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1
InternatIonal CommerCIal arbItratIon, an IntroduCtIon2010
In-house Counsel praCtICal guIde
2 IN-HOUSE COUNSEL PRACTICAL GUIDE 3
4 IN-HOUSE COUNSEL PRACTICAL GUIDE 5
table of Contents
5
1 Introduction 7
2 Key points 9
3 Arbitration v. Litigation 10
4 Arbitration - pros 12
Neutrality 12
Expert arbitrators 13
Confidentiality 13
Procedural flexibility - Speed and costs 13
Language 13
Place of arbitration 13
Finality of the award 13
Enforcement 14
5 Arbitration - cons 16
Speed and costs 16
Limited power of arbitrators 17
Multi-party disputes 17
6 The Place of arbitration 18
7 Practical issues 20
Russia 20
India 20
China 20
Hong Kong 21
Singapore 22
Mexico 22
8 The Language of the arbitration 24
9 Ad hoc v. Institutional 26
Ad hoc 26
Institutional 27
Permanency 29
Modern rules of arbitration 29
Qualified staff 29
Reasonable charges 29
10 Some well known institutions 30
The International Chamber of Commerce 30
The London Court of International Arbitration 30
The American Arbitration Association and
the International Centre for Dispute Resolution 30
Singapore International Arbitration Centre 31
International Centre for Settlement of Investment Disputes 31
11 The arbitrators 34
12 The arbitration clause 36
13 The arbitral award 40
Punitive damages 40
Discovery 41
Costs 42
14 Challenge of arbitral awards 44
15 Recognition and enforcement of arbitral awards 46
ANNEX1-PartiestoNewYorkConvention 50ANNEX2-LegislationbasedontheUNCITRAL ModelLawonInternationalCommercialArbitration 56ANNEX3-InstitutionalArbitrationClauses 58ANNEX4-IBARulesonTakingEvidence 62
16 Profile 77
6 IN-HOUSE COUNSEL PRACTICAL GUIDE 7
IntroduCtIon 1
Adisputeresolutionclauseisnormallyfoundattheveryendofacontract,evenifthecontract
islargeandcomplexandwasheavilynegotiatedbetweeninternationalparties.Indeed,onenormally
findsthedisputeresolutionclauseinbetweenthefinalandmorepracticalstandardclauses,
almostasanafterthought.
Whennegotiatingandconcludingacontract,noneofthepartiesassumethattherewillbea
conflict.However,shouldaconflictarise,thedisputeresolutionclausewillbethefirstclausethat
thepartieswillreferto.Itwillbethedisputeresolutionclausewhichwilldeterminewhichcourt
ortribunalwillconsidertheeffectivenessofthecontractualrightsandduties.
Thisbookletdealswiththeconsiderationsthatshouldbemadewhenincludingdisputeresolu-
tionclausesininternationalcommercialcontracts.Morespecifically,thisbookletfocusesonthe
considerationstobemadewhenthepartiescontemplatetosolvepossibledisputesthrough
arbitration.
Inthisbookletthefocuswillbeoninternationalarbitration,asinternationalarbitrationissubject
todifferentrulesandcustomsthandomesticarbitration.Itisbeyondthescopeofthisbooklet
todealwiththecomplexitiesoftheconductandproceedingsofthearbitrationitself,withthe
technicalitiesofthevariousarbitrationrulesandwiththeinterpretationofthecaselawwhichhas
beendevelopedbyvariouscourtsandarbitrationinstitutes.
DirkKnottenbelt
8 IN-HOUSE COUNSEL PRACTICAL GUIDE 9
decidebetweenarbitrationorlitigation;
decideonasuitableformofarbitration;
draftlitigationclauses;
findyourwayamongproceduralrules;and
avoidmakingmistakesinyourarbitrationclause.
thIs guIde on InternatIonal arbItratIon wIll help you:
10 IN-HOUSE COUNSEL PRACTICAL GUIDE 11
arbItratIon v. lItIgatIon
Whendraftingadisputeresolutionclause,thepartiesfirsthavetochoosebetweenarbitration
andlitigation.
Indomesticcontracts,i.e.incontractsbetweenpartiesinthesamestate,itisgenerallyexpected
thatthelocalcourtshavejurisdiction.Indeed,ifthepartiesdonotmakeadifferentchoice,this
willbethecase.
Partiestointernationalcontractswillhavetoagreeonwhatwillhappenifadisputearisesorif
thereisalreadyadisputewhichcannotberesolved.
Generally,andapartfromnegotiatingasolutionorsubmittingthedisputetosomeformof
alternativedisputeresolutionmethod,suchasmediation,thepartiestoacontractcanchoose
betweeneitherlitigationbeforenationalcourtsorarbitrationtosettleanypossibledisputes.
Theconceptofarbitrationissimple.Partiesagreetosubmittheirdisputetoapersonoranumber
ofpersonswhoseexpertiseorjudgementtheytrust.Thepartiesalsoagreethatthedecisionof
thispersonorthesepersonsisfinalandbinding.Thatperson-orthesepersons-willlistentothe
parties,willconsiderthefactsandargumentsandmakeadecision.Inshort,arbitrationisthere-
foreaneffectivewayofobtainingafinalandbindingdecisioninadispute,withoutsubmitting
ittoacourtoflaw.
Whywouldpartieschooseforarbitration,ratherthanforanationalcourtoflaw?
arbItratIon - pros
NeutralityPartiestoaninternationalcontractusuallycomefromdifferentcountries.Althoughsuchparties
sometimesagreeonthejurisdictionofanationalcourt,itisoftendifficulttoagreeonthe
competenceofthecourtofeitherparty’scountryorofacourtofathird,neutralcountry.
Anationalcourthasitsownformalities,itsown
rulesandprocedures.Mostlikelysuchrulesand
proceduresaredevelopedtoonlydealwith
domesticmattersandnotwithinternationalcom-
mercialorinvestmentdisputes.Thenationalcourt
ofonepartywillthereforebeaforeigncourttothe
otherparty.Acourtofathirdcountrywillevenbe
foreigntobothparties.Anynationalcourtwillbe“foreign”toeitheroneorbothoftheparties.
Therefore,ifapartytoaninternationalcontractdoesnotinsistonanagreementtoarbitrate,that
partymayfindthat,whenadisputearises,itwillbeobligedtosubmitaclaiminaforeigncourt,
toemployforeignlawyersand–inmanycases-totranslatethecontract,thecorrespondence
betweentheparties,andotherrelevantdocumentsintothelanguageoftheforeigncourt.
Furthermore,chancesarethatifthecaseproceedstoahearing,thelanguageofthehearingwill
bedifficultforonepartytounderstandwithouttheaidofinterpreters.Consequently,thatparty
mayfeeldisadvantagedinpresentingitscasetothecourt.
Inarbitration,adisputeisnormallydeterminedinaneutralforumratherthaninthecountryof
oneparty.Moreover,eachpartywillbeabletoparticipateintheselectionofthetribunal,whether
thetribunalconsistsofasolearbitratororofthreearbitrators.Thearbitratororarbitratorswillbe
requiredtobestrictlyindependentandimpartial.
Ifthepartieshaveagreedononearbitrator,heorshewillbechosenbyagreementoftheparties,
orbysomeindependentinstitutiontowhichthepartieshaveagreed.
Ifthepartieshaveagreedonthreearbitrators,twoofthemarenormallychosenbytheparties
themselves.Thethirdarbitratorisnormallyselectedbythefirsttwoarbitratorsorbytheoutside
institution.
Inanycase,whetherthetribunalconsistsofonearbitratororofthree,itwillbeastrictly“neutral”
tribunalandneitherpartyshouldfeeltobeatadisadvantageinpresentingitscase.
Expert arbitrators Anotherreasonforpreferringarbitrationtolitigationisthatthearbitratorscanbeselectedfor
theirspecificexpertise,forexampleincaseswherespecifictechnicalknowledge,qualifications
andexperiencearerequired.
ConfidentialityAfurtherreasonwhichmakesarbitrationanattractivealternativetolitigationisconfidentiality.
Contrarytolitigation,whichisopentothepublic,arbitrationisprivate.Theprivacyandconfiden-
tialityofarbitralproceedingsisveryattractivetocompaniesandinstitutionswhichareinvolvedin
internationaltransactionsandwhodonotwishfordisputesorthedetailsofsuchtransactionsto
becomepublic.
Procedural flexibility - Speed and costsInarbitration,thepartiescandeterminetheprocedurewhichbestsuitsthecase.Theyarenot
boundbytheproceduralrulesofnationalcourts.Thisflexibilitycanleadtosavingtimeandcosts.
LanguageThepartiescandeterminethelanguageofthearbitration,whichwillnotonlyapplytothelan-
guageinwhichtheoralhearingswillbeconducted,butalsoinwhichthebriefsandsupporting
documentsmustbesubmitted.
Place of arbitrationRatherthanhavingtosubmittoacourtinthecountryoftheotherparty,thepartiescanagreeto
aneutraloraconvenientplace(oracombinationthereof )toconductthearbitration.
Finality of the awardSubjecttocertainprovisionsofnationallawor
aspecificagreementbetweentheparties,an
arbitralawardisfinal:itwillnot,asisthecase
withcourtjudgments,bethefirststeponan
expensiveladderofappeals.
12 IN-HOUSE COUNSEL PRACTICAL GUIDE 13
“Any national court will be
“foreign” to either one or both
of the disputing parties.“
“An arbitral award is final: it
will not be the first step on an
expensive ladder of appeals.”
Enforcement Thejudgmentsofalocalcourtcanonlybeenforcedinthatcountry.Insomeinstances,ifthat
countryispartytoatreatyforthereciprocalenforcementofcourtjudgments,thejudgmentcan
beenforcedinothercountries.Mostcountriesare,however,partytoonlyalimitednumberof
suchtreaties.Forinstance,theNetherlandsispartoftheEuropeanUnion,onthebasisofwhich
aDutchjudgmentcanbeenforcedin27Europeancountries2.EnforcingaDutchjudgmentinany
othercountrywillbemuchmoredifficult,timeconsumingandcostly.
Anarbitrationaward,renderedinthe
Netherlands,however,canbeenforcedin
over140countries,undertheprovisionsof
internationaltreatiessuchastheNewYork
Conventionof1958towhichthe
Netherlandsisaparty.
“An arbitration award,
rendered in the Netherlands, can
be enforced in over 140 countries.”
14 IN-HOUSE COUNSEL PRACTICAL GUIDE 15
Limited power of arbitratorsIngeneral,arbitratorshavelesspowerthanacourtoflaw.Forexample,thepowertodemandthe
attendanceofwitnessesunderpenaltyofafineorimprisonment,ortoordertheattachmentofa
bankaccountorofassets,arepowerswhichonlystatecourtshave.Theyarenotpowersthatany
stateislikelytodelegatetoaprivatearbitraltribunal,howeverimminentandwellrespectedthat
arbitraltribunalmaybe.
Multi-party disputesArbitrationworksmosteasilywhenthereareonlytwopartiesinvolved-oneastheclaimantand
theotherastherespondent.Anarbitraltribunalhasnopowertojointhirdparties(i.e.persons
whoarenotapartytothearbitrationagreement)intoarbitrationagainsttheirwill.
arbItratIon - Cons
Speed and costsPartiesincreasinglycomplainaboutdelays,particularlyatthebeginningandattheendofthear-
bitration.Atthebeginning,thecomplaintisthatittakestoolongtoconstituteanarbitraltribunal
and,thus,tocommencewiththearbitration.Attheendofthearbitration,thecomplaintisthat
somearbitraltribunalstaketoomuchtimetomaketheiraward.
