belated Answer. The Article 6(3) screening process is triggered where no Answer is filed, where the Answer fails to meet certain requirements of Article 5 and/or where the Answer is submitted after expiry of the time limit for doing so. The default rule under Article 6(3) is that the arbitral tribunal will decide on jurisdiction with no prior decision by the Court jurisdiction with no prior decision by the Court
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pursuant to Article 6(4). However, the Secretary General may of course decide to refer the matter to the Court. Where a respondent fails to file an Answer but confirms its willingness to participate in the arbitration, Article 6(3) still applies, unless the respondent expressly states that it will not bring jurisdictional objections.
3-202 Pleas concerning the existence, validity or scope of the arbitration agreement. In practice, objections to jurisdiction may be highly varied and can go beyond the existence, validity or scope of the arbitration agreement. Examples include allegations that the arbitration clause was obtained by fraud; that it is void under a certain law; that the dispute at hand does not fall within its scope; that before commencing arbitration the claimant failed to undertake certain preliminary steps required by a multi-tiered dispute resolution clause; that the subject matter of the dispute is not capable of settlement by arbitration; or that the same dispute is or has been before another arbitral tribunal or a state court. The Secretary General has discretion to refer such issues to the Court for a decision under Article 6(4), but in practice the examples just given are likely to be referred directly to the arbitral tribunal as provided in Article 6(3).
3-203 On the other hand, where a party has not signed and/or does not appear to be bound by the arbitration agreement at all and no evidence to the contrary has been produced by the party making the objection, or where the arbitration agreement appears inoperable or does not refer to the ICC or to arbitration, these matters are more likely to be submitted to the Court for a decision under Article 6(4).
3-204 Whether all of the claims may be determined in a single arbitration. This part of Article 6(3) principally concerns cases in which claims are made under more than one arbitration agreement and a party contends that the claims arising from the different arbitration agreements cannot be heard together in a single arbitration. It therefore links in with Article 6(4), subparagraph (ii), and Article 9, which were new to the 2012 Rules and relate to claims brought under multiple contracts.
3-205 Timing. Articles 6(3) and 6(4) are applied at the outset of the arbitration, before the arbitral tribunal has been constituted. The screening process is usually conducted soon after a jurisdictional objection is raised, or soon after the Answer is submitted or should have been submitted. If the Secretary General decides to refer the matter to the Court for a decision under Article 6(4), the Court will proceed promptly after the Secretariat has afforded all relevant parties an opportunity to comment on the matter.
3-206 That said, Article 6(3) does not set a time limit for the exercise of the Secretary General’s gate-keeping function. Nor is a time limit mentioned in Article 6(4). This is because there is a need for flexibility. However, once the case file has been transmitted to the arbitral tribunal, all jurisdictional questions, whether arising from newly submitted claims, late jurisdictional
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objections, or otherwise, should be dealt with by the arbitral tribunal. Nevertheless, the silence of Articles 6(3) and 6(4) as to timing empowers the Court to take a decision under those articles at any time during an arbitration should it be necessary to do so.
3-207 Internal procedure. Under Article 6(3), the Secretary General has set up the following internal procedure. Where a case falls within the scope of Article 6(3) (i.e. a party fails to submit an Answer within the time limit granted or raises jurisdictional objections), the team within the Secretariat that is assigned to the case will review the submissions made in the context of the case under the Secretary General’s instructions. Where all claims are brought pursuant to a single contract that appears to be signed by all parties and contains an arbitration agreement clearly referring disputes to ICC arbitration, the case will be referred directly to the arbitral tribunal, although the team will also communicate the relevant features of the case to the Secretary General for his or her information. Any other situation will prompt a review of the case by the Secretary General. To assist the Secretary General in this task, the team assigned to the case will prepare a brief written report on the case. Upon completing such review, the Secretary General may then decide, where appropriate, to submit the case to the Court for a decision pursuant to Article 6(4).
3-208 Notification of Article 6(3) decisions. The Secretariat will inform the parties if the Secretary General decides to refer the matter to the Court for a decision under Article 6(4), and will invite their comments on whether and to what extent the arbitration should proceed. In other cases falling within the scope of Article 6(3), the default position will apply and the arbitration will simply proceed.
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ARTICLE 6(4): PRIMA FACIE DECISIONS BY THE COURT ON THE EXISTENCE OF AN ARBITRATION AGREEMENT
In all cases referred to the Court under Article 6(3), the Court shall decide whether and to what extent the arbitration shall proceed. The arbitration shall proceed if and to the extent that the Court is prima facie satisfied that an arbitration agreement under the Rules may exist. In particular:
The Court’s decision pursuant to Article 6(4) is without prejudice to the admissibility or merits of any party’s plea or pleas.
3-209 Purpose. Article 6(4) outlines the Court’s function in determining the extent to which it is prima facie satisfied that an arbitration agreement under the Rules may exist. The underlying purpose of this preliminary assessment is to filter out as early as possible any arbitral proceedings where the Court considers there is no objective basis for asserting ICC arbitral jurisdiction or where the conditions of Article 6(4), subparagraph (ii), in relation to multiple arbitration agreements are not met. The Court is limited to a prima facie decision on whether an ICC arbitration agreement may exist, leaving any arguable jurisdictional questions to the arbitral tribunal. The Court’s decision is not a decision on jurisdiction at all, but an administrative decision on whether the arbitration shall proceed and whether the Secretariat may transmit the case file to the arbitral tribunal.
3-210 2012 modifications. The Secretary General’s new gate-keeping role under Article 6(3) significantly reduces the number of cases the Court is called upon to consider under Article 6(4). For those cases referred to it, the Court’s function under Article 6(4) is largely the same as the function it performed under Article 6(2) of the 1998 Rules, albeit with some significant differences. One of these is the Court’s express power to decide, where appropriate, that the case shall proceed in regard to certain claims but not others, rather than simply close the proceedings. Under Article 6(4), the Court decides “whether and to what extent the arbitration shall proceed” (emphasis added), and an arbitration can proceed “to the extent” the Court is prima facie satisfied. The language of the former Article 6(2) merely empowered the Court to decide that an arbitration would or would not proceed. However, in practice the Court regularly used the former Article 6(2) to remove one or more parties from the proceedings if their removal cleared the jurisdictional barrier preventing the case from proceeding.
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3-211 Important additions have also been made for cases in which claims are made under more than one arbitration agreement (multicontract arbitrations are now specifically recognized by the new Article 9). Article 6(4), subparagraph (ii), provides a framework for the Court’s prima facie consideration of arbitral jurisdiction in these cases and guides the parties by setting out the threshold applied by the Court when making its prima facie assessment, as discussed below.
Overview of Article 6(4)
3-212 Structure. Article 6(4) is composed of four sentences. The middle two sentences are the most relevant in practice, whereas the first and the last sentences contain statements of a more general nature. The second sentence is key, as it sets forth the threshold for the Court’s decisions pursuant to Article 6(4). It indicates that the Court will allow a case to proceed only to the extent that it is prima facie satisfied that an arbitration agreement under the Rules may exist. The overarching principle of the assessment carried out pursuant to Article 6(4) is that the Court will be looking for prima facie consent to arbitrate. Subparagraphs (i) and (ii) of Article 6(4) provide guidance as to how the prima facie assessment will be made in cases involving more than two parties (subparagraph (i)) or in cases where claims are made under more than one arbitration agreement (subparagraph (ii)). Subparagraphs (i) and (ii) do not represent alternatives to the prima facie assessment provided for in the second sentence of Article 6(4). Nor do they provide different thresholds for such an assessment. Rather, they set forth the relevant considerations for the Court to make its assessment in specific situations. The following paragraphs are intended to offer guidance to the reader on the application of Article 6(4) and specifically on which parts of it are applied in different types of situations, depending on the number of parties and arbitration agreements that are involved in a given case.
3-213 Two parties, claims based on one arbitration agreement. Where there is a single arbitration agreement and only two parties to the arbitration, the prima facie assessment will be conducted simply by reference to the second sentence of Article 6(4).
3-214 More than two parties, claims based on one arbitration agreement. In cases involving more than two parties, the specific requirements of subparagraph (i) will also be applied. The Court in some instances will decide that the case will not proceed in respect of certain parties so that the case can proceed with the remaining parties. In the context of an arbitration involving more than two parties but only one arbitration agreement, subparagraph (i) essentially directs the Court to make a prima facie assessment in relation to each party individually.
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3-215 based on two or more Two parties, claims arbitration agreements. Claims in a given case are usually brought under a single arbitration agreement. In those rare cases where claims are made under more than one arbitration agreement, the specific requirements of subparagraph (ii) will be applied in the context of the prima facie assessment. Subparagraph (ii) specifies that the Court, in making its prima facie assessment, must take into account considerations such as the compatibility of the arbitration agreements and whether the parties may have agreed that all of the claims may be heard together in a single arbitration. Subparagraph (ii) applies irrespective of the number of parties involved in an arbitration, and therefore also applies in an arbitration with two parties only, provided that claims are made under more than one arbitration agreement. However, such cases are extremely rare, as most cases with two parties will not have more than one arbitration agreement and most cases with more than one arbitration agreement will involve more than two parties.
3-216 More than two parties and claims based on two or more arbitration agreements. As noted above, those rare cases where claims are made under more than one arbitration agreement often involve more than two parties. In such circumstances, both subparagraphs (i) and (ii) will apply in the context of the prima facie assessment. In other words, when Article 6(4), subparagraph (ii), applies, it will almost always apply in conjunction with Article 6(4), subparagraph (i). Both subparagraphs (i) and (ii) are concerned with the same issue, namely to ensure that the prima facie assessment is conducted appropriately. In practice, this means that under each subparagraph of Article 6(4), the Court will be looking for prima facie consent to arbitrate—under subparagraph (i), consent of all parties; and under subparagraph (ii), consent to a single arbitration involving claims from more than one arbitration agreement. However, the Court will not apply the requirements of subparagraphs (i) and (ii) separately, but will rather make a holistic assessment of the case (see paragraphs 3-253 and 3-254)
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3-217 Types of decisions. Four different types of decisions are available to the Court pursuant to Article 6(4). The Court may decide:
3-218 The effects of the Court’s decisions under Article 6(4) are addressed in Articles 6(5)–6(7). Article 6(5) applies to the extent that the Court has allowed a case to proceed, while Articles 6(6) and 6(7) apply to the extent that the Court has removed parties or claims under Article 6(4).
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Application of Article 6(4)
Prima facie assessment
3-219 As noted above, a prima facie assessment, pursuant to the second sentence of Article 6(4), is made in all cases where the Court makes a decision under Article 6(4), irrespective of how many parties or arbitration agreements are involved. Article 6(4) establishes a fairly low threshold, requiring only that the Court be prima facie satisfied that an agreement “may”, rather than “does”, exist. Provided there is evidence pointing to a possible ICC arbitration agreement between the relevant parties, the Court will allow the arbitration to proceed. However, a mere allegation relating to the criteria set forth in Article 6(4) is not sufficient. The Court will generally require that the allegation be supported by some evidence.
3-220 Paragraphs 3-221–3-235 explain the factors that the Court is likely to consider in making its prima facie assessment. Paragraphs 3-236–3-239 show how such an assessment is made in situations where there are more than two parties (Article 6(4), subparagraph (i)), while paragraphs 3-240– 3-252 explain how it is applied in situations where claims are made under more than one arbitration agreement (Article 6(4), subparagraph (ii)). Paragraphs 3-253–3-256 discuss how the prima facie assessment is made in regard to arbitrations involving at one and the same time more than two parties and claims made under more than one arbitration agreement (i.e. in which both subparagraphs (i) and (ii) come into play).
3-221 Reference to arbitration as the dispute resolution method. The Court will not allow a matter to proceed unless it is prima facie satisfied that the parties may have agreed to resolve their dispute by arbitration, as opposed to any other form of dispute resolution. When applying the former Article 6(2), the Court decided on several occasions that an arbitration would not proceed where the contract contained no reference to “arbitration” or “arbitrators” whatsoever—whether in the relevant clause,
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its heading or elsewhere in the contract. However, cases involving dispute resolution clauses of that kind are rarely submitted to ICC arbitration in the first place. The Court has also been fairly generous in its interpretation of what may be a reference to arbitration and, when in doubt, will let the arbitral tribunal decide whether the parties agreed on arbitration. For instance, in a case where the heading of the clause used the word arbitration but no reference was made to arbitration or arbitrators in the clause itself, the Court allowed the matter to proceed.
3-222 Reference to the ICC. It is not sufficient that the parties might have agreed to arbitration in general. The Court must be prima facie satisfied that the parties may have agreed to arbitrate specifically under the Rules or under the administration of the ICC or the Court. The Court will not allow a matter to proceed where the arbitration agreement provides for ad hoc arbitration or arbitration under the rules of another arbitral institution.
3-223 In practice, the Court will generally construe an explicit reference to the ICC or one of its constituent entities, however vague, as sufficient, unless there is clear evidence to suggest that the Rules do not apply. Likewise, the Court will usually allow cases to proceed where the arbitration agreement does not refer expressly to the ICC or any of its constituent entities but includes a reference to a non-existing institution that could be read as a poorly drafted attempt to designate the ICC. The arbitral tribunal will be left to decide whether the parties intended to agree to ICC arbitration.
3-224 Acceptable references to the ICC are varied and can include any terminology pointing, even vaguely, to the Court. The following are examples of language that led to positive decisions under Article 6(2) of the 1998 Rules: “Chamber of Commerce of Paris”, “arbitration in Paris in the chamber of arbitration”, “arbitration in Paris under the auspices of the international association of arbitration”, and the “Geneva Court of International Arbitration”. In such cases, it was then for the arbitral tribunal fully to consider the question of jurisdiction.
3-225 A reference to the ICC will not be sufficient where the parties have not agreed to arbitration under the Rules but have rather opted for the Court to act as an appointing authority pursuant to its Rules of the ICC as Appointing Authority in UNCITRAL or Other Ad Hoc Arbitration Proceedings. The Court also will remain mindful that a reference to the ICC does not necessarily imply arbitration but may instead be a reference to the ICC ADR Rules, Rules for Expertise or Dispute Board Rules, all of which are administered by the ICC but not by the Court (see Chapter 4).
3-226 Clauses referring to other arbitral institutions or rules. The Court has occasionally seen clauses that attempt to mix and match arbitral rules and arbitral institutions. For example, the parties may have attempted to select the Rules but opted for a different institution to administer the case. Under the 1998 Rules, the Court allowed such cases to proceed since only the
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Court can administer arbitrations under the Rules (see Article 1(2)). To avoid any further uncertainty, Article 6(2) of the 2012 Rules expressly confirms that, by agreeing to arbitration under the Rules, parties agree to their case being administered by the Court.
3-227 The situation is different where the parties’ arbitration agreement designates the Court or the ICC as the administering body but selects a set of arbitration rules other than those of the ICC, such as the UNCITRAL Arbitration Rules or the rules of another arbitral institution. In these cases, depending on the precise nature of the clause, the Secretariat will usually inform the claimant, upon receipt of the Request for Arbitration, that the Court does not administer arbitrations under rules other than its own. If the claimant nonetheless chooses to proceed in the knowledge that the ICC Rules will be applied to the case, the Secretariat will accept the case and invite comments from the other party or parties. If a respondent does not agree or is not participating, the Court has usually found that the case cannot proceed under Article 6(4).
3-228 Split clauses. The Court sometimes will need to examine arbitration clauses that refer to ICC arbitration but also either mention a particular condition to be fulfilled before a party may resort to ICC arbitration (e.g. a minimum amount in dispute or a mandatory mediation prior to arbitration) or limit ICC arbitration to certain types of disputes. It has been the Court’s practice simply to allow such matters to proceed even where there may be a dispute as to whether the condition has been fulfilled. When applying the new Article 6(3), the Secretary General is unlikely to submit such cases to the Court for a decision under Article 6(4), as such matters are best left for an arbitral tribunal to decide.
3-229 Identifying the parties to an arbitration agreement. Leaving aside the wording of the arbitration agreement, a question frequently arises as to whether the parties named as such in the arbitration are in fact bound by the arbitration agreement. This question can arise regardless of the number of parties to the arbitration. However, it very frequently arises in arbitrations with more than two parties. In such cases, the Court must determine prima facie whether each of the parties named in the arbitration may be bound by the arbitration agreement. This enquiry does not change how the Court conducts its prima facie assessment. Rather, the Court will assess each party individually on a prima facie basis and, where there are more than two parties to the arbitration, the Court may narrow down the arbitration by allowing it to proceed only in respect of those parties that prima facie may be bound by the arbitration agreement. If no claimants or no respondents are so bound, then the arbitration will not proceed at all.
3-230 Signatories. Where the arbitration agreement is contained in a contract, an initial consideration is whether each party has signed that contract. Normally, the Court will allow an arbitration to proceed in respect of all parties that are named as parties to the contract and have also signed it. However, a party’s signature on a contract does not necessarily mean it is
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a party to that contract and bound by its arbitration clause. A party may have signed a contract simply to acknowledge its existence without assuming any obligations under the contract. Where it is clear that this was the reason for a party’s signature, the Court may require further evidence that this party became bound by the arbitration clause.
3-231 Furthermore, a party may have signed a contract on behalf of another party or as the agent for another party. For example, where the managing director of a company signs a contract on behalf of his or her company, he or she will ordinarily bind the company but not him or herself personally. In general, the Court has not allowed cases to proceed against a party that has signed a contract on behalf of another without further evidence that the signatory was personally bound by the arbitration clause.
3-232 In some cases parties have denied the authenticity of their signature on a contract or denied that the individual who signed was authorized to do so by his or her company or government. As the Court is not equipped to determine such allegations, they will generally be transmitted directly to the arbitral tribunal under Article 6(3).
3-233 Non-signatories. Where a party that has not signed the contract containing the arbitration agreement is named in an arbitration, the Court will exercise caution in determining on a case-by-case basis whether prima facie that party may nonetheless have become bound by the arbitration agreement. A range of legal constructs have been developed enabling non-signatories to be regarded as being bound by an arbitration agreement. The Court is in no position to assess on a case-by-case basis the legal acceptability of such constructs under the applicable law. However, it can assess whether there is prima facie evidence that might be sufficient to support its application. If there is, the case will usually proceed against the nonsignatory.
3-234 To make its assessment the Court will require some evidence; an unsupported allegation that a non-signatory is bound by an arbitration agreement will not suffice. When provided with such evidence, the Court has allowed cases to proceed in which the following allegations were made: (i) that the non-signatory has participated in the negotiation, performance and/or termination of the contract (e.g. in its capacity as a parent or other company related to the signatory); (ii) that the non-signatory is an assignee of the original signatory’s obligations under the contract; (iii) that the nonsignatory is the guarantor of a signatory (although some additional evidence of its acceptance of the arbitration agreement will usually be required). On the other hand, the Court has not been persuaded to allow a case to proceed where, for example, it was merely alleged that the non-
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signatory party was a shareholder in the signatory corporation. In such cases, the Court required further evidence of the shareholder’s direct participation in the negotiation, performance and/or termination of the contract.5
3-235 In the case of an arbitration brought pursuant to an investment law, treaty or trust instrument where there is an open offer to arbitrate with a specified class of persons, there will not be a signatory party as such. The agreement to arbitrate will be concluded through compliance with the acts specified by the relevant instrument. Generally, the Court will not concern itself with the question of whether or not such acts have been performed or whether the claimant is of the specified class. An arbitral tribunal will be better placed to make such an assessment.
Arbitrations with more than two parties (Article 6(4), subparagraph (i))
3-236 The fact that there are more than two parties to the arbitration does not change how the Court’s prima facie assessment is conducted. Therefore, any of the above considerations (see paragraphs 3-221–3-235) may still apply. A prima facie assessment will be made in relation to each party individually and the Court will look for evidence of an arbitration agreement binding them all. Where all claims are made under a single arbitration agreement, Article 6(4), subparagraph (i), can be applied fairly easily. However, a prima facie assessment is more delicate where claims are made under more than one arbitration agreement.
3-237 All claims made under a single arbitration agreement. Where all claims in the arbitration are made under one and the same arbitration agreement, it is sufficient to assess each of the parties individually on a prima facie basis. To the extent that the Court is prima facie satisfied that each of the parties is bound, it will also be prima facie satisfied that the arbitration agreement may bind them all.
3-238 Claims made under more than one arbitration agreement. Where claims are made under more than one arbitration agreement, the requirements set out in Article 6(4), subparagraph (ii), apply in addition to Article 6(4), subparagraph (i). However, subparagraph (i) will not be applied in the same way as when there is a single arbitration agreement, for it is not sufficient to make a prima facie assessment in relation to each of the parties individually. It might very well be that each of the parties is bound by one of the arbitration agreements, but that the parties are not bound to arbitrate with each other or together in a single arbitration (see paragraphs 3-248 and following).
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3-239 Possible decisions. Under Article 6(4), subparagraph (i), the Court may decide that the arbitration shall proceed in respect of all parties, that it shall not proceed in respect of any party, or that it shall proceed in respect of some but not all parties.
Claims under more than one arbitration agreement (Article 6(4), subparagraph (ii))
3-240 Article 9 permits parties to make claims arising out of or in connection with more than one contract and more than one arbitration agreement in a single arbitration (see paragraphs 3-340 and following). In some cases, all the contracts will contain distinct arbitration agreements, which is likely to be a source of complication. Article 6(4), subparagraph (ii), specifies how a prima facie assessment will be conducted where claims pursuant to Article 9 are made under more than one arbitration agreement. It does not apply to all claims made under Article 9 (i.e. claims made under more than one contract), but only to the subcategory of claims made under several contracts containing distinct arbitration agreements.
3-241 The existence of multiple arbitration agreements can raise difficult issues of consent (see paragraphs 3-243–3-249). While Article 9 operates as an umbrella clause, it is subject to Article 6(4). Article 6(4), subparagraph (ii), clarifies that the Court will allow a matter to proceed only if and to the extent it is prima facie satisfied that (a) the arbitration agreements under which the claims are made6may be compatible and (b) the parties may have agreed that the claims can be determined together in a single arbitration.
3-242 The purpose of Article 6(4), subparagraph (ii), is twofold. First, as a purely practical matter, where claims are to proceed on the basis of multiple arbitration agreements, any significant incompatibility between them that has not been rectified by a subsequent agreement of the parties will prevent the arbitration from moving forward. Second, since arbitration is an inherently consensual process, the Court must endeavour to evaluate whether there is prima facie consent for claims under the different arbitration agreements to proceed together in a single arbitration. It should be noted that these two considerations are not unrelated. Any similarities between the arbitration agreements may be a prima facie indication of consent. Where the same parties have signed two different contracts containing identical arbitration clauses, the identity of those clauses will be one factor leaning in favour of a determination that, prima facie, those parties may have intended any claims brought under either of the contracts to be heard together. Where the contracts contain incompatible arbitration agreements, leaving aside any administrative difficulties this may cause, the incompatibility can be an indication that the parties did not intend claims brought under different contracts to proceed in a single arbitration.
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3-243 Compatibility of the arbitration agreements. The Court must be prima facie satisfied that multiple arbitration agreements may be compatible with each other. It goes without saying that each arbitration agreement must be an agreement to arbitrate under the Rules. Beyond that, the compatibility requirement does not mean that the arbitration agreements must be identical; they must merely be substantively compatible. So, for example, if one arbitration agreement provides for Paris as the place of arbitration and another provides for New York, or one arbitration agreement provides for three arbitrators and another for a single arbitrator, the clauses are clearly incompatible (unless those differences are rectified by a subsequent agreement among the parties).
3-244 The question of compatibility can sometimes be difficult to determine. For example, where one arbitration agreement provides for Paris as the place of arbitration and another is silent as to the place of arbitration, or one provides for three arbitrators and the other is silent as to the number of arbitrators, there is not necessarily any incompatibility. In such cases, when fixing the place of arbitration under Article 18(1) or fixing the number of arbitrators under Article 12(1), the Court could rectify the potential incompatibility. However, the Court exercises caution and restraint when taking such action.
3-245 There may also be incompatibilities concerning procedural matters. Providing for different languages of arbitration in different arbitration agreements will normally be considered as an incompatibility that prevents the arbitration from proceeding. However, providing for different laws applicable to the merits in different contracts will not normally be considered as an incompatibility because the arbitral tribunal need not apply the same substantive law to all the claims made in an arbitration; it can apply one law to the claims brought under one arbitration agreement and a different law to those brought under another.
3-246 Other examples of procedural incompatibilities between arbitration agreements include time limits (e.g. for making submissions or rendering awards), provisions on the allocation of arbitration costs, and additional or special powers granted to arbitral tribunals. Depending on the circumstances, such incompatibilities may or may not prevent the Court from allowing the case to proceed.
3-247 Incompatibilities between arbitration agreements can always be rectified by subsequent agreements among the parties. The participation of all parties in the arbitration and their agreement as to how the arbitration should proceed will generally overcome incompatibilities of any kind between arbitration agreements.
3-248 Prima facie consent to claims arising from different arbitration agreements being heard together. Consent can be express or implied. Where two or more arbitration agreements expressly provide that disputes arising from each of them may be heard together, or alternatively that such disputes may not be heard together, the Court will obviously respect such agreements. However, it is unfortunately very rare for arbitration agreements to be so explicit. The Court must examine objective factors to determine prima facie whether the parties to the different arbitration agreements may have consented to the claims being heard in a single arbitration. The party seeking to establish that there is a prima facie consent should put forward all factors it considers to be relevant.
3-249 This prima facie assessment typically involves the consideration of all relevant circumstances. Without pretending to be exhaustive, the Court’s past practice7shows that the following factors may be relevant in assessing prima facie consent to determine claims arising from several arbitration agreements in a single arbitration. None of these factors alone is decisive. Rather, they might be considered together and along with any other relevant factors.
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3-250 Possible decisions. Under Article 6(4), subparagraph (ii), the Court may decide that the arbitration shall proceed in respect of all claims, that it shall not proceed in respect of any claims, or that it shall proceed in respect of some but not all claims.
3-251 Only in very exceptional circumstances can the Court be expected to decide that an arbitration can proceed in regard to certain claims only. First, it can do so only within the narrow category of cases to which Article 6(4), subparagraph (ii), applies. Under the 1998 Rules, the Court decided in this way on just three occasions. In all three cases, the claimant and the respondent introduced claims under different arbitration agreements, which were considered incompatible. In each case, the Court decided to allow the arbitration to proceed only in respect of the claimant’s claims.
3-252 Where one party makes claims under more than one arbitration agreement and the Court finds that the conditions of Article 6(4), subparagraph (ii), are not met, the Court is unlikely to decide that an arbitration cannot proceed in regard to certain claims only. Rather, it will usually decide that the arbitration shall not proceed at all (e.g. if it considers that the arbitration agreements are incompatible). It will then be for the claiming party to decide whether to commence separate arbitrations based on each arbitration agreement.
Arbitrations with more than two parties and claims under more than one arbitration agreement (simultaneous application of Article 6(4), subparagraphs (i) and (ii))
3-253 Where Article 6(4), subparagraph (ii), applies, it will often do so in conjunction with Article 6(4), subparagraph (i). In practice, where claims are made under more than one arbitration agreement in a case involving more than two parties, the Court is unlikely to allow the arbitration to proceed unless it is prima facie satisfied that at least one of the arbitration agreements may be binding upon all of the parties to the arbitration. All the requirements of Article 6(4), subparagraph (ii), must also be met.
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3-254 In practice, the Court is not expected to apply the requirements of Article 6(4), subparagraphs (i) and (ii), separately, but rather assess the circumstances of the case as a whole to make sure that its decision is consistent with both subparagraphs (i) and (ii). Indeed, there is some overlap between the two subparagraphs, which both deal with the question of party consent but from different angles. Whether there may be an arbitration agreement that binds all parties will also be relevant to the question of whether the parties may have agreed that their claims may be determined in a single arbitration.
Examples
3-255 The following examples illustrate how the Court may make its prima facie assessment in practice.
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3-256 The key question for the Court is whether prima facie the parties to the different arbitration agreements may have consented to the claims being dealt with in a single arbitration. If it considers this to be the case, it will also be satisfied that there may be an agreement to arbitrate binding all the parties as required by Article 6(4), subparagraph (i). In practice, this will usually be an implicit agreement separate from, or in addition to, the two or more written arbitration agreements.
ARTICLE 6(5): DECISIONS ON THE JURISDICTION OF THE ARBITRAL TRIBUNAL
In all matters decided by the Court under Article 6(4), any decision as to the jurisdiction of the arbitral tribunal, except as to parties or claims with respect to which the Court decides that the arbitration cannot proceed, shall then be taken by the arbitral tribunal itself.
3-257 Purpose. Article 6(5) provides that the arbitral tribunal may determine its own jurisdiction. This principle is also expressed in Article 6(3) for all cases that are submitted directly to the arbitral tribunal.
3-258 2012 modifications. Although the provision is new, Article 6(5) serves the same purpose as the second sentence of Article 6(2) of the 1998 Rules.
3-259 Application. The rule expressed in Article 6(5) derives from the well-known “competence-competence” principle, according to which an arbitral tribunal is empowered to rule on its own jurisdiction. Consequently, as part of its mission, the arbitral tribunal is required to determine any issues relating to its own jurisdiction that may arise in the course of the arbitration, regardless of whether such issues were considered by the Court under Article 6(4). This may include a decision as to whether claims brought pursuant to Article 9, to which Article 6(4), subparagraph (ii), may apply, can be heard in a single arbitration.
3-260 Article 6(5) does nothing more than confirm that it is for the arbitral tribunal, and not the Court, to determine its own jurisdiction. It applies only in respect of parties and claims for which the Court has decided, pursuant to Article 6(4), that the case can proceed. That will be a very small proportion of cases given the Secretary General’s new gate-keeping function under Article 6(3). The vast majority of cases where there are jurisdictional issues will be submitted directly to the arbitral tribunal under Article 6(3). In cases where the Court decides under Article 6(4) that the arbitration cannot proceed in respect of certain parties or certain claims, then Article 6(6) applies in respect of such parties and claims.
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3-261 The arbitral tribunal must consider jurisdiction—including whether the arbitration can proceed with respect to more than one contract—where there has been an Article 6(4) decision. Whenever there has been a decision by the Court under Article 6(4), the arbitral tribunal must consider the question of jurisdiction over the parties and/or the claims. While this requirement may seem odd to some arbitrators in certain circumstances, it is a well-established practice of the Court. Where the arbitral tribunal considers that a jurisdictional decision has become unnecessary (e.g. where a party has abandoned a jurisdictional objection it made previously, or where a party that had refused to participate begins participating without contesting jurisdiction), then the arbitral tribunal should state this clearly in its award and explain that, despite the Court’s decision under Article 6(4), jurisdiction is no longer a disputed issue.
3-262 Non-participating parties. For the avoidance of doubt, wherever there is a non-participating party in an arbitration, the arbitral tribunal must rule on its own jurisdiction with respect to that party, even though there may not be any specific objection to jurisdiction and even if the Secretary General did not refer the matter to the Court pursuant to Article 6(3).
3-263 Effect of a positive decision by the Court under Article 6(4). When the Court decides to allow a case to proceed under Article 6(4), this is a purely administrative decision and does not in any way prejudge or influence the arbitral tribunal’s decision on jurisdiction. Moreover, the conditions of Article 6(4), subparagraph (ii), are not binding on the arbitral tribunal, although they may assist the tribunal to frame the issues.
3-264 Timing of jurisdictional decisions. Article 6(5) does not specify when, during the arbitration, the arbitral tribunal should decide on its jurisdiction. This is a question of procedure that the arbitral tribunal may determine pursuant to Article 19, and with due consideration to its obligations under Article 22. Jurisdictional objections can and often are decided in a discrete, preliminary phase of the arbitration. An early decision on jurisdiction can have the advantage of saving time and unnecessary expense where the arbitral tribunal finds that it has no jurisdiction. However, this option is not always appropriate. Jurisdictional issues can sometimes be closely linked to issues of law or fact relating to the merits and may be best dealt with at the same time as the merits. Furthermore, jurisdictional objections can sometimes be raised by a respondent as a dilatory tactic. Splitting jurisdiction from the merits will almost invariably lead to additional delays and costs if the arbitral tribunal rules that it does have jurisdiction. Therefore, an arbitral tribunal should carefully consider in each case whether jurisdiction should be decided separately as a preliminary matter or determined together with the substantive issues in dispute. Appendix IV to the Rules mentions separating decisions as one of the techniques the arbitral tribunal and the parties might wish to consider at the first case management conference (see paragraphs 3-912 and following).
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3-265 Form of jurisdictional decisions. It is a long-standing practice of the Court to prefer decisions on jurisdiction to take the form of awards rather than procedural orders. A decision that the arbitral tribunal possesses no jurisdiction at all should be in the form of a final award, as its effect will be to end the arbitration. A decision partly declining jurisdiction or upholding jurisdiction should be in the form of a partial award if jurisdiction has been dealt with separately from the merits, or otherwise possibly in a final award (see paragraph 3-1191).
3-266 The Court is conscious that certain domestic laws do not recognize jurisdictional decisions as awards while others do. Nonetheless, describing such decisions as awards for ICC purposes ensures that they will be scrutinized by the Court under Article 33. Furthermore, where a decision on jurisdiction contains subsidiary orders that may need to be enforced (e.g. a decision on costs), it is generally better for it to be in the form of an award so as to facilitate enforcement.
3-267 Nature of the arbitral tribunal’s decision on jurisdiction. Under virtually all arbitration laws, an arbitral tribunal’s decision on jurisdiction is not a final decision, insofar as it can be reviewed by a court at the place of the arbitration. Jurisdictional decisions can also be reviewed in the context of proceedings to enforce the arbitral tribunal’s award.
ARTICLE 6(6): DECISIONS BY STATE COURTS ON THE EXISTENCE OF AN ARBITRATION AGREEMENT FOLLOWING A NEGATIVE ARTICLE 6(4) DECISION
Where the parties are notified of the Court’s decision pursuant to Article 6(4) that the arbitration cannot proceed in respect of some or all of them, any party retains the right to ask any court having jurisdiction whether or not, and in respect of which of them, there is a binding arbitration agreement.
3-268 Purpose. Article 6(6) reasserts the administrative nature of the Court’s decisions under Article 6(4). It clarifies that a negative Article 6(4) decision in respect of some or all parties does not remove a party’s right to seek a decision from a state court.
3-269 2012 modifications. Although the provision is new, the content of Article 6(6) derives from Article 6(2) of the 1998 Rules. It refines two principles expressed in the first and last sentences of the former Article 6(2). The principles remain substantively the same, although Article 6(6) now includes the words “and in respect of which”, mirroring a similar change in Article 6(4) (formerly Article 6(2) of the 1998 Rules).
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3-270 Notification. Contrary to Article 6(2) of the 1998 Rules, Article 6(6) does not refer expressly to the Court’s duty to notify the parties of its decisions under Article 6(4). However, it is a well-established practice of the Secretariat to notify Article 6(4) decisions as soon as they are made.
3-271 Negative decision in respect of parties. Where the Court decides that the arbitration cannot proceed in respect of some or all of the parties, any party may ask a competent state court to determine whether there is an arbitration agreement and which parties are bound by it. Determining the competent court in this respect is a matter for the parties, but it will usually be a court at what would be the place of the arbitration. Parties remaining in the arbitration cannot subsequently request the arbitral tribunal, once constituted, to reconsider a partly negative decision made by the Court pursuant to Article 6(4).
3-272 Article 6(6) explicitly allows any party to request such a decision, including the parties excluded by the negative decision. In practice, the party requesting such a remedy is likely to be the party that wanted the arbitration to proceed.
3-273 Only in very rare cases have state courts found that there was a binding arbitration agreement after the Court decided pursuant to Article 6(4) or its predecessor that there was no prima facie arbitration agreement. In one such case in 2008, the claimant brought claims against three shareholders pursuant to a share purchase agreement. It also brought claims against a fourth individual that it alleged was an undisclosed shareholder. As none of the respondents were participating in the proceedings and the fourth party was not named as a party to the share purchase agreement, the Court made a partial negative decision under the former Article 6(2), removing the fourth respondent from the proceedings. The claimant thereafter sought an order from a US federal trial court in New York to have the fourth respondent brought back into the arbitration. To do so, it brought an action against the ICC itself. The trial court found that the former Article 6(2) was not intended to enable parties to seek a judicial review of the Court’s decisions. Accordingly, it upheld the ICC’s interpretation of Article 6(2). Any order relating to the arbitrability of a dispute would instead presuppose a court action by the parties pursuing arbitration against those resisting it, as they are the interested parties.9In light of this decision, the claimant modified its strategy and brought an action in the same trial court against the fourth individual. That individual failed to appear and a default judgment was handed down ordering it to be a respondent party in the ICC arbitration proceedings. In light of this development, the Court decided to reconsider its decision in relation to the fourth individual and allowed the case to proceed against it. The issue of jurisdiction over the fourth respondent then became an issue for the arbitral tribunal to decide.
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ARTICLE 6(7): REINTRODUCTION OF CLAIMS IN OTHER PROCEEDINGS
Where the Court has decided pursuant to Article 6(4) that the arbitration cannot proceed in respect of any of the claims, such decision shall not prevent a party from reintroducing the same claim at a later date in other proceedings.
3-274 2012 modifications. New provision.
3-275 Article 6(7) addresses the rare situations in which the Court has decided under Article 6(4) that the arbitration can proceed in respect of some but not all claims. Article 6(7) clarifies that a negative decision in respect of a claim does not necessarily imply that such claims cannot be submitted to ICC arbitration, but simply that they cannot be heard together with the other claims in that arbitration (e.g. because the relevant ICC arbitration agreements are incompatible).
3-276 More generally, where the Court decides that the arbitration cannot proceed in respect of a claim, that claim may nonetheless be raised in other proceedings. Depending on the circumstances, the “other proceedings” can be another ICC arbitration—for instance, where two sets of claims are brought under incompatible ICC arbitration agreements—or arbitral or court proceedings outside the ICC. This will of course be a matter for the interested parties to consider.
ARTICLE 6(8): FAILURE OF A PARTY TO PARTICIPATE IN AN ARBITRATION
If any of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration shall proceed notwithstanding such refusal or failure.
3-277 2012 modifications. None.
3-278 Article 6(8) confirms that a party’s refusal to take part in arbitral proceedings does not prevent the arbitration from proceeding. The Rules provide other specific powers that enable the arbitration to continue where a party fails to participate, such as the Court’s power to appoint a coarbitrator on behalf of a defaulting party (Articles 12(2) and 12(4)), its power to approve the Terms of Reference in the absence of a party’s signature (Article 23(3)), and the arbitral tribunal’s authority to proceed with a hearing if a duly summoned party fails to appear without a valid excuse (Article 26(2)).
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3-279 Article 6(8) applies equally to non-participation by either respondents or claimants. However, it is rare for a claimant to abandon the proceedings. Where this does occur, the respondent side will usually be content to have the case withdrawn without a decision on the merits, unless it has counterclaims or claims for costs that it is determined to see through. In such circumstances, if the claimant did not pay the advance on costs before ceasing to participate, the respondent may need to pay the full balance itself if it wants the case to continue (see paragraphs 3-1407– 3‑1411). As arbitrations become increasingly complex, with larger numbers of parties and more tangled webs of claims, counterclaims, cross-claims and claims against additional parties, there is a greater likelihood that they will be continued despite being abandoned by the claimant.
3-280 Importantly, and unlike the procedure in many state courts, a party’s failure to participate in arbitral proceedings does not empower the arbitral tribunal to make a default ruling in the remaining party’s favour. On the contrary, in these circumstances an arbitral tribunal must still satisfy itself that the claims or defences of the remaining party have been established and proved. Accordingly, the arbitral tribunal should continue to require the remaining party to make submissions, file evidence and, where a hearing is to be held, attend that hearing and present its case.
ARTICLE 6(9): SEPARABILITY OF THE ARBITRATION AGREEMENT
Unless otherwise agreed, the arbitral tribunal shall not cease to have jurisdiction by reason of any allegation that the contract is non-existent or null and void, provided that the arbitral tribunal upholds the validity of the arbitration agreement. The arbitral tribunal shall continue to have jurisdiction to determine the parties’ respective rights and to decide their claims and pleas even though the contract itself may be nonexistent or null and void.
3-281 Purpose. Article 6(9) expresses a basic tenet of international arbitration in recognizing that the arbitration agreement is independent of the contract in which it may be contained. The principle that the arbitration agreement has an autonomous existence is commonly referred to as the “separability”
or “autonomy” of the arbitration agreement and has its importance where a party alleges that the contract containing an arbitration agreement is void. It ensures that the arbitral tribunal’s jurisdiction over such allegations is maintained.
3-282 2012 modifications. For the sake of clarity, the term “claim” has been replaced with “allegation” when referring to contentions that a contract is non-existent or null and void. In addition, the term “adjudicate” has been replaced with “decide”.
3-283 Consequences of separability. The concept of separability is usually said to have two main consequences. First, the validity of an arbitration clause contained in a contract is not necessarily affected by that of the contract in which it is contained. Accordingly, the arbitration clause could still be valid even if the contract itself is void. An arbitral tribunal must treat the arbitration agreement and the main contract separately when ruling on their validity. For example, if the owner in a construction project discovers that the construction company with which it has contracted does not hold a construction permit, the contract may well be null and void under the law applicable to it. As a separate agreement, an arbitration clause contained in the construction contract should not be voided by the absence of the construction permit.
3-284 Second, an arbitration agreement is not necessarily governed by the same law as the law that governs the contract containing it. Indeed, determining the law that governs an arbitration agreement should be a separate exercise from determining the law that governs the merits of a dispute.
3-285 Article 6(9) expresses the principle in very broad terms. The first sentence indicates that the arbitral tribunal does not cease to have jurisdiction where a party alleges that the contract is non-existent or null and void. The second sentence confirms that the arbitral tribunal shall continue to have jurisdiction even where the contract is in fact non-existent or null and void. That said, the arbitral tribunal would obviously cease to have jurisdiction if it finds the arbitration agreement itself to be non-existent or void.
3-286 The scope of the doctrine of separability can vary considerably under different national laws, which may lead to differences of interpretation when state courts are requested to rule on issues of arbitral jurisdiction before an arbitral tribunal has done so. Parties are therefore advised to ascertain the position under relevant law.
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ARTICLES 7–10: MULTIPLE PARTIES, MULTIPLE CONTRACTS AND CONSOLIDATION
3-287 The 2012 Rules contain an entirely new section to address issues surrounding disputes involving multiple parties and multiple contracts. To a large extent, the Rules reflect practices developed by the Court and the Secretariat when applying the 1998 Rules. Those Rules were silent on most multiparty and multicontract issues, but were nonetheless sufficiently flexible to allow the Court to administer increasingly complex cases. When the 1998 Rules were drafted, multiparty and multicontract arbitrations were still relatively rare. At the time, the drafters felt there was no particular need to incorporate provisions expressly addressing such cases (apart from the former Article 10, which related to the appointment of threemember arbitral tribunals in multiparty cases, and the former Article 4(6) concerning consolidation). In recent years, cases extending beyond the classic bipolar model of arbitration have been on the rise and represent an increasingly large part of the Court’s caseload.
3-288 Articles 7–10 formalize a number of already existing Court practices while also expanding on or providing greater flexibility to others. The Rules now provide a procedural framework that openly addresses a more diverse range of needs. The new sections are organized as follows:
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ARTICLE 7: JOINDER OF ADDITIONAL PARTIES
Article 7(1)
A party wishing to join an additional party to the arbitration shall submit its request for arbitration against the additional party (the “Request for Joinder”) to the Secretariat. The date on which the Request for Joinder is received by the Secretariat shall, for all purposes, be deemed to be the date of the commencement of arbitration against the additional party. Any such joinder shall be subject to the provisions of Articles 6(3)– 6(7) and 9. No additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party, otherwise agree. The Secretariat may fix a time limit for the submission of a Request for Joinder.
Article 7(2)
The Request for Joinder shall contain the following information:
The party filing the Request for Joinder may submit therewith such other documents or information as it considers appropriate or as may contribute to the efficient resolution of the dispute.
Article 7(3)
The provisions of Articles 4(4) and 4(5) shall apply, mutatis mutandis, to the Request for Joinder.
Article 7(4)
The additional party shall submit an Answer in accordance, mutatis mutandis, with the provisions of Articles 5(1)–5(4). The additional party may make claims against any other party in accordance with the provisions of Article 8.
3-289 Purpose. The expression “to join an additional party” in Article 7 refers to a situation where there is already an arbitration pending under the Rules and one of the parties to that arbitration seeks to add a new party to the arbitration. Article 7 grants all parties the right to name additional parties.
3-290 Article 7 addresses a number of procedural issues that arise in relation to joinder, such as (i) requirements for submitting a Request for Joinder (Articles 7(1)–7(3)), (ii) notification of a Request for Joinder to the additional party (Article 7(3)) and (iii) the additional party’s Answer to the Request for Joinder (Article 7(4)). By referring to Articles 6(3)–6(7) and 9 and repeating the language of Article 4(2), the joinder provision makes it clear that the Request for Joinder has effects that are equivalent to those of a Request for Arbitration. This means that any party against which a Request for Joinder is made automatically becomes a party to the arbitration upon the submission of that Request, subject of course to Articles 6(3) and 6(4) and to the arbitral tribunal’s affirming jurisdiction over that party. This means that a joined party can be removed by the Court if it makes a negative decision under Article 6(4) or later by the arbitral tribunal if it lacks jurisdiction over that party.
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3-291 2012 modifications. As mentioned above, Article 7 is entirely new and does not have an equivalent in the 1998 Rules. Nonetheless, the Court and its Secretariat developed a number of practices under the 1998 Rules allowing additional parties to be joined to an arbitration in a limited number of circumstances. The practice of allowing a respondent party to request the joinder of an additional party began in the early years of the 1998 Rules10and has since evolved. An analysis of Court decisions under the 1998 Rules shows that the Court adopted a more flexible case-by-case approach to joinder in recent years, while always proceeding with caution.11
3-292 Although the 2012 Rules broaden certain procedural aspects of joinder, Article 7 nonetheless preserves the core features of the Court’s joinder practice under the 1998 Rules. The following description of significant issues relating to joinder in ICC arbitration provides an overview of the changes made as well as the features that remain:
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assessments.12 This difference has now been removed. Under the 2012 Rules, the Court makes the same prima facie assessment set out in Articles 6(3) and 6(4) regardless of whether the party in question was initially brought into the arbitration by a claimant, a respondent or an additional party.
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Who may submit a Request for Joinder
3-293 Any party to the arbitration, whether a respondent, claimant or additional party, may request the joinder of an additional party pursuant to Article 7(1). Several parties can jointly request the joinder of an additional party.
3-294 Intervention of a third party or an amicus curiae. Article 7(1) only allows existing parties to an arbitration to join additional parties. The Rules do not provide for rare situations in which a person not a party to the arbitration learns of its existence and seeks to be joined to it (known in some jurisdictions as third-party intervention). When contacted by a person requesting to be joined to an existing arbitration, the Secretariat has usually pointed out that, due to the ICC’s obligation of confidentiality, the Secretariat is not even in a position to acknowledge the existence of the arbitration, much less entertain a request for intervention.
3-295 A different but related question is whether or not the intervention of an amicus curiae is permissible.13An amicus curiae is a person external to the proceedings who volunteers information to assist a court or arbitral tribunal in deciding a matter before it. The information provided may be a legal submission, factual evidence or testimony, or a learned treatise on a relevant matter. Amicus curiae parties are recognized and permitted in a number of jurisdictions belonging to various legal traditions. They are also commonplace in public international law and are occasionally seen also in investment treaty arbitration. The Rules do not say whether an amicus curiae may intervene in an ICC arbitration, nor do they exclude this possibility. On the very rare occasions when the Secretariat has received an amicus curiae request, it contacted the arbitral tribunal to discuss how it would like to proceed, but without revealing to the arbitral tribunal the information contained in the amicus curiae submission.
3-296 Parties are of course at liberty to agree before or during an arbitration that the intervention of a third party or an amicus curiae shall be permitted.
How to submit a Request for Joinder
3-297 Submission. A Request for Joinder should be sent to the Secretariat team in charge of the case file and not directly to the additional party. The Secretariat will notify the Request for Joinder to all other parties, including the additional party, pursuant to Article 7(3).
3-298 Filing fee. Pursuant to Article 7(3), the requirements of Article 4(4) apply mutatis mutandis to Requests for Joinder. Accordingly, the requesting party must pay an initial, non-refundable advance of US$ 3,000. That amount is required for every submission of a Request for Joinder, although
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a single submission can cover the joinder of more than one party. The fee is due regardless of whether the Request for Joinder is submitted as a stand-alone document or included within another document, such as an Answer to the Request for Arbitration (see paragraph 3-151).
3-299 Additional requirement of hard copies. Pursuant to Articles 7(3), 4(4) and 3(2), and no matter what means of communication has been used initially to submit the Request for Joinder (e.g. fax or email), the party requesting joinder must supply one hard copy for each other party (i.e. the party or parties to be joined and all existing parties other than the party or parties submitting the Request for Joinder) and for each arbitrator, as well as one for the Secretariat’s records. However, the parties can waive this hard copy requirement if they so agree in writing in the relevant contract or elsewhere.
3-300 Form of the Request for Joinder. The Rules do not lay down any requirements with respect to the form of Requests for Joinder. Accordingly, they may take any form, provided they contain the information mentioned in Article 7(2) (see paragraph immediately below). There are no guidelines on how this information should be presented: the requesting party may determine the best presentation for a clear and well-organized Request for Joinder. When a Request for Joinder is submitted simultaneously with an Answer to a Request for Arbitration (or an Answer to a Request for Joinder), the parties are free to file either separate or combined documents. Where a party chooses the latter option, it is encouraged to give the submission a title clearly indicating that it serves as both its Answer and a Request for Joinder.
Content of the Request for Joinder
3-301 Article 7(2) specifies that the Request for Joinder must provide:
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3-302 Claim(s) against the additional party. As is made clear by the use in Article 7(1) of the words “request for arbitration against the additional party” and the cross-reference to Article 4(3), subparagraph (d), the Request for Joinder must contain actual claims against the additional party. Merely reserving the right to make a claim at a later date or making a conditional claim is generally insufficient. In a case administered under the 1998 Rules the Court decided not to join an additional party because the respondent requesting joinder sought merely to reserve its right to make future claims against the additional party in the event that the arbitral tribunal decided against the respondent.
3-303 Additional documents or information. As with the Request for Arbitration and the Answer, the party seeking joinder may submit such other documents or information as it considers appropriate or as may contribute to the efficient resolution of the dispute. Other relevant information may include any proposals relating to case management or the arbitration procedure.
Time limit for submitting a Request for Joinder
3-304 Cut-off. Article 7(1) provides that a Request for Joinder must be made before the confirmation or appointment of any arbitrator by the Court or (in relation to confirmations only) the Secretary General, unless all parties agree otherwise. In practice, the Secretariat decides when to invite the Secretary General or the Court to confirm or appoint arbitrators pursuant to Article 13 and will not usually proceed with the confirmation or appointment of an arbitrator without having warned the parties of its imminence and put them on notice of its effect on the possibility of submitting a Request for Joinder.
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3-305 Secretariat’s power to set a time limit. The last sentence of Article 7(1) empowers the Secretariat to fix a time limit for the submission of a Request for Joinder. This enables the Secretariat to avoid undue delay in the constitution of the arbitral tribunal, which may be caused by the tardy submission of a Request for Joinder.
3-306 The Secretariat may exercise its power to fix time limits vis-à-vis any party, including the parties that initiated the arbitration, and at any time before the confirmation or appointment of any arbitrator. The Secretariat typically requires that any Request for Joinder be made at the latest in the respondent’s (or additional party’s) Answer to the Request for Arbitration (or Answer to the Request for Joinder). It does not generally fix a time limit for the claimant to join additional parties unless the claimant intimates that it intends to make a Request for Joinder. Furthermore, as stated above, the Secretariat will usually warn all parties just prior to confirming or appointing any arbitrator that joinder will not be possible after that confirmation or appointment.
3-307 A party may make a reasoned request for an extension of the Secretariat’s time limit, specifying the date by which it intends to submit the Request for Joinder.
Notification of the Request for Joinder (Article 7(3))
3-308 Notifying the additional party. Article 7(3) contains a cross-reference to Article 4(5). Accordingly, the Secretariat will notify the Request for Joinder and will follow the notification process set out in Article 4(5). It may consequently withhold notification if the requesting party fails to meet its obligations under Article 7(3).
3-309 Notifying other parties to the arbitration. Although not expressly provided for in the Rules, the Secretariat will also send the Request for Joinder to all existing parties to the arbitration (other than the party or parties that submitted the Request for Joinder) and invite their comments.
Date of commencement of the arbitration against the additional party
3-310 As expressly stated in Article 7(1), arbitration against the additional party commences on the date the Request for Joinder is received by the Secretariat (see the discussion of Article 4(2) in paragraphs 3-123 and 3-124).
Answer to the Request for Joinder (Article 7(4))
3-311 Submission. Article 7(4) requires additional parties to submit an Answer to the Request for Joinder, in accordance with Articles 5(1)–5(4). If the additional party also wishes to make claims against the requesting party or any other existing party to the arbitration, Article 7(4) clarifies that such claims are to be made under Article 8(1). Pursuant to Article 5(1), all Answers are to be submitted to the Secretariat. They should be sent to the team in charge of the arbitration.
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3-312 Additional requirement of hard copies. Pursuant to Articles 7(4), 5(3) and 3(2), and no matter what means of communication has been used initially to submit the Answer to the Request for Joinder (e.g. fax or email), the additional party must supply one hard copy of the Answer to the Request for Joinder for each other party (i.e. all parties other than the party or parties submitting the Answer to the Request for Joinder) and for each arbitrator, as well as one for the Secretariat’s records. However, the parties can waive this hard copy requirement if they so agree in writing in the relevant contract or elsewhere.
3-313 Time limit and extension. Under Articles 7(4) and 5(1), the additional party has thirty days to submit its Answer. The time limit begins when the additional party is notified of the Request for Joinder by the Secretariat pursuant to Article 7(3), and the fact that the Request for Joinder may have been received at an earlier date directly from the requesting party is irrelevant. The Secretariat may extend the thirty-day time limit, if need be.
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3-314 Form. The Rules do not lay down any requirements with respect to the form of the Answer to the Request for Joinder. An Answer may take any form, provided it contains the information required by Articles 7(4) and 5(1) (see paragraph immediately below). There are no restrictions on how this information is to be presented. It is left to the parties to determine the best way of presenting a clear and well-organized Answer. When claims pursuant to Article 8(1) or a Request for Joinder pursuant to Article 7(1) are submitted simultaneously with an Answer to the Request for Arbitration, parties are free to make these submissions separately or together in a single document.
3-315 Content. Pursuant to Articles 7(4) and 5(1), the additional party must provide the following information in its Answer to the Request for Joinder:
Claims by the additional party
3-316 Articles 5(5) and 5(6), which allow respondents to make counterclaims in their Answers and claimants to submit a reply to those counterclaims, do not apply to additional parties joined under Article 7. Additional parties may nonetheless make claims pursuant to Article 8 against any existing parties. Article 8 empowers parties to make claims against any other party prior to the completion of the Terms of Reference.
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3-317 As specified in Article 8(2), the additional party must provide the following information on any claims made in its Answer to the Request for Joinder or in a separate document:
3-318 Request for Joinder by the additional party. Since the additional party becomes a party to the arbitration as soon as the Request for Joinder has been submitted, it may request the joinder of another additional party pursuant to Article 7(1). The Secretariat will usually fix a time limit pursuant to Article 7(1) for the additional party to do so, as it does for the original parties (see paragraphs 3-305–3-306).
Status of the additional party
3-319 Procedural role. Any entity may be named as an additional party pursuant to Article 7, just as any entity may be named as a respondent in the Request for Arbitration. However, the fact that an entity is named as a party to the arbitration does not ensure its continuing involvement in the proceedings. As with any party named as such in a Request for Arbitration, the additional party will be removed if (i) the Court determines pursuant to Article 6(4) that the arbitration shall not proceed with respect to that party, or (ii) the arbitral tribunal determines that it has no jurisdiction over that party (see paragraphs 3-257 and following). Accordingly, a party wishing to join an additional party should consider carefully whether the arbitral tribunal has jurisdiction over that party. It should also bear in mind that it might be held liable for costs if it joins an additional party that is subsequently rejected.
3-320 Interplay with Articles 6(3) and 6(4). Pursuant to Article 7(1), the Court may carry out a prima facie assessment of jurisdiction pursuant to Articles 6(3) and 6(4) where the additional party does not submit an Answer in accordance with Article 7(4), or if any party raises one or more pleas concerning the existence, validity or scope of an arbitration agreement between the parties. Thus, where a matter is referred to it pursuant to
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Article 6(3), the Court will allow the matter to proceed against the additional party only where it is prima facie satisfied that the additional party may be bound by the relevant arbitration agreement (see paragraph 3-229).
3-321 Interplay with Article 9. Pursuant to Article 9, claims against the additional party can be made under a different arbitration agreement from the arbitration agreement(s) upon which the existing claims are based. However, Article 6(4), subparagraph (ii), lays down specific requirements for disputes involving multiple contracts. In such cases, the Court will allow a matter to proceed only when it is prima facie satisfied (a) that the arbitration agreements may be compatible and (b) that the parties may have agreed to have such claims heard together in a single arbitration. If the Court is not so satisfied in the context of a Request for Joinder, it will not allow the matter to proceed against the additional party.
ARTICLE 8: CLAIMS BETWEEN MULTIPLE PARTIES
Article 8(1)
In an arbitration with multiple parties, claims may be made by any party against any other party, subject to the provisions of Articles 6(3)–6(7) and 9 and provided that no new claims may be made after the Terms of Reference are signed or approved by the Court without the authorization of the arbitral tribunal pursuant to Article 23(4).
Article 8(2)
Any party making a claim pursuant to Article 8(1) shall provide the information specified in Article 4(3) subparagraphs c), d), e) and f).
Article 8(3)
Before the Secretariat transmits the file to the arbitral tribunal in accordance with Article 16, the following provisions shall apply, mutatis mutandis, to any claim made: Article 4(4) subparagraph a); Article 4(5); Article 5(1) except for subparagraphs a), b), e) and f); Article 5(2); Article 5(3) and Article 5(4). Thereafter, the arbitral tribunal shall determine the procedure for making a claim.
3-322 Purpose. In an arbitration with more than two parties, Article 8(1) explicitly allows any party to the arbitration, whether a claimant, respondent or additional party, to make a claim against any other existing party. The provision also sets a time restriction on the making of new claims: they need to be made before the Terms of Reference are established. If made thereafter, they will require the arbitral tribunal’s authorization pursuant to Article 23(4). The other provisions of Article 8 define the procedure for making claims. Article 8(2) explains what to include in the document containing the claim, while Article 8(3) sets out the steps for submitting and responding to claims.
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3-323 2012 modifications. Article 8 is entirely new, having no equivalent in the 1998 Rules, although it was already the practice of the Court to allow parties to make claims against any other party.
Scope of Article 8(1)
3-324 Application to all types of claims. Article 8(1) applies in a multiparty arbitration. In particular, it provides a means of making claims outside the framework of the Request for Arbitration, the Answer to the Request, and the Request for Joinder, although it also applies to claims made in any of those three documents in a multiparty arbitration.
3-325 Article 8(1) is of practical importance insofar as it clarifies that, in an arbitration with more than two parties, any party can make a claim against any other party. Although this possibility was not prohibited under the 1998 Rules, their silence was sometimes misinterpreted as restricting claims to those between opposing sides in the dispute, thereby excluding claims between parties on the same side. More generally, any party may make claims against any other party irrespective of whether that party has made a claim against the former.
3-326 The term “claim” in Article 8(1) is used without reference to specific types of claims. However, the new Article 2, subparagraph (iv), clarifies that “claims” include any type of claim, whether between claimants, respondents or additional parties. Accordingly, claims made under Article 8(1) may include:
3-327 Parties against which claims are made. Article 8 covers only claims brought against an existing party to the arbitration. Any claim against a person or entity not a party to the arbitration must be made pursuant to Article 7 and in accordance with the procedure set forth in Articles 7(2) and 7(3).
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3-328 Applicability of Articles 6(3)–6(7) and 9. Like claims made under Articles 4, 5 or 7, those made under Article 8(1) are immediately integrated into the proceedings as soon as they are made. The cross-reference to Articles 6 and 9 clarifies that those general provisions and the restrictions contained therein also apply to claims made under Article 8. As expressly noted in Article 8(1), any claim may be subject to the Court’s prima facie assessment of jurisdiction under Articles 6(3)–6(7). In addition, where a claim is based on an arbitration agreement other than that upon which existing claims have been brought, Article 8(1), in referring to Article 9, makes it clear that the provisions relating to situations involving multiple arbitration agreements contained in Articles 9 and 6(4), subparagraph (ii), apply.
Procedure for making claims pursuant to Article 8
Who may submit claims
3-329 Article 8(1) makes it clear that any existing party may submit claims against any other.
How to submit a claim
3-330 Submission. Articles 8(2) and 8(3) describe the requirements for making a claim under Article 8(1). Article 8(3) draws an important distinction in relation to the time at which such claims are made. Pursuant to the crossreferences in Article 8(3), parties should send the document containing the claims to the Secretariat team in charge of the case, with a copy to all parties to the arbitration. If the Secretariat has transmitted the case file to the arbitral tribunal, the procedure described in the first sentence of Article 8(3) does not apply. Instead, the arbitral tribunal will determine the procedure for making claims. If an arbitral tribunal has not given directions on this point, a party will need to request such directions from it before filing the claim.
3-331 No payment required. Article 8(3) does not refer to Article 4(4), subparagraph (b). This is because parties are not required to pay an additional registration fee when making claims against existing parties to the arbitration.
3-332 Additional requirement of hard copies. Pursuant to Articles 8(3), 4(4), subparagraph (a), and 3(2), the claiming party should technically supply one hard copy of the document containing its claim(s) for each other party and one for each arbitrator, as well as one for the Secretariat’s records. However, in practice many of the claims are made in ordinary correspondence copied to all parties. In such cases the Secretariat is unlikely to require hard copies.
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3-333 Form of the document containing the claim(s). No formal requirements are laid down in Article 8(1). A claim may therefore take any form, provided it contains the information required by Article 8(2) (see paragraph immediately below). Depending on the circumstances, Article 8 claims may be contained in an ordinary letter, in briefs, or in the Answer to the Request for Arbitration or the Request for Joinder.
When to submit a claim
3-334 Article 8(1) explicitly provides that after the Terms of Reference have been signed or approved by the Court a party may not make additional claims without the authorization of the arbitral tribunal. It thereby repeats the rule expressed in Article 23(4). Subject to any contrary order of the arbitral tribunal, any party may make additional claims at any time prior to the establishment of the Terms of Reference.
Content of the document containing the claim(s)
3-335 According to Article 8(2), a party making a claim under Article 8(1) must provide the information required of Requests for Arbitration in Article 4(3), subparagraphs (c) to (f); namely:
Notification of claims
3-336 The Secretariat will notify any claims made under Article 8(1) to the party against which such claims are made and ask it to respond within thirty days in accordance with Articles 8(3) and 5(1). Although not expressly provided in the Rules, the Secretariat will also send a copy of the document containing the claims to all other parties to the arbitration. Where the claims are made in ordinary correspondence, the Secretariat may not formally notify the document containing the claims, but rather note that it was copied to all parties. If already constituted when the claims are made, the arbitral tribunal rather than the Secretariat will determine the procedure for such claims.
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Responding to claims made under Article 8(1)
3-337 Time limit and extension. Pursuant to Articles 8(3) and 5(1), the Secretariat will grant the party against which claims are made a thirty-day time limit for submitting a response. The time limit begins as soon as this party has been notified of the claims by the Secretariat pursuant to Articles 8(3) and 4(5). Receipt of the document directly from the party making the claim(s) is irrelevant. The Secretariat may extend the thirty-day time limit.
3-338 Content and form of response. A party submitting a response to claims made under Article 8(1) shall provide the following information:
3-339 While referring to Article 5(1) for purposes of the content of a response, Article 8(3) omits several of the other requirements listed in Article 5(1). A significant portion of the information requested in Article 5(1) will already have been provided in an earlier submission (pursuant to Article 4(3), Article 5(1), Article 7(2) or Article 7(4), depending on the circumstances), as claims made under Article 8(1) may only be made against existing parties to the arbitration.
ARTICLE 9: MULTIPLE CONTRACTS
Subject to the provisions of Articles 6(3)–6(7) and 23(4), claims arising out of or in connection with more than one contract may be made in a single arbitration, irrespective of whether such claims are made under one or more than one arbitration agreement under the Rules.
3-340 Purpose. Article 9 confirms that claims may be brought under different contracts and different arbitration agreements in one and the same arbitration. The following are examples of situations to which Article 9 applies. A claimant commences arbitration by raising claims under two different contracts each of which includes an arbitration agreement. Provided that the conditions of Articles 6(3)–6(7) and 23(4) are met, those claims can be heard in that arbitration, saving the claimant from having to commence two separate arbitrations. In another case, where a claimant commences arbitration and makes claims under one arbitration agreement, the respondent can make a counterclaim under a different arbitration agreement, always subject to Articles 6(3)–6(7) and 23(4).
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3-341 2012 modifications. This is an entirely new provision. However, it reflects the practice adopted by the Court under the 1998 Rules, which acknowledged the possibility of multicontract arbitral proceedings, subject to certain limitations.14
3-342 Scope. Article 9 broadly applies to all claims, irrespective of the number of parties to the arbitration and of whether the claims under the different contracts and/or arbitration agreements are made by the same or different parties. It therefore applies to claims made in a Request for Arbitration (Article 4), an Answer to the Request for Arbitration (Article 5), a Request for Joinder or an Answer to the Request for Joinder (Article 7), and claims between multiple parties (Article 8). In order for the Court to establish under which arbitration agreement each claim is made, Articles 4(3), subparagraph (f), 5(5), subparagraph (d), and 7(2), subparagraph (c), require any party making a claim under more than one arbitration agreement to specify which claim is made under which arbitration agreement.
3-343 Limitations. Article 9’s cross-reference to Articles 6(3)–6(4) is essential to its operation. It ensures that Article 9 is not used as a jurisdictional or contractual basis for hearing together in a single arbitration claims made under more than one arbitration agreement where there is no consent. Reading Article 9 together with Articles 6(3) and 6(4), claims arising from different arbitration agreements may be heard together in a single arbitration only if the Court is satisfied that (a) the arbitration agreements under which those claims are made may be compatible, and (b) all parties to the arbitration may have agreed that those claims can be determined together in a single arbitration.
3-344 The Secretariat will proceed differently depending on (i) whether all parties are participating in the proceedings and an Answer has been submitted by any respondent(s) and (ii) whether any party raises an objection to the claims arising out of more than one arbitration agreement.
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with the parties and endeavour to elicit an agreement that rectifies it. If the parties fail to reach an agreement that resolves the incompatibility, it is likely that the Secretary General will refer the matter to the Court under Article 6(3) for a decision under Article 6(4), subparagraph (ii).
3-345 Application of Article 6(4), subparagraph (ii). Article 6(4), subparagraph (ii), contains a specific provision for claims subject to Article 9 (see paragraph 3-240).
3-346 Concluding note. When making decisions in relation to multicontract arbitrations, the Court is often faced with highly complex issues. It might be called on to make a prima facie assessment of the compatibility of different dispute resolution procedures and whether the parties might have agreed to have the claims heard together in a single arbitration. Under the 1998 Rules, the Court dealt with objections to claims arising out of multiple contracts by way of a prima facie decision under Article 6(2) of the 1998 Rules. The development of the Court’s practice in relation to multicontract arbitration, which is described elsewhere,15is a good example of how the Court’s experience and expertise equips it to deal with changes in the field of international arbitration. Since the 1998 Rules were released, multicontract arbitration has become increasingly common.
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ARTICLE 10: CONSOLIDATION OF ARBITRATIONS
The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, where:
In deciding whether to consolidate, the Court may take into account any circumstances it considers to be relevant, including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations, and, if so, whether the same or different persons have been confirmed or appointed.
When arbitrations are consolidated, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties.
3-347 Purpose. In ICC arbitration, the term “consolidation” is used to refer to a procedural mechanism whereby two or more pending arbitrations (i.e. arbitrations with separate ICC case reference numbers) are merged into a single arbitration.16In ICC arbitration, consolidation pursuant to Article 10 does not include situations where claims have been brought in a single arbitration under more than one contract or more than one arbitration agreement. These are covered by Article 9.
3-348 Article 10 sets out the circumstances in which, upon a party’s request, the Court may decide to consolidate two or more arbitrations pending under the Rules into one arbitration. Consolidation enables a single arbitral tribunal to decide all issues, which is conducive to procedural efficiency and lower costs under the ICC’s costs scales. It also eliminates any risk of inconsistent decisions rendered in different proceedings. However, consolidation is not always appropriate. Article 10 sets out a framework within which the Court may determine whether or not to consolidate.
3-349 2012 modifications. Article 10 replaces the former Article 4(6) and, despite maintaining a conservative approach to consolidation, considerably expands the Court’s powers to consolidate. Under the former Article 4(6), unless the parties had agreed to consolidate, the Court could order consolidation only where the parties in the proceedings to be consolidated were the same. Yet, consolidation can also be appropriate in other situations, such as where parties, although not all involved in all of the pending arbitrations, are nonetheless bound by a single arbitration agreement. For example, parties A, B and C sign a contract containing an ICC arbitration agreement and A initiates a first arbitration against B and
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C, after which B initiates a second arbitration against C. In situations such as this, it may be useful to bring together all claims into a single arbitration to avoid parallel arbitral proceedings. A further modification is that Article 10 now explicitly confirms that consolidation may occur if agreed by the parties, which corresponds to the practice developed under the 1998 Rules.
3-350 Finally, one part of the test under the former Article 4(6) has been altered. Previously, consolidation had to be requested before drawing up the Terms of Reference. Now, Article 10 rather requires the Court to give consideration to whether any arbitrators have been confirmed or appointed in any of the arbitrations.
Requirements for consolidation
3-351 The Court may not consolidate cases of its own volition. Rather, Article 10 requires a request for consolidation, which may be made by any party to any of the arbitrations to be consolidated, whether a claimant, respondent or an additional party.
3-352 Further, Article 10 specifies that the Court may consolidate arbitrations in only three situations:
3-353 Article 10, subparagraph (a): parties’ agreement. The Court can order consolidation pursuant to an explicit agreement of all the parties in all of the arbitrations to be consolidated. Where there is such an agreement, the Secretariat will take the administrative steps necessary to effect the consolidation without requesting a decision from the Court. This is made possible due to a standing decision of the Court to consolidate arbitrations where all parties agree to do so. If the parties’ agreement to consolidate has been made in the relevant arbitration agreements(s) rather than after the commencement of the arbitrations to be consolidated, the standing decision may not necessarily be applied. If it is not applied, the Court will decide whether to consolidate in accordance with Article 10, subparagraph (a).
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3-354 Article 10, subparagraph (b): same arbitration agreement. The Court may consolidate arbitrations where all of the claims in the different arbitrations are made under the same arbitration agreement. If that requirement is met, the Court may consolidate arbitrations even if the parties to the arbitrations are not all the same, which was not the case under Article 4(6) of the 1998 Rules. The broader scope of Article 10, subparagraph (b), is useful and appropriate as there is usually no reason to exclude consolidation a priori where all of the parties are bound by the same agreement to arbitrate, even though they may not all be parties to both pending arbitrations.
3-355 While Article 10, subparagraph (b), does not expressly require the Court to examine the identity of the parties in the different arbitrations or whether the different disputes arise in connection with the same “legal relationship”, these are factors that the Court can take into account when exercising its discretion (see paragraph 3-358). The fact that two or more arbitrations have been brought under the same arbitration agreement does not necessarily mean that there is any link between the claims made in each arbitration. It could happen that different parties to a multiparty arbitration agreement bring claims in separate arbitrations that are completely unrelated to each other. Although rare, it might also happen that wholly unrelated contracts refer disputes to the same arbitration agreement. The Court therefore considers on a case-by-case basis whether to consolidate cases brought under the same arbitration agreement. For instance, the Court might find that there is no link between the claims or that the claims do not arise out of the same “legal relationship”.
3-356 Article 10, subparagraph (c): more than one arbitration agreement. The Court may also consolidate arbitrations in which the claims arise under more than one arbitration agreement but only if (i) the arbitrations are between the same parties, (ii) the dispute arises in connection with the same legal relationship, and (iii) the Court finds the arbitration agreements to be compatible. While in one sense Article 10, subparagraph (c), is entirely new, it in fact takes its lead from Article 4(6) of the 1998 Rules and the Court’s former practice in relation to multiple contracts. The Court can therefore be expected to apply Article 10, subparagraph (c), in a manner similar to the way in which it handled multicontract situations and consolidation under the 1998 Rules. The first two requirements of Article 10, subparagraph (c), are taken from Article 4(6)17of the 1998 Rules. The third requirement comes from the Court’s former practice in relation to multicontract arbitrations.18That third requirement is also found in Article 6(4), subparagraph (ii), when the Court considers whether a single arbitration can proceed on the basis of more than one arbitration agreement. This shows the similarity between a single arbitration involving claims under more than one arbitration agreement and the consolidation of two or more arbitrations involving claims made under different
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arbitration agreements. The slight difference between Article 6(4), subparagraph (ii), and Article 10, subparagraph (c), is that for the former the Court is taking a prima facie decision as to whether a case can proceed whereas in the latter the administrative decision to consolidate is final.
3-357 Below, the conditions of Article 10, subparagraph (c), are considered each in turn:
3-358 Court’s discretion. Pursuant to Article 10, the Court has discretion to grant or deny a request for consolidation where the requirements of Article 10, subparagraphs (a), (b) or (c), are satisfied. This discretion is reflected in the use of the term “may” at the beginning of Article 10. In exercising its discretion, the Court may take into account any circumstances it considers to be relevant, including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations and, if so, whether the same or different arbitrators have been confirmed or appointed. Once consolidated, the previously separate arbitrations will become a single arbitration to be decided by a single arbitral tribunal, so if arbitrators have been confirmed in more than one of the arbitrations, and if those arbitrators are different individuals, the Court will be unable to consolidate the arbitrations as it will be impossible to constitute a single arbitral tribunal unless the different arbitrator(s) resign or are removed by the Court at the parties’ request.
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3-359 As intimated in paragraph 3-356, Article 6 plays no role in consolidation under Article 10.
3-360 Finally, where the Court decides not to consolidate arbitrations, it may nevertheless be able to appoint the same arbitral tribunal in the relevant cases, which may then run the cases in parallel.
Administrative steps to effect consolidation
3-361 When the parties have agreed or when the Court has decided to consolidate two or more arbitrations, the Secretariat will carry out the necessary administrative steps in relation to the case reference number and caption and accounting matters.
3-362 Case reference number and caption. Article 10 clarifies that the arbitrations will be consolidated into the arbitration that commenced first in time, unless otherwise agreed by the parties. As regards the case reference number, this means that the consolidated case will bear the case number of the arbitration that commenced first, while mentioning the numbers of the cases that were consolidated into it. For instance, if cases 12345/XY and 12356/XY were to be consolidated, the consolidated case would receive the case reference 12345/XY(c 12356/XY). The Secretariat will also inform the parties of the new case caption and set a short time limit (usually no longer than a week) within which parties may submit any objections.
3-363 Accounting. Where a case is consolidated into another, the ICC will retain the initial deposit (currently set at US$ 3,000) paid by the claimant in that case. In other words, that initial deposit is forfeited and not credited to the paying party’s share of the advance on costs in the consolidated case. However, any sum remaining in the account of the case that has been terminated will be transferred to the account of the consolidated case and in that case will be credited to the party that made the payment.
3-364 Once consolidation has been completed, or at a later stage where appropriate, the Secretariat will invite the Court to readjust the advance on costs (if it was already fixed prior to consolidation) pursuant to Article 36(5) and in light of the new amount in dispute (see paragraphs 3-1403– 3‑1406).
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ARTICLES 11–15: DEFINING TERMINOLOGY RELEVANT TO THE CONSTITUTION OF THE ARBITRAL TRIBUNAL AND THE REPLACEMENT OF ARBITRATORS
3-365 When referring to the constitution of arbitral tribunals, the Rules use a number of terms with specific meanings. A proper understanding of how arbitrators are selected and tribunals constituted in ICC proceedings requires that these terms be correctly understood. The purpose of this introduction to Articles 11–15 is to clarify those terms.
3-366 The key terms used in relation to the selection of arbitrators are “nomination”, “confirmation”, “appointment” and “proposal”. The “nomination” of an arbitrator can only be made by one or more of the parties (Articles 12(3)–12(5)), by the co-arbitrators where they are empowered to nominate the president of the arbitral tribunal (Article 12(5)), or through some other agreed method external to ICC arbitration procedure. Once nominated, an arbitrator must be “confirmed” by the Court (Article 13(1)) or the Secretary General (Article 13(2)). If not nominated, the arbitrator will be “appointed” by the Court (Articles 12(3)– 12(5)). Appointments are generally based upon a “proposal” from an ICC National Committee or Group (Article 13(3)), although the Court is also empowered to appoint arbitrators directly in certain circumstances (Article 13(4)). The confirmation and the appointment of arbitrators are therefore alternatives and depend on how the arbitrator’s name is initially put forward. Also, in the case of a nomination, the parties know who the person is and receive his or her CV and any relevant declarations or statements ahead of the confirmation, whereas in the case of an appointment, the parties usually receive the arbitrator’s name and CV only after the person has been appointed. Once appointed or confirmed, an arbitrator will have the same functions, obligations and responsibilities regardless of how he or she was selected.
3-367 The terms “appointment” and “confirmation” are sometimes confused or used inaccurately, which can cause problems especially in arbitration clauses.
3-368 Other terms that are also sometimes misunderstood or misused are “objection”, “challenge” and “replacement”. Before an arbitrator is confirmed, any of the parties that did not nominate the arbitrator may “object” to his or her confirmation (see Articles 13(1) and 13(2)). The Court will take objections into account when deciding whether or not to confirm the arbitrator. After being confirmed or appointed, an arbitrator can be contested only by way of a “challenge” (Article 14), which can result in the Court’s removing the arbitrator from the arbitral tribunal (Article 15(1)). An objection made prior to confirmation or appointment is not a challenge; parties cannot employ the challenge procedure until an arbitrator has been appointed or confirmed. The Court will in most cases “replace” an arbitrator who has been removed for any reason (Article 15).
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ARTICLE 11(1): IMPARTIALITY AND INDEPENDENCE
Every arbitrator must be and remain impartial and independent of the parties involved in the arbitration.
3-369 Purpose. Article 11(1) expresses a basic tenet of international arbitration and one which the Court considers to be essential to the legitimacy of ICC arbitration. The provision fulfils several functions: it guides the Court and the parties in their decisions relating to arbitrators, and it serves arbitrators as a basis for their disclosure obligations under Articles 11(2) and 11(3). 3-370 Article 11(1) applies to all arbitrators, whether nominated (by one or more parties, the co-arbitrators or through some other procedure) or appointed by the Court, and irrespective of the arbitrator’s status (sole arbitrator, coarbitrator or tribunal president). The requirement of independence and impartiality is continuous, lasting throughout the arbitration.
3-371 2012 modifications. The word “impartial” has been added to the provision. A similar addition has been made to a number of other provisions: Articles 11(2) and 11(3) relating to disclosure obligations; Article 13(2) relating to the confirmation of arbitrators by the Secretary General; and Article 14(1) relating to challenges. The wider formulation of the 2012 Rules better reflects general standards in international arbitration rules and legislation and the Court’s own practice. The Court has always considered challenges based on a lack of impartiality and independence alike, although a challenge based purely on alleged impartiality is more difficult to demonstrate and therefore less likely to succeed. The inclusion of impartiality in the Rules is not expected to affect the standard applied by the Court in determining objections or challenges to arbitrators. However, the express reference to impartiality in Articles 11(2) and 11(3) may affect the scope of disclosure obligations.