Forvariousreasons,internationalarbitrationnolongerisarelativelyinexpensivemethodof
disputeresolution.First,thefeesandexpensesofthearbitrator(unlikethesalaryofajudge)must
bepaidbythepartiesandthesechargesmaybesubstantialininternationalarbitrationsofany
significance.
Second,itmaybenecessarytopayadministrativefeesandexpensesofanarbitralinstitution,and
thesetoocanbesubstantialespeciallyifasecretaryorregistrarisappointedtoadministerthe
proceedings.
Finally,itwillbenecessarytohireroomsformeetingsandhearings,ratherthanmakinguseofthe
publicfacilitiesofthecourtsoflaw.Furthercostswillbemadeforcourtreportersandtranslators.
Ontopofthat,thepartieswillhavetobearthecostsforthefeesandexpensesoftheirlegaladvi-
sorsandexpertwitnesses.Inmajorarbitration,thesemayeasilyrunintomillionsofdollars.
Assuch,internationalarbitrationisun-
likelytobecheaperthanproceedingsin
acourtoffirstinstance.However,arbi-
trationisaformof“one-stopshopping”.
Althoughtheinitialcostsarenotlikely
tobelessthanthoseofproceedings
incourt,thecostsofaninternational
arbitrationmaywellcomparefavorably
tothecostsofpursuingaclaimthrough
costlyappealstosuperiornationalcourts.
16 IN-HOUSE COUNSEL PRACTICAL GUIDE 17
“The one-stop-shop of international
arbitration is often less costly than
pursuing a claim through appeals in
national courts.”
the plaCe of arbItratIon
Assumingthatthechoicehasbeenmadetoarbitrate,thesecondchoicetobemadewhen
draftinganarbitrationclause,istodeterminetheplaceofarbitration.
Thelegalplaceor“seat”ofthearbitrationdeterminesthelawwhichwillgovernthearbitration
(lex arbitri).Sinceinternationalarbitrationsusuallytakeplaceincountriesthatare“neutral”,thelaw
whichgovernsthearbitrationsnormallyisdifferentfromthelawthatgovernsthecontract,i.e.
themeritsofthedispute.
The lex arbitri,thus,willcoverissuessuchas:
–thedefinitionandformofanarbitrationagreement;
–whetheradisputecanbearbitrated(arbitrability);
–theconstitutionofatribunalandthegroundstochallengethetribunal;
–equaltreatmentoftheparties;
–interimmeasures;
–therighttoahearing;
–courtassistance,ifrequired;
–thevalidityofanawardandtherighttochallengeanaward.
Thechoicefortheplaceofarbitrationcanhaveserious
consequencesandcareshouldbetakenthatlocalcourts
willenforcetheawardandnotundulyinterferewith
thearbitration.Assuch,partiesshouldavoidlocatingan
arbitrationincountrieswhicharenotsignatoriestothe
NewYorkConvention(1958).3
New York Convention of 1958
The New York Convention of 1958 is the most important international treaty relating to inter-
national commercial arbitration. It is one of the cornerstones of international arbitration; and it
is no doubt because of the New York Convention that international arbitration has become the
established method of resolving international trade disputes.
All major trading nations of the world have become party to the New York Convention. At this
moment, the Convention has more than 140 parties.
The New York Convention provides for a more simple and effective method of obtaining recogni-
tion and enforcement of foreign arbitral awards. Although the full title of the Convention suggests
that it is concerned only with the enforcement of foreign awards, this is misleading: the Conven-
tion is also concerned with the recognition
of arbitration agreements. In order to
enforce arbitration agreements, the New
York Convention requires the courts of con-
tracting states to refuse to allow a dispute
that is subject to an arbitration agreement
to be litigated before its courts, if an
objection to such litigation is raised by any party to the arbitration agreement.
Seriousconsiderationshouldbegiventowhetherornotthereisarightofappealtolocalcourts,
permittingsuchcourtstointerferewiththemeritsoftheaward.Ifsuchrightofappealexists,it
shouldbeconsideredifsuchrightcanbeexcludedbyagreementbetweentheparties.
Jurisdictionswhichrequirethattheparties’counselorthearbitratorsshouldbeoflocalnational-
ityoradmittedtothelocalbarshouldalsobeavoided.
Onewaytodeterminewhetheraparticularjurisdictionisarbitratorfriendly,istocheckifthat
countryhasadoptedtheUNCITRALModelLawonInternationalCommercialArbitration(1985).4
UNCITRALModelLaw(1985)
The Model Law was adopted by the United Nations in 1985 and was aimed at the harmonization
of the arbitration laws of the different countries of the world. The Model Law has been a major
success. The text goes through the arbitral process from beginning to end from a simple and
readily understandable form. It is a text that many states have adopted, either as it stands or with
minor changes, as their own law of arbitration. So far, over 60 states have adopted legislation
based on the Model Law.
The UNCITRAL Model Law is based upon
the principle that the local courts in the place of arbitration should support,
but not interfere with, the arbitral process. Oncethelegalissuesrelatingtotheplaceofarbitra-
tionhavebeencontemplated,practicalissuesshouldbeconsidered,suchasgeographical
convenience,availabilityofsuitablearbitrators,locationofwitnessesandevidenceandthe
availabilityofsupportservices,suchashearingrooms,courtreportersandsoforth.
Finally,oncetheplaceofarbitrationhasbeenagreedupon,thepartiesarefreetohavemeetings
andhearingselsewhere.Thiswillnotaffectthechoicefortheplaceofarbitrationand,thus,
ofthelex arbitri.
18 IN-HOUSE COUNSEL PRACTICAL GUIDE 19
“The choice for the place
of arbitration can have
serious consequences.”
“The 60 states that have adopted
the UNCITRAL Model Law, are
arbitration-friendly jurisdictions.”
20 IN-HOUSE COUNSEL PRACTICAL GUIDE 21
praCtICal Issues
Inthechoiceoftheplaceofthearbitration,thereareanumberofcountrieswithspecificissues.
Itisbeyondthescopeofthispapertogiveanexhaustiveoverview,butbelowthemoreimpor-
tantissuesareaddressedwhichhavearisenwhenselectinganarbitralvenueincertaincountries
outsidethemainstream.
RussiaRussiancourtsaresometimesreluctanttorecognizeandenforceinternationalcommercialarbi-
trationawards.SincethegroundsforrefusingenforcementislimitedbytheNewYorkConven-
tion,contraventionofpublicpolicyoftenservesasthereasonforrejectingenforcement.Insome
instances,courtsinterpretthenotion“publicpolicy”toovaguely.Somecourtstendtoconsider
thecontraventionofmandatoryRussianlawasacontraventionofRussianpublicpolicy.
WherethesubjectofthecontractislocatedinRussia,itmaysometimesbepreferabletochoose
aplaceofarbitrationinRussiaitself.Althoughitmaynotbeeasytheenforcetheawardoutside
Russia,arbitrationinRussiaundertherulesoftheInternationalCommercialArbitrationCourtat
theChamberofCommerceoftheRussianFederation(“ICAC”)maybeconsideredasanalternative
toinstitutionalarbitrationelsewhereforRussian-relateddisputes.Duetotheunpredictabilityof
rulingsofthelocalcourtsandtheuncertainprospectsofenforcement,specialistadviceshould
alwaysbeobtained.
IndiaUntil1996,whenIndiaadoptedtheArbitrationandConciliationAct,Indiancourtshadwiderang-
ingpowerstointerveneinarbitrationproceedings.Althoughthe1996Actaimstoreducecourt
intervention,theIndianSupremeCourthasrenderedanumberofdecisionsinwhichthegrounds
forchallenginganawardhavebeenexpanded.
ChinaAllarbitrationsinChinaareinstitutional.Thepartiesmustchooseanarbitrationinstitutetocon-
ductthearbitration.Theinstitutethenappointsthearbitrators.
PartiesarbitratinginternationaldisputeswithinChinaalmostalwaysdosoaccordingtotherules
oftheChinaInternationalEconomicTradeCommission(“CIETAC”),whichhasavirtualmonopoly
overarbitrationsconductedinChina.
ThelatestversionoftheCIETACrulescameintoeffecton10May1998.Thehearingstendtobe
shortandinformal,withemphasisbeingplacedupondiscoveryofthefactsratherthanlegal
analysis.Lengthyhearingsinvolvingmultiplesessionsoveraperiodofmonthsarealmostun-
heardof.
SomeChinesedomesticarbitrationcommissionsareauthorizedtoacceptinternationalarbitra-
tions,buttheirrulesarelesssophisticatedthanthoseofCIETAC.Itisuncertainwhetherforeign
lawyersmayappearbeforedomesticarbitrationcommissions,andthechoiceofarbitratorsislim-
ited.Moreimportantly,itisnotclearifanawardmadebyadomestictribunalinaninternational
casecanbeenforcedinaNewYorkConventioncountry.IntransactionswithChinesecounterpar-
tieswheretheplaceofarbitrationistobewithinChina,itisthereforeadvisablethatarbitration
clausesrefertoCIETACarbitration.
AwardsmadeoutsideChinainacountrywhichispartytotheNewYorkConventionwillbe
recognizedandenforcedinChina,subject,however,toreviewofboththelocalcourtandthe
SupremeCourt.
Hong KongHongKongisrecognizedasapopularvenueforinternationalarbitrationsinSouth-EastAsia,
mainlyduetoamodernUNCITRAL-basedlaw,theapplicabilityoftheNewYorkConventionand
theavailabilityofhigh-skilledlocalprofessionalsandexcellentfacilities.
Until1997,whenthesovereigntyoverHongKongwastransferredfromtheUKtoChina,awards
madeinHongKongwereenforceableinChinaasforeignawardsundertheNewYorkConvention
withitslimitedgroundsforrefusalofrecognitionandenforcement.Since1997,however,there
havebeenconcernsthataHongKongawardwouldbetreatedasadomesticawardinChina,
thusenablingthepartyagainstwhomenforcementissought,toinvokeamuchwiderrangeof
groundsonwhichtochallengeenforcement.
InNovember1998,theauthoritiesinChinaandHongKongreachedagreementregarding
thereciprocalenforcementofarbitralawards.Untilrecentlyitwasuncertainwhattheactual
effectoftheagreementwas.InNovember2009,China’sSupremePeople’sCourtpublishedthe
“NoticeConcerningQuestionsRelatedtotheEnforcementofHongKongArbitralAwardsinthe
Mainland”,whichclarifiesthatadhocandinstitutionalarbitrationawardsmadeinHongKongare
enforceableinmainlandChina,subjecttocertainspecificgroundsforrefusal.
22 IN-HOUSE COUNSEL PRACTICAL GUIDE 23
SingaporeUntiltheamendmentoftheSingaporeLegalProfessionActin1992,foreignlawyerswerenot
allowedtoappearascounselinarbitrationstakingplaceinSingapore.Thathasnowchangedand
foreignlawyersmaynowappearinarbitrationproceedingsinSingaporeprovidedeitherthat
thelawapplicabletothedisputeisnotSingaporelaw,or,ifSingaporelawdoesapply,that
aSingaporelawyerappearsjointlywiththeforeignlawyer.ThishaspushedSingapore’spopularity
andacceptabilityasaninternationalarbitrationvenue,especiallyforarbitrationswhereChina
isaparty.
MexicoMexicoadoptedtheUNCITRALmodellawsomeyearsagoandhasacoreofexpertsinthefield.