3-372 Background. Over the last ten to twenty years, arbitrator independence has become a focus of much attention due to developments that have occurred in international arbitration. The increasing complexity of international commercial transactions, as manifested in the growing number of contracts involving numerous parties from different parts of the world and different industry sectors, means that more parties than before are likely to be concerned by conflicts of interest. The legal profession, too, has been marked by the emergence of global law firms, networks of law firms and alliances between law firms in response to the increasingly international scope of their activity. Consequently, the potential for constructive, as opposed to direct, ties between arbitrators and parties is much greater than ever before. Further, the exponential growth of international arbitration and the still relatively modest pool of highly experienced arbitration experts mean that the same counsel and arbitrators often find themselves involved in a number of different cases together.
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Institutions such as the Court have therefore been required to devote more attention to the issue of independence and impartiality, either at the request of parties or of their own volition. Guidelines such as the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration have been developed to assist in dealing with this subject. Investment arbitration has also influenced matters relating to an arbitrator’s independence and impartiality.
3-373 The Court’s understanding of independence and impartiality. Situations giving rise to questions of independence or impartiality commonly concern an arbitrator’s role in a related matter or an arbitrator’s relationship (directly or indirectly, e.g. through his or her law firm) with one or more parties or an entity linked to a party, counsel or a state. However, these questions may also arise in many other situations, sometimes unprecedented. The Rules do not provide any guidance on what is to be understood by independence and impartiality. Nor has the Court adopted internal regulations or guidelines on the application of these concepts. While the Court is aware of the importance of consistency in decision making, its main priority is to reach the most fair and effective solution on a case-by-case basis. In this field as in other aspects of procedure, flexibility is essential, especially given the different regions and legal traditions involved in ICC arbitration.
3-374 When determining whether an arbitrator is independent and impartial, the Court may take into account a range of factors and sources from a variety of perspectives, none of which are in themselves necessarily decisive. The Court’s primary resource is the experience of its members and the members of the Secretariat, together with the vast database of previous Court decisions on objections and challenges to arbitrators. When faced with an objection or a challenge, the Secretariat diligently briefs the Court on similar decisions it has taken in the past, particularly where the situation is difficult. Secondary sources such as the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration may provide further inspiration, and the Court has generally been supportive of their development. Yet these Guidelines relate to disclosure and do not purport to set standards in relation to challenges against arbitrators. Furthermore, by their very nature, guidelines risk being incompatible with the Court’s flexible approach.20For example, the Green List of the IBA Guidelines may conflict with the subjective criterion expressed in Article 11(2), which requires that a potential arbitrator reveal all circumstances that could cast doubt on that arbitrator’s independence in the eyes of the parties (see paragraphs 3-376 and following). In addition, research into ICC cases has revealed facts and circumstances not covered by the IBA Guidelines that have led to the removal or non-confirmation of ICC arbitrators.21
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3-375 Assessment of independence and impartiality. An arbitrator’s independence and impartiality is assessed (i) in the context of disclosure obligations under Articles 11(2) and 11(3) (see paragraphs 3-385 and following); (ii) when the Court decides on objections to confirmations of arbitrators under Article 13(1) and (iii) when the Court decides on challenges to arbitrators under Article 14(1) (see paragraphs 3-562 and following). Examples of decisions made by the Court on these matters have been provided elsewhere.22
ARTICLE 11(2): STATEMENT OF ACCEPTANCE, AVAILABILITY, IMPARTIALITY AND INDEPENDENCE
Before appointment or confirmation, a prospective arbitrator shall sign a statement of acceptance, availability, impartiality and independence. The prospective arbitrator shall disclose in writing to the Secretariat any facts or circumstances which might be of such a nature as to call into question the arbitrator’s independence in the eyes of the parties, as well as any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality. The Secretariat shall provide such information to the parties in writing and fix a time limit for any comments from them.
3-376 Purpose. Article 11(2) creates a strict disclosure obligation for all prospective arbitrators before their confirmation or appointment. This disclosure serves as a basis for parties and the Court to determine an arbitrator’s independence, impartiality and availability, and flushes out at an early stage any objections a party may have to the arbitrator. The Court does not have the capacity to investigate potential arbitrators itself, although the Secretariat may be aware of circumstances that should be disclosed by the arbitrator and bring those circumstances to the arbitrator’s attention. Parties will in certain circumstances investigate an arbitrator’s independence beyond what he or she has disclosed to them.
3-377 In practice, a prospective ICC arbitrator should make all disclosures and declarations required by Article 11(2) in a single document called the statement of acceptance, availability, impartiality and independence (“Statement”).23
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3-378 2012 modifications. The provision has changed substantively in two ways. First, the former Article 7(2) referred only to a “statement of independence”, whereas Article 11(2) requires a “statement of acceptance, availability, impartiality and independence”. As a matter of practice under the 1998 Rules, the Court always required arbitrators to confirm their acceptance and availability before appointment. What is new to Article 11(2) is therefore the concept of “impartiality”, which is discussed above under Article 11(1) (see paragraphs 3-369 and following). A new version of the form was released on 1 January 2012 when the new Rules came into effect. It now incorporates the term impartiality and includes some small changes relating to the disclosure of an arbitrator’s availability.
3-379 The second substantive change follows logically from the first. It is the requirement that arbitrators disclose “any circumstances that could give rise to reasonable doubts as to the arbitrator’s impartiality”.
3-380 Availability. Experience has shown that arbitrators who unrealistically assess their workload may find themselves unable to fulfil their responsibilities under Articles 22 and 24, leading to lengthy delays in the proceedings and in particular in the delivery of the award. There have been cases in which an excessively heavy workload led an arbitrator to resign or caused the Court to remove the arbitrator pursuant to Article 11(2) of the 1998 Rules (now Article 14(2)).
3-381 The Statement serves not only to provide the Court and the parties with information on an arbitrator’s availability, but also encourages the arbitrator to reflect on his or her availability, given the importance the Rules lay on conducting the proceedings efficiently (see paragraphs 3-791 and following). Since 2009, the Statement has placed stronger emphasis on availability and requests arbitrators to provide any additional information that may help to clarify their statements regarding availability (e.g. the status of any ongoing cases, or an assessment of the hearing time the arbitrator expects to have available in the coming year or so).
3-382 Disclosure of an arbitrator’s availability also improves transparency for the parties, as it gives them the opportunity to make objections based on what they perceive as inadequate availability. Where there are genuine concerns over availability, the Court may decide not to confirm or appoint the arbitrator. However, it will endeavour to respect a party’s choice of arbitrator and will not entertain frivolous or unmeritorious objections raised on the basis of information provided in the Statement. It should be noted that the Court has not fixed a maximum number of pending cases in excess of which an arbitrator is automatically considered as being ineligible to serve.
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3-383 Between mid-2009, when the new Statement form was first introduced, and the end of 2011, the Court decided not to confirm only three arbitrators on the basis of information relating to availability provided in their Statement. In one of these cases, the Court made its decision not only in light of the arbitrator’s unavailability (in his Statement he disclosed that he was serving as president of sixty-eight arbitral tribunals and acting as coarbitrator in another eighty-three), but also on account of objections relating to the arbitrator’s independence and impartiality. The other party had also objected to the arbitrator’s confirmation. In another case, the arbitrator who had been nominated jointly by the co-arbitrators to serve as president of the arbitral tribunal disclosed in his Statement that he would be taking sabbatical leave for three months during the initial stages of the proceedings. Recognizing that this might be unacceptable to the parties, he proposed that all initial procedural matters be dealt with prior to his sabbatical and that a hearing then be held as soon as the sabbatical was over. While the parties and the co-arbitrators appeared to be satisfied with this suggestion, the Secretariat expressed concern that the arbitrator would be completely unavailable throughout his sabbatical to respond to or address any urgent issues that might arise. Accordingly, the Court decided not to confirm him as president. In the third case, the Court decided not to confirm a co-arbitrator nominated by a party where the candidate had disclosed that he was already sitting as an arbitrator on a large number of cases. The opposing side requested assurances as to his availability and, as none were provided, objected to the arbitrator’s confirmation. In these circumstances the Court decided not to confirm the arbitrator.
3-384 During the same period, there were several cases in which the arbitrator’s Statement did not raise any significant concerns, but the Court and its Secretariat knew the arbitrators to have been unacceptably late in delivering awards in other ICC arbitrations. In most of these matters, rather than not confirming the arbitrators in question, the Secretary General or the President of the Court contacted the arbitrators who had been nominated and suggested that they decline the nomination, which they did. In one case the Court decided not to confirm the respondent’s nominee as co-arbitrator, as the arbitrator concerned had been causing delays in other ICC cases by repeatedly failing to submit draft awards within reasonable time limits. Furthermore, he had frequently overlooked correspondence from the Secretariat. Despite being warned several times that his performance was unacceptable, the arbitrator had done nothing to remedy the situation. In some cases parties have insisted on putting in place a particular arbitrator, notwithstanding obvious constraints on that person’s availability, and have subsequently complained to the Secretariat about delays. Parties should therefore give proper consideration to such issues prior to confirmation.
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Impartiality and independence24
3-385 Scope of disclosure obligation. Article 11(2) calls for full disclosure of any facts or circumstances that could be relevant to the arbitrator’s independence “in the eyes of the parties”. This is a subjective standard, determined from the parties’ perspectives. As such, it contrasts with objective standards adopted in many other arbitration rules. Arbitrators are therefore required to make a judgment that takes into account the views of the parties. They cannot simply disclose on the basis of a range of objective factors or criteria. The variability and flexibility created by the subjectivity of the standard may in some situations prompt arbitrators to be more forthcoming and in other situations prevent the trivial and unnecessary disclosure that can result from very detailed guidelines.
3-386 The provision sets a slightly different disclosure standard for impartiality. The arbitrator must disclose any facts or circumstances that “could give rise to reasonable doubts” as to his or her impartiality. Impartiality, unlike independence, inherently contains a subjective element (i.e. the arbitrator’s state of mind). Therefore, the broad subjective standard used for independence did not seem appropriate. The consequence of using an objective standard is that any arbitrator with actual doubts as to his or her impartiality should of course decline to serve.
3-387 There are several reasons for the insistence on complete disclosure. First, it is especially important given the international character of ICC arbitration. The wide range of legal and cultural traditions influencing parties to ICC arbitrations inevitably leads the Court to consider various conceptions of independence and impartiality, many of which have a specific view of certain relationships.
3-388 Second, it alerts the parties to potential conflicts of interest and biases at the outset of the arbitration. The parties can then make an informed decision about whether or not to object to the arbitrator’s confirmation or, if the arbitrator has already been appointed or confirmed, whether to challenge the arbitrator. The time limit under Article 14(2) to make a challenge is thirty days from receipt by the challenging party of the notification of the appointment or confirmation of the arbitrator, or thirty days from when the challenging party was informed of the facts and circumstances on which the challenge is based. Given the upfront disclosure obligation and the time limit for challenges, full disclosure may flush out all objections and challenges based on existing circumstances at the beginning of an arbitration. Addressing these objections and challenges at an early stage is far less disruptive than having to deal with challenges later when an arbitrator has become deeply involved in a case. Also, if a party fails to raise a challenge promptly after becoming aware of the facts, it will often be considered by state courts to have lost its right to rely on those facts in any attempt to set aside an arbitral award or resist its enforcement.
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3-389 Where facts or circumstances are disclosed, the arbitrator should provide detailed information, including relevant dates, financial arrangements, and details of companies and individuals with which the relationship is or was held. A lack of information may be construed against the arbitrator’s appointment or confirmation if there are doubts. Arbitrators should note that this disclosure obligation is ongoing throughout the proceedings (Article 11(3)).
3-390 Information on which to base a conflict-of-interest check. An arbitrator can check potential conflicts of interest only to the extent the necessary case information is available to him or her. When the Secretariat sends a prospective arbitrator the CV form and blank Statement to complete, it also informs the arbitrator of the identity of the parties in the case and the counsel representing them. It will also identify entities otherwise related to the dispute, such as other entities mentioned in the Request for Arbitration and the Answer (if the Answer has been received). However, the Secretariat can only pass on information with which it has been provided by the parties. In the Request and the Answer, parties should therefore clearly identify any entity related to the case that may be relevant to arbitrators when checking conflicts of interest.
3-391 Spot checks by the Court and its Secretariat. As mentioned above, the Court and its Secretariat do not make independent enquiries into the impartiality and independence of arbitrators. However, given their knowledge of the international arbitration profession, Court or Secretariat members may be aware or may come across information that should have been disclosed. Where appropriate, the Secretariat also makes use of its electronic case management system, which contains detailed information on an individual’s or a law firm’s prior involvement in ICC arbitration. The Secretariat occasionally spot-checks the case management system to ascertain whether arbitrators have made an accurate disclosure of their
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previous or pending ICC arbitrations. Where undisclosed information is discovered through the above means, the Secretariat encourages the arbitrator to amend his or her Statement and, if necessary, to make disclosures in other ongoing proceedings.
3-392 There have been rare situations in which the Secretariat requested that an arbitrator provide further clarification on his or her independence or impartiality where it felt that the initial disclosure was inadequate or vague. The parties may similarly request additional information. The Secretariat will generally relay such requests to the arbitrator.
3-393 Consequences of incomplete disclosure. An arbitrator’s deliberate failure to disclose will be damaging to his or her professional reputation. In many jurisdictions, making a false declaration can lead to disciplinary action by relevant professional bodies, such as lawyers’ associations. If the Court is required to decide on a challenge against an arbitrator made on the basis of circumstances that the arbitrator could have and should have disclosed from the outset, it treats non-disclosure with considerable suspicion and tends to lower the threshold that determines whether or not the challenge is accepted. Following a successful challenge, it will also take non-disclosure into account when fixing the fees of an arbitrator who has been removed. The Court has in the past also initiated replacement proceedings against an arbitrator who refused to disclose information that was known to the Court or its Secretariat.
Procedure for submitting arbitrator forms
3-394 The Secretariat will request all potential arbitrators to complete the Statement and to provide a curriculum vitae (CV). The Secretariat requests this of potential arbitrators promptly once they have been nominated (whether by the parties, co-arbitrators or some other method), proposed by a National Committee or Group, or selected by the Secretariat or the Court for possible direct appointment. If the Statement includes any type of disclosure relating to the arbitrator’s independence or impartiality, it will be referred to as “qualified”. If there is no such disclosure, the Statement is “unqualified”.
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3-395 Arbitrators nominated for confirmation. Where an arbitrator has been nominated for confirmation, the Secretariat will invite the nominee to complete blank Statement and CV forms. The arbitrator should return these forms to the Secretariat as quickly as possible. The Secretariat then transmits them to the parties. If the Statement is unqualified, the parties are not invited to submit comments, although they may do so if they wish. If the Statement is qualified, the Secretariat grants the parties a time limit, usually seven to ten days, in which to comment on the Statement. If the parties request additional information or clarification from the arbitrator, the Secretariat normally relays such requests to the arbitrator. The parties are informed of and given an opportunity to comment on any clarification provided by the arbitrator. If a party objects to the arbitrator’s confirmation, the Court will decide the matter pursuant to Article 13(1).
3-396 Arbitrators proposed for appointment. The Secretariat’s practice is different with respect to appointments. Where the appointment is made on the basis of a proposal from an ICC National Committee or Group as foreseen in Article 13(3), the National Committee or Group will transmit the blank Statement and CV forms to the arbitrator. National Committees and Groups often ask arbitrators to return the forms to them, and they in turn forward them to the Secretariat. However, in practice many arbitrators return their completed Statement and CV directly to the Secretariat.
3-397 In the case of appointments, unlike confirmations, the Secretariat will not send the Statement and CV of an arbitrator being considered for appointment to the parties until the Court has formally appointed him or her, unless there are exceptional reasons for doing so. The parties therefore normally do not have any opportunity to object to the candidate before his or her appointment. An exception may be made to this practice where the prospective arbitrator submits a qualified Statement. Until relatively recently, the Court simply refused to appoint any arbitrators who had included a disclosure in their Statement. That practice changed in 2008 in recognition of the fact that minor disclosures should not necessarily exclude a potential arbitrator from being appointed. The Court will generally consider appointing an arbitrator who has made a minor disclosure, although it will circulate his or her Statement and CV to the parties in advance of the Court’s decision to appoint. In a recent case the Court decided to appoint as president of the arbitral tribunal an arbitrator
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who had submitted a qualified Statement and despite the fact that the respondent made an objection after receiving the arbitrator’s forms from the Secretariat. However, the disclosure was inconsequential. A foreign office of the arbitrator’s law firm had in the past acted as counsel for a member of the claimant’s group of companies (not a subsidiary or parent company) on unrelated tax issues relating to the registration of an aircraft.
3-398 If an arbitrator who has been proposed for appointment by a National Committee or Group makes a significant disclosure, the Secretariat normally asks the relevant National Committee or Group to propose someone else without circulating the forms, or else the Court makes a direct appointment pursuant to Article 13(3).
Table 10: Non-confirmations and non-appointments of arbitrators,2007–2011
3-399 Timing of an arbitrator’s confirmation/appointment following receipt of the completed forms by the Secretariat. The length of time between the submission of an arbitrator’s Statement and CV and his or her confirmation or appointment can vary, depending on the circumstances of the case. Delays can be caused by various factors, such as those listed below:
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ARTICLE 11(3): ONGOING DUTY TO DISCLOSE
An arbitrator shall immediately disclose in writing to the Secretariat and to the parties any facts or circumstances of a similar nature to those referred to in Article 11(2) concerning the arbitrator’s impartiality or independence which may arise during the arbitration.
3-400 Purpose. Article 11(3) follows on from Article 11(2) by confirming that the disclosure obligation relating to impartiality and independence continues throughout the arbitration. The ongoing nature of an arbitrator’s duty to be impartial and independent is expressed in Article 11(1), which requires an arbitrator to “be and remain” impartial and independent. As discussed above under Article 11(2), the parties and the Court rely primarily on the arbitrator to volunteer any information that might be relevant to the arbitrator’s impartiality or independence. As the potential for conflicts of interest has grown, so has the need for arbitrators constantly to monitor their own independence, particularly when they are associated with large law firms.
3-401 2012 modifications. The wording “to those referred to in Article 11(2) concerning the arbitrator’s impartiality or independence” has been inserted to make it clear that an arbitrator’s ongoing disclosure obligation applies only to issues of impartiality and independence and not to all of the matters which must now be declared under Article 11(2). As in Articles 11(1) and 11(2), a reference to impartiality has been added (see paragraph 3-371).
3-402 Additional disclosures in practice. Additional disclosures made during an arbitration are not uncommon. Article 11(3) requires that they be made in writing. More often than not they will be made in an ordinary letter addressed to the Secretariat and/or the parties. The Secretariat will ensure that all parties are promptly informed of any disclosures. Although parties are not expressly given a time limit in which to comment on any disclosures made in the course of the proceedings, in practice they sometimes request additional information or clarification from the arbitrator. They are also
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entitled to challenge the arbitrator pursuant to Article 14(1) within the thirty-day time limit set in Article 14(2). In practice, parties are generally cautious about filing a challenge that could disturb the smooth running of the arbitration. In some instances, where the arbitrator believes that the new disclosure is significant, he or she may simply resign. However, resignations too, although sometimes necessary, can be equally disrupting for the parties because a replacement arbitrator will need to be appointed or confirmed and made conversant with the case file, all of which will take time and incur extra cost. The Court considers that arbitrators have a responsibility to avoid situations that may lead to a conflict of interest during an arbitration and will take this into account when fixing the fees of arbitrators who have resigned or been successfully challenged.
3-403 Disclosing future conflicts. In recent years, some arbitrators from large law firms have completed their initial Statement in such a way as to leave open the possibility of their firm accepting future instructions that might otherwise create a conflict of interest. They state, for example, that while there is presently no relationship between their law firm and any of the parties to the arbitration, it cannot be ruled out that the law firm might accept instructions to act for or against such parties in relation to other matters while the arbitration is still proceeding. Some go even further and state that in agreeing to the arbitrator’s confirmation or appointment, the parties also agree that the arbitrator’s participation in the proceedings does not preclude other lawyers from the same firm from accepting certain instructions while the arbitration is still proceeding. In such cases arbitrators generally offer assurances that they will have no involvement with such instructions and will not be able to access any information relating to them. Even with such assurances, the Court and its Secretariat have not been amenable to such attempts to waive issues of independence that may arise in the future. The Secretariat has usually informed in writing the arbitrator concerned and the parties that the Court will not be bound by the arbitrator’s Statement relating to future conflicts of interest and that any such potential conflicts must be disclosed in accordance with Article 11(3). Any Statement expressing reservations with regard to future conflicts of interest will in no way limit the Court’s power to decide challenges against the arbitrator even on the basis of an issue that the Statement was intended to cover.
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ARTICLE 11(4): FINALITY AND NON-COMMUNICATION OF REASONS FOR DECISIONS OF THE COURT ON THE CONSTITUTION OF THE ARBITRAL TRIBUNAL
The decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final, and the reasons for such decisions shall not be communicated.
3-404 Purpose. Article 11(4) prevents the Court from reconsidering its decisions on the appointment, confirmation, challenge or replacement of arbitrators and from divulging the reasons behind such decisions. It is the only provision in the Rules that specifically addresses the giving of reasons and the finality of decisions. Any decisions that lie outside the scope of Article 11(4) can therefore be reconsidered or substantiated by the Court, which has developed relevant practices in that respect (see paragraph 3-39).
3-405 2012 modifications. None.
3-406 Finality. While not spelt out in the Rules, most Court decisions are considered as final. The Court will not usually reconsider them unless its attention is drawn to important considerations that it was not aware of when making its initial decision. However, there are a few decisions that derogate from this principle. They include decisions relating to advances on costs (which are always made subject to later readjustment) (Article 36(5)) and decisions on requests to extend deadlines for awards (Article 30(2) and Terms of Reference (Article 23(2)). Finality is particularly important for decisions relating to the selection and removal of arbitrators because abusive requests for reconsideration of such decisions are likely to delay the arbitration.
3-407 The finality referred to in Article 11(4) relates primarily to the decisions of the Court. However, in some jurisdictions it may have broader implications.
3-408 The Court and its Secretariat apply Article 11(4) strictly. If a party or an arbitrator asks for a decision that comes within its scope to be reconsidered, the Secretariat draws their attention to the finality of the decision, referring to Article 11(4). However, if important new facts come to light, they may require the Court to make a new and separate decision on the issue, rather than simply reconsider its former decision. For example, a new challenge against an arbitrator could be brought on the basis of facts not previously considered by the Court.
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3-409 Reasons. The Court generally does not give reasons for any of its decisions. If requested, the Secretariat sometimes provides parties with information on the factors taken into account by the Court and/or explanations on the nature and consequences of a decision. However, this practice does not extend to decisions falling within the scope of Article 11(4), for which no reasons can be provided. A similar prohibition on giving reasons for decisions relating to arbitrator appointments and removals can be found in the rules of most international arbitral institutions.
3-410 It occasionally happens that one or more parties insistently request the reasons for a decision caught by Article 11(4). Usually, in such circumstances, the parties are reminded that they have agreed to settle their dispute pursuant to the Rules and that the arbitral tribunal has also accepted its mandate under the Rules, which prevent the Court from communicating reasons.25
3-411 The Court’s practice of not giving reasons, particularly for challenge decisions, has sometimes been questioned by parties or arbitrators or more generally by the international arbitration community. The matter was discussed extensively in the context of the revision leading to the 2012 Rules but it was ultimately decided to leave the Rules unchanged in that respect.
3-412 A common argument is that parties are entitled to learn why a challenge was or was not upheld. It is also argued that the publication of sanitized challenge decisions would provide a useful body of precedents to which parties and arbitrators could refer to understand the Court’s position on issues of arbitrator independence. These suggestions have been and will continue to be considered seriously. Arbitration practice evolves continuously and it is the ICC’s responsibility, as a leading arbitral institution, systematically to review its practices.
3-413 One justification for not giving reasons in individual cases is that doing so would not do justice to the wealth and breadth of legal perspectives represented within the Court and which are essential to its legal neutrality. The Court’s decision-making process may encompass several strands of thought not easily channelled into a single line of reasoning. The absence of a need to articulate reasons makes for decisions that are more sensitive to the diversity of legal opinions held within the Court. Most challenges based on an alleged lack of independence are referred to a plenary session of the Court attended by members from highly diverse backgrounds. While consensus among Court members is often reached in relation to the acceptance or rejection of a challenge, each Court member’s reasons for arriving at a particular conclusion may be different.
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3-414 Practical considerations are also relevant. Reasoned decisions are more costly to produce. The Court would need to consider whether its users are prepared to pay these additional costs. Further, preparing reasons takes time and would delay notification of decisions. Giving reasons could also provide dissatisfied parties with ammunition for a counter-attack and could increase the likelihood of the decision being contested in state courts, which in turn would lead to further delays and jeopardize the enforceability of awards.
3-415 Whilst the Court is aware of the need for consistency in its decision making, its main priority is to enable a solution to be found, fairly, rapidly and cost effectively, on a case-by-case basis. To keep users informed about the Court’s practices, the ICC periodically publishes general summaries of challenge decisions,26which draw together a number of decisions and discuss grounds for challenges thematically, without giving detailed reasons for individual decisions.
ARTICLE 11(5): ARBITRATORS’ UNDERTAKING TO RESPECT THE RULES
By accepting to serve, arbitrators undertake to carry out their responsibilities in accordance with the Rules.
3-416 2012 modifications. Minor linguistic adjustments.
3-417 As a central figure to whom the parties defer in the proceedings, the arbitrator must put into effect and uphold the Rules and practices of the Court. Upon accepting office, an arbitrator is regarded by the Court as having made a commitment to see the arbitration through to its end (subject to the provisions relating to removal and replacement) and manage it in accordance with the Rules. A number of provisions are particularly relevant to this duty. The first is compliance with the independence, impartiality and disclosure requirements of Articles 11(1) and 11(2), especially in view of their juxtaposition with Article 11(5). However, the scope of Article 11(5) goes beyond independence and impartiality and also relates to other duties incumbent on the arbitrator such as performing tasks diligently in accordance with Article 22(1). In this respect, the Statement in which a potential arbitrator confirms his or her availability to manage the arbitration efficiently (see paragraph 3-381) also expresses the arbitrator’s commitment to adhere to the time limits set in the Rules or modified by the Court.
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ARTICLE 11(6): PRIORITY OF PARTY AGREEMENTS ON THE CONSTITUTION OF THE ARBITRAL TRIBUNAL
Insofar as the parties have not provided otherwise, the arbitral tribunal shall be constituted in accordance with the provisions of Articles 12 and 13.
3-418 Purpose. Party autonomy is one of the distinctive features of international arbitration. Parties can agree on virtually whatever procedure they like and the Court will endeavour to respect their agreements, unless they are inconsistent with certain provisions of the Rules that are considered essential to ICC arbitration. These essential provisions concern the relationship between the ICC and the parties and the fixing of the costs of the arbitration (e.g. Articles 23, 33, 36, 37). Article 11(6) makes it clear that any agreement between the parties relating to the constitution of the arbitral tribunal takes precedence over the default provisions of Articles 12 and 13. It is only where there is no specific agreement between the parties on a particular issue, or where the parties’ agreement is for some reason inoperable, that the relevant fallback provision in the Rules takes effect.
3-419 2012 modifications. None.
3-420 Qualifications to Article 11(6). Article 11(6) permits derogations only from Articles 12 and 13, and not from Article 11 itself. Article 11 contains provisions— the fundamental obligations incumbent on an arbitrator (e.g. independence, impartiality, disclosure and respect for the Rules); the finality of the Court’s decisions regarding arbitrators; and the prohibition on providing reasons for such decisions—that constitute cornerstones of the Rules from which the parties cannot derogate without the institution’s agreement. Such agreement is unlikely to be forthcoming except in exceptional circumstances. The Court generally considers Articles 13(1) and 13(2) to be mandatory, too, in the sense that arbitrators must be subject to confirmation by the Court or the Secretary General. In any event, the Court has rarely seen agreements that expressly attempt to bypass the confirmation process. In one such case, the arbitration clause stated that “the appointment of the arbitrators by the parties is not subject to confirmation or rejection by the Court of Arbitration of the ICC”. Given this was an affront to a fundamental feature of ICC arbitration,27the Court determined that the arbitration could not proceed.
3-421 Form of party agreements. The Rules do not specify any formal requirements for agreements that modify any of the provisions of Articles 12 and 13, but they are almost always made in writing or at least evidenced in writing. Such agreements are often contained in the arbitration clause included in the parties’ contract. Alternatively, they may be made subsequently (e.g. in correspondence following the submission of the
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Request for Arbitration). Any agreement under Article 11(6) must be made by all of the parties. If any party disagrees, or does not comment, then the Court and its Secretariat will usually consider that there is no agreement. In exceptional circumstances the Court may consider a lack of objection from a non-participating party as an indication of its acceptance of the agreement made by the participating parties. However, it will do so only with extreme caution and after providing proper notice.
3-422 Encouraging party agreements. The Court and its Secretariat are proactive in seeking agreements between the parties on the constitution of arbitral tribunals. As a simple example, where a Request for Arbitration is submitted on the basis of an arbitration agreement that does not specify the number of arbitrators, the Secretariat will invite comments from all parties on the number of arbitrators. This process might result in an agreement that there should be one or three arbitrators. In addition, where the parties agree on a sole arbitrator, the Secretariat will remind them that they can nominate jointly the sole arbitrator. Even without an invitation from the Secretariat, the parties are always free to agree on any aspect of the constitution of the arbitral tribunal and the nomination or appointment of arbitrators at any time, and are encouraged to do so.
3-423 Alternative procedures in practice. In practice, parties frequently enter into agreements that modify some aspect of the Rules with respect to the constitution of the arbitral tribunal. It is not uncommon for them to agree to empower the co-arbitrators to nominate jointly the president of the arbitral tribunal, which obviates the need for an appointment by the Court pursuant to Article 12(5) (see paragraph 3-462). Parties in some cases arrive at rather unusual or creative agreements. For example, in a 2009 case the parties agreed that the Court would toss a coin to decide which of two prospective presidents of the arbitral tribunal would be appointed. Sometimes, the parties request that the Court or its Secretariat provide them with a list of potential arbitrators from which the parties can select a nominee (an additional charge may be made if more than one list is requested by the parties). The Court and its Secretariat may also be requested to administer a blind list, on the basis of which preferences are expressed by each of the parties anonymously. In some instances, the arbitration clause provides, or the parties sometimes agree, that the Court will appoint all three arbitrators in a three-member panel, rather than have each side nominate a co-arbitrator. Finally, parties can even agree to have an appointing authority separate from the Court select an arbitrator. In some instances, the appointing authority is the President of the Court or the Chairman of the ICC. In others, the designated authority will be a separate arbitral institution that provides such a service. The Court will consider for confirmation any arbitrator who is appointed by a separate entity or individual.
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3-424 Devising alternative procedures. The Court will make every effort to give effect to the parties’ agreement. However, parties should be wary about attempting to devise unusual procedures for appointing arbitrators without advice from arbitration specialists. A poorly drafted agreement in this regard could, at best, cause uncertainty, additional cost and delay in constituting the arbitral tribunal and, at worst, potentially call into question the validity and/or operability of the entire agreement to arbitrate. Furthermore, circumstances can change such that a procedure agreed upon by the parties prior to the dispute may no longer be suitable. Parties should also be very cautious about agreeing to shortened time limits for the nomination or selection of arbitrators. One of the dangers of making alternative agreements on time limits is that they may not be realistic or may not sit well within the general structure of the appointment procedure as provided in the Rules. In any event, when specifying time limits, parties should avoid ambiguities as to when such time limits start running.
ARTICLE 12: OVERVIEW OF THE CONSTITUTION OF THE ARBITRAL TRIBUNAL UNDER THE RULES
3-425 Note. An overview of ICC terminology relating to the selection and removal of arbitrators and the constitution of arbitral tribunals is provided in paragraphs 3-365–3-368.
3-426 Article 12, formerly Article 8 in the 1998 Rules, broadly outlines the procedure for determining an arbitral tribunal’s size and selecting its members. The 2012 Rules introduce a number of modifications to the former provisions primarily for the purpose of improving their clarity.
3-427 Article 12 consists of three main parts:
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3-428 The application, interpretation and administration of Article 12 accounts for a large part of the day-to-day work of the Court and its Secretariat. The provisions are applied fairly flexibly and, wherever possible, the Secretariat will encourage the parties to reach agreement, or at least invite them to express their preferences. The parties’ input will be invited throughout the process of constituting the arbitral tribunal, from the moment the Request for Arbitration is notified.
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ARTICLE 12(1): NUMBER OF ARBITRATORS
The disputes shall be decided by a sole arbitrator or by three arbitrators.
3-429 Purpose. Where the Court determines the number of arbitrators, it will decide on either one or three arbitrators and is not empowered to fix any other number. Where the parties choose the number of arbitrators, Article 12(1) serves as a reminder that it is most appropriate for a dispute to be decided by one or three arbitrators, which is standard practice in international arbitration.
3-430 2012 modifications. None.
3-431 Pros and cons of choosing one or three arbitrators. Various considerations need to be taken into account when determining the size of an arbitral tribunal, regardless of whether the decision is made by the parties themselves or by the Court pursuant to Article 12(2). The considerations examined by the Court are analysed further below under Article 12(2). In general, a sole arbitrator usually brings significant cost savings and may be quicker. For example, meetings and hearing dates should be easier to coordinate and the decision-making process accelerated. Deliberation among three arbitrators, which may necessitate exchanges and lengthy debate to reach a consensus, is avoided. However, opting for a sole arbitrator means that the outcome of the arbitration will be determined by one person alone. One of the most compelling reasons for parties to prefer three arbitrators is that it normally gives each side the possibility of nominating a member of the arbitral tribunal, which tends to increase their confidence in the process.
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3-432 Agreeing on a different number of arbitrators. Although it may be inferred from Article 11(6) combined with Article 2, subparagraph (i), that parties are free to agree on a number of arbitrators other than one or three, it would generally be unwise to do so. First, the number of arbitrators should be odd. This is a mandatory requirement in many legal systems, particularly civil law legal systems. It also makes practical sense, as the arbitral tribunal’s work cannot then be stalled by an even division of opinions. Further, an arbitral tribunal composed of more than three arbitrators is likely to cause unnecessary additional costs and delay and potentially lead to operational difficulties, without necessarily providing any additional benefit in terms of the quality of decisions.
3-433 Arbitration agreements have been known occasionally to provide for a two-member tribunal and the subsequent intervention of an “umpire” in the event of a deadlock. Although a two-step arbitration process of this kind may be recognized by some domestic arbitration laws, the Court has usually refused to administer such cases, as the Rules are based on the assumption that all members of an arbitral tribunal participate in the arbitral proceedings in their totality. The Court considers umpire procedures unsuited to the ICC system of arbitration.
3-434 Notwithstanding their undesirability, the Court is very occasionally faced with party agreements providing for two or five arbitrators (other numbers are hardly ever seen). Upon learning of such agreements, the Secretariat will strongly encourage the parties to agree otherwise. Where the agreement is for an even number of arbitrators (i.e. most commonly two), the Secretariat may draw the parties’ attention to any relevant provisions of the law governing the arbitration agreement or the arbitration proceedings that prohibit such agreements.
ARTICLE 12(2): DETERMINING THE NUMBER OF ARBITRATORS
Where the parties have not agreed upon the number of arbitrators, the Court shall a sole arbitrator, save where it appears to the Court that the dispute is such as to warrant the appointment of three arbitrators. In such case, the claimant shall nominate an arbitrator within a period of 15 days from the receipt of the notification of the decision of the Court, and the respondent shall nominate an arbitrator within a period of 15 days from the receipt of the notification of the nomination made by the claimant. If a party fails to nominate an arbitrator, the appointment shall be made by the Court.
3-435 Purpose. Article 12(2) applies only when the parties have not agreed on the number of arbitrators. In such situations, it serves two distinct purposes. First, it empowers the Court to determine the size of the arbitral tribunal. Second, it spells out the basic process for the constitution of both one and three-member tribunals. Where the Court opts for one arbitrator, it is required to appoint that arbitrator. Where it decides on a three-member
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arbitral tribunal, Article 12(2) describes the initial steps to be taken towards constituting the tribunal: each side is required to nominate a co-arbitrator for confirmation by the Court, failing which the co-arbitrator is appointed by the Court on behalf of the defaulting party or parties. The subsequent step of selecting the president of the arbitral tribunal is not dealt with in Article 12(2), but in Article 12(5).
3-436 2012 modifications. The last sentence of Article 12(2) is new. It was not necessary in its predecessor, Article 8(2) of the 1998 Rules, because the appointment of a co-arbitrator by the Court on behalf of a defaulting party was covered by the former Article 9(6), which has been removed and reworked in the 2012 Rules.
3-437 Court and Secretariat procedure. If the parties have agreed on the number of arbitrators prior to the submission of the Request for Arbitration (e.g. in the arbitration clause included in their contract), then Article 12(3) or 12(4) applies to the constitution of the arbitral tribunal. Where there is no such prior agreement, the Secretariat will invite the parties to comment on the number of arbitrators when acknowledging receipt of and notifying the Request for Arbitration. The claimant may already have made a proposal in its Request for Arbitration, in which case the Secretariat will simply invite the respondent to comment on the proposal. Where the economic value of a case is considered small and the parties have opted for a three-member arbitral tribunal, the Secretariat will in most cases actively encourage the parties to agree instead on a sole arbitrator and will point out the relative cost of each option (the fees and expenses of three arbitrators can be expected to be threefold those of a sole arbitrator).
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3-438 When and how does the Court determine the number of arbitrators? Only when the parties have been unable to reach agreement is it necessary for the Court to decide on the size of the arbitral tribunal pursuant to Article 12(2). The Court will not be invited to make this decision until all parties have had a reasonable opportunity to comment. The application of Article 12(2) is generally triggered by the respondent’s failure to file an Answer within the time limit set or where it becomes clear that the parties will not agree on the number of arbitrators. When inviting the Court to make a decision on the number of arbitrators, the Secretariat will bring to its attention all relevant information that has been provided, for instance, in the Request for Arbitration, the Answer to the Request and the parties’ general correspondence.
3-439 Article 12(2) creates a presumption in favour of a sole arbitrator. However, it is only a presumption and the Court carefully considers the characteristics of the dispute in order to determine the best number of arbitrators for the case. Where the nature of the dispute suggests that its parties may benefit from a three-member panel, the Court will decide on the matter using a holistic approach that takes into account, among other things, the economic value of the dispute, its apparent legal and factual complexity, its political sensitivity or significance in other non-financial terms (e.g. the Court will often consider that three arbitrators are appropriate for disputes involving one or more states or state entities as parties).
3-440 The financial value of the dispute, while not decisive in itself, is an important factor. There is no minimum amount in dispute above which the Court will, as a rule, decide in favour of three arbitrators. Instead, the Court will in all instances consider the particular circumstances of the case. Subject to all other relevant factors, it has in the past been unusual for the Court to decide in favour of three arbitrators where the amount in dispute is below US$ 5 million or to decide in favour of a sole arbitrator where the amount in dispute exceeds US$ 30 million.
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3-441 Pros and cons of choosing one or three arbitrators. This is discussed above under Article 12(1) (see paragraph 3-431).
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ARTICLE 12(3): SOLE ARBITRATOR
Where the parties have agreed that the dispute shall be resolved by a sole arbitrator, they may, by agreement, nominate the sole arbitrator for confirmation. If the parties fail to nominate a sole arbitrator within 30 days from the date when the claimant’s Request for Arbitration has been received by the other party, or within such additional time as may be allowed by the Secretariat, the sole arbitrator shall be appointed by the Court.
3-443 2012 modifications. Minor linguistic adjustments.
3-444 Article 12(3) encourages parties to agree on the identity of their sole arbitrator. Although it sets a time limit for their joint nomination, extensions are readily granted and the Court will generally accept a joint nomination made by the parties after the time limit for making such a nomination has expired, so long as the Court has not at that stage appointed an arbitrator itself. This tolerance is based on the assumption that, in making a joint nomination late, the parties have implicitly agreed to extend the time limit.
3-445 Article 12(3) also empowers the Court to appoint the arbitrator pursuant to Article 13 if the parties are unable to agree on a nominee.
ARTICLE 12(4): SELECTION OF CO-ARBITRATORS FOR A THREE-MEMBER TRIBUNAL
Where the parties have agreed that the dispute shall be resolved by three arbitrators, each party shall nominate in the Request and the Answer, respectively, one arbitrator for confirmation. If a party fails to nominate an arbitrator, the appointment shall be made by the Court.
3-446 Purpose. The provisions of Article 8(4) of the 1998 Rules have been split over two paragraphs in the 2012 Rules, i.e. Articles 12(4) and 12(5), which set out the procedure for the constitution of three-member tribunals. That procedure consists of (i) the nomination and confirmation or the appointment of the two co-arbitrators pursuant to Article 12(4) (alternatively Article 12(2)) and (ii) the nomination and confirmation or the appointment of the president of the tribunal pursuant to Article 12(5). Article 12(4)
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applies only where the parties have agreed that the dispute shall be resolved by three arbitrators; Article 12(2) applies where the Court has decided on the number of arbitrators. Under both provisions, each side will have the opportunity to nominate applies only where the parties have agreed that the dispute shall be resolved by three arbitrators; Article 12(2) applies where the Court has decided on the number of arbitrators. Under both provisions, each side will have the opportunity to nominate a co-arbitrator.
3-447 Article 12(4) also empowers the Court to appoint a co-arbitrator where either side fails to nominate one.
3-448 2012 modifications. Article 8(4) of the 1998 Rules also included the procedure for the appointment of the president of the arbitral tribunal. In the 2012 Rules, this aspect of Article 8(4) has become Article 12(5), a new provision. A change of wording has been made at the start of the provision to make clear that it applies only where the parties have agreed to a threemember panel. This removes any risk of confusion between Articles 12(4) and 12(2).
3-449 Deadlines for party nominations. Article 12(4) specifies that the nomination of a co-arbitrator should be made in the nominating side’s initial submission. The claimant must therefore nominate a co-arbitrator in its Request for Arbitration, as required by Article 4(3), subparagraph (g), and the respondent must do likewise in its Answer, as required by Article 5(1), subparagraph (e). If the respondent applies for an extension of the time allowed for submitting its Answer, Article 5(2) requires it to nominate a coarbitrator in its application.
3-450 It is not uncommon for a party that is unrepresented and/or less familiar with the Rules to miss these deadlines. In some instances (e.g. where the respondent is a large corporation), the Request for Arbitration may not reach the relevant individual or group within the corporation before a significant portion of the time allowed for submitting an Answer has elapsed. In general, the Court prefers co-arbitrators to be selected by the parties and is therefore flexible in its application of deadlines for making nominations. For example, if the claimant fails to nominate an arbitrator in its Request, the Secretariat will invite it to do so promptly when advising the claimant that it has notified the Request to the respondent. A time limit of fifteen days is typically fixed and may be extended. Where the respondent fails to nominate a co-arbitrator in its Answer, it is usually offered a further opportunity to make a nomination. Where the respondent applies for an extension of the time limit for submitting its Answer, the Secretariat follows Article 5(2) to the letter and requires the respondent’s application to contain comments on the constitution of the arbitral tribunal. Where appropriate, these comments will include the nomination of a co-arbitrator. As mentioned in the discussion of Article 5(2), the Secretariat will normally refuse to grant an extension if the respondent does not nominate a coarbitrator where required (see paragraphs 3-142–3-144). This enables the Secretariat to proceed with the constitution of the arbitral tribunal without delay. However, in exceptional circumstances and provided its application is substantiated, the respondent may be allowed additional time to make its nomination.
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3-451 The Court has usually taken a different approach where the parties have specified deadlines for the nomination of arbitrators in their arbitration agreement (Articles 11(6) and 38 permit such modifications of time limits). If the opposing party objects to the tardy nomination, the Court has generally refused the nomination and appointed an arbitrator itself.
3-452 Desirable qualities for party-nominated co-arbitrators. The purpose of allowing each side to select a co-arbitrator is not to gain representation on the arbitral tribunal, but rather to grant the parties peace of mind by allowing them to have at least one known quantity on the arbitral tribunal. A party will often select a national of the state from which it originates. A party may also seek an arbitrator with a deep understanding or extensive knowledge of the legal or business tradition or the industry sector in which that party operates.
3-453 Whatever criteria the parties adopt when nominating co-arbitrators, the Court will expect party-nominated co-arbitrators to meet the same high standards of independence and impartiality as presidents of arbitral tribunals and sole arbitrators. This is a requirement of the Rules. Moreover, it is generally considered counter-productive in international arbitration to nominate a co-arbitrator who will be biased in favour of the nominating party’s position because such bias is likely to marginalize the arbitrator in the arbitral tribunal’s deliberations.
3-454 Neither the Court nor its Secretariat can suggest arbitrators for nomination by the parties, nor do they maintain a list of arbitrators from which the parties must choose. The parties are entirely free in their choice of arbitrator. Selecting an arbitrator is a crucial step in international arbitration, so parties may wish to seek expert legal advice before deciding which arbitrator to nominate.
3-455 Multiple parties and failure to arrive at a joint nomination. In cases where multiple claimants, respondents or additional parties are unable to arrive at a joint nomination pursuant to Article 12(6) or 12(7), the Court may make the necessary appointments pursuant to Article 12(4) or 12(8).
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3-456 Can a party withdraw its nomination? The Court has generally allowed nominations to be withdrawn before the nominee has been confirmed pursuant to Article 13(1) or 13(2), but not thereafter. Once confirmed, an arbitrator may be replaced only for the reasons specified in Article 15(1). A party should be cautious about withdrawing its initial nominee if the new nomination is likely to be made outside any time limit for making a nomination, particularly if the time limit has been set in the parties’ arbitration agreement.
3-457 Appointment of a co-arbitrator by the Court. If a party fails to nominate a co-arbitrator, the Court will step in and appoint the arbitrator on the party’s behalf pursuant to Article 13(3) or 13(4). The appointment process and the factors taken into consideration when making the appointment are discussed below under those provisions.
ARTICLE 12(5): SELECTION OF THE PRESIDENT OF THE ARBITRAL TRIBUNAL
Where the dispute is to be referred to three arbitrators, the third arbitrator, who will act as president of the arbitral tribunal, shall be appointed by the Court, unless the parties have agreed upon another procedure for such appointment, in which case the nomination will be subject to confirmation pursuant to Article 13. Should such procedure not result in a nomination within 30 days from the confirmation or appointment of the co-arbitrators or any other time limit agreed by the parties or fixed by the Court, the third arbitrator shall be appointed by the Court.
3-458 Purpose. Article 12(5) defines the procedure according to which the president of the arbitral tribunal is selected, regardless of whether the decision to submit the dispute to a three-member tribunal was made by the parties or the Court. The parties are entitled to nominate the president jointly or to agree on another procedure for the president’s nomination. In all cases the nominated president will need to be confirmed by the Court pursuant to Article 13(1) or 13(2). Where the selected procedure fails to result in a nomination within the specified thirty-day time limit or any other time limit fixed by the Court or agreed by the parties, Article 12(5) empowers the Court to appoint the president.
3-459 2012 modifications. As discussed under Article 12(4), the content of Article 8(4) of the 1998 Rules has been split into Articles 12(4) and 12(5). Therefore, while Article 12(5) is new, in reality it merely restates the second part of the former Article 8(4) along with the modification described in the next paragraph.
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3-460 A substantive modification is the inclusion of a default time limit of thirty days for the parties’ agreed procedure to result in the nomination of the president. It is common for the parties to empower the co-arbitrators jointly to nominate the president, failing which the Court will step in. Under the 1998 Rules, parties often failed or omitted to agree on a time limit for making the nomination despite the need for such a time limit under certain arbitration laws. The Court’s practice was therefore to insist in all cases that a time limit be agreed by the parties, failing which it would fix a time limit itself. A further agreement between the parties or a further decision by the Court was necessary to extend that time limit. This process resulted in delays and additional correspondence which can now be avoided due to the default time limit. The time limit of thirty days from the confirmation or appointment of the co-arbitrators reflects the Court’s usual practice when fixing such time limits under the 1998 Rules and is in keeping with the time limit commonly agreed by parties for this purpose.
3-461 When can the parties agree to an alternative procedure? The parties can agree on a procedure for selecting the president of the tribunal at any time until the Secretariat notifies them of the president’s appointment by the Court. Such agreements are commonly found in the parties’ arbitration agreement but may be made subsequently, after the Request for Arbitration has been submitted. For example, where nothing has been foreseen in the arbitration agreement, the claimant frequently proposes a method for selecting the president when submitting its Request for Arbitration. The Secretariat will then invite the other parties to comment and will encourage all the parties to reach an agreement. Where a selection procedure has been neither foreseen in the arbitration agreement nor proposed by the claimant in its Request, the Secretariat will draw the parties’ attention to the default provision under the Rules and remind them that they may opt for an alternative procedure.
3-462 Choosing an alternative procedure. By far the most frequent alternative procedure for selecting the president is joint nomination by the two coarbitrators. Sometimes a joint nomination is made by the parties themselves. The former method is more likely to succeed because co-arbitrators tend to be more objective and consensual than parties. Also, co-arbitrators are likely to be more comfortable with a president they have nominated, which is likely to reinforce the tribunal’s collegiality. It is not uncommon for the co-arbitrators to consult the parties when nominating the president to ensure they are involved in the process. For example, co-arbitrators sometimes seek the parties’ opinion on a specific candidate or ask them to comment on a small list of potential candidates. They may also invite the parties to comment on any qualifications the arbitrator must hold. Sometimes, the parties explicitly request the co-arbitrators to consult them in the selection process. In a case from 2011, for example, the parties required the co-arbitrators to draw up a list of six candidates and gave themselves a short period of time to make comments and give ratings on The co-arbitrators then took into account the
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parties’ feedback when making their joint nomination. Other procedures for selecting arbitrators are discussed under Article 11(6) (see paragraph 3-423).
3-463 Time limit for nominating the president. The default time limit under Article 12(5) applies only when the parties have not themselves agreed on a time limit, either in their arbitration agreement or subsequently. It is thirty days from the date of the confirmation or appointment of the second coarbitrator, if the co-arbitrators are confirmed or appointed on different dates. It is normal practice for the Court to appoint or confirm both coarbitrators simultaneously, although there may be exceptions.
3-464 The Court is empowered to fix a time limit other than thirty days. Although this rarely happens, instances in which it might be inclined to do so are where the parties inform it of special circumstances, where the case is fasttrack or where the thirty-day time limit is inconsistent with other time limits referred to in the parties’ arbitration clause. The Court can extend the thirty-day default time limit, or any other time limit it has fixed, upon a party’s request or on its own initiative. However, it is unlikely to do so if one of the parties expressly objects or where the time limit has been agreed by the parties. The parties are free to agree to extend the time limit at any time, regardless of whether it was previously agreed by them or fixed by the Court.
3-465 Appointment of the president by the Court. Where no alternative procedure has been agreed upon or the agreed procedure does not result in a nomination, the Court will step in and appoint the president to avoid further delay.
ARTICLES 12(6)–12(8): THREE-MEMBER ARBITRAL TRIBUNALS IN MULTIPARTY ARBITRATION
3-466 Brief overview. Articles 12(6)–12(8) address the constitution of threemember arbitral tribunals where (i) there are more than two parties to the arbitration and (ii) either the parties have agreed or the Court has decided on a three-member arbitral tribunal. Without those two conditions, Articles 12(6)–12(8) do not apply.
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3-467 Where applicable, these provisions determine the manner in which the arbitral tribunal is to be constituted. Article 12(6) describes the default method. It states that one co-arbitrator shall be nominated by the claimants jointly and the other co-arbitrator by the respondents jointly, and that the co-arbitrators so nominated shall be subject to confirmation pursuant to Article 13. This provision follows the approach adopted elsewhere in the Rules of permitting each side to nominate a co-arbitrator in cases to be submitted to a three-member arbitral tribunal (see Articles 12(2) and 12(5)). Article 12(7) logically extends this approach to additional parties joined pursuant to Article 7. The additional party may align itself with either the claimant’s side or the respondent’s side for the purpose of nominating a co-arbitrator.
3-468 The important difference between the constitution of arbitral tribunals in two-party cases and multiparty cases is found in Article 12(8), which states that if either side fails to make a joint nomination and all the parties have not agreed on a different procedure, the Court is empowered to appoint each member of the arbitral tribunal where it considers this to be appropriate and to designate one of them to act as president.
3-469 The result of applying Article 12(8) is strikingly different from that of applying the default procedure for appointing co-arbitrators in arbitrations between two parties. In the latter case, where one side nominates a coarbitrator but the other fails to do so, the Court will appoint an arbitrator on behalf of the defaulting party only (see last line in Articles 12(2) and 12(4)). The first party’s nominee is maintained. This is in contrast to Article 12(8) where all parties forfeit their right to nominate an arbitrator.
3-470 The purpose of Article 12(8) is to ensure equality between parties in the process of constituting an arbitral tribunal. The right of parties to participate in this process is an important feature of arbitration. Where all the parties on one side are unable to agree on a choice of co-arbitrator, the Court can deny all the parties in the arbitration the right to nominate an arbitrator, if appropriate. This across-the-board measure prevents one party or one side from having a perceived or actual advantage over the other in respect of the arbitral tribunal’s constitution.
3-471 Background. Articles 12(6) and 12(8) are a restatement of Articles 10(1) and 10(2) of the 1998 Rules. Article 12(7) of the 2012 Rules was added to ensure harmony with the new provisions on multiparty arbitration, specifically Article 7. None of the versions of the Rules prior to 1998 contained specific provisions on constituting arbitral tribunals in multiparty cases. Up until 1992 the Court would simply request that multiple claimants or multiple respondents nominate a co-arbitrator jointly. If either side failed to do so, the Court would appoint an arbitrator on that side’s behalf, but would allow the opposing side’s nomination to stand.
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3-472 This was the approach taken in an ICC arbitration that prompted the French Court of Cassation’s landmark Dutco decision in 1992.28The ICC Court confirmed the arbitrator nominated by the claimant and requested the two respondents to nominate an arbitrator jointly, failing which the Court would appoint an arbitrator on their behalf. Although the respondents eventually submitted a joint nomination, they did so under protest, contending that they should each have been entitled to nominate a co-arbitrator. They challenged the constitution of the arbitral tribunal before the arbitral tribunal itself and, as that challenge was rejected, subsequently challenged the award before the Paris courts. Upon appeal, the Court of Cassation ultimately held that parties are entitled to equality of treatment, including in the process of constituting the arbitral tribunal. This decision was instrumental in prompting the Court to reconsider its practice in this respect. When the Rules were revised in 1998, Article 10 was added to address these cases of potential inequality.
3-473 2012 modifications. Apart from the addition of Article 12(7) for joinder cases, no substantive changes have been made to the provision contained in the former Articles 10(1) and 10(2) of the 1998 Rules. However, this provision no longer stands alone, as it did in Article 10, but forms part of the new Article 12, where it logically and conveniently lies alongside the other provisions on the constitution of three-member arbitral tribunals.
ARTICLE 12(6): JOINT NOMINATION OF A CO-ARBITRATOR
Where there are multiple claimants or multiple respondents, and where the dispute is to be referred to three arbitrators, the multiple claimants, jointly, and the multiple respondents, jointly, shall nominate an arbitrator for confirmation pursuant to Article 13.
3-474 2012 modifications. Minor linguistic adjustments.
3-475 As explained in the overview above, Article 12(6) defines the selection process that applies by default in cases involving multiple claimants or respondents. It mirrors and is fully compatible with the procedure set out in Articles 12(2) and 12(4) allowing each side in the arbitration to nominate a co-arbitrator. As to the timing of each side’s respective nomination, the Court’s usual approach is to apply, by analogy, the procedure set out in
Articles 12(2) and 12(4).
3-476 In practice, it is extremely rare for multiple claimants not to nominate a coarbitrator jointly. If they commence the arbitration jointly, they should be able to agree on the identity of an arbitrator. It is also very common for multiple respondents to nominate a co-arbitrator jointly. If the respondents
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have all been named as such, it is often because they are related companies or at least have a related or common interest in the dispute against the claimants. Nonetheless, there may be times when they have diverging views on the choice of arbitrator, making a joint nomination impossible.
3-477 The Court occasionally administers cases where there are more than two opposing sides. In those cases, it is uncommon for the parties collectively to be able to agree on the co-arbitrators, so Article 12(8) usually applies.
ARTICLE 12(7): PARTICIPATION OF ADDITIONAL PARTIES IN THE NOMINATION OF CO-ARBITRATORS
Where an additional party has been joined, and where the dispute is to be referred to three arbitrators, the additional party may, jointly with the claimant(s) or with the respondent(s), nominate an arbitrator for confirmation pursuant to Article 13.
3-478 2012 modifications. New provision.
3-479 Article 12(7) facilitates multiparty arbitrations and clarifies corresponding procedures in furtherance of Articles 7–10. The provision broadens the scope of Articles 12(6) and 12(8) to any additional parties joined in accordance with Article 7. The fundamental principle of permitting parties to participate in the constitution of their arbitral tribunal and assuring equality in that process must naturally extend to additional parties. This explains why it is not possible to join an additional party to an ICC arbitration after an arbitrator has been confirmed or appointed.
3-480 In many cases it is obvious on which side the additional party will align itself for the purpose of constituting the arbitral tribunal. This is primarily a matter for the parties to consider and agree upon. The Secretariat will seek to encourage such agreement as soon as an additional party is joined. Where the additional party is unable to agree with one of the existing parties on the nomination of a co-arbitrator, the Court may apply Article 12(8).
ARTICLE 12(8): ALTERNATIVE METHOD FOR CONSTITUTING A THREE-MEMBER ARBITRAL TRIBUNAL
In the absence of a joint nomination pursuant to Articles 12(6) or 12(7) and where all parties are unable to agree to a method for the constitution of the arbitral tribunal, the Court may appoint each member of the arbitral tribunal and shall designate one of them to act as president. In such case, it shall be at liberty to choose any person it regards as suitable to act as arbitrator, applying Article 13 when it considers this appropriate
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3-481 Purpose. Article 12(8) allows the Court to sidestep the ordinary appointment/confirmation process described in Articles 12(2) and 12(4) in order to ensure that all parties are treated fairly and equally when constituting a three-member arbitral tribunal in multiparty cases. If either side is unable to make a joint nomination, the Court may appoint all three members of the arbitral tribunal and designate one of those members to act as president. In this case, all the parties in the case will forfeit their right to nominate a co-arbitrator. As noted above, more often than not multiple claimants or respondents will be tied to each another through ownership or a relationship of another kind, leading to similar or identical interests or a common purpose. The likelihood that these parties will disagree is thus reduced, and consequently the Court will only rarely apply Article 12(8).
3-482 2012 modifications. Minor linguistic adjustments.
3-483 Court’s discretion to apply Article 12(8). Article 12(8) does not require the Court to take action where a set of parties is unable to agree on a joint nominee. It rather permits the Court to appoint all arbitrators where it considers this course of action to be appropriate. If the Court decides not to apply Article 12(8) when one side fails to make a joint nomination, it will usually consider confirming the other side’s nominee pursuant to Articles 13(1) and 13(2) and will appoint a co-arbitrator on behalf of the defaulting side pursuant to Article 13(3) or 13(4).
3-484 The Dutco case referred to in the overview above was a decision of the French Court of Cassation. Very few other state courts have reached similar decisions. Nonetheless, the ICC Court generally considers that it should respect the principle of fairness and equality affirmed in Dutco.29Accordingly, in the absence of a joint nomination pursuant to Articles 12(6) or 12(7), the Court will seriously consider applying Article 12(8), regardless of the place of arbitration, and will usually proceed to do so, particularly if it considers that the parties might have incompatible or opposing interests in relation to the outcome of the dispute. In one case, for example, a respondent party that was partly owned by the claimant filed jurisdictional objections and made arguments on the merits that conflicted with those of the other respondent. It also brought cross-claims against the other respondent party. Given the respondents’ clearly diverging interests, the Court decided to appoint all three arbitrators.
3-485 The Court rarely chooses not to apply Article 12(8). It may occasionally do so when there are special circumstances rendering any questions of inequality and fairness moot or at least less obvious. Where the parties on one side of the dispute are subsidiaries of the same parent company or are otherwise closely related or share similar interests in the arbitration, the Court may be less inclined to apply Article 12(8) if their failure to agree appears to be tactical in nature. Another typical situation in which the
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Court may refrain from applying Article 12(8) is when one or more of the parties on the side that failed to nominate a co-arbitrator are not participating in the proceedings. In a 2010 case, one of the respondents was a company jointly owned and controlled by the claimants and the other respondent parties. However, the dispute primarily concerned the shareholder relationship between the claimants and the other respondent parties. The jointly held company did not participate in the arbitration, doubtless because its shareholders, engaged in a dispute amongst themselves, were unable to operate it. The claimants jointly nominated a co-arbitrator and all the respondents other than the jointly held company did likewise. The jointly held company did not object to any of the coarbitrators and its own interests were not at the centre of the dispute. The Court confirmed the co-arbitrators who had been nominated and did not apply Article 10(2) of the 1998 Rules (corresponding to the current Article 12(8)). The Court’s decision not to apply Article 12(8) is often made in cases in which at least one of the respondents is not participating in the proceedings, although it may equally decide to apply the provision in such cases. If none of the respondents at all is participating in the proceedings, the Court generally does not apply Article 12(8).
3-486 How does the Court apply Article 12(8)? If the Court decides to appoint all arbitrators pursuant to Article 12(8), it must then determine what appointment process to use. It is not required to follow the usual method for appointing arbitrators described in Article 13 and virtually never does. Rather, it simply selects and appoints three arbitrators whom it considers to be appropriate, in the same manner as when applying Article 13(4), subparagraph (c) (see paragraph 3-545). It will not appoint candidates previously nominated or suggested by the parties, as this would amount to sidestepping Article 12(8).
3-487 Agreeing on a different method for constituting the arbitral tribunal. Article 12(8) expressly permits parties to agree on a procedure for selecting arbitrators other than that described in Article 12(8). Although already recognized in Article 11(6), this right is restated in Article 12(8), given the serious impact this provision may have on the parties by denying them the opportunity to nominate a co-arbitrator.
3-488 Where parties foresee a potential for multiparty disputes early in their commercial dealings, they may wish to agree on specific procedures for selecting co-arbitrators in the event of a disagreement. However, such agreements are not without risk. For example, the Court has encountered multiparty arbitration agreements that purport to give only some of the parties the right to nominate co-arbitrators, leaving other parties without that right. Many state courts consider equal treatment in the process of constituting arbitral tribunals to be a fundamental right. Also, problems may unexpectedly arise where, for example, parties named in the agreement as having a right to nominate are subsequently liquidated or sold, or exercise those rights in unexpected ways. Arbitration agreements
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must always be drafted with utmost care and attention, and preferably with the advice of expert arbitration practitioners. As observed above under Article 11(6), the Court will nonetheless make every effort to give effect to parties’ agreements when constituting the arbitral tribunal.
3-489 Where the Court applies Article 12(8) and appoints all three arbitrators in two or more closely related cases, it may decide to appoint the same arbitral tribunal in each case. In practice, the Court has done so where the contracts and contracting parties were identical and the disputes were of a similar nature and related.
ARTICLE 13(1): FACTORS TO CONSIDER WHEN CONFIRMING OR APPOINTING ARBITRATORS
In confirming or appointing arbitrators, the Court shall consider the prospective arbitrator’s nationality, residence and other relationships with the countries of which the parties or the other arbitrators are nationals and the prospective arbitrator’s availability and ability to conduct the arbitration in accordance with the Rules. The same shall apply where the Secretary General confirms arbitrators pursuant to Article 13(2).
3-490 Purpose. Article 13(1) serves two purposes. First, it outlines the factors to which the Court and Secretary General have regard when confirming arbitrators and to which the Court has regard when appointing arbitrators. Second, it empowers the Court to confirm an arbitrator nominated by one or more parties or nominated through some other agreed procedure.
3-491 2012 modifications. Minor linguistic adjustments.
3-492 Appointments and confirmations. As noted above in paragraph 3-366, a distinction is made in ICC arbitration between confirmation and appointment. While the considerations mentioned in Article 13(1) apply to both appointments and confirmations, they are far more relevant to appointments than to confirmations. When confirming arbitrators, the Court, or alternatively the Secretary General pursuant to Article 13(2), merely approves the parties’ choice and will generally respect that choice unless a party has objected to the confirmation on compelling grounds or the arbitrator has made a significant disclosure relating to independence or impartiality, in which case the Court may refuse to confirm the arbitrator even in the absence of an objection. The Court occasionally decides not to confirm an arbitrator when, although no party has objected, it has important information about the arbitrator’s poor performance in previous or ongoing arbitral proceedings. If aware of issues relating to independence or impartiality that the arbitrator should have disclosed to the parties, the Court will encourage the arbitrator to disclose them and then seek the parties’ comments on the disclosure. Where a prospective arbitrator repeatedly refuses to disclose facts or circumstances that the Court has
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requested him or her to disclose, the Court has occasionally decided not to confirm the arbitrator for that reason. The consequences of withholding confirmation pursuant to Article 13(1) are addressed below (see paragraphs 3-513 and 3-514).
3-493 Timing of confirmation or appointment decisions. The length of time between the submission of an arbitrator’s Statement and CV pursuant to Article 11(2) and his or her confirmation or appointment can vary enormously (see paragraph 3-399). In the case of appointments, the Court will usually be in a position to decide in less than two weeks from the Secretariat’s receipt of the arbitrator’s forms.
3-494 Comments on the factors listed in Article 13(1). The list of factors in Article 13(1) is not exhaustive. The Court may take into account any other factors it considers relevant. One essential factor is the potential arbitrator’s independence and impartiality, which is not mentioned here as it is specified as a mandatory requirement in Article 11(1).30The considerations that inform the Court’s decisions on appointments rather than confirmations are discussed below.
3-495 Nationality. The concept of neutrality has traditionally included an arbitrator’s nationality. While the concept may be outmoded in certain contexts, parties often still attach importance to it in international arbitration as a factor affecting an arbitrator’s perceived neutrality. Article 13(5), which prevents the Court from appointing as a president or sole arbitrator a person with the same nationality as any party, is the most explicit reflection of this concern in the Rules. However, the provision does not apply to co-arbitrators or to arbitrators confirmed by the Court. It is common for a party to select as a co-arbitrator a candidate who shares its own nationality or at least country of residence. Similarly, when the Court appoints a co-arbitrator on behalf of a defaulting party, its practice is to appoint a person of that party’s nationality where possible.31
3-496 Extending Article 13(5), the Court likewise rarely appoints as president an arbitrator who holds the same nationality as one of the party-nominated co-arbitrators, unless the parties are agreeable to this. Accordingly, the Court’s practice is not to decide on the appointment of the president until both co-arbitrators have been confirmed. In many cases, it is also desirable to have multiple nationalities on the arbitral tribunal so as to benefit from a mix of national and cultural backgrounds.
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3-497 The Court’s practice is to equate nationality with citizenship or the holding of a particular passport. It does not usually consider other factors such as ethnicity, cultural background, birthplace or previously held citizenship as constituting nationality.
3-498 Residence. An arbitrator’s place of residence alone would not cause the Court to refuse to confirm a nominated arbitrator, but it is a highly relevant factor when the Court appoints an arbitrator. Place of residence is taken into consideration principally for reasons of convenience, time and cost. Particularly in smaller cases, the Court will look for well-qualified arbitrators in or close to the place of the arbitration, or at least with easy access to the place of the arbitration or in the same or a neighbouring time zone. In larger cases, the cost of travel to the place of the arbitration becomes less relevant. Although residence is important, the Court’s primary objective, however, is to appoint an arbitrator with the right qualifications, qualities and experience. If there is nobody suitable in or close to the place of the arbitration, the Court does not hesitate to look elsewhere.
3-499 Other relationships with the countries of which the parties or the other arbitrators are nationals. Familiarity with the cultures and jurisdictions from which the parties originate can be an obvious advantage. However, the “other relationships” to which Article 13(1) refers can cut both ways. If close, an arbitrator’s other relations with a particular country could create a neutrality concern that militates against that candidate’s appointment, yet an arbitrator’s familiarity with one or more countries or cultures is often desirable and may result in smoother proceedings. Examples of other relationships relating to nationality include having formerly held a nationality or, while never having held the nationality, having resided in the country for a lengthy period.
3-500 Availability. The rapidity of arbitral proceedings is usually important to the parties. While the speed of proceedings is controlled in large part by the parties themselves and their legal advisers, arbitrators also have a responsibility to ensure that they do not cause delays in the arbitration owing to their lack of availability. While the Court recognizes that wellqualified, experienced practitioners and arbitrators frequently juggle a number of professional activities, overcommitment has become an important source of delay. Assisted by the broader disclosure requirements of the Statement (see paragraphs 3-376–3-382), the Court is better equipped now to assess availability. Where there are doubts, it may seek further assurances from the candidate. The Court also uses relevant inside
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information, such as knowledge gained from past experiences with the same arbitrator. For a discussion of cases in which the Court decided not to confirm or appoint arbitrators as a result of their lack of availability, see paragraphs 3-383 and 3-384.
3-501 Ability. The ability to conduct an arbitration in accordance with the Rules has various facets, the most important of which are discussed below.
3-502 Expertise, experience and qualifications. Expertise, experience and qualifications with respect to the subject matter of the dispute and the governing law can be desirable. However, these are not necessarily requirements that are considered more important than a proven track record in international arbitration.
3-503 Knowledge of international arbitration. The Court prefers to appoint candidates who have a solid general knowledge and experience of international arbitration (domestic arbitration may also be relevant), particularly ICC arbitration. However, the Court is also committed to expanding the global pool of arbitrators and recognizes the importance of allowing younger and less experienced arbitrators to gain experience. In smaller cases, the Court may be inclined to appoint up-and-coming arbitrators. Extensive prior exposure to arbitration, as a counsel to parties for example, will generally be required in order for a candidate with no prior experience as an arbitrator to be considered for appointment. Prior international arbitration experience, preferably ICC experience, is even more important where the candidate is being considered for appointment as a president or sole arbitrator, rather than a co-arbitrator. The above standards are applied by the Court when making appointments. When confirming arbitrators, the Court will generally respect the parties’ preferences, hence the importance of their nominating a candidate with an appropriate level of experience.
3-504 Legal qualifications. For appointments in cases where the applicable law has already been determined, the Court will endeavour to find a candidate who is either qualified in that law or has some knowledge of it, as gauged from the candidate’s studies and professional experience. However, an arbitrator who has both extensive knowledge of the applicable law and experience in international arbitration might not be available. Furthermore, some arbitrators with knowledge of the applicable law may be ruled out on grounds of nationality under Article 13(5), given that lawyers are often qualified to practise the law of the country of which they are nationals. The
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Court is therefore often compelled to appoint an arbitrator with no qualifications in, or in some instances no direct knowledge of, the applicable law, although it will generally seek to appoint arbitrators who at least are conversant with similar laws. Accordingly, lawyers from the common law system will tend to be appointed in cases where the substantive law belongs to that system, while civil lawyers will tend to be appointed where the governing law belongs to the civil law system.
3-505 The Court rarely appoints arbitrators with a technical (e.g. engineering, accounting) but no legal background. This is particularly true when it comes to appointing presidents and sole arbitrators, since in the Court’s experience lawyers are often better able to manage the proceedings and ensure that concerns of due process and fairness are not overlooked. However, many technical experts have acquired such skills by experience, so there may be times when the Court appoints technical experts with no legal background but a proven track record in international arbitration. As an illustration, a small number of engineers have extensive experience of acting as presidents of ICC arbitral tribunals, despite lacking formal legal training.
3-506 Language skills. ICC arbitrations are conducted in, and awards are written in, a large number of different languages (see tables 29 and 38). Ideally, an arbitrator should be very comfortable in the language or languages of the arbitration. He or she should understand all documents and oral submissions and be able to write and speak the language clearly. That said, the Court can be flexible with regard to a candidate’s linguistic skills and will balance them against other considerations. Imposing overly stringent requirements such as near native speaking and writing skills may in certain instances significantly diminish the pool of competent candidates.32
3-507 When considering language, the Court may be confronted with several situations. The first is the absence of any agreement among the parties on language. In such a case, the Court will seek the parties’ comments on their preferred language and/or do its best to anticipate the likely language(s) of the arbitration, particularly taking into account the language of the parties’ contract (referred to in Article 20). However, the mere request by a party for a particular language will not automatically mean that the Court will limit itself to appointing an arbitrator competent in that language. If the other party objects to that language, and the request appears unreasonable in the circumstances, little weight will be given to it.
3-508 The issue is simpler where the parties have agreed on the language or languages of the arbitration. However, the choice of an unusual language or one not spoken by many experienced arbitrators can sometimes make it difficult to find a suitable candidate. The Court may be restricted by Article 13(5), which prevents it from appointing as sole arbitrators or
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presidents persons of the same nationality as any party. For example, where the language of the arbitration was Greek and one of the parties was Greek, the Court found relatively few non-Greek nationals fluent in Greek and with experience of international arbitration.
3-509 The Court will not usually confirm an arbitrator who does not speak the agreed language of the arbitration. However, where the language is disputed, it will not necessarily require all arbitrators to be competent in all possible languages of the arbitration. Doing so would unnecessarily restrict the parties’ choice in designating co-arbitrators. The Court may require nominated arbitrators to be competent in what appears to be the language most likely to be used for the arbitration, once again with particular emphasis placed on the language of the parties’ contract.
3-510 It occasionally happens that the co-arbitrators nominated by the parties do not speak a common language. For example, in one case where the language of the arbitration was undetermined, the claimant contended that the language should be English and nominated an arbitrator who spoke only German and English. The respondent claimed that the language should be French and nominated an arbitrator who spoke only French and Arabic. The dispute involved documents in English, French and German. The Court decided to confirm both co-arbitrators and appointed a president fluent in English, French and German. After the arbitral tribunal had been constituted, the proceedings were conducted simultaneously in English and French. However, the two co-arbitrators were unable to communicate with each other directly as they did not speak a common language.
3-511 Parties’ wishes or agreements on qualifications for arbitrators. Parties sometimes agree, in their arbitration agreement or later, on requirements for arbitrators. Such agreements often refer to the required technical skills or industry experience that the arbitrator should have. The Court also encounters agreements requiring that the arbitrator(s) master certain languages, such as the language of the arbitration or another relevant language. Further, parties may agree that certain nationalities (e.g. nationalities of the parties and/or of certain parent companies) should not be represented on the arbitral tribunal.
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3-512 Any agreements that place strict requirements on an arbitrator’s qualifications, language abilities or skills should be made with extreme care. An unusual combination of skills or requirements can, in some circumstances, severely restrict the pool of potential candidates. It is better that preferences are expressed as desirable qualities rather than strict requirements, so as to leave the parties or the Court with some flexibility to find a competent arbitrator who also has those desired qualities.
3-513 Consequences of non-confirmation under Article 13(1). The Rules do not expressly state what happens if the Court decides not to confirm a nominee pursuant to Article 13(1). In practice, the Court usually grants the nominating party a time limit (typically fifteen days or less) within which to nominate another candidate. The Court may alternatively leave the fixing of this time limit to the Secretariat. The Court will usually provide a party with several opportunities to nominate an arbitrator before it considers that the party has failed to do so, with the result that the appointment is made by the Court pursuant to the last sentence of Article 12(2) or 12(4).
3-514 Where the Court decides not to confirm a president nominated by the coarbitrators or a president or sole arbitrator nominated jointly by the parties or by some other agreed procedure, it may be more cautious about granting new time limits. Depending on the nature of the parties’ agreement, it may first seek the parties’ comments on how to proceed.
ARTICLE 13(2): CONFIRMATION BY THE SECRETARY GENERAL
The Secretary General may confirm as co-arbitrators, sole arbitrators and presidents of arbitral tribunals persons nominated by the parties or pursuant to their particular agreements, provided that the statement they have submitted contains no qualification regarding impartiality or independence or that a qualified statement regarding impartiality or independence has not given rise to objections. Such confirmation shall be reported to the Court at its next session. If the Secretary General considers that a co-arbitrator, sole arbitrator or president of an arbitral tribunal should not be confirmed, the matter shall be submitted to the Court.
3-515 Purpose. Article 13(2), first introduced in the 1998 Rules as Article 9(2), empowers the Secretary General to confirm arbitrators nominated by the parties or pursuant to their agreements. The exercise of this power is limited to situations in which the arbitrator’s Statement is either unqualified or, if qualified, does not give rise to an objection from any party (see paragraphs 3-394 and 3-395). Article 13(2)’s purpose is practical. It aims to reduce the decision-making burden on the Court and to prevent delays where confirmation is uncontroversial. The Secretary General can consider confirmations daily whereas the Court only meets weekly. Pursuant to Article 5(1) of Appendix II, this power to confirm arbitrators may be, and
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regularly is, delegated to the Deputy Secretary General or the General Counsel. In practice, most confirmations are made by the Secretary General or the Secretary General’s delegate rather than by the Court. As required by Article 13(2), these confirmations are reported to the Court.
3-516 2012 modifications. In keeping with the changes made to Articles 11(1)– 11(3), the provision now expressly specifies that qualifications regarding impartiality may bar the Secretary General from confirming an arbitrator if such qualification gives rise to an objection from a party.
3-517 Confirmations raising significant issues. Article 13(2) reserves the Court’s role for more problematic nominations. In practice, even if an arbitrator has not submitted a qualified Statement, but an objection or concern is raised in relation to his or her confirmation, the matter will be submitted to the Court for consideration. The Secretary General is not authorized to refuse a nominee’s confirmation.
3-518 With reference to the last sentence of Article 13(2), since only uncontroversial confirmations are submitted to the Secretary General, it is relatively rare for him or her to consider that the candidate should not be confirmed and for the decision therefore to be referred to the Court. An example nonetheless arose in 2010 and concerned an arbitrator nominated jointly by the co-arbitrators as president. Neither of the parties objected to the confirmation of the president when the Secretariat forwarded his completed forms to them. However, the Secretary General or his delegate felt uncomfortable confirming the president owing to his performance in a previous arbitration that had been greatly delayed. The Secretary General or his delegate accordingly referred the matter to the Court. After being briefed on the individual’s prior performance, the Court decided not to confirm him despite the absence of an objection from any of the parties.
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ARTICLE 13(3): APPOINTMENT OF ARBITRATORS
Where the Court is to appoint an arbitrator, it shall make the appointment upon proposal of a National Committee or Group of the ICC that it considers to be appropriate. If the Court does not accept the proposal made, or if the National Committee or Group fails to make the proposal requested within the time limit fixed by the Court, the Court may repeat its request, request a proposal from another National Committee or Group that it considers to be appropriate, or appoint directly any person whom it regards as suitable.
3-519 Purpose. Article 13(3) directs the Court as to the manner in which it appoints arbitrators. Subject to Article 13(4), it applies to all appointments of arbitrators by the Court, but only appointments, i.e. not confirmations (see paragraph 3-366 on the distinction between the confirmation and the appointment of an arbitrator). Hence, Article 13(3) does not apply where the arbitrator has been nominated by one or more parties or by the coarbitrators, or has been proposed, nominated or appointed through some other procedure agreed by the parties pursuant to Article 11(6).
3-520 2012 modifications. Three modifications have been made to the corresponding provisions in the 1998 Rules. First, the appointment of presidents (then named chairmen) and sole arbitrators were dealt with separately from the appointment of co-arbitrators in the 1998 Rules (respectively in Articles 9(3) and 9(6)). Article 13(3) of the 2012 Rules concerns the appointment of all categories of arbitrators (i.e. presidents, sole arbitrators and co-arbitrators) by the Court.
3-521 Second, “or Group” has been added after each reference to “National Committee”. There are certain territories in which the ICC has not been able to establish a National Committee, because they are not recognized as sovereign states or for other reasons, and has established a “Group” instead. The ICC’s National Committees system is discussed in paragraphs 3-10–3-12. Groups currently exist in Hong Kong and Macao (which are now part of China), Chinese Taipei and Palestine (which is not presently recognized as a state by the United Nations). They serve a similar function to National Committees in relation to the appointment of arbitrators, proposing names of prospective arbitrators for the Court to consider for appointment.
3-522 Third, and most significantly, the language “or appoint directly any person whom it regards as suitable” has been added at the end of Article 13(3). Under the former Article 9(3), which stopped at the word “appropriate”, where a National Committee failed to propose a suitable president or sole arbitrator or failed to respond in good time, the Court was forced either to revert to the same National Committee or to seek a proposal from another National Committee. The only exception for presidents and sole arbitrators was provided in the former Article 9(4), which allowed the Court to “choose the sole arbitrator or the chairman [now president] of the arbitral tribunal
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from a country where there is no National Committee, provided that neither of the parties objects within the time limit fixed by the Court”. As far as coarbitrators were concerned, the former Article 9(6) ended in the same way as the current Article 13(3) by providing the Court with some flexibility where a National Committee’s proposal was rejected or not made in time.
3-523 This revision provides the Court with more flexibility to make a direct appointment after having first attempted to make the appointment on the basis of a proposal from a National Committee or Group. National Committees and Groups provide an invaluable service to the Court in identifying new and appropriately qualified arbitrators. However, some National Committees and Groups fail to respond to the Court’s requests in time, or propose unsuitable candidates. The Court’s priority is always to proceed with the appointment of the most suitable arbitrator for the case as promptly as possible. It will be better placed to meet this objective with the increased flexibility offered by Article 13(3).
3-524 Court selection of National Committee or Group. Article 13(3) requires the Court first to request a proposal from a National Committee or Group. However, the task of constituting the arbitral tribunal remains entirely with the Court, which first selects the National Committee or Group from which to seek a proposal and then decides whether to accept or reject the proposal made.
3-525 Article 13(3) requires the Court to select the National Committee or Group “that it considers to be appropriate”. In making its decision, the Court primarily considers the factors set out in Articles 13(1) (see paragraphs 3-494 and following) and 13(5) (see paragraphs 3-552 and following). It also considers the applicable law, the nature and complexity of the dispute, the languages involved and the place of the arbitration. The peculiarities of individual National Committees or Groups may also be considered. Experience shows that some National Committees and Groups are better placed than others to act quickly and/or to propose experienced arbitrators or arbitrators with certain desired qualities or capabilities. There are also National Committees and Groups whose performance the Court has found to be unsatisfactory for various reasons, including the transparency of their internal selection process, the quality and appropriateness of the candidates proposed, and the speed with which proposals are made.
3-526 ICC National Committees and Groups generally propose arbitrators of the same nationality as themselves. However, there is no formal requirement for them to do so. Some National Committees and Groups may apply a long-term residency requirement instead. This is particularly appropriate for Groups, where nationality is not an apposite criterion.
3-527 As a result of the circumstances of the case or the particular qualifications required of the arbitrator, the Court may in some cases already have a person in mind when it decides to seek a proposal from a given National Committee or Group. The Secretariat, on the Court’s behalf, will suggest
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that person to the National Committee or Group when informing it of the Court’s decision to invite it to make a proposal. However, National Committees and Groups are independent and remain free to propose whomever they wish. It will then be up to the Court to decide whether or not to accept the proposal. In some instances, the National Committee or Group will propose a different but very suitable candidate who was unknown to the Court or had escaped its attention.
3-528 The Court occasionally selects more than one National Committee or Group to make a proposal. This may occur, for example, where a rare combination of qualifications is required and the Court wishes to invite proposals from several National Committees or Groups at once to save time. This occurred in 2010, for example, in a case in which the Court was required to appoint an experienced arbitrator who also had some knowledge of the polyester film industry. If this approach results in the proposal of more than one suitable individual, the Court will appoint the one best suited to the case. National committees and groups are generally informed if they are one of several being invited to make a proposal.
3-529 When approaching National Committees and Groups, the Secretariat will generally fix a seven-day deadline for the proposal. The Court is becoming increasingly insistent on the deadline being respected, and the second sentence of Article 13(3), which allows for a direct appointment where a National Committee or Group does not propose an arbitrator in good time, puts it in a stronger position to enforce that deadline. The Secretariat will also provide the National Committee or Group it invites to make a proposal with the necessary and desired attributes the arbitrator should have and basic information about the case. The case information assists the National Committee or Group in making a suitable proposal and the candidate proposed in deciding whether to accept the proposal or disclose potential conflicts of interest.
3-530 Court decision on whether to appoint a proposed arbitrator. A National Committee or Group sometimes proposes a candidate whom the Court considers to be unsuitable. The candidate’s unsuitability may be due to (i) a lack of relevant experience (see paragraphs 3-502 and 3-503); (ii) a lack of certain preferred or required skills, such as a language or familiarity with a given legal system (see paragraphs 3-504–3-510); (iii) insufficient availability (see paragraph 3-500); (iv) a disclosure or other information concerning independence or impartiality (see paragraphs 3-385–3-393); or (v) the arbitrator’s performance in prior ICC arbitrations (see paragraph3-492). Where the Court rejects a proposal, it informs the National Committee or Group and decides whether to renew its request, seek a proposal from a different National Committee or Group, or bypass that step by directly appointing the arbitrator.
3-531 Direct appointments by the Court. The process of selecting an arbitrator for direct appointment pursuant to Article 13(3) is the same as for direct appointments pursuant to Article 13(4).
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3-532 Confidential nature of the appointment process. The parties are generally not informed about the steps taken by the Court and its Secretariat in selecting an arbitrator for appointment. For example, they will not usually be informed that the Court has decided to invite a given National Committee or Group to make a proposal. Nor will they be informed of any proposals made by that National Committee or Group or any subsequent decisions (e.g. to reject a proposal, choose a different National Committee or Group, or proceed to a direct appointment).
3-533 If an arbitrator under consideration for appointment has not made a disclosure on his or her Statement, the arbitrator’s identity is not revealed to the parties at all prior to his or her appointment. It is only once the arbitrator has been appointed that the Secretariat will inform the parties of his or her identity and of the manner in which the appointment was made (i.e. via which National Committee or Group or directly, and whether under Article 13(3) or 13(4)). Where the prospective arbitrator has made a disclosure on his or her Statement, the relevant facts will be sent to the parties for comments before the appointment is considered. As noted above in the discussion of Article 11(1), the Court applies a stricter standard of independence when appointing an arbitrator itself than when confirming an arbitrator nominated by one or more parties or by the co-arbitrators. However, the Court will usually appoint arbitrators who make a minor disclosure. Accordingly, these arbitrators are not prevented from being proposed by a National Committee or Group on account of such disclosure. In such instances the Secretariat usually circulates the candidate’s CV and Statement to the parties for comment prior to appointment by the Court (see paragraph 3-397).
3-534 Composition and operation of National Committees. As part of the ICC, National Committees have functions other than those relating to arbitration (see paragraph 3-11). However, their arbitration services have become a key aspect of their work. In certain cases, their membership includes local leading arbitration practitioners and law firms active in arbitration.
3-535 For the purpose of appointing arbitrators, National Committees and Groups give the Court more effective access to arbitrators in regional and national markets. In light of the impressive arbitration networks many have developed, they are key to identifying local arbitrators who have not yet gained more widespread global recognition for their work. As the demand for international arbitration continues to increase, the need for an ever greater pool of talented arbitrators also grows.
3-536 Although the manner in which National Committees and Groups perform their functions under Article 13(3) remains at their discretion, many established National Committees and Groups have formal procedures in place or at least operate in accordance with guidelines. For example, some National Committees or Groups have set up committees or panels of local arbitrators or other experts who will consider each request from the Court for a proposal.
ARTICLE 13(4): DIRECT APPOINTMENT OF ARBITRATORS
The Court may also appoint directly to act as arbitrator any person whom it regards as suitable where:
a) one or more of the parties is a state or claims to be a state entity; or
b) the Court considers that it would be appropriate to appoint an arbitrator from a country or territory where there is no National Committee or Group; or
c) the President certifies to the Court that circumstances exist which, in the President’s opinion, make a direct appointment necessary and appropriate.
3-537 Purpose. As mentioned above, the second sentence of Article 13(3) allows the Court to appoint an arbitrator directly where it does not accept a proposal made by a National Committee or Group, or where no proposal is received within the time limit fixed. Article 13(4) specifies three further situations in which the Court, when required to make an appointment pursuant to Article 12, may depart from the National Committee procedure and appoint an arbitrator directly. The situation listed in subparagraph (b) was foreseen in the 1998 Rules (Article 9(4)), but was conditional upon neither party’s objecting to the measure described. Situations (a) and (c) are entirely new.
3-538 2012 modifications. New provision.
3-539 State entities. The ICC Commission on Arbitration’s Task Force on Arbitration Involving States or State Entities was formed in 2009 in response to the growth in the number of ICC arbitrations involving states or state entities as parties. The Working Group recommended various changes to the Rules to accommodate the special needs and requirements of these arbitrations. Article 13(4), subparagraph (a), is one such modification. States view the Court itself as nationally neutral, but some expressed a dislike of the National Committee system. There was a perception among some that National Committees favour business interests since businesses often make up their membership. This concern applies in particular where the dispute arises from an investment treaty or otherwise touches on state sovereignty.
3-540 A notable feature of Article 13(4), subparagraph (a), is the reference at the end of the phrase to where a party “claims” to be a state entity. This relieves the Court of the conceivably difficult task of deciding whether a party is or is not a state entity.
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3-541 Article 13(4) employs the word “may”, making it clear that even where one of the three situations applies, the Court has discretion to make an appointment on the basis of a proposal from a National Committee or Group.
3-542 Country with no National Committee or Group. The Court needs to have the freedom to appoint the best possible person for a given case and to ensure the broad geographic spread of the arbitrators it appoints. It must not be limited to those countries that have established ICC National Committees or Groups. However, given that the ICC has some ninety National Committees and four Groups spread throughout the world, this situation is rarely encountered in practice. It nonetheless offers some flexibility in the appointment process.
3-543 Certification by the President of the Court. Article 13(4) also empowers the President of the Court to authorize direct appointments where necessary and appropriate. The President exercises this power by means of certification, which demonstrates its exceptional nature. Article 13(4), subparagraph (c), is not intended to override the useful role of National Committees and Groups in constituting arbitral tribunals, but merely to allow the Court a degree of flexibility in exceptional situations. Under the previous version of the Rules, the only way in which the Court could appoint a national of a given country was via his or her National Committee. This state of affairs was not always in the best interests of the users of ICC arbitration. In a 2009 case, for example, the parties had specifically agreed that the arbitrator should be of a particular nationality, but they could not agree on the identity of the individual. The Court attempted to appoint an arbitrator of that nationality but the National Committee in question repeatedly failed to make reasonable proposals, and the proposals it did make were late. Eventually, the National Committee did make a reasonable proposal but this process delayed the constitution of the arbitral tribunal by approximately three months. The solution to this example would now be found in the current Article 13(3). However, after several such experiences with a National Committee, the President may be inclined to resort to Article 13(4), subparagraph (c), in a future case calling for the proposal of an arbitrator by that National Committee. It has also happened that a National Committee has informed the Court that, in light of understaffing, long vacation periods or other events and circumstances, it was not in a position to ensure the continuity of its operations. Requests for proposals therefore went unanswered, forcing the Court to turn to a different and sometimes less appropriate National Committee.
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3-544 In these and similar situations, the Court can now apply the second sentence of Article 13(3), after giving the National Committee a further opportunity to make a proposal. However, in exceptional situations, the urgency or particular characteristics of a case may make it appropriate for the President of the Court to certify the application of Article 13(4), subparagraph (c). Certification is a device inspired by the principle of checks and balances to ensure that the provision is applied as intended. A situation in which the President might consider applying Article 13(4), subparagraph (c), is where a party to the arbitration is or claims to be an international organization. In such cases, a rationale similar to that described in the discussion of Article 13(4), subparagraph (a), in relation to states may apply. It is important to note that even if the President of the Court provides certification, the Court may nonetheless decide not to appoint an arbitrator directly.
3-545 What is the process for direct appointment? Where a direct appointment is to be made under Article 13(4) or the second sentence of Article 13(3), the names of potential arbitrators may emerge from discussions at a Court session, and/or the Secretariat may suggest one or more potential arbitrators to the Court. In the latter instance, the name(s) will result from internal discussions among Secretariat members and approval of the suggestions by the Secretary General, Deputy Secretary General, General Counsel or Managing Counsel before the names of any arbitrators are submitted to Court. The Secretariat will then ask for a CV and a Statement from any arbitrator(s) being considered and, once these have been received, invite the Court to appoint the candidate. The same factors as those discussed in connection with Article 13(1) will be taken into consideration (see paragraphs 3-494 and following).
ARTICLE 13(5): NATIONALITY OF THE PRESIDENT OF THE ARBITRAL TRIBUNAL
The sole arbitrator or the president of the arbitral tribunal shall be of a nationality other than those of the parties. However, in suitable circumstances and provided that none of the parties objects within the time limit fixed by the Court, the sole arbitrator or the president of the arbitral tribunal may be chosen from a country of which any of the parties is a national.
3-546 Purpose. Article 13(5) establishes the default rule requiring presidents and sole arbitrators to be of a nationality other than that of any of the parties. It thereby contributes to the arbitral tribunal’s real or perceived neutrality with respect to nationality. However, the provision allows the president or the sole arbitrator to have the same nationality as one or more of the parties in “suitable” circumstance and where no party objects.
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3-547 Although not evident from the text itself, Article 13(5) has been interpreted as being applicable only when the Court is appointing arbitrators. It does not apply, for example, to sole arbitrators or presidents nominated jointly by the parties or to presidents nominated jointly by the co-arbitrators. On the basis of Article 11(6), the Court considers agreements on such alternative procedures for selecting arbitrators to be deviations from the default provisions on the appointment of arbitrators. The confirmation of arbitrators selected through such alternative procedures would therefore not be subject to Article 13(5).
3-548 2012 modifications. Minor linguistic adjustments.
3-549 Application of Article 13(5). The Court applies Article 13(5) strictly. There are broadly two circumstances that the Court may consider as suitable for appointing an arbitrator with the same nationality as one or more parties. The first is where all parties share the same nationality, such that the appointment cannot be said to favour one or more parties over the others. For example, in a case where all of the parties are Spanish, the logical choice, provided no party objects, would be to appoint a Spanish arbitrator.
3-550 The second circumstance is where the parties are of different nationalities but it appears to the Secretariat that they may be expecting the arbitrator to have the same nationality as one of them. Take, for example, a case involving an English party and a German party where the place of the arbitration is Frankfurt, German law is applicable, the language of the arbitration is German, both parties have engaged German lawyers to represent them, and both sides have nominated German co-arbitrators. It would be natural for the parties to expect a German president and would seem odd if the Court were to appoint a president of another nationality. In such situations the Secretariat may solicit the parties’ agreement on a particular nationality before referring the matter to the Court. If all parties agree on a nationality in advance, even that of one of the parties, there is no need for the Secretariat to refer to the Court before seeking a proposal from a National Committee or Group. Where the parties are of different nationalities, the Court typically seeks a positive agreement from the parties, rather than relying on a mere lack of objection as foreseen in Article 13(5). It is less likely that the Court will rely on a lack of objection in cases where one of the parties is not participating in the proceedings.
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3-551 Where the Court contemplates appointing an arbitrator of the same nationality as all the parties (or, in rare cases, one or more but not all of the parties) despite the absence of the parties’ express agreement, it will need to enquire as to whether the parties object. As a matter of practice, it will usually fix a deadline of some five days for objections to be made. Following the Court’s decision, the Secretariat will write to the parties indicating that the Court has decided to seek a proposal from a particular National Committee or Group that shares the nationality of one or more parties unless any of the parties objects within five days, in which case it will invite another National Committee or Group to propose an arbitrator. When making its initial decision, the Court will have selected this second National Committee or Group as a fallback in case one of the parties objects. Accordingly, if the Secretariat receives no objection, it will immediately request the first National Committee or Group to propose an arbitrator. If it does receive an objection, it will seek a proposal from the fallback National Committee or Group.
3-552 Determining nationality. As mentioned previously, the Court generally equates an arbitrator’s nationality with citizenship and the holding of a passport as opposed to any other connection to a country such as ethnic origin, residence or a previously held nationality. However, in certain situations a long-term resident in a country that imposes unusual requirements for citizenship may be considered effectively to be a national of that country. The Court considers a person holding more than one nationality to be a national of all the countries concerned. An arbitrator’s nationality has to be disclosed on the forms that he or she is required to complete and return to the Secretariat during the confirmation or appointment process.
3-553 Determining the nationality of a party can in some instances be more complicated. For individual parties, the same approach will be used as for arbitrators. For states or state entities, nationality will be evident. The Court treats companies as being nationals of the country in which they were incorporated. However it may also have regard, for the purposes of Article 13(5), to the nationalities of parent companies if the arbitrating party is known to be a wholly-owned offshore subsidiary. Where the nationalities of parties are not clear at the time a Request for Arbitration is submitted, the Secretariat makes efforts to clarify this as best it can before any decision on the appointment of an arbitrator is made.
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ARTICLE 14(1): CHALLENGES AGAINST ARBITRATORS
A challenge of an arbitrator, whether for an alleged lack of impartiality or independence, or otherwise, shall be made by the submission to the Secretariat of a written statement specifying the facts and circumstances on which the challenge is based.
3-554 Purpose. Article 14(1), like Article 14 as a whole, defines the procedure whereby a party may challenge an arbitrator with a view to having that arbitrator removed and replaced. If the Court accepts the challenge, the arbitrator is removed and the issue of his or her replacement will be dealt with in accordance with Article 15. If the Court rejects the challenge, the arbitrator will remain on the arbitral tribunal and the case will proceed.
3-555 2012 modifications. The term “impartiality” has been added. The reference to impartiality in the 2012 Rules is discussed under Article 11(1) (see paragraph 3-367). The addition of impartiality as a specific ground for challenge is not expected to affect the standard applied by the Court in determining challenges against arbitrators. While the express reference to impartiality is new, the Court has always had to deal with challenges based on an alleged lack of impartiality, either because the reference to independence was assumed to encompass impartiality or on the basis of the catch-all phrase “or otherwise”. However, these types of challenges rarely succeed because a lack of impartiality is very rare and, in any event, difficult to demonstrate.
3-556 Scope. The challenge procedure under Article 14 can only be employed to remove an arbitrator who has already been appointed or confirmed by the Court (see paragraphs 3-366–3-368). Before an arbitrator’s confirmation, a party may file an objection to the candidate’s confirmation (see paragraphs 3-492, 3-517 and 3-518). An objection made prior to confirmation (or appointment, if the forms have been circulated before the appointment) is accordingly not a challenge and does not fall within the scope of Article 14.
3-557 Moreover, the challenge procedure applies to arbitrators only. It cannot be employed in an attempt to challenge a party’s counsel, an expert, Court members or Secretariat staff. The Secretariat has occasionally received a challenge against the Counsel in charge of the team to which the case has been assigned. Such challenges have been promptly rejected because Article 14 applies only to arbitrators. If a party has concerns regarding the conduct of any Secretariat staff member or his or her handling of a case, it should write a letter of complaint to, or inform, the Secretariat’s management.
3-558 Submitting a challenge. A party wishing to challenge an arbitrator must write to the Secretariat, addressing its challenge to the team handling the case and copying it to all other parties and all members of the arbitral tribunal. The time limit for filing the challenge is laid down in Article 14(2).
3-559 Form of a challenge. Article 14(1) provides that the facts and circumstances on which the challenge is based must be submitted in writing. This requirement is an initial but important barrier to frivolous challenges as it forces the challenging party to explain itself. It also assists the Court in identifying straightforward challenges that could potentially be addressed in the context of an accelerated procedure (see paragraph 3-590). The writing requirement also ensures procedural fairness for the arbitrator and the other parties by allowing them to consider and respond to the precise facts and circumstances on which the challenge is based.
3-560 Challenge submissions should be concise and measured. They should adopt a sensible structure, avoid repetition, and provide clear references to all factual grounds in support of their allegations. Attachments such as supporting evidence and witness statements may be enclosed with the challenge, although parties should show sound judgment and restraint in doing so. The Court generally does not find extracts from text books or articles regarding standards of independence and impartiality to be helpful. However, carefully prepared extracts of relevant case law or doctrine defining the standards of independence and impartiality under the law at the place of the arbitration can be useful in certain instances.
3-561 The Court does not allow oral submissions from parties in relation to any of its decisions. In respect of challenges, Article 14(1) refers expressly to a “written statement”. Parties have occasionally sought permission to make oral submissions in support of challenges. Those requests have consistently been refused. In 2010, a party challenging an arbitrator insisted in its written statement that the Court listen to a cassette recording of the arbitration’s hearing, so that it could appreciate the tone of the challenged arbitrator’s voice. The Court considered whether it was prevented from listening to the cassettes or whether, in fact, the cassettes would simply constitute evidence in support of the challenge. Ultimately, the Court found the written transcript of the hearing to be sufficient to decide on the challenge, such that it did not need to listen to the cassette.
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3-562 Bases of challenges. Article 14(1) allows challenges for an “alleged lack of impartiality or independence, or otherwise.” A party must clearly indicate the grounds for its challenge, but need not state whether the challenge is based on a lack of independence, impartiality, or otherwise. In practice, challenges are brought on a multitude of grounds, some being quite frequent and others very rare. The most common ground for a challenge is an arbitrator’s lack of independence (see paragraph 3-369). Most of these challenges are based on alleged direct or indirect relationships between the arbitrator (or, more commonly, his or her law firm) and a party or between the arbitrator and counsel to one of the parties. Independence challenges may also be based on direct or indirect personal relationships, usually between an arbitrator and one of the parties’ counsel.
3-563 A challenge based purely on an alleged lack of impartiality is generally more difficult to make. Such challenges are most commonly grounded on what a party perceives as unfair treatment in the proceedings or on an arbitrator’s conduct or comments during a hearing or meeting. Challenges based purely on an arbitrator’s procedural decisions have very rarely succeeded.
3-564 Challenges for lack of impartiality may also be based on prior academic writings (e.g. in articles or books) in which the arbitrator has taken a position that is contrary to an aspect of the challenging party’s case. Such challenges have virtually never succeeded. Challenges based on an arbitrator’s relationship with a subject matter (issue conflicts) are less likely to succeed in commercial arbitration, where the issues in dispute are more likely to turn on facts and circumstances unique to the case and the contract, than in investment treaty arbitration, where similar and related issues often arise. In a recent case, an arbitrator was challenged by a party that was a state entity on the grounds that, in an unrelated arbitration, he had given expert witness evidence on a legal issue that was relevant to the case at hand. The party against which the witness evidence was proffered was another state entity from the same state as the challenging party. In accepting the challenge, the Court took into account that the expert testimony in the other case concerned certain facts that bore a relation to those in the case at hand. The strong tone of the expert evidence relating to the state entity’s position was also brought to the Court’s attention. However, in another case concerning a similar legal issue, the Court rejected a challenge involving an arbitrator who, in an academic article written many years earlier, had heavily criticized a law on which the respondent was relying in support of its jurisdictional objections.
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3-565 The Court’s practice is different where an arbitrator has been or is involved in some capacity in a case that is actually related to the arbitration at hand. In deciding such challenges, the Court takes into account whether the arbitrator had (or may have) access to information that is relevant to the case but is not available to all parties or their counsel, with the result of inequality in the access to the information.
3-566 Challenges for lack of impartiality have also been made (unsuccessfully) in a few cases where the challenging party alleged that the arbitrator was racist.
3-567 The catch-all phrase “or otherwise” in Article 14(1) allows a party to challenge an arbitrator for reasons other than an alleged lack of independence or impartiality. Parties have made challenges on grounds such as an arbitrator’s alleged inability to conduct the proceedings according to the Rules or an arbitrator’s lack of relevant skills (e.g. no qualifications relating to the applicable law). Such challenges are unlikely to succeed unless the parties have specifically agreed on the need for such skills in their arbitration agreement or subsequently. More likely to succeed are challenges based on the arbitrator’s inability to conduct an arbitration in the required language(s). In 2010, the Court allowed a challenge for a reason other than independence or impartiality where the arbitrator had developed substance abuse problems and was no longer able to fulfil his functions. Challenges have also been made on the grounds that the arbitral tribunal has not been properly constituted in accordance with the Rules or the parties’ arbitration agreement. Such challenges rarely, if ever, succeed.
3-568 Another ground on which challenges have occasionally been made is the size of the arbitrator’s caseload or the number of other commitments preventing him or her from devoting the required amount of time to the arbitration. An arbitrator’s unresponsiveness and general failure to perform his or her duties properly and in a timely manner could constitute grounds for a challenge, although proceedings under Article 15(2) are a more suitable and more common remedy in such situations (see paragraphs 3-611 and following).
3-569 For the avoidance of doubt, a party’s failure to object to the confirmation of an arbitrator, either on the basis of facts disclosed in the Statement or otherwise, does not preclude that party from challenging the arbitrator once he or she has been confirmed. However, if the information forming the basis of the challenge was disclosed by the arbitrator prior to confirmation, the Court may well take into account the challenging party’s failure to object to the confirmation. A party is also entitled to challenge an arbitrator whose confirmation it had previously contested and even on the same grounds, although such challenges are very unlikely to succeed.33
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3-570 Frequency of challenges and success rate. Arbitrators and practitioners sometimes contend that there has been a rise in the number of challenges against arbitrators in recent years. These comments generally depict the trend as unfortunate, given the disruptive effect challenges can have on arbitration proceedings. Even if there were such a trend, whether it is fortunate or unfortunate would depend on whether the challenges were made on legitimate grounds. If legitimate, the rise in challenges would not be a cause for concern as it would strengthen users’ confidence in arbitration. A rise in illegitimate challenges would be a cause for concern. In any event, as illustrated by the statistics below (see table 20), the number of challenges against ICC arbitrators has not risen in proportion to the number of cases.
3-571 The Court dealt with 397 challenges to arbitrators between 1 January 2001 and 31 December 2011. Considering that 7,082 new cases were initiated and 11,921 arbitrators were confirmed or appointed over the same period, those 397 challenges made in a total of 255 arbitrations do not appear excessive. The 255 cases with at least one challenge represent only 3.6% of the 7,082 initiated cases. Comparing the number of challenges to the number of appointed or confirmed arbitrators, only 3.3% of arbitrators were challenged. Successful challenges are rather infrequent. Of the 397 challenges submitted between 2001 and 2011, the Court accepted only 30, which represents a success rate of only 7.6%.
3-572 The extensive disclosure requirements under Article 11(2) are one of the primary reasons for the relatively low number of challenges against ICC arbitrators, and their even lower success rate. These requirements allow the parties to express their concerns about arbitrators from the outset of the arbitration by objecting to confirmations, thereby avoiding the potentially high costs and significant delays associated with challenges. The more detailed nature of the disclosure requirements in the 2012 Rules should flush out even more challenges early.
3-573 The table below sets out challenge statistics for the past decade. It shows that the percentage of cases in which challenges were introduced as a proportion of the number of new cases varied slightly from year to year, but with no discernible trend up or down. The same can be said for the number of challenges filed as a proportion of the number of arbitrators confirmed or appointed by the Court.
3-574 Dilatory and abusive challenges. The procedure for challenging arbitrators can undoubtedly be misused by parties in an attempt to create delays or antagonize the challenged arbitrator.34
3-575 While it is true that challenges are sometimes raised for the wrong reasons, only the party filing a challenge can ever be certain whether the challenge is genuine or dilatory. What may appear from one perspective as an unfounded, abusive challenge may have resulted from a real concern by the party filing it. The Court and its Secretariat fully acknowledge that they are not in a position to judge a challenging party’s motives. Accordingly, they will give due consideration to all challenges.
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3-576 Minimizing the effects of dilatory challenges. Where the Secretariat considers that a challenge is straightforward, it will put in place an accelerated challenge procedure (see paragraph 3-590). In appropriate circumstances, the arbitral tribunal may even wish to continue its work pending the Court’s decision on the challenge to avoid any delay in the arbitration. However, if the proceedings continue and the challenge is accepted by the Court, then any decisions taken by the arbitral tribunal during the challenge procedure could be called into question. Accordingly, an arbitral tribunal must carefully consider whether to proceed with an arbitration when one of its members is challenged. In so doing, it should take into account the likelihood that the challenge will succeed, as well as the stage the proceedings have reached. For example, if the challenge is made shortly before a hearing that was planned long beforehand and is scheduled to be attended by numerous people, suspending the proceedings may be highly disruptive. Yet even where the challenge appears to have no chance of success, the challenging party could react strongly to the arbitral tribunal’s refusal to suspend the proceedings.
3-577 Court and Secretariat procedure for determining challenges. The procedure followed by the Court and its Secretariat when considering challenges is governed by Article 14(3) and is discussed below (see paragraphs 3-585 and following).
ARTICLE 14(2): THIRTY-DAY TIME LIMIT FOR ADMISSIBILITY OF CHALLENGES
For a challenge to be admissible, it must be submitted by a party either within 30 days from receipt by that party of the notification of the appointment or confirmation of the arbitrator, or within 30 days from the date when the party making the challenge was informed of the facts and circumstances on which the challenge is based if such date is subsequent to the receipt of such notification.
3-578 Purpose. A successful challenge brought late in the proceedings is more likely to result in delay and additional costs. Article 14(2) sets at thirty days the time limit within which any challenge must be brought. It accordingly limits strategic use of the challenge process as a delaying tactic by requiring that a challenge be brought promptly after a party learns of the relevant information.
3-579 2012 modifications. Minor linguistic adjustments.
3-580 Court practice. Before making its decision on the merits of any challenge, the Court will examine whether the challenge is timely, although sometimes the consideration of timeliness is unnecessary because it is clear that the challenge should be rejected on its merits. For challenges brought on grounds known to the challenging party at or before the time an arbitrator is appointed or confirmed, the thirty-day time limit runs from receipt by the challenging party of the notification of the arbitrator’s appointment or
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confirmation. Where the Court has appointed an arbitrator, it will notify the parties and send them the arbitrator’s CV and Statement, which should contain any initial disclosures relating to independence and impartiality. In the case of confirmations, these forms will be circulated to the parties before the decision to confirm is made (and will not be circulated again thereafter) (see paragraph 3-395).
3-581 For facts and circumstances discovered later in the arbitration, the thirtyday time limit begins to run from the date on which a party was “informed” of these new facts or circumstances. In some instances, this date will be clear. For example, a party may make a challenge based on facts or circumstances subsequently disclosed by the arbitrator himself or herself pursuant to Article 11(3). Other cases sometimes prompt extensive argument as to when the challenging party learned of the relevant facts or circumstances and the Court will give this careful consideration. In principle, Article 14(2) requires actual rather than constructive knowledge by the challenging party. In practice, the Court will often assess whether the surrounding circumstances are such that the challenging party ought to have known certain facts or circumstances at a given point in time.
3-582 Grey areas emerge in relation to information that is in the public domain. To some extent, all parties must be assumed to be aware of information in the public domain. Yet the Court cannot expect a party to be cognizant of information from obscure or specialized sources, particularly when the degree of obscurity is assessed from the perspective of the challenging party, taking into account its country of residence, language, size (i.e. of a company), industry sector, etc. For example, an arbitrator may be challenged as a result of his or her undisclosed position as a director (or supervisory board member) of a publicly listed company that is connected to the dispute. The names of board members of publicly listed companies can generally be obtained. Yet, depending on its place of residence and industry background, the challenging party usually has little reason to have searched for or noticed such information.
3-583 Where a challenge is based on facts or circumstances that the arbitrator ought to have disclosed but failed to do so, the Court may be less stringent in assessing when the party was informed of the facts or circumstances and be more inclined to construe doubt in the challenging party’s favour. When it comes to assessing the merits of such a challenge, the mere failure to disclose, while certainly relevant, will not in itself persuade the Court to accept the challenge.
3-584 The Court will not hesitate to reject a challenge made after the expiry of the time limit allowed for its submission. Where the Court cannot assess with reasonable certainty when the challenging party was informed of the relevant facts or circumstances, it will tend to rely on the challenging party’s assertions and move on to consider the challenge on its merits.
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ARTICLE 14(3): COMMENTS ON A CHALLENGE
The Court shall decide on the admissibility and, at the same time, if necessary, on the merits of a challenge after the Secretariat has afforded an opportunity for the arbitrator concerned, the other party or parties and any other members of the arbitral tribunal to comment in writing within a suitable period of time. Such comments shall be communicated to the parties and to the arbitrators.
3-585 Purpose. Article 14(3) sets out the procedure followed by the Court and the Secretariat for determining a challenge. This comprises three distinct steps: (i) the gathering of comments from the other parties, the challenged arbitrator and the other arbitrators; (ii) a Court decision on the admissibility of the challenge; and (iii) where necessary, a Court decision on the merits of the challenge. The latter two decisions are taken at the same Court session. When administering Article 14(3), the Court and the Secretariat ensure due process for all concerned in relation to what is often a very important decision for the parties and the arbitrators.
3-586 2012 modifications. None.
3-587 Gathering comments. Where a party challenges an arbitrator pursuant to Article 14(1), the Secretariat will promptly notify the challenge to all concerned and grant them an opportunity to comment. Notification will be made by separate letters to (i) the challenged arbitrator, (ii) any other arbitrators and (iii) the parties. These letters will usually grant their recipients about ten days within which to comment. The Secretariat will acknowledge receipt of any comments and notify them to all concerned where necessary. Comments submitted after the time limit, as well as additional comments and unsolicited responses to comments, are usually communicated to the Court provided they are received well in advance of the relevant Court session.
3-588 Where comments raise issues that are likely to prompt further comments from other parties or arbitrators, the Secretariat may extend the abovementioned time limit or specifically request a further round of comments. However, in most cases the Secretariat will seek to maintain the original time limit so as to avoid undue delay.
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3-589 Preparatory steps. As with virtually all Court decisions, the Secretariat will draft a written report to brief the Court on the challenge decision sought from it. Relevant correspondence and evidence will be attached for the Court’s consideration. The Secretariat does not make recommendations to the Court regarding the outcome of challenges. In this respect the report on a challenge is different from the Secretariat’s other reports. The Secretariat may nonetheless trawl its database of previous decisions to inform the Court about similar challenges that the Court has considered in the past. A member of the Court is then assigned to draft a second report, which will contain the Court member’s recommendation on the outcome of the challenge.
3-590 Plenary or committee session of the Court? Given the importance of challenge decisions, the Court’s traditional practice was to rule on all challenges at its monthly plenary session rather than at one of its weekly committee sessions (see paragraph 3-31). In recent years, the Court has begun to deal with straightforward challenges at committee sessions so as to shorten the duration of the procedure and thereby avoid undue delay. A Court member will be asked to prepare a report and make a recommendation on the challenge. The committee may either decide to reject the challenge or, if it has a doubt, refer the decision to the next monthly plenary session (although this has so far never happened). In any event, if the committee cannot reach a unanimous decision on a matter, Article 4(5) of Appendix II requires it to refer the matter to a plenary session. Any challenge that potentially could succeed will be considered directly at a plenary session.
3-591 Notification of the Court’s decision. The Secretariat will promptly notify all parties and arbitrators of the Court’s decision, stating simply whether the challenge was accepted or rejected. Pursuant to Article 11(7), the Court’s decisions on challenges are final and the reasons are not communicated. The prohibition on communicating reasons also means that the Court will not disclose whether a challenge was rejected due to its timing or on its merits. If a challenge is accepted, the replacement of the arbitrator is made in accordance with Article 15(4).
3-592 Duration of the challenge procedure. The Court deals with challenges quickly. The duration of the procedure will depend to some degree on the parties and arbitrators, and whether they are allowed time to submit additional rounds of comments. If the challenge is submitted to a committee session of the Court, it should be determined within one to two weeks of the Secretariat’s receiving all final comments from the parties and the arbitrators. If the challenge goes to a plenary session, which is held at the end of each month, it may take longer, depending on when the final comments are received.
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ARTICLE 15(1): CIRCUMSTANCES LEADING TO REPLACEMENT
An arbitrator shall be replaced upon death, upon acceptance by the Court of the arbitrator’s resignation, upon acceptance by the Court of a challenge, or upon acceptance by the Court of a request of all the parties.
3-593 Purpose. Article 15(1) lists those situations in which a member of the arbitral tribunal may be replaced. Its effect is tempered by the Court’s power under Article 15(5) to decide that the remaining members of an arbitral tribunal will proceed as a truncated tribunal. Accordingly, the occurrence of a situation mentioned in Article 15(1) will not necessarily mean that a new arbitrator is appointed. Furthermore, while death and the acceptance of a challenge under Article 14 will obviously leave a vacancy on an arbitral tribunal, Article 15(1) recognizes the Court’s authority to reject an arbitrator’s resignation.
3-594 2012 modifications. Article 12(1) of the 1998 Rules, the provision’s previous iteration, did not include in the last line the words “acceptance by the Court of a” in relation to a joint request from all parties. Accordingly, the new Article 15(1) purportedly empowers the Court not to accept a joint request from the parties to replace an arbitrator. However, it is difficult in practice to conceive of any situation in which the Court would, or indeed could, reject such a joint request from all the parties. Requiring the Court’s acceptance of the parties’ agreement rather enables the Court to satisfy itself that there is, in fact, such an agreement. The Court’s decision on the matter will also clearly mark the point in time at which the arbitrator’s function ceases (see paragraph 3-608).
3-595 Scope. Article 15(1) (and indeed Article 15 in its entirety) applies only in respect of arbitrators who have been appointed or confirmed by the Court or the Secretary General. The provision does not apply and is of no relevance to the selection of an alternative arbitrator in the event an arbitrator is not confirmed. The consequences of not confirming an arbitrator are discussed under Article 13(1) (see paragraphs 3-513 and 3-514).
3-596 Article 15(1) lists a range of circumstances that lead to the replacement of an arbitrator or to the application of Article 15(5).
3-597 Death. The death of an arbitrator is not unknown, especially in certain jurisdictions where parties tend to appoint highly experienced yet elderly arbitrators. The Court is faced with the deaths of several acting arbitrators every year.
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3-598 Resignation. Common reasons for the tendering of resignation include the discovery of serious conflicts of interest (e.g. because the arbitrator has moved to a new law firm that has a relationship with a party involved in the dispute); illness or personal problems; the arbitrator’s acceptance of a professional position that is inconsistent with his or her role as an arbitrator (e.g. appointment as a judge in some jurisdictions or to a governmental position); a court order or injunction that restricts the arbitrator’s ability to act; the abeyance of a case for an excessively long period; the arbitrator’s perception that he or she is no longer able to control the parties or has lost their confidence; or a party’s challenge.
3-599 In rare cases, an entire three-member arbitral tribunal may resign en bloc. This occurred in a recent case where the arbitral tribunal’s award on jurisdiction was set aside by a national court at the place of the arbitration. As a result, the arbitrators felt they had lost their legitimacy and that the parties’ interests would best be served by the constitution of a new arbitral tribunal.
3-600 An arbitrator’s realization that he or she may not have the expertise to decide on the issues of the case may be another reason for resigning. In a recent case, the president of the arbitral tribunal, who was an engineer with no legal training, resigned when the legal complexity of the case became greater than initially foreseen.
3-601 An arbitrator’s resignation at an inconvenient time can be extremely disruptive to an arbitration. The Court is therefore empowered to reject resignations where it considers that the parties’ interests are better served by having the arbitrator remain in place. Between 2001 and 2010, a total of 208 resignations were tendered, five of which were rejected.
3-602 In a recent case, all three arbitrators tendered their resignations because of continuous disagreements among them. Recognizing the undesirable effect the replacement of the entire arbitral tribunal would have on the proceedings, the Court decided instead to accept only the president’s resignation, thereby easing tensions within the arbitral tribunal and preserving the familiarity with the case already acquired by the other arbitrators.
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3-603 Resignations are sometimes rejected where they are tendered as a result of a challenge. Offering to resign in such situations does not necessarily mean that the arbitrator believes the challenge will be accepted. Rather, an arbitrator may simply wish to avoid remaining in a case where a party makes what the arbitrator considers to be a mischievous or aggressive challenge. In two recent examples of this kind, the Court refused to accept the resignation. In the first example, the sole arbitrator appeared to have tendered his resignation as a result of the pressure caused by the respondent’s conduct in the proceedings and the challenge it had made. In the second case, the arbitrator tendered his resignation owing to attacks on his integrity by the claimant. In both instances, the Court considered that resignation would be unhelpful to the subsequent conduct of the case. By refusing to accept the resignations, it also reaffirmed its confidence in the arbitrators.
3-604 In many cases the Secretariat will contact the arbitrator before the relevant Court session to ascertain whether he or she would remain committed to the case were the Court to reject the resignation.
3-605 Acceptance of a challenge. The challenge of arbitrators is addressed above under Article 14 (see paragraphs 3-554 and following).
3-606 Acceptance of the parties’ joint request. It is rare for all the parties jointly to request the replacement of an arbitrator. It is more common that one side will want the arbitrator removed and the other side will object, in which case the matter will be determined by the Court either as a challenge or pursuant to Article 15(2). Nonetheless, it does occur from time to time. In a 2010 case, for example, the parties requested the removal of two coarbitrators who had already been confirmed, having subsequently agreed to submit the case to a sole arbitrator. The Court accepted the parties’ request and then confirmed the parties’ joint nomination of a sole arbitrator.
3-607 Where all parties agree that an arbitrator should be replaced, the arbitrator in most cases will promptly tender his or her resignation. This did not happen in a 2008 case in which all parties agreed that the co-arbitrator nominated by the claimant should be replaced because he was unable to work in the language of the arbitration without the assistance of translators and interpreters, despite information suggesting otherwise in his CV. The arbitrator refused to recognize the parties’ agreement to replace him, arguing that the Secretariat should provide translations and interpretation. He also argued that if he were removed, he would be entitled to damages
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covering his fees until the end of the arbitration. Pursuant to the former Article 12(1), the Court took note of the parties’ agreement and replaced the arbitrator with another arbitrator subsequently nominated by the claimant.
3-608 Article 15(1) specifically requires the Court’s approval of the parties’ agreement. Although it is difficult to conceive of any situation in which the Court would refuse to recognize such a joint request, requiring its acceptance serves a purpose. As the example above demonstrates, it can be useful to have a Court decision formerly marking the arbitrator’s removal. Furthermore, in making its decision the Court will be able to verify that the parties have actually agreed to replace the arbitrator.
3-609 The Court’s replacement of an arbitrator. Articles 15(4) and 15(5) set out the options available to the Court when a vacancy arises. The Court has discretion to determine how the new arbitrator will be selected. The arbitral tribunal may then determine if and to what extent prior proceedings shall be repeated before the reconstituted arbitral tribunal (see paragraphs 3-645–3-648). Where the proceedings have already been closed, the Court may alternatively decide not to fill the vacancy but rather to allow the remaining arbitrators to continue as a truncated arbitral tribunal (Article 15(5)).
3-610 Determining fees upon an arbitrator’s replacement. In most circumstances, as soon as an arbitrator is removed the Court will fix his or her fees. The reasons for removal and replacement are highly relevant in determining the arbitrator’s fees. Where these reasons were outside the arbitrator’s control (e.g. death or illness), he or she will likely be remunerated pursuant to Article 37 in accordance with the Court’s regular practice. Relevant factors for the Court to consider in this regard will be the stage the arbitration had reached and the amount of work undertaken by the arbitrator (see paragraphs 3-1454–3-1459 and 3-1499 and following). Where the replacement was a result of the arbitrator’s own misconduct or a failure to make a disclosure, the Court may, on the other hand, reduce his or her fees considerably. One reason for this reduction is to minimize the financial burden of the replacement on the parties, which may need to pay additional sums to cover the cost of fully briefing a new arbitrator. The extra cost can be considerable, especially where a hearing needs to be repeated.
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ARTICLE 15(2): REPLACEMENT ON THE COURT’S INITIATIVE
An arbitrator shall also be replaced on the Court’s own initiative when it decides that the arbitrator is prevented de jure or de facto from fulfilling the arbitrator’s functions, or that the arbitrator is not fulfilling those functions in accordance with the Rules or within the prescribed time limits.
3-611 Purpose. Article 15(2) gives the Court a power that enables it to fulfil one of its central functions: monitoring and policing the conduct of arbitrators. Given the disruptive effect the removal of an arbitrator can have on the proceedings, the Court uses this provision sparingly. Nonetheless, it will not hesitate to apply Article 15(2) where, upon balancing all relevant factors, it determines that the arbitrator’s removal is in the parties’ best interests. The application of Article 15(2) is not a punishment for an arbitrator’s poor performance, but rather a practical solution to further the parties’ interests in ensuring a rapid and effective arbitration procedure. Although the provision is exercised on the Court’s own initiative and at its discretion, Article 15(3) requires the Court and its Secretariat to consult the parties and the arbitrators first (see paragraph 3-628).
3-612 2012 modifications. Minor linguistic adjustments.
3-613 Can a party invoke Article 15(2)? Article 15(2) applies only to the replacement of arbitrators on the Court’s own initiative. A party wishing to have an arbitrator removed must challenge the arbitrator under Article 14. The information forming the basis of an Article 15(2) procedure usually becomes known to the Court and its Secretariat in the course of their administration and supervision of a case. However, it sometimes happens that the Court will consider initiating replacement proceedings on the basis of information that has been brought to its attention by one of the parties.
3-614 Standard for removal. The provision distinguishes between two types of obstacles that prevent arbitrators from fulfilling their functions. The first, a de jure obstacle, is very rare in practice because an arbitrator would usually resign where he or she becomes de jure unable to fulfil his or her mission. This type of obstacle will usually involve a domestic legal restriction on the arbitrator’s performing his or her duties. For example, some countries do not allow sitting judges to serve as arbitrators. Alternatively, an arbitrator in a particular jurisdiction might be constrained by a court injunction from proceeding with the arbitration. He or she could be replaced by another arbitrator who is not under that court’s jurisdiction so that the case can resume.
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3-615 The most common reasons for initiating replacement proceedings are de facto and arise where the arbitrator is causing unacceptable delays (e.g. by failing to deliver an award), is not responding to correspondence from the Secretariat or the parties, or is otherwise not conducting the arbitration in accordance with the Rules. Occasionally, situations arise where personal conflicts between arbitrators on the same tribunal lead to a breakdown in their working relations, preventing the arbitral tribunal from functioning properly. In such cases, too, the Court may intervene. The Court has to date never applied Article 15(2) to remove an arbitrator it considers to be insufficiently independent or impartial, as these issues would normally be addressed through a challenge made by a party pursuant to Article 14.
3-616 In a 2008 case, the members of the arbitral tribunal were having difficulty working together owing to disagreements among them which seriously delayed the completion of a majority award. The Court replaced the president of the arbitral tribunal pursuant to Article 12(2) of the 1998 Rules with a strong and highly experienced president who quickly brought the case back on track.
3-617 Two cases in 2008 resulted in the initiation of replacement proceedings against a sole arbitrator who then tendered his resignation before the Court could make its decision under Article 12(2). In one of those cases, the replacement proceedings were initiated because the arbitrator was not available for a hearing at any of the times requested by the parties. A party informed the Secretariat of this problem and the Court decided to initiate replacement proceedings.35The sole arbitrator immediately resigned. In the other case, a sole arbitrator who lacked experience as an ICC arbitrator inadequately managed the proceedings. There were doubts as to whether he verified that his correspondence had reached the intended recipients and whether messages left with his assistant were communicated to him. Furthermore, his statements on jurisdiction in the draft Terms of Reference suggested he was inclined to prejudge the issue. The sole arbitrator resigned after the commencement of replacement proceedings. In a case at the end of 2009, replacement proceedings were commenced against an arbitrator sitting in two unrelated cases because he failed to deliver the award in both cases, despite the fact that some twelve months had elapsed since the parties’ last submissions and notwithstanding numerous promises to the Secretariat that he would complete the awards.
3-618 Another 2008 case led the Court to initiate replacement proceedings against the co-arbitrator nominated by the respondent after he twice refused to attend hearings at the last minute, appearing to give priority to his other professional activities. The situation caused delays and additional costs for the parties and the other members of the arbitral tribunal. The Court decided to initiate replacement proceedings, whereupon the respondent agreed with the claimant’s preference that the arbitrator be replaced.
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3-619 Removing an arbitrator as a result of a long delay in delivering an award is a very delicate matter. While the Court may be in a position to judge whether the delay is acceptable or unacceptable, its function is to look ahead rather than backwards in order to determine whether the arbitrator’s removal is in the parties’ best interests. A decision to remove would normally entail the appointment of a new arbitrator who knows nothing about the case. The Court and the Secretariat will usually prefer to continue exerting pressure on the existing arbitrator to deliver the award, before resorting to Article 15(2).
3-620 Two recent cases prompted the replacement of sole arbitrators as a result of delays. In both cases, the proceedings had been closed for over one and a half years but no draft final award had been submitted for scrutiny during that time. In one of the cases, the arbitrator blamed an unexpectedly high workload at his firm and was replaced by the Court. In the other, the arbitrator promptly submitted a draft award upon being informed of the initiation of replacement proceedings against him. However, the award was of poor quality and consequently the Court decided not to approve it. It subsequently proceeded to replace the arbitrator. In another case, the sole arbitrator took fifteen months to prepare Terms of Reference and submit them to the Court for approval pursuant to Article 18(3) of the 1998 Rules (now Article 23(3)). Although the parties were less than cooperative in the preparation of the Terms of Reference, the Court nonetheless decided to replace the arbitrator in light of these delays and other factors, in particular repeated promises to deliver the document.
3-621 Court and Secretariat procedure. The procedure for applying Article 15(2) is addressed in Article 15(3), discussed immediately below.
ARTICLE 15(3): RIGHT OF PARTIES AND ARBITRATORS TO COMMENT ON THE APPLICATION OF ARTICLE 15(2)
When, on the basis of information that has come to its attention, the Court considers applying Article 15(2), it shall decide on the matter after the arbitrator concerned, the parties and any other members of the arbitral tribunal have had an opportunity to comment in writing within a suitable period of time. Such comments shall be communicated to the parties and to the arbitrators.
3-622 Purpose. Article 15(3) serves a function similar to Article 14(3) by ensuring that all parties and arbitrators may comment prior to decisions under
Article 15(2).
3-623 2012 modifications. None.
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3-624 Secretariat’s warnings. The Court will not apply Article 15(2) lightly and in most instances will provide warnings to the arbitrator so that he or she may attempt to address the Court’s concerns before replacement proceedings are initiated. Where an arbitrator, through action or inaction, is causing substantial delays, the Secretariat will usually warn the arbitrator at least once that his or her continued failure to accelerate the proceedings or to deliver the draft award, as the case may be, could result in the application of Article 15(2). Depending on the circumstances, the parties may be copied on some of that correspondence with the arbitrator. Such warnings will always be given in circumstances where the Secretariat feels that the warning itself might rectify the problem. The threat to apply Article 15(2) will often come from the Secretariat’s management and/or the President of the Court, in the hope of impressing upon the arbitrator the seriousness of the matter, and may be followed up by a telephone call or even a meeting with the arbitrator concerned.
3-625 Overview of replacement proceedings. Article 15(2) is applied in two stages and in two separate Court sessions. At the first session, the Court will initiate the replacement proceedings (see paragraphs 3-626 and 3-627). It will then decide at the second Court session whether or not to remove the arbitrator (see below paragraph 3-631), taking into account all comments received from the parties and, if such be the case, the other arbitrators between the two Court sessions (see paragraphs 3-628–3‑630). Accordingly, the Court’s decision to initiate replacement proceedings is taken before it seeks any formal comments from the parties and the arbitrators. In practice, as explained above, the parties and the arbitrators will usually have been put on advance notice of the likelihood of replacement proceedings.
3-626 Initiating replacement proceedings. The information forming the basis of the decision to initiate replacement proceedings will, in practice, usually come from knowledge of the arbitrator’s performance acquired by the Secretariat in the course of its day-to-day management of the case. If the case is sufficiently problematic to suggest that Article 15(2) may need to be applied, the Secretariat’s management will already be well aware of this. It may even have discussed the case informally with the President of the Court or other senior Court members before the matter is submitted to Court. Other Court members may be aware of delays in a case from prior decisions on the extension of time limits made pursuant to Article 23(2) or 30(2).
3-627 The Court will usually initiate replacement proceedings at a plenary session, although there is no requirement to do so.36Given its potential effect on the arbitration, the decision is not taken lightly. A problem considered serious enough to justify initiating replacement proceedings will, in practice, usually lead to the removal of the arbitrator, unless a significant change occurs between the two Court sessions. Such a change
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might be rectification of the underlying problem by the arbitrator (e.g. by submitting the overdue award37); a preference expressed by all parties for the arbitrator to remain in place; the parties’ agreement to have the arbitrator removed; or the arbitrator’s resignation.
3-628 Gathering comments. The second step in applying Article 15(2) is to provide the parties and the arbitrators with an opportunity to submit written comments. A primary function of Article 15(3) is to ensure that this essential aspect of procedural fairness is respected. Following the Court’s decision to initiate replacement proceedings, the Secretariat will promptly notify the decision to all those concerned and request their comments. Notification will be made by separate letters to (i) the arbitrator against whom replacement proceedings have been commenced, (ii) the other members of the arbitral tribunal (if any) and (iii) the parties. These letters usually give their recipients ten days in which to comment. The Secretariat will ensure that any comments are notified to all concerned. Comments submitted after the time limit, as well as additional comments and unsolicited responses to comments, are usually communicated to the Court provided they are received well in advance of the relevant Court session.
3-629 Where comments raise additional issues that are likely to prompt further comments from the parties or arbitrators, the Secretariat may extend the above-mentioned time limit or specifically request a further round of comments. However, since replacement proceedings are often initiated as a result of an arbitrator’s sloth, the Secretariat will seek to maintain the original time limit to ensure that the Court’s decision is taken as quickly as possible.
3-630 In its correspondence requesting the parties’ comments, the Secretariat does not normally set out the reasons for the Court’s decision to initiate replacement proceedings. However, these reasons should be obvious from the arbitrator’s conduct, the delay incurred, or notification of an impediment preventing fulfilment of the arbitrator’s functions.
3-631 The Court’s final decision. As mentioned above, decisions to initiate replacement proceedings will not always result in a Court decision pursuant to Article 15(2) (see paragraph 3-625). Where they do, the Court will usually make its decision at a plenary session, given the importance of the decision and its impact on the proceedings (see paragraph 3-31). If the Court decides to remove the arbitrator, it must also decide whether the arbitrator should be replaced and, if so, how (see paragraphs 3-634–3-644 and 3-649–3-654).
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ARTICLE 15(4): PROCESS FOR SELECTING THE REPLACEMENT ARBITRATOR
When an arbitrator is to be replaced, the Court has discretion to decide whether or not to follow the original nominating process. Once reconstituted, and after having invited the parties to comment, the arbitral tribunal shall determine if and to what extent prior proceedings shall be repeated before the reconstituted arbitral tribunal.
3-632 Purpose. Article 15(4) addresses two distinct issues. First, it sets out the procedure for replacing an arbitrator who has been removed pursuant to Article 15(1) or 15(2). As noted above under Article 15(1), Article 15 applies only where the arbitrator has already been appointed or confirmed. It does not apply where the Court has decided not to confirm a nominated arbitrator under Article 13(2). The second and wholly unrelated issue addressed by Article 15(4) is the extent to which prior proceedings may be repeated before the reconstituted arbitral tribunal.
3-633 2012 modifications. None.
Procedure for replacing an arbitrator who has been removed
3-634 The Court has full discretion to decide on the method to be used for selecting a replacement arbitrator, regardless of the reason for the replacement. The Court may even appoint the new arbitrator directly, instead of following a procedure that conforms with either Article 13 or the selection process set out in the parties’ arbitration agreement. This flexibility enables the Court to move quickly in appointing a well-qualified replacement where the circumstances of the case so require. As provided in Article 15(5), the Court may not need to replace the arbitrator in certain instances. The Court’s discretion also prevents potential abuse by a party that may otherwise seek repeatedly to nominate unsuitable arbitrators in an effort to derail the arbitration.
3-635 Seeking the parties’ comments on the selection process. Where it appears likely that a replacement arbitrator will be needed (e.g. the former arbitrator has died or resigned or all parties have agreed to remove him or her), the Secretariat may seek the parties’ views on how the replacement should be made, prior to the relevant Court session. If the arbitrator who has been removed was a co-arbitrator who had been nominated by a party, the Secretariat will usually invite the party in question to nominate a new coarbitrator, subject to the Court’s decisions on the need to replace the arbitrator (Articles 15(1) and 15(5)) and the method to be used for making the replacement (Article 15(4)).
3-636 Where there is doubt that the arbitrator will need replacing (e.g. in the case of challenges under Article 14 or replacement proceedings under Article 15(2)), the parties’ comments will not normally be sought in advance. Instead, the Court will decide on the method to be used for selecting the
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replacement arbitrator immediately upon deciding to remove the previous arbitrator. In some cases, the Court may defer a decision on how to reconstitute the arbitral tribunal if it feels that the parties’ comments could be particularly helpful.
3-637 Whatever method is chosen for selecting the replacement arbitrator, the Court will not usually appoint a replacement arbitrator immediately upon removal of the previous arbitrator. As a result, parties will have a small window of time, after being notified of the arbitrator’s removal, in which to comment on the selection process. Although in most cases the Secretariat will not invite comments, it will consider any comments it may receive and can adapt or change the selection process so that it matches what the parties may have agreed. In a 2011 case, the Secretariat notified the parties that a sole arbitrator had been removed under the former Article 12(2) (now Article 15(2)) and that it was taking steps to appoint a replacement as quickly as possible. The parties promptly responded with a joint request that they be allowed some input in selecting the replacement, notwithstanding the fact that the Court had decided to appoint the replacement arbitrator directly. Following further discussion with the parties, the Secretariat compiled a list of three candidates and requested the parties to express an order of preference or delete those they did not want. The parties both expressed a preference for one of the candidates, who was then appointed by the Court.
3-638 How does the Court choose a selection process? To determine how the replacement arbitrator is to be selected, the Court will consider a range of factors including time constraints, the nature of the original selection process, and whether reusing the original process will be efficient and effective.
3-639 In practice, the Court usually either (i) directly appoints the arbitrator or (ii) follows the original process, whatever it may have been. Where the removed arbitrator was a party-nominated co-arbitrator, the preferred method is to allow the party to nominate a replacement co-arbitrator. It is very rare that the Court will directly appoint a replacement co-arbitrator where the party that nominated the previous arbitrator is still participating in the proceedings.
3-640 An exception may occur where the Court considers that the nominating party would exercise its right to nominate in bad faith with the objective of delaying or frustrating the arbitration. This could conceivably arise, for example, where the Court becomes aware that one of the parties has exerted pressure on a co-arbitrator to resign, in an effort to obstruct the finalization of an award. The Court, as a result of the party’s inappropriate behaviour and of the likelihood that the party would nominate a candidate who is vulnerable to such pressure, may be inclined to appoint an arbitrator on its behalf even though the resigning arbitrator was originally nominated by that party.
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3-641 In most cases, the mere possibility of a direct appointment in these circumstances will serve to discourage behaviour of the type discussed above, as the party in question may lose its right to nominate a co-arbitrator altogether if that right is not exercised in good faith.
3-642 Where the arbitrator who has been removed was a president of the arbitral tribunal nominated jointly by the co-arbitrators, the usual practice is to invite the co-arbitrators to select a new president, provided the Court feels confident that the co-arbitrators will be able to agree on a suitable candidate promptly. Similarly, where the arbitrator who has been removed was nominated jointly by the parties, the Court will assess the likelihood of the parties’ being able to agree on a new arbitrator and the time this will take.
3-643 If, regardless of his or her position on the tribunal, the arbitrator who has been removed was appointed by the Court pursuant to Article 13(3) or 13(4), the Court will usually appoint the replacement directly rather than seek a proposal from a National Committee or Group. The names of potential direct appointees will be found in the same way as when applying Article 13(4) (see paragraph 3-545).
3-644 Transmission of the case file to a replacement arbitrator. Once a replacement arbitrator has been appointed or confirmed, the Secretariat will send the arbitrator a copy of the case file, as described below under Article 16 (see paragraphs 3-658–3-662). The Secretariat’s own file will not always include all materials, submissions and evidence, so the Secretariat will request the arbitrator who has been removed to return the case file in his or her possession and may withhold payment of any fees until it has received that file. The Secretariat will then transmit the file to the new arbitrator after first removing from the submissions any notes by the previous arbitrator. When the replacement occurs towards the end of an arbitration, this task can be very time consuming and complex.
Repetition of prior proceedings
3-645 Once a replacement has been made, Article 15(4) leaves the arbitral tribunal with broad discretion to determine, after seeking the parties’ views, the extent to which any prior proceedings should be repeated. Written submissions and evidence will not normally be a source of concern as they will be in the case file and therefore available for the new arbitrator to study. Arbitrators sometimes ask whether documents such as the Terms of Reference need to be re-issued, but this is generally unnecessary because the new arbitrator, in agreeing to serve, will be considered to have accepted the mission described in the Terms of Reference.
3-646 The main question is therefore whether any hearings should be repeated. Arbitral hearings can be very costly and time-consuming. The thought of repeating a hearing may be shocking to the arbitrators, counsel and to the parties who have to bear the extra cost and delay. Where hearings were fully transcribed or recorded, one possibility is for the new arbitrator simply to rely on those transcripts or recordings. In any event, if all parties and the new arbitrator are willing to carry on without repeating a hearing, then the other members of the arbitral tribunal will usually not insist otherwise.
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3-647 However, a party may have strong reasons for requesting a hearing before all the individuals who are going to decide the case. If a party insists on a “rehearing”, many arbitral tribunals will allow this so as to reduce the possible grounds upon which their award could be attacked. Alternatively, an arbitral tribunal may feel that the parties have already been granted an adequate opportunity to present their cases.
3-648 Another question that has arisen in connection with the repetition of prior proceedings is the status of partial awards rendered by the previous arbitral tribunal. In general, an award has res judicata effect once rendered and cannot be revisited by either the arbitral tribunal that rendered it or a newly constituted tribunal in the same case. Therefore, arbitral tribunals have usually rejected as irrelevant the repetition of prior proceedings that have already resulted in a partial award. Usually, arbitral tribunals allow proceedings to be repeated only insofar as they relate to issues that have not yet been decided upon. It is of course an entirely different matter if a partial award has been set aside by a competent court and the arbitral tribunal is subsequently replaced. In such circumstances, the reconstituted arbitral tribunal may well be required to decide some or all of the same issues that were dealt with in the partial award that was set aside.
ARTICLE 15(5): TRUNCATED ARBITRAL TRIBUNALS
Subsequent to the closing of the proceedings, instead of replacing an arbitrator who has died or been removed by the Court pursuant to Articles 15(1) or 15(2), the Court may decide, when it considers it appropriate, that the remaining arbitrators shall continue the arbitration. In making such determination, the Court shall take into account the views of the remaining arbitrators and of the parties and such other matters that it considers appropriate in the circumstances.
3-649 Purpose. Article 15(5) provides an alternative to replacing an arbitrator who has been removed. In cases where the proceedings have been closed, it empowers the Court to allow the remaining arbitrators to continue their work as a truncated tribunal. This is an acknowledgement of the fact that it may not be necessary or desirable to spend extra time and money on replacing and briefing an arbitrator in a case that is almost at an end. The provision obviously does not apply in cases decided by a sole arbitrator, but only those decided by a collegiate tribunal and irrespective of the cause of the vacancy on the tribunal.
3-650 2012 modifications. None.
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3-651 Applicability of the provision. The application of Article 15(5) is limited to arbitrations that have already been closed pursuant to Article 27. If the proceedings have not yet been closed, the vacancy on the arbitral tribunal must be filled with a replacement. This limitation means that, in practice, an arbitral tribunal will often be well advanced in its deliberations and may already have taken some or all of its decisions when it becomes faced with the question of whether or not to fill a vacancy.
3-652 Procedure. In appropriate cases, at around the time an arbitrator is removed, consideration will be given to applying Article 15(5). The Secretariat may even seek the parties’ comments on the possible application of Article 15(5) ahead of the Court’s session at which the replacement is to be considered. In other instances, the Secretariat will invite comments from the parties and the remaining arbitrators only after the Court has decided to remove the arbitrator.
3-653 The Court’s discretion. The Court has rarely applied Article 15(5) if a party or an arbitrator objects (an example is provided below, however). Between 2007 and 2011, the Court applied the former Article 12(5) (now Article 15(5)) in only four cases. The vacancy on the tribunal was due to various causes (death, resignation, a successful challenge, removal pursuant to Article 12(2) of the 1998 Rules (now Article 15(2)). In deciding whether or not to allow the proceedings to continue with a truncated tribunal, the Court considers a number of factors such as the cost to the parties that a replacement may involve; the stage the proceedings have reached (and in particular whether deliberations on the final award have already taken place and decisions taken); the category of the arbitrator who has been removed (if a co-arbitrator nominated by a party, failure to replace the arbitrator may create an imbalance between the parties); and the likelihood of a deadlock between the remaining arbitrators, as typically only two arbitrators will be left.
3-654 In a 2011 case, the Court decided to proceed with a truncated tribunal after the president of the arbitral tribunal resigned upon accepting the position of general counsel in a multinational company that barred him from serving as an arbitrator. His resignation immediately followed the rendering of a partial award that decided all issues relating to the dispute except costs. The parties agreed to the resignation and requested that the co-arbitrators be allowed to make the remaining decisions on costs on their own. In another case, the Court applied the former Article 12(5) (now Article 15(5)) upon its removal of a co-arbitrator, notwithstanding the fact that one of the parties objected to a truncated tribunal. The final award had already been rendered and it only remained for the co-arbitrators to decide on an application for correction or interpretation of the award pursuant to Article 29(2) of the 1998 Rules (now Article 35(2)). Furthermore, the final award was rendered by a majority of the arbitral tribunal that did not include the removed arbitrator. In that regard, the application for correction or interpretation was only in relation to the work of the remaining arbitrators. In yet another case, the Court permitted a truncated arbitral tribunal to
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proceed with rendering the final award after the death of a co-arbitrator. At the time of the decision, the Court had already scrutinized a draft of the award but decided not to approve it. The parties agreed to a truncated arbitral tribunal, although the respondent qualified its agreement by stating that any future application for the correction or interpretation of the final award should prompt the Court to replace the deceased coarbitrator. Such applications were made by both parties following the rendering of the final award. The claimant also echoed the respondent’s call for a third arbitrator, prompting the Court to replace the deceased coarbitrator for the purpose of deciding on the applications.
ARTICLE 16: TRANSMISSION OF THE CASE FILE TO THE ARBITRAL TRIBUNAL
The Secretariat shall transmit the file to the arbitral tribunal as soon as it has been constituted, provided the advance on costs requested by the Secretariat at this stage has been paid.
3-655 Purpose. Article 16 specifies when the Secretariat will transmit the case file to the arbitral tribunal. It will do so as soon as the arbitral tribunal is fully constituted (i.e. when all arbitrators have been appointed or confirmed under Article 13) and provided any requested advance on costs has been paid. Transmission of the file pursuant to Article 16 marks the beginning of the arbitral tribunal’s core tasks. At that point, the arbitral tribunal takes over the day-to-day running of the case from the Secretariat, although the Secretariat will continue to monitor the proceedings closely and intervene where necessary and appropriate. Transmission of the file also triggers the time limit specified in Article 23(2) for the arbitral tribunal to complete the Terms of Reference.
3-656 2012 modifications. None.
3-657 Payment of the requested advance on costs. The parties must pay any request for an advance on costs before the Secretariat transmits the case file to the arbitral tribunal. This ensures adequate remuneration for the work to be done by the arbitral tribunal and the ICC during the initial stages of the proceedings. In practice, the advance payment requested before transmission of the case file will correspond to the provisional advance fixed pursuant to Article 36(1). This payment is intended to cover the costs of the arbitration through to the completion of the Terms of Reference. It is
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usually fixed by the Secretary General upon receipt of the Request for Arbitration. The Secretariat will request the claimant to pay the provisional advance generally within thirty days of being informed of the notification of the Request. Although rarely needed, the provision’s broad language also leaves the Court and its Secretariat with sufficient flexibility to require payment of any additional part of the advance on costs or even the full advance on costs where necessary.
3-658 Transmission of the case file in practice. If the provisional advance has been paid, the Secretariat will transmit a copy of the file to each member of the arbitral tribunal as soon as possible after the tribunal has been constituted (i.e. once the last arbitrator has been confirmed or appointed). Transmission of the file is made by letter addressed to the arbitral tribunal and copied to the parties.
3-659 Documents to be transmitted. The Secretariat does not necessarily transmit every document in its case file to the arbitral tribunal. It may leave out those documents that it considers clearly irrelevant to the arbitral tribunal’s task. It will always include the Request for Arbitration, any Answers to the Request, any counterclaim submissions, any replies to the counterclaim and any Requests for Joinder. Where an Answer, reply, Request for Joinder or similar document has been submitted late, or otherwise does not comply with Article 5 or Article 7, the Secretariat will nonetheless include it in the file. A party wishing to contest the validity of a submission that has been filed late in an arbitration must make an application to the arbitral tribunal, once constituted. The Secretariat will not declare a submission inadmissible by reason of its being filed late.
3-660 In addition to the parties’ submissions, the Secretariat will send the arbitral tribunal copies of the correspondence between it and the parties and between it and the arbitrators. It will usually omit correspondence that is clearly not relevant to the arbitral tribunal’s task. For example, correspondence relating exclusively to the arbitral tribunal’s constitution will not normally be included. Parties may contact the Secretariat if they
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feel that certain correspondence between the Court and the parties should not be transmitted. The Court will normally respect such a request if the correspondence does not relate to the dispute itself (e.g. a letter containing objections to the confirmation of a particular arbitrator).
3-661 Important information with the Secretariat’s letter. When transferring the case file, the Secretariat will provide the arbitral tribunal with a range of relevant information, documents and notes. It will remind the arbitral tribunal that it needs to prepare Terms of Reference within two months pursuant to Article 23(2); hold a case management conference pursuant to Article 24(1); and establish a procedural timetable pursuant to Article 24(3). It also highlights the arbitral tribunal’s obligation, under Article 22(1), to conduct the arbitration expeditiously and cost-effectively. The Secretariat will also enclose a case information sheet containing the addresses and other contact information of the parties and their legal representatives and a summary of the procedural characteristics of the case (place of the arbitration, language of the arbitration, any relevant arbitration and choice-of-law clauses) and a table containing relevant financial information (the amount in dispute, any advances on costs that have been fixed, payments already made by the parties, information on the likely range of fees for the arbitrator(s)). Also included is information about how arbitrators are replaced; how the advances on costs are fixed and what they cover; how and when arbitrators’ fees are paid; how arbitrators can request the reimbursement of disbursements; value added tax, charges and imposts applicable to arbitrators’ fees; and various administrative issues; as well as the ICC Award Checklist and a presentation of the ICC Hearing Centre in Paris.
3-662 Apart from the case information sheet and the list of documents making up the case file, the Secretariat does not automatically provide the parties with the above enclosures. Any party that wishes to see one or more of them can request copies from the Secretariat.
ARTICLE 17: PROOF OF AUTHORITY
At any time after the commencement of the arbitration, the arbitral tribunal or the Secretariat may require proof of the authority of any party representatives.
3-663 Purpose. The Rules do not establish a general requirement for a law firm or individual lawyer representing a party to provide a power of attorney or any other proof of authority. The new Article 17 expressly empowers the arbitral tribunal and the Secretariat to request such proof of authority where they consider this appropriate.
3-664 2012 modifications. New provision.
3-665 Secretariat’s use of the power. Disputes regarding proof of authority are in most cases best left for the arbitral tribunal to determine. The Secretariat is unlikely to make frequent use of Article 17. It might employ the provision in rare cases where a dispute over representation is preventing an arbitration from moving forward. For example, a party may contest the authority of a supposed representative to nominate an arbitrator, delaying the constitution of the arbitral tribunal. Further, although Article 17 allows the arbitral tribunal and the Secretariat to seek proof of authority even without a request from a party, the Secretariat is unlikely to do so unless the authority of a party representative has been specifically contested.
3-666 The provision places no time limit on the exercise of this power. Once the Secretariat has transmitted the case file to the arbitral tribunal pursuant to Article 16, decisions on proof of authority will normally be left for the arbitral tribunal.
3-667 Arbitral tribunal’s use of the power. Representation is rarely contested in ICC arbitration. Where it is, the matter will normally be dealt with by the arbitral tribunal.
3-668 Article 26(4) acknowledges that parties can have “duly authorized” representatives. The vast majority of the world’s arbitration laws also recognize this principle in international arbitration, removing any limitations on who may represent a party.38Nonetheless, the law at the place of arbitration may in some instances specifically require representatives to prove that they have been authorized to act by the party they are claiming to represent. Such proof of authority is generally in the form of a signed power of attorney. In some cases, therefore, the arbitral tribunal may be required to ask for proof of authority.
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3-669 Where authority is contested, it will be for the arbitral tribunal to determine what proof of authority is required and whether that requirement or set of requirements has been met. The arbitral tribunal may also need to determine whether the scope of a representative’s mandate is sufficiently broad if it has been specifically contested by a party.
ARTICLE 18(1): PLACE OF the ARBITRATION
The place of the arbitration shall be fixed by the Court, unless agreed upon by the parties.
3-670 Purpose. Article 18(1) concerns the legal “place” (also known as the “seat”) of the arbitration. The place of arbitration referred to in Article 18(1) must not be confused with the location(s) of hearings, meetings or the arbitral tribunal’s deliberations. The latter, dealt with in Articles 18(2) and 18(3) respectively, may be different from the place of arbitration.
3-671 Article 18(1) empowers the Court to fix the place of arbitration if the parties fail to agree on it. Unlike many other institutional arbitration rules, which provide for a default place of arbitration (typically the city where the institution is situated), the Rules give the Court broad discretion to select any place of arbitration in the absence of an agreement between the parties. A single fallback place of arbitration would not be appropriate in ICC arbitration, which has a global caseload. Cases commenced in 2011, for example, were seated in 113 cities in 63 different countries.
3-672 2012 modifications. None.
3-673 Significance of the place of arbitration. The place of arbitration can have very important consequences.
3-674 First, the place of arbitration determines the law governing the arbitration proceedings.39While national laws governing international arbitration are now broadly similar in developed legal systems, there can still be differences. Examples of these differences include possible limitations on
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the kinds of disputes that can be resolved by arbitration; the manner in which arbitration agreements are enforced; the extent to which local courts will give priority to the arbitral tribunal to determine jurisdictional disputes; the extent to which courts are empowered to provide support for arbitration proceedings or, conversely, to restrict arbitration proceedings; and the extent and scope of the grounds for recourse against arbitral awards. Less developed legal systems may have radically different arbitration legislation, or even none at all. Furthermore, laws are always subject to interpretation by the courts. National courts interpret their respective arbitration laws in slightly different ways and there are even differences in the interpretation and application of provisions that are common to countries that have adopted the UNCITRAL Model Law on International Commercial Arbitration. Where any kind of court involvement is required in the course of an arbitration, it is normally the courts at the place of the arbitration that will have jurisdiction. For best results, a place of arbitration should have a modern and accessible law governing international arbitration and a modern, neutral and supportive court system.
3-675 Second, the place of the arbitration will determine the “nationality” of an arbitral award. This can be important when it comes to the enforcement of the award. When ratifying the New York Convention, many states chose to make a reciprocity reservation. This means that they will enforce awards only if the place of arbitration was in another state that has also ratified the Convention. The state in which the place of arbitration is situated should therefore be a party to the Convention. However, this requirement is not particularly inhibiting since, at the time of writing, 146 states were parties to the Convention.
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3-676 The place of arbitration must be a city. For the sake of legal certainty, it is the Court’s longstanding practice to require that the place of arbitration be a city (or town) rather than a country. In some countries, particularly those with a federal system, the arbitration laws in different states, provinces, cantons or other regions may differ from each other. Even where a uniform arbitration law applies throughout an entire nation, each city or region within that nation will usually have its own court system, such that the failure to designate a city (or town) as the place of arbitration may create uncertainty as to which courts are competent to hear any issues requiring the involvement of courts.
3-677 Accordingly, when the Court must fix the place of arbitration, it will select a city and specify the country in which it is situated. If the parties’ arbitration agreement specifies a country or region but not a city, the Secretariat will encourage the parties to agree on a city. If they cannot agree, or where a party is not participating in the arbitration, the Court will select a city within the parties’ chosen country when fixing the place of arbitration. In so doing, it will take into account ease of access and geographic convenience for the parties and their representatives. The Court will also consider the city’s neutrality in relation to the parties, as it always does when fixing the place of arbitration. Typically, the selected city will be the country’s capital or an important business city within the country.
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3-678 Party agreements on the place of arbitration. The parties may agree on the place of arbitration either in their arbitration agreement or at any time before it is fixed by the Court. If it is not specified in the arbitration agreement, it will often be agreed upon in the parties’ correspondence with the Secretariat after the commencement of the arbitration. Between 2007 and 2011, arbitration clauses specified the place of arbitration in more than 76 per cent of cases. The parties subsequently agreed to a place of arbitration in a further 12 per cent of cases and the Court fixed the place of arbitration in the remaining 12 per cent of cases (see table 28).
3-679 For both legal and practical reasons (see paragraphs 3-674, 3-675 and 3-686), the choice of a place of arbitration should not be taken lightly. Parties ideally should seek expert legal advice before agreeing on a place of arbitration.
3-680 Any agreement on the place of arbitration should be clear and precise. It should ideally specify that the city mentioned is the “place” or the “seat” of the arbitration, so as to avoid confusion with the location of any hearings or meetings or the offices of the ICC. It is best to use language such as “the place of arbitration shall be [city]” or “place of arbitration: [city]”.
3-681 Where an arbitration clause refers to a city without specifying that it is intended to be the place of arbitration, the Court will usually interpret the reference as an agreement on the place of arbitration unless all parties confirm that this was not their intention. Expressions such as “ICC arbitration held in Geneva”, “ICC arbitration to take place in Singapore”, “London ICC arbitration” or even “the venue of arbitration will be New York”, have been accepted as agreements on the place of arbitration, subject to the overall context and to any other locations specified in the arbitration agreement. Where the wording is somewhat vague, as in the examples above, the Secretariat will usually write to the parties at the outset stating that it understands the reference to the particular city as a reference to the place of arbitration unless the parties inform it otherwise.
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3-682 Where a dispute arises over whether a city mentioned in the arbitration clause was intended to be the place of the arbitration, and the wording of the clause is ambiguous, the Court may decide to “fix” the place of the arbitration so as to remove any doubt. In so doing, the Court’s general practice is to fix the place mentioned in the clause unless all parties have indicated that it was not intended to be a designation of the place of arbitration.
3-683 Where a clause contains a vague reference to Paris, France, the Court exercises greater caution. Indeed, in a clause referring, for example, to “ICC Paris arbitration”, “ICC in Paris”, “ICC, Paris”, “arbitration administered by the ICC International Court of Arbitration in Paris” or “arbitration by the Paris ICC Court”, the reference to Paris could well have been included to help identify the institution, which is headquartered in Paris. In such cases, the Court usually fixes Paris as the place of arbitration if at least one party indicates that this was the parties’ intention. The Secretariat will inform the parties of this practice in advance of the Court’s decision and invite their comments.
3-684 Absence of agreement between the parties. Where no place of arbitration has been specified in the arbitration clause, the Secretariat will invite the parties’ comments and seek to elicit an agreement.40The Rules require the parties to comment on the place of arbitration at an early stage, in either the Request (Article 4(3), subparagraph (h); see paragraphs 3-104 and 3-105) or the Answer (Article 5(1), subparagraph (f); see paragraphs 3-162 and 3-163).