MexicoistheLatinAmericanjurisdictionofchoicefortheICC.
24 IN-HOUSE COUNSEL PRACTICAL GUIDE 25
the language of the arbItratIon
Ifnochoiceforthelanguageofthearbitrationismade,itwillbeuptothetribunalorthe
arbitrationinstitutetomakethatchoice.Toavoidtheinevitableuncertaintiesoftranslationsand
interpretationsand,thus,toavoidmisunderstanding,thelanguageofthearbitrationshouldbe
seriouslyconsidered.
Whenchoosingthelanguage,considerationshouldbe
giventotheapplicablelawofthecontract,theplaceof
arbitration,thelanguageofthecontract,thelanguage
oftheprincipaldocuments,themothertongueofthe
principalwitnessesandthelanguageofthearbitrators.
“The language of the
arbitration should
be seriously considered.“
ad hoC v. InstItutIonal
Thenextdecisiontobemadeisontheruleswhichwillapplytothearbitration.
Asstatedabove,anyarbitration,whereveritisconducted,issubjecttothelawoftheplaceof
arbitration(lex arbitri).Generally,however,theseruleswillbebroadandnon-specific.Theywillsay,
forexample,thatthepartiesmustbetreatedwithequality,buttheywillnotgointodetailofhow
thisisachievedintermsoftheexchangeofstatementsofcaseanddefense,witnessstatements,
documents,andsoforth.
Therefore,morespecificproceduralrulesarerequiredforwhichthepartieshavethechoice
betweenanarbitrationad hoc,withouttheinvolvementofanarbitralinstitution,oraninstitu-
tionalarbitration,accordingtotherulesofoneoftheestablishedarbitralinstitutions.
Ad hocAnad hocarbitrationisconductedpursuanttorulesagreedbythepartiesthemselvesorlaid
downbythearbitraltribunal.Partiestoanad hocarbitrationmayestablishtheirownrulesof
procedure,providedthattherulestheyagreeupontreatthepartieswithequalityandalloweach
partyareasonableopportunityofpresentingitscase.Draftingownrulesofprocedureisamajor
taskandshouldnotbeundertakenwithoutspecialistadvice.Assuch,itcanbetime-consuming
andexpensiveandfar-reachingmistakescanbemadeiftherulesdonotanticipatecertaincase
relatedproblems.
Alternatively,thepartiesmayagreethatthearbitrationwillbeconductedaccordingtoanestab-
lishedsetofrules,suchastheUNCITRALArbitrationRules(1976).5TheUNCITRALArbitrationRules
areintendedtobeusedbypartieswhowishtoavoidinvolvinganarbitralinstitutionbutwish
touseasetofgenerallyaccepted
rules.Thisensuresaframeworkwithin
whichthetribunalandtheparties
candevisedetailedrules;anditsaves
spendingtimeandmoneyindrafting
aspecialsetofrules.
Properlystructured,ad hocarbitrationshouldbelessexpensivethaninstitutionalarbitration
and,thus,bettersuitssmallerclaimsandlessaffluentparties.Ad hocarbitrationplacesmoreofa
burdenonthearbitrator(s),andtoalesserextentupontheparties,toorganizeandadministerthe
arbitrationinaneffectivemanner.
Adistinctdisadvantageofthead hocapproachisthatitseffectivenessmaybedependentupon
thewillingnessofthepartiestoagreeuponproceduresatatimewhentheyarealreadyindis-
pute.Failureofoneorbothofthepartiestocooperateinfacilitatingthearbitrationcanresultin
anundueexpenditureoftimeinresolvingtheissues.Itisnotdifficulttodelayarbitralproceed-
ings,forinstancebyrefusingtoappointanarbitrator,sothatfromthebeginningoftheproceed-
ingsthereisnoarbitraltribunalinexistence,andnorulesavailabletodealwiththesituation.In
thatcase,apartymayseekcourtinterventionandthelitigationcostsnegatenotonlythecost
advantageofad hocarbitrationbutalsotheparties’intentiontoarbitrate.
InstitutionalAninstitutionalarbitrationisoneinwhichaspecializedinstitutionwithapermanentcharacter
intervenesandassumesthefunctionsofaidingandadministeringthearbitralprocess,aspro-
videdbytherulesofthatinstitution.Itispertinenttonotethattheseinstitutionsdonotarbitrate
thedispute,itisthearbitratorswhoarbitrate,andsothetermarbitrationinstitutionissomewhat
inappropriateasonlytherulesoftheinstitutionapply.
Theadvantagesofinstitutionalarbitrationareapparent.Foremostare:(i)availabilityofpre-estab-
lishedrulesandprocedureswhichassurethatarbitrationwillgetoffthegroundandproceedto
conclusionwithdispatch;(ii)administrativeassistancefrominstitutionsprovidingasecretariator
courtofarbitration;(iii)listsofqualifiedarbitrators,oftensplitupinfieldsofexpertise;(iv)appoint-
mentofarbitratorsbytheinstitutionshouldthepartiesrequestit;(v)physicalfacilitiesandsupport
servicesforarbitrations;(vi)assistanceinencouragingreluctantpartiestoproceedwitharbitration
and(vii)anestablishedformatwithaprovenrecord.
ThebestknowninternationalarbitrationinstitutesaretheInternationalChamberofCommerce
(ICC),theLondonCourtofInternationalArbitration(LCIA),
theInternationalCentreforSettlementofInvestment
Dispute(ICSID),andtheAmericanArbitrationAssociation
(AAA).Therearealsoregionalarbitralinstitutionsandthere
areChambersofCommercewithanestablishedreputation,
suchasinStockholm,SwitzerlandandVienna.
26 IN-HOUSE COUNSEL PRACTICAL GUIDE 27
“The UNCITRAL Arbitration Rules can
be used by parties who wish to avoid
involving an arbitral institution.”
“An arbitral institute can
effectively deal with an
obstructing party.”
28 IN-HOUSE COUNSEL PRACTICAL GUIDE 29
Byincorporatingtheapplicabilityoftherulesofsuchinstitutionsintoacontract,thepartiesincor-
porateadetailedbookofrules,whichwillgovernanyarbitrationthatmaytakeplaceinthefuture.
If,atsomefuturestage,anarbitratorischallengedonthegroundsoflackofindependenceor
impartialityorifonepartyprovesreluctanttogoaheadwitharbitrationproceedingsandrefuses
toappointanarbitrator,itwillneverthelessbepossibleforthepartyorpartieswhowishtofilea
claimtodosoeffectively.Therewillbeasetofrulestoregulateboththewayinwhichthearbitral
tribunalistobeappointedandthewayinwhichthearbitrationistobeconductedandcarried
throughtoitsconclusion.
TheclauserecommendedbytheICC,forinstance,states:
All disputes arising in connection with the present contract shall be finally settled under the Rules
of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbi-
trators appointed in accordance with the set of rules.
Ruleslaiddownbytheestablishedarbitralinstitutionswillgenerallyhaveprovedtoworkwell.
Theruleswillhaveundergoneperiodicrevisioninconsultationwithexperiencedpractitioners,
takingintoaccountnewdevelopmentsinthelawandthepracticeofinternationalarbitration.
Someinstitutions,suchastheICC,reviewthearbitraltribunal’sawardindraftform,beforeitis
senttotheparties.Suchareviewservesasameasureof “quality control”.Theinstitutiondoesnot
commentonthesubstanceoftheaward,ordoesnotinterferewiththedecisionsofthearbitral
tribunal,butitdoesensurethatthetribunalhasdealtwithalltheissuesbeforeitandthatits
awardalsocoverssuchmattersasinterestandcost.
Institutionalarbitrationhassomedisadvantages.Undermostinstitutionalrules,thepartiesnot
onlypaythearbitrators,butalsotheinstitution,whichincreasesthecostsofthearbitration.
Further,certainrulesprovideforcertainstepstobetakeninthearbitrationbeforebeingableto
proceed,whichmayleadtoadelayofthearbitration.
Giventhegreatnumberofarbitralinstitutionsorcentresintheworldandthefactthatnewones
continuetocomeintoexistence,itisnotpracticaltolistthemall.Thereare,however,certain
considerationswhichthepartiesshouldhaveinmindwhenchoosinganarbitralinstitution.The
basicrequirementsforanarbitralinstitutionarethefollowing.
PermanencyDisputesbetweenpartiestoanagreementfrequentlyarisemanyyearsaftertheagreementwas
made,particularlyinmajorprojectagreementsandinlong-termcontracts.Itisimportantthat
theinstitutionwhichthepartiesagreeshouldadministerthearbitrationisstillinexistencewhen
thedisputearises.Otherwisethearbitrationagreementmayprovetobe “inoperative or incapable
of being performed”,asstatedintheNewYorkConvention.
Modern rules of arbitrationThepracticeofinternationalarbitrationchangesanddevelops,asnewlaws,rules,andprocedures
comeintoexistence.Itisimportantthattherulesofthearbitralinstitutionshouldbeup-to-date
toreflectthesechanges.
Qualified staffOneoftheimportantmeritsofinstitutionalarbitrationisthatthepartiesandthearbitratorscan
seekassistanceandadvicefromtheinstitutionalstaff,responsibleforadministratinginternational
commercialarbitrationsundertheinstitutionalrules.Thisassistancemayextendnotonlyto
explainingtherules,butalsotomakesurethattimelimitsareobserved,feesarecollected,visas
arrangedandaccommodationreserved.
Reasonable chargesSomearbitralinstitutionsassesstheirownadmin-
istrativefeesandexpensesandthefeespayableto
thearbitratorbyreferringtoaslidingscalebased
ontheamountsindispute.Otherinstitutions,such
astheLCIA,assesstheiradministrativecostsand
expensesandthefeesofthearbitratorsbyreferring
tothetimespentonthecase.
“An arbitral institute bases its
fees on either the amount in
dispute or the time spent.”
30 IN-HOUSE COUNSEL PRACTICAL GUIDE 31
some well known InstItutIons
The International Chamber of Commerce6 TheInternationalCourtofArbitrationoftheInternationalChamberofCommercewasestablished
inParisin1923.TheICCCourtdoesnotdecidemattersbutappointsarbitraltribunalstodealwith
suchmatters.TheICCisknownfortwospecificfeatures,namelytheTermsofReferenceandthe
scrutinyofawards.
TheTermsofReferencearedrawnupatanearlystageofthearbitrationandsetsout,inter alia,the
namesandaddressesofthepartiesandtheirrepresentatives,asummaryoftheirclaims,theplace
ofarbitration,andalistofissuestobedetermined.Thishelpstofocustheattentionofboththe
partiesandthearbitratorsonwhatisreallyatstake.
Whenthearbitraltribunalisreadytodeliveritsaward,thetribunalisrequiredtosubmititindraft
formfor “scrutiny”bytheICCCourt.TheCourtdoesnotinterferewiththearbitrator’sdecisionbut
checkstheformalcorrectnessoftheaward,toensurethatitdealswithallthematterswithwhich
itisrequiredtodealandthattherearenoobviousmisprintsorarithmeticalerrors.
ThefeesandexpensesoftheICCandthearbitratorsarecalculatedonthebasisoftheamountin
dispute.
The London Court of International Arbitration7 TheLCIAwasfoundedin1892.TheLCIA,liketheICC,doesnotdecidemattersbutappoints
arbitraltribunals.
ThefeesoftheLCIAandthearbitratorsarecalculatedonthebasisoftimespent.
The American Arbitration Association and the International Centre for Dispute Resolution8 TheAAAwasestablishedin1926.Inordertodealwiththedramaticexpansioninthenumberof
disputesbeingreferredtointernationalarbitration,theAAAestablishedaseparateinternational
division:theICDR.IthasacentrallocationinNewYorkwithofficesinDublinandMexicoCity.
AAAarbitrationsaddressavarietyofindustry-specificsituationsthroughgeneralcommercialand
industry-specificrules.
TheadministrativefeesoftheAAAarecalculatedonthebasisoftheamountindispute.AAA
arbitratorsarecompensatedonthebasisoftimespent.
Singapore International Arbitration Centre9
Asdiscussedabove,internationalarbitrationinSingaporeusedtobelessfavoredduetorestric-
tionsontheappearanceofforeigncounsel.SincesuchrestrictionshavebeenremovedtheSIAC
hasincreasedinpopularity,alsoasanalternativetoHongKongarbitration.
ThefeesandexpensesoftheSIAandthearbitratorsarecalculatedonthebasisoftheamount
indispute.
International Centre for Settlement of Investment Disputes10
Sinceitsinception60yearsago,theprincipalaimoftheWorldBankhasbeentostimulatethe
economicgrowthandsocialdevelopmentofdevelopingcountriesthroughtheprovisionof
financialresourcesandthestimulationofprivateinvestment.
Asaresult,theWorldBankhasovertimebeenincreasinglyrequiredtofacilitatetheamicableset-
tlementofdisagreementsthatarosebetweenprivateinvestorsandstates.Onthatbasis,in1965,
theConventionontheSettlementofInvestmentDisputesbetweenStatesandNationalsofOther
Stateswasdrafted,therebycreatingICSID.
ICSIDisanautonomousintergovernmentalorgan,withitsowngoverningbody,theAdministra-
tiveCouncil,andaSecretariat.ICSIDdoesnotarbitratedisputes.Rather,theseresponsibilitiesare
carriedoutbyarbitrationtribunals,whicharecreatedonan “ad-hoc” basisbythepartiesforeach
individualproceeding.Assuch,thefunctionsofICSIDarebasicallythoseofasecretariatproviding
supporttothetasksofthearbitraltribunals.
Inthepast50years,ICSIDhasbecometheleadingarbitralforumonaninternationallevelfor
theresolutionofdisputesbetweeninvestorsandstates.Thisisdueinlargeparttothesixmain
characteristicsoftheCentre.
First,theuniversalityofICSID’ssystem.ICSIDcurrentlycomprises142memberstates.Thevast
majorityofbilateralinvestmenttreaties(BITs)containdisputesettlementprovisionswithconsents
fromthestatepartytoarbitrationadministeredbyICSID.
32 IN-HOUSE COUNSEL PRACTICAL GUIDE 33
Second,theuniqueandautonomouslegalframeworkoftheinstitution.ICSIDisbasedexclusively
onitsownconstitutingtreaty,theICSIDConvention,andissubjecttoitsownrules,theICSID
RulesofProcedure.ICSIDisoneofthefewinternationalforumstowhichinternationalinvestors
havedirectaccess.ThatistosaythatinordertoaccessICSID,aninvestordoesnotneedtogo
throughgovernmentalchannels,butcandosodirectly.
ThethirdcharacteristicofICSIDisthatitisaspecializedforum,limitedtoinvestmentrelated
disputesofalegalnature.
ThefourthcharacteristicofICSIDisitsconsensualnature.TheICSIDConventiondoesnotimpose
anyobligationoncontractingstatestosubmittoarbitralorconciliatorymechanismsofICSID.
Theseobligationsonlyariseonceastatehasexpresslyaccepted,inwriting,thatacertaintypeof
disputeisthesubjectofarbitration.Suchisoftenthecasewithinthecontextofbilateralinvest-
menttreaties(BITs).
ThefifthcharacteristicofICSIDarbitrationisitsindependencefromthejudicialmechanismsof
contractingstates.Inaddition,ArbitralAwardsdictatedbyTribunalsconstitutedinaccordance
withICSIDproceduresarebindingandcannotbereviewedbylocalcourts.Therevision,recti-
fication,interpretationandannulmentofDecisionsandAwardsaretheonlyviableavenuesto
pursue,andtheymustbecarriedoutinaccordancewithICSIDnormsandregulations.
Finally,thesixthcharacteristicofISCIDisitseffectiveness.TheConventionhasgrantedICSIDthe
toolsnecessarytodealwiththepotentiallackofcooperationbyaparty,whichcoulddisruptor
delaythearbitrationprocess.Thecontractingstateshavecometorealizethebindingnatureof
ICSIDAwardsandDecisions,givingthemequalauthorityasdefinitivesentencesemanatingfrom
localcourts.
Thesesixcharacteristics:universality,itslegalframework,specialization,consensualnature,inde-
pendence,andeffectiveness,aretheinternalfactorsthathaveturnedICSIDintothemainarbitra-
tionforumworldwideforthesettlementofdisputesbetweenforeigninvestorsandstates.
34 IN-HOUSE COUNSEL PRACTICAL GUIDE 35
the arbItrators
Oncetheformallegalrequirementshavebeenagreedupon,thearbitraltribunalmustbechosen.
Asthequalityofthearbitraltribunalmakesorbreaksthearbitration,thisisanimportantchoice
fortheparties.
Inchoosingtherightarbitrator,notonlyanappropriateknowledgeoftherelevantareaoflaw
isimportant,butalsoanestablishedexperienceinarbitration,particularlyforasolearbitratoror
thepresidingarbitrator,whomusteffectivelytakecontroloftheproceedings.Therightsofthe
parties,andinparticulartherighttoafairhearing,mustbemeticulouslyobserved.Procedural
rulesmustbedraftedaswellasatime-tableforthevariousstepstobetakenduringthearbitra-
tion.Theyarealltasksthatcallforskilland,aboveall,experienceinthepracticeofinternational
arbitration.
Theestablishmentofanarbitraltribunalinvolvesmanyconsiderations.Thereis,first,thequestion
ofnumbers.Shouldtherebeonearbitratorormore?Isthereanygeneralruleastothenumber
ofarbitratorsthatshouldbeappointedordoesthisdependuponthecircumstancesofthe
particulardispute?
Thelawsofsomecountriessensiblyprovidethatthenumberofarbitratorsmustbeuneven.In
commercialcases,thechoiceinpracticeisbetweenoneandthree.Modernpreferenceisfor
internationaldisputestobereferredtoanarbitraltribunalofthreearbitrators,unlesstheamount
indisputeissmall.Eachofthepartieswillusuallyhavetherighttonominateatleastonearbitra-
tor,leavingthethirdarbitratortobechosenbyagreement,bytheappointedarbitratorsorbythe
arbitrationinstitution.
Theadvantagetoapartyofbeingabletonominateanarbitratoristhatitgivesthepartiescon-
cernedasenseofinvolvementinthearbitraltribunal.Eachpartywillhaveatleastone‘judgeof
itschoice’tohearitscase.Thisisparticularlyimportantinaninternationalarbitrationwhere,apart
fromthemeritsofthecase,therearedifferences
inlanguage,traditionandculturebetweenthe
partiesand,indeed,betweenthemembersofthe
arbitraltribunalthemselves.Apartynominated
arbitratorwillbeabletomakesurethatthecase
oftheappointingpartyisproperlyunderstoodby
thearbitraltribunal.Inparticular,suchanarbitrator
shouldbeabletoensurethatanymisunderstand-
ingsthatmayarisebetweenthearbitratorsareclarifiedanddonotleadtoinjustice.Itmayappear
tobedifficultinpractice,butitisquitepossibleforanarbitratortofulfilausefulroleinrepresenting
theinterestofdueprocessofthepartywhonominatedhimorherwithoutsteppingoutsidethe
boundsofindependenceandimpartiality.
Athree-membertribunalismoreexpensivethananarbitrationconductedbyasolearbitrator.
Furthermore,itwillusuallytakelongertoobtainanaward.Ingeneral,however,andespeciallyin
largerarbitrations,anarbitraltribunalwiththreearbitratorsislikelytoprovemoresatisfactoryto
theparties.Indeed,sinceinmostarbitrationsnoeffectiveappealprocedureonthemeritsexists,
theriskofanerroroflaworfactbyathree-membertribunalisfarlowerthaninthecaseofasole
arbitrator.
“Three party appointed
arbitrators instead of one
will help bridge cultural and
language differences.”
Allmajorarbitrationinstitutesprovidefortheirownmodelclauses.
Asageneralpurposemodelclauseforinstitutionalarbitrationmayserve:
Any dispute, controversy, or claim arising out of or in connection with this contract, including any
question regarding its existence, validity, or termination, shall be finally resolved by arbitration un-
der the Rules of [name institute] in force at [the date hereof / the date of the request for arbitration],
which Rules are deemed to be incorporated by reference into this clause.
The tribunal shall consist of [a sole / three] arbitrator[s].
The place of arbitration shall be [city].
The language of the arbitration shall be [language].
Asageneralpurposeclauseforad hocarbitrationcanserve:
1. Any dispute, difference, controversy or claim arising out of or in connection with this agreement
shall be referred to and determined by arbitration in [place].
2. The arbitral tribunal shall be composed of three arbitrators appointed as follows:
– each party shall appoint an arbitrator, and the two arbitrators so appointed shall appoint a
third arbitrator who shall act as president of the tribunal;
– if either party fails to appoint an arbitrator within 30 days of receiving notice of the appointment
of an arbitrator by the other party, such arbitrator shall at the request of that party be appointed
by [the appointing authority];
– if the two arbitrators to be appointed by the parties fail to agree upon a third arbitrator within
30 days of the appointment of the second arbitrator, the third arbitrator shall be appointed by
the [appointing authority] at the written request of either party;
– should a vacancy arise because any arbitrator dies, resigns, refuses to act, or becomes incapable
of performing his functions, the vacancy shall be filled by the method by which that arbitrator
was originally appointed. When a vacancy is filled the newly established tribunal shall exercise
its discretion to determine whether any hearing shall be repeated.
3. As soon as practicable after the appointment of the arbitrator to be appointed by him, and in any
event no later than 30 days after the tribunal has been constituted, the claimant shall deliver to
the respondent (with copies to each arbitrator) a statement of case, containing particulars of his
claims and written submissions in support thereof, together with any document relied on.
4. Within 30 days of receipt of the claimant’s statement of case, the respondent shall deliver to the
claimant (with copies to each arbitrator) a statement of case in answer, together with any coun-
terclaim and any document relied upon.
36 IN-HOUSE COUNSEL PRACTICAL GUIDE 37
the arbItratIon Clause
Onceagreementhasbeenreachedonallpreviouslymentionedissues,thepartiescandraftthe
arbitrationclausetobeincludedinthecontract.
Thearbitrationclausewillconstitutetheagreementtoarbitratebetweentheparties.Theagree-
menttoarbitrateisthecornerstoneofinternationalarbitration.Itrecordstheconsentofthe
partiestosubmittoarbitrationwhichisessentialtoconductanyprocessofdisputeresolution
outsidestatecourts.
Therearetwobasictypesofarbitrationagreement:thearbitrationclauseandthesubmission
agreement.Anarbitrationclauselookstothefuture,whereasasubmissionagreementlooksto
thepast.Thefirst,whichismostcommon,isusuallyincludedinthecontractbetweentheparties
andisanagreementtosubmitfuturedisputestoarbitration.Thesecondisanagreementto
submitexistingdisputestoarbitration.