3-685 Failing agreement between the parties, the Court will carefully consider their comments and proposals. In the past, the Court only rarely fixed as the place of arbitration a city proposed by a party, so as to avoid giving the impression of favouring one side. For example, where one side proposed Kuala Lumpur and the other Hong Kong, the Court would usually reject both proposals and fix a third city. However, in recent years the Court has modified its practice where the proposal can be regarded objectively as reasonable and neutral. For example, if a Malaysian party proposes Kuala Lumpur and a Californian party proposes Hong Kong, the Court will not fix Kuala Lumpur but may fix Hong Kong, provided it is otherwise a suitable place of arbitration (see paragraph 3-686).
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3-686 In addition to the parties’ comments, the Court will consider a number of factors that it considers essential to fixing a suitable place of arbitration. These include:
3-687 Finally, and for the avoidance of doubt, the Court does not require a connection between the chosen place of arbitration and any of the parties or arbitrators, the applicable substantive law or the underlying facts of the dispute. The Court regularly fixes, and parties regularly agree to, places of arbitration with no connection to the case or its actors.
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3-688 Confirming the place of arbitration. Under the 1988 Rules, the Court would “confirm” the place of arbitration in all cases. Continuing its former practice, the Court occasionally confirmed the place of arbitration in the early years of applying the 1998 Rules. It generally did so because the parties had made an unclear agreement and disagreed over its interpretation. Confirming the place of arbitration constituted a middle ground in situations where the Court felt that it was unable to fix the place yet considered that the issue needed to be clarified. In recent years, the Court has very rarely “confirmed” the place of arbitration (it last did so in 2005). Where there is doubt, it rather simply fixes the place of arbitration. In some recent cases, the Court decided to “take note” of the parties’ agreement on the place of arbitration as a way of addressing one party’s objection and removing any doubt over the identification of the place of arbitration.
3-689 Provisionally fixing the place of arbitration. While not specifically referred to in the Rules, the Court has in the past provisionally fixed a place of arbitration. Such a decision may be required where the Court is unable to interpret contradictory or conflicting agreements between the parties. It has happened, for example, that the parties’ contract mentions two different places of arbitration or an amendment to the contract specifies a place different from that mentioned in the original contract and it is not clear which one prevails. A final decision on the place of arbitration will, in these rare cases, be left to the arbitral tribunal after allowing the matter to be fully argued by the parties. In one case, the arbitration clause provided that “the place of the hearings shall be selected by the party who did not request the arbitration”. The respondent alleged that it had the right to choose the place of arbitration while the claimant requested that the Court fix the place of arbitration. The Court finally decided to fix a provisional place of arbitration and to leave the final decision to the arbitral tribunal. In some cases where the arbitration clause specifically stated that the arbitral tribunal would fix the place of arbitration, the Court decided not to fix even a provisional place of arbitration.
3-690 Changing the place of arbitration. If the parties have agreed on the place of arbitration, as a general rule it can be changed only by a subsequent agreement of the parties. If an arbitral tribunal has been constituted, such an agreement would in practice need to be made in consultation with the arbitral tribunal. The Rules do not empower the Court to change a place of arbitration that the parties have agreed to. In the past, the Court has rejected even strongly argued requests by parties to do so. Indeed, the agreed place of arbitration could be considered a condition of the parties’ consent to arbitrate. Any decision (whether by an arbitral tribunal, the ICC,
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or even a state court) to change the place could consequently give rise to an argument that the arbitral proceedings were not conducted in accordance with the parties’ agreement. In any event, and as recalled by at least one arbitral tribunal in denying a party’s request to change the place of arbitration, the arbitral tribunal is free to decide that hearings and meetings will be held elsewhere, as provided in Article 18(2) (see paragraphs 3-693 and following).
3-691 In extreme cases where the place of arbitration initially agreed upon can no longer function as such, and assuming that at least one party refuses to agree on a different place, it is conceivable that a party could apply to the arbitral tribunal to change the place of arbitration.
3-692 The Court arguably has greater discretion to change the place of arbitration if it was initially fixed by the Court. However, the Court does not normally reconsider any of its decisions unless substantial new elements emerge that it did not previously take into account (see paragraph 3-406). Accordingly, only radically changed circumstances will normally prompt the Court to give serious consideration to a party’s request to change the place of arbitration. Factors that the Court may take into account—other than the circumstances at the place of arbitration—include the stage the arbitration has reached and, in particular, whether the Terms of Reference have been signed or any decisions or awards have been rendered.
ARTICLE 18(2): LOCATION OF HEARINGS AND MEETINGS
The arbitral tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate, unless otherwise agreed by the parties.
3-693 Purpose. Article 18(2) empowers the arbitral tribunal to determine the place where hearings and meetings are held, in the absence of agreement between the parties. Hearings and meetings may be held in a location other than the place of arbitration, discussed above.
3-694 2012 modifications. None.
3-695 Hearings and meetings. Hearings and meetings are any gatherings related to the arbitration at which the parties or their representatives are present. Article 18(2) covers procedural meetings, meetings at which Terms of Reference are finalized and signed, witness hearings or examinations, and hearings without witnesses. If a meeting does not involve the parties but only the members of the arbitral tribunal, then it would be regarded as a meeting to deliberate and come within the scope of Article 18(3). Due process requires that hearings and meetings involving any party should not be held without the presence of all parties, unless a party fails to attend after having been duly summoned to do so.
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3-696 Determining the location of hearings and meetings. Occasionally, the parties will specify the use of a particular hearing venue or location. If there is an agreement on the location of hearings, Article 18(2) makes it clear that the arbitral tribunal will be bound by it.
3-697 If there is no agreement between the parties, the usual presumption is that most hearings and meetings are held at the place of arbitration. The principal factors to which ICC arbitral tribunals typically have regard when considering whether to fix a different location are convenience, efficiency and economy. The legal place of arbitration will often have been chosen (whether by agreement between the parties or by the Court) because of its neutrality. Accordingly, it may lack any connection to the parties or the subject matter of the dispute and may not be geographically convenient for any of the actors in the dispute. The arbitral tribunal may consider another location more convenient for meetings and hearings, taking into account the location of the parties’ counsel, the arbitrators, the parties themselves, and the witnesses. When making such a decision, the arbitral tribunal should also have regard to means of transport at the location, the facilities it offers (e.g. hotels, hearing rooms), the availability of support services (e.g. translation and transcription services), visa requirements and whether work permits may be required for members of the arbitral tribunal or the parties’ counsel. Finally, the arbitral tribunal must consider the location’s neutrality in relation to the parties, in the same way as the Court does when fixing the place of the arbitration (see paragraph 3-686).
3-698 For example, in a dispute between Indian and US parties where the place of arbitration is Singapore yet all or most counsel and arbitrators are located in London, it may make sense to hold the hearings and meetings in London. However, in the same case, if most of the witnesses are located in Queensland, Australia, and the arbitral tribunal will also need to inspect the project site there, it may be more convenient to hold one or more hearings in Brisbane, since the parties, their lawyers and the arbitrators will need to travel there for the site inspection anyway. Any other hearings that do not require a site inspection or a large number of witnesses (e.g. preliminary hearing on jurisdiction, hearing on costs) may take place in London.
3-699 The parties’ views, which are specifically referred to in Article 18(2), must be sought and considered by the arbitral tribunal. In practice, there may be several exchanges of correspondence or a telephone conference call between the arbitral tribunal and the parties concerning the location of and arrangements for hearings and meetings. An arbitral tribunal is unlikely, and would be ill-advised, to fix hearings outside the place of the arbitration merely for its own convenience if there is a strong and reasonable objection from any party. Nonetheless, the arbitral tribunal does have the power to do so.
3-700 The arbitral tribunal should exercise caution before deciding that no hearing or meeting will be held at the place of the arbitration. Some state courts may consider that at least some part of an arbitration should
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physically occur at the place of the arbitration. It should be kept in mind that, no matter where hearings and meetings are actually held, the arbitral tribunal remains bound by and subject to the relevant arbitration law at the place of the arbitration.
3-701 Telephone and video conference hearings. Although not expressly mentioned in Article 18 or 25, it is possible to hold hearings by electronic means such as telephone or video conference. Paragraph (f) of Appendix IV to the Rules encourages arbitral tribunals and parties to consider such procedures as a means of reducing time and costs where a face-to-face hearing is not essential (see paragraphs 3-986 and 3-993).
3-702 Changed circumstances at the place of arbitration. The arbitral tribunal might also consider holding hearings and meetings at a location other than the place of the arbitration if that place has become unsafe or undesirable. In 1999 and 2000, an American claimant in two related cases against Serbian state agencies repeatedly requested that the place of arbitration be changed from Belgrade in Serbia to Geneva in Switzerland, given the political situation in Yugoslavia at the time and, in particular, popular resentment of Americans following the NATO bombings of Belgrade in 1999. The Court and the arbitral tribunal refused to change the place of arbitration but the arbitral tribunal decided to hold the hearings in Geneva, despite the Serbian party’s objection.
3-703 Hearing arrangements generally. Leaving aside the geographic location of hearings and meetings, the arbitral tribunal’s general power to conduct proceedings as it thinks fit also empowers it to decide on the actual venue (such as a conference facility, hotel or purpose-built hearing room) and all other arrangements for hearings in the absence of an agreement between the parties. In some cases the arbitral tribunal will delegate this task to counsel to one of the parties, often the claimant’s counsel.
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ARTICLE 18(3): LOCATION OF DELIBERATIONS
The arbitral tribunal may deliberate at any location it considers appropriate.
3-704 2012 modifications. None.
3-705 Many arbitral tribunals conduct their deliberations by telephone, email and fax. For certain issues, particularly those relating to key decisions in an award, the arbitral tribunal may find it necessary to meet face to face.41Such meetings may be followed by the exchange of draft awards between the arbitrators and/or further deliberations by email or telephone.
3-706 The members of an arbitral tribunal may meet wherever they please to deliberate face to face without the parties. ICC arbitrators often have many commitments outside the arbitration. These commitments, together with the diverse geographical origins of the arbitrators on most three-member ICC arbitral tribunals, can make it difficult to coordinate the deliberation process. ICC arbitrators usually deliberate in the location most convenient to them, taking into account their respective places of residence and schedules. This location may be the place of residence of one or more members or another location where they all happen to be at the same time, such as the city in which a major conference on international arbitration that they are all attending is being held.
3-707 In most instances, the president of the arbitral tribunal will organize these meetings and suggest where they should be held. In practice, this rarely gives rise to any controversy. However, in a recent case tensions arose between the members of the arbitral tribunal when attempting to schedule and organize deliberations. One of the co-arbitrators contested (among other things) the president’s choice of location for the deliberations. They were planned to be held at the place where the president and the other co-arbitrator resided, which was a two-hour flight away from the place of residence of the objecting co-arbitrator. Despite the objecting co‑arbitrator’s threats not to attend, the deliberation meeting took place at the location chosen by the president.
3-708 Finally, a notable difference between Articles 18(2) and 18(3) is that the latter requires no input from the parties. Deliberations are entirely a matter for the arbitral tribunal. The parties do not normally need to be informed of when or where they are to take place or have taken place.
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ARTICLE 19: RULES GOVERNING THE PROCEEDINGS
The proceedings before the arbitral tribunal shall be governed by the Rules and, where the Rules are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration.
3-709 Purpose. Article 19 becomes relevant once the case file has been transmitted to the arbitral tribunal in accordance with Article 16 and applies through to the end of the proceedings. It establishes the hierarchy of rules defining the proceedings before the arbitral tribunal. That hierarchy is very simple. The proceedings are governed by the Rules and, where they are silent, by any agreements between the parties or, if they cannot or do not agree, any decisions by the arbitral tribunal. In practice, the Rules are extraordinarily flexible in relation to the proceedings, so the shape and style of an ICC arbitration is influenced much more by its individual actors (parties, parties’ counsel and arbitrators) than by the provisions of the Rules.
3-710 2012 modifications. Article 19, which derives from Article 15 of the 1998 Rules, contains only the former Article 15(1). Article 15(2) of the 1998 Rules is now Article 22(4), as its subject matter corresponds to that of Article 22. The content of the former Article 15(1) (now Article 19) has not changed.
3-711 Procedural matters addressed directly in the Rules. Strictly speaking, the provisions of the Rules lie at the top of the hierarchy established by Article 19. In practice, agreements between the parties and decisions by the arbitral tribunal will have a greater role in determining the nature of the procedure because the Rules address only a very limited range of matters and, even in the matters they address, leave the procedure predominately in the parties’ and/or the arbitral tribunal’s control.
3-712 The Rules foresee four concrete steps once the case file has been transmitted to the arbitral tribunal in accordance with Article 16: (i) the establishment of Terms of Reference (Article 23); (ii) the holding of a case management conference (new to the 2012 Rules) at the time of preparing the Terms of Reference (Article 24(1)); (iii) the establishment of the procedural timetable, which is usually completed at the case management conference (Article 24(2)); and (iv) the arbitral tribunal’s obligation to declare the proceedings closed promptly after the last step in the procedure (Article 27).
3-713 Article 22 places a limit on the arbitral tribunal’s freedom to determine procedure by requiring it to conduct the arbitration fairly and impartially. The 2012 Rules have also introduced several new provisions that provide guidance to parties and the arbitral tribunal on conducting an efficient and cost-effective arbitration.
3-714 Articles 25 and 26, which address the gathering of evidence and the conduct of hearings, establish additional powers and requirements. To the
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extent that those powers are part of the Rules, they may technically be considered to lie at the top of the hierarchy established by Article 19. However, derogations by the parties from those provisions are likely to be accepted in practice.
3-715 Procedural matters not addressed in the Rules. Where the Rules are silent, Article 19 provides that the proceedings before the arbitral tribunal are determined by agreement between the parties or, failing agreement, by a decision of the arbitral tribunal.
3-716 The parties’ agreements may be made in their arbitration agreement or after the arbitration has been commenced. It is very rare for parties to set out detailed procedures in an arbitration agreement, although in some instances an arbitration clause will contain provisions on basic procedural matters such as time limits and submission deadlines. Indeed, it makes little sense for parties to set out a detailed arbitration procedure in an arbitration clause in their contract because at that stage they do not know precisely what the dispute will be about. They are unlikely therefore to be in a position to determine the best procedure.
3-717 Agreements between the parties on arbitration procedure are more commonly made during the arbitration, typically with the guidance or even the close involvement of the arbitral tribunal. An experienced arbitral tribunal will have valuable expertise in designing appropriate procedures and can assist the parties enormously in that respect. The case management conference is an ideal opportunity for the arbitral tribunal to propose procedures and assist the parties in reaching agreement on a wide range of procedural issues.
3-718 In theory, if the parties were to agree on something that the arbitral tribunal could not accept, the arbitral tribunal may resign. Alternatively, the parties could simply agree to remove and replace an arbitral tribunal that refused to accept their agreed procedure. Fortunately, that rarely, if ever, occurs. An experienced arbitral tribunal will and should use its authority to persuade the parties to agree on a procedure that the arbitrators consider appropriate for the case and, when doing so, remind them of their duty under Article 22(1). Expertise in designing appropriate procedures is one of the desired qualities of an experienced international arbitrator, so it would make little sense to ignore the arbitral tribunal’s input.
3-719 As Article 19 makes clear, where the parties are unable to agree, the procedure is determined by the arbitral tribunal. When making procedural decisions—especially if they are important—the arbitral tribunal should consult the parties. An arbitral tribunal will usually first try to elicit an agreement, failing which it will make the decision itself.
3-720 In those very rare instances where there is disagreement among the members of the arbitral tribunal on an issue of procedure, Article 31(1) applies by analogy, empowering the majority or, failing a majority, the president to decide alone.
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3-721 Relevance of national procedural rules. Article 19 clarifies that the parties and the arbitral tribunal need not refer to national rules of procedure. In practice, it is very rare for parties to agree on, or for arbitral tribunals to adopt, national rules of procedure. Such rules are unlikely to be well suited to international arbitration.
3-722 However, the parties and the arbitral tribunal must respect any mandatory rules of procedure at the place of the arbitration that are applicable to international arbitrations (see paragraphs 3-771–3-773). Failure to do so may lead to the award being set aside. For similar reasons, an arbitral tribunal may also have regard to mandatory rules of procedure applicable to international arbitrations at any place where enforcement proceedings are likely to be initiated. ‘
3-723 “Typical” ICC procedure. Aside from the few provisions in the Rules that were discussed above (see paragraphs 3-711–3-714), there is no “typical” format for proceedings in ICC arbitration. The broad flexibility of the Rules allows an ICC arbitration to take whatever shape or form the parties and/ or the arbitral tribunal consider most appropriate to the particular case. In practice, the procedure that is adopted will often have the broad features common to various national laws. The procedure will also depend significantly on a range of factors relating to the peculiarities of the case and the geographic and cultural backgrounds or experience of the parties’ representatives, their counsel and the arbitrators. These individuals—the key actors in an ICC arbitration—can mould the arbitration procedure as they wish. A combination of their expectations and the nature of the individual case will determine what shape the procedure ultimately takes. Given the extraordinary diversity of geographic backgrounds and types of disputes found in ICC arbitration, parties and arbitral tribunals adopt a wide variety of procedures. An ICC arbitration involving primarily Brazilian actors may be conducted completely differently from an arbitration in which the actors are from Russia, Australia, China, North America or Central Africa.
3-724 When are procedural decisions made? Procedural decisions may be made at any time during the arbitration, irrespective of whether they are made by the arbitral tribunal or through an agreement between the parties. The parties and the arbitral tribunal will discuss the basic shape and structure of the proceedings during the case management conference required by Article 24 and/or during the process of preparing the Terms of Reference. Those discussions should lead to a procedural timetable, issued in accordance with Article 24(2), which sets out the broad terms of the procedure to be followed and relevant time limits. Procedural timetables can later be modified by agreement of the parties or by the arbitral tribunal, possibly through the holding of further case management conferences as foreseen by Article 24(3).
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3-725 Other decisions on procedure are taken as and when necessary during the arbitration. A party may request a procedural decision from the arbitral tribunal at any time, and the arbitral tribunal may make procedural decisions at any time. The arbitral tribunal should consult the parties before making any procedural decisions of importance.
3-726 Form of procedural decisions by the arbitral tribunal. The Rules do not lay down any formal requirements for procedural decisions made by the arbitral tribunal. They generally take one of three forms. (1) The decision is sometimes set out in the arbitral tribunal’s written correspondence to the parties. This will often apply to small or straightforward procedural decisions. (2) More detailed procedural orders (e.g. decisions setting out multiple procedural steps) will usually be issued in the form of a separate, signed procedural order. Signing such orders is good practice because it ensures that there is no doubt as to which version of the order is final and to be applied (the arbitral tribunal will often have circulated draft procedural orders to the parties for their comments). (3) Procedural decisions are sometimes made orally during telephone conferences or arbitration hearings. It is good practice for such decisions to be recorded and confirmed in writing shortly thereafter, again so that there is no doubt about their content.
3-727 IBA (International Bar Association) Rules on the Taking of Evidence in International Arbitration. The IBA Rules offer a useful framework for parties seeking guidance on how to structure their arbitral proceedings (see www.ibanet.org Parties to ICC proceedings sometimes adopt the IBA Rules for use as guidance (although rarely as binding rules) in the evidentiary stage of the arbitration or some specific part of it. They may agree to this in their arbitration agreement or at a later time, such as in the Terms of Reference. Sometimes it is the arbitral tribunal that suggests the IBA Rules be adopted or that certain provisions be used for guidance.
ARTICLE 20: LANGUAGE OF THE ARBITRATION
In the absence of an agreement by the parties, the arbitral tribunal shall determine the language or languages of the arbitration, due regard being given to all relevant circumstances, including the language of the contract.
3-728 Purpose. An important characteristic of international arbitration that distinguishes it from litigation in state courts is the parties’ freedom to select the language or languages of the arbitration proceedings. There is no restriction on which language(s) the parties may select for an ICC arbitration. The decision on language should not be taken lightly as it may have an impact on the efficiency and cost of the proceedings and the choice of arbitrators. If the parties are unable to agree on the language of the arbitration, Article 20 empowers the arbitral tribunal to decide.
3-729 2012 modifications. None.
3-730 Party agreements on language. Like any important agreement, an agreement on the language of the arbitration should be clear, precise and, ideally, recorded in writing. In the majority of ICC arbitrations the parties will have agreed on the language in their contract, typically as part of or near the arbitration agreement. In many other cases the parties will agree on the language fairly quickly once a dispute has arisen. If there is no agreement on the language prior to submission of the Request, Article 4(3) requires the claimant to comment on the matter in its Request (see paragraph 3-105). The Secretariat will then solicit the respondent’s comments and encourage the parties to agree (see paragraph 3-163).
3-731 As well as improving efficiency and reducing costs, an early agreement on the language will greatly simplify the process of selecting counsel and arbitrator(s). There is an obvious advantage for parties to ensure that their counsel and selected arbitrators possess the right language abilities. Such abilities are also an essential consideration when the Court appoints and confirms arbitrators pursuant to Articles 12 and 13 (see paragraphs 3-506– 3-510).
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3-732 The parties’ choice of language can be important. A number of factors should be considered. The language of the contract is explicitly mentioned in Article 20 and, although not decisive in itself, should be considered highly relevant. Other factors relate to efficiency and the pool of wellqualified counsel and arbitrators who are competent in the language. For example, if Bulgarian is the language of the arbitration and Chinese law governs the merits, it is likely to be a challenging task to find well-qualified counsel and arbitrators. In certain arbitrations, the subject matter may be highly complex, creating a need for arbitrators who are specialists within a certain industry or field of law. Ideally, the arbitrators should also have knowledge of the rules of law governing the merits and of international arbitration practices. If, in addition, the arbitrators are required to satisfy unusual language requirements, the pool of potential candidates may be highly limited or even non-existent.
3-733 Furthermore, the linguistic abilities of potential witnesses may be relevant where the use of an interpreter would inadequately convey their testimony or, at least, result in inefficiencies and higher costs (e.g. for simultaneous translation during hearings). The parties should consider the language of most of the documentary evidence so as to avoid the need for excessive translations, which will be costly and cause delays (alternatively, parties may consider flexible language requirements; see paragraphs 3-742 and 3-743). Finally, the languages in which the Court and its Secretariat can operate may be relevant (see paragraph 3-739).
3-734 Decisions on language by the arbitral tribunal. If the parties have not reached agreement, the arbitral tribunal must determine the language or languages of the arbitration. In some instances, this may mean interpreting documents to determine whether an agreement has actually been reached. Arbitral tribunals usually make their decisions on language in short but reasoned procedural orders issued before the Terms of Reference. In some cases, determining the language may prove so complex that the arbitral tribunal will prefer to reserve its decision until after the Terms of Reference. In such cases, the Terms of Reference will need to be drafted either in all of the potential languages or, with the parties’ agreement, in one of those languages with a clear stipulation that doing so does not prejudge the arbitral tribunal’s eventual decision on language. If more than one language is used for the Terms of Reference, the arbitral tribunal will need to specify which version prevails in the event of inconsistency.
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3-735 Article 20 requires the arbitral tribunal to have regard to all relevant circumstances, including the language of the contract, when deciding on the language of the arbitration. Arbitral tribunals generally adopt one or a combination of two broad approaches. The first is to attempt to identify the language in which the parties would have expected the arbitration to proceed when they made their arbitration agreement, using objective factors and taking into account the language of both pre- and postcontractual communications between the parties. Adopting this approach, the language in which the arbitration agreement is drafted (assuming it to be in only one language) serves as a highly persuasive indicator in determining the language of the arbitration. However, other factors may rebut that presumption in certain circumstances (e.g. where all of the parties’ correspondence in connection with the negotiations and performance of the contract was in a different language).
3-736 The second approach, while still adopting aspects of the first, consists in balancing the convenience of different languages to the actors in the arbitration. The arbitral tribunal will consider, in particular, the languages spoken by its own members, the parties’ counsel and the likely witnesses, as well as the language(s) of much of the documentary evidence.
3-737 Where an arbitral tribunal determines that the language of the arbitration is a language not spoken by one or more arbitrators, the arbitrator(s) may find it appropriate to tender their resignation in the interests of efficiency. The Court has in the past accepted challenges based on such circumstances. Where counsel does not speak the language of the arbitration, a party may consider engaging different or additional counsel.
3-738 Finally, an arbitral tribunal should always check the applicable arbitration law when determining the language. Some jurisdictions fix a default language where the parties have not agreed on the language. However, this is rare, and virtually unknown in the more popular jurisdictions for arbitration.
3-739 Languages used by the Court and its Secretariat. When deciding on the language(s) of the arbitration, parties and the arbitral tribunal may wish to consider communications with the Secretariat. The Court’s two official languages are English and French, but the Court also holds sessions for the scrutiny and approval of awards in German, Spanish and Portuguese (see paragraph 3-1200). The Secretariat’s correspondence with the parties relating to the various steps of the procedure is drafted in English, French, Spanish, Portuguese or German. Where the language of the arbitration has not yet been determined, the Secretariat usually drafts its correspondence either in the language of the contract (if it is one of the above-mentioned languages) or alternatively in English. Secretariat staff members speak many additional languages and are able to provide guidance to parties and review correspondence in those languages.
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3-740 Conducting the arbitration in a language in which the Secretariat is capable of operating can reduce delays. However, parties remain free to select a language that is not known to any Secretariat staff, in which case the Court and its Secretariat may need to translate documents for its own internal purposes. The language used for correspondence between the Secretariat and the parties should not restrict or influence the arbitral tribunal’s decision on the language of the arbitration.
3-741 Multiple languages and flexible language orders. The parties or the arbitral tribunal may select more than one language for a single arbitration. However, a fully bilingual or multilingual arbitration is difficult to undertake and may increase costs significantly. Correspondence from the parties and the arbitral tribunal, as well as orders and awards, may need to be issued in all languages. Unless counsel, witnesses and arbitrators are fluent in all languages, simultaneous interpreters will almost certainly be necessary, too, for hearings and meetings. Furthermore, using multiple languages can give rise to differences of meaning between different language versions. That is particularly problematic where awards are concerned. Apart from the risk of inconsistencies, the process of drafting and scrutinizing awards drafted in more than one language will be delayed. Finally, selecting multiple languages for an arbitration will significantly reduce the pool of potential arbitrators for the case to those who master both or all languages.
3-742 Despite these potential difficulties, there may be times when parties still prefer multiple languages in the interests of fairness and, in some instances, to allow each of them to make its case in its native language. Yet these goals can be achieved in other ways. It is possible for the parties to agree, or for an arbitral tribunal to decide, that while the official language of the arbitration is X, parties may file documents and/or make submissions in language Y with or without the need for a translation. There are few limitations on the kinds of agreements that parties can make or orders that arbitral tribunals can issue in respect of language. In international arbitration, it is not uncommon to see fairly detailed orders on language issues.
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3-743 Regardless of the language of the arbitration, witnesses will often be permitted to testify in their own language, in which case the party that calls the witness may need to provide a translation of written testimony and arrange interpretation for oral testimony. Translation and interpretation may be unnecessary if the other players in the case understand the language in question.
ARTICLES 21(1)–21(3): OVERVIEW OF THE RULES OF LAW GOVERNING THE MERITS
3-744 Articles 21(1)–21(3) specify how the principles of law that govern the parties’ substantive claims and defences, i.e. the merits of the dispute, are determined. These are the only provisions in the Rules that address substance or substantive law (i.e. the law relevant to the determination of whether a party wins or loses on the basis of its claims, defences and/or the corresponding relief it seeks). All other provisions of the Rules concern the procedure or the arbitral process (i.e. how the arbitration is conducted).
3-745 By way of background, it is essential to understand that in an international arbitration several different laws may be relevant. These include:
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3-746 Article 21’s first paragraph is of primary importance. It establishes how the rules of law applicable to the substance or merits of the dispute are determined. Like many other provisions of the Rules, Article 21(1) allows the parties to exercise their choice, failing which the arbitral tribunal must determine the applicable rules of law. Further reinforcing the importance of parties’ agreements in ICC arbitration, Article 21(2) requires the arbitral tribunal, in any event, to take account of the parties’ contract if any, and any relevant usages in their trade or industry. Article 21(3) gives parties the possibility of empowering the arbitral tribunal to decide the case in accordance with principles of fairness and justice rather than rules of law.
ARTICLE 21(1): APPLICABLE RULES OF LAW
The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.
3-747 Purpose. Article 21(1) specifies how the rules of law governing the merits or substance of the dispute are determined. In keeping with the consensual nature of arbitration, Article 21(1) allows the parties to choose those rules of law. Where no agreement can be reached, the arbitral tribunal, as the body best placed to understand the features and particularities of the case, will decide on the appropriate rules of law. The expression “rules of law” allows the parties or the arbitral tribunal to choose not only a domestic legal system but also a set of laws or guidelines that depart from that classical understanding of the law (e.g. model laws issued by nongovernmental or supranational entities, international trade guidelines) (see paragraph 3-761). The expression “rules of law” also encompasses the rights and obligations that may arise under an investment treaty or law and is not intended to confine the parties or the arbitral tribunal to rules and principles of private law.
3-748 2012 modifications. None.
3-749 Parties’ agreements on the law governing the merits. Parties usually include a governing law clause within their contract, often in close proximity to the dispute resolution provisions. In cases where claims are made on the basis of a treaty, the treaty itself will apply.
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3-750 In order to avoid potentially costly disputes at a later date, contractual choice-of-law clauses should be clear and precise. The inclusion of a choice-of-law clause in a contract brings a number of advantages. First and foremost, knowing the governing law will make it easier for parties to understand their own contractual rights and obligations in advance during their performance of the contract. Second, it avoids a sometimes costly dispute at a later date over which law should govern the merits. Third, it simplifies the process of selecting arbitrators, as it is usually desirable for at least one member of an arbitral tribunal to be formally qualified in the law governing the merits or at least to possess substantial knowledge of that law.
3-751 If the parties have not included a choice-of-law clause in their contract, they may nonetheless agree on the law governing the merits at any time, such as once a dispute has arisen. Yet it may be difficult for them to reach such an agreement. The choice of law may have a significant impact on the outcome of the dispute. Even if parties have not cast their minds that far ahead, they will often favour rules of law with which they or their legal advisers are familiar. This explains why, once a dispute has arisen, each side often expresses a strong preference for a particular law, which rarely coincides with the other party’s preference.
3-752 Where parties have agreed on a substantive law, the arbitral tribunal must respect that choice. If it fails to do so, this might be considered as a failure to conduct the procedure in accordance with the parties’ agreement, which would undermine the enforceability of a subsequent award.
3-753 Arbitral tribunal’s decisions on the law governing the merits. Where the parties fail to reach an agreement, the arbitral tribunal determines the rules of law that will govern the merits of the dispute.
3-754 Timing of the arbitral tribunal’s decision. Given the flexibility of ICC arbitration, the Rules do not specify when an arbitral tribunal will determine the law governing the merits of the dispute. The timing of the decision is a question of procedure that should be discussed in the context of Article 19. In practice, parties and arbitral tribunals will often consider it an advantage if the rules of law governing the merits are determined at an early stage of the proceedings, before the parties have made submissions on the merits
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The parties are then in a position to refer to the content and application of the correct law when making their submissions. For this reason, determining the rules of law may constitute the first step of the proceedings following completion of the Terms of Reference, although it is not unheard of in ICC arbitration, particularly in smaller cases, for the arbitral tribunal to determine the law governing the merits in the award that rules on the merits. In such instances the parties may need to take into account and plead on the basis of both (or all) potentially applicable laws when making their substantive submissions, although many disputes turn primarily on their facts and the interpretation of the relevant contract(s).
3-755 Form of the arbitral tribunal’s decision. The Rules do not lay down any particular formal requirements for the arbitral tribunal’s decision on the law governing the merits. Given its importance, any such decision should be in writing and properly reasoned.42If the arbitral tribunal includes the decision in a document that addresses matters relating to the substance of the dispute or the arbitral tribunal’s jurisdiction, that document should of course take the form of an award. If the arbitral tribunal chooses to make a stand-alone decision on the law governing the merits, its decision can take the form of either an order or an award. If it is in the form of an award, the arbitral tribunal must submit a draft to the Secretariat for scrutiny by the Court pursuant to Article 33, which offers a means of quality control at no extra cost to the parties or the arbitral tribunal. For this reason, the Court prefers that decisions on the rules of law governing the merits be made as awards. Characterizing the decision as an award for ICC purposes should not, in principle, influence the way in which the decision is characterized legally at the place of the arbitration. If the arbitral tribunal has concerns in this regard, the Court and its Secretariat can offer informal scrutiny of the decision, allowing it to remain as an order.
3-756 Factors for arbitral tribunals to consider when deciding on the rules of law governing the merits. Unlike the application of conflict-of-law rules by national courts, an arbitral tribunal’s determination of the law governing the merits should not be protracted or overly complex. Article 21(1) provides considerable flexibility in this regard, requiring only that the arbitral tribunal apply the rules of law “which it determines to be appropriate”. The provision relieves arbitral tribunals of the need to apply formal conflict-of-law rules. However, it does not relieve them of the need to give reasons for their decisions. Consequently, an arbitral tribunal should explain why it determines a particular law “to be appropriate”.
3-757 In practice, ICC arbitral tribunals rarely refer in their decisions to a particular set of conflict-of-law rules, although they may have regard to generally accepted principles of conflict-of-law rules. To take a simple example, ICC arbitrators will often apply a classic principle of conflict of laws by searching
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for the law that is most closely connected to the contract. For instance, in disputes over the sale of goods where the parties have not chosen the governing law, ICC arbitral tribunals have often considered the law of the seller’s place of business as being most closely connected to the contract—a common principle in conflict of laws—unless there are indications to the contrary.
3-758 ICC arbitral tribunals also typically look to identify which law the parties, at the time of making the contract, reasonably would have expected to be applied to the dispute. Once again, the law with the closest connection to the contract or to the substantive aspects of the underlying dispute will be favoured, although the arbitral tribunal will also take into account the parties’ nationalities, the legal traditions with which they are familiar, and any other relevant factors. Arbitral tribunals have rarely, if ever, considered as relevant any factors that are extraneous to the merits of the dispute but related to the procedure, such as the arbitrators’ backgrounds or the place of the arbitration.
3-759 Which rules of law may be chosen by the parties or the arbitral tribunal? The Rules do not restrict the parties in their choice of rules of law to govern the merits.43There is no requirement, for example, that there be a connection between the chosen law and the underlying dispute or any of the parties. Parties sometimes use the freedom they are given by choosing the law of an entirely neutral country that has no link whatsoever with any party or the dispute.
3-760 Article 21(1) deliberately refers not to “law” but to “rules of law”. The latter term has gained currency in international arbitration. Its purpose is to avoid any restrictive presumption that parties and arbitral tribunals must adopt the law of a domestic legal system, which could be inferred from use of the word “law” alone.
3-761 The term “rules of law” encompasses an almost limitless range of options. These include, for example, transnational commercial law (also known as general principles of international commercial law or lex mercatoria44) and non-national sets of rules or principles, such as the UNIDROIT Principles of International Commercial Contracts, the Principles of European Contract Law, INCOTERMS, model laws prepared by UNCITRAL, and any principles of public international law that may be applicable (e.g. in investment treaty arbitration). Parties or the arbitral tribunal could even develop a legal framework that borrows and combines individual rules and principles or entire sets of rules and principles from a number of sources (e.g. combining provisions from one or several domestic legal systems with principles of international treaty law and transnational commercial law).
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3-762 A combination of domestic laws or a reference to transnational commercial law may better suit the international character of many disputes submitted to international arbitration than the application of a law that was drafted or has developed primarily for use within a particular country. Transnational commercial law can also offer a compromise where the parties cannot agree on which of their respective domestic laws should govern the dispute. The possibility of referring to transnational commercial law or tailor-made concoctions of applicable legal principles is another manifestation of the flexibility of international commercial arbitration.
3-763 Conversely, a possible disadvantage of referring to any non-national system of law is the potential absence of predictability and certainty, depending on the instrument chosen. Domestic laws, particularly from well-developed legal systems, are usually easy to access. They also operate with reasonable consistency so that actors should, to a large extent, be able to find out in advance what the law is. The content and precise application of transnational commercial law, on the other hand, is always open to debate. Parties and arbitral tribunals should therefore weigh the advantages and disadvantages of such choices before adopting them.
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3-764 What is covered by the law governing the merits? As already mentioned, the law governing the merits of a commercial arbitration is applied to the substance or merits of the parties’ claims and defences. Generally, it covers all aspects of those claims and defences. However, it will not cover procedural questions, such as claims relating to the allocation and quantum of legal costs, which are dealt with either by the Rules, by agreement between the parties, or by a decision of the arbitral tribunal (see paragraphs
3-709 and following). There is sometimes doubt as to whether the law governing the merits covers interest, which may be regulated by procedural law. Provisions on interest in procedural laws tend to be broad and general, leaving the arbitral tribunal with discretion to apply the law governing the merits to the question of interest in any event. Similarly, there may be doubts as to whether other issues, such as statutes of limitation, estoppel or set-off, are to be considered substantive or procedural.
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3-765 Certain peripheral aspects of a dispute could be subjected to laws different from the principal governing law. For example, the law at the place where a party was incorporated may be relevant to determining that party’s capacity to contract or to enter into an arbitration agreement.
3-766 Finally, different claims in an arbitration may be governed by different substantive laws. This may happen where, pursuant to Article 9, claims have been made with respect to more than one contract and the different contracts are governed by different substantive laws. Also, non-contractual claims (e.g. pre-contractual misrepresentation) may be governed by a law other than the law governing any contractual claims. An arbitral tribunal should consider the question of which law governs non-contractual claims separately from the question of which law governs contractual claims. Wherever more than one substantive law applies, the arbitral tribunal should determine each claim according to the substantive law that applies to it.
3-767 Establishing the content of the law governing the merits. Once the law governing the merits is known, the arbitral tribunal will need to determine the content of that law where relevant to the dispute. In international arbitration, it is each party’s responsibility to establish the content of any provision of the rules of law governing the merits upon which it seeks to rely. This differs from some civil law systems, where the parties need only plead on the facts of the case, leaving the application of appropriate legal principles to the judge, on the assumption that the judge knows the law.
3-768 In international arbitration, it often happens that only some, or indeed none, of the arbitrators are qualified or specialists in the rules of law governing the merits. Even if they are so qualified, parties should not assume that they will apply the law on their own initiative. Rather, parties should refer to and supply all relevant information on the content of the legal provisions on which they rely. They typically establish the content of the substantive law through pleadings by counsel, providing the arbitral tribunal with copies of the relevant code(s), statute(s), jurisprudence and/ or case law, and/or through the testimony of expert legal witnesses. The arbitral tribunal should then determine the relevant content of the substantive law based on its assessment of all of those submissions and evidence.
3-769 Iura novit curia. In some legal systems, the parties may rely on the judge’s knowledge of the law rather than setting out and explaining the law to the judge. This is usually not the case in international arbitration, for which this approach is undesirable. If an arbitral tribunal considers that certain relevant provisions of the rules of law governing the merits have not been presented to it, it is well advised to adopt one of two approaches. One is to ignore the point, even if it means rejecting a claim or defence. The other is to invite the parties to make submissions on those potentially relevant provisions of law.
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3-770 An arbitral tribunal should be very cautious about applying any provision of law on which the parties have not had an opportunity to comment or make submissions. Unlike judges in some civil law jurisdictions, arbitral tribunals that decide a case on the basis of legal concepts not raised by any of the parties will risk breaching due process requirements, rendering the award vulnerable to being set aside or difficult to enforce. If an arbitral tribunal is contemplating the application of legal concepts not argued by the parties, it should seek to uphold due process by presenting those concepts to the parties and inviting their comments. Yet even this should be done with caution, as one side may feel that it unfairly favours the opposing side by giving it ideas on how to argue its case.
3-771 Mandatory laws that an arbitral tribunal may need to apply. An arbitral tribunal must apply all relevant and applicable provisions of the rules of law that the parties have chosen or the arbitral tribunal has determined to be applicable to the merits of the dispute. In addition, it may occasionally be required to apply laws that are mandatory in a different jurisdiction.
3-772 Laws characterized as mandatory are intended to implement fundamental public policy in the legal system to which they belong. This means that the parties cannot avoid or derogate from those laws in the context of that legal system. Several legal systems have mandatory laws that may be relevant to an arbitration:
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3-773 These three categories of potential mandatory laws are best explained by way of an example. Consider a case where the place of arbitration is Singapore, the law applicable to the merits is New York law, and the dispute relates to the construction of an industrial facility in Indonesia. The arbitral tribunal would need to respect any mandatory Singaporean procedural laws applicable to international arbitration proceedings seated in Singapore. All provisions of New York law on which the parties seek to rely should also be respected, to the extent that they are relevant to the issues before the arbitral tribunal. In certain limited circumstances, ICC arbitral tribunals may also consider that mandatory Indonesian laws (if any) apply where an underlying factual issue is intimately connected to the law of Indonesia.
3-774 A situation of this kind arose in a recent case involving a dispute over the financing of certain development and renovation works on properties situated in Saudi Arabia, which the respondents controlled. The respondents alleged that the financing agreement at the centre of the dispute was null and void because it violated Saudi public policy. Specifically, they argued that the agreement provided for interest payments that were contrary to Islamic Shari’a law, which is commonly regarded as fundamental to Saudi Arabia’s constitutional order. The claimant argued that Shari’a law was irrelevant, as the law of England and Wales had been agreed as the applicable law in the contract. In addition, the place of arbitration was Geneva, Switzerland. The arbitral tribunal addressed the issue by analysing the extent to which arbitrators can or should recognize exceptions to the legal framework agreed upon by the parties or fixed by the arbitral tribunal pursuant to Article 21. It identified two such exceptions, one of which consisted in upholding fundamental values of public policy that are internationally accepted. The other related to mandatory rules of the type discussed above, applicable where a contract “would violate fundamental and overriding legal and moral principles of the country to which the subject matter of the dispute is closely connected”. It also sought to explain why in certain instances it may be appropriate to apply mandatory law to “preclude parties [from] adopting an arbitration agreement for the purpose of avoiding the fundamental legal and moral rules of the country which is inherently linked to the transaction”. Noting that this exception operates only in very limited circumstances, the arbitral tribunal found that the facts of the case fell within the exception such that mandatory provisions of Shari’a law might apply. The dispute was inherently connected to Saudi Arabia as it involved financing for a project based exclusively in that country and conducted by Saudi entities. While the claimant was not itself Saudi, it acquired a commercial sub-lease on the property under the agreement. In the end, the arbitral tribunal found that the respondents had been unable to demonstrate persuasively that the agreement actually violated Shari’a law.
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3-775 In the example above, it was the respondents that raised and sought to rely on Saudi law. A trickier issue is whether an arbitral tribunal should raise a potentially applicable mandatory law when not raised by any of the parties. If they are mandatory procedural laws at the place of the arbitration, the answer is usually yes. Respect for such laws could be crucial to ensuring that any award will not be set aside. ICC arbitral tribunals also generally find that the same applies to mandatory provisions belonging to the law applicable to the merits (as this system of law should be applied in its entirety). As mentioned in paragraph 3-770, the arbitral tribunal should at the very least invite the parties to comment on any point of law that they have not raised themselves. As for other laws factually connected to the dispute, there is much debate as to whether they should be raised by the arbitral tribunal on its own initiative. As indicated in paragraph 3-772, ICC arbitral tribunals are in practice rarely confronted with mandatory substantive laws of such third countries.
3-776 In a rare case from 2004 raising issues of this kind, the parties were in a dispute over two agreements relating to the exchange of glass production technology and its use in Europe and elsewhere. The agreements restricted the parties’ use of each other’s technology in other regions of the world, raising competition issues. In particular, the respondent claimed that the first contract was null and void under European competition law, which the arbitral tribunal regarded as mandatory within Europe. However, the respondent did not formally plead for relief in relation to the alleged nullity. German law applied to the first contract. As European law is an integral part of German law, the relevant EU competition law was clearly applicable. The arbitral tribunal ultimately found that the contract complied with that law and, despite the fact that the matter had not been pleaded by the respondent, also addressed the issue of mandatory laws in relation to the second contract.
ARTICLE 21(2): CONTRACTUAL PROVISIONS AND TRADE USAGES
The arbitral tribunal shall take account of the provisions of the contract, if any, between the parties and of any relevant trade usages.
3-777 Purpose. Article 21(2) requires the arbitral tribunal to place the parties’ contract, if any, centre stage in the resolution of contractual disputes. This provision is a further reflection of the importance of the parties’ agreements in international arbitration, where contractual terms are often considered to have greater importance than legal requirements and technicalities. In some instances, an ICC arbitral tribunal may render its award simply by applying the terms of the contract to its factual findings, without needing to refer to the law governing the merits.
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3-778 Furthermore, the commercial and often technical nature of the disputes submitted to international arbitration means that the arbitral tribunal, where appropriate, must consider business practices and standards, as fixed by the parties themselves or the relevant industry sector. Article 21(2) accordingly requires the arbitral tribunal to apply any relevant trade usages.
3-779 2012 modifications. The provision has been slightly altered to state that the arbitral tribunal shall take into account the provisions of the contract between the parties “if any” and “any” relevant trade usages. The words “in all cases” have been deleted from the beginning. These changes were made in recognition of the growth in arbitrations based on non-contractual instruments such as bilateral investment treaties or tort, where no contract exists.
3-780 Trade usages. A trade usage is a custom or understanding in a given trade or industry. Alternatively, it may be a custom specific to dealings between the disputing parties. In both senses, a trade usage arguably constitutes part of the essential context underlying a contract or certain of its terms.
3-781 It is up to any party wishing to rely on a trade usage to prove its existence, content and meaning. A party may do so in many different ways, such as through trade publications and guidelines and/or expert witness testimony. Once demonstrated, the trade usage can shed light on the interpretation of a contractual term or create a separate, implied contractual term. Specific trade usages are in effect an implicit part of the parties’ contract.
3-782 Relationship with the applicable law. The need to take account of trade usages and apply the parties’ contract is subject to the arbitral tribunal’s obligation to respect and apply the rules of law governing the merits. Article 21(2) does not require the arbitral tribunal to give full effect to trade usages and contractual terms, but merely to take account of them. Indeed, the provisions of the law governing the merits will in certain instances override trade usages or contractual terms that would otherwise be relevant to the resolution of the dispute, and in the case of claims brought under an investment treaty trade usages are unlikely to be relevant at all. The arbitral tribunal is entitled to disregard the applicable rules of law only when assuming the powers of amiable compositeur or deciding ex aequo et bono in accordance with Article 21(3).
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ARTICLE 21(3): AMIABLE COMPOSITEUR, EX AEQUO ET BONO
The arbitral tribunal shall assume the powers of an amiable compositeur or decide ex aequo et bono only if the parties have agreed to give it such powers.
3-783 Purpose. The parties may empower the arbitral tribunal to decide their dispute according to general principles of fairness and justice rather than law. This possibility is rarely, if ever, available in state courts, but it is a feature of international arbitration recognized by most modern arbitration laws.45It goes under various names but is commonly referred to as amiable compositeur, ex aequo et bono or both. While there is occasional debate as to whether the terms are interchangeable with regard to their practical meaning and application, we shall treat them as synonymous for present purposes and refer only to amiable compositeur.
3-784 2012 modifications. None.
3-785 Need for agreement between the parties. The exercise of the powers of amiable compositeur is strictly limited to situations in which the parties have agreed to give the arbitral tribunal such powers. The Rules do not lay down any formal requirements for recording the parties’ agreement but it should ideally be in writing and will often appear in the arbitration agreement. The agreement should then be confirmed in the Terms of Reference, as required by Article 23(1), subparagraph (g). An arbitral tribunal requested to assume the powers of amiable compositeur should, as a matter of good practice, require written evidence or written confirmation of the parties’ agreement for it to do so.
3-786 The arbitral tribunal cannot grant itself the powers of amiable compositeur even when it has to determine the rules of law governing the merits pursuant to Article 21(1). Under that provision, the arbitral tribunal is limited to determining the rules of law applicable to the dispute, whether they be part of a state legal system or some other body of rules. Acting as amiable compositeur implies the absence of rules of law so does not fall within the scope of Article 21(1).
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3-787 Meaning and implications of amiable compositeur. There are diverging views as to precisely what it means to act as amiable compositeur. There is no universal and firmly settled definition. The concept is understood in various ways in different jurisdictions and by different experts. According to a broad understanding, an amiable compositeur should disregard any and all provisions of the rules of law governing the merits that are not mandatory and base his or her decisions purely on principles of fairness and justice, regardless of whether the outcome is consistent with the law. According to a narrower understanding, an arbitrator will start by applying rules of law but is free to digress from them if he or she considers that they do not lead to a fair outcome.
3-788 There is debate about the extent to which an amiable compositeur may disregard the terms of the parties’ contract. One view is that this is permissible if the interests of fairness and justice so require. The predominant view is that an amiable compositeur is bound by the terms of the parties’ contract but may have regard to notions of fairness, rather than refer to legal principles, when interpreting those terms. The Rules reflect the latter view, given that Article 21(3) operates subject to Article 21(2).
3-789 An arbitrator may act as amiable compositeur only when making substantive decisions. Procedure remains governed by relevant agreements between the parties, the Rules and mandatory procedural provisions applicable to international arbitrations at the place of the arbitration (see Article 19). An ICC arbitrator must in all cases fulfil his or her duties in accordance with the Rules. For example, an amiable compositeur must still render a reasoned award pursuant to Article 31(2), although the nature of the reasoning will of course be different.
3-790 An arbitral tribunal’s power to act as amiable compositeur may be beneficial to the resolution of a dispute where the parties consider that the rules of law governing the merits are not well suited to the issues raised in the arbitration or are insufficiently developed to meet the parties’ particular needs. It may also be appropriate for the arbitral tribunal to act as amiable compositeur where one of the parties’ key priorities is to preserve their long-term business relationship. However, given that the exercise of the power can be vague and uncertain, it is very rare for parties to give an arbitral tribunal the power to decide in this manner (see table 32).
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ARTICLES 22(1) AND 22(2): EFFECTIVE CASE MANAGEMENT
Article 22(1)
The arbitral tribunal and the parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute.
Article 22(2)
In order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.
3-791 Purpose. Article 22(1) lays down a general duty for arbitral tribunals and parties to control the time and cost of arbitrations. In so doing, it provides a framework and basis for other provisions relating to specific aspects of its implementation such as Article 22(2) (procedural measures), Article 23 (Terms of Reference) and Article 24 (case management conferences and procedural timetable).
3-792 2012 modifications. New provisions.
3-793 Promoting time and cost efficiency. As mentioned in the Preface, one of the underlying aims of the revision process leading to the 2012 Rules was to include ways and means of encouraging parties and arbitral tribunals to control the time and cost of arbitrations. Corporate users were particularly insistent on the importance of this aim. Article 22 serves as a general basis for setting expectations and implementing measures to improve time and cost efficiency.
3-794 In most ICC arbitrations the largest cost item is not the arbitrators’ fees and expenses or the ICC administrative expenses, but rather the legal fees and other costs relating to the parties’ own presentation of their cases. Lawyers’ fees, expenses relating to witnesses and expert evidence and other similar expenses are generally proportionate to the length and complexity of proceedings and vary significantly depending on the manner in which a case is run. Parties sometimes insist on having multiple rounds of briefs even in relatively simple cases. Also, it is not uncommon for parties to appoint more experts than necessary or to call too many factual witnesses to testify despite the meagre contribution they are likely to make to the arbitral tribunal’s fact-finding mission. Document production, whether on paper or in electronic format, is also likely to increase costs significantly, particularly if it is conducted through a process of discovery.
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3-795 The obligation. Article 22(1) creates an underlying expectation that parties and arbitrators should make arbitral proceedings as expeditious and costeffective as possible, bearing in mind the complexity and value of the dispute. Within the structure of the 2012 Rules, Article 22(1) establishes a general principle that guides the various steps set out in roughly chronological order in Articles 23 to 26.
3-796 The obligation imposed by Article 22(1) is broad but not absolute. It requires “every effort” to be made to fulfil its purpose, subject to the sole limitation of ensuring appropriate proportionality to the complexity and value of the dispute. This does not mean that the arbitration may be conducted more or less efficiently depending on the complexity and value of the case. Rather, efficiency should always be maximized to the extent permitted by the circumstances of the case, particularly its complexity and monetary or non-monetary value. The provision aims above all to exclude unnecessarily aggressive, improper or disruptive tactics and what might be described as an overlawyered approach.
3-797 Although it is not unusual for such a duty to be placed on arbitral tribunals under various rules and laws, Article 22(1) makes it clear that this duty is also to be assumed by the parties.
3-798 Cost and other sanctions. To ensure compliance with Article 22(1), various sanctions are possible. Disregard of Article 22(1) can have adverse financial consequences for both parties and arbitral tribunals. A serious breach of Article 22(1) by an arbitrator could even lead to his or her replacement pursuant to Article 15(2).
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3-799 Article 37(5) expressly provides that, when allocating costs, the arbitral tribunal may take into account the extent to which a party has contributed to the expeditious and cost-effective conduct of the arbitration. As mentioned in paragraph 3-1488, the arbitral tribunal can and should use costs as a tool to enforce efficient case management.
3-800 Arbitrators may also be financially penalized for their delays in completing arbitral awards. The Court indeed takes the efficient conduct of the arbitration into account when fixing the arbitrator’s fees (Article 2(2) of Appendix III refers to the rapidity of the proceedings and the timeliness of the submission of the draft award) and will not hesitate to sanction inefficiencies by reducing the fees (see paragraph 3-1457).
3-801 Procedures for ensuring expeditious and effective proceedings. The Rules provide the arbitral tribunal and parties with certain tools to assist them in fulfilling their obligations under Article 22(1). For example, Article 22(2) empowers the arbitral tribunal to adopt procedural measures it considers appropriate to ensure effective case management, after first consulting the parties. Once the proceedings are under way, the arbitral tribunal can make any necessary adjustments by adopting further procedural measures and/or modifying the procedural timetable pursuant to Article 23(4), although it must first consult the parties. Article 22(3) requires the parties to abide by such procedural measures and any other orders of the arbitral tribunal.
3-802 The Rules provide a setting in which to discuss and adopt these measures by requiring a case management conference to be held while the Terms of Reference are being drawn up or as soon as possible thereafter (Article 24). Article 24(1) refers to the new Appendix IV, which contains a nonexhaustive list of case management techniques available to the parties and the arbitral tribunal (see paragraphs 3-921–3-923).
3-803 The parties themselves should remain open to a range of techniques aimed at enhancing efficiency and controlling costs, and should consider them as early as when they draft their arbitration agreement, not just when arbitration proceedings commence.
3-804 Article 22(2) does not permit the arbitral tribunal to adopt procedural measures that are contrary to an agreement of the parties. This limitation is consistent with Article 19 (see paragraphs 3-715 and following).
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ARTICLE 22(3): ORDERS AND OTHER MEASURES RELATING TO CONFIDENTIALITY
Upon the request of any party, the arbitral tribunal may make orders concerning the confidentiality of the arbitration proceedings or of any other matters in connection with the arbitration and may take measures for protecting trade secrets and confidential information.
3-805 Purpose. Article 22(3) specifically empowers the arbitral tribunal to issue orders relating to confidentiality generally or the confidentiality of certain aspects of the case, such as trade secrets or other confidential information. It recognizes the arbitral tribunal’s power to determine whether the arbitration or any aspects of the arbitration are confidential and to order that such confidentiality be respected.
3-806 2012 modifications. Article 22(3) replaces Article 20(7) of the 1998 Rules dealing with the protection of trade secrets and confidential information. Apart from broadening the scope of the former Article 20(7), Article 22(3) also clarifies that an order or a measure relating to confidentiality may be issued only if requested by one of the parties.
3-807 Tailor-made confidentiality orders. The Rules do not provide that the arbitration proceedings are confidential. Rather than creating a general rule requiring the proceedings to be kept confidential and then attempting to define the exceptions that will inevitably arise, the Rules take a more flexible and tailor-made approach, leaving the matter for the parties or the arbitral tribunal to address in light of the specific circumstances of the case. Parties should nonetheless consider whether the law at the place of the arbitration contains any rules providing for the confidentiality of arbitration proceedings.
3-808 Subject matter of confidentiality orders. Article 22(3) states that a confidentiality order may concern the arbitration proceedings or any other matter in connection with the arbitration. It could relate to the very existence of the arbitration, or to specific documents produced, such as documentary evidence, pleadings, witness statements, Terms of Reference,
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or any award or procedural order. As the purpose of Article 22(3) is to allow orders to be tailored to the circumstances of each case, the provision places no restriction on the arbitral tribunal other than limiting its orders to matters “in connection with the arbitration”. In a case under the 1998 Rules, for example, the arbitral tribunal ordered that no one outside the hearing room should be allowed simultaneous access to the hearing transcript. In another case, the arbitral tribunal issued an order concerning the confidentiality of oral testimony.
3-809 Enforcement of confidentiality orders. The Rules are silent as to how confidentiality orders can be enforced. As mentioned in paragraph 3-823, arbitral tribunals lack the coercive powers of state courts to enforce their orders, but have strong persuasive powers. Parties will think twice before disregarding an arbitral tribunal’s order during the arbitration as it may reflect poorly on them. Furthermore, the Rules expressly state in Article 22(5) that the parties undertake to comply with any order issued by an arbitral tribunal, which includes confidentiality orders. The breach of a confidentiality order may therefore serve as a basis for bringing a claim for damages or interim relief before the arbitral tribunal (or a future arbitral tribunal) or in court (see paragraphs 3-824 and 3-825). The arbitration laws of some jurisdictions provide that confidentiality orders issued by arbitral tribunals may be enforced by the courts.
3-810 Parties’ agreements. Parties are of course free to enter into confidentiality agreements of their own accord. In practice, such agreements tend to be found either in the arbitration agreement or in the Terms of Reference and, depending on the circumstances and needs of the parties, may range from the fairly general to the very specific. In some cases, the parties will agree on a higher degree of confidentiality (“strictly confidential”) or restricted access to documents for certain individuals. When entering into confidentiality agreements, parties should verify whether the law applicable to the arbitration procedure contains any specific requirements as to confidentiality.46
3-811 Measures for protecting trade secrets and confidential information. The second part of Article 22(3) concerns orders to protect the confidentiality of trade secrets or other information before it is disclosed or otherwise produced in an arbitration. In practice, arbitral tribunals will often combine
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protective orders with a confidentiality undertaking. The Rules do not define “trade secrets” or “confidential information” but, instead, give the arbitral tribunal discretion to devise protective orders specifically tailored to the case.
3-812 In a protective order, the arbitral tribunal can, for example, authorize a party to redact a document to remove all parts that are not relevant to the dispute, restrict access to documents that the parties produce, or prohibit use outside the proceedings of any document produced by the opposing side. The provision places no limit on the arbitral tribunal’s creativity in making protective orders. In a case under the 1998 Rules the arbitral tribunal put in place an auditor and an audit procedure to protect confidential information. In another case the arbitral tribunal invited the parties’ counsel to hold a meeting to review all the documents sought and reach an agreement on appropriate measures to preserve the confidentiality of the documents.
3-813 Request by a party. The application of Article 22(3) requires a request from a party. This requirement extends to both confidentiality orders and protective orders.
ARTICLE 22(4): FAIR AND IMPARTIAL TREATMENT
In all cases, the arbitral tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case.
3-814 Purpose. Article 22(4) affirms an overriding and fundamental principle of arbitration, which finds expression in varying terms in virtually all arbitration laws and rules as well as in the New York Convention. It requires arbitral tribunals to act fairly and impartially and to grant each party a reasonable opportunity to make its case.
3-815 The position of this provision within Article 22 serves as a reminder that the arbitral tribunal should be sensitive to this principle when determining how to conduct the arbitration in an expeditious and cost-effective manner. It is essential to keep the principle in mind when considering specific case management techniques pursuant to Article 22(2). The provision may also guide the arbitral tribunal in the exercise of its duties under Article 19 to determine the procedure and under Article 25(1) to establish the facts of the case through all appropriate means.
3-816 2012 modifications. The provision has not changed in content but has changed position from Article 15 of the 1998 Rules (now Article 19) relating to the rules governing the proceedings, to Article 22, relating to the more general topic of the conduct of the arbitration.
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3-817 Fairness, impartiality and reasonable opportunity. The provision calls for fairness, impartiality and a “reasonable” opportunity to be heard. This contrasts with the terms of some rules and laws that require equality between the parties and/or a “full” opportunity to be heard. A full opportunity to present one’s case might be understood as requiring the arbitral tribunal to allow each and every procedural request of a party. Balancing all parties’ interests and the need for efficiency rather requires that each party be granted a reasonable opportunity to present its case.
3-818 What is reasonable and fair in a given case is a matter for the arbitral tribunal to determine. An arbitral tribunal that manifestly breaches Article 22(4) could be challenged pursuant to Article 14(1) or replaced on the Court’s own initiative pursuant to Article 15(2).47
3-819 Impact on the enforceability of awards. The importance of Article 22(4) lies not only in upholding the legitimacy of international arbitration but also, at a more practical level, in strengthening the enforceability of ICC awards. In most jurisdictions, a lack of procedural fairness or an insufficient opportunity to be heard will be grounds for setting aside an arbitral award. They are also grounds for resisting the enforcement of awards under Article V of the New York Convention.
ARTICLE 22(5): COMPLIANCE WITH ORDERS FROM THE ARBITRAL TRIBUNAL
The parties undertake to comply with any order made by the arbitral tribunal.
3-820 2012 modifications. New provision.
3-821 Compliance with arbitral tribunal orders. Article 22(5) is a manifestation of the arbitral tribunal’s authority to conduct the proceedings, which it derives from the parties’ agreement to resolve their dispute through arbitration. The arbitration agreement confers jurisdiction on the arbitral tribunal and, as a corollary, creates a contractual obligation for the parties to comply with the arbitral tribunal’s decisions. The parties’ obligation to comply with the arbitral tribunal’s orders therefore exists independently of Article 22(5), and was considered to be implicit in the 1998 Rules. Indeed, under those and earlier versions of the Rules, arbitral tribunals regularly made orders with which the parties were expected to comply.
3-822 Article 22(5) explicitly requires the parties to comply with any and all orders made by the arbitral tribunal, including procedural orders, orders concerning conservatory or interim measures pursuant to Article 28, and orders on confidentiality pursuant to Article 22(3). It is evident that Article 22(5) is a general provision and should not be seen as a derogation from
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the hierarchy of procedural rules established in Article 19. Consequently, the arbitral tribunal cannot make an order that conflicts with an agreement of the parties.
3-823 Enforcement of orders from the arbitral tribunal. Arbitral tribunals lack the coercive powers that are available to state courts to enforce their orders. An arbitral tribunal may be able to impose penalties for noncompliance, but in practice this is relatively rare. However, arbitral tribunals have strong persuasive powers. In most cases, the fact that the arbitral tribunal may draw adverse inferences from a party’s failure to comply with its orders, combined with the party’s desire not to antagonize the arbitral tribunal, predispose parties to comply voluntarily with such orders.
3-824 In addition, the fact of having undertaken to comply with orders could serve as a basis for bringing a claim for contractual damages. The combination of Articles 22(3) and 22(5) creates a contractual obligation, the breach of which may give rise to an entitlement to damages. This mechanism offers a means of protecting confidentiality that might not otherwise be available.
3-825 Finally, some arbitration laws empower local courts to enforce certain orders made by arbitral tribunals, particularly in relation to the taking of evidence and interim measures of protection. To this end, parties should refer to the law at the place of the arbitration or the law at the place where the order is to be enforced.
ARTICLE 23(1): TERMS OF REFERENCE
As soon as it has received the file from the Secretariat, the arbitral tribunal shall draw up, on the basis of documents or in the presence of the parties and in the light of their most recent submissions, a document defining its Terms of Reference. This document shall include the following particulars:
a) the names in full, description, address and other contact details of each of the parties and of any person(s) representing a party in the arbitration;
b) the addresses to which notifications and communications arising in the course of the arbitration may be made;
c) a summary of the parties’ respective claims and of the relief sought by each party, together with the amounts of any quantified claims and, to the extent possible, an estimate of the monetary value of any other claims;
d) unless the arbitral tribunal considers it inappropriate, a list of issues to be determined;
e) the names in full, address and other contact details of each of the arbitrators;
f) the place of the arbitration; and
g) particulars of the applicable procedural rules and, if such is the case, reference to the power conferred upon the arbitral tribunal to act as amiable compositeur or to decide ex aequo et bono.
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3-826 Purpose and benefits of the Terms of Reference. Article 23(1) describes a distinctive feature of ICC arbitration, not found in the rules of other major international arbitral institutions, although in recent years certain smaller, regional institutions have included terms of reference in their arbitration rules.48
3-827 Terms of Reference in ICC proceedings provide a framework for the arbitration by summarizing the merits of the dispute and setting out the arbitration’s procedural parameters in one convenient document. The Terms of Reference fulfil several functions. They anchor the arbitration and serve as a guide to which the parties and the arbitral tribunal may refer throughout the proceedings. Preparing them is a valuable exercise in itself. It gives the parties and the arbitral tribunal a tangible goal for defining the procedural features of their case. It also forces arbitrators to engage with the file at an early stage of the proceedings and develop an understanding of the case. Further, it encourages the parties to determine the parameters of their dispute and identify those issues on which the arbitration hinges. If done properly, this exercise allows the parties to construct their cases clearly and comprehensively, making subsequent written and oral submissions more focused. The collaborative and cooperative atmosphere created by the process of preparing the Terms of Reference can even lead to settlement on some or all issues or at least a more cooperative approach to the subsequent arbitration proceedings.
3-828 In certain instances, the Terms of Reference may also cure a jurisdictional deficiency in an arbitration agreement (e.g. omission of a clear reference to the Rules or to ICC arbitration in the clause) or create arbitral jurisdiction for certain limited subsidiary orders (see paragraph 3-868).
3-829 Finally, the Court and its Secretariat will tend to use the Terms of Reference during the scrutiny process under Article 33 as a starting point for determining whether all claims have been dealt with in the final award. However, since the claims and issues often evolve in the course of an arbitration, the extent to which the Terms of Reference can be relied upon for that purpose is limited.
3-830 2012 modifications. The changes made to the provision’s predecessor, Article 18(1) of the 1998 Rules, are primarily intended to bring the requirements concerning information to be included in the Terms of Reference in line with Articles 4(3), 5(1) and 5(5), which themselves have undergone a number of changes. Of particular note is the requirement in Article 23(1), subparagraph (a), that the document identify and provide contact information for the parties’ counsel or other representatives (see
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paragraph 3-840). In addition, as is required in the Request and the Answer, the Terms of Reference should state the value of any quantified claims and an estimate of the monetary value of any other claims (see paragraph 3-844).
3-831 Preparation. Preparation of the Terms of Reference is a collaborative process, although ultimate responsibility for this task lies with the arbitral tribunal. Given the binding force the document has with respect to a number of procedural matters, and the fact that all parties’ signatures are required, the parties necessarily have a role to play in drafting the document. However, Article 23 leaves open the nature and extent of this role. Article 23(1) states that the arbitral tribunal will prepare the document in light of the parties’ most recent submissions, but in practice it will seek their active participation. Discussions around the Terms of Reference can serve as a basis for the parties to agree on, or at the very least make comments and express preferences on, several of the procedural matters referred to in Articles 19–22. Regrettably, parties sometimes misunderstand the purpose of the Terms of Reference and adopt a litigious attitude when discussing their content. Such behaviour is generally unwarranted as the parties’ positions can usually be protected by appropriate reservations or caveats. That said, the arbitral tribunal should avoid simply insisting on and pushing through its own ideas where a party expresses genuine concern or justified objections. Rather, it should seek to build consensus amongst all involved through persuasion and/or adapting the draft in a way that removes contentious elements or clarifies that they will be decided in the arbitration.
3-832 In most cases, the president of a three-member arbitral tribunal or the sole arbitrator prepares a first draft of the Terms of Reference. Alternatively, he or she may create a skeleton and invite the parties to insert relevant information that concerns them (e.g. their factual allegations and a summary of their claims). The president of the arbitral tribunal will usually have first discussed the draft with the co-arbitrators and modified it in light of their comments.49Typically, the arbitral tribunal then circulates the draft amongst the parties and requests their written comments. It may additionally or alternatively organize a teleconference to discuss the document.
3-833 Following one or several such rounds of feedback from the parties, the arbitral tribunal usually holds at least one meeting or teleconference with the parties to finalize the Terms of Reference.
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3-834 If a physical meeting is held, it often lasts a few hours and will usually take place at the location agreed upon for future hearings, although any other convenient location might be preferred. Both the parties and the arbitral tribunal often find such a meeting valuable in establishing initial contact with the other individuals participating in the arbitration. Although not explicitly provided for in the Rules, many arbitral tribunals merge this meeting with the case management conference required by Article 24(1). The potentially high cost of holding a physical meeting may prompt arbitral tribunals in smaller cases to opt for alternatives such as a conference call or another form of direct communication. Once a final version has been settled, the arbitral tribunal then circulates the Terms of Reference by courier or registered mail for signature to meet the requirements of Article 23(2).
3-835 After the Terms of Reference have been signed by all members of the arbitral tribunal and all parties pursuant to Article 23(2), the arbitral tribunal must submit the original signed version to the Secretariat, which will transmit a copy to the Court in accordance with Article 23(2) and preserve the original in its records. Arbitral tribunals often have the parties sign a sufficient number of originals so that each party and each arbitrator receives one. If the arbitral tribunal sends multiple originals to the Secretariat, the Secretariat will send one copy to each party representative and, where needed, any arbitrator who does not already have an original. Where only one original is signed, the arbitral tribunal should circulate a copy of that original to the parties, as the Secretariat will not do so itself. However, the Secretariat will provide a copy of the original if requested by a party. It may even prepare certified copies of the Terms of Reference where a party requires them (e.g. for the purpose of enforcement proceedings; see paragraph 3-1248).
3-836 Where one or more parties fail or refuse to sign the Terms of Reference, the arbitral tribunal will need to submit them to the Court for approval pursuant to Article 23(3).
3-837 Language. The Terms of Reference should be written in the language of the arbitration. Where the language has not been agreed upon by the parties, it will usually be determined by the arbitral tribunal pursuant to Article 18 before the Terms of Reference are prepared. In rare cases, the language will remain undetermined at the time the Terms of Reference are
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drafted. This can occur where there is a significant and potentially complex dispute over the language and the arbitral tribunal prefers to finalize the Terms of Reference, listing language as an issue to be determined, before initiating a process to determine it. In such situations, arbitral tribunals have adopted one of two approaches. The first is to prepare two (or more) versions of the Terms of Reference, one in each language. The second is to prepare the Terms of Reference in one of the languages making very clear, by way of a clause in the Terms of Reference, that doing so does not in any way prejudge the arbitral tribunal’s eventual decision on the language of the arbitration. If the former approach is adopted, it should be made clear which version takes precedence over the other in the event of a conflict between the two versions.
3-838 Form and content. The Rules do not lay down any specific requirements with regard to the form of the Terms of Reference. So long as they contain the information listed in Article 23(1), the arbitral tribunal and the parties are free to decide how to present this information. They should of course endeavour to produce a clear and well-organized document. Depending in particular on the arbitral tribunal’s preferences and on the degree of detail that the parties provide when stating their positions, the Terms of Reference can look quite different from one case to another.
3-839 Article 23(1) specifies that the Terms of Reference must contain, as a minimum, the following information:
3-840 (a) The names in full, description, address and other contact details of each of the parties and of any person(s) representing a party in the arbitration. Three additions have been made in the 2012 Rules. First, the Terms of Reference must now specify the parties’ addresses, although in practice this information was almost always provided before. The obligation to provide “other contact details” is another 2012 addition and includes, for instance, email addresses. Also new to the 2012 Rules is the need to specify the contact details of party representatives, although again this information was usually provided in the past. The Terms of Reference are an important opportunity for each party to clarify precisely its name and identity. Naming parties precisely can be important when it comes to enforcing an arbitral award.
3-841 Although the Rules also require a description of each party, considerable flexibility is left to the arbitral tribunal and the parties in determining what such description may include. The arbitral tribunal should consider providing a description of each party’s core business as well as any part of its business that is relevant to the case. It should also consider including information regarding each party’s legal status (e.g. corporation registered in a particular jurisdiction) as well as its ownership and control.
3-842 (b) The addresses to which notifications and communications arising in the course of the arbitration may be made. In most cases, the arbitral tribunal and the Secretariat will direct all correspondence to the parties’ legal representatives, whose contact information will be included in the Request (Article 4(3), subparagraph (b)) and the Answer (Article 5(1), subparagraph (b)). All contact information should be verified, clarified and completed before it is set out again in the Terms of Reference.
3-843 (c) A summary of the parties’ respective claims and of the relief sought by each party, together with the samount of any quantified claims and, to the extent possible, an estimate of the monetary value of any other claims. As mentioned in paragraph 3-838 above and in paragraphs 3-90 and 3-150 relating respectively to the Request and the Answer, the parties have some freedom to determine what to set out regarding the dispute and in what level of detail. The content of the Request, the Answer and any other submissions made at an early stage of the proceedings not only establishes a framework for the arbitration but is a tactical matter for each party to determine as it sees fit, provided it does so in keeping with its general duty under Article 22(1). The level of detail may also be affected by the amount of information available to each side’s legal representatives at that stage. However, parties should bear in mind that, pursuant to Article 23(4), once the Terms of Reference are established no party can make new claims or counterclaims that fall outside the limits of the Terms of Reference unless the arbitral tribunal has authorized it to do so. Parties are therefore encouraged to provide a clear and complete description of their claims and the corresponding relief sought so as to ensure that, even if the claims are revised or modified at a later stage, they nonetheless fall within the limits of the Terms of Reference.
3-844 The Terms of Reference must specify the type of relief sought and its monetary value. They must not only provide the amounts of quantified claims but also estimate the monetary value of any other claims to the extent possible. This requirement was not in the 1998 Rules, Article 18(1)(c) of which simply required, “an indication to the extent possible of the amounts claimed or counterclaimed”. Accurate information on the monetary value of claims, whether quantified or unquantified, is relevant to fixing the advance on costs and ensuring appropriate remuneration for the arbitrators and the ICC. This information is now required of the parties when they make claims, whether in the Request (Article 4(3), subparagraph (d)), the Answer (Article 5(5), subparagraph (b)) or in multiparty arbitrations (Article 8(2)). It should, therefore, be readily available when drafting the Terms of Reference. If not, the arbitral tribunal should request it of the parties and include it in the Terms of Reference.
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3-845 Some arbitral tribunals request that each party draft its own summary of claims and statement of relief sought for inclusion in the Terms of Reference. While parties should have the last word in deciding how their claims are formulated, the arbitral tribunal may at times provide some assistance, especially where a party and/or its counsel are inexperienced in preparing Terms of Reference or not well versed in the language of the arbitration.
3-846 The parties’ claims, like all other parts of the Terms of Reference, are drafted “in the light of [the parties’] most recent submissions”. This clarification resolves a controversy that sometimes occurs when a party makes submissions that are not expressly foreseen in the Rules (e.g. a written statement after the expiry of the time allowed for submitting an Answer) or adjusts its position when providing input for the Terms of Reference.
3-847 In addition to a summary of the parties’ claims, the Terms of Reference normally contain a description of the factual background to the case, possibly including both uncontested and contested facts. While the Terms of Reference may serve as a record of uncontested facts, the parties may be unwilling to bind themselves at such an early stage of the arbitration. Accordingly, the arbitral tribunal should draft the facts with some care to reflect the parties’ preferences and avoid any impression that the arbitral tribunal may already have formed a view on a disputed issue of fact.
3-848 When a party signs the Terms of Reference this certainly does not mean that it accepts the opposing side’s statement of its position or even its statement of the alleged facts. While this point may seem obvious, many arbitral tribunals include a statement indicating that a party’s signature on the Terms of Reference does not imply its acceptance of any statement or contention made in another party’s summary of its case or claims.
3-849 (d) Unless the arbitral tribunal considers it inappropriate, a list of issues to be determined. The list of issues differs from the summary of claims under Article 23(1), subparagraph (c). It is primarily intended to identify questions of fact and law which, at the time of drafting the Terms of Reference, appear to be relevant to determining the parties’ claims. The arbitral tribunal and the parties should endeavour to single out the issues on which the case is likely to hinge, so as to give a greater focus to the arbitration proceedings. Unlike the summary of claims, the list of issues is not intended to limit the scope of the arbitration, as the relevant issues may well evolve as the case progresses. Accordingly, the arbitral tribunal often will indicate expressly in the Terms of Reference that the list of issues is not necessarily exhaustive.
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3-850 In some cases, the arbitral tribunal and/or the parties will consider it premature to prepare a list of issues that is truly helpful in framing the dispute. Alternatively, drawing up a list of issues might prove too controversial and risk delaying preparation of the Terms of Reference. The list can therefore be dispensed with if thought to be inappropriate. Even when a list of issues is not included, the process of contemplating its inclusion serves the useful purpose of ensuring that the arbitral tribunal gives due consideration to what the issues are at an early stage of the proceedings.
3-851 In considering whether or not to include a list, the arbitral tribunal must examine the potential issues and determine whether they can be formulated in a manner that is not likely to cause controversy or complicate subsequent proceedings and the drafting of the award. The arbitral tribunal should keep in mind that the list of issues is not intended to be binding and may find it convenient to state that. Moreover, the preparation of a very basic list of issues should not prove controversial. The list might be as simple as the following example:
3-852 While a very basic list of issues such as this should not prove controversial or difficult to draw up, it is obviously of much less value than a more precise and detailed list of issues. The list of issues for the Terms of Reference therefore depends enormously on the nature of the case, the extent to which the parties have developed their positions by that stage, the degree of cooperation among the parties, and the preferences of all actors in the proceedings.
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3-853 (e) The names in full, address and other contact details of each of the arbitrators. The obligation to provide “other contact details” is a 2012 addition and includes, for instance, email addresses. Normally, it is not necessary for the arbitrators to provide their personal, as opposed to professional, contact details. However, certain arbitration laws do require an award to include all arbitrators’ personal addresses.
3-854 (f) The place of the arbitration. This refers to the legal place of the arbitration as specified in Article 18(1), rather than to the physical location in which the arbitral tribunal may intend to hold hearings or meetings (see Article 18(2)). By the time the Terms of Reference are prepared, the place of the arbitration will already have been agreed by the parties or fixed by the Court pursuant to Article 18(1).
3-855 (g) Particulars of the applicable procedural rules and, if such is the case, reference to the power conferred upon the arbitral tribunal to act as amiable compositeur or to decide ex aequo et bono. The Court’s preference is that the “particulars of the applicable procedural rules” are limited to basic points and general descriptions. Precise procedural rules and directions are usually better placed in a separate procedural order so that the arbitral tribunal has the possibility of modifying them as the case evolves. The Terms of Reference should include only basic procedural features, such as the applicable version of the Rules, the language of the arbitration, sundry issues such as confidentiality undertakings where desired, and the manner in which further procedural decisions will be taken by the arbitral tribunal. The latter will usually include a reference to Article 19, to any procedural agreements made by the parties, such as in their arbitration agreement, and possibly to any other process the arbitral tribunal wishes to adopt for the purpose of determining procedure. The Terms of Reference may also note that further procedural directions will be issued by way of separate procedural order(s). If desired, they may further provide for the president’s power to make small procedural decisions alone.
3-856 Some arbitral tribunals nonetheless try to regulate as much of the procedure as possible in the Terms of Reference. They may include precise orders relating to communications, document discovery or even time lines for the submission of written briefs and evidence. The perceived advantage of this approach is that it elevates these orders to agreements between the parties from which they cannot deviate without a subsequent agreement. However, it also results in time and effort being spent on regulating matters that can prove controversial and delay preparation of the Terms of Reference. Many details may even prove redundant (e.g. extensive rules for document disclosure where such disclosure turns out to be extremely limited or unnecessary). Most importantly, rules agreed in the Terms of Reference may restrict the arbitral tribunal’s procedural flexibility in responding to unforeseen situations at a later stage of the proceedings.