Anarbitrationagreementthatprovides
forinternationalarbitrationmusttakeinto
accounttheinternationalrequirements,
providedininternationalconventions.If
itfailstodoso,thearbitrationagreement,
andanyawardmadeunderit,maynot
qualifyforinternationalrecognitionand
enforcement.
TheinternationalrequirementsarestipulatedintheNewYorkConvention.UndertheConvention
eachcontractingstateundertakestorecognizeandgiveeffecttoanarbitrationagreementwhen
thefollowingrequirementsarefulfilled:
–theagreementisinwriting;
–itdealswithexistingorfuturedisputes;
–thesedisputesariseinrespectofadefinedlegalrelationship,whethercontractualornot;
–theyconcernasubjectmattercapableofsettlementbyarbitration.
“An international arbitration
agreement must take into account
international conventions in order
to be recognised.”
38 IN-HOUSE COUNSEL PRACTICAL GUIDE 39
5. Within 30 days of the receipt by the claimant of any statement of counterclaim by the respondent,
the claimant may deliver to the respondent (with copies to each arbitrator) a reply to counter-
claim together with any additional document relied upon.
6. As soon as practicable after its constitution, the tribunal shall convene a meeting with the parties
or their representatives to determine the procedure to be followed in the arbitration.
7. The procedure shall be as agreed by the parties or, in default of agreement, as has been determined
by the tribunal. However, the following procedural matters shall in any event be taken as agreed:
– the language of the arbitration shall be [language];
– the tribunal may in its discretion hold a hearing and make an award in relation to any prelimi-
nary issue at the request of either party and shall do so at the joint request of both parties;
– the tribunal shall hold a hearing, or hearings, relating to substantive issues unless the parties
agree otherwise in writing;
– the tribunal shall issue its final award within 60 days of the last hearing of the substantive issues
in dispute between the parties.
8. In the event of default by either party in respect of any procedural order made by the tribunal, the
tribunal shall have power to proceed with the arbitration and to make its award.
9. If an arbitrator reported by one of the parties fails or refuses to participate in the arbitration at any
time after the hearings on the substance of the dispute have started, the remaining two arbitra-
tors may continue the arbitration and make an award without vacancy being deemed to arise if,
in their discretion, they determine that the failure or refusal of the other arbitrator to participate is
without reasonable excuse.
10. Any award or procedural decision of the tribunal shall, if necessary be made by a majority and, in
the event that no majority may be formed, the presiding arbitrator shall proceed as if he were a
sole arbitrator.
Mistakescaneasilybemade,renderinganarbitrationclauseinvalid.Examplesare:
– The Parties shall seek to amicably resolve any dispute arising out of this agreement as soon as
possible after such dispute occurs.
– If the Parties fail to reach an amicable settlement
pursuant to (1) above, either Party may refer the
dispute to a neutral adviser to resolve the dispute.
– If the Parties fail to resolve the disputes pursuant
to the mechanisms provided for in (1) or (2), either
party may refer the dispute to the ICC London.”
“All disputes and differences originating in connection with the present contract, non-authorized by
negotiations, are subject to final settlement by arbitration of the Dutch court. The applicable right –
Dutch law.”
“The two Parties shall endeavour to carry out the recommen¬dations issued by the conciliation com-
mission for the settlement of their disputes and claims. In case the disagreement persists, the difference
shall be submitted by one or the other Party, to the appropriate Algerian jurisdiction.”
“Disputes hereunder shall be referred to arbitration, to be carried out by arbitrators named by
the International Chamber of Com¬merce in accordance with the arbitration procedure set forth in the
Civil Code of Venezuela and the Civil Code of France, with due regard for the law of the place of arbitration.”
“All questions which cannot be solved by negotiations, are the subject to consideration in the Interna-
tional Arbitration Court in the Hague (Netherlands) according to the legislation of the Kingdom
of Netherlands.”
“All disputes arising out of or in connection with this agency contract shall be finally settled under
the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in
accordance with the said Rules. Arbitration shall be conducted at the Netherlands Arbitrage Instituut,
Rotterdam, the Netherlands.”
“In case of arbitration, the ICC Rules of Arbitration shall apply; in case of litigation, any dispute shall be
brought before the Courts of England.”
“Arbitration, if any, by ICC Rules in London.”
“Disputes to be resolved through arbitration by the AA.”
“All disputes arising out of or in connection with this Bill of Lading shall, in accordance with Chinese
Law, be resolved in the Courts of the People’s Republic of China, all be arbitrated in the People’s Republic
of China.”
“If despite our hopes we are unable to find a basis for agreement at our proposed meetings then we
would agree with your suggestion that arbitration under the auspices of the International Chamber of
Commerce of Paris would be an acceptable alternative solution.”
“Mistakes in your arbitration
clause can render it invalid.”
the arbItral award
Thepowersofanarbitraltribunalarenotnecessarilythesameasthoseofastatecourt.Atribunal
cannotimprisonanyone;nordoesithavethepowertoimposepenaltiesintheformofpayment
offinestothestate.Thesearesovereignpowersconstitutionallyreservedtojudgesappointedby,
andoperatingunder,theauthorityofthestateitself.
Afewissuesmayariseininternationalarbitrationwhichshouldbebroughttotheattentionof
Europeanpartiesagreeingonarbitration.
Punitive damagesInEuropeancivillawcountries,theAmericanconceptofpunitivedamageisalwaysobserved
somewhatcritically.Indeed,underFrench,GermanandDutchlaw,punitivedamagesarenot
recoverable.UnderEnglishlaw,punitivedamagesmaybeawardedonlyincertainlimitedactions
intort.
Theissueofpunitivedamagesraisestwoissues.Thefirstconcernsthepowerofthearbitraltribu-
naltoimposepunitivedamages.Thesecondrelatestoenforceability.
Thequestiononwhetheranarbitraltribunalhasthepowertoimposepunitivedamagesdepends
onthelawoftheplaceofarbitration(thelex arbitri -forinstance,claimsforpunitivedamagesare
permissibleintheUS)andthetermsofthearbitrationagreement.
WhenagreeingtoarbitrationwithaUSparty,itmay,therefore,beadvisabletoexplicitlyexclude
thepossibilitytoclaimpunitivedamages.
Withregardtoenforcement,thequestionis
whetheranawardofpunitivedamageswould
beenforceableundertheNewYorkConvention
inacountrythatdoesnotitselfrecognizesuch
aremedy.Thegroundforrefusalofenforce-
mentwouldbearticleV.2oftheConvention,
whichallowsforrefusalofrecognitionor
enforcementofanawardifrecognitionorenforcementwouldbecontrarytopublicpolicy.
40 IN-HOUSE COUNSEL PRACTICAL GUIDE 41
“An arbitral tribunal in the US
or the UK may have the power
to impose punitive damages.”
DiscoveryTheavailabilityofdiscoverydependsonthelawofthejurisdictioninwhichthearbitrationisheld
andtheapplicablerules.Mostinternationalarbitrationrulesprovidethatthearbitratorsmayorder
thepartiestosubmitorexchangedocumentsinadvanceofthehearing.Forexample,theUNCITRAL
Rulesprovidethat
“[a]t any time during the arbitral proceedings the arbitral tribunal may require the parties to produce
documents, exhibits or other evidence within such a period of time as the tribunal shall determine.”
TheICCRulesstate:
“Atanytimeduringtheproceedings,theArbitralTribunalmaysummonanypartytoprovide
additionalevidence.”
TheAAAInternationalArbitrationRulesstate:
“Atanytimeduringtheproceedings,theTribunalmayorderpartiestoproduceotherdocu-
ments,exhibitsorotherevidenceitdeemsnecessaryorappropriate.”
TheLCIARuleslistamongthepowersofthearbitratorstheability
“toorderanypartytoproducetotheArbitralTribunal,andtotheotherparties...anydocu-
mentsorclassesofdocumentsintheirpossession,custodyorpowerwhichtheArbitral
Tribunaldeterminestoberelevant.”
Theserulesreflectthecommonpracticeinin-
ternationalarbitrationwithrespecttodiscovery.
Inshort,somedocumentdiscoveryisgenerally
permitted,eveninarbitrationsinLatinAmerica
wherediscoveryisrarelypermittedinlitigation.
Thedifficultyineverycaseisforthearbitratorsto
determinehowmuchdiscoveryisappropriate.
“It is up to the arbitrators to
determine, on a case-by-case
basis, how much discovery
is appropriate.”
42 IN-HOUSE COUNSEL PRACTICAL GUIDE 43
TribunalsnowfrequentlyapplytheprinciplesoftheIBARulesofEvidence,whichgenerallypermit
thepartiestoobtaindocumentsnecessaryforthemtoprovetheircase,buttoavoidthepossibil-
ityoffishingexpeditions.11TheIBARulesofEvidenceprovidethatthepartiesshallfirstsubmitto
eachotherandtheArbitralTribunalthedocumentsonwhichtheyintendtorely.Followingsuch
anexchange,anypartymaysubmittotheArbitralTribunalarequestthattheothersideproduce
additionaldocuments.TherequesttoproducemustbemoredetailedthananAmericanlitigation
documentrequest.
Theuseofelectroniccommunicationhasmadedealingwiththesediscoveryissuessubstantially
moredifficult.Evenwhendiscoveryrequestsarenarrowlyandproperlyframed,theymaystill
requireapartytoreviewandtoproducethousandsofemailexchanges.Thishascomplicated
thearbitrators’taskofdetermining,generallyatarelativelyearlystageofthecase,whatdiscovery
shouldbepermittedandwhatshouldbedeniedasbeingirrelevant,excessiveorimproperfor
otherreasons.Thechallengeforarbitratorsnowwillbetoexercisethiscontrolandtodevelop
innovativetechniques-forexample,potentiallybyrulingthatonlydocumentsfittingcertainelec-
tronicsearchtermsshallbeproduced-inordertoallowdiscoveryofrelevantmaterialwithout
overwhelmingthearbitrationprocess.
CostsAnawardmayincludeanawardofcosts.Costsmaybedividedintotwobroadcategories:the
costofthearbitrationandthecostsoftheparties.
Thecostofthearbitrationusuallyincludethefees,travellingandotherexpensespayableto
theindividualmembersofthearbitraltribunalthemselves,andrelatedexpensesincluding-for
instance-thefeesandexpensesofanyadministrativeinstitutionorofexpertsappointedbythe
tribunal.Alsoincludedinthecostsarethefeesandexpensesofanyadministrativesecretaryor
registrarandanyotherincidentalexpensesincurredbythetribunalfortheaccountofthecase.
Thecostsofthepartiesincludenotonlythefeesandexpensesofthelawyersengagedtorepre-
sentthepartiesinthearbitralproceedings,butalsomoneyspentinthepreparationandpresen-
tationofthecase.Therewillbeotherprofessionalfeesandexpensessuchasthoseofaccountants
orexpertwitnesses,aswellasthehotelandtravellingexpensesofthelawyers,witnessesand
othersconcerned.Copyingchargesandtheexpensesoftelephone,fax,emailandsoonwillalso
formpartoftheparties’so-calledlegalcostsandexpenses.
Insomecountries,suchastheUS,theusualpracticeisforeachpartytobearitsowncosts,
includingthecostsofcallingwitnessesandtosharetheadministrativecostsequally.
Ingeneral,however,theprocedureininternationalcommercialarbitrationisforthearbitral
tribunaltohavepowertorequirethelosingpartytopayorcontributetowardsthelegalcosts
ofthewinningparty.
44 IN-HOUSE COUNSEL PRACTICAL GUIDE 45
Somearbitrationrulesprovidefor“internal”challenges.Themostextensiveprovisionforthe
challengeofarbitralawardsbymeansofaninternalreviewprocedureistobefoundintheICSID
arbitrationrules.Incaseofanapplicationfortheannulmentoftheaward,an ad hoccommittee
ofthreemembersisconstitutedbyICSIDtodeterminetheapplication.Iftheawardisannulled,
inwholeorinpart,eitherpartymayaskforthedisputetobesubmittedtoanewtribunal,which
tribunalwillconsiderthedisputeagainandthendeliveranew(andfinal)award.
Challenge of arbItral awards
Whatifanarbitrationislost?Isappealoranyotherreviewpossible?Itdepends.
First,itdependsonwhethertherelevantrulesofarbitrationestablishaninternalappealproce-
dure,asisthecaseinmanymaritimeandcommodityarbitrationsystems.
Second,itdependsonwhetherthelawoftheseatofthearbitrationcontainsanyprovisionsfor
challenginganarbitralaward;and,ifso,onwhatbasis.
Evenwheretherelevantrulesofarbitration
providethatanawardistobefinalandbind-
ingonthepartiesandthatthepartiesagree
tocarryitoutwithoutdelay,thelawofthe
seatofthearbitrationusuallyprovidessome
wayofchallenginganarbitralaward.
Thepurposeofchallenginganawardistohaveitmodifiedinsomewaybythestatecourt,or
moreusuallytohavethecourtdeclarethattheawardistobedisregarded(annulled,orsetaside)
inwholeorinpart.Ifanawardissetasideorannulledbytherelevantcourt,itwillusuallybe
treatedasinvalidandaccordinglyunenforceable,notonlybythecourtsoftheseatofarbitration
butalsobynationalcourtselsewhere.Thisisbecause,underboththeNewYorkConventionand
theUncitralModelLaw,thecompetentcourtmayrefusetograntrecognitionandenforcementof
anawardthathasbeensetasidebyacourtoftheseatofarbitration.
Mostchallengeswillbemadebeforecourts.Althougheachcountrywhichhasalawgoverning
arbitrationwillhaveitsownconceptforchallengingarbitralawards,threegeneralgroundsfor
suchchallengescanbeidentified.
First,anawardmaybechallengedonjurisdictionalgrounds,i.e.thenon-existenceofavalidand
bindingarbitrationclause.
Second,anawardmaybechallengedonwhatmaybebroadlydescribedas“procedural”grounds,
suchasthefailuretogivepropernoticeoftheappointmentofanarbitrator.
Third,anawardmaybechallengedonsubstantivegrounds,onthebasisthatthearbitraltribunal
madeamistakeoflaworonthegroundsofamistakeoffact.
“The national law of the seat of
the arbitration may allow a party
to challenge the arbitral award.”
46 IN-HOUSE COUNSEL PRACTICAL GUIDE 47
reCognItIon and enforCement of arbItral awards
Thevastmajorityoftheawardsareperformedvoluntarily.However,ifthelosingpartyfailstocarry
outanaward,thewinningpartyneedstotakestepstoenforceperformanceofit.
Tousetheawardtotakeactionagainstassetsofthelosingparty,theawardmustberecognized
byanationalcourtandsubsequentlybeenforcedagainstthelosingparty.Internationally,itis
generallymucheasiertoobtainrecognitionandenforcementofaninternationalarbitralaward
thanofaforeigncourtjudgment.Thisisbecausethenetworkofinternationalandregional
treatiesprovidingfortherecognitionandenforcementofinternationalarbitralawardsismore
wide-spreadandbetterdevelopedthan
correspondingprovisionsfortherecogni-
tionandenforcementofforeignjudgments.
Indeed,thisisoneoftheprincipaladvan-
tagesofarbitrationasmethodofresolving
internationalcommercialdisputes.
Theenforcementofanarbitralawardinthecountrythatistheseatofarbitrationisusuallyarela-
tivelyeasyprocess.Itgenerallyinvolvesthesameprocessesasarerequiredfortheenforcement
ofanawardinadomesticarbitration.Enforcementofanawardthatisregardedbytheplaceof
enforcementasa“foreign”or“international”awardisamorecomplexmatter.
Courtproceedingsaregenerallynecessarytoobtainatitleonthebasisofwhichstepscanbe
takenagainstthedefaultingparty.
Ofcourse,withintheEuropeanUnion,theEuropeanCounselRegulation44/2001providesforthe
enforcementofEuropeanNationalCourtJudgmentswithinEurope.OutsideEurope,nogeneral
conventiondealingwithjurisdictionandtherecognitionandenforcementofforeignjudgments
yetexists.
TheNewYorkConventionfacilitatestherecognitionandenforcementofforeignarbitralawardsin
theterritoryofitsmorethan140signatorystates,irrespectiveofthearbitrationrulesunderwhich
theproceedingswereconducted.
TheformalitiesrequiredforobtainingrecognitionandenforcementofawardstowhichtheNew
YorkConventionappliesaresimple.Thepartyseekingsuchrecognitionandenforcementis
merelyrequiredtosubmittotherelevantcourt:
–thedulyauthenticatedoriginalawardoradulycertifiedcopythereof;and
–theoriginalagreementreferredtoinArticleIIoradulycertifiedcopythereof.
Iftheawardandthearbitrationagreementarenotintheofficiallanguageofthecountryinwhich
recognitionandenforcementissought,certifiedtranslationsareneeded.Oncethenecessary
documentshavebeensupplied,thecourtwillgrantrecognitionandenforcementunlessoneor
moreofthegroundsforrefusal,listedinArticleVoftheNewYorkConvention,arepresent.
Thegroundsforrefusalare:
–thearbitrationagreementisnotvalidunderthelawtowhichthepartieshavesubjectedit;
–thepartyagainstwhomtheawardisinvokedwasnotgivenpropernoticeoftheappointment
ofthearbitratororofthearbitrationproceedings;
–theawarddealswithmattersbeyondthescopeofthesubmissiontoarbitration;
–Thecompositionofthetribunalorthearbitralprocedurewasnotinaccordancewiththe
agreementoftheparties;
–theawardhasnotyetbecomebindingontheparties.
IftheNewYorkConventiondoesnotapply,therecognitionprocedureasprovidedbythe
nationallawofthecountryinwhichenforcementissought,mustbefollowed.Thiscouldresultin
alengthyandcostlyprocedurewithnoguaranteeonafavorableoutcome,sincethedefending
partymaybeabletochallengeeveryaspectoftheaward.
“It is easier to obtain enforcement
of an international arbitral award
than of a foreign court judgment.”
48 IN-HOUSE COUNSEL PRACTICAL GUIDE 49
1Thisbookletisanadaptationofapaperwhichwaspresentedatthe5thGermanCommercialandCorporate
Conference(DeutscherHandels-undGesellschaftsrechtstag)inBerlinon17September2010.
2CouncilRegulation(EC)No44/2001of22December2000onjurisdictionandtherecognitionandenforcement
ofjudgmentsincivilandcommercialmatters.
3ThetextandstatusoftheNewYorkConventionof1958canbefoundat:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention.html
4ThetextoftheModelLaw(1985),asamended,canbefoundat:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html
5TheUNCITRALArbitrationRules(1976)canbefoundat:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1976Arbitration_rules.html
TheArbitrationRuleswererevisedin2010:
http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-e.pdf
6FormoreinformationandforthetextoftheICCArbitrationRules,see:
http://www.iccwbo.org/policy/arbitration/id2882/index.html
7FormoreinformationandforthetextoftheLCIAArbitrationRules,see:
http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration.aspx.
8FormoreinformationandforthetextoftheAAAandICDRArbitrationRules,see:
http://www.adr.org/arb_med>and<http://www.adr.org/sp.asp?id=28819
9FormoreinformationandforthetextoftheSIACArbitrationRules,see:
www.siac.org.sg/cms>.
10FormoreinformationandforthetextoftheICSDArbitrationRules,see:
http://icsid.worldbank.org/ICSID/Index.jsp
11ThetextoftheIBARulesofEvidencecanbefoundat:
http://www.int-bar.org/images/downloads/IBA%20rules%20on%20the%20taking%20of%20Evidence.pdf.