3-857 A further disadvantage of including detailed procedural agreements in the Terms of Reference is that, in the event a party refuses to sign the Terms of Reference and the Court is required to approve them pursuant to Article 23(3), such approval is likely to be withheld if they contain agreements that depart from the Rules or from any previous agreement the parties may have made. For more information on standards applied by the Court when approving Terms of Reference, see paragraph 3-886.
3-858 Article 23(1), subparagraph (g), also requires the arbitral tribunal to refer to any power it has been granted to act as amiable compositeur or to decide ex aequo et bono. Article 21(3) allows an arbitral tribunal to assume such powers with the parties’ consent. The arbitral tribunal must clearly record this consent in the Terms of Reference.
3-859 Additional suggestions regarding content. The requirements of Article 23(1) are just the bare minimum for the content of Terms of Reference. It is strongly advisable to include other elements. The arbitral tribunal and the parties should consider including:
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3-860 Content where Court approval of the Terms of Reference is necessary. Where the Terms of Reference must be approved by the Court pursuant to Article 23(3) because a party has refused to sign them or is not participating in the arbitration, the arbitral tribunal must take care to satisfy the following requirements:
3-861 The Court is very unlikely to approve Terms of Reference pursuant to Article 23(3) that do not meet the above requirements.
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ARTICLE 23(2): SIGNING THE TERMS OF REFERENCE
The Terms of Reference shall be signed by the parties and the arbitral tribunal. Within two months of the date on which the file has been transmitted to it, the arbitral tribunal shall transmit to the Court the Terms of Reference signed by it and by the parties. The Court may extend this time limit pursuant to a reasoned request from the arbitral tribunal or on its own initiative if it decides it is necessary to do so.
3-862 Purpose. Article 23(2) deals with three matters. First, by requiring the signatures of all parties and arbitrators, it recognizes the collaborative nature of the Terms of Reference. However, a party’s refusal to sign is not an insurmountable obstacle, as Article 23(3) allows the Court to approve the Terms of Reference in such circumstances. Second, Article 23(2) sets a time limit of two months for the arbitral tribunal to transmit the signed Terms of Reference to the Court. Third, the provision provides a means of extending that time limit. The arbitral tribunal and the parties should remember that the Terms of Reference are a mandatory initial step in the arbitral process and that delaying their completion will diminish their utility.
3-863 2012 modifications. None.
3-864 Signing. The Terms of Reference are often signed by each party’s counsel rather than by the party itself or one of its officers or employees. For the purposes of ICC arbitration, an arbitral tribunal is not required to seek proof of the signatory’s authorization, such as a power of attorney. However, in some circumstances or in some jurisdictions it may be prudent to do so given the importance of the Terms of Reference (the arbitral tribunal may request such proof pursuant to Article 17). If the Terms of Reference are not signed at a physical meeting convened for this purpose, they will usually be circulated by courier to each person involved for signing (see paragraph 3-834).
3-865 Effect of signature. The requirement that the Terms of Reference be signed has a historical explanation. One of the initial purposes of Terms of Reference was to satisfy the requirement previously found in many arbitration laws according to which, upon the occurrence of a dispute, all parties had to enter into a “submission agreement” empowering an arbitral tribunal to resolve that dispute. Consequently, arbitration agreements made prior to a dispute, including contractual arbitration clauses, were simply not enforced or enforceable in many jurisdictions.
3-866 Submission agreements are rarely, if ever, required by arbitration laws these days. Although the Terms of Reference therefore no longer fulfil this purpose, they still need to be signed for other important reasons. Signing forces all actors to participate in their preparation and focus on the key aspects of the dispute from an early stage. It also elevates the Terms of Reference above the arbitral tribunal’s procedural orders, which remain unilateral orders to which the parties may not have agreed even though they will usually have been consulted on their content.
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3-867 The Terms of Reference constitute a legal document, the signing of which has legal consequences. The document may sometimes cure a jurisdictional deficiency in an arbitration agreement. To take a very simple example, where the reference in an arbitration clause to the ICC Rules is ambiguous, a party’s signature of the Terms of Reference without protest can possibly cure that defect.
3-868 In cases where the arbitral tribunal finds that it does not have jurisdiction over a party, the Terms of Reference can give it jurisdiction to make certain limited subsidiary orders. Typical examples would be orders on costs (see paragraphs 3-1482 and following) and confidentiality.
3-869 The Terms of Reference create a cut-off for new claims. Parties may bring new claims not made within the Request for Arbitration or the Answer only prior to the signature or approval of the Terms of Reference. Thereafter, new claims may be made only pursuant to Article 23(4), which requires the arbitral tribunal’s authorization.
3-870 Signing the Terms of Reference has legal effects for the arbitral tribunal, too. Its mission is defined by the Terms of Reference which, once signed, can be hierarchically superior to the parties’ original arbitration agreement, as they post-date that agreement. Also, the signing of the Terms of Reference triggers the default time limit of six months set in Article 30(1) for the arbitral tribunal to render its final award. Finally, if a compromis51is required by the law governing the proceedings, the Terms of Reference may serve that purpose.
3-871 Time limit for the Terms of Reference. Article 23(2) requires the Terms of to be completed within two months of the date on which the case file is transmitted to the arbitral tribunal pursuant to Article 16. The Secretariat’s covering letter sent with the case file will remind the arbitral tribunal that the time limit begins on that date. In practice, the Court does not require the signed Terms of Reference to be transmitted to it within that time limit but rather considers the deadline to have been met once all the parties and arbitrators have signed the document, even if the Secretariat has not received the original by then.
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3-872 The Court may extend the two-month time limit “pursuant to a reasoned request from the arbitral tribunal or on its own initiative”. The distinction between these two options has little practical significance. The Secretariat closely monitors all cases and should know when a deadline is approaching. Before inviting the Court to consider extending the deadline, the Secretariat will contact the arbitral tribunal to seek its input and enquire whether an extension is needed, and if so, for how long.
3-873 The Secretariat will usually put pressure on the arbitral tribunal if it considers that it has not been working diligently towards the deadline. In certain cases, the reason for a delay may be an uncooperative party or other difficulties not of its doing. The arbitral tribunal must provide all parties with a reasonable opportunity to participate in the preparation of the Terms of Reference and to sign them. However, it must also exert discipline by promptly submitting the Terms of Reference to the Court for approval where it appears that a party’s refusal to sign is dilatory or otherwise unreasonable.
3-874 The duration of any extension will not normally exceed two months. It may well be shorter if the Secretariat is expecting to receive the document rapidly or where there have already been delays and the Court wishes to put pressure on an arbitral tribunal to complete the Terms of Reference.
3-875 The Court’s power to grant extensions also implies that it has the power not to do so. There may be times when the Court is tempted not to grant an extension if the arbitral tribunal’s request is unreasonable or there has already been an unacceptable delay. However, the Court’s refusal would risk bringing the arbitration to an end, which is unlikely to be in the parties’ interests. In extreme cases, where the Secretariat considers that an arbitral tribunal is proceeding too slowly, the Court may commence replacement proceedings pursuant to Article 15(2). In a 2010 case, for example, the sole arbitrator took fifteen months (with the Court having to grant numerous extensions) to prepare the Terms of Reference and submit them to the Court for approval pursuant to Article 18(3) of the 1998 Rules (now Article 23(3)). Once completed, the Terms of Reference fell far short of expectations and were not approved. Thereupon, the Court decided to initiate replacement proceedings pursuant to Article 12(2) of the 1998 Rules (now Article 15(2)) and the arbitrator was subsequently replaced.
3-876 The Secretariat will usually notify to both the parties and the arbitral tribunal the decisions the Court makes on requests to extend the time limit for the Terms of Reference. The Court is not required to provide reasons for such decisions and very rarely does.
3-877 Amendments to the Terms of Reference. The Rules do not mention whether and in what circumstances the Terms of Reference can be amended.52The Secretariat has usually taken the view that amendments
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are rarely, if ever, needed. If there is a significant change in the procedure or the scope of the claims and issues to be addressed in the arbitration, that change can be recorded simply through an exchange of correspondence or by way of an order from the arbitral tribunal.
3-878 For example, if an arbitrator is replaced for some reason, there would seem to be no need to re-execute the Terms of Reference to reflect this. The Secretariat will have confirmed that change in writing to all actors in the proceedings. Similarly, if the arbitral tribunal has decided to authorize the inclusion of a new claim pursuant to Article 23(4), that decision can simply be recorded in a procedural order or correspondence without any need to amend the Terms of Reference, unless the law at the place of the arbitration requires otherwise. Any such change should also be recorded in the summary of the procedure included in the arbitral tribunal’s next award in the case.
3-879 Despite the availability of such alternatives for recording important changes in the procedure, an arbitral tribunal may nonetheless prefer to modify the Terms of Reference by re-executing them with the parties. Besides, there may be situations in which it makes sense to amend them, as where an additional party is added to the proceedings with that party’s consent and the consent of the existing parties. In the past, the Court has accepted modifications to the Terms of Reference where all parties agreed.
ARTICLE 23(3): COURT APPROVAL OF THE TERMS OF REFERENCE
If any of the parties refuses to take part in the drawing up of the Terms of Reference or to sign the same, they shall be submitted to the Court for approval. When the Terms of Reference have been signed in accordance with Article 23(2) or approved by the Court, the arbitration shall proceed.
3-880 Purpose: Article 23(3) empowers the Court to approve the Terms of Reference where one or more parties are unwilling to sign the document or are not participating in the proceedings. It offers an alternative means of giving formal recognition to the Terms of Reference to allow them to come into effect and enable the arbitration to proceed. For the avoidance of doubt, approval of the Terms of Reference is not required if all parties have signed them.
3-881 2012 modifications. None.
3-882 Procedure. Where a party is not participating at all, the need for Court approval of the Terms of Reference will be obvious. Upon receiving the case file from the Secretariat, the arbitral tribunal should have made efforts to include the non-participating party. That party should also have been
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provided with the various drafts of the Terms of Reference and the final version. If it still does not react, the arbitral tribunal should promptly send the Terms of Reference signed by all the participating parties and the arbitrator(s) to the Secretariat.
3-883 The situation is more delicate where a party is participating but refuses to sign. The Court will expect the arbitral tribunal to make reasonable efforts to prepare Terms of Reference that are acceptable to that party, which should also be granted a reasonable opportunity to sign the document. The arbitral tribunal will need to determine whether a party’s requests for modifications are unreasonable or have been made as a dilatory tactic, or whether that party has genuine concerns or does not properly understand the process. In the latter cases, steps might be taken to consider its proposed changes or convince it to sign.
3-884 The Secretariat knows the standards applied by the Court when approving Terms of Reference. If an arbitral tribunal submits Terms of Reference that are unlikely to be approved, the Secretariat will usually revert to the arbitral tribunal and request a modified version before submitting them to the Court.
3-885 Terms of Reference are considered by the Court for approval at its weekly committee sessions (see paragraphs 3-32–3-34). If the Terms of Reference are approved, the Secretariat will notify all parties and the arbitral tribunal of their approval and simultaneously send a copy to the party that has not signed to give it a final chance to sign, which it is normally asked to do within fifteen days. Regardless of whether that party subsequently decides to sign, the Terms of Reference come into effect on the date of the Court’s approval.
3-886 The Court’s standard for approving Terms of Reference. Where Terms of Reference are signed by all parties and arbitrators, the Court is flexible over their form and content. Provided the minimum requirements of Article 23(1) are met, the Court will normally accept them. However, where Terms of Reference are submitted for approval, the Court applies more stringent standards in order to safeguard the interests of the party that has not signed them. Accordingly, Terms of Reference submitted for the Court’s approval should meet all of the requirements of Article 23(1) plus the additional requirements listed in paragraph 3-860. The Court will also strongly urge the arbitral tribunal to include the additional content mentioned in paragraph 3-859.
3-887 The Court exercises its power of approval only in situations where one or more parties refuse to sign the Terms of Reference or where one or more parties are not participating in the arbitration. It will systematically withhold approval in the very rare situations where none of the parties has signed them. The Court is unable to override an arbitrator’s refusal to sign, so any disagreement between the arbitrators will have to be resolved within the
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tribunal itself. Otherwise, the only alternative would be for the Court to remove and replace the member in question pursuant to Article 14 or 15 if, by refusing to sign, the arbitrator is considered to be inadequately performing his or her functions.
3-888 Effects of approval. Approval pursuant to Article 23(3) triggers the commencement of the default six-month time limit under Article 30(1) for rendering the final award. Approval also has the effect of preventing the parties from making additional claims falling outside the scope of the Terms of Reference without the arbitral tribunal’s authorization (Article 23(4)).
3-889 The applicable law and the circumstances of the case could possibly lead to further effects ensuing from the Court’s approval of the Terms of Reference. However, such approval is not intended to substitute for the defaulting party’s signature in the sense that it could bind that party to the provisions of the Terms of Reference. It merely allows the arbitration to proceed.
ARTICLE 23(4): NEW CLAIMS SUBSEQUENT TO THE TERMS OF REFERENCE
After the Terms of Reference have been signed or approved by the Court, no party shall make new claims which fall outside the limits of the Terms of Reference unless it has been authorized to do so by the arbitral tribunal, which shall consider the nature of such new claims, the stage of the arbitration and other relevant circumstances.
3-890 Purpose. One of the purposes of the Terms of Reference is to define the scope of the dispute by precisely setting forth the parties’ claims. That purpose would be undermined if parties could continue making claims indefinitely, thereby complicating and prolonging the resolution of the dispute. Article 23(4) clarifies that once the Terms of Reference have been signed or approved, the parties cannot make new claims falling outside their scope unless the arbitral tribunal authorizes such claims. Restricting the parties’ ability to bring additional claims after the establishment of the Terms of Reference assists the arbitral tribunal in managing the proceedings smoothly and efficiently. Nonetheless, the provision arms the arbitral tribunal with sufficient flexibility to permit new claims where appropriate.53
3-891 2012 modifications. Minor linguistic adjustments only. However, the provision has been moved into Article 23 (the successor to Article 18 of the 1998 Rules), while in the 1998 Rules it stood alone as Article 19.
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3-892 New claims prior to signing the Terms of Reference. While Articles 4(3), subparagraphs (c) and (d), 5(5), subparagraphs (a) and (b), and 7(2), subparagraph (c), require any claiming party to state its claims in its Request, its Answer or its Request for Joinder, the Rules do not expressly indicate whether additional claims can be made before the Terms of Reference are finalized. By inference from Article 23(4) (and also from Article 8(1) where there are more than two parties to the arbitration), parties may make new claims at any time prior to the establishment of the Terms of Reference, unless the arbitral tribunal orders otherwise. The arbitral tribunal may consider fixing a time limit for new claims to prevent last-minute claims from disrupting the completion of the Terms of Reference.
3-893 When should the arbitral tribunal make a decision based on Article 23(4)? When a party seeks to introduce a new element in its case (whether or not a claim) after the Terms of Reference have been signed or approved, it is possible that the other parties will agree to its inclusion or at least not raise an objection. If there is an objection or where the new element obviously constitutes a new claim, the arbitral tribunal will need to consider whether Article 23(4) applies and, if so, whether the claim should be allowed. This task can require a delicate balance of interests, and the arbitral tribunal should tread carefully when considering whether to apply the provision.
3-894 If the opposing side does not object to the introduction of new elements in a party’s case, one option is simply not to make a decision pursuant to Article 23(4). The lack of objection could be considered as a waiver under Article 39 of the authorization required by Article 23(4). However, if it is clear that the new element is a claim, it is preferable for the arbitral tribunal to make a decision on whether it falls outside the scope of the Terms of Reference and, if so, whether it should be admitted under Article 23(4).
3-895 Where the arbitral tribunal considers it appropriate or necessary to decide on the applicability of Article 23(4) (which will normally occur when a party specifically asks for permission to make a new claim or another party objects to what it considers to be a new claim), a first step should be to seek the parties’ comments on the matter.
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3-896 When does a claim require authorization? Article 23(4) is triggered where (i) a new element introduced into a case is either presented as a new claim by a party or identified as such by the arbitral tribunal, and (ii) that claim falls outside the limits of the Terms of Reference. These two questions are considered in turn.
3-897 (i) Is it a “claim”? Different jurisdictions have different definitions of what constitutes a claim. Given the geographic diversity and international character of ICC arbitration, the actors in a single case may have different understandings of the term. At one end of the spectrum, any variation in a party’s arguments may be seen as a new claim. At the other end, only new requests for relief may be regarded as new claims.
3-898 Normally, ICC arbitral tribunals do not consider a change in argument as a new claim. Typically, a new claim will imply that the relief requested is based on an entirely new ground. That new ground would need to be more than a mere correction or adjustment to the language of an existing request for relief. In a case administered under the 1998 Rules, the claimant sought to change its cause of action, preferring to argue the tort of deceit rather than contractual misrepresentation. The respondent objected by alleging that the claim was entirely new. In its final award, the arbitral tribunal found that the switch from contract to tort did not result in the making of a new claim. The tort argument was based on the same set of facts as the contractual argument. Furthermore, the claimant did not seek additional forms of relief. Accordingly, the sole arbitrator determined that the claimant’s modification of its case merely amounted to a “new characterization of a claim already presented in the Terms of Reference”. Similarly, adjusting the quantum of a quantified claim is not usually considered as amounting to a new claim.
3-899 It is also widely understood that an application for interim or conservatory measures pursuant to Article 28(1), while being quite distinct in terms of the relief sought, does not amount to a “claim” for the purpose of Article 23(4). The Terms of Reference are not intended to frame procedures for interim or conservatory relief.
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3-900 An arbitral tribunal will usually ask itself to what extent the supposed new claim departs substantially from what was envisaged in the Terms of Reference. It is sometimes not easy to separate the question of whether a new element in a case is a claim from the question of whether it falls outside the scope of the Terms of Reference.54
3-901 (ii) Does it fall outside the limits of the Terms of Reference? A new claim that does not alter or add to the range of considerations outlined in the Terms of Reference will have a negligible effect on the arbitration. In particular, matters that do not place any additional burden on opposing parties when presenting their defences and that may be a corollary to existing claims (e.g. a claim for interest arising out of other claims for damages) will usually be considered to fall within the limits of the Terms of Reference.
3-902 In a recent case, the claimant revised its claim for damages in light of the arbitral tribunal’s findings in its partial award. The arbitral tribunal had found that the termination of the contract in question was not governed by the legal provisions on which the claimant had based part of its claim for damages. Accordingly, the claimant revised its claim, modifying the legal grounds on which it sought compensation for lost profits and re-quantifying the amount claimed. In particular, the claimant modified the time period used to calculate its lost profits. The respondent argued that the amended claim had a “new basis” and therefore should be dismissed. The arbitral tribunal found that it fell within the limits of the Terms of Reference and therefore did not require authorization pursuant to Article 19 of the 1998 Rules.
3-903 Should an arbitral tribunal authorize a new claim falling outside the limits of the Terms of Reference? If the arbitral tribunal decides that an element of a party’s case constitutes a new claim falling outside the scope of the Terms of Reference, it must then consider whether to authorize the claim pursuant to Article 23(4).
3-904 As indicated in the provision, the arbitral tribunal should consider all relevant circumstances. In particular, the provision mentions the nature of the new claim and the stage of the arbitration. A claim that is related to the underlying dispute and fits into the proceedings (e.g. because it relates to similar questions of fact and law) will be more acceptable to an arbitral tribunal than a claim that requires the proceedings to take a significantly different direction. In the past, for example, arbitral tribunals have only rarely authorized the inclusion of new claims that were based on entirely new facts or arose out of another contract. Indeed, Article 9, which allows multicontract claims, explicitly refers to Article 23(4) as a potential restriction. The likelihood that a new claim that is sufficiently related to the underlying dispute and factual matrix will be authorized will diminish in the later stages of the arbitration.
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3-905 In determining whether authorization is appropriate, the arbitral tribunal will need to balance any disruption that would result in the arbitration against any inefficiency caused if the claim needs to be brought in other proceedings. The arbitral tribunal should always be mindful of its commitment to fostering expeditious and cost-effective arbitral proceedings (Article 22(1)). A new claim brought late in the arbitration may lead to unreasonable delay and additional costs because the opposing side will need to be provided with a sufficient opportunity to respond. Considerations of fairness and the good administration of justice may cause an arbitral tribunal to admit a claim if it has an important bearing on the dispute.
3-906 The question arbitral tribunals often ask themselves is to what extent would the new claim disrupt the natural course of resolving the dispute or require a change in the procedure? If authorizing the claim would necessitate a significant change, then the arbitral tribunal must consider the stage the proceedings have reached when assessing how great the resulting disruption is likely to be. It should also consider whether there are good reasons why the claim was not made earlier and whether the attempt to make a new claim is abusive, designed merely to delay the arbitration or to surprise the other side. Another factor to take into consideration is the opposing side’s ability to defend itself against the new claim without undue delay.
3-907 Form of the decision. A decision pursuant to Article 23(4) will usually be made in a procedural order. Alternatively, it is sometimes made in an award together with other decisions, including even a decision on the merits of the new claim. However, the latter approach would require the parties to present arguments in relation to the new claim before knowing whether the arbitral tribunal has authorized its inclusion, which would not serve the procedural efficiency that authorization seeks to ensure by ruling out claims that do not meet the conditions of Article 23(4).
3-908 Consequences of not authorizing a new claim. If the arbitral tribunal does not allow a new claim, it should not address the merits of that claim. The claiming party will be free to bring it in other proceedings. In such a case, the arbitral tribunal should consider mentioning any negative decision pursuant to Article 23(4) in the summary of the proceedings included in its next award in the case.
3-909 Jurisdiction over the new claim. A party opposing the introduction of a new claim may wish to contest the arbitral tribunal’s jurisdiction over the claim. This is an entirely separate matter for the arbitral tribunal to consider. For example, it may be arguable that the new claim falls outside the scope of the parties’ arbitration agreement or is not capable of settlement by arbitration under the applicable law. Any such objection will need to be considered by the arbitral tribunal either at the time it decides whether to authorize the new claim (if the jurisdictional issue has been properly pleaded by then) or at a later time, after authorizing the new claim.
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3-910 If the new claim is brought under a contract containing a separate arbitration agreement, it is good practice for the arbitral tribunal to have due regard to Articles 9 and 6(4), subparagraph (ii). In any event, it is difficult to conceive of a situation in which an arbitral tribunal could find that it has jurisdiction over a claim brought under a new arbitration agreement without the consent of all the parties, given that the arbitral tribunal will not have been constituted under that arbitration agreement. In principle, unless the parties agree otherwise, an arbitral tribunal can only decide claims that fall within the scope of the arbitration agreement under which it has been constituted.
3-911 If the new claim is made against a person that is not a party to the arbitration, and therefore amounts to an attempt to join a new party, the arbitral tribunal must have regard to Article 7. In particular, Article 7(1) provides that no additional party may be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party, agree otherwise.
ARTICLE 24(1): CASE MANAGEMENT CONFERENCE
When drawing up the Terms of Reference or as soon as possible thereafter, the arbitral tribunal shall convene a case management conference to consult the parties on procedural measures that may be adopted pursuant to Article 22(2). Such measures may include one or more of the case management techniques described in Appendix IV.
3-912 Purpose. Article 24(1) establishes a formal process to enable the arbitral tribunal and the parties to organize the arbitral proceedings in a manner that is consistent with their duties under Article 22(2). The mandatory case management conference is a tool designed to ensure a tailor-made procedure. The new Appendix IV, to which Article 24(1) explicitly refers, provides some guidance on the topics that may be addressed during the case management conference.
3-913 2012 modifications. New provision.
3-914 Time and costs. Article 24(1) is part of a response to increasing concern over time and cost efficiency in arbitration. That concern has been borne out of a number of regrettable situations ranging from cases in which parties (or their legal counsel) adopt unnecessarily litigious tactics (sometimes called “guerrilla tactics”) to those in which busy arbitral tribunals operate on autopilot and adopt boilerplate procedures that may not be suited to the needs of a particular case. Under the 1998 Rules, experienced arbitral tribunals would often hold a form of case management conference when establishing a procedural timetable pursuant to Article 18(4). Those Rules did not explicitly require the arbitral tribunal and the parties to consider case management techniques, however. The new Article 24(1) should serve as a reminder that the flexibility offered by
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arbitration should be used to the advantage of time and cost-efficient dispute resolution. If arbitration is to continue serving the needs of the business community and the states and state-owned enterprises that use it, an effort must be made to ensure that the procedure is tailored to the circumstances of each particular case.
3-915 Timing. Article 24(1) requires the conference to be held when the Terms of Reference are drawn up or as soon as possible thereafter. In this way, an efficient procedure can be defined early in the arbitration. When a meeting is organized for the purpose of drawing up the Terms of Reference, the case management conference will normally be held at the same meeting, taking advantage of the fact that the parties and the members of the arbitral tribunal are all assembled. However, it may be difficult in some cases to determine the best procedure at such an early stage. The issues in dispute may not be ripe enough for the arbitral tribunal to assess the precise procedural needs of the case. In such a situation, the parties and the tribunal may limit case management decisions to the preliminary phases of the arbitration and plan one or more further case management conferences once the case has developed sufficiently.
3-916 Party consultation. Article 22(2) requires the arbitral tribunal to consult the parties before adopting procedural measures. Any agreements between the parties will take precedence over any decisions of the arbitral tribunal on the rules governing the proceedings, in accordance with Article 19 (see paragraphs 3-715 and following). The parties can be consulted at the case management conference itself. However, pursuant to Article 24(3), the arbitral tribunal may request the parties to submit case management proposals ahead of the conference. Alternatively, the arbitral tribunal may circulate its own proposals for the parties’ consideration or comments. In any event, the arbitral tribunal should familiarize itself with the parties’ pleadings and evidence (to the extent they have been filed by then) before the case management conference.
3-917 Organization. After taking any such initial steps, the arbitral tribunal must organize the conference and determine how it should be conducted. It should also consider requesting or requiring the attendance of internal party representatives in addition to their legal counsel (see paragraph 3-939).
3-918 A case management conference may take various forms. There is no requirement for a physical meeting (see paragraphs 3-936 and 3-937). As noted above, where a physical meeting has been arranged to draw up the Terms of Reference, the case management conference will normally take place at the same time. The arbitral tribunal will attempt, through an open discussion with the parties, to devise procedures allowing the dispute to be dealt with as efficiently as possible. The case management conference is also an ideal time to discuss and prepare the procedural timetable required by Article 24(2), which will be affected by the case management techniques that are chosen.
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3-919 As noted in paragraph 3-719, views as to what constitutes an appropriate procedure may vary not only between the parties but also between the parties and the arbitral tribunal. The parties or their legal counsel may have strong views about how the case should be run and how evidence should be presented. The natural inclination, and in some instances the professional duty, of the parties’ counsel may dispose them towards a very thorough and therefore cumbersome procedure. This approach can have the advantage of forestalling criticism that an important element or issue has been insufficiently addressed. Conversely, the arbitral tribunal—sometimes erroneously owing to its limited understanding of a case in its early stages— may propose shortcuts that leave the parties feeling that they cannot present their cases properly. While a balance needs to be struck between these two extremes, the Rules encourage arbitral tribunals to be proactive in case management and to focus the parties’ attention on the key issues in dispute.
3-920 Absence of a party. If a party does not participate in the arbitration or in the case management conference, the conference must still take place. The arbitral tribunal should ensure that any non-participating party is provided with minutes of the meeting or a summary of the issues that were addressed. The non-participating party should also be afforded an opportunity to comment on those minutes.
3-921 Case management techniques. Article 24(1) refers to new Appendix IV, which contains a non-exhaustive list of case management techniques. Appendix IV is based on the report of the ICC Commission on Arbitration entitled Techniques for Controlling Time and Costs in Arbitration (available at www.iccwbo.org).
3-922 As the introduction to the list of case management techniques makes clear, controlling time and cost is important in all cases. However, it will be particularly important in low value cases, where the costs of resolving the dispute may become disproportionately high if the procedure is not managed properly. Proportionality cannot be assessed on a purely arithmetical basis: the monetary value of a dispute may not always reflect what is truly at stake. There may be important questions of principle, public policy (in the case of states) or business strategy at issue.
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3-923 A detailed discussion of the case management techniques described in Appendix IV is outside the scope of this commentary. The ICC Commission report Techniques for Controlling Time and Costs in Arbitration contains a checklist of techniques, as do other publications such as the UNCITRAL Notes on Organizing Arbitral Proceedings. A few of the matters raised in Appendix IV merit particular attention:
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ARTICLE 24(2): PROCEDURAL TIMETABLE
During or following such conference, the arbitral tribunal shall establish the procedural timetable that it intends to follow for the conduct of the arbitration. The procedural timetable and any modifications thereto shall be communicated to the Court and the parties.
3-924 Purpose. Article 24(2) requires the arbitral tribunal, in conjunction with the parties, to establish a procedural timetable for the arbitration. This is a valuable exercise as it causes the parties and the arbitral tribunal to plan ahead. Although revisable, the targets fixed in the document establish a basic framework for conducting an efficient arbitration. The procedural timetable and any modifications to it are communicated to the parties and the Court. Owing to the provisions of Article 30 (relating to the fixing of the time limit for the final award), the procedural timetable now assumes greater importance than it did under the 1998 Rules. The document has become a means by which the Court can monitor the progress of a case.
3-925 2012 modifications. Article 24(2) broadly follows Article 18(4) of the 1998 Rules with a few linguistic changes, including those necessary to accommodate its new position in the Rules as part of case management rather than associated with the Terms of Reference, as was the case in the 1998 Rules.
3-926 Form of the procedural timetable. The Rules do not lay down any restrictions or guidance on the form of a procedural timetable, which is consistent with their approach to the Terms of Reference and awards. The timetable should of course be recorded in writing. It should also be as clear and precise as possible, so that there can be no doubt over whether any part of it has been complied with. Typically, the content of a procedural
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timetable will be presented to the parties before being issued as a final order. Like any other procedural order, the timetable will usually be signed by the sole arbitrator or the president of a three-member arbitral tribunal (see paragraphs 3-726 and 3-1138) and should not be signed by the parties. Arbitral tribunals occasionally attempt to include the procedural timetable in the Terms of Reference, but this is not advisable (see paragraph 3-856).
3-927 Content of the procedural timetable. The Rules do not lay down any requirements concerning the content of procedural timetables, leaving the arbitral tribunal to decide, in conjunction with the parties, what should be included and what is best left unspecified. Nonetheless, timetables typically list all the major stages of the arbitration, including dates for meetings and hearings and deadlines for, among other things, the filing of written submissions, evidence and witness statements.
3-928 Process of establishing the procedural timetable. When deciding on dates and timelines, the arbitral tribunal and the parties should take into account their duties under Article 22(1). The arbitral tribunal must also comply with its obligation under Article 22(4). In that respect, the procedural timetable should be designed with ample input (or at least opportunities for input) from all parties. Furthermore, the arbitral tribunal should have regard to any specific agreements the parties have made on procedure (see the discussion of Articles 19 and 22(2) above).
3-929 As indicated above, the case management conference provides an ideal opportunity to discuss the content of the procedural timetable. In most instances, the arbitral tribunal will also circulate a draft procedural timetable and seek written comments from the parties.
ARTICLE 24(3): CONTINUED CASE MANAGEMENT
To ensure continued effective case management, the arbitral tribunal, after consulting the parties by means of a further case management conference or otherwise, may adopt further procedural measures or modify the procedural timetable.
3-930 2012 modifications. New provision.
3-931 Article 24(3) authorizes the arbitral tribunal to adopt additional procedural measures or modify existing procedures at any time, provided it consults the parties first. The provision also makes it clear that the arbitral tribunal’s duty to ensure effective case management is ongoing. Although not an obligation, Article 24(3) expressly recognizes that it is possible to hold more than one case management conference. In practice, arbitral tribunals often issue directions on individual aspects of procedure in the course of the proceedings, or modify previous procedural directions to take account of developments in the case or changed circumstances.
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3-932 Pursuant to Article 24(3), the arbitral tribunal can also modify the procedural timetable. The procedural timetable should be kept up-to-date and will need modifying whenever deadlines are extended or expectations regarding the timing of different stages of the arbitration change. Article 24(2) provides that the arbitral tribunal must communicate these modifications, along with a revised version of the procedural timetable, to all parties and the Court.
3-933 Where the proceedings are bifurcated, the procedural timetable is likely to deal with only one phase at a time, with the result that one or more further timetables may become necessary, depending upon the outcome of the preceding phase.
ARTICLE 24(4): CONDUCTING THE CASE MANAGEMENT CONFERENCE
Case management conferences may be conducted through a meeting in person, by video conference, telephone or similar means of communication. In the absence of an agreement of the parties, the arbitral tribunal shall determine the means by which the conference will be conducted. The arbitral tribunal may request the parties to submit case management proposals in advance of a case management conference and may request the attendance at any case management conference of the parties in person or through an internal representative.
3-934 2012 modifications. New provision.
3-935 Article 24(4) refers to three specific aspects of the conference.
3-936 Means. First, it leaves some flexibility over how the case management conference is conducted. Where possible and practicable, it is preferable that the arbitral tribunal convenes a physical meeting, or incorporates the case management conference into another meeting such as a meeting organized for the Terms of Reference. A physical meeting can be a valuable way of establishing meaningful contact with other individuals participating in the arbitration and help foster relationships that are conducive to a smooth arbitration and even settlement negotiations. A physical meeting can also ease or even prevent the tensions and frustrations that sometimes surface where parties come from different cultural backgrounds and have different expectations of the process.
3-937 Not every case will require a physical meeting. Certain considerations, including cost, may make physical meetings impossible or undesirable. Therefore, case management conferences can also be held by other means such as video or telephone conference. Whatever means is chosen, it should be direct and ensure a real-time dialogue in which all parties are given the opportunity to participate.
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3-938 Parties’ case management proposals. Second, the arbitral tribunal may request the parties to submit their own proposals for procedural measures. Such requests will encourage the parties to co-operate in the process and to develop a considered opinion, consistent with their duty under Article 22(2), regarding the measures and timetable best suited to the needs of their case. In practice, party proposals are already quite frequent in proceedings involving experienced counsel, and counsel’s proposals will often be very valuable, but not always. Some counsel may believe that their client’s position is best advanced by being highly contentious on relatively mundane procedural matters.
3-939 Parties’ attendance. Finally, Article 24(4) grants the arbitral tribunal an important power to request the attendance of the parties in person (i.e. through an internal representative of a company or government) at the case management conference. The parties’ presence at the case management conference has a number of advantages. First, the parties themselves become responsible for the consequences of decisions made. Second, their presence may help to control the excesses occasionally shown by their legal advisers. As already mentioned above, the purpose of this provision is to encourage a considered approach to procedure and thereby reduce the risk of the arbitration being conducted on autopilot or, worse, in an unduly contentious manner.
ARTICLE 25(1): ESTABLISHING THE FACTS OF THE CASE
The arbitral tribunal shall proceed within as short a time as possible to establish the facts of the case by all appropriate means.
3-940 Purpose. Article 25(1) is a further manifestation of the arbitral tribunal’s general duty to proceed expeditiously. It does not provide specific guidance on how to establish the facts, which is in keeping with the underlying and highly-valued procedural flexibility offered by the Rules, but Articles 25(2)–25(5) equip the arbitral tribunal with specific tools for fulfilling its mission.
3-941 2012 modifications. None.
3-942 Procedure for determining the facts. Article 25(1) gives the arbitral tribunal broad discretion to determine the fact-finding process. In practice, it will depend on the manner in which the case is conducted generally and will be strongly influenced by the parties’ and individual arbitrators’ preferences. Arbitral procedure in general is addressed in the discussion of Article 19 (see paragraph 3-723 in particular).
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3-943 Whatever fact-finding process is adopted, the parties will bear primary responsibility for locating and presenting the evidence that is necessary to establish the facts upon which they seek to rely. Depending on the cultural backgrounds and preferences of the arbitrators, they may or may not probe for further information or clarification from the parties on points of fact. Some arbitrators consider that a party’s failure to present evidence supporting a disputed question of fact implies that the fact remains unproven and that is the end of the matter. Other arbitrators may point out the absence of evidence and offer the party an opportunity to provide more evidence. In this regard, Article 25(5) expressly recognizes the arbitral tribunal’s power to summon a party to provide additional evidence.
3-944 Importantly, an arbitral tribunal must be very cautious about seeking to determine relevant facts by its own means (such as through independent enquiry or relying on its own knowledge), unless this is done with the consent of the parties. In the interests of fairness and due process, if an arbitrator becomes acquainted with relevant facts outside the context of the arbitral proceedings, he or she should inform the parties immediately and allow them to comment on those facts.
3-945 An arbitral tribunal and/or the parties sometimes opt to follow specific rules relating to fact finding, notable examples of which in the context of international arbitration are the IBA Rules on the Taking of Evidence in International Arbitration and the UNCITRAL Notes on Organizing Arbitral Proceedings.
3-946 Sources of factual evidence. The main sources of evidence in international arbitration are (i) documentary evidence, as discussed below; (ii) factual witness testimony, discussed below under Article 25(3); and (iii) expert witness testimony, discussed below under Article 25(4). Facts may also be established through the exchange of written and oral arguments, where one side alleges facts that the other admits. Other fact-finding exercises such as site visits or the inspection of property are used where appropriate.
3-947 Documentary evidence. Documentary evidence is central to fact finding in most ICC arbitrations. The procedure will almost always include a process by which any party may submit documentary evidence that supports its case. Typically, the documents will be filed together with the filing party’s written pre-hearing submission(s).
3-948 In addition to documents in a filing party’s own possession, the procedure may include a process by which a party can request the production of documents that are in another party’s possession. However, parties and the arbitral tribunal should not assume that document production is necessary in every case. Approaches to document production are strongly influenced by legal cultures and may therefore vary considerably depending on the background of the arbitral tribunal, the parties and their legal representatives. For this reason it can be a sensitive subject in international arbitration. Full discovery as practised in common law systems is possible
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but rarely permitted in ICC arbitration. It is more common that an arbitral tribunal will allow requests for document production broadly in line with the IBA Rules on the Taking of Evidence in International Arbitration, whether or not those rules are specifically referred to or adopted.55
3-949 If document production forms part of the procedure and the requested party refuses to produce a document, the arbitral tribunal can order its production pursuant to Article 25(5). When determining whether there should be a procedure for document production, or defining its scope, the parties and the arbitral tribunal should be mindful of the impact that this procedure may have on time and costs. Suggestions regarding documentary evidence form a key component of Appendix IV to the Rules on case management techniques. Appendix IV suggests that the parties and the arbitral tribunal should consider:
3-950 Finally, the parties’ rights to submit documents in support of their cases, whether obtained under a document production order or from the relevant party’s own files, should be limited in time. That time limit may, for example, be set in (or be clear from) one of the arbitral tribunal’s orders or timetables. In the interests of efficiency, arbitral tribunals will not normally allow additional documentary evidence to be filed outside the time limits that it has fixed, save in exceptional circumstances.
3-951 The past decade has seen a steady increase in requests for the production of electronic documents, ranging from emails to more complex forms of evidence such as computer files and even occasionally metadata. These types of documents present a number of challenges. To assist parties and arbitrators in the matter, the ICC Commission on Arbitration issued a report in 2012 entitled Managing E-Document Production, which is available at www.iccwbo.org.
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ARTICLE 25(2): HEARINGS
After studying the written submissions of the parties and all documents relied upon, the arbitral tribunal shall hear the parties together in person if any of them so requests or, failing such a request, it may of its own motion decide to hear them.
3-952 Purpose. Article 25(2) addresses the issue of hearings and serves three functions in that regard. First, it fixes a logical order of events such that any hearing is held only after the arbitral tribunal has studied the written submissions and evidence. Second, it requires that a hearing be held if so requested by a party. Third, it authorizes the arbitral tribunal to call a hearing of its own volition.
3-953 2012 modifications. None.
3-954 Hearings in general. In practice, all important decisions in relation to hearings are typically made after due consultation with the parties. The arbitral tribunal will normally try to accommodate the parties’ preferences and/or to balance their preferences if divergent. Since hearings in international arbitration often necessitate travel and a considerable time commitment by the arbitrators, the parties and their lawyers, they can be very costly exercises. Accordingly, when fixing the number and duration of hearings, an arbitral tribunal should be mindful of its duty to conduct expeditious and cost-effective arbitral proceedings (Article 22(1)). However, that duty must always be balanced against the obligation to ensure that each party has a reasonable opportunity to present its case (Article 22(4)).
3-955 The need for, and preliminary details of, a hearing will usually be considered well in advance, as part of the case management process pursuant to Article 24(1). Arbitral tribunals should also mention hearing dates on the procedural timetable issued pursuant to Article 24(2).
3-956 Typically, each phase of an arbitration will involve one hearing. However, the particular circumstances of a case may sometimes call for more than one or none at all. Additional, unforeseen hearings are unusual but may be required where important new evidence comes to light belatedly, or where a previously unavailable witness becomes available. As discussed under Article 25(6) (see paragraph 3-985), there may be advantages in not holding a hearing at all.
3-957 Article 25(2) specifically empowers the arbitral tribunal to call a hearing “of its own motion”, even in the absence of any request from a party. This provision can prove helpful where the arbitral tribunal, during its deliberations for example, feels that a further hearing is necessary. That
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said, if all parties were to object to the holding of a hearing, it would be very rare in practice for an arbitral tribunal to insist. An important consideration in this regard is that the parties will have to bear the (often significant) costs of any hearing.
3-958 Parties’ right to request a hearing. As a manifestation of basic due process rights, Article 25(2) gives any party the right to request a hearing. This right can become relevant where both the opposing side and the arbitral tribunal consider that a hearing is unnecessary. Where there is disagreement over whether to hold a hearing, the Rules are silent as to the precise scope of a party’s right to request a hearing. Article 25(2) does not state that a hearing must be held on every point or in every phase of the arbitration. It certainly does not require the arbitral tribunal to hold a hearing at any time a request is made. Furthermore, whether the arbitral tribunal construes Article 25(2) as requiring a face-to-face hearing, or whether the use of video or teleconferencing suffices, will depend on the circumstances of the case. In practice, arbitral tribunals have generally erred on the side of caution and interpreted Article 25(2) as requiring at least one face-to-face hearing on the merits if a party insists.
3-959 The Court has occasionally intervened where an arbitral tribunal fails to abide by Article 25(2) and attempts to refuse a party’s request for a hearing. In such circumstances, the Secretariat will usually remind the arbitral tribunal of Article 25(2) and discuss whether a hearing should be held. Parties have occasionally filed challenges against arbitrators as a result of such refusals.
3-960 Study of submissions and evidence prior to the hearing. Article 25(2) states that the arbitral tribunal should study the parties’ written submissions and evidence before holding a hearing. Although logical, this should not restrict the natural flow of the proceedings. It does not necessarily prevent the filing of further evidence or submissions after a hearing if the arbitral tribunal has authorized or requested them pursuant to Article 25(5), although such late filing should obviously be avoided if it raises new issues. The filing of post-hearing material does not imply that a further hearing will be required.
ARTICLE 25(3): HEARING WITNESSES AND EXPERTS
The arbitral tribunal may decide to hear witnesses, experts appointed by the parties or any other person, in the presence of the parties, or in their absence provided they have been duly summoned.
3-961 2012 modifications. None.
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3-962 Article 25(3) empowers the arbitral tribunal to hear any witness, partyappointed experts or other person it considers appropriate and helpful to determining the facts of a case. While not expressly provided within the provision, this authority can also be applied to experts appointed by the arbitral tribunal pursuant to Article 25(4). The arbitral tribunal may hear witnesses even in the absence of some or all of the parties, provided that all parties have received reasonable notice of the hearing (see paragraph 3-996).
3-963 A factual witness could be any person that a party considers to have something relevant to say. Factual witnesses are most commonly company or government employees who had some involvement in, and therefore possess direct knowledge of, the issues that have led to the dispute. It is normally considered that international arbitration differs from some domestic legal regimes in allowing a party’s officers or employees to appear as witnesses. As part of their evidence, factual witnesses typically describe their qualifications, position in the relevant organization, and precise role in the project or activity that has led to the dispute.
3-964 An expert witness is a person who possesses expertise relevant to the issues in dispute. The nature of any experts involved will depend enormously on the case in question. In many cases experts are not necessary at all. In others, parties may wish to present technical, commercial or legal experts, for example. Unlike factual witnesses, an expert witness is usually required to confirm that he or she is independent of the parties and has had no prior involvement in the dispute itself. Expert witnesses are generally required to confirm their relevant expertise as part of their evidence, before providing their opinion on questions that have been put to them.
3-965 The arbitral tribunal will determine the manner in which any witness testimony is taken. It is common in international arbitration for witnesses (both factual and expert) to present their evidence in chief56in writing. This is usually provided in the form of a signed witness statement that is filed at a time specified by the arbitral tribunal, and usually set out in the procedural timetable issued pursuant to Article 24(2). Typically, at some stage prior to the hearing, the parties will be invited to indicate their preferences as to which witnesses they would like to have present at the hearing. If there is disagreement on the matter, the arbitral tribunal may need to make a decision balancing, as usual, issues of efficiency and economy against the parties’ rights to present their cases.
3-966 If the witnesses have filed written evidence in chief, it is uncommon for them to be allowed to repeat that evidence orally at the hearing. Rather, the party calling the witness may be offered an opportunity briefly to ask the witness to clarify certain issues or respond to aspects of the opposing side’s evidence that concern the witness’s evidence. The principal reasons for hearing witnesses are, therefore, twofold. One reason is to enable the
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arbitral tribunal to gain a first-hand impression of the witness’s character and seek clarification concerning the witness’s evidence. In that respect, it is common during hearings for arbitrators to put questions directly to witnesses. The other common reason for hearing a witness is to allow the opposing side to cross-examine the witness in an effort to test the integrity of his or her evidence. Some tribunals also use a technique called witness conferencing, where opposing witnesses are heard together and answer questions put by the arbitral tribunal and the parties’ counsel. Although it can also be used for factual witnesses, witness conferencing is particularly helpful when hearing expert witnesses and is most commonly used for this purpose.
ARTICLE 25(4): EXPERTS APPOINTED BY THE ARBITRAL TRIBUNAL
The arbitral tribunal, after having consulted the parties, may appoint one or more experts, define their terms of reference and receive their reports. At the request of a party, the parties shall be given the opportunity to question at a hearing any such expert.
3-967 Purpose. Article 25(4) enables the arbitral tribunal to engage experts. An expert appointed by the arbitral tribunal is often perceived as more neutral than a party-appointed expert. The provision also protects the parties’ interests by ensuring that they are consulted prior to any such appointment and may question the expert.
3-968 2012 modifications. Minor linguistic adjustments.
3-969 Use of experts in ICC arbitration. Expertise is one factor relevant to the selection of arbitrators, but there are many others (see paragraphs 3-494 and following). In practice, the arbitral tribunal may not possess all relevant expertise necessary to decide a case. This is particularly true where the dispute is very technical in nature. An arbitral tribunal may in appropriate cases be assisted by an expert’s evidence. Technical, financial and legal experts are those most commonly appointed, but there is no restriction on the type of expertise that may be called upon.
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3-970 There are two principal methods by which expert witness evidence is taken. The first is for one or more parties to engage an expert who tenders evidence (see Article 25(3) above). Typically, these experts will file a written opinion or report and will later be presented for oral examination.
3-971 The second method is for the arbitral tribunal itself to appoint one or more experts, as foreseen by Article 25(4). Some arbitral tribunals and/or parties will be suspicious of party-appointed experts and will prefer the neutrality of those engaged directly by the arbitral tribunal. Using an expert appointed by the arbitral tribunal may also be less costly and time-consuming than using party-appointed experts, as only one expert, instead of one per party, needs to be appointed in each area of expertise. However, engaging even one expert will increase the total cost of an arbitration and can cause delays. An arbitral tribunal should therefore consider whether experts are truly necessary in light of the circumstances of the case.
3-972 A variation of the above is where the arbitral tribunal appoints its own expert in addition to the experts the parties have engaged. The additional expert can assist the arbitral tribunal in understanding the issues and simplify its task of deciding between any conflicting views of the partyappointed experts.
3-973 Consultation with the parties. Article 25(4) requires that the parties be consulted before the arbitral tribunal engages an expert. The costs and potential delays resulting from the appointment of an expert mean that the question of whether to make the appointment can be important to the parties. It is rare that all parties will agree on the identity of the expert; the arbitral tribunal will often need to select the expert itself after consulting the parties.
3-974 Terms of reference and the expert’s role. The Rules provide no guidance on the role of experts appointed by the arbitral tribunal. It is prudent for an arbitral tribunal and the parties to agree with the expert on terms of reference that define the precise scope of the expert’s role and how that role will fit into the proceedings.
3-975 A few key considerations are worth bearing in mind when defining an expert’s role. First and foremost, an expert appointed by the arbitral tribunal must be independent and impartial. Arbitral tribunals usually require any prospective expert to confirm in writing his or her independence and impartiality and disclose any relevant issues in a manner that is analogous to arbitrators’ obligations under Articles 11(1)–11(3). Second, it is good practice for the arbitral tribunal to provide the parties with a copy of any written expert report and to allow them to comment on it. Article 25(4) expressly entitles the parties to question the expert, and such questioning will often prove beneficial to the arbitral tribunal in assessing and understanding the expert’s evidence.
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3-976 Finally, the appointment of an expert does not relieve the arbitral tribunal of any aspect of its duty to decide the dispute itself. This is its role and function, which it cannot abdicate.
ARTICLE 25(5): SUMMONING PARTIES FOR ADDITIONAL EVIDENCE
At any time during the proceedings, the arbitral tribunal may summon any party to provide additional evidence.
3-977 Purpose. Article 25(5) broadens the arbitral tribunal’s power to determine the facts of a case by empowering it to order a party to produce additional evidence. This provision is most commonly used to order the production of additional documents, but could potentially be used for any type of additional evidence. Article 25(5) can be applied at a party’s request or on the arbitral tribunal’s own initiative.
3-978 As already discussed under Article 25(1), ICC arbitrations typically include a process by which the parties may request the production of documents from another party. If the requested party refuses to produce a document, the arbitral tribunal can order its production pursuant to Article 25(5) (for more information on procedures for document production, see paragraphs 3-947–3-951).
3-979 2012 modifications. None.
3-980 Arbitral tribunal’s initiative. Like other parts of Article 25, Article 25(5) encourages arbitral tribunals to exercise their fact-finding role proactively by taking the initiative to request evidence from the parties where appropriate.
3-981 Factors to consider when requesting additional evidence. An arbitral tribunal should consider several factors before requesting additional evidence. First, all parties, including the party that produces the evidence, should be afforded an opportunity to comment on any new evidence that is produced. For this reason, an arbitral tribunal should avoid requesting additional evidence late in the proceedings (e.g. when deliberating) as
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such a request is likely to result in delays. Requesting evidence that supports or contradicts a party’s position may be seen as assisting one side and consequently impair the arbitral tribunal’s image of neutrality. However, this should not in all cases deter an arbitral tribunal from requesting evidence that it considers necessary; it should merely be conscious of the effect that its request might have.
3-982 Failure to produce requested evidence. Article 25(5) should be read in conjunction with the new Article 22(5), according to which the parties undertake to comply with any order made by the arbitral tribunal. While parties generally comply with orders to produce evidence, an arbitral tribunal’s powers are quite limited if they refuse or fail to do so. Some arbitration laws provide for the support of local courts to enforce an arbitral tribunal’s document production order. Otherwise, in appropriate circumstances, the arbitral tribunal can draw an adverse inference from the party’s failure or refusal, in accordance with a practice well established in international arbitration and foreseen in the IBA Rules on the Taking of Evidence in International Arbitration. However, the arbitral tribunal should exercise caution in drawing an adverse inference.57
ARTICLE 25(6): PROCEEDINGS WITHOUT A HEARING
The arbitral tribunal may decide the case solely on the documents submitted by the parties unless any of the parties requests a hearing.
3-983 2012 modifications. None.
3-984 Article 25(6) highlights the possibility of conducting proceedings on the basis of documents only, although if any party requests a hearing Article 25(2) requires the arbitral tribunal to accede to that request by holding at least one hearing in the arbitration (see paragraphs 3-958 and 3-959).
3-985 A hearing is not necessarily useful in all cases. Due consideration should be given to proceedings based on documents only in small cases, especially if the cost of holding a hearing (including travel, hearing room rental, time spent by lawyers and arbitrators, etc.) might be disproportionate to the value or importance of the case or the relevant part of the case. In any case where there are no factual witnesses to be questioned, the arbitral tribunal may find that it can decide the dispute on the basis of the parties’ written submissions and the documentary evidence.
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3-986 In practice, ICC arbitrations conducted on the basis of documents only are rare. That said, it is hoped that the focus on effective case management in the 2012 Rules will lead to increased awareness and acceptance of this possibility. Appendix IV to the Rules invites arbitral tribunals, in the interests of efficiency and economy, to identify any “issues to be decided solely on the basis of documents rather than through oral evidence or legal argument at a hearing” and to consider “[u]sing telephone or video conferencing for procedural and other hearings where attendance in person is not essential”. These guidelines should ensure that arbitral tribunals give serious consideration to not holding a hearing, reducing the number of issues to be considered at a hearing, and/or, where appropriate, holding a hearing by way of a teleconference or video conference.58
ARTICLE 26(1): SUMMONING PARTIES TO A HEARING
When a hearing is to be held, the arbitral tribunal, giving reasonable notice, shall summon the parties to appear before it on the day and at the place fixed by it.
3-987 Purpose. Article 26(1) confirms the arbitral tribunal’s dominant role in fixing the place, date and time of any hearing (see also Article 18(2) concerning the arbitral tribunal’s power to fix the place of a hearing, unless otherwise agreed by the parties). The provision also embodies a basic tenet of due process insofar as it requires the arbitral tribunal to afford all parties a reasonable opportunity to attend the hearing by giving them reasonable notice of its time and place.
3-988 2012 modifications. None.
3-989 Fixing a date and time for the hearing. An arbitral tribunal should make all reasonable efforts to ensure that the time and place of the hearing is reasonably convenient for all expected attendees. In practice, the arbitral tribunal will exercise its power to fix the date and time only after consulting
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the parties. Indeed, an agreement on those issues will usually be reached by the arbitral tribunal and the parties. Discussions on dates and times, or at least tentative dates, will often take place as early as the case management conference conducted pursuant to Article 24.
3-990 Where agreement cannot be reached, the arbitral tribunal must balance the desire to fix a date that suits all involved against its duty under Article 22(1) to conduct the arbitration proceedings expeditiously and efficiently. Where a party is being unreasonably difficult in agreeing to hearing dates, the arbitral tribunal will ultimately need to step in and fix the dates. In some cases, reminding the party of that power will prompt it to express a preference for a date agreeable to all.
3-991 In a case from 2010–2011, the respondent attempted to delay the hearing on the merits on several occasions. It contrived a number of procedural developments which caused the hearing to be rescheduled. The sole arbitrator proposed two new dates to the parties. While the claimant confirmed its availability on both dates, the respondent failed to comment. Instead, its principal counsel stated that he was unavailable on the second date and that the respondent was likely to call additional witnesses, making it impossible at that time to find a date that would be suitable to all those involved. The sole arbitrator then changed her approach slightly by defining a one-month period and asking the parties to inform her of the dates on which any witnesses, counsel or party representatives would not be available. The respondent did not answer. Upon being requested again to state its preferred dates, the respondent objected to certain of the sole arbitrator’s procedural decisions without proposing hearing dates. The sole arbitrator granted the respondent a final opportunity to comment on the hearing dates and reminded it that if it did not respond she would simply fix the hearing date as she thought fit. The respondent finally began to cooperate on the matter and expressed its preference for a hearing date.
3-992 Where the parties agree on dates that the arbitral tribunal considers will prolong the proceedings unnecessarily, the arbitral tribunal’s obligation to conduct the proceedings efficiently may require it to inform the parties of its concern and seek to persuade them to accept a hearing at an earlier date. In a 2011 case, a defence manufacturer and a state were involved in a large and potentially complex dispute. In the initial stages of the
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proceedings, they agreed to hold the hearing on the merits on a series of dates more than twenty months later. However, the president of the arbitral tribunal believed the resulting duration of the proceedings to be inappropriate. Despite the parties’ agreement on the matter, he felt it breached the arbitral tribunal’s obligation to conduct the arbitration expeditiously (as reflected at the time in provisions such as Article 20(1) of the 1998 Rules, now expressly recognized in Article 22(1)). After contacting the Secretariat and informing it of his opinion, which the Secretariat shared, the president urged the parties to find earlier dates. The parties and the arbitral tribunal finally decided to hold the hearing some twelve months later.
3-993 Fixing the location of the hearing. There are no rules or fixed practices concerning the physical location of hearings in ICC arbitrations. The arbitral tribunal in certain cases may even consider holding a hearing by teleconference or video conference, as mentioned in the discussion of Article 25(6) above (see paragraph 3-986) and suggested in Appendix IV to the Rules. In particular, it is common for procedural (as opposed to evidentiary) hearings to be held remotely rather than in the form of a physical meeting. In a 2011 case involving parties from Turkey and Germany, in which the place of the arbitration was Zurich, the Zurich-based sole arbitrator decided, in the interest of efficiency and after consulting the parties, that all the hearings would be held using Skype.
3-994 Nonetheless, most hearings in ICC arbitrations, especially hearings on the merits, will be held in the form of physical meetings. The choice of the city in which to hold a hearing is discussed in detail under Article 18(2) (see paragraphs 3-696 and 3-700). A hearing may be hosted in any convenient premises. The ICC offers state-of-the-art, purpose-built hearing rooms in Paris, which the parties may rent (see www.icchearingcentre.org). There are also excellent specialized hearing facilities available for rent in other arbitration hubs. Hearings are often held in the conference or meeting rooms of large hotels. They can also be held at a law firm, such as the law firm of one of the arbitrators or even one of the parties’ counsel. Where the premises of a party’s counsel are to be used, the arbitral tribunal should first seek the other side’s consent.
3-995 The facilities required for a hearing will vary immensely depending on the nature of the case. At the very least, it will be necessary to find a room that comfortably seats all actors who will attend. In addition, each party often will request a private break-out room. The arbitral tribunal may also need its own private room. Other desirable facilities include, among other things, practical equipment and services such as internet connectivity, photocopiers, fax machines, and the availability of refreshments.
3-996 The meaning of reasonable notice. Article 26(1) does not specify how much notice is “reasonable”. Reasonable notice will depend on the nature of the case as well as factors such as the location of the parties and their representatives, the complexity of the issues to be considered, and the
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length and purpose of the hearing. However, as noted above, hearing dates are in practice usually agreed upon by the arbitral tribunal and the parties rather than simply announced by the arbitral tribunal without warning. Hence, reasonable notice may not be a relevant consideration, except perhaps for non-participating parties.
ARTICLE 26(2): ABSENCE OF A PARTY AT THE HEARING
If any of the parties, although duly summoned, fails to appear without valid excuse, the arbitral tribunal shall have the power to proceed with the hearing.
3-997 Purpose. Article 26(2) confirms the arbitral tribunal’s authority to proceed with a hearing even in the absence of a party. This power is essential, as a recalcitrant party could otherwise frustrate the entire process simply by choosing not to appear at the hearing. In that respect, the provision mirrors Article 6(8), which allows the arbitral tribunal to proceed despite a responding party’s failure to participate. Nonetheless, when resorting to Article 26(2) the arbitral tribunal should be mindful of its obligation under Article 26(1) to give all parties reasonable notice of the time and place of a hearing, particularly non-participating parties.
3-998 2012 modifications. None.
3-999 Excuses for absence. Article 26(2) specifies that an arbitral tribunal may proceed with a hearing only if the absent party has failed to provide a “valid” excuse for its absence. In practice, the absent party should inform the arbitral tribunal of the details of its excuse as soon as the excuse materializes and, at the very least, a few days before the hearing is scheduled to take place. Prompt notice will allow the arbitral tribunal to seek the other side’s views. The arbitral tribunal may treat any tardy notice with suspicion.
3-1000 The circumstances of the case will dictate whether or not the excuse is valid. The arbitral tribunal will need to consider whether there is a real impediment for the relevant party to attend the hearing. It should also weigh the impediment against factors such as the next available hearing date for all parties and arbitrators. The opportunity to be present at a hearing is an important element of due process. Therefore, if a party convinces the arbitral tribunal that it is genuinely prevented from attending, the arbitral tribunal will usually prefer to be cautious and postpone the hearing. If rescheduling the hearing leads to a waste of expenditure and/or additional costs, the arbitral tribunal may decide that these will be borne by the party that caused the postponement (see paragraph 3-1488).
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3-1001 Finding creative ways to address excuses. Certain impediments to attendance do not necessarily require a hearing to be postponed or cancelled. The arbitral tribunal, in certain cases, may find creative ways of addressing the excuse in question while meeting the requirements of Article 26(2) and due process. Such solutions can include changing the location of the hearing or holding the hearing as planned and following it up with an additional smaller hearing. In one recent case, the claimant, a Thai company, appeared to do everything in its power to have the sole arbitrator cancel an upcoming hearing in Bangkok. Only a few days before the hearing, it stated that all foreigners intending to come to Bangkok for the hearing would require Thai work visas, without which the hearing would be unlawful. While the sole arbitrator was quickly issued a visa by the Thai authorities, the respondent’s counsel and its witnesses were unable to obtain the visas they required. Finding it reasonably doubtful that the respondent would succeed in obtaining work visas for a hearing in Bangkok, and expressing concern about threats of legal action made against him in Thailand,59the sole arbitrator decided to relocate the hearing to Hong Kong, notwithstanding the claimant’s objection and its threat not to participate in any hearing held outside Thailand.
3-1002 In another case, an important factual witness from one side contended that he could not attend the hearing because his doctors had advised him that he was too ill to fly. The other side insisted on being able to crossexamine the witness in person. In order to accommodate both parties while preventing undue delays, the arbitral tribunal held the hearing but decided that it, together with the parties and their counsel, would all take a ten-hour flight to examine the witness at his place of residence.
ARTICLE 26(3): THE ARBITRAL TRIBUNAL’S CONTROL OVER THE HEARING
The arbitral tribunal shall be in full charge of the hearings, at which all the parties shall be entitled to be present. Save with the approval of the arbitral tribunal and the parties, persons not involved in the proceedings shall not be admitted.
3-1003 Purpose. Article 26(3) places the management of any hearing in the hands of the arbitral tribunal. This is intended to ensure an orderly and efficient use of time. The provision also restricts the presence of third parties at hearings so as to ensure that the proceedings are conducted in private.
3-1004 2012 modifications. None.
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3-1005 Determining the procedure for hearings. The arbitral tribunal may make all decisions necessary for managing the hearing and will give directions as required. In practice, arbitral tribunals exercise this power in close consultation with the parties.
3-1006 Discussing the procedure for hearings. The legal traditions with which the parties and the arbitrators are familiar will often influence their opinions on and expectations as to how a hearing should be conducted. Determining the procedure may prove controversial and may test the arbitral tribunal’s perceived neutrality and even its patience. Matters that may cause fractious disagreement often derive from differences between the traditional common law and civil law approaches. Examples include the procedure for questioning witnesses and how, if at all, oral argument should be heard (e.g. which party will first take the stand, the parties’ rights of reply, the amount of time granted to each party, whether questions will be permitted).
3-1007 Experienced arbitral tribunals tend to discuss such matters with the parties well in advance of the hearing. A convenient place at which to begin discussions would be the case management conference held pursuant to Article 24(1) or an initial procedural meeting or hearing.
3-1008 After consulting the parties, but again well in advance of any hearing, the arbitral tribunal should establish clearly and comprehensively the manner in which the hearing will be conducted. It will usually do so in a procedural order that either deals exclusively with the upcoming hearing or addresses several other matters as well. This step should flush out any objections or problems in advance.
3-1009 Factors to consider when deciding on procedure. As well as respecting the parties’ preferences and ensuring that the hearing will achieve its intended purposes, an arbitral tribunal should have regard to two further factors. First, the arbitral tribunal should be mindful of its obligations under Article 22(4) to ensure that each party has a reasonable opportunity to present its case. Second, it must keep time and cost considerations at the forefront, as required by Article 22(1). Detailed guidelines on how to make hearings cost-effective are contained in the ICC Commission report Techniques for Controlling Time and Costs in Arbitration (available at www.iccwbo.org).
3-1010 The arbitral tribunal should endeavour to decide beforehand on several aspects of the hearing. The 1996 UNCITRAL Notes on Organizing Arbitral Proceedings provide the following useful list of procedural issues to consider when organizing a hearing (the Notes contain a discussion of each point):
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3-1011 The Notes also provide a list of issues related to witness evidence that is relevant when organizing witness hearings:
3-1012 The arbitral tribunal should consider issuing directions on whether it will allow the introduction of new documentary evidence during the hearing.
3-1013 Attendance of third parties at hearings. Article 26(3) provides that any individual who is not involved in the proceedings will be excluded from hearings, unless the parties and arbitral tribunal agree otherwise. This protects confidentiality and the smooth running of hearings. At the start of a hearing, the arbitral tribunal may require all individuals present to identify themselves to the other participants.
3-1014 The restriction on attendance by third parties obviously does not extend to the parties’ legal representatives, witnesses who will be testifying, experts who will be testifying, and the arbitral tribunal’s administrative secretary, if any. From time to time, other third parties are also invited to attend. For example, in appropriate circumstances, the arbitral tribunal, with the parties’ consent, may permit students or other persons interested in learning about arbitration to sit in on a hearing, provided they strictly respect its confidentiality. Secretariat staff are not automatically admitted to hearings, although sometimes they may seek the parties’ and the arbitral tribunal’s permission to attend.
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ARTICLE 26(4): ATTENDANCE AT HEARINGS OF DULY AUTHORIZED REPRESENTATIVES AND ADVISERS
The parties may appear in person or through duly authorized representatives. In addition, they may be assisted by advisers.
3-1015 2012 modifications. None.
3-1016 Article 26(4) clarifies that parties are not themselves required to attend hearings but may be represented by counsel. It occasionally happens, particularly in smaller arbitrations, that a party is not represented but appears itself. In the vast majority of ICC arbitrations parties are represented by lawyers, both at the hearing and in other contexts. Where legal representatives are retained, an executive or legal officer from the party itself will usually also be present at any hearings, allowing the party to direct and inform its counsel. That person’s presence also helps to ensure that instructions can be obtained quickly and efficiently from the party itself.
3-1017 Article 17 allows the arbitral tribunal to request proof of authority from legal counsel. Where the counsel fails to provide such formal proof within the time limit given, the arbitral tribunal may be compelled to exclude that counsel.
ARTICLE 27: CLOSING OF THE PROCEEDINGS AND DATE FOR SUBMISSION OF DRAFT AWARDS
As soon as possible after the last hearing concerning matters to be decided in an award or the filing of the last authorized submissions concerning such matters, whichever is later, the arbitral tribunal shall:
After the proceedings are closed, no further submission or argument may be made, or evidence produced, with respect to the matters to be decided in the award, unless requested or authorized by the arbitral tribunal.
3-1018 Purpose. Article 27 is designed to mark the closure of the evidentiary and submissions phase, after which point no party may make a submission without the arbitral tribunal’s authorization. Once the arbitral tribunal has either held the last hearing on the merits or received the last authorized submissions from the parties, it must immediately fulfil the two ensuing obligations listed in Article 27, although not necessarily simultaneously. First, it must declare that no further submissions and arguments may be made on any matter to be decided in an award (declare the proceedings closed), so that it may move on to the deliberation stage for that award.
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Second, to give the parties some idea of when they can expect the award, the arbitral tribunal is required to inform the Secretariat and the parties of the date by which it expects to submit the draft award for scrutiny by the Court. This second requirement also assists the Court and its Secretariat in controlling the duration of the arbitration.
3-1019 2012 modifications. Article 27 serves the same purpose as Article 22 of the 1998 Rules, but contains additional elements to ensure that arbitral tribunals take prompt action to declare the proceedings closed and to indicate the likely date for submitting the award. The main substantive change is the opening wording “as soon as possible after”, which did not appear in Article 22 of the 1998 Rules. Arbitral tribunals often failed to apply Article 22 of the 1998 Rules at all, or waited until they were about to submit their draft award to the Secretariat before applying it. Tardy application of the former Article 22 defeated the purpose of the provision.
3-1020 Any type of award. Article 27 applies to all types of awards, including partial, interim and final awards. Only awards by consent do not fall within the scope of the provision.
3-1021 Timing. The two obligations under Article 27 are triggered by the later of (i) the last hearing on any issues to be decided in the award or (ii) the making of the last authorized submissions. The occurrence of both events can be established objectively and are foreseeable. The arbitral tribunal is required to fulfil its two obligations of indicating the date by which it expects to submit the award and closing the proceedings as soon as possible after the occurrence of the triggering event. The two obligations need not necessarily be performed simultaneously.
3-1022 Date of submission of the draft award. Article 27 fits into the arbitrator’s broader obligation under Article 22(1) to conduct the arbitration proceedings in an expeditious and cost-effective manner. Late submissions from parties will invariably cause delay, so it is useful to mark a point after which submissions cannot be made. Also, deliberation and the drafting of awards can be a source of further delay. Specifying an approximate date for submitting the award to the Court creates strong external expectations that will prove helpful in motivating arbitrators to move the process forward.
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3-1023 The Secretariat will closely monitor whether the arbitral tribunal is fulfilling its prediction and will not hesitate to notify it of any concerns the Court or the Secretariat may have over the timeliness of the submission of the draft award. Significant delays in the submission of draft awards to the Court are thankfully infrequent. However, when they do occur they are extremely disruptive and reflect very poorly on the arbitrator(s) concerned.
3-1024 Closing of the proceedings. Before closing the proceedings, the arbitral tribunal must first be satisfied that the parties have had a reasonable opportunity to present their cases. The relevant wording of Article 22(1) of the 1998 Rules has been deleted.60However, the obligation to ensure that each party has a reasonable opportunity to present its case flows from Article 22(4) and therefore remains, notwithstanding the change of language in Article 27.
3-1025 Article 27 explicitly states that once the arbitral tribunal has closed the proceedings, no further submission or argument may be made, or evidence produced, with respect to the matters to be decided in the award. The closing of the proceedings therefore serves as a cut-off. However, the arbitral tribunal has discretion to request or authorize additional submissions by reopening the proceedings if it sees fit (see paragraph 3-1028).
3-1026 To determine when the case is ripe for decision and the proceedings can be closed, the arbitral tribunal should have regard to several key considerations:
• The closing of the proceedings should not take the parties by surprise. The arbitral tribunal should therefore ideally include an initial closing date in the procedural timetable established pursuant to Article 24(2). Parties will then be aware of the time frame they are granted to make their cases, and may alert the arbitral tribunal well in advance if they consider that a change might be required.
• The arbitral tribunal must also provide the parties with sufficient time and adequate opportunities to present their cases effectively.
3-1027 When the arbitral tribunal is satisfied that it is in a position to close the proceedings, it should do so promptly, because Article 27 requires the tribunal to close the proceedings “as soon as possible” after the triggering event.
3-1028 Reopening of the proceedings. The arbitral tribunal has exclusive discretion to decide whether proceedings should be reopened, and if so, to what extent. During deliberations, arbitrators will in some instances realize that more evidence or argument on a particular issue is necessary. However, an arbitral tribunal must be careful to ensure that all parties are treated fairly. For example, it must inform all parties of any request for more evidence or argument and should allow all other parties to respond to any new evidence or new submissions. In some cases this will not be necessary given the nature of the submission or evidence.
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3-1029 It sometimes happens that the Court makes comments on a draft award during the scrutiny process that prompt an arbitral tribunal to reopen the proceedings. For example, where the Court spots what it considers to be inadequacies in legal reasoning, and where the parties have inadequately pleaded the legal issue to which it relates, the arbitral tribunal may need to reopen the proceedings to seek submissions on that issue. Similarly, it can happen that an arbitral tribunal makes a costs order in favour of a party without seeking submissions on costs. In such instances the Court usually suggests that the arbitral tribunal invite the parties to make submissions on costs before making its decision on costs.
3-1030 Sometimes, parties request authorization to make additional submissions. Arbitral tribunals normally accept such requests only if the desired submission is clearly relevant to resolving the dispute and could not have been made earlier.
3-1031 Unsolicited submissions. There may be times when a party makes an unsolicited submission or files additional evidence after the proceedings have been declared closed, thereby breaching Article 27. An arbitral tribunal will normally disallow and ignore such submissions. If it decides otherwise, the other side is likely to need an opportunity to respond.
ARTICLE 28(1): CONSERVATORY AND INTERIM MEASURES ORDERED BY THE ARBITRAL TRIBUNAL
Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the arbitral tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. The arbitral tribunal may make the granting of any such measure subject to appropriate security being furnished by the requesting party. Any such measure shall take the form of an order, giving reasons, or of an award, as the arbitral tribunal considers appropriate.
3-1032 Purpose. Interim or conservatory relief can be an important, if not essential, tool for protecting legitimate interests during an arbitration. Owing to the time gap between the commencement of the arbitration, the substantive hearing and the final award, events may occur that cause irreparable and uncompensable harm to a party, evidence may disappear, or a party may attempt to place assets beyond reach. In the past, national laws and the rules of arbitral institutions did not empower arbitral tribunals to order interim or conservatory relief. A different approach now prevails. Accordingly, Article 28(1) expressly authorizes an arbitral tribunal to order interim or conservatory measures unless the parties agree otherwise. In practice, arbitral tribunals will grant such relief only where it is truly necessary.
3-1033 2012 modifications. None.
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3-1034 Timing. It goes without saying that the arbitral tribunal is not in a position to act before the Secretariat transmits the case file to it pursuant to Article 16. This is usually done as soon as the arbitral tribunal has been constituted (see paragraph 3-658). Prior to that, parties may seek urgent interim measures from an emergency arbitrator pursuant to Article 29. They are also free to apply to any other competent judicial authority for interim relief, as provided in Article 28(2).
3-1035 The arbitral tribunal has authority to grant interim or conservatory relief as soon as the case file has been transmitted to it. It does not need to wait until the Terms of Reference have been established.
3-1036 Types of measures. The Rules do not define “interim measure” or “conservatory measure”. In practice, arbitral tribunals grant a broad range of measures. The Rules permit the arbitral tribunal to determine whether the relief sought constitutes interim or conservatory relief and whether, as a consequence, it is in a position to grant relief pursuant to Article 28. Common types of interim and conservatory relief include:
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3-1037 Requirements. The Rules do not establish any requirements for granting interim or conservatory measures. Nor do they contain any guidelines on how such requirements should be determined. Caution should be exercised in granting interim or conservatory measures, as their effects could be determinative in a dispute or difficult to reverse. The criteria according to which such measures are granted are thus important. Generally, granting interim or conservatory measures is considered to be a matter of procedure and therefore falls under the law governing the arbitration, usually the arbitration law at the place of the arbitration. In practice, arbitral tribunals will often refer to one or both of the following basic requirements:
3-1038 These are not the only requirements and they may not necessarily be relevant under Article 28(1). It is rather for the arbitral tribunal to determine the test it deems appropriate in the circumstances. It should also have regard to any provisions concerning interim relief in the arbitration law at the place of the arbitration. Article 17A of the 2006 version of the UNCITRAL Model Law on International Commercial Arbitration, used as the basis for many national laws, contains a list of conditions for granting interim measures.
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3-1039 Jurisdiction. An important requirement is that the arbitral tribunal must have at least prima facie jurisdiction over the merits of the claim to which the interim measure relates and over the party against which the measure will be made. An arbitral tribunal has no power over third parties (i.e. entities or individuals who are not parties to the arbitration). Interim relief against a third party can be granted, if at all, only by a state court. If an arbitral tribunal’s jurisdiction has been challenged, this does not prevent it from granting interim or conservatory relief, provided it is satisfied that there is a reasonable basis on which to assume jurisdiction.
3-1040 Ex parte interim relief. On very rare occasions, parties have requested ex parte interim relief from an arbitral tribunal. There is no place for purely ex parte interim relief in ICC arbitration. However, arbitral tribunals have occasionally issued an order preserving the status quo for a short period of time pending a response from the respondent party. The latter approach is consistent with Section 2 of Article 17 of the 2006 version of the UNCITRAL Model Law on International Commercial Arbitration.
3-1041 Form. As explicitly stated in Article 28(1), the arbitral tribunal is free to determine the form the measure takes. Arbitral tribunals commonly use orders rather than awards for this purpose. One advantage of deciding the measure in the form of an order is that it may be faster, as it will not need to go through the scrutiny process to which all awards are subject under Article 33. However, scrutiny has the advantage of providing parties and the arbitral tribunal with a reliable quality control mechanism (at no extra cost to the parties). This can be a strong argument in favour of opting for an award rather than an order. Besides, the Court can, if requested, scrutinize awards quickly, sometimes within as little as forty-eight hours. The choice of form will not be determinative of its enforceability, as interim measures in the form of awards are not usually enforceable under the New York Convention. Furthermore, the arbitral tribunal’s characterization of a decision as an award or an order is not binding on state courts, which will rather look at the substance of the decision and the domestic law to which they are subject (see paragraph 3-1045).
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3-1042 Security. Article 28(1) permits the arbitral tribunal to subject any interim or conservatory measure to the payment of security by the party requesting the measure. The order for security may, for example, require the party requesting relief to make a payment into an escrow account or to post a bond.
3-1043 Modification, suspension or termination of measures. Although not expressly indicated in the provision, the arbitral tribunal is in most cases able to modify, suspend or terminate a measure that it has previously granted.
3-1044 Enforcement of interim measures. Parties have a contractual obligation under Articles 22(5) and 34(6) to comply with an arbitral tribunal’s orders and awards. Experience shows that interim measures ordered by arbitral tribunals are complied with voluntarily in an overwhelming majority of cases. In situations where they are not, arbitral tribunals usually do not have the coercive powers of state courts to ensure compliance with their orders and awards. They nonetheless have strong persuasive powers: parties will be more disposed to comply with an order than risk irritating or alienating an arbitral tribunal through non-compliance. Whether arbitral tribunals may impose penalties for non-compliance will usually depend on the relevant applicable law.
3-1045 In addition, a measure for interim or conservatory relief issued by an arbitral tribunal may be enforceable through judicial authorities where the jurisdiction permits. Interim measures granted by arbitral tribunals are enforceable in particular in those jurisdictions that have adopted the 2006 amendments to the UNCITRAL Model Law on International Commercial Arbitration.
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ARTICLE 28(2): CONSERVATORY AND INTERIM MEASURES ORDERED BY JUDICIAL AUTHORITIES
Before the file is transmitted to the arbitral tribunal, and in appropriate circumstances even thereafter, the parties may apply to any competent judicial authority for interim or conservatory measures. The application of a party to a judicial authority for such measures or for the implementation of any such measures ordered by an arbitral tribunal shall not be deemed to be an infringement or a waiver of the arbitration agreement and shall not affect the relevant powers reserved to the arbitral tribunal. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat. The Secretariat shall inform the arbitral tribunal thereof.
3-1046 Purpose. Article 28(2) expressly permits parties to seek interim or conservatory relief from a “competent judicial authority”, i.e. outside the framework of ICC arbitration. The provision clearly specifies that applying for such measures will not constitute a breach of the parties’ arbitration agreement. It will often be faster and more effective for parties to seek emergency interim relief from a court. The court may even be able to enforce the measure rapidly itself. Courts are also usually empowered to grant ex parte interim relief to maintain the status quo pending inter partes proceedings. As noted above, ex parte interim relief from arbitral tribunals is very rarely granted and may be contrary to the Rules.
3-1047 2012 modifications. None.
3-1048 Jurisdiction of the competent authority; relation to the arbitration agreement. The Rules cannot confer jurisdiction on any judicial authority seized of a request for interim or conservatory measures by a party to an arbitration. The judicial authority will naturally determine its own jurisdiction and will be guided and bound not by Article 28(2) but rather by the law to which it is subject. Article 28(2) clarifies that by resorting to state courts or other judicial authorities for conservatory or interim measures a party does not infringe or waive the arbitration agreement. After the case file has been transmitted to the arbitral tribunal pursuant to Article 16, the Rules require there to be circumstances making it “appropriate” for parties to resort to state courts for such relief. Therefore, once the arbitral proceedings are under the control of a fully constituted arbitral tribunal (see paragraph 3-655), a party must carefully consider whether resorting to a judicial authority is consistent with the arbitration agreement.
3-1049 The Rules do not state what circumstances are “appropriate”, leaving this for the arbitral tribunal to determine in the event that the appropriateness of an application for interim or conservatory measures is contested in the arbitration by the other side. The circumstances are generally considered appropriate if the arbitral tribunal is not in a position to provide suitable
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interim relief to the requesting party. Such may be the case, for instance, where third parties are involved, where the measures will be effective only if granted ex parte, or where court enforcement is required and is more easily obtained directly from the relevant court. An arbitral tribunal may even lack the authority to grant the requested relief under the rules of law governing the merits.
3-1050 Type of judicial assistance. Pursuant to Article 28(2), parties may apply to a competent judicial authority not only to obtain conservatory or interim measures, but also to request the implementation of such measures ordered by the arbitral tribunal.
ARTICLE 29: INTRODUCTION TO EMERGENCY ARBITRATOR PROCEEDINGS
3-1051 Overview. Like Article 28, Article 29 provides parties with an alternative to state courts for seeking interim or conservatory relief. It fills a potential gap resulting from the fact that an arbitral tribunal cannot grant interim or conservatory relief in accordance with Article 28 until it has received the case file pursuant to Article 16. Article 29 enables parties to seek extrajudicial interim or conservatory measures before the arbitral tribunal is in a position to act under Article 28 and even before the Request for Arbitration is filed. However, the applicant must demonstrate that the requested relief is so urgent that it cannot wait for the arbitral tribunal to be constituted.
3-1052 Parties may consider using the emergency arbitrator proceedings for a number of different reasons and as an alternative to seeking relief from a competent state court. State courts may not have the necessary authority to grant interim or conservatory relief. In other instances, they can be perceived as slow, inexperienced or even biased or corrupt, leading a party to conclude that its interests may best be protected by an independent and experienced international arbitrator. Furthermore, parties may regard the emergency arbitrator proceedings as a helpful alternative where the interim relief sought concerns multiple jurisdictions and would otherwise require applications to be made in several courts in different countries.
3-1053 2012 modifications. New set of provisions.
3-1054 Terminology. The emergency arbitrator proceedings are governed by Articles 29(1)–29(4) and the Emergency Arbitrator Rules contained in Appendix V. These provisions are collectively referred to in the Rules as the “Emergency Arbitrator Provisions” (Article 29(5)). The Emergency Arbitrator Provisions refer to the party seeking urgent interim or conservatory relief as the “applicant” and the defending party as the “responding party”. “responding party”.
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3-1055 Opt-out. Parties are free to opt out of these Emergency Arbitrator Provisions (see Chapter 5). If there is no opt-out, the provisions automatically apply where the parties have agreed to ICC arbitration after the date on which the 2012 Rules came into force, i.e. 1 January 2012, or have amended a pre-existing agreement so as to include them.61
3-1056 Core features of the Emergency Arbitrator Provisions. The Emergency Arbitrator Provisions create a procedure that is distinct from the arbitration procedure set out in the Rules. Below is an overview of the principal features of this procedure.
a) The Application and the Request for Arbitration. The emergency arbitrator proceedings are commenced by submitting an Application for Emergency Measures (“Application”) pursuant to Article 1 of Appendix V. There are three possible scenarios: (i) the Request for Arbitration has been already submitted, in which case a copy of the Request must be submitted with the Application (Article 1(3), subparagraph (i), of Appendix V); (ii) the Request for Arbitration and the Application are submitted simultaneously; or (iii) the Application is submitted before the Request for Arbitration, in which case the Request must be submitted within ten days (Article 1(6) of Appendix V). In the latter case, the President of the Court will terminate the emergency arbitrator proceedings if the Secretariat has not received the Request within ten days of the Secretariat’s receipt of the Application or a longer period determined by the emergency arbitrator (Article 1(6) of Appendix V).
b) Costs relating to emergency arbitrator proceedings. For the sake of expediency and efficiency, the Emergency Arbitrator Rules do not replicate the costs system used for arbitration. The cost is rather a lump sum of US$ 40,000, of which US$ 10,000 cover the ICC administrative expenses and US$ 30,000 the emergency arbitrator’s fees and expenses (Article 7(1) of Appendix V). The applicant must pay the total amount up front and provide evidence of payment in its Application (see paragraph 3-1076). The costs incurred by parties during emergency arbitrator proceedings can be recovered by bringing a claim for recovery either before the emergency arbitrator or before the arbitral tribunal in the related arbitration proceedings. If both the emergency arbitrator proceedings and its related arbitration proceedings are withdrawn before costs are awarded, the parties can agree on the allocation of costs. Alternatively, a claim for recovery could be brought in another arbitration. If the emergency arbitrator proceedings are terminated before an order has been made, the President of the Court determines the amount to be reimbursed to the applicant, if any. An amount of US$ 5,000 for the ICC administrative expenses is non-refundable.
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c) Time limits. Given the urgency of emergency arbitrator proceedings, Appendix V contains short time limits. Although not explicitly mentioned in Appendix V, Articles 3(2)–3(4) apply to the Emergency Arbitrator Provisions and to the time limits they contain.
d) Decision-making bodies. Again due to their urgency, most decisions relating to the administration of the proceedings are made by the President of the Court alone. When making such decisions, the President will consult the Secretariat and report the decision to the Court. These steps serve as important checks and balances on the exercise of the President’s authority. Decisions on challenges against emergency arbitrators are an exception and are decided by the Court. The President’s powers can be exercised by a Vice-President in the circumstances specified in Article 8(2) of Appendix V. The emergency arbitrator makes all decisions relating to the conduct of the proceedings and the substance of the Application.
e) The emergency arbitrator. When appointing an emergency arbitrator, the President of the Court will select a person with the necessary experience who is able to meet the challenging demands that the Emergency Arbitrator Provisions will place on him or her. The President will also have regard to any attributes or qualifications the parties have agreed the emergency arbitrator should have. In practice, the President will be advised by the Secretariat as to suitable candidates from the pool of individuals who are serving or have served as arbitrators in ICC proceedings. As with regular arbitrators, the emergency arbitrator must always be and remain impartial and independent of the parties involved in the dispute. He or she will be required to sign a statement of acceptance, availability, impartiality and independence (Articles 2(4) and 2(5) of Appendix V). In addition, the emergency arbitrator will not be permitted to serve as an arbitrator in the related arbitration proceedings (Article 6 of Appendix V) unless all parties agree.
f) Challenges against the emergency arbitrator. A challenge against an emergency arbitrator must be made within three days of notification of the emergency arbitrator’s appointment or of the date on which the challenging party is informed of the facts or circumstances on which its challenge is based (Article 3(1) of Appendix V). In such instances, the Secretariat will determine an appropriate time limit (usually three days) in which to gather comments from the other parties and the emergency arbitrator, after which it will invite the Court (not the President) to decide on the challenge (Article 3(1) of Appendix V). Given the urgency of the proceedings, the Court will decide on the challenge at its next possible session. A challenge does not automatically suspend the emergency arbitrator proceedings.
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g) The place of the emergency arbitrator proceedings. The place of the arbitration, if determined, will serve as the place of the emergency arbitrator proceedings. If the place of the related arbitration has not yet been determined, the President of the Court will fix the place of the emergency arbitrator proceedings (Article 4(1) of Appendix V). The President can be expected to do so when determining, pursuant to Article 1(5) of Appendix V, whether the Application may be notified, or soon thereafter. The President will consider many of the factors that the Court would consider when fixing the place of arbitration pursuant to Article 18 (see paragraph 3-686). Article 4(2) of Appendix V clarifies that meetings do not need to be held at the place of the emergency arbitrator proceedings (see related comments on Article 18(2)).
h) The Order. The emergency arbitrator will issue his or her decision on the measures sought in the form of an order (Article 29(2)). The emergency arbitrator may render more than one order in the same proceedings.
3-1057 Covering lacunas. Appendix V does not address all matters that may arise in connection with emergency arbitrator proceedings. Accordingly, certain provisions of the Rules will or may apply to the emergency arbitrator proceedings (e.g. Article 3). Article 8 of Appendix V contains a rule similar to that of Article 41 specifying that in situations not covered by Appendix V, decisions must be made in the spirit of the Appendix and the Rules.
3-1058 Road map. Emergency arbitrator proceedings step by step:
a) Application. The party seeking emergency relief must submit its Application to the Secretariat before the Secretariat transmits the case file to the arbitral tribunal in the related arbitration proceedings pursuant to Article 16 (Article 29(1), Article 1 of Appendix V) (see paragraphs 3-1062 and following for more information on submitting an Application).
b) Review by the President and notification. The President of the Court then promptly reviews the Application and, in accordance with Article 1(5) of Appendix V, considers whether or not the conditions mentioned in Articles 29(5) and 29(6) exist and, accordingly, whether or not the Emergency Arbitrator Provisions apply (see paragraphs 3-1093 and following).
If the President considers the Emergency Arbitrator Provisions to be applicable, the Secretariat then notifies the Application to the responding party or parties (Article 1(5) of Appendix V) (for more information on the consequences of a negative decision by the President, see paragraph 3-1103).c) Appointment. As soon as possible, usually within two days of notification, the President of the Court appoints an emergency arbitrator (Article 2(1) of Appendix V) and the Secretariat transmits the case file to the appointee (Article 2(3) of Appendix V).
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(d)Proceedings before the emergency arbitrator. The emergency arbitrator’s first task is to prepare a procedural timetable, usually within two days of the Secretariat’s transmitting the file to him or her (Article 5(1) of Appendix V). The emergency arbitrator is free to determine how best to conduct the emergency arbitrator proceedings, taking into account their urgency (Article 5(2) of Appendix V). This provision is broader than Articles 19 and 22(2), which require an arbitral tribunal in all circumstances to consult with the parties and generally respect any agreement they may reach. Notwithstanding the greater liberty, the emergency arbitrator is required to act fairly and impartially and to ensure due process (Article 5(2) of Appendix V), as is the arbitral tribunal under Article 22(4) (see paragraphs 3-814–3-819). If a responding party chooses not to participate in the emergency arbitrator proceedings, the emergency arbitrator proceedings will nevertheless continue. However, the emergency arbitrator must ensure that the responding party is afforded a reasonable opportunity to participate. What is reasonable will depend on the circumstances and the alleged urgency of the relief sought. In particular, the emergency arbitrator should send all communications to any non-participating party in compliance with Article 3.
By the time an emergency arbitrator is appointed, the Secretariat will have notified the Application to the responding side, so any order from the emergency arbitrator will not take the responding side by surprise. While not expressly mentioned in the Rules, it is conceivable that the emergency arbitrator might issue an initial order (e.g. a freezing order or an order otherwise maintaining the status quo) before the responding party has filed its response. Depending on the circumstances, granting the responding party an opportunity to comment after the initial order has been rendered might still be considered as reasonable within the meaning of Article 5(2) of Appendix V.
e) Order. The emergency arbitrator then issues an order containing his other decision on the urgent relief requested. The order is issued no later than fifteen days from the date on which the file was transmitted to the emergency arbitrator or any extension of this time limit granted by the President (Article 29(2), Article 6(4) of Appendix V)). Article 6 of Appendix V sets out all details concerning the form and content of the order (see paragraph 3-1083).
Finally, the emergency arbitrator notifies the order directly to the parties, not through the Secretariat.
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ARTICLE 29(1): APPLYING FOR EMERGENCY MEASURES
A party that needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal (“Emergency Measures”) may make an application for such measures pursuant to the Emergency Arbitrator Rules in Appendix V. Any such application shall be accepted only if it is received by the Secretariat prior to the transmission of the file to the arbitral tribunal pursuant to Article 16 and irrespective of whether the party making the application has already submitted its Request for Arbitration.
3-1059 Purpose. Article 29(1) establishes the procedural requirements for initiating emergency arbitrator proceedings. Article 29(1) defines Emergency Measures as urgent interim or conservatory measures that cannot await the constitution of the arbitral tribunal (for a discussion of the meaning of interim or conservatory measures, see paragraph 3-1036). It can be expected that parties will use the emergency arbitrator proceedings to seek various types of relief. In practice, they will consider whether their interests are best served by seeking urgent interim relief from an emergency arbitrator, from competent state courts (Article 28(2)) or from the arbitral tribunal after waiting for it to be constituted and for the case file to be transmitted to it (Article 28(1)).
3-1060 2012 modifications. New provision.
3-1061 Urgency. Urgency is a condition for making an Application. It is for the emergency arbitrator to determine whether this requirement is met, as provided in Article 6(2) of Appendix V. Under Article 1(5) of Appendix V neither the Secretariat nor the President of the Court is required to verify whether the Application meets this condition. Accordingly, the President’s decision to accept an Application does not imply that the President considered that the necessary urgency exists.
3-1062 When to submit an Application. An Application can be submitted at any time before the case file is transmitted to the arbitral tribunal pursuant to Article 16. When submitting the Application, the applicant must include a copy of the Request for Arbitration (if it has been submitted by then) and any other submissions made by the parties in the arbitration (Article 1(3), subparagraph (i), of Appendix V).
3-1063 The applicant may even make an Application before a Request for Arbitration has been submitted. In this case, it must submit a Request for Arbitration within ten days of the Secretariat’s receipt of the Application or any extension of that time limit decided by the emergency arbitrator (Article 1(6) of Appendix V). If no Request for Arbitration is received within that time limit, the President will terminate the emergency arbitrator proceedings.
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3-1064 Who can submit an Application. Any party who has agreed to arbitration under the Rules on or after 1 January 2012 may seek Emergency Measures against any party with which it has made such an arbitration agreement. Parties may also agree that the Emergency Arbitrator Rules apply to arbitration agreements that pre-date the Rules, although this would need to be clearly recorded in writing.
3-1065 How to submit an Application. As with a Request for Arbitration, the applicant must submit its Application to the Secretariat. While the applicant is free to submit the Application using any reasonable means of communication, it is nonetheless required to provide a hard copy for every other party identified in the Application, the emergency arbitrator and the Secretariat (Article 1(2) of Appendix V). In light of the urgency of the proceedings, applicants are encouraged to send the Application to the Secretariat by email and to telephone the Secretariat to inform it of the Application. The Secretariat has set up a dedicated email address for use by parties when submitting their Applications (for more information, see www.iccarbitration.org).
3-1066 Form. The Rules do not lay down any requirements relating to the form of an Application. While the Application must contain the information listed in Article 1(3) of Appendix V, the applicant is free to determine how to present this information. It should of course endeavour to submit a clear and well-organized document.
3-1067 Content. Article 1(3) of Appendix V contains a list of what the Application must contain. Many of these requirements mirror those of Article 4(3) relating to the Request for Arbitration. Specifically, the Application must include:
3-1068 (a) The name in full, description, address and other contact details of each of the parties. The obligation to provide “other contact details” includes, for instance, email addresses. Applicants are encouraged, where possible, to provide the name of a contact person for the responding party (except, of course, where the responding party is an individual), as well as that person’s telephone number and email address. Courier services will normally request or even require this information in case their initial attempts to deliver fail.
3-1069 Although the Rules also require a description of each party, considerable flexibility is left to the applicant to determine what such a description may include. The applicant should consider providing a description of the parties’ operations or business, as well as information about the ownership and control of each party. Information of this sort may be relevant to ensuring, among other matters, that the emergency arbitrator is independent and impartial. Where the Application has been made before a corresponding Request for Arbitration has been submitted, the applicant should also identify those potential parties to the arbitration that are not parties to the emergency arbitrator proceedings.
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3-1070 (b) The name in full, description, address and other contact details of any person(s) representing the applicant. The Secretariat will communicate exclusively with the applicant’s designated counsel, unless the applicant expressly requests otherwise.
3-1071 (c) A description of the circumstances giving rise to the Application and of the underlying dispute referred or to be referred to arbitration and (d) a statement of the Emergency Measures sought. The parties enjoy freedom to determine what to disclose about the dispute and in what detail. Given the short duration of emergency arbitrator proceedings, the applicant will have little time to expand on the information later, so, particularly where a Request for Arbitration has not yet been submitted, it will facilitate the emergency arbitrator’s task if the applicant provides at the outset a fairly detailed description of the context in which the Application is made.
3-1072 (e) The reasons why the applicant needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal. This will determine the basis of the Application, which the emergency arbitrator will assess pursuant to Article 6(2) of Appendix V (see paragraph 3-1083). The Applicant should therefore set out its reasons in detail.
3-1073 (f) Any relevant agreements and, in particular, the arbitration agreement(s). As a minimum, the applicant should include a copy of the agreement(s) or contract(s) that contain(s) the arbitration agreement. It is not sufficient for an applicant merely to list or mention the agreement(s) in the Application.
3-1074 Where the arbitration agreement is contained in a separate document or documents (e.g. a subsequent agreement to arbitrate, exchange of emails), such other documents must be submitted as well. Simply quoting the arbitration agreement(s) in the Application may not be considered sufficient.
3-1075 (g) Any agreement as to the place of the arbitration, the applicable rules of law or the language of the arbitration. If an agreement has already been reached on the place of the arbitration, the applicable law or the language of the arbitration (which must be distinguished from the language or the place of the emergency arbitrator proceedings), the applicant must specify what has been agreed upon and indicate the source of the agreement, especially where it is not contained in the arbitration agreement.
3-1076 (h) Proof of payment of the amount referred to in Article 7(1) of Appendix V. The applicant must pay US$ 40,000 prior to or when filing the Application. The Secretariat will not notify the Application to the responding party until it has received proof of payment.
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3-1077 (i) Any Request for Arbitration and any other submissions in connection with the underlying dispute, which have been filed with the Secretariat by any of the parties to the emergency arbitrator proceedings prior to the making of the Application. If the Application is submitted after the commencement of an arbitration, the Request for Arbitration and all other relevant documents should be submitted with the Application. As an Application must be made before the file is transmitted to the arbitral tribunal, the number of submissions already made in the arbitration will normally be limited.
3-1078 Additional documents. Parties may submit any additional documents or information that they consider appropriate or useful. In particular, they should consider providing documents that may assist the President in determining, pursuant to Article 1(5) of Appendix V, whether or not the conditions referred to in Articles 29(5) and 29(6) exist and the Emergency Arbitrator Provisions shall or shall not therefore apply. The President will consider only the arguments and documentary evidence provided with the Application. Accordingly, the applicant must make sure that it provides persuasive documentary evidence demonstrating the existence of any of the conditions referred to in Articles 29(5) and 29(6).
3-1079 Language. Article 1(4) of Appendix V specifies the language in which the applicant should draft the Application. If the language of the arbitration has been agreed upon, the applicant should use that language. If there is no agreement on the language of the arbitration, the applicant should write the Application in the language of the arbitration agreement(s).
ARTICLE 29(2): FORM OF EMERGENCY RELIEF
The emergency arbitrator’s decision shall take the form of an order. The parties undertake to comply with any order made by the emergency arbitrator.
3-1080 Purpose. Article 29(2) specifies the form of an emergency arbitrator’s decision, stating that it shall be issued as an order. Accordingly, the decision will not be scrutinized by the Court pursuant to Article 33, which only concerns awards.
3-1081 The second sentence states that parties undertake to comply with the order. It implies voluntary compliance with the order and should be read in conjunction with Article 29(4), which empowers the arbitral tribunal to deal with the consequences of non-compliance.
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3-1082 2012 modifications. New provision.
3-1083 Features of the order and related requirements. Article 6 of Appendix V gives details concerning the form, content and timing of the emergency arbitrator’s order:
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3-1084 The emergency arbitrator is free to subject the order to any conditions he or she thinks fit (e.g. the provision of security (Article 6(7) of Appendix V).
3-1085 Compliance with and enforcement of orders. Article 29(2), like Article 22, obliges the parties to comply with any orders made by the emergency arbitrator. While in most instances the emergency arbitrator will issue only a single, final order, the provision also applies to any other order, including orders relating to procedure.
3-1086 Like arbitral tribunals, the emergency arbitrator lacks the coercive powers of state courts to enforce the order. As the emergency arbitrator’s role is limited to granting emergency interim measures, parties may possibly feel less compelled to comply voluntarily with the order of an emergency arbitrator than with a decision of an arbitral tribunal. However, parties may have at least one method at their disposal to ensure compliance since certain jurisdictions allow for the enforcement of orders for interim or conservatory relief as they do awards. The arbitration laws of these jurisdictions may even expressly facilitate the enforcement of an order by state courts.62Where such enforcement is not possible, for whatever reason, the breach of an emergency arbitrator’s order (whether relating to procedure or granting urgent interim relief) could in some cases be a ground for claiming contractual damages, depending on the applicable law and the circumstances (see paragraphs 3-824 and 3-825). The arbitral tribunal in the related arbitration may decide such claims pursuant to Article 29(4) once it has received the case file in accordance with Article 16 (see paragraph 3-1091). However, experience shows that most participating
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parties comply voluntarily with interim measures ordered by arbitral tribunals. Therefore, it is reasonable to expect that parties will comply with the orders of emergency arbitrators without the need for enforcement proceedings in a state court.
3-1087 Binding effect of the order. It may be inferred from Article 29(2) that parties are bound by orders once they are issued. Article 6(6) of Appendix V lists four circumstances in which the order ceases to be binding: when the emergency arbitrator proceedings are terminated by the President (Article 6(6), subparagraph (a)); when the emergency arbitrator is successfully challenged and removed (Article 6(6), subparagraph (b)); and when the related arbitration comes to an end as a result of its completion or premature termination (Article 6(6), subparagraphs (c) and (d)). As the list in Article 6(6) of Appendix V is non-exhaustive, there may be other circumstances in which the order will cease to be binding. Furthermore, either the emergency arbitrator or the arbitral tribunal may decide to modify, terminate or annul the order for various reasons (see paragraphs 3-1090 and 3-1091).
ARTICLES 29(3) AND 29(4): EFFECT OF THE EMERGENCY ARBITRATOR PROCEEDINGS ON THE ARBITRAL TRIBUNAL’S POWERS
Article 29(3)
The emergency arbitrator’s order shall not bind the arbitral tribunal with respect to any question, issue or dispute determined in the order. The arbitral tribunal may modify, terminate or annul the order or any modification thereto made by the emergency arbitrator.
Article 29(4)
The arbitral tribunal shall decide upon any party’s requests or claims related to the emergency arbitrator proceedings, including the reallocation of the costs of such proceedings and any claims arising out of or in connection with the compliance or noncompliance with the order.
3-1088 Purpose. Articles 29(3) and 29(4) recognize the arbitral tribunal’s role as the ultimate decision-making body. Article 29(3) deals with the arbitral tribunal’s powers in relation to the emergency arbitrator’s findings and the order itself. Article 29(4) concerns the arbitral tribunal’s jurisdiction to hear claims in relation to the emergency arbitrator proceedings.
3-1089 2012 modifications. New provisions.
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3-1090 Relationship between the emergency arbitrator and the arbitral tribunal. The emergency arbitrator’s findings do not bind the arbitral tribunal, which is free to make decisions that contradict or are incompatible with some or all of the findings in the emergency arbitrator’s order. The arbitral tribunal is also empowered to modify, terminate or annul the emergency arbitrator’s order and to decide on any consequent request or claim for relief. However, where a party submits a request to the emergency arbitrator before the case file is transmitted to the arbitral tribunal pursuant to Article 16, the emergency arbitrator can modify, annul or terminate his or her own order (Article 6(8) of Appendix V).
3-1091 The emergency arbitrator cannot act as arbitrator in the related arbitration. In order to avoid any perception of a lack of impartiality and in recognition of the accelerated nature of his or her appointment process, the emergency arbitrator cannot serve as an arbitrator in the related arbitration or any other arbitration related to the dispute with which it deals (Article 2(6) of Appendix V). This is essential to ensuring that the arbitral tribunal is in a position to provide a fresh review at a second level. However, this provision does not prevent all parties from deciding otherwise by mutual agreement. Such an agreement would be easy to implement in the case of a sole arbitrator, but it is difficult to see how the emergency arbitrator could serve in any position other than president in the case of a three-member tribunal.
3-1092 Requests and claims for relief. Article 29(4) enables the arbitral tribunal to decide on requests and claims arising from the emergency arbitrator proceedings. For instance, and as explicitly mentioned in Article 29(4), the arbitral tribunal may revise the emergency arbitrator’s decision on costs and reallocate the costs between the parties. Another example of subsidiary relief covered by Article 29(4) is a claim for damages arising from a party’s compliance with an order that later is annulled, terminated or modified by the arbitral tribunal. Similarly, the side that was granted the order may request damages for the other side’s failure to comply with the order. However, the examples expressly mentioned in the Rules are not exhaustive and parties may request any other type of relief related to the emergency arbitrator proceedings.
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ARTICLES 29(5) AND 29(6): SCOPE OF THE EMERGENCY ARBITRATOR PROVISIONS
Article 29(5)
Articles 29(1)–29(4) and the Emergency Arbitrator Rules set forth in Appendix V (collectively the “Emergency Arbitrator Provisions”) shall apply only to parties that are either signatories of the arbitration agreement under the Rules that is relied upon for the application or successors to such signatories.
Article 29(6)
The Emergency Arbitrator Provisions shall not apply if:
3-1093 Purpose. Articles 29(5) and 29(6) define the scope of the Emergency Arbitrator Provisions. They indicate the factors to be taken into consideration by the President pursuant to Article 1(5) of Appendix V when determining, on the basis of the information contained in the Application, whether the Emergency Arbitrator Provisions apply. The Application can be notified to the responding party only if the President finds that the Emergency Arbitrator Provisions apply. In that regard, the President’s role is similar to the Court’s role under Article 6(4), although the assessment the President makes is obviously different.
3-1094 2012 modifications. New provisions.
3-1095 President’s power under Article 1(5) of Appendix V. The President ensures compliance with Articles 29(5) and 29(6) when applying Article 1(5) of Appendix V, which states:
If and to the extent that the President of the Court (“President”) considers, on the basis of the information contained in the Application, that the Emergency Arbitrator Provisions apply with reference to Articles 29(5) and Article 29(6) of the Rules, the Secretariat shall transmit a copy of the Application and the documents annexed thereto to the responding party. If and to the extent that the President considers otherwise, the Secretariat shall inform the parties that the emergency arbitrator proceedings shall not take place with respect to some or all of the parties and shall transmit a copy of the Application to them for information.
CHAPTER 3: COMMENTARY ON THE 2012 RULES 307
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3-1096 The President therefore determines whether emergency arbitrator proceedings can be set in motion on the basis of a given Application. The President will make that decision rapidly, usually within twenty-four hours of receiving the Application.
3-1097 On the basis of the information provided in the Application, the President will determine (i) whether all parties identified in the Application are signatories, or successors to signatories, of the relevant arbitration agreement (see paragraphs 3-1098 and 3-1099); (ii) whether the arbitration agreement was entered into after the 2012 Rules came into force (see paragraph 3-1100); and (iii) whether the parties have opted out of the Emergency Arbitrator Provisions (see paragraphs 3-1101 and 3-1102).
3-1098 Signatory or successor to a signatory. The Emergency Arbitrator Provisions apply only to signatories of the relevant arbitration agreement and successors to such signatories. The purpose of this limitation is to reduce the potential for abuse of the procedure and to provide a prima facie jurisdictional test that is straightforward for the President to administer pursuant to Article 1(5) of Appendix V (see paragraph 3-1095). Given the urgent nature of emergency arbitrator proceedings, it would not be possible to apply a procedure as broad as Articles 6(3) and 6(4). The signatories of the arbitration agreement will usually be the parties who are named as such in the arbitration agreement or accompanying contract and have signed it. Successors to signatories may have acquired their status through assignments, novation, mergers or other valid transfers of rights, which the applicant will need to prove by providing the necessary documentary evidence.
3-1099 By requiring the parties to emergency arbitrator proceedings to be signatories of the arbitration agreement in the related arbitration, the Rules in effect make the Emergency Arbitrator Provisions inapplicable to arbitrations based on treaties. The particular manner in which the arbitration agreement is formed in those cases (i.e. through a state’s open offer to arbitrate that is accepted when an investor submits a Request for Arbitration) would lead the President to find that the parties are not “signatories” of the arbitration agreement.
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3-1100 Temporal restriction. Article 29(6), subparagraph (a), confines the Emergency Arbitrator Provisions to cases where the arbitration agreement was concluded after the 2012 Rules came into force, i.e. on 1 January 2012 or thereafter. This restriction differs from the general rule expressed in Article 6(1), which specifies that the parties are deemed to have submitted to the Rules in effect on the date of commencement of the arbitration, unless they have agreed to submit to the Rules in effect on the date of their arbitration agreement. However, and as noted above, parties may overcome the restriction by specifically agreeing that the emergency arbitrator provisions shall apply, notwithstanding conclusion of the arbitration agreement prior to 1 January 2012.
3-1101 Express opt-out. The parties can opt out of the Emergency Arbitrator Provisions (Article 29(6), subparagraph (b)). Suggested opt-out language is provided in the standard ICC arbitration clause, which recommends the following wording: “The Emergency Arbitrator Provisions shall not apply.” Any other clear language would suffice, whether specified in the arbitration agreement itself (see Chapter 5) or elsewhere.
3-1102 Implied opt-out. Agreeing to another pre-arbitral procedure that provides for the granting of conservatory, interim or similar measures amounts to an implied opt-out and therefore also excludes the application of the Emergency Arbitrator Provisions (Article 29(6), subparagraph (c)). For example, this will occur where the parties have agreed to the ICC pre-arbitral referee procedure or to use a dispute board that may issue interim measures.
3-1103 Effects of a negative decision pursuant to Article 1(5) of Appendix V. Where the President considers, pursuant to Article 1(5) of Appendix V, that the Emergency Arbitrator Provisions do not apply with regard to certain or all responding parties, he or she will direct the Secretariat to inform all parties that the emergency proceedings shall not take place with respect to those parties. In so doing, the Secretariat will also transmit a copy of the Application for information to all parties named in it. Where the President determines that the proceedings shall not take place with respect to all responding parties, the Secretariat will keep the applicant’s filing fee of US$ 5,000, which, as indicated in Article 7(5) of Appendix V, is nonrefundable. The applicant will of course have to bear its own costs, while the responding party will not have incurred any costs, having not yet been notified of the Application. In such instances, the applicant is free to apply for urgent interim measures from a state court.
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ARTICLE 29(7): EFFECT OF EMERGENCY ARBITRATOR PROCEEDINGS ON OTHER METHODS OF SEEKING URGENT INTERIM OR CONSERVATORY MEASURES
The Emergency Arbitrator Provisions are not intended to prevent any party from seeking urgent interim or conservatory measures from a competent judicial authority at any time prior to making an application for such measures, and in appropriate circumstances even thereafter, pursuant to the Rules. Any application for such measures from a competent judicial authority shall not be deemed to be an infringement or a waiver of the arbitration agreement. Any such application and any measures taken by the judicial authority must be notified without delay to the Secretariat.
3-1104 2012 modifications. New provision.
3-1105 The Emergency Arbitrator Provisions are not intended to be the only means of seeking urgent relief. In keeping with Article 28(2), Article 29(7) provides for an alternative source of urgent interim or conservatory relief by expressly permitting parties to seek such relief from a “competent judicial authority”, i.e. outside the framework of ICC arbitration.
3-1106 Article 29(7) slightly qualifies the right to seek relief from the courts by distinguishing between situations in which a party initiates court proceedings before submitting an Application to the Secretariat and those situations in which the court proceedings are initiated later. Where the applicant has already submitted an Application, the Rules require circumstances that make it “appropriate” for the party to resort to a state court. In such circumstances, the applicant’s filing of an inappropriate request to a judicial authority could be considered to be in breach of the arbitration agreement.
ARTICLE 30(1): TIME LIMIT FOR RENDERING THE FINAL AWARD
The time limit within which the arbitral tribunal must render its final award is six months. Such time limit shall start to run from the date of the last signature by the arbitral tribunal or by the parties of the Terms of Reference or, in the case of application of Article 23(3), the date of the notification to the arbitral tribunal by the Secretariat of the approval of the Terms of Reference by the Court. The Court may fix a different time limit based upon the procedural timetable established pursuant to Article 24(2).
3-1107 Purpose. Article 30(1) addresses the time limit within which the arbitral tribunal must render the final award. The Court considers that a time limit for the final award is desirable, and even necessary under some arbitration laws. In practice, and pursuant to the last sentence of the provision, the Court usually fixes a time limit other than the default six-month time limit upon receiving the procedural timetable in accordance with Article 24(2) (see paragraph 3-1113).
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3-1108 2012 modifications. The last sentence is new. It specifically empowers the Court to fix a time limit other than the default six months in situations where the arbitral tribunal’s procedural timetable makes the default time limit obviously unrealistic. The Court’s usual practice under the 1998 Rules was not to revise or extend the six-month time limit until shortly before its expiry. That practice has changed under the 2012 Rules (see paragraph 3-1113).
3-1109 Start of the time limit. The six-month time limit begins to run once the Terms of Reference have been established. The provision refers to both methods of establishing the Terms of Reference:
3-1110 Where the Court fixes a different time limit as foreseen in the last sentence of Article 30(1), it will specify an end date as the arbitral tribunal’s deadline, in which case the question of when the time limit begins to run is irrelevant.
3-1111 How to meet the requirements of the provision. Article 30(1) states that the arbitral tribunal must “render” the “final” award in order to meet the time limit. Accordingly, only the very last award in an arbitration, rather than a partial award dealing with some but not all of the disputed issues, will satisfy the time limit. Furthermore, the mere submission of a draft to the Secretariat is insufficient. The final award, in order to be “rendered”, must have been scrutinized and approved by the Court pursuant to Article 33, signed by the arbitral tribunal and notified to the parties by the Secretariat pursuant to Article 34(1) (see paragraphs 3-1214–3-1216).
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3-1112 Effect of the time limit in practice. Only a small number of ICC arbitrations that end in a final award63are completed within six months of the Terms of Reference. It often happens that the parties and the arbitral tribunal, taking into consideration the complexity of the case and the availabilities of the various actors involved, establish a procedural timetable that foresees steps taking place beyond the initial six-month period, making it impossible for the arbitral tribunal to render its final award within that time. In keeping with its commitment to party autonomy, the Court normally accepts such timetables and fixes a different time limit for the final award. The Court also recognizes that the arbitral tribunal and the parties may need to revise their schedule for the proceedings as the arbitration progresses. Where necessary, it will extend the time limit pursuant to Article 30(2) shortly before it expires, taking into account any new estimates the arbitral tribunal may provide of when it will likely render the final award.
3-1113 Fixing of a different time limit by the Court. The Court’s practice under the 1998 Rules was to extend the time limit only at the end of the six-month period even when the reasons for doing so were known much earlier (e.g. from information provided in a procedural timetable issued pursuant to Article 18(4) of the 1998 Rules)). The practice is different under the 2012 Rules. The Court fixes an appropriate time limit on the basis of the schedule set out in the procedural timetable established pursuant to Article 24(2). Usually, that time limit will be eight to twelve weeks after the scheduled date of the hearing or the last round of submissions, so as to provide the arbitral tribunal with a reasonable amount of time to complete its award. It is likely that the default time limit of six months will be used only where the Court finds it impossible to fix an alternative time limit based on the procedural timetable. Where an arbitration is split into phases, the Court is likely to follow the same approach as it did under the 1998 Rules when extending time limits, i.e. to fix the time limit one phase at a time (see paragraphs 3-1127–3-1129).
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ARTICLE 30(2): EXTENSION OF THE TIME LIMIT FOR RENDERING THE FINAL AWARD
The Court may extend the time limit pursuant to a reasoned request from the arbitral tribunal or on its own initiative if it decides it is necessary to do so.
3-1114 Purpose. Article 30(2) provides flexibility with regard to the overall duration of arbitration proceedings by allowing the Court to extend the time limit for rendering the final award. It is not uncommon for it to do so in those arbitrations subject to the default time limit of six months foreseen in Article 30(1). If a different time limit tailored to the procedural timetable has been fixed, the Court may not need to grant a further extension.
3-1115 2012 modifications. None.
3-1116 Granting an extension. The Court may grant an extension pursuant to a reasoned request from the arbitral tribunal or on its own initiative. There is little practical difference between these two options. The Secretariat closely monitors all cases and will be attentive to the date on which the time limit expires. In the large majority of cases, the Court will grant an extension shortly before the existing time limit is set to expire. Before inviting the Court to consider extending the deadline, the Secretariat will contact the arbitral tribunal to obtain an update on the progress of the proceedings. Where the last steps in the procedural timetable, such as a hearing or final submission, have been completed, Article 27 requires the arbitral tribunal to indicate when it is likely to submit the draft final award. If the arbitral tribunal fails to do so, the Secretariat will remind it of this obligation and request its opinion on the length of the extension that the Court should grant.
3-1117 Duration of the extension. In the early years of the 1998 Rules, the Court generally granted extensions of three months regardless of the circumstances of the case. This practice had the advantage of being consistent and predictable as well as easy to apply. Furthermore, it allowed the Court to be apprised every three months of the latest developments in all cases in which the initial six-month time limit had expired. However, the practice left parties and arbitrators perplexed about the utility of such rolling extensions.
3-1118 Since 2009, the Court has adopted a case-specific approach whereby it extends the time limit in light of all relevant circumstances, and in particular the stage the proceedings have reached. In that respect, it is helpful to distinguish between two broad groups of cases: (a) those in which one or several procedural steps remain to be completed and (b) those in which only the final award remains to be drafted. Each is considered in turn.
3-1119 (a) Additional procedural steps remaining. Where the procedural timetable foresees additional procedural steps, such as the making of submissions by
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the parties or a hearing on the merits, the Court will grant an extension that gives the arbitral tribunal a reasonable amount of time to prepare the final award after completing the final step that has been scheduled in the proceedings.
3-1120 For example, where a procedural timetable or other direction from the arbitral tribunal calls for post-hearing written submissions by 1 March as the last step in the proceedings, the Court will normally grant the arbitral tribunal an extension of about eight weeks (if the tribunal is composed of a sole arbitrator) or twelve weeks (if the tribunal is composed of three members) beyond 1 March.
3-1121 (b) Secretariat awaiting a draft final award. Where the last procedural step has already occurred and the Secretariat is awaiting submission of the arbitral tribunal’s draft final award for scrutiny, the Court will carefully consider the length of the extension. Article 30(2) is an important tool at the Court’s disposal for monitoring the arbitral tribunal’s performance. The Court can use the duration of the extension to signal to arbitrators its expectations about when the award should be received. The Secretariat will also inform the parties of these expectations by copying to them its letters notifying the arbitral tribunal of a decision pursuant to Article 30(2) (see paragraph 3-1131).
3-1122 The Court takes very seriously any unreasonable delay by the arbitral tribunal in submitting a draft award, whether interim, partial or final.
3-1123 In accordance with Article 27, subparagraph (b), the arbitral tribunal must inform the Secretariat and the parties as soon as possible after the last procedural step in the arbitration of the date by which it expects to submit its draft award to the Court. As mentioned above, the Court generally expects to receive an award within about eight weeks following the final procedural step if the tribunal consists of a sole arbitrator, and within about twelve weeks if the tribunal comprises three arbitrators. The Court nonetheless recognizes that certain cases are significantly more complex than others, requiring exhaustive analysis and consideration by the arbitral tribunal. Moreover, the arbitrators comprising a three-member tribunal may have difficulty organizing a meeting to deliberate or reaching a consensus on the outcome.
3-1124 In light of the above, the Court will tread cautiously when granting extensions and give due consideration to the amount of additional time the arbitral tribunal should receive. If submission of the draft final award is delayed, the Secretariat will engage in discussions with the arbitral tribunal to ascertain the cause of the delay, and the amount of work that has already been completed and remains to be done. Taking into account the arbitral tribunal’s position and its own objective assessment, the Court then will set a new time limit concordant with the arbitral tribunal’s genuine and reasonable needs. If, for example, the final award is almost complete and is about to be submitted for scrutiny pursuant to Article 33, the Court may be inclined to grant an extension of little more than a few weeks.
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3-1125 If, four to five months after completion of the last scheduled procedural step, the award is still outstanding, the Court and its Secretariat will place significant pressure on the arbitral tribunal to deliver, unless there are exceptional reasons for not doing so. Such pressure may take the form of letters, emails and telephone calls from the Secretariat’s management or even the President. In such instances, the Court will normally extend the time limit only for short intervals and insist on the urgency of the matter when notifying the arbitral tribunal of each extension.
3-1126 Where the arbitral tribunal’s delay is long and unreasonable, the Court may ultimately initiate replacement proceedings pursuant to Article 15(2). While replacing an arbitrator in the final stages of a case has undesirable consequences (see paragraphs 3-615, 3-653 and 3-654), it is preferable to the alternative of aborting the arbitration by refusing an extension. In cases where the Court considers that the arbitral tribunal unreasonably delayed delivery of the award, the arbitral tribunal is likely to see its fees reduced significantly (see paragraphs 3-1454–3-1457). An arbitrator’s poor performance will not be forgotten and may influence the Court when it considers him or her for appointment or confirmation in subsequent cases (see paragraphs 3-500 and 3-384).
3-1127 Split proceedings and the duration of extensions. In many cases, the proceedings will be split into two or more distinct phases, each of which may end in an award. For example, jurisdiction and the merits, or liability, quantum and costs, may be dealt with in separate phases, each ending with an award.
3-1128 In such cases, the Court will usually take each phase at a time when considering whether or not to grant an extension pursuant to Article 30(2). Besides enabling the Court and its Secretariat to monitor more effectively the arbitral tribunal’s diligence, this approach is also better suited to procedural timetables and directions in bifurcated proceedings, which will normally relate only to a single phase as the outcome of that phase may determine whether the arbitration is to continue and, if so, on what basis.
3-1129 In those rare cases where a procedural timetable provides for distinct phases of the arbitration to run concurrently, rather than consecutively, the Court will usually take account of the longest phase when determining the appropriate length of an extension.
3-1130 Does the Court ever refuse an extension? The Court’s power to grant extensions of course implies the power not to do so. However, the Court’s refusal to extend a deadline would run the serious risk of bringing the arbitration to an end without a final award, making the entire arbitration a waste of time and money. It is therefore not generally in the parties’ interests for the Court to refuse an extension, although the Court may grant a shorter extension than that sought by the arbitral tribunal.
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3-1131 Notification of decisions on extensions. The Secretariat generally notifies both the parties and the arbitral tribunal of the Court’s decisions on extending the deadline for submitting a final award.
ARTICLE 31(1): MAKING OF THE AWARD
When the arbitral tribunal is composed of more than one arbitrator, an award is made by a majority decision. If there is no majority, the award shall be made by the president of the arbitral tribunal alone.
3-1132 Purpose. Article 31(1) lays down the conditions under which a threemember arbitral tribunal arrives at an award, whether partial or final.
Unanimous decisions are by far the most common in ICC arbitration. However, in some instances an arbitrator will be unable to agree with the other members of the arbitral tribunal and will dissent from the majority decision. Dissent may be expressed with or without the filing of a separate dissenting opinion. A dissenter will almost always be a co-arbitrator, as it is extremely rare for the co-arbitrators jointly to reach a decision with which the president does not agree. Cases in which the arbitral tribunal fails to arrive at a majority decision, requiring the president to make the award alone, are exceptional. It sometimes happens that the composition of the majority varies between the different decisions made in the award, as the arbitrators may agree on some but not all of the issues.
3-1133 2012 modifications. Minor linguistic adjustments.
3-1134 Application. Article 31(1) applies to all awards, whether interim, partial or final. There is nothing in the language of the provision that suggests it applies to other decisions of the arbitral tribunal, such as procedural orders. In practice, it is very unusual for a procedural order not to be unanimous. The Court and its Secretariat have very occasionally been faced with arbitral tribunals whose members were unable to agree on the substance of a relatively important procedural order. The arbitral tribunals in these cases were invited to follow the same principle as prescribed for awards in
Article 31(1).
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3-1135 The provision’s reference to “more than one arbitrator” recognizes that, in very rare cases, the number of arbitrators may be different from one or three (see paragraphs 3-432–3-434).
3-1136 Process of deliberation by the arbitral tribunal. While not specified in the Rules, it is implicit that where there is more than one arbitrator, the arbitrators must deliberate before making their decisions, regardless of the form their decisions may take. This does not necessarily mean that all arbitrators must deliberate actively (although they certainly should), but rather that all arbitrators be given a reasonable opportunity to provide their views and to deliberate with their fellow arbitrators. Certain arbitration laws expressly require each arbitrator to be given the opportunity to participate in the deliberation process. The arbitral tribunal should check for any local requirements. Where the arbitration law is silent on the matter, the requirement is nonetheless considered to be a general principle of international arbitration practice.
3-1137 Depending on how they operate, arbitral tribunals may occasionally forgo deliberations for very minor procedural orders such as those specifying hearing arrangements or extending deadlines by a very short period. These minor issues can sometimes be addressed fairly and effectively by the president of the arbitral tribunal alone. Indeed, presidents will sometimes seek advance agreement from the parties and the co-arbitrators to proceed in this manner.
3-1138 The arbitral tribunal must endeavour to deliberate on all important decisions. In practice, the extent of the deliberations varies enormously depending on the type of decision being made and the preferences and personalities of the individual arbitrators. For a procedural order, deliberation might be nothing more than the exchange of a few emails between the members of the arbitral tribunal and/or a brief teleconference. For awards, deliberation could be anything from a discussion for a few hours at the conclusion of a hearing to an exchange of emails and a teleconference or a protracted and intense series of face-to-face meetings. The purpose of deliberations is to allow the arbitral tribunal’s members to pool their views and their respective assessments of the case so as to reach an accurate and thorough decision. Once all decisions are agreed upon in principle, a first draft of the award may be prepared by the president alone, or the drafting may be divided between the different members of the arbitral tribunal. The full draft is then typically circulated among the arbitrators for comment, following which further deliberation might take place in writing or possibly even by way of another meeting or a teleconference.
3-1139 The deliberation process can sometimes lead to tensions among the members of the arbitral tribunal. In extreme cases, tensions have impeded the arbitral tribunal’s deliberations to such an extent that the Court was required to remove arbitrators pursuant to Article 15.
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3-1140 Importantly, the arbitral tribunal’s deliberations are strictly confidential and should not be divulged to the parties. Some arbitration laws expressly provide for the confidentiality of deliberations. In any event, the Court expects deliberations to be conducted in private and kept secret from the parties. Any concerns an arbitrator may have regarding the deliberation process may be brought to the Secretariat’s attention.
3-1141 Unanimous decisions and disagreements. The deliberation process should, and usually does, lead to a consensus. The arbitrators do not all need to agree on every single point for the award to be unanimous. Broad agreement on the outcome will normally be sufficient for them all to put their names to the award. Even without such agreement, an arbitrator may ultimately decide that there is an inevitable risk of being outvoted when serving on a three-member arbitral and that it is more appropriate simply to be guided by his or her fellow members. Indeed, it is often in the parties’ best interests to receive a single, unanimous award.
3-1142 Award by the president alone. Where the arbitrators are unable to reach a majority decision on one or more issues, Article 31(1) authorizes the president of the arbitral tribunal to render an award alone. Such awards are extremely rare in practice. Nonetheless, the existence of this provision can have an important effect on the arbitrators’ conduct. In granting this power to the president, the provision differs from many arbitration rules (e.g. the UNCITRAL Arbitration Rules), which require a majority decision. However, that requirement means that when there is a deadlock the president may ultimately need to side with one of the co-arbitrators, which can place the co-arbitrators in a relatively strong position and marginalize the president’s own opinion on the correct outcome of the case. Accordingly, Article 31(1) allows the president to remain true to his or her own view, avoiding a potentially unbalanced outcome. The provision does not in any way undermine the importance of the co-arbitrators’ views, as confirmed by the rarity of awards made by presidents alone. In the overwhelming majority of cases, the deliberation process takes place in an atmosphere of mutual respect for the opinions of fellow arbitrators.
3-1143 Dissenting opinions. The Rules do not mention dissenting opinions. Nonetheless, the Court has a well-established practice of allowing them. Dissenting opinions take many different forms. These include:
3-1144 The form of dissenting opinions may vary depending on whether or not the dissenting opinion will be communicated to the parties. In some cases, the dissenting arbitrator will indicate that his or her dissenting opinion is not intended to be communicated to the parties, but merely to aid the Court in the scrutiny process. Accordingly, the parties may not learn of the dissent. However, some arbitration laws require the reasons for a dissent to be recorded in the award if the dissenter refuses to sign it.
3-1145 Where the Secretariat receives a dissenting opinion with the draft award, it will transmit the opinion to the Court. The Court will not scrutinize the dissenting opinion pursuant to Article 33 but will read it and may give consideration to the views it expresses. The Court’s comments on the award itself may even include references to the dissent, inviting the majority to strengthen its own reasoning in relation to issues raised by the dissenter. The changes subsequently made have, on occasion, even led to a unanimous award.
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3-1146 Where an arbitrator indicates that he or she intends to file a dissenting opinion and the Secretariat has already received the draft award, the question arises as to whether the scrutiny process under Article 33 should be delayed until the dissenting opinion is received. The Court’s practice in recent years has been to fix a short but reasonable time limit for the dissenter to file his or her opinion, failing which the Court will proceed with the scrutiny process without the dissenting opinion. This time limit does not normally exceed three to four weeks, as the Court considers it a priority to scrutinize the award so that it can be finalized.
3-1147 The Court’s usual practice is to communicate any dissenting opinion to the parties when it notifies the award to them, provided that doing so will not endanger the enforceability of the award. Any danger a dissenting opinion might create for the enforceability of an award is more likely to result from its content than from the manner in which it is communicated to the parties. Accordingly, the Court prefers to work with dissenting arbitrators to remove from the dissent any inappropriate material, such as confidential communications between the members of the arbitral tribunal that would breach the well-accepted principle of the confidentiality of their deliberations. If the dissenter cooperates, the Court will be in a position to communicate the dissenting opinion to the parties at the same time as the award, which is usually both the dissenting arbitrator’s and the Court’s preference.
3-1148 After an award has been scrutinized and the Secretariat has received from the majority an amended (if amendments were necessary) and signed award, it will not wait long for a signed version of the dissent. If the dissenting arbitrator cannot deliver the final, signed dissent promptly, the Secretariat usually proceeds to notify the award and to send the dissenting opinion at a later date. The Court considers that prompt notification of the award must take priority over the communication of any dissenting opinion.
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ARTICLE 31(2): REASONING
The award shall state the reasons upon which it is based.
3-1149 2012 modifications. None.
3-1150 Article 31(2) expresses a basic tenet of international commercial arbitration by requiring arbitral tribunals to justify their decisions. This allows the parties to understand the reasoning behind the award, which may in turn persuade them to accept the award and voluntarily comply with it. Providing reasons also helps to ensure the award’s enforceability. Most domestic arbitration laws require awards to be reasoned unless the parties have agreed otherwise. The extent and form of this reasoning may also be relevant. When examining an award for the purpose of recognition, enforcement or setting aside, a state court may be less critical of the award if its reasoning is complete and convincing.
3-1151 Arbitrators enjoy broad discretion as to the appropriate length and level of detail of an award. The appropriate length will depend on various factors including the number of claims, the complexity of the case and the manner in which the parties have argued the case (in particular, the length and number of the parties’ submissions). Therefore, there is no minimum or maximum length for awards. The bulk of ICC awards are between thirty and a hundred pages long, although awards far longer are not unknown.
3-1152 Although rare, parties may jointly choose not to follow Article 31(2) by allowing the arbitral tribunal to issue an award without reasons. The Court has approved such awards in the past, but will consider each instance carefully during the scrutiny process and will require that the parties’ agreement to dispense with reasons be in writing and signed. Furthermore, parties should verify whether any relevant jurisdictions (e.g. where the place of arbitration and the likely places of enforcement are situated) require that an award be reasoned.
ARTICLE 31(3): DATE AND PLACE OF THE AWARD
The award shall be deemed to be made at the place of the arbitration and on the date stated therein.
3-1153 Purpose. Knowing when and where an award was made can be important, principally in subsequent state court proceedings relating to the award. As awards are often physically made in various places and at various times, Article 31(3) dispels any possible uncertainty.
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3-1154 2012 modifications. None.
3-1155 Location. The New York Convention applies “to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought” (Article I(1), emphasis added). In addition, Article I(3) of the Convention permits a state, when ratifying or acceding to the Convention, to “declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State” (emphasis added). Article V also refers to the place where an award was made. Determining where an award was made is therefore of some importance. Furthermore, the law at the place of the arbitration may require awards to be made at the place of the arbitration.
3-1156 The “deeming” provision contained in Article 31(3) is intended to simplify the arbitral tribunal’s work. Pursuant to Articles 18(2) and 18(3), arbitral tribunals are permitted to hold hearings and to deliberate in any location. In addition, an award can be drafted and signed anywhere in the world, depending primarily on where the arbitrators deliberate, reside or find themselves at the relevant time. A common practice amongst three member tribunals is for the award, once finalized, to be circulated by courier to the place of residence of each arbitrator for his or her signature. The president of the arbitral tribunal will coordinate this circulation process and will normally be the last arbitrator to sign the award.
3-1157 In providing that an award is deemed to be made at the place of the arbitration, Article 31(3) removes any uncertainty over the “nationality” of an award. It ensures that the flexibility offered to arbitral tribunals by Articles 18(2) and 18(3) and the fact that many leading international arbitrators perform their professional activities across several jurisdictions do not undermine the enforceability of an award. Accordingly, arbitrators are not obliged to meet simply to sign the award (unless this is an express requirement at the place of the arbitration).
3-1158 The arbitral tribunal should check requirements at the place of the arbitration, in case local arbitration law requires an award to be signed physically at the place of the arbitration. This can be both inconvenient and costly if, as often happens, one or more of the arbitrators do not reside at the place of the arbitration. Some laws may require each arbitrator to state the exact date and place of his or her signature of the award. Such requirements have no impact on the deeming provision of Article 31(3) but the details required will need to be mentioned. Arbitral tribunals should also have regard to whether local law requires some or all of the arbitral proceedings to be conducted at the place of arbitration for Article 31(3) to be effective.
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3-1159 Date. Article 31(3) also recognizes the practical reality that the members of an arbitral tribunal may each sign the award on different dates. An arbitral award is therefore deemed to be made on the date stated in the award rather than any date of signature, which can remain unstated.
3-1160 The arbitral tribunal is therefore free to choose the date of the award. However, it must be careful to select a date that is after the date of approval of the award by the Court pursuant to Article 33. In ICC arbitration an award can be “made” only after the Court has approved it.
ARTICLE 32: AWARD BY CONSENT
If the parties reach a settlement after the file has been transmitted to the arbitral tribunal in accordance with Article 16, the settlement shall be recorded in the form of an award made by consent of the parties, if so requested by the parties and if the arbitral tribunal agrees to do so.
3-1161 Purpose. Parties are free to settle their dispute and to withdraw the arbitration at any time. They may see an advantage in their settlement being recorded in the form of an award by consent (although this is not obligatory). Article 32 authorizes and lays down the requirements for awards by consent.
3-1162 2012 modifications. None.
3-1163 Settlements and parties’ options. Approximately 47 per cent of ICC arbitrations are withdrawn before a final award is rendered. The Secretariat is not always informed of the reasons for such withdrawals, but they occur mostly when there is a settlement of the dispute. The parties should
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promptly inform the Secretariat and the arbitral tribunal of any settlement or other reason for withdrawing the case.64This will avoid additional costs resulting from work performed unnecessarily by the ICC or the arbitral tribunal.
3-1164 Once a settlement is reached, the parties have several options. One option is to request an award by consent. The advantages of doing so are set out in paragraphs 3-1166 and 3-1167. Yet, there may be disadvantages in doing so, including the additional cost caused by the extra work required not only from the arbitral tribunal in making the award, but also from the Court and its Secretariat in scrutinizing and formally notifying the award and the delay such extra work will cause to the closure of the case.
3-1165 It is very rare for arbitration laws to require that a settlement be recorded in the form of an award by consent. Parties are normally at liberty to enter into a settlement agreement and simply request that the arbitration be withdrawn. In such situations, the arbitral tribunal may be requested to render a formal termination order or may do so of its own accord. With or without such a termination order, where all parties have requested the withdrawal of all claims, or where the claiming party has requested withdrawal and the opposing side has not objected, the Court will take note of the withdrawal and proceed to fix the costs of the arbitration pursuant to Article 37(6).
3-1166 Advantages of an award by consent. Awards by consent are often seen to have two advantages over mere settlement agreements. The first relates to enforcement. A settlement agreement is simply a contract and is not an award for the purposes of enforcement under the New York Convention. On the other hand, an award by consent is an award, so it should be enforceable under the New York Convention. That said, the enforceability of awards by consent is less certain than that of ordinary awards. There is a dearth of decided case law around the world relating to the conditions under which an award by consent may or may not be enforceable, and some doubt has been expressed on the matter in academic commentaries. Besides, parties should weigh the reality of this advantage: if there is nothing left to enforce (e.g. because the settlement sum has already been paid before the award by consent is issued), the potential advantage an award by consent offers for purposes of enforcement may be superfluous.
3-1167 A second perceived advantage is that an award by consent may be seen as having been sanctioned by the arbitral tribunal and the Court. State parties often seek an award by consent for this reason. Having the arbitral tribunal record an agreement in the form of an award may even be a requirement to give effect to that agreement under the law or administrative procedure of the state concerned. Although arbitral tribunals have the power under Article 32 to refuse to make an award by consent, this rarely happens (it
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might occur, for instance, where the settlement appears to facilitate money laundering or fraud). Neither the arbitral tribunal nor the Court has any duty to assess the terms underlying the settlement to verify whether they are fair.
3-1168 Timing of the settlement. A requirement for the making of an award by consent is that the parties must reach their settlement after the file has been transmitted to the arbitral tribunal pursuant to Article 16. This requirement serves to ensure the integrity of the award, as awards should always result from a genuine dispute. A settlement prior to the arbitral tribunal’s being seized of the dispute would normally lead simply to the withdrawal of the case (unless a subsidiary issue (e.g. costs) arises that must be determined by an arbitral tribunal).
3-1169 Despite the foregoing, the Court is sometimes requested to proceed with the constitution of an arbitral tribunal and transmission of the file where parties have already settled their dispute. In a 2009 case, the parties had settled their dispute in the course of ICC ADR proceedings and subsequently sought to commence an ICC arbitration for the purpose of recording that settlement in the form of an award by consent. The Court and its Secretariat are extremely cautious in such situations. There may be real doubt about whether such an award is an award at all because no dispute has been referred to an arbitral tribunal for its decision. In that regard, the arbitral tribunal will be requested to consider carefully the circumstances of the case and the settlement.
3-1170 Once the file has been transferred to the arbitral tribunal, the parties are free to request an award by consent at any time. Parties occasionally settle as late as just before the Secretariat is due to notify a final award.
3-1171 Are Terms of Reference required? Terms of Reference play a central role in organizing the arbitration and accordingly are mandatory (see Article 23). However, the Court has allowed arbitral tribunals to forgo Terms of Reference if the parties settle beforehand and expressly waive the need for Terms of Reference. This waiver should be in writing and be communicated to the Secretariat as well as the arbitral tribunal.
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3-1172 The arbitral tribunal’s agreement to an award by consent. Although rare in practice, an arbitral tribunal may refuse to issue an award by consent. In determining whether to issue an award by consent, the arbitral tribunal may wish to65
a) consider whether the settlement agreement is contrary to mandatory law or public policy (see paragraphs 3-771–3-776), or whether there are circumstances that would make the award potentially unenforceable;
b) satisfy itself that the award will not be used for a fraudulent or illegal purpose;
c) verify that every party has in fact requested the award. Silence or apparent acquiescence is not sufficient. An award by consent cannot bind any party not participating in the proceedings. Any such party may need to be dismissed from the proceedings before the award is made;
d) if the request is made before the Terms of Reference have been drawn up, the person or party making the request must have the necessary authority or competence to do so.
3-1173 Preparing an award by consent. Upon agreeing to make an award by consent, the arbitral tribunal should assist the parties to transform their settlement into a proper award by consent. It should also check any particular requirements at the place of the arbitration.
3-1174 Parties will sometimes prepare an award by consent themselves and annex the settlement agreement in some way. In such instances, the arbitral tribunal should notify the parties if it believes that the text submitted is inadequate, incomplete, ambiguous, or leaves matters unresolved. Such awards can be particularly problematic if they are conditional upon matters that may be subject to future disagreements. Parties also often overlook the allocation of the arbitrators’ fees and expenses (see paragraphs 3-1450 and following) and the ICC administrative expenses (see paragraphs 3-1475 and following), which should be considered specifically and separately from any agreement on the parties’ own legal costs (see paragraphs 3-1489–3-1493). Ultimately, the Court will consider the award by consent as the arbitral tribunal’s document and work product.
3-1175 Form and content of an award by consent. As indicated above, an award by consent is an award and must therefore meet the quality requirements of any ICC award (see paragraphs 3-1181 and following). An award by consent usually reproduces the operative parts of the parties’ settlement and will record, either expressly or by reference to a separate settlement agreement annexed to the award, the parties’ respective obligations. In accordance with Article 37(4), the award must also record the parties’ agreement on the allocation of the costs of the arbitration.
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3-1176 The requirement in Article 31(2) that all awards be reasoned applies differently in relation to awards by consent. The reasons upon which such awards are based are, quite simply, the parties’ settlement and agreement on each issue. The arbitral tribunal is not required to provide further reasons.
3-1177 An award by consent cannot contain any decisions by the arbitral tribunal. It should only reflect the parties’ agreements and should contain an order for the parties to comply with those agreements. Under no circumstances can the arbitral tribunal use the award by consent to decide, for the sake of completeness, any remaining issues on which the parties have failed to reach agreement. In contrast, partial or final awards can incorporate decisions that simply record the parties’ agreements on certain matters.
3-1178 Settlements sometimes address claims or issues that have not previously been raised in the arbitration or that are the subject of other proceedings. Such settlements can in principle by recorded as awards by consent provided all parties agree. A settlement agreement and award by consent can even bind a new party, provided that all parties, including the additional party, have so agreed and the arbitral tribunal accepts this.
3-1179 Partial awards by consent. Article 32 allows for partial awards by consent. Although rare in practice, such awards may be appropriate where the parties’ settlement covers only some of their claims or claims concerning some but not all of the parties.
3-1180 Fixing the costs of the arbitration. Where a case ends early owing to a settlement or otherwise, the Court will usually fix the costs of the arbitration pursuant to Article 37(6) at an amount corresponding to the work actually done at that stage of the case. In most instances this will mean that the Court reimburses a portion of the advance on costs (see paragraph 3-1505).
ARTICLE 33: SCRUTINY OF THE AWARD BY THE COURT
Before signing any award, the arbitral tribunal shall submit it in draft form to the Court. The Court may lay down modifications as to the form of the award and, without affecting the arbitral tribunal’s liberty of decision, may also draw its attention to points of substance. No award shall be rendered by the arbitral tribunal until it has been approved by the Court as to its form.
3-1181 Purpose. The Court’s scrutiny of all draft awards is a distinctive feature of ICC arbitration. It serves primarily to maximize the legal effectiveness of an award by identifying any defects that could be used in an attempt to have it set aside at the place of the arbitration or resist its enforcement elsewhere. Scrutiny also improves the award’s general accuracy, quality and persuasiveness.
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3-1182 The Court’s comments on draft awards may range from the correction of typographical and clerical mistakes and errors of computation to farreaching remarks that may sometimes require the entire award or at least sections of the award to be redrafted. While the quality of draft ICC awards submitted to the Court for scrutiny is by and large very good, it can happen that inexperienced, overcommitted or careless arbitrators produce lowerquality work. In the Court’s experience, it is rare that an award will not benefit from some scrutiny and some awards benefit enormously. Most importantly, scrutiny can prevent delays and costs that might result from an application for correction or interpretation of an award under Articles 35(1)–35(3) where a defect is spotted shortly after the award is rendered, or the more drastic situation of an award being set aside or refused enforcement where a defect is serious enough. Finally, the Court’s endorsement functions as an internationally recognized seal of approval, which may make awards less prone to challenge or annulment simply by virtue of being an ICC award. Article 6 of Appendix II containing the Internal Rules of the Court mentions that when performing its scrutiny function the Court will consider, to the extent practicable, the requirements of mandatory law at the place of the arbitration.
3-1183 Parties should note that the scrutiny process is a cornerstone of the Rules from which they cannot derogate. The Court has rarely seen agreements that attempt to bypass Article 33. In one such instance, the arbitration clause explicitly excluded the scrutiny of awards by the Court, which decided that the clause was incompatible with the Rules and that the arbitration therefore could not proceed.66
3-1184 2012 modifications. None.
3-1185 Scope of Article 33: defining an “award”. Article 33 applies to all awards, including final, partial and interim awards, as well as awards by consent.67It does not apply to other arbitral tribunal decisions, such as procedural orders and directions.
3-1186 Whether or not a decision is an award from a legal perspective depends primarily on the law of the jurisdiction in relation to which the question arises and needs to be answered. In most instances this will be the law at the place of the arbitration, but the law at the place of enforcement may also be relevant if it defines awards differently from the law at the place of the arbitration. The legal characterization of a decision as an award can have important consequences. For example, under almost all arbitration laws, setting-aside proceedings can be initiated only for awards, not for orders. Similarly, the New York Convention facilitates the recognition and
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enforcement of awards but not orders. Nonetheless, a growing number of arbitration laws now provide for the enforcement of certain orders made by arbitral tribunals. Characterizing a decision as an award also gives it the force and authority of res judicata.
3-1187 In many jurisdictions, the title given to a decision by an arbitral tribunal (e.g. “award” or “order”) will not necessarily determine how it is characterized according to legal criteria.
3-1188 For the purposes of scrutiny, the Court adopts a pragmatic, case-by-case approach to identifying awards, which is broadly consistent with the approach of most modern courts. If a decision determines one or more of the disputed substantive issues in the case (e.g. one or more claims, including costs claims), it should take the form of an award. If it relates to the process or procedure of the arbitration (e.g. ordering the production of documents, ordering a witness to attend a hearing, deciding the language of the arbitration, fixing time limits, issuing directions for a hearing), then it should be an order. The Court strongly encourages arbitral tribunals to treat decisions on their jurisdiction as awards, even though they are not legally characterized as such under certain arbitration laws. Quasiprocedural decisions such as the determination of the governing substantive law pursuant to Article 21(1) (see paragraph 3-755) and the issuing of interim measures of protection (see paragraph 3-1041) may or may not be considered as awards. Generally, the Court prefers such decisions to be described as awards and subjected to its scrutiny for quality-control purposes, even if they are not characterized as such under the law at the place of the arbitration.
3-1189 A decision that is defined as an award in the context of an ICC arbitration will automatically be subject to the Court’s scrutiny. Although orders are not subject to a similar process, there may be times when an arbitrator requests the Secretariat’s informal comments on a draft order before issuing it.
3-1190 If, from the perspective of the Court and its Secretariat, an arbitral tribunal is considered to have wrongly designated a decision as an award or an order, the Secretariat is likely to urge it to modify the title of the decision. If an order is issued for a matter that should have been dealt with in an award, the Secretariat may request that the arbitral tribunal integrate the decision into its next award. If the Secretariat receives an order incorrectly entitled award, no full scrutiny process will take place.
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3-1191 Types of awards. Article 2, subparagraph (v), of the Rules refers to three kinds of awards: interim, partial and final. Article 32 deals with awards by consent. Each category is considered below.
3-1192 All of the awards listed above—as well as any other awards—must be submitted to the Court for scrutiny in accordance with Article 33.
3-1193 The precise title of an award may sometimes vary from the terms listed above. There may be times when a specific title is preferred by the arbitral tribunal and/or required by the law at the place of the arbitration. The arbitral tribunal should check local requirements.
3-1194 By way of summary, it is worth reiterating that a final award must not leave any issue open or undecided. Once a final award has been made, the tribunal is considered functus officio, thereby losing its authority over the parties (other than for the purposes of Articles 35(1)–35(3)). Any award that leaves an issue to be decided is a partial award (or interim award in certain circumstances if the arbitral tribunal so prefers). An award by consent may be partial or final; if it is final, the same considerations will apply as to final awards not made by consent.
3-1195 ICC Award Checklist. In February 2010, the Secretariat released a checklist for ICC arbitrators.68It identifies a number of formal points to which all arbitral tribunals should have regard before submitting their draft award for scrutiny pursuant to Article 33. However, the checklist is not exhaustive of issues that may be raised by the Court when applying Article 33.
3-1196 The checklist is sent to all arbitrators as an enclosure with the Secretariat’s letter transmitting the case file to the arbitral tribunal in accordance with Article 16. It includes a list of basic formalities such as indicating the parties’ addresses, mentioning the ICC case reference number, setting out the
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arbitration clause, including a procedural summary, referring to relevant decisions of the Court, providing a dispositive section (i.e. a final set of orders), and adopting the Court’s recommended style for signing the last page of the award.
3-1197 The idea behind the checklist was to increase efficiency and transparency. The Secretariat found that it was regularly making the same minor comments on awards. Rather than being repeatedly reminded of these points, arbitrators are now expected to check these matters themselves before submitting their awards. This reduces the workload of the Court and its Secretariat and reduces the number of comments that may be sent to an arbitral tribunal on its award. As part of the scrutiny process, the Secretariat will check that all items on the checklist have been addressed. If not, it will resend a copy of the checklist to the arbitral tribunal, identifying the missing points. When making comments on awards, the Court may also specify why the award does not meet particular requirements mentioned on the checklist (see paragraph 3-1209).
3-1198 Scrutiny process. Arbitral tribunals make all their decisions alone and draft their awards without the involvement or interference of the Court or its Secretariat. Occasionally, when deliberating on or drafting an award, an arbitral tribunal will contact the Secretariat to enquire about the Court’s practice on certain issues or to seek the benefit of the Court’s experience (e.g. particularly on complex jurisdictional or procedural matters). Even the most experienced international arbitrators will avail themselves of this source of knowledge and practice from time to time and the Secretariat can act as a good sounding board, drawing on the experience acquired from its vast caseload.
3-1199 Usually, it is only when the arbitral tribunal has a complete draft of its award that it will submit it for scrutiny. Unless it is preparing an award by consent (see paragraphs 3-1173 and 3-1174), the arbitral tribunal should under no circumstances send the draft award directly to the parties. Upon receipt of the draft award, the Counsel managing the file will promptly review it. In some rare instances the Counsel may contact the arbitral tribunal directly, before the formal scrutiny process, to identify an obvious error. This may happen, for example, when the arbitral tribunal has omitted to include a dispositive section or a summary of the procedural history of the case. The arbitral tribunal will be invited to rectify the error and resubmit the award. However, informal pre-scrutiny reviews are not encouraged by the Secretariat.
3-1200 Following any such initial steps, if the award is in a language other than English or French, the Secretariat will have it translated into English at the ICC’s expense. To enable long awards in Spanish, Portuguese and German to be scrutinized in their original language without any need for translation, the Court has begun arranging committee sessions attended by Court and
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Secretariat members competent in those languages. This practice, discussed further above (see paragraph 3-32), seeks to avoid the costs and delays associated with translating awards. It may be extended to other languages in the future.
3-1201 The Counsel managing the case will prepare a draft report (see paragraphs 3-40–3-44) to brief the Court on the background of the case and the award and to present the Secretariat’s proposed comments. The Secretariat’s management will then undertake a second-level review of the award and report. Once a final report is agreed, the Secretariat will forward the agenda and the award to those Court members scheduled to attend the Court session one week before the session. It will also forward the Terms of Reference established for the case and, in certain instances, previous awards rendered by the arbitral tribunal in the case.
3-1202 Upon receiving the draft award, the Counsel may discuss with a member of the Secretariat’s management whether the award should be submitted for scrutiny to the Court’s monthly plenary session or to one of its weekly committee sessions. The vast majority of awards are submitted to committee sessions. Awards that involve a state or state entity as a party, have resulted in a dissenting opinion, or raise a significant concern will normally be scrutinized at a plenary session. However, for the sake of expediency, the Secretariat’s recent practice has been to send some of these awards to a committee session. Where, for some reason, the circumstances of a case necessitate urgent notification of the award to the parties, the Court and its Secretariat can adopt an accelerated scrutiny process, but they do so only in exceptional situations. Under Article 1(3) the President is vested with the power to make urgent decisions alone and very occasionally may use this power to scrutinize an award on an urgent basis (see paragraph 3-35).
3-1203 When awards are submitted to a plenary session (and, for certain awards, a committee session), a member of the Court will be requested to prepare a written report (see paragraph 3-30). The Secretariat will provide that Court member with all relevant information and documents. Once complete, the report will be distributed to all other Court members attending the plenary session, who will often make additional comments orally at the session. The Court will then decide, usually by consensus but very occasionally by a vote, whether or not to approve the award. Whatever the Court’s decision may be, it will agree on a single set of comments for the Secretariat to transmit to the arbitral tribunal.
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3-1204 The scrutiny process at committee sessions of the Court is much the same, although only three Court members consider the award and there is rarely a formal report by a Court member. Rather, all three Court members will read the award and the Secretariat’s agenda. Depending on the nature of the award and the comments suggested by the Secretariat, there may be very little or considerable discussion. Once again, the Court will generally reach consensus on whether to approve the award and will decide on a single set of comments to be transmitted to the arbitral tribunal. In those rare cases in which the Court members cannot reach a consensus, the award will be submitted to one of the Court’s upcoming plenary sessions.
3-1205 The Court’s decision. Whether at a plenary or a committee session, the Court issues one of three decisions when it scrutinizes a draft award. The award may be (i) approved as it is; (ii) approved “subject to” the arbitral tribunal making certain modifications of form and/or considering the Court’s comments on substance; or (iii) rejected and therefore not approved. The second category—approval “subject to” comments—is by far the most common.
3-1206 If an award is not approved, the Court will prepare comments for the arbitral tribunal in the same way as for an award that was approved “subject to” comments. However, the subsequent steps differ: if an award is not approved, the process must begin anew in the sense that the arbitral tribunal must submit a revised draft award for scrutiny by the Court after having addressed the Court’s comments on the first draft.
3-1207 Nature of the Court’s comments on form and substance. The language of Article 33 makes clear that the scrutiny process cannot require the arbitral tribunal to change the substance of its award. The Court can do no more than draw the arbitral tribunal’s attention to matters of substance and the Court is careful to respect this limit, no matter how frustrating it may be for
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Court members when confronted with draft awards they simply do not agree with. While the scrutiny process may lead an arbitral tribunal to modify a substantive aspect of its decision, this will result from the Court’s identifying a problem such as missing elements in the decision, weaknesses in the reasoning, inconsistencies, the failure to deal with certain issues or claims, or dealing with claims or issues not raised by the parties.
3-1208 The distinction between formal and substantive comments can be difficult to determine and in practice is rarely necessary (see paragraph 3-1211). Where it does have to make a distinction, the Court will take a case-bycase or comment-by-comment approach.
3-1209 Examples of comments relating to form include references to missing information (e.g. failure to quote the arbitration agreement, indicate the place of the arbitration, provide details about the parties and their counsel, or summarize the procedural history of the case and extensions of the time limit for rendering the final award). Many of these points are now contained in the ICC Award Checklist described above (see paragraphs 3-1195–3-1197). The Court will also refer to any special requirements of which it is aware concerning the formal validity of awards at the place of the arbitration or even in jurisdictions where enforcement proceedings may be needed.
3-1210 Examples of points that could potentially affect the substantive outcome of a case, while not necessarily being substantive themselves, include whether the arbitral tribunal has neglected any issues (infra petita), whether it has decided issues not raised by the parties (ultra petita), whether reasons are given for all decisions (as required by Article 31(2)), whether the dispositive section of the award is clear, whether costs and interest are addressed (they are occasionally overlooked or dealt with too perfunctorily), and errors in mathematical calculations. Comments that are of a more substantive nature include drawing the arbitral tribunal’s attention to apparent contradictions or inadequacies in its reasoning, potential flaws in its analysis, inconsistencies between the dispositive section and the body of the award, and mandatory requirements of the arbitration law at the place of the arbitration.
3-1211 As noted above, it is very rarely necessary for the Court to distinguish between comments of form and substance. Minor formal points are in practice simply dealt with by arbitral tribunals without controversy. If an arbitral tribunal strongly objects to making a formal change, the Court may relent. However, where the Court considers the point to be crucial to assure the formal validity of the award or for some other reason, it will usually be able to persuade the arbitral tribunal to make the change.
3-1212 Comments that might affect substance can lead to several possible outcomes. First, the arbitral tribunal may, upon receiving the Court’s comments, admit its own error or at least the lack of clarity in its reasoning and approach, and modify the award accordingly. Alternatively, the arbitral
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tribunal may point out that the Court’s comment is incorrect or is based on a misunderstanding of an aspect of the award. The Court is perfectly willing to withdraw a comment if an arbitral tribunal is able to explain why the comment is misplaced. Finally, the arbitral tribunal may simply explain to the Court why, after considering the Court’s comment, it has decided that it does not wish to act on it. Whether or not the Court accepts to withdraw such a comment will depend on the circumstances of the case and the nature of the arbitral tribunal’s explanation. If the Court feels strongly about the comment, there may be further dialogue between the Secretariat and the arbitral tribunal. In most cases, this process is simply a matter of ensuring that the arbitral tribunal has understood the Court’s concern. Ultimately, if the arbitral tribunal remains fixed on its initial decision, the Court is likely to withdraw a substantive comment. However, it has happened that the Court initiated replacement proceedings against an arbitrator who refused even to consider the Court’s comments in relation to points of substance that concerned serious jurisdictional issues. The Court may consider the points to be so fundamental as to call into question the competence of the arbitrator concerned.
3-1213 Dissenting opinions. The Court does not specifically subject dissents to the scrutiny process, although it will request modifications where a dissent violates fundamental principles, particularly those relating to the confidentiality of the arbitral tribunal’s deliberation process. Where strong arguments forming the basis of a dissent are not addressed in the majority award, the Court may suggest that the majority decision address them. Dissenting opinions are discussed in detail under Article 31(1) (see paragraphs 3-1143–3-1148).
3-1214 Submitting a revised version of an award that was approved subject to comments. Once the arbitral tribunal has revised the draft award in light of the Court’s comments, it must send the revised draft to the Secretariat for review. A revised version of the award will not normally be resubmitted to the Court. Rather, the Counsel in charge of the file will verify whether the arbitral tribunal has duly considered all of the Court’s comments. If in doubt about whether a comment has been adequately addressed, the Counsel will refer to the Secretariat’s management. If an arbitral tribunal refuses to change a point of form or adequately to consider a point of
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substance, the Secretariat may put the issue to the Court for it to decide how to proceed. In so doing, the Court and its Secretariat will be mindful of Article 33’s clear indication that the arbitral tribunal maintains the right to make the final decision on any point of substance.
3-1215 Final steps in rendering the award. Once the Court or its Secretariat, as the case may be, has verified that all comments have been addressed in the revised draft, or where the Court has approved the award pursuant to Article 33 without comments, the Secretariat will request that the arbitral tribunal sign and date the requisite number of originals of the award and send them to the team assigned to the case. The date can be of considerable importance (see paragraphs 3-1153, 3-1159, 3-1160).
3-1216 The Secretariat will then make a final verification of the originals and notify them to the parties in accordance with Article 34(1). Where the originals are complete and do not raise any issues (i.e. fully reflect the revised version approved by the Secretariat) needing to be solved before notification, the Secretariat will usually notify the award within one to two days of receipt (see further Article 34).
3-1217 Time frame of the scrutiny process. Despite its rigour, the scrutiny process will normally take two to three weeks, from the date the Secretariat receives the draft award to the date it sends the Court’s comments to the arbitral tribunal (for information on accelerated scrutiny processes, see paragraph 3-1198). However, the duration can vary depending, among other things, on whether the draft award needs to be translated, whether it will be submitted to a committee or a plenary session (plenary sessions being held only once a month) and the quality and length of the draft (which has a bearing on the time it takes for the necessary staff to read it). While the Secretariat strives to ensure sufficient staffing, delay may also occur where a particular Counsel receives an abnormally large number of draft awards in a single week.