50 IN-HOUSE COUNSEL PRACTICAL GUIDE 51
State Signature Ratification, Entry into force Accession or Succession
Afghanistan(a),(b) 30November2004(a) 28February2005
Albania 27June2001(a) 25September2001
Algeria(a),(b) 7February1989(a) 8May1989
AntiguaandBarbuda(a),(b) 2February1989(a) 3May1989
Argentina(a),(b) 26August1958 14March1989 12June1989
Armenia(a),(b) 29December1997(a) 29March1998
Australia 26March1975(a) 24June1975
Austria 2May1961(a) 31July1961
Azerbaijan 29February2000(a) 29May2000
Bahamas 20December2006(a) 20March2007
Bahrain(a),(b) 6April1988(a) 5July1988
Bangladesh 6May1992(a) 4August1992
Barbados(a),(b) 16March1993(a) 14June1993
Belarus(e) 29December1958 15November1960 13February1961
Belgium(a) 10June1958 18August1975 16November1975
Benin 16May1974(a) 14August1974
Bolivia(PlurinationalStateof ) 28April1995(a) 27July1995
BosniaandHerzegovina(a),(b),(f ) 1September1993(s) 6March1992
Botswana(a),(b) 20December1971(a) 19March1972
Brazil 7June2002(a) 5September2002
BruneiDarussalam(a) 25July1996(a) 23October1996
Bulgaria(a),(e) 17December1958 10October1961 8January1962
BurkinaFaso 23March1987(a) 21June1987
Cambodia 5January1960(a) 4April1960
Cameroon 19February1988(a) 19May1988
Canada(h) 12May1986(a) 10August1986
CentralAfricanRepublic(a),(b) 15October1962(a) 13January1963
Chile 4September1975(a) 3December1975
China(a),(b),(j) 22January1987(a) 22April1987
Colombia 25September1979(a) 24December1979
anneX 1 - partIes to new york ConventIon(October 2010)
CookIslands 12January2009(a) 12April2009
CostaRica 10June1958 26October1987 24January1988
Côted’Ivoire 1February1991(a) 2May1991
Croatia(a),(b),(f ) 26July1993(s) 8October1991
Cuba(a),(b) 30December1974(a) 30March1975
Cyprus(a),(b) 29December1980(a) 29March1981
CzechRepublic 30September1993(s) 1January1993
Denmark(a),(b),(c) 22December1972(a) 22March1973
Djibouti(a),(b) 14June1983(s) 27June1977
Dominica 28October1988(a) 26January1989
DominicanRepublic 11April2002(a) 10July2002
Ecuador(a),(b) 17December1958 3January1962 3April1962
Egypt 9March1959(a) 7June1959
ElSalvador 10June1958 26February1998 27May1998
Estonia 30August1993(a) 28November1993
Fiji 27September2010 26December2010
Finland 29December1958 19January1962 19April1962
France(a) 25November1958 26June1959 24September1959
Gabon 15December2006(a) 15March2007
Georgia 2June1994(a) 31August1994
Germany(a) 10June1958 30June1961 28September1961
Ghana 9April1968(a) 8July1968
Greece(a),(b) 16July1962(a) 14October1962
Guatemala(a),(b) 21March1984(a) 19June1984
Guinea 23January1991(a) 23April1991
Haiti 5December1983(a) 4March1984
HolySee(a),(b) 14May1975(a) 12August1975
Honduras 3October2000(a) 1January2001
Hungary(a),(b) 5March1962(a) 3June1962
Iceland 24January2002(a) 24April2002
India(a),(b) 10June1958 13July1960 11October1960
Indonesia(a),(b) 7October1981(a) 5January1982
52 IN-HOUSE COUNSEL PRACTICAL GUIDE 53
Iran(IslamicRep.of )(a),(b) 15October2001(a) 13January2002
Ireland(a) 12May1981(a) 10August1981
Israel 10June1958 5January1959 7June1959
Italy 31January1969(a) 1May1969
Jamaica(a),(b) 10July2002(a) 8October2002
Japan(a) 20June1961(a) 18September1961
Jordan 10June1958 15November1979 13February1980
Kazakhstan 20November1995(a) 18February1996
Kenya(a) 10February1989(a) 11May1989
Kuwait(a) 28April1978(a) 27July1978
Kyrgyzstan 18December1996(a) 18March1997
LaoPeople’sDemocraticRepublic 17June1998(a) 15September1998
Latvia 14April1992(a) 13July1992
Lebanon(a) 11August1998(a) 9November1998
Lesotho 13June1989(a) 11September1989
Liberia 16September2005(a) 15December2005
Lithuania(e) 14March1995(a) 12June1995
Luxembourg(a) 11November1958 9September1983 8December1983
Madagascar(a),(b) 16July1962(a) 14October1962
Malaysia(a),(b) 5November1985(a) 3February1986
Mali 8September1994(a) 7December1994
Malta(a),(f ) 22June2000(a) 20September2000
MarshallIslands 21December2006(a) 21March2007
Mauritania 30January1997(a) 30April1997
Mauritius(a) 19June1996(a) 17September1996
Mexico 14April1971(a) 13July1971
Moldova(a),(f ) 18September1998(a) 17December1998
Monaco(a),(b) 31December1958 2June1982 31August1982
Mongolia(a),(b) 24October1994(a) 22January1995
Montenegro(a),(b),(f ) 23October2006(s) 3June2006
Morocco(a) 12February1959(a) 7June1959
Mozambique(a) 11June1998(a) 9September1998
Nepal(a),(b) 4March1998(a) 2June1998
Netherlands(a),(d) 10June1958 24April1964 23July1964
NewZealand(a) 6January1983(a) 6April1983
Nicaragua 24September2003(a) 23December2003
Niger 14October1964(a) 12January1965
Nigeria(a),(b) 17March1970(a) 15June1970
Norway(a),(i) 14March1961(a) 12June1961
Oman 25February1999(a) 26May1999
Pakistan(a) 30December1958 14July2005 12October2005
Panama 10October1984(a) 8January1985
Paraguay 8October1997(a) 6January1998
Peru 7July1988(a) 5October1988
Philippines(a),(b) 10June1958 6July1967 4October1967
Poland(a),(b) 10June1958 3October1961 1January1962
Portugal(a) 18October1994(a) 16January1995
Qatar 30December2002(a) 30March2003
RepublicofKorea(a),(b) 8February1973(a) 9May1973
Romania(a),(b),(e) 13September1961(a) 12December1961
RussianFederation(e) 29December1958 24August1960 22November1960
Rwanda 31October2008 29January2009
SaintVincentandtheGrenadines(a),(b) 12September2000(a) 11December2000
SanMarino 17May1979(a) 15August1979
SaudiArabia(a) 19April1994(a) 18July1994
Senegal 17October1994(a) 15January1995
Serbia(a),(b),(f ) 12March2001(s) 27April1992
Singapore(a) 21August1986(a) 19November1986
Slovakia(i) 28May1993(s) 1January1993
Slovenia(f ),(k) 6July1992(s) 25June1991
SouthAfrica 3May1976(a) 1August1976
Spain 12May1977(a) 10August1977
SriLanka 30December1958 9April1962 8July1962
Sweden 23December1958 28January1972 27April1972
Switzerland 29December1958 1June1965 30August1965
SyrianArabRepublic 9March1959(a) 7June1959
Thailand 21December1959(a) 20March1960
TheformerYugoslavRepublicofMacedonia(b),(f ),(l) 10March1994(s) 17November1991
TrinidadandTobago(a),(b) 14February1966(a) 15May1966
Tunisia(a),(b) 17July1967(a) 15October1967
54 IN-HOUSE COUNSEL PRACTICAL GUIDE 55
Turkey(a),(b) 2July1992(a) 30September1992
Uganda(a) 12February1992(a) 12May1992
Ukraine(e) 29December1958 10October1960 8January1961
UnitedArabEmirates 21August2006(a) 19November2006
UnitedKingdomofGreatBritainandNorthernIreland(a),(g) 24September1975(a) 23December1975
UnitedRepublicofTanzania(a) 13October1964(a) 11January1965
UnitedStatesofAmerica(a),(b) 30September1970(a) 29December1970
Uruguay 30March1983(a) 28June1983
Uzbekistan 7February1996(a) 7May1996
Venezuela(BolivarianRepublicof )(a),(b) 8February1995(a) 9May1995
Vietnam(a),(b),(e),(e) 12September1995(a) 11December1995
Zambia 14March2002(a) 12June2002
Zimbabwe 29September1994(a) 28December1994
a.Declarationsandreservations.ThisstatewillapplytheConventiononlytorecognitionand
enforcementofawardsmadeintheterritoryofanothercontractingstate.
b.Declarationsandreservations.ThisstatewillapplytheConventiononlytodifferencesarising
outoflegalrelationships,whethercontractualornot,thatareconsideredcommercialunderthe
nationallaw.
c.On10February1976,DenmarkdeclaredthattheConventionshallapplytotheFaeroeIslands
andGreenland.
d.On24April1964,theNetherlandsdeclaredthattheConventionshallapplytotheNetherlands
Antilles.
e.Declarationsandreservations.Withregardtoawardsmadeintheterritoryofnon-contracting
states,thisstatewillapplytheConventiononlytotheextenttowhichthosestatesgrantrecipro-
caltreatment.
f.Declarationsandreservations.ThisstatewillapplytheConventiononlytothosearbitralawards
whichwereadoptedaftertheentryintoeffectoftheConvention.
g.TheUnitedKingdomextendedtheterritorialapplicationoftheConvention,forthecaseof
awardsmadeonlyintheterritoryofanothercontractingstate,tothefollowingterritories:Gibral-
tar(24September1975),IsleofMan(22February1979),Bermuda(14November1979),Cayman
Islands(26November1980),Guernsey(19April1985),Jersey(28May2002).
h.Declarationsandreservations.CanadadeclaredthatitwouldapplytheConventiononlyto
differencesarisingoutoflegalrelationships,whethercontractualornot,thatwereconsidered
commercialunderthelawsofCanada,exceptinthecaseoftheProvinceofQuebec,wherethe
lawdidnotprovideforsuchlimitation.
i.ThisstatewillnotapplytheConventiontodifferenceswherethesubjectmatteroftheproceed-
ingsisimmovablepropertysituatedinthestate,orarightinortosuchproperty.
56 IN-HOUSE COUNSEL PRACTICAL GUIDE 57
LegislationbasedontheUNCITRALModelLawonInternationalCommercialArbitrationas
adoptedin1985hasbeenenactedin(asofOctober2010):
Armenia (2006),
Australia (1989,2010*),
Austria (2005),
Azerbaijan (1999),
Bahrain (1994),
Bangladesh (2001),
Belarus (1999),
Bulgaria (2002),
Cambodia (2006),
Canada (1986),
Chile (2004),
China (theHongKongSpecialAdministrative
Region(1996)andtheMacaoSpecial
AdministrativeRegion(1998)),
Croatia (2001),
Cyprus,
Denmark (2005),
DominicanRepublic (2008),
Egypt (1994),
Estonia (2006),
Georgia (2009*),
Germany (1998),
Greece (1999),
Guatemala (1995),
Honduras (2000),
Hungary (1994),
India (1996),
Iran(IslamicRepublicof ) (1997),
Ireland (1998,2010*),
Japan (2003),
Jordan (2001),
Kenya (1995),
Lithuania (1996),
Madagascar (1998),
Malta (1995),
Mauritius (2008*),
Mexico (1993),
NewZealand (1996,2007*),
Nicaragua (2005),
Nigeria (1990),
Norway (2004),
Oman (1997),
Paraguay (2002),
Peru (1996,2008*),
thePhilippines (2004),
Poland (2005),
theRepublicofKorea (1999),
theRussianFederation (1993),
Rwanda (2008*),
Serbia (2006),
Singapore (2001),
Slovenia (2008*),
Spain (2003),
SriLanka (1995),
Thailand (2002),
theformerYugoslavRepublicofMacedonia (2006),
Tunisia (1993),
Turkey (2001),
Uganda (2000),
Ukraine (1994),
theUnitedKingdomofGreatBritainandNorthernIreland(Scotland(1990)andBermuda,an
overseasterritoryoftheUnitedKingdom),theUnitedStatesofAmerica(theStatesofCalifornia
(1996),Connecticut(2000),Florida(2010*),Illinois(1998),Louisiana(2006),OregonandTexas),
Venezuela(BolivarianRepublicof ) (1998),
Zambia (2000)
Zimbabwe (1996).
*IndicateslegislationbasedonthetextoftheUNCITRALModelLawonInternationalCommercial
Arbitrationwithamendmentsasadoptedin2006.
anneX 2 - legIslatIon based on the unCItral model law on InternatIonal CommerCIal arbItratIon
58 IN-HOUSE COUNSEL PRACTICAL GUIDE 59
anneX 3 - InstItutIonal arbItratIon Clauses
American Arbitration Association (AAA)Anycontroversyorclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbe
determinedbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordance
withitsInternationalArbitrationRules.
Thepartiesmaywishtoadd:
Thenumberofarbitratorsshallbe[oneorthree];
Theplaceofarbitrationshallbe[cityand/orcountry];
Thelanguage(s)ofthearbitrationshallbe[…].
China International Economic and Trade Arbitration Commission (CIETAC)AnydisputearisingfromorinconnectionwiththisContractshallbesubmittedtotheChinaInter-
nationalEconomicandTradeArbitrationCommissionforarbitrationwhichshallbeconductedin
accordancewiththeCommission’sarbitrationrulesineffectatthetimeofapplyingforarbitration.
Thearbitralawardisfinalandbindinguponbothparties.
Thepartiesmayalsostipulatethefollowingmattersinthearbitrationclause:
theplaceofarbitrationand/orhearing;
thelanguageofthearbitration;
thenumberofarbitrators;
thenationalityofthearbitrators;
themethodofselectionofthearbitrators;
theapplicablelawofthecontract;and/or
theapplicationofgeneralprocedureorsummaryprocedure.
International Chamber of Commerce (ICC)Alldisputesarisingoutoforinconnectionwiththepresentcontractshallbefinallysettledunder
theRulesofArbitrationoftheInternationalChamberofCommercebyoneormorearbitrators
appointedinaccordancewiththesaidRulesofArbitration.
London Court of International Arbitration (LCIA)Anydisputearisingoutoforinconnectionwiththiscontract,includinganyquestionregardingits
existence,validityortermination,shallbereferredtoandfinallyresolvedbyarbitrationunderthe
LCIARules,whichRulesaredeemedtobeincorporatedbyreferenceintothisclause.
Thenumberofarbitratorsshallbe[one/three].
Theseat,orlegalplace,ofarbitrationshallbe[Cityand/orCountry].
Thelanguagetobeusedinthearbitralproceedingsshallbe[…].