3-1218 Once the Secretariat has transmitted the Court’s comments to the arbitral tribunal, the tribunal will usually return the revised award in less than a week. If all changes are made satisfactorily, it should then be notified to the parties within a matter of days. The arbitral tribunal sometimes may take
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longer if the Court’s comments are numerous or require substantial additional work from the arbitral tribunal. Where an award was not approved the first time, the scrutiny process will need to be repeated. Each year usually brings a small number of cases that result in a lengthy scrutiny process (including several versions of an award), in extreme cases up to five or six months. A protracted scrutiny process generally results from a real problem with the award that the arbitral tribunal must address and/or the Court’s decision not to approve the award several times, rather than any inefficiency in the process.
3-1219 Information provided to the parties about the scrutiny process. The scrutiny process takes place without the parties’ involvement and is considered to be confidential in a similar way to the arbitral tribunal’s deliberations. The parties are not informed of any exchanges between the arbitral tribunal and the Court or Secretariat in this regard. The parties will receive the award only in its final form as approved by the Court and notified by the Secretariat in accordance with Article 34(1).
3-1220 If requested, the Secretariat will inform the parties whether it has received a draft award for scrutiny and, if so, try to give them an idea of when they might expect to receive notification of the award. The Secretariat will usually refrain from indicating what type of award (i.e. partial or final) it has received, as this information could reveal its outcome (e.g. a final award in a case where only questions of jurisdiction have been considered). Where the Court has approved an award, the Secretariat may inform the parties of that decision, although it will not provide details of any comments the Court may have made or even disclose whether the Court has made any comments.
ARTICLE 34: INTRODUCTION TO ENFORCEMENT OF ICC AWARDS
3-1221 Article 34 concerns the post-award phase of an arbitration. It addresses the notification, deposit and enforceability of awards, as well as sundry services that the parties may require in connection with enforcement proceedings.
3-1222 Beyond those sundry services and any steps taken in relation to a request for the correction or interpretation of an award pursuant to Article 35(1) or 35(2), the administrative functions of the Court and its Secretariat cease once a final award has been notified to the parties in accordance with Article 34(1). It should be noted that the Rules do not include any provisions relating to the appeal, annulment, setting aside, recognition or enforcement of awards. These are matters of law that state courts must address.
3-1223 In practice, the vast majority of parties will comply with ICC awards voluntarily, rendering enforcement proceedings unnecessary. However, where such voluntary compliance does not occur, the winning party may request that a state court recognize and enforce the award. The recognition
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and enforcement of awards is facilitated by the New York Convention, which requires all contracting states (of which there were 146 at the time of writing69) to recognize and give effect to arbitration agreements and to recognize and enforce arbitral awards made outside the territory of the enforcing state. The winning party in an arbitration can therefore have the award enforced in any of those 146 countries, subject to the conditions set out in the New York Convention. The enforcing court can refuse such recognition or enforcement on only very narrow grounds.
3-1224 National courts throughout the world readily and regularly enforce ICC awards and any problems encountered by parties are generally limited to a small number of jurisdictions. In the rare cases where the New York Convention does not apply to a particular award, other enforcement treaties or procedures may be available to parties. If enforcement proceedings are successful, the enforcing court will use its own compulsive processes to force the losing party to comply (e.g. by seizing its money or property).
3-1225 The various means of recourse against arbitral awards available to parties are discussed below under Article 34(6).
ARTICLE 34(1): NOTIFICATION OF THE AWARD TO THE PARTIES
Once an award has been made, the Secretariat shall notify to the parties the text signed by the arbitral tribunal, provided always that the costs of the arbitration have been fully paid to the ICC by the parties or by one of them.
3-1226 Purpose. Article 34(1) lays out the procedure by which ICC awards are officially notified to the parties. The arbitral tribunal must not send an award to the parties under any circumstances. Rather, the Secretariat will notify the award promptly after it receives a signed, final version that has been scrutinized by the Court pursuant to Article 33. Before doing so, the Secretariat will check that all of the Court’s comments made in the scrutiny process have been addressed. Arbitral tribunals are therefore strongly advised to send the Secretariat an unsigned electronic copy of an award that has been revised in light of the Court’s comments, so that this version can be checked by the Secretariat before it is finally signed (see paragraph 3-1214).
3-1227 2012 modifications. None.
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3-1228 Specifics of notification. To notify awards, the Secretariat will follow the provisions of Article 3(2) relating to communications with the parties. Accordingly, the award will be notified to each party’s legal representative as listed in the award itself. This is one of the reasons why, as part of the scrutiny process, the Court generally insists that the arbitral tribunal accurately state the names and addresses of the parties’ legal representatives in an award.
3-1229 The Secretariat will dispatch the award by courier (or by registered post for certain destinations) to all parties on the same day. Given that different recipients will often be located at different distances from the office of the Secretariat effecting the notification, the time taken to deliver the award may vary. As a result, one party may receive an award one or several days before the other.
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3-1230 Occasionally, parties will request expedited notification or notification that ensures simultaneous receipt. Where the Secretariat’s management is satisfied that there is real urgency or a genuine need for such services, the Secretariat may transmit the award to all parties by fax or email. However, the Secretariat usually specifies in such instances that this electronic transmission does not constitute official notification of an award. Official notification will generally occur when a party receives the original signed award in accordance with Article 34(1). From time to time, parties agree to special notification procedures. For example, they sometimes agree that a representative from each party will attend the Secretariat’s offices at a designated time to collect the award simultaneously.
3-1231 The date of receipt of the award by a party will usually have legal consequences. First, it triggers the time limit of thirty days in which a party may request the correction or interpretation of the award pursuant to Article 35(2). It will generally also trigger time limits set, for example, by the law at the place of the arbitration or the place of enforcement (e.g. time limits for setting aside or enforcing an award). The date of receipt of the award by a party may also trigger time limits for complying with the award or relating to the accrual of interest.
3-1232 The Secretariat will generally notify any separate dissenting opinion to the parties along with the award. However, if the dissenting arbitrator cannot deliver the final, signed dissent promptly, the Secretariat will simply notify the award and send the dissent to the parties at a later date (for more information on the notification of dissents, see paragraphs 3-1147 and 3-1148).
3-1233 Full payment of the advance costs. As indicated in Article 34(1), the Secretariat will withhold notification of the award where the parties have not paid the costs of the arbitration in full. This restriction protects the financial interests of the ICC and the arbitrators. It applies only to amounts due to be paid to the ICC for the advance on costs and not to any amounts owed to third parties (e.g. for services related to hearings) or to an arbitrator to refund expenses. Nor does it apply to amounts held by the ICC as advances on arbitrators’ value added tax. The Secretariat may agree to withhold notification of an award in such circumstances if requested to do so by the arbitral tribunal.
3-1234 In practice, the notification of an award is rarely delayed by a failure to pay the advance on costs. This is because the Secretariat generally requests the payment of an advance on costs during the early stages of an arbitration (see paragraph 3-1345) and will usually deal with any failure to pay the advance on costs well before a draft award is submitted for scrutiny. In extreme situations, the Secretary General will apply Article 36(6). However, there may be times when a case progresses very quickly and an award is received before all monies are paid. Also, in those rare cases where the Court readjusts the advance on costs at a very late stage, the Court and its Secretariat may need to delay scrutiny of the award until the parties meet meet
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their payment obligations. Consequently, if an award needs to be withheld owing to non-payment of the advance on costs, it is usually withheld prior to scrutiny rather than being scrutinized and then withheld prior to notification.
3-1235 Upon receiving a draft award, the Court will occasionally readjust the advance on costs and decrease it to the amount already held by the ICC so that the award can be scrutinized and notified to the parties. This may happen where a decrease in the advance on costs is warranted for some reason, for example because the parties have reached a settlement and request the arbitral tribunal to issue an award by consent or an award relating to costs (as it sometimes happens that costs do not form part of the settlement).
3-1236 Confidentiality of ICC awards. The Court and its Secretariat will not provide copies of awards to any individual or entity other than the parties, their legal representatives and the arbitrators. Within the ICC structure, only Court members and Secretariat staff (provided they are not excused from the case) will have access to awards. However, the Court may publish extracts from awards after removing names and any other information that could disclose the parties’ identities, unless the parties agree to specific confidentiality requirements that do not permit such publication. It is the Secretariat’s usual practice not to release a sanitized award for publication less than three years after the case in which it was rendered was closed.
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ARTICLE 34(2): CERTIFIED COPIES OF AWARDS
Additional copies certified true by the Secretary General shall be made available on request and at any time to the parties, but to no one else.
3-1237 2012 modifications. None.
3-1238 Article 34(2) allows parties to request additional copies of awards, certified by the Secretary General or, as provided in Article 5(1) of Appendix II, the Secretary General’s delegate (in practice, often the Deputy Secretary General or General Counsel). Article IV(1), subparagraph (a), of the New York Convention requires a party seeking enforcement of an award to present a “duly authenticated original award or a duly certified copy thereof”. However, parties should always check local requirements to ascertain what the enforcing court requires of them.70A certified copy might not always be sufficient. If requested, the Secretariat will endeavour to assist parties in meeting unusual requirements (Article 34(5)). 3-1239 Article 34(2) reflects the Court’s duty of confidentiality by restricting the distribution of certified copies to the parties alone (or their duly authorized legal representatives).
ARTICLE 34(3): PARTIES’ WAIVER OF ANY OTHER FORM OF NOTIFICATION OF THE AWARD
By virtue of the notification made in accordance with Article 34(1), the parties waive any other form of notification or deposit on the part of the arbitral tribunal.
3-1240 2012 modifications. Minor linguistic adjustments.
3-1241 Article 34(3) is designed to protect an award against the assertion that it has not been properly notified. Notification pursuant to Article 34(1) is sufficient to meet ICC requirements. Any other external requirements, such as those established by applicable law (usually that of the place of the arbitration), are deemed to be waived, to the extent such waiver can be made under the law in question.
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ARTICLE 34(4): ARCHIVING OF ORIGINALS OF AWARDS
An original of each award made in accordance with the Rules shall be deposited with the Secretariat.
3-1242 2012 modifications. Minor linguistic adjustments.
3-1243 The Secretariat keeps at least one original of every ICC award, in addition to certain other documents listed in Article 1(7) of Appendix II (i.e. the Terms of Reference, decisions of the Court and correspondence issued by the Secretariat). It is necessary for the Secretariat to archive originals so that certified copies can be issued by the Secretary General pursuant to Article 34(2) and for record-keeping and research purposes.
3-1244 The Secretariat will destroy most other documents it holds shortly after the arbitration has ended (see paragraph 3-1249).
ARTICLE 34(5): ASSISTANCE IN HAVING AWARDS RECOGNIZED AND/OR ENFORCED
The arbitral tribunal and the Secretariat shall assist the parties in complying with whatever further formalities may be necessary.
3-1245 2012 modifications. None.
3-1246 In addition to providing certified copies of awards pursuant to Article 34(2), the Secretariat is committed to assisting parties in their efforts to have ICC awards formally recognized and enforced by national courts. However, the Secretariat must remain neutral, ensuring that it does not unfairly assist one party to the detriment of another.
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3-1247 The Secretariat’s practice is to construe “formalities” in Article 34(5) as including any requirements for the recognition or enforcement of an award. These formalities do not extend to matters of a more substantive nature, such as validating an award in cases where its validity is being challenged, as neither the Secretariat nor the Court is the appropriate body to provide such assistance. The Secretariat will consider any request for assistance on a case-by-case basis and reserves the right to refuse requests that may be too onerous or perceived as taking sides. For example, it will be reluctant to perform a service that the requesting party could perform itself or have done by a law firm or other service provider. Article 2(11) of Appendix III authorizes the Secretariat to seek reimbursement of any costs it incurs in performing additional services under Article 34(5).
3-1248 Assistance typically requested of the Secretariat includes the certification of documents other than awards (e.g. copies of the Terms of Reference or copies of correspondence notifying Court decisions to the parties). The Secretariat will not normally certify documents which it has not issued or which the Court has not approved. On the rare occasions when it does, it will not certify the document (e.g. the Request for Arbitration) as a true copy of the original but rather a true copy of the copy held in its files. The Secretariat may also provide parties with proof of receipt by other parties of documents or letters it has sent out to them (e.g. an award or the Request for Arbitration).
3-1249 Parties should note that the Secretariat will destroy many of the documents it holds once the arbitration has ended. It will generally keep only those documents that it is required to retain in its archives pursuant to Article 1(7) of Appendix II, i.e. awards, Terms of Reference, Court decisions and correspondence issued by the Secretariat. The Secretariat will warn the parties before documents are destroyed and grant them a time limit— usually thirty days—in which they may request the return of their respective documents. In practice, this is usually done in the Secretariat’s letter notifying the final award to the parties or in its letter informing the parties of the Court’s decision on the costs of the arbitration following the withdrawal or termination of a case. The Secretariat may charge a party for any costs incurred in returning documents to it (e.g. courier charges) when requested to do so.
ARTICLE 34(6): BINDING EFFECT OF THE AWARD ON PARTIES
Every award shall be binding on the parties. By submitting the dispute to arbitration under the Rules, the parties undertake to carry out any award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.
3-1250 2012 modifications. Minor linguistic adjustments.
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3-1251 Article 34(6) contains several important elements. First, it expresses a basic tenet of international arbitration, also affirmed by the New York Convention and most arbitration laws. The parties agree to be bound by and undertake to comply with any award. A party’s failure to respect this undertaking will often prompt the opposing party to initiate enforcement proceedings. Where successful, those proceedings enable the winning party to benefit from the coercive powers of national courts to seize money or assets that belong to the party against which enforcement is sought. Arbitrators and parties should note that the fact that a relevant state (e.g. where the place of the arbitration is situated or where enforcement is sought) is a party to the New York Convention does not guarantee enforcement of an award.71
3-1252 Article 34(6) also states that parties are deemed to have waived their rights to any waivable form of recourse against the award. This deemed waiver can have significant legal consequences. It will be a matter of law for the relevant national court to determine whether Article 34(6) is sufficient to waive any waivable form of recourse. Accordingly, parties should seek expert advice on local interpretations of Article 34(6). 3-1253 The question of what, if any, means of recourse are available against an arbitral award is regulated by the applicable procedural law, which will almost always be the law at the place of the arbitration. Under most arbitration laws the only forms of recourse permitted against awards are setting-aside or annulment proceedings. These proceedings do not allow courts to review an arbitral tribunal’s findings of fact or application of the law.
3-1254 Although most arbitration laws do not allow parties to waive their right to request a court to set aside an award, a small number of jurisdictions that are popular amongst users of arbitration (e.g. France, Belgium, Switzerland) do permit such a waiver in certain circumstances. While Article 34(6) refers to the waiver of any form of recourse, it is unlikely to be deemed sufficient to constitute a waiver of the right to bring proceedings to set aside an award even in those jurisdictions where such a waiver is possible.
3-1255 A few jurisdictions permit appeals against arbitral awards in addition to setting-aside or annulment proceedings. Such rights of appeal are usually waivable, so should be ruled out by Article 34(6). An example is section 69(1) of the English Arbitration Act 1996, which provides for a limited appeal of an arbitral award on a question of law in certain circumstances “unless otherwise agreed by the parties”, indicating that this right to appeal can be waived.
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ARTICLE 35(1): CORRECTION ON THE ARBITRAL TRIBUNAL’S INITIATIVE
On its own initiative, the arbitral tribunal may correct a clerical, computational or typographical error, or any errors of similar nature contained in an award, provided such correction is submitted for approval to the Court within 30 days of the date of such award.
3-1256 Purpose. Article 35(1) allows an arbitral tribunal to correct an award that has already been approved, signed and notified to the parties. The provision should be used only for mistakes that could alter the meaning of an award. It is rarely used in practice because most such mistakes by the arbitral tribunal can and should be identified during the Court’s scrutiny process (Article 33) and any remaining error is more likely to be spotted by a party when reviewing an award after receiving it and in this case will lead to an application under Article 35(2). The time limit of thirty days removes the risk of any persisting uncertainty over the finality of the award’s content.
3-1257 2012 modifications. None.
3-1258 Procedure for making a correction. The arbitral tribunal should send the Secretariat a draft “addendum”72that clearly lays out the desired corrections. In practice, an arbitral tribunal will usually contact the Secretariat before submitting its addendum to seek the Secretariat’s views on the best way to proceed. Articles 31, 33 and 34 apply mutatis mutandis to any addendum. The addendum should therefore be reasoned and will be subjected to the Court’s scrutiny process under Article 33. The arbitral tribunal must not send its correction directly to the parties.
3-1259 The form and content of addenda, as well as the procedure for their scrutiny and notification, are discussed in detail under Article 35(3).
3-1260 Time limit. The provision states that an arbitral tribunal’s draft addendum must be submitted to the Court for approval within thirty days of the date of the award, which is determined pursuant to Article 31(3). However, the Court’s practice is to consider this time limit met if the addendum is received by the Secretariat (as opposed to the Court) within that time.
3-1261 The time limit applies to all kinds of awards, whether final, partial, interim or by consent. If the time limit for correcting a partial or interim award has expired, the arbitral tribunal cannot simply make the correction in its next award. Rather, the parties must agree to extend the time limit, which they rarely do. In the event that an arbitral tribunal discovers an important error after the expiry of the time limit, it should inform the Secretariat.
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3-1262 Scope of Article 35(1). The provision is restricted to clerical, computational and typographical mistakes, and mistakes of a similar nature. The arbitral tribunal cannot rectify flaws it discovers in its own reasoning or add references.
3-1263 Clerical, computational and typographical mistakes are usually small, but their consequences can be significant. The mistakes that arbitral tribunals will tend to identify and seek to correct include those concerning the calculation of damages or interest, the misspelling of a word that may affect the meaning of a sentence, or the use of one word where another was clearly intended (e.g. “respondent” instead of “claimant”).
3-1264 In an unusual case from 2009, the arbitral tribunal signed the wrong version of an award, after apparently printing out an earlier version rather than the final version. The Secretariat, which was not in a position to identify the error, subsequently notified the signed version to the parties. The arbitral tribunal discovered the error, revoked the award, and asked the Secretariat to notify the correct version to the parties.
ARTICLE 35(2): APPLICATION BY A PARTY FOR THE CORRECTION OR INTERPRETATION OF AN AWARD
Any application of a party for the correction of an error of the kind referred to in Article 35(1), or for the interpretation of an award, must be made to the Secretariat within 30 days of the receipt of the award by such party, in a number of copies as stated in Article 3(1). After transmittal of the application to the arbitral tribunal, the latter shall grant the other party a short time limit, normally not exceeding 30 days, from the receipt of the application by that party, to submit any comments thereon. The arbitral tribunal shall submit its decision on the application in draft form to the Court not later than 30 days following the expiration of the time limit for the receipt of any comments from the other party or within such other period as the Court may decide.
3-1265 Purpose. Article 35(2) enables a party to request corrections of the kind described above in Article 35(1). A party may in addition request an interpretation of any part of an award that lacks sufficient clarity. The provision offers a rapid and simple procedure for dealing with such corrections and interpretations.73
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3-1266 2012 modifications. Minor linguistic adjustments.
3-1267 How to make an application. A party must file an application under Article 35(2) with the Secretariat, not with the arbitral tribunal. The application should refer to Article 35(2), bear the relevant ICC case file number, be in writing, contain reasons, and attach any document upon which it relies. However, parties should not include new documents since the application should refer only to the award and, if necessary, to any previously filed submissions or evidence. It cannot introduce new evidence. The application may be submitted by any means, including fax and email. The Secretariat does not require hard copies.
3-1268 Time limit for making an application. The Secretariat must receive the application within thirty days from the date on which the applicant receives the award in accordance with Article 34(1). Any dispute over whether an application under Article 35(2) has been filed within that time limit will be decided by the arbitral tribunal. If the Secretariat receives such an application well outside the time limit, it might advise the applicant that it is not in a position to take any further steps or forward it to the arbitral tribunal.
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3-1269 The arbitration law at the place of the arbitration may provide a different time limit for the submission of requests for correction or interpretation. However, the Court and ICC arbitrators have generally considered that, unless the time limit specified by the national law is found to be mandatory under that law, the time limit specified in the Rules will prevail.
3-1270 Procedure following receipt of the application. Upon receiving an application under Article 35(2), the Secretariat will determine whether to invite the Court to fix a special advance on costs for dealing with the application in accordance with Article 2(10) of Appendix III (see paragraphs 3-1279–3-1285). Once any advance on costs has been paid in full, the Secretariat will notify the other parties of the application. By separate letter sent the same day, it will notify the arbitral tribunal and invite it to fix a time limit for the other parties to comment on the application. Upon being notified of the application, the arbitral tribunal will take control of the procedure for correction or interpretation.
3-1271 Time limit for the other parties’ comments. The arbitral tribunal should promptly fix a time limit, normally not exceeding thirty days, for any comments from the other parties. Where the correction appears straightforward (e.g. correcting a miscalculation or inserting missing language), the arbitral tribunal may wish to fix little more than seven to ten days, whereas more extensive requests for interpretation may require the full thirty days. It would be very unusual for an arbitral tribunal to consider it necessary to fix a time limit in excess of thirty days.
3-1272 The time limit is intended to prevent delays rather than to set an absolute cut-off. Accordingly, the arbitral tribunal may, if it sees fit, take account of comments submitted after the expiry of the time limit, provided this does not delay the submission of the draft addendum or decision pursuant to Article 35(3). Furthermore, the Rules do not prevent the arbitral tribunal from authorizing a further round of submissions or comments from the parties in those rare cases where such steps are considered necessary.
3-1273 Time limit for submitting the draft addendum or decision. A draft addendum or decision74must be submitted to the Court for approval within thirty days of the expiry of the last time limit set by the arbitral tribunal for parties’ comments. However, a tolerance considers the time limit to have been met if the arbitral tribunal submits its draft to the Secretariat (rather than the Court) within that time. Although not expressly stated, the Court may extend the time limit if need be and in practice does so from time to time.
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3-1274 Scope of the provision.75The corrections that parties may request are identical to those that the arbitral tribunal is entitled to make pursuant to Article 35(1) (see paragraphs 3-1262–3-1264). The arbitral tribunal will determine whether the requested correction falls within the scope of Article 35(2) and whether it is necessary to make the correction. In some cases, the arbitral tribunal may acknowledge the error but, given its insignificance, refuse to correct it.
3-1275 In practice, applications for interpretation (as opposed to correction) are rarely accepted. Most arbitral tribunals find that to be admissible a request for interpretation must seek to clarify the meaning of an operative part of the arbitral tribunal’s decision. Therefore, requests for interpretation should generally target the dispositive section of the award or other parts that directly affect the dispositive section or the parties’ rights and obligations. Most such ambiguities will normally have been identified by the Court during the scrutiny process.
3-1276 Many applications for interpretation amount to attempted appeals aimed at altering the meaning of an award, raising an additional issue or attempting to have the arbitral tribunal reconsider its decision or the evidence. Article 35(2) does not empower an arbitral tribunal to revise the outcome or reasoning of its award. Attempted appeals accordingly do not fall within the scope of Article 35(2).
3-1277 Additional rights under national laws. The arbitration law at the place of the arbitration may grant parties additional rights relating to the completion of awards. For example, some laws allow parties to request an additional award addressing claims presented in the arbitration but omitted from the award.76In many instances, these additional rights will be waivable or subject to contrary agreements between the parties. By agreeing to ICC arbitration, the parties may in such cases be limited to the scope of correction and interpretation permitted by Article 35(2). In this regard, the Secretariat’s Note on Correction and Interpretation of Arbitral Awards (“Note”) states as follows:
Where the relevant national law or court practice provide specific circumstances in which an arbitral tribunal may render certain decisions other than corrections or interpretation regarding an award which had been approved and notified, such situations shall be treated in the spirit of this Note.
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3-1278 The arbitral tribunal will therefore need to determine whether its power to revise the award is limited to the provisions of Article 35(2), or whether additional non-waivable (or non-waived) rights exist under local law. The Court has in a number of exceptional cases approved addenda in which arbitral tribunals have relied on the law at the place of the arbitration to correct omissions in their awards.
3-1279 Costs. Article 2(10) of Appendix III empowers the Court to fix a special advance on costs to cover the arbitral tribunal’s fees and expenses and the ICC administrative expenses arising from a procedure for correction or interpretation under Article 35(2).77If a special advance is fixed, the applicant must pay it in full before the Secretariat notifies the application to the other parties and the arbitral tribunal.
3-1280 If, upon receipt of an application under Article 35(2), the Secretariat considers that the circumstances could necessitate an advance on costs, the Secretariat’s management will be consulted to decide whether the matter should be submitted to the Court.
3-1281 The Secretariat will invite the Court to fix an additional advance only where the costs of the arbitration have already been fixed by the Court pursuant to Article 37, i.e. where the application is for the correction or interpretation of a final award. If the request concerns a partial or interim award, the Court may be invited to increase the advance on costs pursuant to Article 36(2).
3-1282 The Court’s power to fix a special advance under Article 2(10) of Appendix III is discretionary. It generally does not do so where an initial and cursory review of the application suggests that the need for correction or interpretation may have been caused by an error or shortcoming of the arbitral tribunal. The applicant should not have to pay a fee to correct such an error.
3-1283 Applications made under Article 35(2) are not infrequently disguised attempts to appeal an award. In such cases, the applications are often lengthy and complicated, requiring the arbitral tribunal to undertake significant work before rejecting the application as falling outside the scope of Article 35(2). The Court will almost certainly fix an additional advance in such cases
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3-1284 The amount of the advance is at the Court’s discretion and depends on the nature of the application. In most recent cases it has fallen between US$ 5,000 and US$ 10,000. When the Court approves the arbitral tribunal’s Article 35(2) decision, it will fix the arbitral tribunal’s fees and the ICC administrative expenses. If there are three arbitrators, their fees are usually allocated in the same proportions as when fixing the costs of the arbitration pursuant to Article 37 (see paragraphs 3-1462–3-1465).
3-1285 If the Court has not fixed an additional advance, it has the power to fix fees for the arbitral tribunal and/or ICC administrative expenses when approving the arbitral tribunal’s decision under Article 35(2).78This power is rarely, if ever, used. In the rare event that it is used, the Secretariat will withhold notification of the addendum or decision to the parties until these costs are paid.
3-1286 The arbitral tribunal may award costs against a party when making its decision. Such costs may include both those fixed by the Court (if any) and legal and other costs incurred by the parties. For example, where, as often happens, the arbitral tribunal decides to reject an application because it is groundless or outside the scope of Article 35(2), it may decide to order the applicant to pay the other side’s costs and to bear any costs fixed by the Court. Normally, only the applicant will have advanced the costs fixed by the Court, so no payment from one side to the other will be needed. An arbitral tribunal should only award costs to a party that has claimed them.
3-1287 In the past it was rare for arbitral tribunals to include orders on costs in their decisions under Article 35(2). Such orders have become more frequent since 2010, when it became more common for the Court to fix special advances pursuant to Article 2(7) of Appendix III to the 1998 Rules, now Article 2(10) of Appendix III to the 2012 Rules.
3-1288 Addendum to an addendum. As an addendum correcting or interpreting an award forms part of the award (as specified in Article 35(3)), the addendum itself may be subject to an application for correction or interpretation made by a party pursuant to Article 35(2) or even spontaneous correction by the arbitral tribunal pursuant to Article 35(1). The thirty-day time limit for the parties to make such an application will start to run on the date they receive the addendum. Although rare, such applications are not unknown. In a 2007 case, for example, the claimant had requested the correction of a few typographical errors in the final award. It then requested a small correction to the resulting addendum twenty-five days after it had received the addendum, as paragraphs were misnumbered in one of its appendices. The arbitral tribunal rendered a second addendum shortly thereafter.
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ARTICLE 35(3): DECISIONS ON CORRECTION OR INTERPRETATION
A decision to correct or to interpret the award shall take the form of an addendum and shall constitute part of the award. The provisions of Articles 31, 33 and 34 shall apply mutatis mutandis.
3-1289 Purpose. Article 35(3) defines the form of decisions made by arbitral tribunals under Articles 35(1) and 35(2). As an addendum, the decision becomes part of the award it is modifying and, as such, must meet the requirements of all awards rendered under the Rules. Articles 31, 33 and 34 therefore apply, meaning in particular that the addendum must be reasoned and will be scrutinized by the Court.
3-1290 2012 modifications. Minor linguistic adjustments.
3-1291 Terminology: “addenda” and “decisions”.79The Court’s practice is to reserve the term “addendum” for decisions that result in the correction or interpretation of an award.
3-1292 Where the Article 35(2) application is entirely rejected and no order is made on costs, the decision will be called a “decision”. The Court does not consider a decision to be part of the award. Nonetheless, while not expressly stated in Article 35(2), the Court will require decisions to meet the same requirements as addenda with respect to form. In particular, decisions are scrutinized in the same way as addenda and must indicate the reasons why the arbitral tribunal is rejecting the application for correction or interpretation (see paragraphs 3-1295–3-1297). This will enable the Court to assess whether the decision has been correctly characterized or is in fact an addendum (and vice versa). For this reason it is necessary for the Court to scrutinize both. Also, imposing these requirements is a precautionary measure, as certain state courts may consider that a decision forms part of the award.
3-1293 Where the Article 35(2) application is entirely rejected and the arbitral tribunal makes an order in regard to costs pursuant to Article 35(2), the decision will then be called a “decision and addendum”. While differentiating the decision from an addendum, which corrects or interprets the award, the name dispels any doubt over whether the decision regarding costs forms part of the award for the purpose of enforcement.
3-1294 Decision making by three-member arbitral tribunals. Article 31(1), which permits awards that are not unanimous, also applies to decisions under Article 35(2). In practice, addenda and decisions will rarely be made by a majority because their content usually proves much less divisive than the
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merits of the case. The Court has nonetheless seen dissents from time to time. In one such case from 2010 the award being corrected was unanimous but a co-arbitrator dissented from the decision not to correct or interpret the award.
3-1295 Reasoning. As stated in Article 31(2), all awards must provide reasoning. An addendum or decision should explain why a request for correction or interpretation is, or is not, accepted and, as the case may be, order or refuse an amendment to the award. In this respect the Note states:
An Addendum or a Decision shall contain the reasons upon which it is based (Article 31(2)). It shall also include operative conclusions (“dispositif”), which set out any modification of the operative conclusions in the relevant award or a finding that the application is rejected. The Court will scrutinize this Addendum or the Decision (Article 33), after which it will be signed by the arbitrators (Article 31 (1) and (3)) and notified to the parties by the Secretariat (Article 34).
3-1296 An arbitral tribunal should not exaggerate the extent of its reasoning when faced with a meritless or straightforward application. In the Court’s experience, arbitral tribunals sometimes include extensive reasoning in decisions in an effort to strengthen the reasoning in their initial award. The Court will usually request that the arbitral tribunal remove superfluous reasoning, which can be counterproductive and even cast some doubt on the arbitral tribunal’s original reasoning.
3-1297 When rejecting a request for interpretation, an arbitral tribunal should in most cases merely provide a reasoned confirmation that the award is sufficiently clear. Similarly, a decision rejecting a request for correction normally need go no further than a concise, reasoned statement to the effect that a request falls outside the scope of Article 35(2) or does not identify an actual mistake.
3-1298 Other required content. As with awards, addenda and decisions should include a number of other features. In particular, the document should:
a) be correctly entitled “addendum”, “decision” or “decision and addendum”, according to the definitions set out in paragraphs 3-1291–3- 1293;
b) include all basic formalities such as (i) the ICC case reference number,
(ii) the names and contact information of the parties, their counsel, and the members of the arbitral tribunal, (iii) the place of the arbitration, (iv) the date of the addendum or decision, and (v) the arbitrators’ signatures;
c) clearly specify that it is an addendum to, or a decision concerning, the award to which it relates. It should also indicate all procedural steps from the approval of the award by the Court (e.g. the date of the award and the date it was received by each party); received by each party);
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d) where Article 35(2) applies, indicate the date on which the application was made and whether it was made within the time limit provided in the Rules;
e) where Article 35(2) applies, describe the contents of each of the requests for correction or interpretation contained in the application;
f) provide reasoning for the arbitral tribunal’s decisions in relation to each request in the application (including an indication of whether a request falls outside the scope of the Rules) or in relation to each correction made on the arbitral tribunal’s own initiative;
g) as noted above, include a dispositive order correcting or interpreting the award or rejecting the application; and
h) if one or more parties request a decision on costs, decide on such requests and fix the costs to be borne by each party.
3-1299 Apart from the above formalities, the Court does not normally require the arbitral tribunal to repeat any other information that has already been set out in the award itself.
3-1300 Addendum and decision checklist. At the time of writing, the Court and its Secretariat were in the process of completing a checklist to assist arbitral tribunals with the preparation of addenda and decisions. The checklist, once approved, will be sent to arbitral tribunals together with the Note and will function similarly to the ICC Award Checklist (see paragraphs3-1195–3-1197).
3-1301 Partial acceptance of an application pursuant to Article 35(2). Where the arbitral tribunal rejects certain parts of a party’s application while accepting others, it should place all these decisions into a single addendum. So long as it contains the correction or interpretation of at least one aspect of the award, an addendum can incorporate other decisions rejecting requests for correction or interpretation. In a recent case, the arbitral tribunal prepared both an addendum and a separate decision in response to a single application. When scrutinizing the documents, the Court requested that both be merged into a single addendum.
3-1302 Scrutiny process. The Court will scrutinize all decisions and addenda in accordance with Article 33. The Court will verify that the arbitral tribunal has given clear reasons for any modification and that it has not unnecessarily tried to justify its previous decisions.
3-1303 Notification of the decision. Once the draft is approved pursuant to Article 33, the procedure for finalizing and notifying addenda and decisions mirrors that of awards. Accordingly, the arbitral tribunal must finalize the document after considering the Court’s comments. It must then sign the requisite number of copies and submit them to the Secretariat for notification to the parties in accordance with Article 34(1).
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ARTICLE 35(4): REMISSION OF AN AWARD
Where a court remits an award to the arbitral tribunal, the provisions of Articles 31, 33, 34 and this Article 35 shall apply mutatis mutandis to any addendum or award made pursuant to the terms of such remission. The Court may take any steps as may be necessary to enable the arbitral tribunal to comply with the terms of such remission and may fix an advance to cover any additional fees and expenses of the arbitral tribunal and any additional ICC administrative expenses.
3-1304 Purpose. In the course of proceedings to set aside an award, a state court, depending on the particular law and procedural rules that apply, may remit an award to the arbitral tribunal to address what it considers to be inadequacies in, or omissions from, the award. In some jurisdictions this is referred to as a “remand”. While only a court at the place of the arbitration normally has the power to remit an award, the Court has already seen one case in which a court at the place of enforcement remitted an award several times to the sole arbitrator (see paragraph 3-1312).
3-1305 Article 35(4) specifically accommodates remission procedures within the parameters of the Rules. It establishes a process that is consistent with the Rules but remains flexible enough for the arbitral tribunal and the Court to proceed in a way that is consistent with the remittance order. It further empowers the Court to fix a special advance on costs to cover the arbitral tribunal’s additional work and expenses and the ICC administrative expenses.
3-1306 2012 modifications. Although it is entirely new, Article 35(4) reflects an existing practice of the Court that was developed in connection with several cases.
3-1307 Procedure established by the Court and its Secretariat. The procedural steps taken by the Court and its Secretariat following a remission order depend enormously on the law and rules governing the state court that remits the award and the terms of the remission. The Court will not act on a remission order of its own volition; it will take steps only if requested to do so by at least one of the parties. Where it does so, the issues that the Court may need to consider include:
3-1308 Procedure established by the arbitral tribunal. Another question is the procedure that will be adopted by the arbitral tribunal to address the remission. The Rules are silent on this. An arbitral tribunal should consider, among other factors:
3-1309 Examples of remission cases. Considering that remissions are rare and can vary in scope, the Court and its Secretariat have no fixed practices in dealing with them. They will proceed on a case-by-case basis. The examples below provide an account of steps that have been taken in past cases and of the particular circumstances that prompted them.
3-1310 In 2009, an English court remitted to the arbitral tribunal several issues relating to set-offs and costs in a final award. In the award, the majority of the arbitral tribunal had determined that the respondent was entitled to a set-off even though the respondent had not claimed that set-off. The court ordered the arbitral tribunal to make a “fresh” award within three months of the date of the order for remission. Although the case had been administratively closed by the Secretariat, the ICC Court found it unnecessary formally to “reopen” the case as the parties had both made applications pursuant to Article 29(2) of the 1998 Rules (now Article 35(2)) in light of the remission order and therefore appeared to assume that the case remained open for corrections and interpretations of the final award pursuant to the lex arbitri. The Secretariat initially contacted the president of the arbitral tribunal to inform him of the order. Upon being requested by the respondent to follow the order’s requirements, the arbitral tribunal contacted the parties and sought their comments on the procedure to follow. It subsequently issued a short procedural order indicating that it would consider the matter on the basis of written submissions alone and set deadlines for these submissions. The arbitral tribunal finally issued an amendment to the award, removing the set-off awarded to the respondent. The Court approved the amendment and also decided against fixing any special costs, in light of the nature of the remission order.
3-1311 In a 2010 case, a Swiss court remitted the final award to the arbitral tribunal after finding that the arbitral tribunal failed to take into account important arguments made by the claimant in relation to the calculation of damages. The ICC Court reopened the case but opted against fixing a special advance on costs, as it appeared from the terms of the remission that the arbitral tribunal may have been at fault in failing to consider arguments made by the claimant during the proceedings. The Court decided to remit the matter to the original arbitral tribunal. However, in an interesting twist the claimant promptly challenged all three members of that arbitral tribunal on account of their previous delays and poor performance in preparing the final award. The respondent objected to the challenge. While noting the extensive delays and concerns over the quality of the arbitral tribunal’s initial work, the Court considered that replacing the arbitrators for the purpose of the remission would have led to further delays and costs and therefore rejected the challenge.
3-1312 In a complex case involving a number of decisions by courts in Michigan, USA, at the trial and appellate levels, a final award that had been rendered in 1994 was remitted three times to the sole arbitrator. An odd feature of this case was that the place of the arbitration was London, United Kingdom, whereas the remission orders were issued as a result of enforcement of the
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award in Michigan. In the first remission order in 2001, the federal trial court found that one element in the award’s dispositive section was unclear and asked the sole arbitrator to clarify its meaning. At the claimant’s request, the ICC Court decided to reopen the case and fixed a special advance on costs. In the meantime, however, the remission order was appealed to the federal courts, ultimately leading to a revised remission order in 2004. On the basis of this second remission order, the sole arbitrator provided the parties in 2005 with a document clarifying the dispositive section but leaving a decision on statutory damages for domestic courts. A federal court in Michigan then proceeded to award the claimant such additional statutory damages. The respondent appealed the decision and the relevant federal appellate court determined in 2008 that it was the role of the sole arbitrator and not the trial court to decide on statutory damages. Accordingly, the award was again remitted to the sole arbitrator. The ICC Court again reopened the case at the claimant’s request and fixed an additional advance on costs. The same sole arbitrator issued a clarification on the issue of statutory damages shortly thereafter, in 2009.
3-1313 In another case, a German court decided in 2009 to annul a final award and to remit the case back to the sole arbitrator on an issue concerning the claimant’s capacity to sue. The ICC Court reopened the proceedings and fixed a modest special advance on costs. That advance on costs was later readjusted and raised due to the increasing complexity of the remission caused by various agreements and requests from the parties.
3-1314 In 2011, a Swiss court at the place of arbitration partly annulled a final award and decided to remit the matter to the sole arbitrator on an issue concerning legal costs and the violation of a party’s right to submit arguments on the matter. The ICC Court decided to reopen the case and to fix a special advance on costs based on the value of the legal costs that were being sought by the claimant. The same sole arbitrator dealt with the remission, inviting the parties to comment on the issue of legal costs. At the beginning of 2012, the sole arbitrator rendered a final award on legal costs upholding his previous conclusions on the matter.
ARTICLES 36 AND 37: INTRODUCTION TO THE ICC’S COSTS SYSTEM
3-1315 Articles 36 and 37, together with Appendix III (“Arbitration Costs and Fees”) and the costs scales contained therein, provide the framework for ICC arbitration costs. Articles 4(4) and 7(3), which require the payment of a filing fee when a Request for Arbitration or a Request for Joinder is submitted, are also relevant to costs.
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3-1316 Final costs. The basic scheme of the Rules in respect of the final determination of costs (Article 37) is as follows:
3-1317 Advance payments. Rather than paying all costs at the end of the case, when the final total amount is fixed, the parties are required to pay the ICC administrative expenses and the arbitrators’ fees and expenses through advance payments or deposits. The amount of these advances is fixed by the Secretary General or the Court, depending on their nature, and can be readjusted if necessary. The ICC’s costs system employs three types of advance payments at different stages of the arbitration:
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3-1318 Purpose of the advance payments. All three types of advance payments are intended to ensure that the ICC holds sufficient funds to cover all ensuing steps in the arbitration until the next payment is due. The initial filing fee is meant to cover the initial expenses of processing and notifying a Request for Arbitration. The provisional advance is designed to cover all costs up to the establishment of the Terms of Reference (Article 23). The advance on costs is the largest advance payment as it is intended to cover the costs of the arbitration through to the very end of the case.
3-1319 How do the advance payments relate to each other? The provisional advance and the filing fee are components of the advance on costs, although they are paid before the advance on costs has been fixed. Accordingly, the filing fee is credited to the provisional advance and both the filing fee and the provisional advance are credited to the paying party’s share of the advance on costs.
3-1320 Advance on costs. The Rules address the advance on costs in Article 36 and in Article 1 of Appendix III. These provisions establish a system designed to ensure advance payment of the ICC administrative expenses and the arbitrators’ fees and expenses, and to prevent a delay or an interruption in the arbitration for financial reasons. The advance on costs is an estimate of what the costs of the arbitration will be if a full arbitration takes place. The core features of the advance on costs are as follows:
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3-1321 Costs scales. The Court fixes the ICC administrative expenses and the arbitrators’ fees by reference to the ICC costs scales, which are also used when the Court fixes the advance on costs. The costs scales are expressed in US dollars and are based on a regressive scale: as the amount in dispute increases, the real amount of the costs increases, but these costs decrease as a proportion or percentage of the amount in dispute. This ensures that cases in which the amount in dispute is high do not result in unreasonably high costs. The ICC administrative expenses and arbitrator’s fees are fixed by applying the following principles:
3-1322 Derogations from the scales are rare. Parties may normally assume that the administrative expenses and arbitrators’ fees fixed by the Court will fall within the costs scales. The costs scales are available in Article 4 of Appendix III to the Rules. A simulation of the likely cost of an arbitration based on the costs scales can be obtained using the cost calculator available at www.iccarbitration.org.
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3-1323 Advantages of the ICC costs system. The use of a published cost scale based on the amount in dispute presents a number of advantages for users. First, the costs of the arbitration are proportionate to the monetary value of the claims. Second, it discourages parties from making frivolous or inflated claims that would increase the costs of the arbitration. Third, it creates a financial incentive for arbitrators to manage the case efficiently, which would not exist if they were paid by the hour. Finally, it provides the parties from the very outset with a degree of transparency and predictability as to the total cost of the arbitration.
3-1324 2012 modifications. The 2012 revision did not change the basic principles of the ICC costs system. Nonetheless, both Articles 36 and 37 contain a number of changes, which will be discussed in turn below. A significant addition is Article 36(4), which enables the Court to allocate the advance(s) on costs fairly among the parties in multiparty arbitrations. The provision does so by providing the Court with sufficient discretion to derogate from normal practices relating to advances on costs.
3-1325 Purpose of Article 36. Article 36, together with the relevant parts of Appendix III, deals with all aspects of the fixing of advance payments and covers not only the payments themselves but also failure or refusal to pay.
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The Article is organized as follows:
ARTICLE 36(1): PROVISIONAL ADVANCE
After receipt of the Request, the Secretary General may request the claimant to pay the provisional advance in an amount intended to cover the costs of the arbitration until the Terms of Reference have been drawn up. Any provisional advance paid will be considered as a partial payment by the claimant of any advance on costs fixed by the Court pursuant to this Article 36.
3-1326 Purpose. Article 36(1) is intended to ensure the payment of sufficient funds for the initial stages of the arbitration. In particular, it is intended to cover the initial work carried out by the Secretariat and the Court, including the constitution of the arbitral tribunal, and by the arbitral tribunal in preparing the Terms of Reference. Payment of the provisional advance (or of any advance requested at that stage) is a condition for the Secretariat to transmit the case file to the arbitral tribunal in accordance with Article 16.
3-1327 2012 modifications. The second sentence of Article 36(1) was previously contained in Article 30(3) of the 1998 Rules.
3-1328 Fixing by the Secretary General and delegation. The power to fix the provisional advance lies with the Secretary General. The Court’s approval is not required. Nonetheless, the Secretariat will normally inform the Court of the amount that has been fixed when it first formally submits the case to the Court for decisions on other matters. The Secretary General may, and regularly does, delegate the power to fix the provisional advance to the Deputy Secretary General or the General Counsel pursuant to Article 5(1) of Appendix II.
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3-1329 Discretionary power. The use of the word “may” indicates that the Secretary General has discretion to decide whether or not to fix a provisional advance. In practice, a provisional advance is fixed in almost every case.
3-1330 Time of fixing. The Secretary General usually fixes the provisional advance before the Request for Arbitration is notified to the respondent. The fixing of the provisional advance may be delayed if the Request for Arbitration does not provide the necessary quantification or estimate for each claim, as required in the 2012 version of Article 4(3). Since the amount of the provisional advance will depend on the number of arbitrators, the Secretary General very occasionally also defers fixing the provisional advance until more information concerning the number of arbitrators is available (see paragraph 3-1335).
3-1331 The claimant is requested to pay the provisional advance immediately after it is fixed and usually within a time limit of thirty days.
3-1332 Calculation of the amount. The Rules do not establish how the provisional advance is to be calculated, although Article 1(2) of Appendix III provides general guidelines for the Secretary General:
The provisional advance fixed by the Secretary General according to Article 36(1) of the Rules shall normally not exceed the amount obtained by adding together the ICC administrative expenses, the minimum of the fees (as set out in the scale hereinafter) based upon the amount of the claim and the expected reimbursable expenses of the arbitral tribunal incurred with respect to the drafting of the Terms of Reference. If such amount is not quantified, the provisional advance shall be fixed at the discretion of the Secretary General. Payment by the claimant shall be credited to its share of the advance on costs fixed by the Court.
3-1333 The Secretary General therefore enjoys some discretion in fixing the provisional advance. The usual practice is to quantify the provisional advance by adding together: (i) half of the administrative expenses resulting from the application of the costs scale, (ii) half of the minimum arbitrator’s fees resulting from the application of the costs scale multiplied by the number of arbitrators and (iii) an amount corresponding to the estimated reimbursable expenses of the arbitrator(s) for the initial phase of the arbitration up to the establishment of the Terms of Reference. The provisional advance is likely to be fixed at a lower amount in cases involving an exceptionally large amount in dispute that would otherwise lead to an excessively high provisional advance. At the time of writing, the practice was to cap the provisional advance at US$ 150,000 in large cases.
3-1334 The provisional advance is calculated on the basis of the claims made by the claimant only (as the only party requested to pay the provisional advance).
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3-1335 Relevance of the number of arbitrators. The number of arbitrators to be appointed has a bearing on the calculation of the provisional advance:
3-1336 Currency. The provisional advance is fixed in US dollars. When the claims are made in another currency, the Secretariat will convert that amount into US dollars using the exchange rate on the date of commencement of the arbitration.
3-1337 Payment of the provisional advance. The Secretariat will usually request that the claimant pay the provisional advance within thirty days of being notified that it has been fixed. This request for payment is usually included in the Secretariat’s letter informing the claimant that the Request has been notified to the respondent.
3-1338 Failure to pay. If the claimant does not pay the provisional advance, the Secretariat will not transmit the case file to the arbitral tribunal in accordance with Article 16 of the Rules. Perhaps even more importantly, the Secretariat usually postpones any significant steps towards the constitution of the arbitral tribunal, or other decisions by the Court, until the provisional advance has been paid. In order to ensure prompt handling of the case, it is therefore in a claimant’s best interests to pay the provisional advance promptly and within the time limit fixed by the Secretariat. If the claimant has still not paid after several reminders, the Secretary General may apply Article 36(6), as a result of which the claims may be deemed withdrawn.
3-1339 Readjustment of the provisional advance. Article 36(1) does not mention that the quantum of the provisional advance can be readjusted. However, this is possible where the information on the basis of which it was calculated is no longer accurate (e.g. following a change in the value of the claimant’s claims or in the assumed number of arbitrators).
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ARTICLE 36(2): ADVANCE ON COSTS
As soon as practicable, the Court shall fix the advance on costs in an amount likely to cover the fees and expenses of the arbitrators and the ICC administrative expenses for the claims which have been referred to it by the parties, unless any claims are made under Article 7 or 8 in which case Article 36(4) shall apply. The advance on costs fixed by the Court pursuant to this Article 36(2) shall be payable in equal shares by the claimant and the respondent.
3-1340 Purpose. Article arbitrators’ fees and expenses for the arbitration. The circumstances of the case may change as the proceedings progress, requiring an upward or downward adjustment of the advance on costs (Article 36(5)).
3-1341 Article 36(2) sets out a general rule for fixing a single advance on costs based on the sum of all claims made by all parties. It also specifies how payment is to be allocated between the parties, with each party having to pay half of the advance on costs. Article 36(3), discussed below, allows for separate advances on costs, which in turn affects how payments are allocated.
3-1342 Article 36(2) explicitly excludes from its scope of application those cases in which claims are made pursuant to Articles 7 (joinder) or 8 (where there are more than two parties in the arbitration). In such cases, the advance on costs is allocated among the parties in accordance with Article 36(4). In practice, where all parties on either the claiming or defending side are involved in all the claims made by that side, then Article 36(4) will be applied in such a way that the advance on costs and its allocation will be the same as it would have been under either Article 36(2) or 36(3) (see paragraph 3-1400).
3-1343 2012 modifications. Article 36(2) replaces the former Article 30(2) of the 1998 Rules. The substance remains unchanged except that the fixing of advances on costs in multiparty cases (where either Article 7 or Article 8 applies) has been removed from the provision. The second sentence of Article 36(2), concerning payment, previously appeared in Article 30(3) of the 1998 Rules. Finally, the former Article 30(2) contained statements concerning the readjustment of advances on costs and the fixing of separate advances, which have now become separate provisions in the 2012 Rules (Articles 36(5) and 36(3) respectively).
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Timing of the advance on costs
3-1344 Article 36(2) states that the Court shall fix the advance on costs “as soon as practicable”. The Secretariat will usually invite the Court to fix the advance on costs as soon as it considers that sufficient information is available for the Court to do so. In particular, information concerning the number of arbitrators and the place of arbitration will be relevant. Also, as the amount in dispute is a key ingredient in calculating the advance on costs, the Court will ensure that it has information on the quantum or estimated monetary value of all claims, whether they are principal claims, counterclaims or cross-claims. Consequently, the Secretariat is unlikely to invite the Court to fix the advance on costs before it has received the Answer to the Request (or the deadline for its submission has expired) and, in particular, information on any counterclaims.
3-1345 The parties are usually not required to pay the advance on costs immediately after it has been fixed. The Secretariat’s practice is rather to wait until the case file has been transmitted to the arbitral tribunal pursuant to Article 16 before requesting payment. 3-1346 As indicated above, the Court may at any time readjust the advance on costs pursuant to Article 36(5).
Calculation of the advance on costs
3-1347 The advance on costs is intended to cover the ICC administrative expenses and the fees and expenses of the arbitrators through to the completion of the arbitration. The administrative expenses and arbitrators’ fees are fixed by reference to the costs scales, which are based on the amount in dispute, i.e. the aggregate value of all claims. The amount of the arbitrators’ expenses is estimated by the Court. Parties may use the cost calculator on the Court’s website (www.iccarbitration.org) to obtain an estimation of the likely amount of the advance on costs (excluding the arbitrators’ expenses) for a given amount in dispute.
Amount in dispute
3-1348 Aggregate value: The “amount in dispute” is the aggregate value of all claims. It comprises:
3-1349 As to claims for interest and costs, it is the Court’s usual practice not to include them in the calculation of the amount in dispute. However, an interest claim may be used instead of a claim for principal where the interest claim exceeds the quantum of the principal claim. In one case, the
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Court readjusted the advance on costs after the respondent made additional counterclaims for interest whose value considerably exceeded the value of the initial counterclaims. The interest appeared to be the principal subject of the counterclaims and the legal grounds on which it was claimed appeared to be different from those of the initial counterclaims, creating more work for the arbitral tribunal. The Court may also take into account a costs claim where it is the only claim or the last remaining claim. In several cases where the Court took this approach, the claimant had withdrawn its principal claim and the respondent wished to maintain its costs claim.
3-1350 Unquantified amount in dispute. Articles 2(1) and 2(5) of Appendix III specify that when the amount in dispute is not stated, the Court shall fix the arbitrators’ fees and the ICC administrative expenses “at its discretion”. The Court has developed a series of general practices in exercising that discretion. Where information on the file points towards a certain monetary value for the claims, it may be used even where the parties do not expressly quantify their claims or estimate their value. Where there is no discernible information available, the Court uses default notional figures.
3-1351 The changes introduced in Articles 4(3), subparagraph (d), 5(5), subparagraph (b), and 7(2), subparagraph (c), of the 2012 Rules were designed to encourage parties to indicate the amount in dispute or at least estimate the monetary value of their claims. Although the application of these new provisions was in its infancy at the time of writing, it is expected that notional amounts in dispute will be necessary for unquantifiable claims only where the parties are genuinely unable to provide even an estimate of their monetary value.
3-1352 Partially quantified amount in dispute. A partially quantified amount in dispute will arise where some but not all of the claims are quantified or where one or several claims have been given a minimum or approximate value.82In such circumstances, the Court will normally fix the advance on costs by applying the costs scales to the partially quantified amount in dispute. Its current practice is to add an amount to both the arbitrators’ fees and the ICC administrative expenses to compensate for the partial quantification.
3-1353 Currency. The costs scales are expressed in US dollars and the advance on costs is fixed in US dollars, unless there is a legal requirement preventing the Court from doing so (Article 4(3) of Appendix III). When the claims are made in a currency other than US dollars, the Secretariat will convert the amount into US dollars for the purpose of applying the costs scales. The Secretariat uses the exchange rate on the date of receipt of the Request for Arbitration for all claims.
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Application of the scales to the amount in dispute
3-1354 Once the amount in dispute has been determined in accordance with the principles set forth above, the Court fixes the advance on costs by referring to the costs scales and calculating the sum of (i) the administrative expenses, (ii) the anticipated arbitrators’ fees and (iii) an estimate of the arbitrators’ expenses. The costs scales do not automatically provide a total amount for the advance on costs fixed by the Court. Rather, the following principles apply:
3-1355 The cost calculator on the Court’s website provides parties with the minimum, maximum and average fees for one arbitrator based on any given amount in dispute. It then offers, by way of illustration only, a total figure based on the average amount of fees multiplied by the number of arbitrators plus the administrative expenses. The following should be noted:
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Payment of the advance on costs
3-1356 In equal shares. The second sentence of Article 36(2) requires each side to pay the advance on costs in equal shares. Therefore, a respondent is obliged to contribute to the advance on costs to the same extent as the claimant, irrespective of whether the respondent makes any claims. Of course, this obligation is temporary and does not in any way affect the arbitral tribunal’s power to allocate the final costs of the arbitration between the parties at its discretion (Article 37(4)).
3-1357 Time limits for payment. Once the advance on costs has been fixed or readjusted, the Secretariat informs the parties and invites payment of any remaining balance. If the case file has not been transmitted to the arbitral tribunal, the Secretariat will not invite payment until this is done, although it will advise the parties of the Court’s decision to fix or readjust the advance on costs once it has been taken. When inviting payment, the Secretariat specifies the exact amount due by each side as well as a time limit for payment. It sets an initial time limit of thirty days, unless there are particular reasons for granting a longer or shorter time limit.
3-1358 Whilst the practice described above remains extant at the time of writing, provision is made in the Rules for the payment of the advance on costs by instalments. Article 1(6) of Appendix III is a new provision by which the Court “may authorize the payment of advances on costs, or any party’s share thereof, in instalments, subject to such conditions as the Court thinks fit, including the payment of additional ICC administrative expenses”. It remains to be seen whether the Court will apply this provision across the board. Were it to do so, the Court would need to require payment of further sums to cover the additional work that the Secretariat will need to perform in dealing with these instalments. The Court may decide to use this provision only in cases where particular circumstances justify such an approach and the Court receives reasonable assurances from the party or parties concerned that future payments will be made (e.g. where a party also furnishes the ICC with a letter of credit).
3-1359 Means of payment. The parties are usually required to pay their respective shares of the advance on costs by wire transfer to the ICC’s bank account. The Secretariat will provide the relevant bank details with the initial request for payment.
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3-1360 In order to ease the burden of payment, the Court accepts payment through bank guarantees in three different situations described in Appendix III:
3-1361 Parties must keep in mind that their ability to pay by bank guarantee is contingent upon the agreement of the ICC’s bank to set up a bank guarantee with the paying party’s bank. In addition, the parties must ensure that the bank guarantee does not expire before the costs of the arbitration are fixed by the Court pursuant to Article 37. The Secretariat will normally remind the parties to extend the bank guarantee when needed. If a party fails to do so, the Secretariat will simply call the bank guarantee shortly before its expiry.
3-1362 Failure to pay the advance on costs. As discussed further below, the Rules do not contain any express sanction for a party that does not contribute to the advance on costs. Rather, Article 36(5) allows any other party to pay by substitution. In practice, the Secretariat will invite a party to substitute for another party if the latter has failed to pay its share after several reminders (see paragraphs 3-1407–3-1411).
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3-1363 A failure to pay the advance on costs may well affect the proceedings. If the Secretariat does not hold sufficient funds for the arbitral tribunal to continue working on the case, it will inform the arbitral tribunal of this and may suggest that the arbitral tribunal suspend its work even before Article 36(6) is applied. The Court will also normally defer the scrutiny of an award pursuant to Article 33 until the advance on costs has been paid in full, although it is very rare for an advance on costs to remain unpaid at such a late stage.
3-1364 If the advance on costs remains unpaid, Article 36(6) sets out a procedure whereby, after a final request for payment, the claims are deemed withdrawn. The Secretariat will warn the parties at least once before the Secretary General applies Article 36(6).
3-1365 Parties are free to request the fixing of separate advances on costs pursuant to Article 36(3). This may relieve them of the need for substitution and protect one side’s claims from being deemed withdrawn pursuant to Article 36(6) where the other side fails to pay. Parties are also at liberty to seek relief from the arbitral tribunal in the event of a failure to pay the advance on costs (see paragraphs 3-1412–3-1415).
3-1366 Inability to pay. Although the Secretariat may extend the time limit for paying the advance on costs, the Court will not adjust the advance on costs on account of a party’s financial situation or its inability to pay.
3-1367 Readjustment of the advance on costs. As provided in Article 36(5), the Court is free to readjust the advance on costs at any stage of the arbitration.
ARTICLE 36(3): SEPARATE ADVANCES ON COSTS
Where counterclaims are submitted by the respondent under Article 5 or otherwise, the Court may fix separate advances on costs for the claims and the counterclaims. When the Court has fixed separate advances on costs, each of the parties shall pay the advance on costs corresponding to its claims.
3-1368 Purpose and basic principles. Article 36(3) is relevant only if counterclaims have been submitted by the respondent, either in its Answer or subsequently. If such is the case, the Court may fix separate advances on costs for the principal claims and the counterclaims. In doing so, it applies the costs scales separately to each side’s claims, instead of fixing a single advance based on the aggregate amount in dispute (the “global” advance on costs). Where the Court fixes separate advances, each side must pay the entire amount of the separate advance on costs corresponding to its own claims. This provision serves to overcome any impasse where one side refuses to contribute towards the payment of an advance on costs that has been calculated including the other side’s claims. Requesting separate advances
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on costs in such situations provides a party with an alternative to either contributing to an advance on costs corresponding to all claims or breaching its payment obligations and exposing its own claims to deemed withdrawal pursuant to Article 36(6).
3-1369 A simple example will help to explain the purpose of the provision. A claimant has made claims of US$ 1 million. The respondent then makes counterclaims of US$ 20 million, which, on any objective interpretation of the basis of the claims, appears to be inflated. This requires the Court to readjust and significantly increase the advance on costs. Were it not for the possibility of requesting separate advances on costs, the claimant’s only options would be (i) to pay 50 per cent of the entire global advance on costs, based on an amount in dispute of US$ 21 million or (ii) to refuse to pay 50 per cent in which case if the respondent also refuses to pay, the Secretary General would apply Article 36(6) and all claims would be considered withdrawn. However, if separate advances on costs are requested, the claimant will be invited to pay an advance corresponding to its US$ 1 million claim and the respondent will be invited to pay an advance corresponding to its inflated US$ 20 million claim. If either party fails to pay its advance, Article 36(6) will be applied to that party’s claims only and the arbitration will continue only with the other party’s claims.
3-1370 In keeping with Article 36(2), those cases in which claims are made pursuant to Articles 7 (joinder) or 8 (where there are more than two parties in the arbitration) are implicitly excluded from the scope of Article 36(3). In such cases, the allocation of the advance on costs is determined according to Article 36(4). In practice, the amounts to be paid by the parties in such cases will often be the same as if the Court were to apply Article 36(2) or 36(3) (see paragraph 3-1400).
3-1371 2012 modifications. Article 36(3) is a new provision bringing together the provisions on separate advances on costs that formerly appeared separately in Articles 30(2) and 30(3) of the 1998 Rules. No substantive changes have been made to those provisions.
3-1372 Calculation of the separate advances on costs. The separate advances on costs are calculated in the same manner as a single advance on costs, the only difference being that the Court applies the costs scales separately to each side’s claims or counterclaims (see paragraphs 3-1347 and following). The regressive nature of the costs scales means that, in almost all cases, the aggregate amount of the separate advances on costs will exceed the amount of a single global advance based on the sum of the claims and counterclaims, so the total amount the parties will need to advance is considerably higher. However, that does not mean that the arbitral tribunal and the ICC will be paid more at the end of the arbitration, as the Court will calculate the arbitral tribunal’s fees and the ICC administrative expenses at
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the end of the case on the basis of the global amount of the claims. It follows that where separate advances on costs have been fixed and paid, the parties will often be reimbursed a portion of those advances at the end of the case.
3-1373 The Court’s discretion. The fixing of separate advances on costs is at the Court’s discretion. In practice, the Court does not fix separate advances on costs without a request from a party. If it receives such a request, it will usually apply Article 36(3) only where the parties have failed to pay in full the global advance on costs fixed pursuant to Article 36(2). The Court’s reluctance to fix separate advances on costs is motivated by a desire to avoid the additional financial burden that it would impose on parties (see paragraph 3-1372). Also, the Court will be wary of fixing separate advances in cases where they appear to have been requested for purely tactical reasons.
3-1374 Upon receiving a request for separate advances on costs, the Secretariat will first send a letter to the parties informing them of the financial consequences of doing so. In particular, it will set out the amounts that the costs scales provide for the total value of the principal claims and the counterclaims considered separately as opposed to when they are considered together. This allows the parties to make an informed decision about whether the fixing of separate advances on costs is really in their interests given the higher aggregate amount they will need to advance.
3-1375 Timing. Article 36(3) does not contain any restrictions on when the Court can fix separate advances on costs. That said, the Secretariat’s usual practice is not to fix them before the Terms of Reference have been established. In addition, the Court will normally not fix separate advances unless it is satisfied that the parties are unwilling to pay the global advance on costs.
3-1376 Payment of separate advances on costs. Pursuant to the second sentence of Article 36(3), each side is required to pay the entire amount of the separate advance fixed for its own claims. As mentioned above, it is the Court’s usual practice first to invite the parties to pay the global advance on costs, and to ask them to pay the separate advances only if the global advance is not paid. Even after fixing separate advances on costs, the Court will normally give the parties a final opportunity to pay the global advance. This provides a last chance to avoid having to pay the increased upfront costs that separate advances imply. Failing payment of the global advance, the Court’s decision to fix separate advances becomes operative by default.
3-1377 Means of payment. For information on how to pay, see paragraphs 3-1359–3-1361.
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3-1378 Failure to pay separate advances on costs. Failure to pay a separate advance on costs may well affect the proceedings, although only in relation to those claims to which the unpaid separate advance relates. Article 36(6) allows claims to be deemed withdrawn in the event that the corresponding advance on costs is not paid. The Secretariat will warn the parties at least once before the Secretary General applies Article 36(6). Where one side’s claims are withdrawn owing to its failure to pay, the arbitration will proceed only with those claims for which the separate advance on costs has been paid.
3-1379 Where claims are deemed withdrawn under Article 36(6), the same claims may be brought “at a later date in another proceeding”. They cannot, therefore, be reintroduced into the same arbitration unless all parties and the arbitral tribunal agree otherwise.
ARTICLE 36(4): ADVANCES ON COSTS IN MULTIPARTY ARBITRATIONS
Where claims are made under Article 7 or 8, the Court shall fix one or more advances on costs that shall be payable by the parties as decided by the Court. Where the Court has previously fixed any advance on costs pursuant to this Article 36, any such advance shall be replaced by the advance(s) fixed pursuant to this Article 36(4), and the amount of any advance previously paid by any party will be considered as a partial payment by such party of its share of the advance(s) on costs as fixed by the Court pursuant to this Article 36(4).
3-1380 Purpose. Article 36(4) is designed to grant flexibility to the Court in ensuring that advance payments are fairly distributed among the parties in multiparty arbitrations. In the vast majority of these cases, the Court will fix and allocate the advance on costs in exactly the same manner as under Article 36(2) or 36(3), as the interests of each claimant as well as each respondent will be aligned. However, in more complex arbitrations, the Court may find it appropriate to allocate the advance on costs differently among the parties or even to fix multiple advances on costs.
3-1381 2012 modifications. New provision.
3-1382 Scope of application. Article 36(4) applies to the fixing of advances on costs in all cases with more than two parties, be it due to the joinder of a party pursuant to Article 7 or the fact that more than two parties are named in the Request for Arbitration (as either claimants or respondents). Article 36(2) specifically excludes such cases (in which Article 7 or 8 applies) from its scope of application, referring them instead to Article 36(4).
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Application of Article 36(4)
3-1383 Range of decisions in practice. The Court’s broad discretion under Article 36(4) enables it (i) to fix one or more advances on costs and (ii) to allocate payment of such advance(s) in any manner it thinks fit. The Court is expected to apply Article 36(4) as follows:
3-1384 Payment. Where the Court decides to allocate the advance on costs equally between the claimants and the respondents (see paragraph
3-1383), each side that comprises more than one party will need to determine what share, if any, of the advance each party on that side will bear. If the Court decides not to allocate the advance equally between each side (see paragraph 3-1383), it will fix specific amounts for each party to pay.
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3-1385 The time limit for payment and the means of payment are the same as under Article 36(2) (see paragraphs 3-1357–3-1361).
3-1386 Consequences of non-payment. If a party fails to pay its share of the advance on costs, any other party may pay that share pursuant to Article 36(5). Depending on the circumstances of the case, the amount payable by each party could be made up of contributions to different sets of claims (see paragraphs 3-1394 and following). In such instances, the Secretariat will send a letter to the parties clarifying which of the other parties is invited to substitute for the defaulting party in whole or in part. The Secretariat will take into account which parties are involved (whether as claiming or responding party) in which sets of claims and, in most cases, should be able to ensure that no party is asked to contribute towards a set of claims in which it is not involved. If no other party substitutes for the defaulting party, the Secretary General may apply Article 36(6), with the result that the claims may ultimately be deemed withdrawn.
3-1387 Previous advances fixed pursuant to Article 36. Article 36(4) states explicitly that in situations where the Court has previously fixed an advance on costs pursuant to Article 36 (e.g. pursuant to Article 36(2)), any such advance shall be replaced by the advance(s) fixed pursuant to Article 36(4). In practice, the Secretariat will warn the parties before inviting the Court to fix advances pursuant to Article 36(4) and will credit any payment made previously as an advance on costs to the paying party’s share of the advance(s) on costs fixed by the Court pursuant to Article 36(4).
Multiple advances on costs
3-1388 As mentioned above (see paragraph 3-1383), Article 36(4) permits the Court to fix more than one advance on costs. Although it is expected that the Court will fix only one advance when initially applying Article 36(4), it is likely to exercise its discretion to fix more than one advance in circumstances similar to those that would justify the fixing of separate advances under Article 36(3).
3-1389 As with separate advances on costs, the Court is likely to fix several advances on costs only if requested to do so by one or more parties and for the sole purpose of isolating claims or sets of claims. However, in light of the multitude of parties, the Court will have more options when fixing multiple advances on costs. A common approach would be to fix one advance on costs for each set of claims. However, the provision also allows for different approaches, such as isolating a party’s claims in order to fix one advance for that party’s claims and a second global advance for all other claims in the arbitration. If applied to the respective claims of several parties, the latter approach could lead to the fixing of numerous advances on costs, each for the claims of a different party.
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3-1390 When fixing more than one advance, the Court will naturally apply the costs scales separately to the total amount of the claims for which a distinct advance on costs is to be requested and, for each advance, will indicate the share payable by each of the parties concerned.
Alternative allocation of advance(s) on costs
When will the Court opt for an alternative allocation?
3-1391 As noted above (see paragraph 3-1383), the Court’s standard approach under Article 36(4) will be to fix a single advance on costs and request its payment in equal shares, as under Article 36(2).
3-1392 It is expected that the Court will require payment to be shared differently if either or both of the following situations applies:
3-1393 In all other cases, unless there are exceptional reasons for doing otherwise, the Court is expected to require the advance on costs to be paid in equal shares by the claimants’ side and the respondents’ side.
Calculating the allocation
3-1394 Basic principles. Where the Court decides to fix multiple advances on costs and fixes the contribution of each party to each advance on costs, the guiding principle will be to ensure that a given party will only contribute towards any claim or claims in which it is involved (whether as a claiming or a responding party). This can be achieved by calculating amounts due for sets of claims (see paragraph 3-1399).
3-1395 Step-by-step explanation. To determine how to allocate the advance on costs when fixing multiple advances, the Court (with the Secretariat’s assistance) will apply a mathematical formula developed to ensure that the same principles govern allocation in each case. The formula’s basic principles are most easily explained by reference to the example below.
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3-1396 Background to example. The arbitration involves three claimants and three respondents and a total of five different claims. The arbitration agreement provides for a three-member arbitral tribunal. Most claims involve different parties on the claiming side and the responding side respectively, as indicated in the table below:
3-1397 Step 1: Identification of the sets of claims. The Court would first need to identify the different sets of claims and their respective values. A set of claims comprises all claims made by identical claiming parties against identical responding parties. Claims D and E in our example therefore constitute a set. Claims involving identical parties but not made by the same claiming parties against the same responding parties do not constitute a set (e.g. claims B and C above).
3-1398 Step 2: Calculation of the portion of the advance on costs corresponding to each set of claims. Once sets of claims are identified, the Court would then need to determine the portion of the total advance on costs that corresponds to each set of claims. For this purpose, the calculation process that has been designed for use by the Court operates as follows:
(i)An advance on costs would be calculated for the total amount in dispute in each set of claims (“intermediate advance”). The intermediate advances would then be added together:
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(ii) Each intermediate advance would then be converted into a percentage of the total amount:
3-1399 Step 3: Calculation of the amount payable by each party. The percentages would then be applied to the global amount of the advance on costs to calculate the amount payable for each set of claims (“partial advance”). In our example, the global advance on costs applied to the entire amount in dispute is US$ 524,482.
Each party’s shares of the partial advances would then be added together to form that party’s share of the total advance on costs (the “amount payable”). The following principles apply:
i) For each set of claims, 50 per cent of the partial advance would be paid by the party or parties bringing the claims and the other 50 per cent by the party or parties against which the claims are brought.
ii) Where a set of claims is brought by and/or against multiple parties, the co-claimant or co-respondent parties, as the case may be, would bear equal shares of their 50 per cent share of the partial advance.
3-1400 As can be seen from the calculations in this example, the total sum payable as the advance on costs (i.e. US$ 524,482) corresponds exactly to the amount that would be provided by the cost calculator applying Article 36(2). Accordingly, even where Article 36(4) is applied, the predictability of the ICC costs system is maintained. Parties can still use the cost calculator to obtain an estimate of the total amount of the costs of the arbitration to be fixed by the Court.
ARTICLE 36(5): READJUSTMENT OF THE ADVANCE ON COSTS AND SUBSTITUTION
The amount of any advance on costs fixed by the Court pursuant to this Article 36 may be subject to readjustment at any time during the arbitration. In all cases, any party shall be free to pay any other party’s share of any advance on costs should such other party fail to pay its share.
3-1401 Purpose. Article 36(5) has a twofold purpose: it allows the Court to readjust advances on costs and the parties to substitute for each other in paying any outstanding balances.
3-1402 2012 modifications. The provision combines two principles previously contained in Articles 30(2) (readjustment of the advance on costs) and 30(3) (substitute payments) of the 1998 Rules.
Readjustment of the advance on costs
3-1403 Monitoring the financial aspects of the arbitration. The Secretariat monitors the financial status of the arbitration regularly to satisfy itself that the amount of the advance on costs is adequate. If it proves to be insufficient, the Secretariat will invite the Court to increase the advance previously fixed. Before doing so, it will usually inform the arbitrators and the parties, stating why the readjustment may be necessary (e.g. due to an increase in the complexity of the case or the amount in dispute).
3-1404 It is incumbent upon the arbitral tribunal to inform the Secretariat of any changes or developments that might have a bearing on the amount of the advance on costs.
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3-1405 Any advance can be readjusted. The advance on costs is fixed at an early stage when the Court is not necessarily in a position fully to appreciate all factors relevant to the fixing of the arbitral tribunal’s fees and expenses. Article 36(5) empowers the Court to readjust at any time during the arbitration the amount of any advance on costs. When readjusting an advance on costs that was fixed pursuant to Article 36(4), the Court’s power to readjust the amounts also extends to setting new amounts payable by each party.
3-1406 Timing and repeated readjustments. The Court may readjust the advance on costs at any time during the arbitration, and it may do so more than once. In practice, the Court will readjust the advance on costs at significant junctures in the proceedings rather than at random. It has usually exercised restraint when requested to increase an advance by a large amount late in the arbitration and has generally been reluctant to increase the advance on costs after a draft final award has been submitted for scrutiny under Article 33. If the amount in dispute decreases late in the proceedings, the Court will not necessarily readjust the advance on costs, as the arbitral tribunal and the Court will have conducted the proceedings in accordance with the higher amount in dispute during much of the arbitration.
Payments by substitution for another party
3-1407 The Court’s primary concern is to ensure that the advance on costs is fully paid. The Rules do not provide for sanctions against a party that does not pay. Instead, in order to prevent the arbitration from stalling where a party fails to pay, Article 36(5) allows any other party to pay in its place. Without this possibility, it would be only too easy for a recalcitrant party to block an arbitration by refusing to pay. As noted above, in cases where there are claims and counterclaims, an alternative is for a party to request the Court to fix separate advances pursuant to Article 36(3) or more than one advance pursuant to Article 36(4). Where the full advance on costs remains unpaid, the Secretary General may apply Article 36(6), which can lead to the relevant claim(s) being deemed withdrawn.
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3-1408 As a matter of practice, the Secretariat will write to the parties informing them of a party’s failure to pay and requesting substitute payment from one or more of the other parties. Where Article 36(4) applies, the Secretariat will ensure that no party is invited to contribute towards claims in which it is not involved as either claimant or respondent. Substitute payments will normally not be requested until the Terms of Reference have been established, and in any event the parties will be warned beforehand that they may need to make such payments if another party fails to pay its share.
3-1409 When considering whether to pay for another party by substitution, a party should bear in mind whether the defaulting party has itself raised claims, in which case, depending on the value of the payment due by the defaulting party, it may be preferable to request separate advances on costs. If a separate advance on costs remains unpaid and Article 36(6) is applied, only the claims corresponding to the separate advance will be deemed withdrawn, whereas if the Court does not fix separate advances on costs and the parties fail to pay the global advance in full, then the case will be deemed withdrawn in its entirety. In the latter case, if the paying party wishes to have the case proceed so that its claims can be considered, it has no choice but to pay the other party’s share by substitution.
3-1410 A substituting party will usually pay another party’s share of the advance on costs in cash. However, if it has already paid 50 per cent of the global advance on costs, it may pay the additional amount by bank guarantee to ease the burden of paying the full advance (see paragraphs 3-1360 and 3-1361).
3-1411 The parties should note that substitute payments are of no relevance to the manner in which liability for the costs of the arbitration is ultimately borne. Where a party is requested to pay on behalf of another, it can and usually will make a claim for the recovery of those additional costs (as well as for its own share of the advance on costs) as part of its costs claim at the end of the arbitration.
Awards ordering the payment of advances on costs
3-1412 Where a party fails to pay its share of the advance on costs and the opposing side ends up having to substitute for it, the paying party may request that the arbitral tribunal render an award ordering the defaulting party to reimburse it. There are numerous examples of ICC awards both accepting and rejecting such requests.
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3-1413 The most common justification for ordering this kind of relief is that the parties have a contractual obligation under the Rules to effect payment. Failure to pay is therefore a breach of contract. A number of ICC arbitral tribunals have taken that view in their awards. Some arbitral tribunals characterize the relief as an order for specific performance of a contractual obligation rather than damages, as damages could only be awarded at the end of the case when ultimate liability for the costs has been determined.
3-1414 Other ICC arbitral tribunals have taken the opposite view, finding that they do not possess the power to make a decision affecting advance payments. They consider the advance on costs to be an administrative matter between the ICC and the parties. In a 2010 case, for example, the claimant paid the respondent’s share of the advance on costs by substitution and then sought an order from the sole arbitrator requiring the respondent to reimburse it. In his partial award, the sole arbitrator found that an award of damages at the end of the arbitration would be a sufficient remedy to compensate the paying party, depending on his ultimate decision as to which party would bear the costs.
3-1415 Another approach, although rarely adopted by ICC arbitral tribunals, is to view the decision as a form of interim relief. However, the requesting party may find it difficult to meet some of the requirements usually applied to the granting of interim measures (see paragraphs 3-1037 and 3-1038). In a case from 2002, the arbitral tribunal granted interim relief to the claimant on the grounds that it adequately demonstrated that it could not afford to pay the respondent’s share of the advance on costs by substitution. The arbitral tribunal found that not granting such relief would cause irreparable harm to the claimant as it was likely to lead to the case being deemed withdrawn pursuant to former Article 30(4).83
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ARTICLE 36(6): DEEMED WITHDRAWAL OF CLAIMS FOLLOWING FAILURE TO PAY
When a request for an advance on costs has not been complied with, and after consultation with the arbitral tribunal, the Secretary General may direct the arbitral tribunal to suspend its work and set a time limit, which must be not less than 15 days, on the expiry of which the relevant claims shall be considered as withdrawn. Should the party in question wish to object to this measure, it must make a request within the aforementioned period for the matter to be decided by the Court. Such party shall not be prevented, on the ground of such withdrawal, from reintroducing the same claims at a later date in another proceeding.
3-1416 Purpose. Article 36(6) sets out a procedure for considering claims as withdrawn where parties do not pay the advance on costs in full. It gives the Secretary General the authority to direct an arbitral tribunal to suspend proceedings where the advance on costs remains unpaid. In this way the Secretary General can ensure that the arbitral tribunal is alerted of the risk of not being paid before it completes its work.
3-1417 2012 modifications. Minor linguistic adjustments.
3-1418 Types of advance payments covered by Article 36(6). The Secretary General may apply Article 36(6) to any type of advance payment requested by the Secretariat, including the provisional advance fixed pursuant to Article 36(1), any advance on costs fixed pursuant to Articles 36(2), 36(3) or 36(4), and certain special or additional advances or fees fixed pursuant to the Appendices to the Rules (e.g. in connection with the correction or interpretation of an award (Article 2(10) of Appendix III) or post-award formalities (Article 2(11) of Appendix III).
3-1419 Timing. The Secretary General may initiate the procedure foreseen in Article 36(6) whenever a request for an advance on costs has not been complied with. In practice, if one or more parties fail to pay within the deadline granted in the initial request, the Secretariat will send one or more payment reminders and will also invite the other parties to pay by substitution before initiating the procedure. The parties will also normally be warned before Article 36(6) is applied. As noted above, the Secretary General will not normally apply Article 36(6) or even request substitution by the other side before the Terms of Reference have been established, as the provisional advance is designed to cover all costs up to that stage. However, this obviously does not apply if the Article 36(6) procedure concerns non-payment of the provisional advance as opposed to the advance on costs.
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3-1420 It is also the Secretary General’s practice not to apply Article 36(6) where the Secretariat considers that the funds already held are sufficient to cover the arbitral tribunal’s and the Court’s work through to the end of the case. In such instances, the Court may rather decide to readjust and decrease the advance on costs.
3-1421 Power exclusive to the Secretary General. Only the Secretary General can apply Article 36(6). Unlike other powers vested in the Secretary General, the Rules do not provide for the power to be delegated.
3-1422 The exclusivity of this power also means that the arbitral tribunal cannot decide on its own initiative to suspend its work because of insufficient funding. However, after the Terms of Reference have been established, Article 1(3) of Appendix III requires that the arbitral tribunal proceed only with respect to those claims for which the entire advance on costs has been paid. The Secretariat will usually advise the arbitral tribunal of unpaid advances and suggest that it refrain from proceeding with the corresponding set of claims or the case in its entirety if necessary.
3-1423 Directing the arbitral tribunal to suspend its work. In practice, when applying Article 36(6), the Secretary General will direct the arbitral tribunal to suspend its work altogether or in respect of those claims in relation to which Article 36(6) is being applied. Article 36(6) requires the Secretary General to consult the arbitral tribunal, which will normally be done through the Secretariat’s case management team assigned to the case. The arbitral tribunal’s opinion is not binding upon the Secretary General. However, if an arbitral tribunal indicates that it is willing to continue at least part of its work notwithstanding the insufficient funding, as sometimes happens, the Secretary General will consider not applying Article 36(6). In such instances, the Court may even readjust and decrease the advance on costs.
3-1424 Fixing a time limit for payment. Article 36(6) requires that a final time limit of no less than fifteen days be given to a defaulting party to effect payment. In practice, the Secretary General normally fixes a time limit of fifteen days but may accord a longer time in the event of special circumstances (e.g. the need for governmental approval of the payment).
3-1425 Deemed withdrawal. If the payment is not made within the time limit set by the Secretary General, and no objection to the application of Article 36(6) is received within the time limit (see paragraph 3-1428), the claims to which Article 36(6) was applied are considered withdrawn. The consequences of such deemed withdrawal are described in paragraph 3-1433.
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3-1426 Objections. A party may object to the Secretary General’s decision under Article 36(6). The filing of an objection automatically interrupts the time limit for payment. The Secretariat will refer any such objection to the Court.
3-1427 Article 36(6) provides that the “party in question” may object. Technically, only the party making the claims to which Article 36(6) is to be applied can object. However, in practice the Secretariat usually brings objections from any party to the Court’s attention.
3-1428 Any objection must be received by the Secretariat in writing prior to the expiry of the time limit set by the Secretary General.
3-1429 Parties must take care to ensure that they state clearly that they are objecting to the application of Article 36(6). It is also advisable to ensure that a copy of the objection is sent to the case management team responsible for the case. Occasionally, an objection is sent to the Secretary General alone. The consequence of a failure to object, as explained further below, is the withdrawal of the claims.
3-1430 Where an objection to the application of Article 36(6) is referred to the Court, the Court may either modify or cancel the time limit or reject the objection. If it fully rejects the objection, it will normally reset a time limit corresponding to the number of days that remained in the original time limit when the objection was made. Alternatively, the Court may decide to extend the time limit initially granted by the Secretary General. In the past it has done so where a party showed serious intent to pay the advance on costs, considerably decreased the value of its claim, or requested that separate advances on costs be fixed. It is rare for the Court to cancel the initial time limit (unless the missing advance on costs has been paid in the meantime). It did so only twice between 2009 and 2011. In one case, the claimant was in liquidation. As a result, only its creditors could decide to substitute for the respondent, which had failed to pay its share of the advance on costs. The creditors were not able to make a decision for another few months. In the other case, both parties objected to their claims being deemed withdrawn and requested that the Court fix separate advances on costs.
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3-1431 In exceptional cases, the Court may postpone its decision on an objection to the application of Article 36(6) to a later date. It has done so, for example, while waiting to be informed of developments in cases where a state court issued an anti-arbitration injunction.
3-1432 The Court has also occasionally accepted payments made after the time limit had expired. Most such cases involved the presentation of documentary evidence indicating that the party attempted to pay within the time limit, although the money was not received by the ICC before the time limit expired. This happened, for example, where a party requested its bank to pay before the time limit expired but a mistake by the intermediary bank caused a delay.
3-1433 Consequences of failure to pay within time limit. If the ICC does not receive payment of the balance of the advance on costs within the time limit granted, all claims to which Article 36(6) is being applied will be deemed withdrawn. Such withdrawal is without prejudice to the same claims being reintroduced in new proceedings. If all remaining claims made in the arbitration are deemed withdrawn, the arbitration ends and the Court will fix the costs of the arbitration pursuant to Article 37. If the deemed withdrawal concerns only some of the claims (e.g. where separate advances on costs have been fixed under Article 36(3)), the arbitration will continue with respect to the remaining claims. Claims cannot subsequently be reintroduced into the same arbitration once they are considered withdrawn under Article 36(6), unless all parties agree or the arbitral tribunal decides otherwise.
ARTICLE 36(7): SET-OFFS IN THE CALCULATION OF ADVANCES ON COSTS
If one of the parties claims a right to a set-off with regard to any claim, such set-off shall be taken into account in determining the advance to cover the costs of the arbitration in the same way as a separate claim insofar as it may require the arbitral tribunal to consider additional matters.
3-1434 Purpose. Where appropriate, Article 36(7) permits the Court to include the value of a set-off in the amount in dispute for the purpose of calculating the advance on costs and the costs of the arbitration.
3-1435 2012 modifications. Minor linguistic adjustments.
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3-1436 What is a “set-off”? Article 36(7) does not define a set-off and the term has different meanings in different legal systems. To determine whether to include a set-off in the amount in dispute, the Court will principally consider whether the arbitral tribunal may be required to decide issues in addition to those raised by the other claims. The Secretariat may refer to the arbitral tribunal on this matter. If the set-off raises different issues, the Court will include the set-off claim in its calculation of the advance on costs.
3-1437 In a case in which set-off claims were considered by the Court, the respondent submitted an amended Answer in which it withdrew its counterclaims but presented a new “set-off defence”. The set-off defence was entirely separate from the respondent’s defence against the principal claims. The sole arbitrator confirmed that the set-off would require him to consider issues beyond those raised by the principal claims, justifying its inclusion in the calculation of the advance on costs. In another case, the respondent made set-off claims that arose from a different contract. No jurisdictional objections were made and these claims were taken into account in the calculation of the amount in dispute.
ARTICLE 37(1): COSTS OF THE ARBITRATION
The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitration, as well as the fees and expenses of any experts appointed by the arbitral tribunal and the reasonable legal and other costs incurred by the parties for the arbitration.
3-1438 Note. For a discussion of how Article 37 fits into the ICC’s costs system as a whole, see paragraphs 3-1315–3-1325.
3-1439 Overall purpose of Article 37. Article 37 addresses cost decisions by the Court and the arbitral tribunal. It must be read in conjunction with Appendix III. The following three factors are relevant to cost decisions made pursuant to Article 37: (i) the type of cost items covered, (ii) the decision-making body (Court or arbitral tribunal) and (iii) the timing of cost decisions (at the end of or during the arbitration). Different principles will apply depending on which cost item is concerned and whether the Court or the arbitral tribunal is the decision-making body.
3-1440 Article 37(1) lists the components of the “costs of the arbitration”. It establishes a framework for Article 37 in its entirety. The provision identifies those cost items that are fixed by the Court (arbitrators’ fees and expenses, ICC administrative expenses) and those that are left to the arbitral tribunal.
3-1441 2012 modifications. Minor linguistic adjustments.
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3-1442 Cost items according to Article 37(1). Article 37(1) lists the following as the “costs of the arbitration” under the Rules:
a) arbitrators’ fees and expenses, as fixed by the Court (see paragraphs 3-1450–3-1474);
b) ICC administrative expenses, as fixed by the Court (see paragraphs 3-1475–3-1481);
c) fees and expenses of any expert appointed by the arbitral tribunal, as fixed by the arbitral tribunal (see paragraph 3-1483); and
d) parties’ reasonable legal and other costs, as fixed by the arbitral tribunal (see paragraphs 3-1489–3-1493).
ARTICLES 37(1) AND 37(2): THE COURT’S DECISIONS ON COSTS
Article 37(1)
The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitration […]
Article 37(2)
The Court may fix the fees of the arbitrators at a figure higher or lower than that which would result from the application of the relevant scale should this be deemed necessary due to the exceptional circumstances of the case.
3-1443 Purpose. It is the Court’s responsibility to fix both (i) the arbitrators’ fees and expenses and (ii) the ICC administrative expenses. Both are calculated by applying the costs scales (see paragraphs 3-1445–3-1447) to the amount in dispute, although the Court has some flexibility to depart from these scales in certain cases.
3-1444 2012 modifications. The last sentence of Article 37(2)’s predecessor, Article 31(2) of the 1998 Rules, now stands alone as Article 37(3) (see paragraph 3-1484). As a result, Article 37(2) addresses only the Court’s decisions on costs, not those of the arbitral tribunal.
3-1445 Costs scales. The Court will fix the arbitrators’ fees and the ICC administrative expenses in accordance with the principles and costs scales contained in Appendix III (see paragraphs 3-1321 and 3-1322). If the amount in dispute is not quantified, the Court may exercise its discretion in fixing the arbitrators’ fees and the administrative expenses (Article 2(1) of Appendix III for the arbitrators’ fees and Article 2(5) of Appendix III for the administrative expenses). In such instances, the Court generally uses a notional amount in dispute to calculate the fees and expenses, as it does when fixing the advance on costs (see paragraphs 3-1350 and 3-1351). It is rare for the amount in dispute to remain unquantified at the end of an arbitration, as the parties will necessarily have quantified any monetary
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claims. Besides, the Rules now require parties to quantify or provide an estimate of the monetary value of their claims from the outset (Articles 4(3), subparagraph (d), 5(5), subparagraph (b), 7(2), subparagraph (c) and 8(2)) (see paragraphs 3-97 and 3-171). Where the amount in dispute remains partially quantified (e.g. as a result of significant declaratory relief), the Court’s current practice, as with advances on costs (see paragraph 3-1352), is generally to add an amount to the figure generated by the costs scales for both the ICC administrative expenses and the arbitrators’ fees.
3-1446 The Court does not rely exclusively on the costs scales when fixing the costs of the arbitration. It will also consider a number of other factors when fixing arbitrators’ fees (see paragraphs 3-1454 and following) and, to a lesser extent, the ICC administrative expenses (see paragraph 3-1475). Furthermore, Article 37(2) enables the Court to fix the arbitrators’ fees at a figure higher or lower than that which would result from the application of the relevant scale, although this power is applied only in exceptional circumstances (see paragraph 3-1451).
3-1447 As specified in Article 37(1), the costs scales in force at the time of the commencement of the arbitration will apply. Consequently, the Court’s adoption of new costs scales in the course of an arbitration will have no impact on that case. The parties should also note that the costs scales applicable at the time the arbitration agreement was concluded are of no relevance (see Article 4(1)).
3-1448 Currency. The costs scales are expressed in US dollars and the Court will fix the arbitrators’ fees and the ICC administrative expenses in that currency unless there is a legal requirement preventing it from doing so (Article 4(3) of Appendix III).
3-1449 Relation to the advance on costs; refunds to parties. As explained in paragraph 3-1317, advances on costs are intended to cover those components of the costs of the arbitration that are fixed by the Court pursuant to Article 37(1). Accordingly, the total amount of the cost items fixed by the Court (arbitrators’ fees and expenses and the ICC administrative expenses) should not exceed the amount of the advance on costs paid by the parties. Where the advance on costs paid by the parties exceeds the aggregate amount of the cost items fixed by the Court, the Secretariat will reimburse that excess amount to the parties (Article 2(9) of Appendix III). In practice, the Secretariat will reimburse the balance of the advance on costs in such a way as to ensure, so far as possible, that both or all sides have paid the costs of the arbitration in equal shares (or in proportion to the payments requested from each party if separate advances on costs or advances on costs under Article 36(4) have been fixed). However, the Secretariat will respect any written agreement of the parties that diverges from the above practice.
Arbitrators’ fees
3-1450 Exclusive power of the Court. The arbitrators’ fees are fixed exclusively by the Court. Article 2(4) of Appendix III clarifies that separate fee arrangements between the parties and arbitrators are not permitted. This is also made clear in the statement of acceptance, availability, impartiality and independence signed by all arbitrators.
3-1451 Principles. The fees are fixed at the Court’s discretion using the costs scales, which indicate the minimum and the maximum fees that are payable depending on the amount in dispute (see paragraphs 3-1321 and 3-1445). Article 37(2) expressly permits derogations from the scales if the Court considers it necessary to fix the fees at an amount higher than the maximum or lower than the minimum fee owing to exceptional circumstances (see paragraphs 3-1458 and 3-1461). The fee scales are not intended to cover an arbitrator’s expenses, which are reimbursed separately (see paragraphs 3-1470–3-1474).
3-1452 Time of fixing the arbitrators’ fees. The Rules do not specify when the Court should fix the arbitrators’ fees. In practice, it does so:
3-1453 Procedure for fixing the arbitrators’ fees. Upon being informed of circumstances that will require an arbitrator’s fees to be fixed, the Secretariat will invite the arbitrator to submit a record of the time spent on the case and a description of the work that has been done. The arbitrator should also describe any factors that he or she feels should be taken into account by the Court when fixing his or her fees. The Court, as discussed below, will take into account numerous factors. The arbitrator’s input in relation to such factors will often prove helpful in reaching an informed
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decision. For instance, arbitrators may wish to notify the Court of the legal, factual and/or procedural complexity of the case or highlight the efficiency of the arbitral proceedings. The Secretariat will usually grant the arbitrators about seven days to submit such comments, which will then be communicated to the Court when it is invited to fix their fees.
3-1454 Factors for the Court to consider.
Article 2(2) of Appendix III lists the factors that the Court considers when fixing arbitrators’ fees. These factors are largely interrelated and in practice will be considered jointly rather than separately:
3-1455 In practice, the average fee provided by the costs scales (see paragraph 3-1321) often operates as a benchmark for the Court in considering the above factors.84Unexceptional proceedings that the Court considers to have been conducted satisfactorily overall will often result in fees amounting to approximately the average under the costs scales. However, one or more factors may lead the Court to depart from the average fee. In so doing, the Court will be particularly aware that its power to fix fees can be used to encourage the arbitral tribunal to conduct the proceedings efficiently (see paragraphs 3-798–3-800). Accordingly, an arbitral tribunal’s good performance may predispose the Court to fix fees above the average amount. Likewise, the Court may consider it necessary to decrease an arbitrator’s fees owing to extensive delays for which the arbitral tribunal is at least partly responsible. Lower fees may also be appropriate simply where the amount in dispute is very large and the average fees would be disproportionate to the amount of work required of the arbitral tribunal. Likewise, a very small amount in dispute will usually prompt the Court to go above the average to ensure adequate remuneration. As an indication, the Court’s current practice is to select the maximum fees permitted by the scales when fixing the advance on costs for an amount in dispute below US$ 250,000 (see paragraph 3-1355).
3-1456 In a case from 2010, the arbitral tribunal was very slow in preparing two partial awards, taking well over a month to revise each of the two short awards after receiving the Court’s comments. A party then requested small corrections to one of the awards pursuant to Article 29(2) of the 1998 Rules (now Article 35(2)). The arbitral tribunal took over two months to
prepare a two-page addendum to the partial award and another month to revise it in light of the Court’s comments. In fixing the costs of the arbitration, the Court decided to reduce the arbitrators’ fees by some 20 per cent.
3-1457 In another case from 2010 in which the amount in dispute was very high, the Court decided to reduce the arbitrators’ total fees by some US$ 200,000. The arbitral tribunal’s delay in drafting the final award was of particular relevance here. Although containing only approximately forty pages of analysis, the award was submitted for scrutiny some nine months after the parties’ last submissions. The Court also took into account other factors such as the number of hours the arbitrators declared having worked on the case, which was well below the estimate which the arbitral tribunal had supplied to the Secretariat during the proceedings and which the Court had taken into account to increase the advance on costs.
3-1458 The Court will usually consider increasing the arbitrators’ fees where the case presents a particularly high degree of factual, legal or procedural complexity that requires a reasonably efficient arbitrator to devote an amount of time and effort to the case that is disproportionate to the amount in dispute. Another recent case serves as a good example. While the relevant legal and factual issues did not present an exceptional level of complexity, counsel for the respondent, in particular, was extremely litigious. The sole arbitrator was required to cope with a barrage of submissions on a weekly and sometimes daily basis. The respondent made well over two hundred submissions, the vast majority of which ran to at least several pages. These submissions also prompted the claimant to submit numerous replies. Furthermore, the parties made several requests for interim relief in relation to the continuing operation of a joint venture at the centre of the dispute. To ensure adequate remuneration for the considerable amount of time that the sole arbitrator needed to devote to the proceedings, the Court decided to fix the arbitrator’s fees at an amount significantly above the average, and indeed the maximum, as permitted by Article 37(2).
3-1459 The Court may consider any other relevant factors if it wishes to do so. For instance, since arbitrators are expected to complete the mission with which they are entrusted, if an arbitrator resigns, the cause and circumstances of the resignation can be taken into account when fixing the arbitrator’s fees. In a 2011 case a co-arbitrator resigned because he was appointed to a senior public function. However, the co-arbitrator did not inform the Secretariat until shortly before assuming his new duties. In addition, his resignation consisted of a single and very brief email to all concerned. When the Secretariat requested a formal letter of resignation addressed to the Secretariat, the co-arbitrator sent back a brief and poorly prepared hand-written note. In light of the co-arbitrator’s somewhat casual treatment of his duties in the case, the Court fixed his fees at an amount that was lower than that which would otherwise have been paid at that stage of the proceedings.
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3-1460 Hourly rates. The remuneration of ICC arbitrators is based on the amount in dispute rather than on hourly rates. That said, on the basis of information received from the arbitrators about the time spent on a case, the Secretariat will calculate the hourly rate for the fees as fixed in the advance on costs and inform the Court of this. The Court will have regard to this rate when exercising its discretion to fix the arbitrators’ fees at the end of the arbitration.
3-1461 In a case from 2011, the Court fixed the sole arbitrator’s fees at an amount equal to almost five times the maximum fees resulting from the application of the costs scales. The sole arbitrator had been faced with an exceptionally large amount of work, having had to render five separate awards and devote over 1,600 hours to the case. In a case from 2010, the Court decided to set the arbitrators’ fees at a figure approximately 50 per cent higher than the maximum provided by the costs scales, even though the case was withdrawn before the arbitral tribunal had rendered a final award. The amount of work required of the arbitral tribunal was exceptional compared to the relatively small amount in dispute (just over US$ 2 million). The hourly rate corresponding to the figure fixed still remained quite low, despite the application of the former Article 31(2) (predecessor of Article 37(2)).
3-1462 Allocating fees within three-member arbitral tribunals. The Court usually fixes the fees of the president of the arbitral tribunal and those of the co‑arbitrators at different amounts. In almost all instances, a higher amount will be set for the president, as more work is normally required of the president than of the co-arbitrators. In the large majority of cases, the co‑arbitrators will receive exactly the same amount (except where a co‑arbitrator replaced another pursuant to Article 15, in which case a portion of his or her fees may go to the replaced arbitrator).
3-1463 Unless the co-arbitrators have agreed a different breakdown (see paragraph 3-1464), the Court’s general practice is to allocate 40 per cent of the total fees to the president and 30 per cent to each co-arbitrator. If an arbitrator has been replaced, the original arbitrator and the replacement arbitrator will be counted as one arbitrator for the purposes of the calculation and the fees of the replaced arbitrator will then be deducted from those of the arbitrator who replaced him or her. The Court will adopt this practice despite the fact that the replacement arbitrator in almost all cases will need to repeat part of the work already completed by the replaced arbitrator (e.g. familiarizing himself or herself with the file). For that reason, when replacing one or more arbitrators, the Court may decide to increase the advance on costs in accordance with Article 36(5) to ensure adequate remuneration for the new arbitrator(s). In one case, for example, the Court increased the advance on costs so that the arbitrators’ fees were almost double the figure provided by the costs scales. It did so partly because the entire arbitral tribunal resigned at a relatively advanced stage of the arbitration, requiring the Court to constitute an entirely new arbitral tribunal that had to repeat many steps already taken in the case.
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3-1464 In practice, arbitrators sometimes agree on a fee allocation that is different from the standard 40/30/30 per cent split. They may, for example, agree on a higher proportion of fees for the president of the arbitral tribunal (such as 50 per cent), recognizing that the president’s role often involves well over 40 per cent of the work. It occasionally happens that arbitrators prefer an equal split (i.e. one third each). Other fee allocations are possible. In a 2010 case, for example, one of the co-arbitrator’s expertise in a technical matter meant that he completed most of the arbitral tribunal’s work. The arbitral tribunal therefore decided to allocate 40 per cent of the fees to that co-arbitrator, 35 per cent to the president and 25 per cent to the other co-arbitrator.
3-1465 Where the arbitrators have not agreed on an alternative allocation, the Court may itself decide on an allocation other than 40/30/30 per cent, although in practice this is relatively rare. The most common variation of the split is 50/25/25 per cent in favour of the president where it appears that the president’s workload and contribution have greatly exceeded those of the co-arbitrators. In one case where the president was replaced as a result of a challenge, the Court decided to allocate the fees equally among the three arbitrators. The Court was informed at the time of the president’s replacement that about two thirds of an initial draft of the final award had been prepared. In an unusual case from 2010, the president of the arbitral tribunal proposed that the Court opt for the following allocation: 45 per cent for the president, 35 per cent for the first co-arbitrator and 20 per cent for the second co-arbitrator. The first co-arbitrator agreed but the second did not comment on the breakdown. According to the president, the second co-arbitrator did not research certain points of law despite having promised to do so and failed to respond to emails or telephone calls from her fellow members of the arbitral tribunal over a period of several months. On the basis of the work done by the members of the arbitral tribunal, the Court decided to allocate the arbitrators’ fees in accordance with the president’s suggestion.
3-1466 Advances on fees. The Court may grant advances on fees in the course of the proceedings if the arbitral tribunal so requests. However, it will normally wait until the arbitral tribunal has reached a milestone in the case—such as establishing the Terms of Reference, rendering a partial award or holding a major hearing—before doing so.
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3-1467 Even where an important milestone has been reached, the Court may decide not to grant an advance on fees. Several factors can influence this decision, including the amount of fees left to be distributed, the number of previous advances on fees that the Court has granted, the significance of the milestone reached in the proceedings, and the arbitral tribunal’s overall diligence.
3-1468 Payment. Once the Court has fixed an arbitrator’s fees, the Secretariat will proceed to pay the arbitrator. If a final award has been approved, the Secretariat will wait until it has received the signed original award for notification to the parties before paying the arbitrator. The Secretariat will of course deduct any advance on fees already paid to each arbitrator. Payments of advances on fees are made upon the Court’s decision to provide such an advance, unless the advance on fees is also intended to cover work on a partial award, in which case payment will be made upon notification of such partial award to the parties. Payment is made to the bank account indicated by the arbitrator in his or her banking instructions, which should be provided with the arbitrator’s statement of acceptance, availability, impartiality and independence and CV at the beginning of the case. The arbitrator may of course update his or her banking instructions at any time before payment is made.
3-1469 VAT. Article 2(13) of Appendix III states that the amounts paid to arbitrators do not include VAT or similar taxes. It clarifies that the parties are obliged to pay such taxes, where applicable, but leaves it to the arbitrators to recover any amount directly from the parties.
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Arbitrators’ expenses
3-1470 General. The Secretariat will reimburse reasonable expenses incurred by arbitrators, using the amount earmarked for such expenses in the advance on costs. The Secretariat will check the reasonableness of the expenses claimed and, with the exception of the per diem rate (see the Secretariat’s Note to the Arbitral Tribunal on the Conduct of the Arbitration, which is circulated to arbitrators upon the transmission of the case file pursuant to Article 16), will generally require receipts before reimbursing any amount. The Court does not “fix” the arbitral tribunal’s expenses. Rather, the Court is informed of the amount that the Secretariat has determined as reimbursable and therefore paid out to the arbitrators. Adding the amount of these expenses to the amounts of the arbitrators’ fees and the ICC administrative expenses (the latter two amounts being fixed by the Court) gives the total amount of the costs of the arbitration.
3-1471 Reimbursable expenses. The Secretariat’s Note to the Arbitral Tribunal on the Conduct of the Arbitration identifies those personal expenses of an arbitrator that are reimbursable. The note addresses only the arbitrators’ personal expenses, not other expenses related to the arbitration, such as those incurred in relation to hearing rooms, stenographers or interpreters. There are several ways of dealing with the latter. A common practice is for the parties to pay these expenses directly. However, such an approach may be difficult where one or more parties refuse or forget to pay their share. A more convenient approach may be for the arbitral tribunal to pay and to seek reimbursement from the Secretariat. A third option is to have the Secretariat pay such expenses directly to the hearing centre or company that provides the service in question. The Secretariat will require clear instructions from the arbitral tribunal, a bill specifying the exact amount to be paid and all relevant information relating to the method of payment.
3-1472 The parties and the arbitral tribunal must inform the Secretariat well in advance if they opt for the second or third of the options described above. Expenses incurred in relation to hearing centres and other services can amount to large sums and therefore might require the Court to readjust and increase the advance on costs pursuant to Article 36(5).
3-1473 Currency of reimbursement. The Secretariat will generally reimburse arbitrators’ expenses in the currency in which they were incurred. However, arbitrators may request repayment of expenses in either US dollars or euros (instead of the currency in which they were incurred) if they provide evidence of the relevant exchange rate applicable on the date the expense was incurred. A printout from a reputable online currency exchange website would be satisfactory for this purpose. Where an expense has been paid by credit card or bank transfer, the Secretariat can refund the total expense to the arbitrator (i.e. taking into account the exchange rate provided by the bank or credit card company and any additional charges relating to the payment) if it receives documentary evidence (such as a credit card statement) to support the claim.
3-1474 Administrative secretaries. An administrative secretary can provide useful assistance to the parties and the arbitral tribunal. Arbitral tribunals are free to engage an administrative secretary for the case with the parties’ consent and provided that the administrative secretary’s fees are paid out of the arbitral tribunal’s fees. The Secretariat issued a note on administrative secretaries in October 1995, which was under revision at the time of writing.
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ICC administrative expenses
3-1475 Costs scales. The Court will fix the ICC administrative expenses on the basis of the relevant costs scales, which generate a single figure for any given amount in dispute (see paragraph 3-1321). Article 2(5) of Appendix III permits the Court to derogate from the scales and fix the administrative expenses at a higher or lower amount in exceptional circumstances. The Court has rarely made use of that power. Nonetheless, it did so in a case where the number of unsuccessful challenges against one of the coarbitrators and the president was exceptionally high (twenty-three challenges in all, including ten against one of the co-arbitrators and thirteen against the president of the arbitral tribunal). It also did so in a case where the arbitral tribunal displayed inefficient and unprofessional behaviour that led to constant frictions and communication problems between its members. As a result, the Secretariat was required to devote considerable additional time and effort to the case.
3-1476 As also indicated in Article 2(5) of Appendix III, the Court has discretion to fix the ICC administrative expenses without applying the scales where the amount in dispute is unquantified. However, in practice the Court will generally prefer to use a notional amount in dispute to fix the administrative expenses in accordance with the scales (see paragraph 3-1445).
3-1477 What do the ICC administrative expenses cover? In principle, the administrative expenses cover all services and work performed by the ICC in administering the arbitration, as well as all disbursements.
3-1478 The 2012 Rules give the Court the power to fix additional ICC administrative expenses in the event of an application for the correction or interpretation of an award pursuant to Article 35(2) or the remission of an award as provided in Article 35(4) (see paragraphs 3-1279 and 3-1307).
3-1479 The additional administrative expenses incurred in keeping a matter in abeyance over a long period of time (usually more than one year) may be covered by a separate abeyance fee, as provided in Article 2(7) of Appendix III.
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3-1480 Time of fixing the administrative expenses. The Court will fix the final and total amount of the ICC administrative expenses when approving the final award or promptly thereafter. If the arbitration is terminated or all claims are withdrawn, it will fix the costs promptly thereafter in accordance with Article 37(6). Article 2(6) of Appendix III permits the Court to decide at any time during an arbitration that a portion of the administrative expenses is due and payable for work that the Court and the Secretariat have already performed. This provision was introduced into the 2012 Rules to facilitate compliance with the requirements of the Generally Accepted Accounting Principles. The Court can be expected to use this power regularly and to declare as due any amounts corresponding to the ICC administrative expenses that would be considered due if the arbitration were terminated at that point (see paragraph 3-1501). Any such amount will be considered as a portion of the total ICC administrative expenses fixed at the end of the arbitration, so Article 2(6) of Appendix III will have no effect on the overall amount of the ICC administrative expenses borne by the parties.
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3-1481 VAT. Article 2(14) of Appendix III clarifies that the ICC administrative expenses may be subject to VAT or charges of a similar nature. At the time of writing, consideration was being given to making the ICC administrative expenses subject to VAT, in which case the ICC would be required to issue VAT invoices and credit notes to the parties in regard to ICC administrative expenses.
ARTICLES 37(1) AND 37(3)–37(5): THE ARBITRAL TRIBUNAL’S DECISIONS ON COSTS Article 37(1)
The costs of the arbitration shall include […] the fees and expenses of any experts appointed by the arbitral tribunal and the reasonable legal and other costs incurred by the parties for the arbitration.
[…]
Article 37(3)
At any time during the arbitral proceedings, the arbitral tribunal may make decisions on costs, other than those to be fixed by the Court, and order payment.
Article 37(4)
The final award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.
Article 37(5)
In making decisions as to costs, the arbitral tribunal may take into account such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner.
3-1482 Purpose. Articles 37(3)–37(5) define the arbitral tribunal’s power to fix the costs of the arbitration and allocate them between the parties. If the arbitral tribunal is requested to fix the costs of the arbitration after the withdrawal or termination of a case, Article 37(6) will apply (see paragraph 3-1506).
3-1483 Specifically, the arbitral tribunal may:
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3-1484 2012 modifications. Article 37(3) is a new provision, although the principle it expresses was previously contained in Article 31(2) of the 1998 Rules. The 2012 Rules therefore give greater prominence to the principle by separating it from the Court’s power to fix certain costs. The opening words of Article 37(3) emphasize that the arbitral tribunal can order the payment of these costs at any time, so before the final award. Article 37(4) has not been modified, while Article 37(5) is an entirely new provision.
3-1485 Timing of decisions relating to costs. The arbitral tribunal may make decisions on costs at three different points in the proceedings, each covered by a separate provision within Article 37:
• Final award. Where a final award is rendered, the arbitral tribunal is required to fix the costs of the arbitration and decide which party shall bear them or in what proportion they shall be borne by the parties (Article 37(4)). If a party seeks legal and other costs not fixed by the Court, the arbitral tribunal must first determine what portion of these costs is reasonable before allocating them (see paragraphs 3-1489 and 3-1493).
Where the parties do not seek costs, the arbitral tribunal should simply specify the costs fixed by the Court and the costs of any experts appointed by the arbitral tribunal, and indicate how the parties have covered these costs. It must also allocate these costs between the parties, despite the absence of any cost claims from the parties.
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3-1486 Procedure for making decisions on costs. Where one or several parties have claimed their costs, the arbitral tribunal should invite them to make submissions on costs, usually following the hearing on the merits or the final submissions on the merits (although a party can request that the arbitral tribunal make certain decisions on costs before the final award; see paragraphs 3-1494–3-1496). The arbitral tribunal should normally also permit the parties to comment on each other’s submissions on costs. Occasionally, arbitral tribunals split the issue of costs from the other issues in the case, resulting in a final award that only addresses costs.
3-1487 Allocating costs pursuant to Article 37(4) or making limited payment orders pursuant to Article 37(3). The arbitral tribunal determines at its discretion which party shall bear the costs and to what extent. Article 37(5), which is new to the 2012 Rules, provides guidance on the exercise of that discretion. It can also serve as a case management tool by encouraging arbitral tribunals to consider whether each party has conducted the arbitration in a cost-effective manner. As such, it reflects one of the underlying aims of the latest revision of the Rules, which was to improve the efficiency and decrease the costs of arbitral proceedings. This aim is also reflected in Articles 22(1), 22(2), 24 and 37(3) (see paragraph 3-799).
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3-1488 Factors taken into account by arbitral tribunals when allocating costs. The parties’ ability to recover a significant portion of their costs in state courts will depend on the local rules in place, which vary significantly from one country to another. Parties, arbitrators and state courts generally accept that the approach to costs adopted in ICC arbitration is unique and not influenced by rules on costs in court proceedings: all costs incurred in relation to arbitral proceedings are in principle regarded as recoverable, provided they are reasonable.85Factors that arbitral tribunals may wish to consider when allocating costs include the following:
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unsubstantiated arguments late in the proceedings; or (iv) misused the procedure to cause extensive and unwarranted delays (e.g. by bringing groundless challenges against an arbitrator pursuant to Article 14).
Costs may serve as a valuable tool to deter parties from adopting dilatory tactics. Such deterrence is an important part of the arbitral tribunal’s own responsibility to ensure efficient and cost-effective proceedings pursuant to Article 22(1) (see paragraphs 3-798 and 3-799).
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3-1489 Fixing the parties’ reasonable legal and other costs. Where one or more parties seek payment of legal or other costs, the arbitral tribunal must normally first determine whether and to what extent they are at all recoverable. In practice, it will fix these legal and other costs only if they are to be borne at least to some extent by another party. Hence, the task of fixing legal and other costs is indissociable from that of determining who shall bear them and to what extent.
3-1490 In exercising its broad discretion, the arbitral tribunal will often consider the following categories of costs to be recoverable:
3-1491 The above list is by no means exhaustive. Arbitral tribunals are free to consider and, if appropriate, may grant any claim. The following costs can prove to be contentious.
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3-1492 Regardless of the nature of the cost, the arbitral tribunal will generally limit recovery to those costs that are incurred during the proceedings and those directly linked to preparing for the arbitration (e.g. drafting the Request). Costs relating to a previous stage of the dispute resolution process (e.g. negotiation or mediation) will not necessarily be recoverable.
3-1493 Even if the cost is of a kind that is generally recoverable, the arbitral tribunal may decide to limit the recoverable amount or decide not to recognize expenditure that it considers to have been unnecessary or unreasonable in amount. When limiting the amount of the costs, arbitral tribunals sometimes compare the legal costs incurred by each party. A sharp difference between parties may reflect unreasonableness in one side’s costs claim. The arbitral tribunal may also identify specific disbursements as unreasonable. For example, a party may have hired an expert to provide evidence on an issue that the arbitral tribunal does not regard as relevant to resolving the dispute.
3-1494 Decisions on costs during the arbitration (Article 37(3)). The new Article 37(3) confirms that the arbitral tribunal may make cost decisions at any time during the arbitration and order payment. However, it cannot make any decision on costs that are still to be fixed by the Court (see paragraphs 3-1443 and following).
3-1495 Although arbitral tribunals were authorized to make decisions on costs during the arbitration under the 1998 Rules, the provision was not well understood. This power is now set out with greater emphasis. It can be used, albeit indirectly, as a case management tool to assist the arbitral tribunal in fulfilling its duty under Article 22(1) to make every effort to conduct the arbitration in an expeditious and cost-effective manner. A party may wish to recover costs relating to a particular phase of the
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arbitration (e.g. an initial phase on jurisdiction). In responding promptly to this request, the arbitral can send a strong message to the parties at an early stage of the proceedings, dissuading them from using dilatory tactics. The provision can also serve other practical purposes. For example, the arbitral tribunal may decide in a partial award on jurisdiction that the case should not proceed against one of several respondents. In such circumstances, the arbitral tribunal will often consider it appropriate to make a consequent order on costs, either in that award or shortly thereafter.
3-1496 Decisions on costs made pursuant to Article 37(3) may be included in a partial award but can also take the form of a procedural order (in which case they should then be confirmed in a subsequent award). The advantage of an award is that it can be enforced. When applying Article 37(3), the arbitral tribunal should follow regular procedure and invite the parties to make submissions on costs before making a decision. It will usually grant costs only if a party has claimed them. However, in rare instances arbitral tribunals have used this power expressly to penalize a party. In a case from 2008, for example, the claimant suddenly replaced its counsel just days before the hearing on the merits was scheduled to commence. The new counsel informed the arbitral tribunal that it wished to change the position pleaded by the claimant and requested the postponement of the hearing. While the president of the arbitral tribunal agreed to this, he also ordered the claimant to pay the respondent GBP 150,000 for wasted costs. The claimant was also required to cover in full all non-reimbursable hearing centre charges and court reporter fees. The president clarified that a failure to make these payments would result in the dismissal of the claimant’s claims. The penalty was later reflected in the allocation of costs at the end of the case.
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ARTICLE 37(6): DECISIONS ON COSTS UPON THE TERMINATION OF THE ARBITRATION
In the event of the withdrawal of all claims or the termination of the arbitration before the rendering of a final award, the Court shall fix the fees and expenses of the arbitrators and the ICC administrative expenses. If the parties have not agreed upon the allocation of the costs of the arbitration or other relevant issues with respect to costs, such matters shall be decided by the arbitral tribunal. If the arbitral tribunal has not been constituted at the time of such withdrawal or termination, any party may request the Court to proceed with the constitution of the arbitral tribunal in accordance with the Rules so that the arbitral tribunal may make decisions as to costs.
3-1497 Purpose. Article 37(6) clarifies how the costs of the arbitration are to be fixed when the arbitration is terminated before the rendering of a final award (e.g. as a result of the withdrawal of all claims, a decision of the arbitral tribunal to terminate the arbitration, or a procedure under Article 36(6) following non-payment of the advance on costs). It addresses the decisions to be taken by the Court and the arbitral tribunal. The provision also clarifies that, in cases that are terminated before the arbitral tribunal has been fully constituted, a party may request the constitution of the arbitral tribunal for the sole purpose of obtaining a decision on costs.
3-1498 2012 modifications. New provision.
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3-1499 Decisions to be taken by the Court. A decision on costs by the Court will be necessary in all cases where the parties have paid more than the filing fee. No decision is required from the Court in relation to the filing fee alone because it is non-refundable (Article 4(4)).
3-1500 The Court has developed certain standard practices to determine the percentages of costs to be fixed at different stages of the arbitration. However, it must be stressed that they are not binding and the Court will not apply them in all cases. Also, they may be modified to reflect developments in Court practice.
3-1501 The current standard practice for the ICC administrative expenses is as follows:
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3-1502 The current standard practice for arbitrators’ fees is as follows:
3-1503 When applying these standards, the Court will also consider the factors to which it has regard when making any decision pursuant to Article 37(4) (see paragraphs 3-1475 and 3-1476 in relation to ICC administrative expenses and paragraphs 3-1454–3-1459 in relation to arbitrators’ fees). The Court will also consider two further factors applicable specifically in the context of Article 37(6):
a) The Court may decide to increase the arbitrators’ fees where it is clear that the arbitral tribunal contributed significantly to the parties’ reaching a settlement. This tendency again reflects the Court’s commitment to fostering efficient and cost-effective proceedings and encouraging arbitral tribunals to contribute towards this goal.
b) The Court may also consider the amount of time set aside by an arbitrator for a scheduled hearing that was cancelled at short notice. The arbitrator may have difficulty filling that time with another arbitration or other professional activities.
3-1504 Generally, the Court will consider that arbitrators are entitled to fees only if the file has already been transmitted to them pursuant to Article 16. However, it is the current practice of the Court to grant a reading fee of US$ 500 to co-arbitrators who have done some work towards the selection of the president of the arbitral tribunal.
3-1505 Reimbursement of the remaining balance of the advance on costs. The Court does not make any decision on the allocation of the costs between the parties. The Secretariat will reimburse any balance of the advance on costs in such a way as to ensure that, so far as possible, each side pays the costs of the arbitration in equal shares in accordance with the principle stated in Article 36(2) (or in proportion to the payments made by each party if separate advances on costs or advances on costs under Article 36(4) were fixed), although it will respect any agreement between the parties that diverges from the above practice. For instance, parties sometimes agree among themselves when reaching a settlement that only one of them will cover the costs of the arbitration. The Court will not reimburse one side or the other as a means of satisfying an award without an agreement of the parties or a court order requiring it to do so.
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3-1506 Decisions to be taken by the arbitral tribunal. Parties that successfully reach a settlement agreement will frequently address issues of costs in their settlement. If this is not the case or the parties fail to agree on costs, a party may request that the arbitral tribunal make certain decisions on costs. The parties are even entitled to require the constitution of the arbitral tribunal for that precise purpose. However, they will be required to pay a corresponding advance on costs.
ARTICLE 38(1): MODIFIED TIME LIMITS
The parties may agree to shorten the various time limits set out in the Rules. Any such agreement entered into subsequent to the constitution of an arbitral tribunal shall become effective only upon the approval of the arbitral tribunal.
3-1507 Purpose. The Rules specify time limits for various steps in the proceedings, including the submission of an Answer (Article 5(1)), the submission of a reply to any counterclaims (Article 5(5)), the nomination of a sole arbitrator or the president of the arbitral tribunal (Article 13), the signature of the Terms of Reference (Article 23(1)) and the rendering of the award (Article 30(1)). Parties may wish to modify the periods specified so as to accelerate some or all aspects of the arbitration procedure or for other reasons (e.g. a slight adjustment of the time limit for parties to nominate their coarbitrators). However, shortening time limits, especially with respect to the establishment of the Terms of Reference or the rendering of the final award, presents certain risks. As a result, modified time limits may be extended by the Court on its own initiative pursuant to Article 38(2).
3-1508 2012 modifications. None.
3-1509 Amendments of time limits in practice. Parties occasionally modify time limits set in the Rules for the constitution of the arbitral tribunal. For example, the arbitration agreement may give the respondent fifteen to twenty days from receipt of the Request for Arbitration to nominate a coarbitrator, rather than the normal thirty days.86Parties may also wish to reduce the time limits for the parties jointly to nominate the sole arbitrator (from the thirty days specified in Article 12(3)) or for the co-arbitrators jointly to nominate the president of the arbitral tribunal (from the thirty days specified in Article 12(5)).
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3-1510 Fast track arbitrations, in which the parties decide, for example, to shorten the time limits for establishing the Terms of Reference and/or rendering the final award, are relatively uncommon in ICC arbitration and account for only 1 or 2 per cent of cases annually.87Where shorter time limits are agreed by the parties, the Court and its Secretariat will do their best to accommodate the parties’ agreement, although the Court is permitted to extend time limits if need be (Article 38(2)). Each year, several complex and high-value ICC arbitrations are completed within a relatively short time.
3-1511 Considerations with regard to fast-track arbitration. Agreeing to time limits that modify those set out in the Rules can be an effective way for parties to tailor the proceedings to their particular needs. However, caution should be exercised to ensure that any such adjustments do not provide grounds for subsequently challenging the award or resisting its enforcement,88for instance because a party was unable to present its case or, where the agreed time limit was not respected, because the arbitral procedure was not in accordance with the agreement of the parties. It can be very difficult to foresee at the time an agreement is drafted precisely what kind of dispute will occur in the future and what procedures will be required to deal appropriately with it. For this reason, the ICC decided against developing specific rules for fast-track arbitrations or any expedited proceedings, preferring instead to encourage a tailor-made approach to each case.
3-1512 Equally, adjustments to the time periods for the nomination of co‑arbitrators can sometimes give rise to difficulties if the time periods are unrealistically short. An added difficulty in such situations is that the Court’s ability to modify time limits pursuant to Article 38(2) is confined to those affecting the discharge of the responsibilities of the arbitral tribunal and the Court, not the parties. Therefore, a party may find that it has inadvertently circumscribed its right to nominate an arbitrator if unforeseen circumstances arise that prevents it from meeting the time limit imposed by the parties’ agreement.
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3-1513 Approval by the arbitral tribunal. Parties may agree to shorten time limits either within the arbitration agreement or at any time thereafter, including once the dispute has arisen and has been referred to arbitration. However, the arbitral tribunal should of course also be comfortable with such modified time limits. Where possible, therefore, the Secretariat will inform arbitrators of any such agreements when they are invited to be considered for confirmation or appointment, in which case a prospective arbitrator can simply decline the invitation if he or she feels unable to meet the modified time limits. In cases where the parties reach such an agreement after the arbitral tribunal has been constituted, Article 38(1) requires the arbitral tribunal’s approval. This ensures that the arbitral tribunal, having accepted its mandate based on the time limits specified in the Rules or as previously modified by the parties, consents to fulfil its mandate in line with the parties’ new expectations.
3-1514 Parties’ agreements to extend time limits. Although not expressly stated, parties may also extend default time limits provided in the Rules. Such agreements are unusual, as parties usually wish to accelerate the arbitral process. However, there may be situations in which such extensions are appropriate. One such situation is where a state is involved as a respondent and may have difficulty complying with Article 5’s thirty-day time limit for nominating a co-arbitrator. The process of governmental consultation and approval may not be possible within so short a period. Another situation is where the parties wish to nominate jointly a sole arbitrator but feel unable to do so within the thirty-day time limit set in Article 12(3).
ARTICLE 38(2): EXTENSION OF MODIFIED TIME LIMITS
The Court, on its own initiative, may extend any time limit which has been modified pursuant to Article 38(1) if it decides that it is necessary to do so in order that the arbitral tribunal or the Court may fulfil their responsibilities in accordance with the Rules.
3-1515 2012 modifications. Minor linguistic adjustments.
3-1516 Article 38(2) is a corollary to Article 38(1) and can be used by the Court to extend any time limit that has been modified pursuant to that provision. The primary purpose of this provision is to ensure that an arbitral tribunal is not rendered functus officio by being unable to meet a time limit agreed upon by the parties pursuant to Article 38(1). However, it also permits the Court to extend modified time limits that may prevent the Court from fulfilling its own responsibilities. For example, an agreement that seeks to impose a time limit on the Court for scrutinizing an award pursuant to Article 33 may be unworkable if the award is long and complex or must be translated into one of the Court’s working languages.
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3-1517 As already noted in connection with Article 38(1), the Court and its Secretariat will usually endeavour to respect the parties’ agreements. The Court may accommodate a need for urgency, for example, by scrutinizing an award at its immediately following committee session or even by having the President of the Court approve it using Article 1(3). The Court also convenes special committees to scrutinize awards in certain languages (notably German, Portuguese and Spanish), thereby minimizing any delay in approving such awards (see paragraph 3-1200). If such time-saving measures are insufficient or unavailable, the Court may have little alternative but to extend time limits agreed upon by the parties. However, in practice the parties themselves, together with the arbitral tribunal, will often agree upon extensions when it becomes clear that previously agreed time limits are unworkable.
3-1518 In exercising its power pursuant to Article 38(2), the Court may act on its own initiative without an application by a party or the arbitral tribunal. In cases where the arbitral tribunal is concerned about its ability to meet any modified time limits and cannot reach agreement with the parties on modifying them, it should draw such concerns to the Secretariat’s attention. Similarly, where a party sees a need for a time limit to be extended and the opposing side does not agree, it may request the Court to extend the time limit. The Court may then consider whether or not to exercise its power pursuant to this provision. If it does, it will usually aim to keep the extension to a minimum. In one recent case, for example, the Court made several seven-day extensions so as to keep the tribunal to a tight deadline for delivering its award.
ARTICLE 39: WAIVER
A party which proceeds with the arbitration without raising its objection to a failure to comply with any provision of the Rules, or of any other rules applicable to the proceedings, any direction given by the arbitral tribunal, or any requirement under the arbitration agreement relating to the constitution of the arbitral tribunal or the conduct of the proceedings, shall be deemed to have waived its right to object.
3-1519 Purpose. Article 39 ensures that if a party fails to raise objections with respect to the constitution of the arbitral tribunal or the conduct of the proceedings it will be deemed to have waived its right to object. This is especially relevant with regard to any subsequent court proceedings. The provision is intended to force parties to raise any genuine procedural concerns promptly during the arbitration, so that, where possible, the concern can be addressed immediately and within the arbitration. This prevents parties from holding back any objections for use in a later attempt to attack the award. A party that proceeds with an arbitration without
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raising a procedural objection runs a serious risk that it will be prevented (either by the Rules or relevant law) from relying on any procedural issue in subsequent court proceedings to set aside or resist enforcement of an award.
3-1520 2012 modifications. None.
3-1521 Scope. Whether or not a failure to raise an objection amounts to a waiver of a right may depend on the law applicable at the place of the arbitration or the place of enforcement of the award or the law applicable to the arbitration agreement. Most arbitration laws expressly provide that the failure to raise objections will amount to a waiver of a right to object.89The interpretation and scope of those provisions will be a matter for the relevant courts to determine. Courts in some jurisdictions have found that certain procedural matters are part of public policy or so fundamental that a failure to raise them cannot amount to a waiver.
3-1522 Article 39 is intended to apply principally to procedural aspects of the arbitration rather than substantive rights. The rule refers to a failure to object to issues of compliance with any:
3-1523 The provision is intended to flush out any concerns about the above-listed issues and stop parties from holding them back for subsequent proceedings attacking the award. Besides, if such concerns are raised promptly during the arbitration, they can be addressed by the arbitral tribunal, which may be able to deal with any actual or perceived prejudice arising from a party’s failure to comply with the procedure.
3-1524 While Article 39 is often effective with respect to issues of due process (subject to the relevant provisions of the applicable law, as mentioned above), its impact on matters such as the independence or impartiality of arbitrators is less certain. For example, some jurisdictions may require an express waiver made with full knowledge of the circumstances.90
3-1525 The provision covers all issues of compliance involving any participant in the proceedings, including an opposing party, the arbitral tribunal, the Court and its Secretariat
3-1526 When should a party raise an objection to avoid waiver? Article 39 does not specify whether a party must have actual knowledge of an instance of non-compliance or whether constructive knowledge will suffice. Constructive knowledge, in common law jurisdictions at least, is generally understood to refer to the awareness of circumstances that could lead a reasonable person to make enquiries. Thus, turning a blind eye may be sufficient to constitute the waiver of a right to object. The applicable standard will be determined by a court of law called upon to consider the effect of this provision.
3-1527 Equally, Article 39 does not contain any temporal restriction as to when a failure to raise objections will constitute a waiver. The provision is certainly intended to be effective against objections made after the award that could have been raised during the arbitration. However, it is less clear how Article 39 applies to belated objections raised while the arbitration is under way. Although Article 14(2) fixes a strict time limit for challenges to arbitrators, the Rules are silent on other types of objections. The arbitral tribunal and/or state courts, as the case may be, will determine the temporal limits of Article 39 on a case-by-case basis, having due regard to the principle that any objection should be raised promptly enough to enable the arbitral tribunal, where possible, to consider and address it.91
3-1528 Non-participating parties. The waiver to which Article 39 refers is deemed to have been made by “a party which proceeds with the arbitration”. This could be considered to limit the scope of the provision to parties that are actively participating in the arbitration. However, under certain laws the deemed waiver will extend to non-participating parties that received notice of the procedural matter at issue, enabling such parties to be aware of a lack of compliance despite not participating in the proceedings.
3-1529 Waiver of substantive rights. A further consideration is whether a failure to object could amount to the waiver, in some circumstances, of a substantive right. While waiving substantive rights is certainly not the primary aim of Article 39, the provision does refer to a failure to raise an objection to comply with any “direction given by the arbitral tribunal”. The 2012 Rules have introduced provisions requiring parties to comply with orders of arbitral tribunals and emergency arbitrators (Articles 22(5) and 29(2)). These provisions arguably confirm that directions of the arbitral tribunal are contractually binding, such that a breach may give rise to an entitlement to compensation. For example, an arbitral tribunal’s order on confidentiality pursuant to Article 22(3) is likely to create a contractual obligation on confidentiality in accordance with the terms of the order. A failure to object in time to another party’s failure to comply with the order might conceivably amount to a waiver of the right to claim corresponding damages. Whether such waiver is possible will almost certainly depend on the relevant applicable law, although it is a consideration that parties should bear in mind.
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ARTICLE 40: LIMITATION OF LIABILITY
The arbitrators, any person appointed by the arbitral tribunal, the emergency arbitrator, the Court and its members, the ICC and its employees, and the ICC National Committees and Groups and their employees and representatives shall not be liable to any person for any act or omission in connection with the arbitration, except to the extent such limitation of liability is prohibited by applicable law.
3-1530 Purpose. Article 40 limits the liability of arbitrators, the Court, and any other ICC body, such as a National Committee or Group, as well as experts appointed by an arbitral tribunal, for acts or omissions in relation to arbitrations. Were such bodies and individuals exposed to liability, this could hinder their work, making it difficult for them to provide the required level of service.
3-1531 2012 modifications. The 2012 Rules have qualified the previously absolute exclusion of liability found in Article 34 of the 1998 Rules by recognizing that it may not be possible “to the extent such limitation of liability is prohibited by applicable law”. Some commentators had expressed doubts about the effectiveness of Article 34 of the 1998 Rules because it purported to exclude liability for any act or omission, including the performance of the ICC’s basic obligations under the Rules.92However, the effectiveness of the provision has not been successfully challenged to date.
3-1532 The 2012 Rules have also extended the list of entities and persons benefiting from the protection of the provision to:
3-1533 Liability and domestic laws. Arbitration law in many countries expressly recognizes the immunity of arbitrators and arbitral institutions. In some countries, such as the United States of America, case law has developed a doctrine of immunity. There are good policy reasons for these limitations, as the absence of such immunity would seriously hamper the effectiveness of arbitration as a means of dispute resolution. The same considerations underlie the immunity that courts enjoy in most jurisdictions.
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3-1534 Some countries do not expressly recognize the immunity of arbitrators and/or arbitral institutions. France is an example of a jurisdiction in which, notwithstanding the introduction of a new arbitration law in 2011 and the French legal system’s arbitration-friendly stance, there is no statutory protection for arbitrators or institutions nor any generally applicable doctrine of immunity. Even in countries where such provisions exist, they may apply only to a limited class of persons, such as arbitrators. In such countries it may be necessary to rely on the exclusion of liability provided in Article 40.
3-1535 Exception to the limitation of liability. As indicated in its last sentence, Article 40 operates within the confines of any applicable law. Many jurisdictions restrict the extent to which service providers, or people generally, can limit their liability. For example, liability for gross or serious negligence often cannot be excluded.
3-1536 Courts may enforce such restrictions either by applying a contractual clause providing for such restrictions only to the extent that it conforms with the applicable law or, alternatively, by completely invalidating the clause. The exception in Article 40 prevents the latter outcome by granting as much protection against liability as is available under the applicable law, but never more
ARTICLE 41: GENERAL RULE
In all matters not expressly provided for in the Rules, the Court and the arbitral tribunal shall act in the spirit of the Rules and shall make every effort to make sure that the award is enforceable at law.
3-1537 Purpose. Article 41 enables the Court and the arbitral tribunal to fill any lacunas in the Rules. In doing so, they must act in the spirit of the Rules and make every effort to ensure that any award rendered in the arbitration is enforceable.93A common misconception is that Article 41, formerly Article
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35 of the 1998 Rules, imposes a best efforts obligation on the Court and the arbitral tribunal to ensure the enforceability of an award. However, a correct reading shows that it is limited to their actions “in all matters not expressly provided for in the Rules”.
3-1538 2012 modifications. None.
3-1539 Article 41 in practice. The Court may rely upon Article 41 to justify its practices in relation to matters not specifically addressed in the Rules. Under the 1998 Rules, the Court developed various “practices” in relation to a number of matters that are now reflected in the 2012 Rules (e.g. joinder, remission of an award to the arbitral tribunal) and based them on the predecessor of Article 41, Article 35 of the 1998 Rules. Article 41 therefore provides a very useful legal basis on which the Court can rely to adapt to new developments in international arbitration.
3-1540 As a result of the new provisions introduced into the 2012 Rules, the Court may find that it needs to rely on the provision less frequently than before, although it will continue to find it helpful in developing practices to deal with novel problems or new trends in arbitration. In a case from 2011 (therefore subject to the 1998 Rules), the arbitration clause required the Court to appoint all arbitrators in a three-member arbitral tribunal but to allow the arbitrators themselves to determine which of them would serve as president. The Rules do not address such situations. Accordingly, the Court was required to devise a novel method for constituting the arbitral tribunal. Maintaining the spirit of Articles 8 and 9 of the 1998 Rules (now Articles 12 and 13), which allow appointments only to specific positions (co‑arbitrator or president, rather than simply arbitrator), the Court decided to appoint the arbitrators only once they had determined their respective positions within the arbitral tribunal. To do so, it first confirmed a list of three candidates and directed them to select the president. They were informed that if they failed to do so, the Court could replace them with other candidates.
3-1541 Application of the provision by arbitral tribunals. Article 41 also offers flexibility to arbitral tribunals, provided they make every effort to make sure their awards are enforceable. For example, arbitral tribunals wishing to help facilitate the settlement of the dispute, which is a possibility now expressly recognized in Appendix IV on case management techniques, have sometimes relied upon this provision for that purpose.
1 1 The Economic and Social Council of the United Nations recognized the right of the ICC as a non-governmental organization to be consulted and to formulate recommendations to the Council on 1 October 1946 (doc. E/189/Rev2).
2 2 However, there are instances when the arbitral tribunal receives the Request before the Answer. For example, the respondent may seek an extension pursuant to Article 5(2) that allows it to submit its Answer well after the date on which the Secretariat transmits the case file to the arbitral tribunal. In cases where the co-arbitrators in a three member arbitral tribunal are requested to nominate jointly the president of the arbitral tribunal, the Secretariat will assist them in this task by sending them the Request and any Answer as soon as they are confirmed or appointed. Yet the Answer will often not be due at that stage.
3 3 The Secretariat has sometimes displayed flexibility and provided an extension slightly beyond the thirty-day norm where the respondent requested, for example, an additional thirty-one to thirty-five days.
4 4 For more information on the topic, see generally S. Greenberg & F. Mange, “Institutional and Ad Hoc Perspectives on the Temporal Conflict of Arbitral Rules” (2010) 27:2 Journal of International Arbitration 199.
5 5 Examples of decisions made by the Court concerning non-signatories have been discussed elsewhere. See A.-M. Whitesell & E. Silva Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience” in Complex Arbitrations: Perspectives on their Procedural Implications, Special Supplement, ICC International Court of Arbitration Bulletin (2003) 7; S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161.
6 6 The Court will not itself identify which claims are made under which arbitration agreement. Rather, the Rules require the parties to do this themselves pursuant to Articles 4(3), subparagraph (f), 5(5), subparagraph (d), or 7(2), subparagraph (c). If the claiming party or parties do not provide this information in their initial submission, the Secretariat will require them to do so before the Court makes its decision under Article 6(4), subparagraph (ii).
7 7 The Court’s former multicontract practice, which has been superseded by Article 6(4), subparagraph (ii), included the examination of several of these elements. That former practice is described in A.-M. Whitesell & E. Silva Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience” in Complex Arbitrations: Perspectives on their Procedural Implications, Special Supplement, ICC International Court of Arbitration Bulletin (2003) 7; and S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161.
8 8 For example, a typical scenario where FIDIC contracts are involved. For information on FIDIC (International Federation of Consulting Engineers), see www.fidic.org.
9 9 Global Gold Mining, LLC v. Robinson et al., 533 F.Supp.2d 442 (2008 S.D.N.Y.).
10 10 For an account of the Court’s early practice in relation to joinder, see A.-M. Whitesell & E. Silva Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience” in Complex Arbitrations: Perspectives on their Procedural Implications, Special Supplement, ICC International
11 11 See S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161.
12 12 Ibid. at 174ff., where some examples are provided.
13 13 Amicus curiae is a Latin legal expression that literally means friend of the court.
14 14 The Court’s practice, including recent examples and changes in that practice, is set out in S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161 at 166ff.
15 15 See A.-M. Whitesell & E. Silva Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience” in Complex Arbitrations: Perspectives on their Procedural Implications, Special Supplement, ICC International Court of Arbitration Bulletin (2003) 7 at 14ff; and S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161 at 166ff.
16 16 The term consolidation may be subject to various interpretations. The above definition is the only definition applicable in ICC arbitration in the context of Article 10.
17 17 See the discussion in S. Greenberg, J. Ricardo Feris, C. Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience” in B. Hanotiau & E.A. Schwartz, eds., Multiparty Arbitration, Dossier VII, ICC Institute of World Business Law, ICC Publication No. 701 (2010) 161 at 163.
18 18 Ibid. at 166ff.
19 19 Ibid. at 170.
20 20 For a discussion of external guidelines and the Court’s position on them, see J. Fry & S. Greenberg, “The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases” (2009) 20:2 ICC International Court of Arbitration Bulletin 12; and A.-M. Whitesell, “Independence in ICC Arbitration: ICC Court Practice concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators” in Independence of Arbitrators, Special Supplement, ICC International Court of Arbitration Bulletin (2007) 7.
21 21 See J. Fry & S. Greenberg, supra note 20 at Appendix by S. Greenberg & J. Ricardo Feris.
22 22 Senior Secretariat staff have regularly published descriptions of challenge decisions, normally in the ICC International Court of Arbitration Bulletin. See e.g. J. Fry & S. Greenberg, “The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases” (2009) 20:2 ICC International Court of Arbitration Bulletin 12 at 24ff.; A.-M. Whitesell, “Independence in ICC Arbitration: ICC Court Practice concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators” in Independence of Arbitrators, Special Supplement, ICC International Court of Arbitration Bulletin (2007) 7 at 28ff.; D. Hascher, “ICC Practice in relation to the Appointment, Confirmation, Challenge and Replacement of Arbitrators” (1995) 6:2 ICC International Court of Arbitration Bulletin 4; and S.R. Bond, “The Experience of the ICC in the Confirmation/Appointment Stage of an Arbitration” in The Arbitral Process and the Independence of Arbitrators, ICC Publication No. 472 (1991) 9.
23 23 This form is sent to potential arbitrators by the Secretariat or a National Committee or Group once they have been nominated or selected for proposal.
24 24 For examples of non-confirmations based on lack of impartiality or independence, see J. Fry & S. Greenberg, “The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases” (2009) 20:2 ICC International Court of Arbitration Bulletin 12 at 19–21.
25 25 At the time of writing, the ICC Commission on Arbitration, through its Task Force on Arbitration Involving States or State Entities, was examining whether states could include in investment treaties an obligation on the Court to provide reasons in respect of challenges (see the Task Force’s upcoming booklet, to be available at www.iccwbo.org).
26 26 See e.g. J. Fry & S. Greenberg, “The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases” (2009) 20:2 ICC International Court of Arbitration Bulletin 12; A.-M. Whitesell, “Independence in ICC Arbitration: ICC Court Practice concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators” in Independence of Arbitrators, Special Supplement, ICC International Court of Arbitration Bulletin (2007) 7; D. Hascher, “ICC Practice in relation to the Appointment, Confirmation, Challenge and Replacement of Arbitrators” (1995) 6:2 ICC International Court of Arbitration Bulletin 4; and S.R. Bond, “The Experience of the ICC in the Confirmation/Appointment Stage of an Arbitration” in The Arbitral Process and the Independence of Arbitrators, ICC Publication 472 (1991) 9.
27 27 The clause also excluded Court scrutiny of awards, another key feature of ICC arbitration (see paragraph 3-1183).
28 28 Sociétés BKMI et Siemens v. Société Dutco construction, Cour de cassation (7 January 1992), Revue de l’arbitrage (1992) 470.
29 29 It is interesting to note in this regard that many other arbitration institutions followed the ICC’s lead by including in their rules a provision like the former Article 10(2), regardless of where proceedings conducted under their rules are usually seated.
30 30 For more information on independence and impartiality, see paragraphs 3-373 and following. For examples of cases presenting issues relating to impartiality and independence, see paragraphs 3-562–3-566 (discussed in the context of challenges to arbitrators).
31 31 Under Article 9(6) of the 1998 Rules, the Court, in the execution of its appointment function, was required to request a proposal for co-arbitrator from the National Committee of the country of origin of the party. This nationality requirement has been abolished in the 2012 Rules (see paragraphs 3-526 and 3-527).
32 32 For a discussion of considerations relating to the language skills of arbitrators, as well as the language of arbitration more generally, see E. Castineira & M. Petsche, “The Language of the Arbitration: Reflections on the Selection of Arbitrators and Procedural Efficiency” (2006) 17:1 ICC International Court of Arbitration Bulletin 33.
33 33 More specific examples of challenges decided by the Court have been described elsewhere. See e.g. J. Fry & S. Greenberg, “The Arbitral Tribunal: Applications of Articles 7-12 of the ICC Rules in Recent Cases” (2009) 20:2 ICC International Court of Arbitration Bulletin 12 and Appendix by S. Greenberg & J. Ricardo Feris; and A.-M. Whitesell, “Independence in ICC Arbitration: ICC Court Practice concerning the Appointment, Confirmation, Challenge and Replacement of Arbitrators” in Independence of Arbitrators, Special Supplement, ICC International Court of Arbitration Bulletin (2007) 7.
34 34 Numerous examples of possibly abusive “guerrilla” challenges to arbitrators in ICC cases, as well as the measures employed by the Court to avoid their effects, are set out in S. Greenberg, “Tackling Guerrilla Challenges Against Arbitrators: Institutional Perspective” [2010: 2] Transnational Dispute Management.
35 35 Before deciding on whether to replace an arbitrator, the Court will first initiate replacement proceedings and solicit the comments of all concerned pursuant to Article 15(3) (see paragraphs 3-626–3-630).
36 36 When considering a challenge at a plenary session, the Court may decide that the issue on which the challenge is based should instead be dealt with pursuant to Article 15(2).
37 37 Nonetheless, the arbitrator may still be removed if the award is only a partial award or is incomplete.
38 38 In a very small number of jurisdictions it remains unclear whether foreign lawyers may represent parties in arbitrations.
39 39 The law governing the arbitration proceedings is often called the lex arbitri. It is sometimes called simply the procedural law, although the arbitral procedural law can in very rare cases be a different law from the law governing the arbitration proceedings or lex arbitri.
40 40 Very occasionally, parties agree in their arbitration agreement that the arbitral tribunal, rather than the Court, will determine the place of arbitration. The Court will respect such agreements. In certain instances the Court may fix a place of arbitration provisionally, as discussed in paragraph 3-689.
41 41 Some jurisdictions may require at least some face-to-face deliberation. The arbitral tribunal should check local requirements.
42 42 While not to be encouraged, an arbitral tribunal occasionally, for the sake of speed, issues an order containing its decision on the rules of law governing the merits and provides reasoning for the decision in a subsequent award.
43 43 The arbitration laws of certain jurisdictions restrict the choice of law in entirely domestic arbitrations, and occasionally even in international arbitrations where there is a party from that jurisdiction.
44 44 See E. Jolivet, “La jurisprudence arbitrale de la CCI et la lex mercatoria”, Les Cahiers de l’arbitrage, Gazette du Palais (29 Apr.–3 May 2001).
45 45 If it is not recognized by the law governing the arbitration proceedings, parties should be very cautious about using it In such jurisdictions an arbitral tribunal’s failure to apply the law may endanger the enforceability of the award.
46 46 An entire issue of the ICC International Court of Arbitration Bulletin has been devoted to the subject. See Confidentiality in Arbitration: Commentaries on Rules, Statutes, Case Law and Practice, Special Supplement, ICC International Court of Arbitration Bulletin (2009).
47 47 However, challenges and requests for the replacement of an arbitrator that are based purely on the arbitrator’s procedural misconduct very rarely succeed, because it is highly unusual for an ICC arbitral tribunal not to comply with Article 22(4).
48 48 For a discussion of Terms of Reference, see M. Schneider, “The Terms of Reference” in The New 1998 ICC Rules of Arbitration: Proceedings of the ICC Conference Presenting the Rules, Special Supplement, ICC International Court of Arbitration Bulletin (1997) 26; S. Lazareff & E. Schäfer, “The 1992 Practical Guide on Terms of Reference Revisited” (1999) 10:2 ICC International Court of Arbitration Bulletin 14; S. Lazareff, “Terms of Reference” (2007) 17:1 ICC International Court of Arbitration Bulletin 21.
49 49 The parties may wish to control the process by preparing the draft themselves. This approach is uncommon and generally not recommended. It is more efficient for the arbitral tribunal to take the lead. More importantly, if the parties draw up the Terms of Reference they will forgo the advantage of having the arbitral tribunal acquaint itself with the file at the very beginning of the case for the purpose of drafting the Terms of Reference.
50 50 Guidance on what to include in this summary can also be found in the ICC Award Checklist, which is distributed to ICC arbitrators when the Secretariat transmits the file to them pursuant to Article 16. This checklist is discussed in connection with Article 33 below (see paragraphs 3-1195–3-1197).
51 51 An agreement to resort to arbitration after the dispute has arisen.
52 52 Article 16 of the 1988 Rules required the execution of a “rider” to the Terms of Reference recording the inclusion of any new claims or counterclaims after the establishment of the Terms of Reference. That rather cumbersome requirement was abandoned in the 1998 Rules.
53 53 For a discussion of Article 23(4)’s predecessor, Article 19 of the 1998 Rules, see E.A. Schwartz, “New Claims in ICC Arbitration: Navigating Article 19 of the ICC Rules” (2006) 17:2 ICC International Court of Arbitration Bulletin 55.
54 54 For a detailed discussion of what constitutes a “new claim”, see E.A. Schwartz, “New Claims in ICC Arbitration: Navigating Article 19 of the ICC Rules” (2006) 17:2 ICC International Court of Arbitration Bulletin 55.
55 55 For more information on document production, see Document Production in International Arbitration, Special Supplement, ICC International Court of Arbitration Bulletin (2006).
56 56 Evidence in chief refers to a witness’s initial statement(s), as opposed to the witness’s responses to questions from an opposing party.
57 57 For more information on adverse inferences, see S. Greenberg & F. Lautenschlager, “Adverse Inferences in International Arbitral Practice” (2011) 22:2 ICC International Court of Arbitration Bulletin 43.
58 58 See also the ICC Commission report Techniques for Controlling Time and Costs in Arbitration, which recommends that due consideration be given to whether or not a hearing is needed.
59 59 In a further attempt to have the hearing cancelled, the claimant alleged that the sole arbitrator had violated Thai law in his conduct of the proceedings. It accordingly filed a formal complaint with the Thai authorities against the sole arbitrator.
60 60 Article 22(1) of the 1998 Rules stated: “When it is satisfied that the parties have had a reasonable opportunity to present their cases, the Arbitral Tribunal shall declare the proceedings closed” (emphasis added).
611 61 Unlike other provisions of the Rules, the Emergency Arbitrator Provisions apply only where the parties entered into the relevant arbitration agreement on the date of entry into force of the 2012 Rules or thereafter (see Article 29(6), subparagraph (a)). This is in contrast to Article 6(1) concerning the other provisions of the Rules.
62 62 Of particular interest in this regard are Articles 17H and 17I of the 2006 UNCITRAL Model Law on International Commercial Arbitration, which provide for enforcement of interim measures issued by arbitral tribunals. While these provisions do not refer specifically to emergency arbitrators, they arguably extend to orders made by emergency arbitrators.
63 63 Approximately 47% of ICC arbitrations are withdrawn (due to a settlement or otherwise) before a final award. Many of those cases end within six months of the Terms of Reference.
64 64 Parties are also encouraged to inform the Secretariat and arbitral tribunal of any settlement discussions if they wish to seek a stay of the arbitration pending these discussions.
65 65 These points are in part taken from H. Lloyd, M. Darmon, J.-P. Ancel, Lord Dervaird, C. Liebscher, H. Verbist, “Drafting Awards in ICC Arbitrations” (2005) 16:2 ICC International Court of Arbitration Bulletin 19.
66 66 The clause also stated that “the appointment of the arbitrators by the parties is not subject to confirmation or rejection by the Court of Arbitration of the ICC”, contravening Articles 13(1) and 13(2) (see paragraph 3-420).
67 67 Article 2, subparagraph (v), defines an award as including, “inter alia, an interim, partial or final award”, and it is the Court’s well-established practice to treat awards by consent (referred to in Article 32) as awards for the purpose of Article 33.
68 68 Reproduced in (2010) 21:1 ICC International Court of Arbitration Bulletin 19. An updated checklist was released on 1 January 2012 to take into account changes in the 2012 Rules.
69 A list of signatures with information concerning ratification can be found on the website of the United Nations Commission on International Trade Law at: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/ NYConvention_status.html.
70 70 Information on formalities relating to the enforcement of awards in numerous jurisdictions can be found in the ICC Commission report, Guide to National Rules of Procedure for Recognition and Enforcement of New York Convention Awards, published as a Special Supplement to the ICC International Court of Arbitration Bulletin and available online in the ICC Dispute Resolution Library (www.iccdrl.com). The Guide was initially prepared in 2008 by a Task Force of the ICC Commission on Arbitration and will be updated periodically to take account of changing requirements.
71 71 For information on states or jurisdictions that have additional requirements for the enforcement of awards, see the ICC Commission report Guide to National Rules of Procedure for Recognition and Enforcement of New York Convention Awards, published as a Special Supplement to the ICC International Court of Arbitration Bulletin and available online in the ICC Dispute Resolution Library (www.iccdrl.com).
72 72 The Court employs special terminology for the decisions made by arbitral tribunals under Articles 35(1) and 35(2) (see paragraphs 3-1291–3-1293).
73 73 For more information on correction and interpretation of awards, see B. Daly, “Correction and Interpretation of Arbitral Awards under the ICC Rules of Arbitration” (2002) 13:1 ICC International Court of Arbitration Bulletin 61.
74 74 For a definition of these terms, see paragraphs 3-1291–3-1293.
75 75 Examples of the provision’s application are provided in B. Daly, “Correction and Interpretation of Arbitral Awards under the ICC Rules of Arbitration” (2002) 13:1 ICC International Court of Arbitration Bulletin 61. See also M. Hauser-Morel & J.H. Nedden, “Correction and Interpretation of Arbitral Awards and Additional Awards” in Post Award Issues, ASA Special Series No. 38 (2011) chapter 2.
76 76 This possibility is offered by Article 33(3) of the UNCITRAL Model Law on International Commercial Arbitration, “[u]nless otherwise agreed by the parties”.
77 77 Article 2(10) of Appendix III differs from the corresponding provision in the 1998 Rules. The provision now refers to remissions under the new Article 35(4) and extends the advance on costs to cover the ICC administrative expenses. It reads: “In the case of an application under Article 35(2) of the Rules or of a remission pursuant to Article 35(4) of the Rules, the Court may fix an advance to cover additional fees and expenses of the arbitral tribunal and additional ICC administrative expenses and may make the transmission of such application to the arbitral tribunal subject to the prior cash payment in full to the ICC of such advance. The Court shall fix at its discretion the costs of the procedure following an application or a remission, which shall include any possible fees of the arbitrator and ICC administrative expenses, when approving the decision of the arbitral tribunal.”
78 78 In relation to the arbitral tribunal’s fees and expenses, this possibility is specifically foreseen in the Note.
79 79 This distinction in terminology is clearly set out in the Note (see paragraph 3-1277), which also states that both addenda and decisions are subjected to the same scrutiny process.
80 80 According to the 2010 scales, which were applicable at the time of writing. The Court may revise its costs scales and may therefore increase the maximum amount.
81 81 The Court is not bound to use the estimates provided by the parties. Where the Court considers that the estimate is too low or otherwise inappropriate, it may instead opt for a notional amount (see paragraphs 3-1350 and 3-1351).
82 82 When a set of claims includes both quantified and unquantifiable claims, the total value of these claims may be considered partially quantified. However, the Court may decide not to take into account claims for declaratory relief that are closely tied to quantified claims (e.g. a claim for damages in relation to the breach of a contract and a corresponding request for a declaration that a party has breached that contract).
83 83 For more information on the matter, see M. Secomb, “Awards and Orders Dealing with the Advance on Costs in ICC Arbitration: Theoretical Questions and Practical Problems” (2003) 14:1 ICC International Court of Arbitration Bulletin 59.
84 84 Assuming that the case has resulted in a final award. Where the case terminates or is withdrawn prior to the rendering of a final award, Article 37(6) will apply and the Court will resort to other benchmarks relating to different stages of the arbitration (e.g. establishment of the Terms of Reference, rendering of a partial award). For a discussion of these benchmarks and of how the Court will resort to them, see paragraphs 3-1501–3-1503.
85 85 For a discussion of attitudes to costs in international arbitration, see B. Hanotiau, “The Parties’ Costs of Arbitration” in Evaluation of Damages in International Arbitration, Dossier of the ICC Institute of World Business Law (2006) 213.
86 86 In instances where the parties agree on a specific time limit for the parties to nominate the co-arbitrators, the Court will usually be very reluctant to confirm any co-arbitrator nominated outside that time limit. Instead, it will usually appoint an arbitrator on that party’s behalf unless the other party explicitly consents to the nominee’s confirmation (see paragraph 3-451).
87 87 For a discussion of fast-track arbitration in the context of broader efforts to expedite proceedings, see the ICC Commission report, Techniques for Controlling Time and Costs in Arbitration (2009), available at www.iccwbo.org.
88 88 See, in this regard, Article 18, Article 34(2), subparagraph (a)(ii), and Article 36, subparagraph (a)(ii), of the UNCITRAL Model Law on International Commercial Arbitration and Article V(1), subparagraph (b), of the New York Convention.
89 89 See e.g. Article 4 of the UNCITRAL Model Law on International Commercial Arbitration.
90 90 See S.A.J. & P. Avax v. société Tecnimont SPA, judgment of 2 November 2011, Reims Court of Appeal, France. Although this case was not directly concerned with the predecessor of Article 39, the court found that a failure to comply with the thirty-day time limit to make a challenge contained in Article 11(2) of the 1998 Rules (now Article 14(2)) would not prevent a national court from setting aside an award where it finds that an arbitrator was insufficiently independent of the parties.
91 91 In this respect, the reference in Article 4 of the UNCITRAL Model Law on International Commercial Arbitration to the objection being raised “without undue delay” is instructive
92 92 The change was also prompted, in part, by a decision of the Paris Court of Appeal in 2009 which, by inference, suggested that the ICC could not exclude liability for a failure to perform its most essential obligations (La S.N.F. S.A.S. v. La Chambre de commerce internationale, Paris Court of Appeal, 1st Chamber, Section C, 22 January 2009).
93 93 The extent of the Court’s obligation to make every effort to ensure that the award is enforceable at law has been considered by state courts. See e.g. M&C Corporation v. Erwin Behr GmbH & Co. KG, 326 F.3d 772 (6th Cir. 2003). In this case the Court invoked Article 35 of the 1998 Rules (predecessor of Article 41) to endorse the remission of an ICC award made in London to an arbitral tribunal to clarify ambiguities impeding its enforcement, even though the Rules did not at the time contain any provision for remissions (now provided in Article 35(4)).