Thegoverninglawofthecontractshallbethesubstantivelawof[…].
Netherlands Arbitration Institute (NAI)Alldisputesarisinginconnectionwiththepresentcontract,orfurthercontractsresulting
therefrom,shallbefinallysettledinaccordancewiththeArbitrationRulesoftheNetherlands
ArbitrationInstitute.
Additionally,variousmattersmaybeprovidedfor:
Thearbitraltribunalshallbecomposedofonearbitrator/threearbitrators.
Theplaceofarbitrationshallbe[city].
Thearbitralprocedureshallbeconductedinthe[…]language.
ConsolidationofthearbitralproceedingswithotherarbitralproceedingspendingintheNether-
lands,asprovidedinSection1046oftheNetherlandsCodeofCivilProcedure,isexcluded.
60 IN-HOUSE COUNSEL PRACTICAL GUIDE 61
Singapore International Arbitration Centre (SIAC)Anydisputearisingoutoforinconnectionwiththiscontract,includinganyquestionregarding
itsexistence,validityortermination,shallbereferredtoandfinallyresolvedbyarbitrationinSin-
gaporeinaccordancewiththeArbitrationRulesoftheSingaporeInternationalArbitrationCentre
(“SIACRules”)forthetimebeinginforce,whichrulesaredeemedtobeincorporatedbyreference
inthisclause.
TheTribunalshallconsistof[…]arbitrator(s).
Thelanguageofthearbitrationshallbe[…].
Stockholm Chamber of Commerce (SCC)Anydispute,controversyorclaimarisingoutoforinconnectionwiththiscontract,orthebreach,
terminationorinvaliditythereof,shallbefinallysettledbyarbitrationinaccordancewiththe
ArbitrationRulesoftheArbitrationInstituteoftheStockholmChamberofCommerce.
Recommendedadditions:
Thearbitraltribunalshallbecomposedofthreearbitrators/asolearbitrator.
Theseatofarbitrationshallbe[…].
Thelanguagetobeusedinthearbitralproceedingsshallbe[…].
Thiscontractshallbegovernedbythesubstantivelawof[…].
UNCITRALAnydispute,controversyorclaimarisingoutoforrelatingtothiscontract,orthebreach,termina-
tionorinvaliditythereof,shallbesettledbyarbitrationinaccordancewiththeUNCITRALArbitra-
tionRules.
Partiesshouldconsideradding:
Theappointingauthorityshallbe[nameofinstitutionorperson];
Thenumberofarbitratorsshallbe[oneorthree];
Theplaceofarbitrationshallbe[townandcountry];
Thelanguagetobeusedinthearbitralproceedingsshallbe[...].
62 IN-HOUSE COUNSEL PRACTICAL GUIDE 63
anneX 4 - Iba rules on takIng evIdenCePreamble1.TheseIBARulesontheTakingofEvidenceinInternationalArbitrationareintendedtoprovide
anefficient,economicalandfairprocessforthetakingofevidenceininternationalarbitrations,
particularlythosebetweenPartiesfromdifferentlegaltraditions.
Theyaredesignedtosupplementthelegalprovisionsandtheinstitutional,adhocorotherrules
thatapplytotheconductofthearbitration.
2.PartiesandArbitralTribunalsmayadopttheIBARulesofEvidence,inwholeorinpart,togovern
arbitrationproceedings,ortheymayvarythemorusethemasguidelinesindevelopingtheirown
procedures.TheRulesarenotintendedtolimittheflexibilitythatisinherentin,andanadvan-
tageof,internationalarbitration,andPartiesandArbitralTribunalsarefreetoadaptthemtothe
particularcircumstancesofeacharbitration.
3.ThetakingofevidenceshallbeconductedontheprinciplesthateachPartyshallactingood
faithandbeentitledtoknow,reasonablyinadvanceofanyEvidentiaryHearingoranyfactor
meritsdetermination,theevidenceonwhichtheotherPartiesrely.
DefinitionsIntheIBARulesofEvidence:
‘ArbitralTribunal’meansasolearbitratororapanelofarbitrators;
‘Claimant’meansthePartyorPartieswhocommencedthearbitrationandanyPartywho,through
joinderorotherwise,becomesalignedwithsuchPartyorParties;
‘Document’meansawriting,communication,picture,drawing,programordataofanykind,
whetherrecordedormaintainedonpaperorbyelectronic,audio,visualoranyothermeans;
‘EvidentiaryHearing’meansanyhearing,whetherornotheldonconsecutivedays,atwhich
theArbitralTribunal,whetherinperson,byteleconference,videoconferenceorothermethod,
receivesoralorotherevidence;
‘ExpertReport’meansawrittenstatementbyaTribunal-AppointedExpertoraParty-Appointed
Expert;
‘GeneralRules’meantheinstitutional,adhocorotherrulesthatapplytotheconductof
thearbitration;
‘IBARulesofEvidence’or‘Rules’meantheseIBARulesontheTakingofEvidenceinInternational
Arbitration,astheymayberevisedoramendedfromtimetotime;
‘Party’meansapartytothearbitration;
‘Party-AppointedExpert’meansapersonororganizationappointedbyaPartyinordertoreport
onspecificissuesdeterminedbytheParty;
‘RequesttoProduce’meansawrittenrequestbyaPartythatanotherPartyproduceDocuments;
‘Respondent’meansthePartyorPartiesagainstwhomtheClaimantmadeitsclaim,andanyParty
who,throughjoinderorotherwise,becomesalignedwithsuchPartyorParties,andincludesa
Respondentmakingacounterclaim;
‘Tribunal-AppointedExpert’meansapersonororganizationappointedbytheArbitralTribunalin
ordertoreporttoitonspecificissuesdeterminedbytheArbitralTribunal;and
‘WitnessStatement’meansawrittenstatementoftestimonybyawitnessoffact.
Article 1 Scope of Application1.WheneverthePartieshaveagreedortheArbitralTribunalhasdeterminedtoapplytheIBA
RulesofEvidence,theRulesshallgovernthetakingofevidence,excepttotheextentthatany
specificprovisionofthemmaybefoundtobeinconflictwithanymandatoryprovisionoflaw
determinedtobeapplicabletothecasebythePartiesorbytheArbitralTribunal.
2.WherethePartieshaveagreedtoapplytheIBARulesofEvidence,theyshallbedeemedto
haveagreed,intheabsenceofacontraryindication,totheversionascurrentonthedateofsuch
agreement.
3.IncaseofconflictbetweenanyprovisionsoftheIBARulesofEvidenceandtheGeneralRules,
theArbitralTribunalshallapplytheIBARulesofEvidenceinthemannerthatitdeterminesbestin
ordertoaccomplishthepurposesofboththeGeneralRulesandtheIBARulesofEvidence,unless
thePartiesagreetothecontrary.
4.IntheeventofanydisputeregardingthemeaningoftheIBARulesofEvidence,theArbitral
Tribunalshallinterpretthemaccordingtotheirpurposeandinthemannermostappropriatefor
theparticulararbitration.
5.InsofarastheIBARulesofEvidenceandtheGeneralRulesaresilentonanymatterconcerning
thetakingofevidenceandthePartieshavenotagreedotherwise,theArbitralTribunalshallcon-
ductthetakingofevidenceasitdeemsappropriate,inaccordancewiththegeneralprinciplesof
theIBARulesofEvidence.
Article 2 Consultation on Evidentiary Issues1.TheArbitralTribunalshallconsultthePartiesattheearliestappropriatetimeintheproceedings
andinvitethemtoconsulteachotherwithaviewtoagreeingonanefficient,economicalandfair
processforthetakingofevidence.
2.Theconsultationonevidentiaryissuesmayaddressthescope,timingandmannerofthetaking
ofevidence,including:
(a)thepreparationandsubmissionofWitnessStatementsandExpertReports;
(b)thetakingoforaltestimonyatanyEvidentiaryHearing;
(c)therequirements,procedureandformatapplicabletotheproductionofDocuments;
64 IN-HOUSE COUNSEL PRACTICAL GUIDE 65
(d)thelevelofconfidentialityprotectiontobeaffordedtoevidenceinthearbitration;and
(e)thepromotionofefficiency,economyandconservationofresourcesinconnectionwith
thetakingofevidence.
3.TheArbitralTribunalisencouragedtoidentifytotheParties,assoonasitconsidersittobeap-
propriate,anyissues:
(a)thattheArbitralTribunalmayregardasrelevanttothecaseandmaterialtoitsoutcome;and/or
(b)forwhichapreliminarydeterminationmaybeappropriate.
Article 3 Documents1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallsubmittotheArbitralTribunal
andtotheotherPartiesallDocumentsavailabletoitonwhichitrelies,includingpublicDocu-
mentsandthoseinthepublicdomain,exceptforanyDocumentsthathavealreadybeensubmit-
tedbyanotherParty.
2.WithinthetimeorderedbytheArbitralTribunal,anyPartymaysubmittotheArbitralTribunal
andtotheotherPartiesaRequesttoProduce.
3.ARequesttoProduceshallcontain:
(a)(i)adescriptionofeachrequestedDocumentsufficienttoidentifyit,or
(ii)adescriptioninsufficientdetail(includingsubjectmatter)ofanarrowandspecificrequested
categoryofDocumentsthatarereasonablybelievedtoexist;inthecaseofDocumentsmain-
tainedinelectronicform,therequestingPartymay,ortheArbitralTribunalmayorderthatitshall
berequiredto,identifyspecificfiles,searchterms,individualsorothermeansofsearchingforsuch
Documentsinanefficientandeconomicalmanner;
(b)astatementastohowtheDocumentsrequestedarerelevanttothecaseandmaterialtoits
outcome;and
(c)(i)astatementthattheDocumentsrequestedarenotinthepossession,custodyorcontrolof
therequestingPartyorastatementofthereasonswhyitwouldbeunreasonablyburdensomefor
therequestingPartytoproducesuchDocuments,and
(ii)astatementofthereasonswhytherequestingPartyassumestheDocumentsrequestedarein
thepossession,custodyorcontrolofanotherParty.
4.WithinthetimeorderedbytheArbitralTribunal,thePartytowhomtheRequesttoProduce
isaddressedshallproducetotheotherPartiesand,iftheArbitralTribunalsoorders,toit,allthe
Documentsrequestedinitspossession,custodyorcontrolastowhichitmakesnoobjection.
5.IfthePartytowhomtheRequesttoProduceisaddressedhasanobjectiontosomeorallofthe
Documentsrequested,itshallstatetheobjectioninwritingtotheArbitralTribunalandtheother
PartieswithinthetimeorderedbytheArbitralTribunal.
ThereasonsforsuchobjectionshallbeanyofthosesetforthinArticle9.2orafailuretosatisfyany
oftherequirementsofArticle3.3.
6.Uponreceiptofanysuchobjection,theArbitralTribunalmayinvitetherelevantPartiesto
consultwitheachotherwithaviewtoresolvingtheobjection.
7.EitherPartymay,withinthetimeorderedbytheArbitralTribunal,requesttheArbitralTribunal
toruleontheobjection.TheArbitralTribunalshallthen,inconsultationwiththePartiesandin
timelyfashion,considertheRequesttoProduceandtheobjection.TheArbitralTribunalmay
orderthePartytowhomsuchRequestisaddressedtoproduceanyrequestedDocumentinits
possession,custodyorcontrolastowhichtheArbitralTribunaldeterminesthat(i)theissuesthat
therequestingPartywishestoprovearerelevanttothecaseandmaterialtoitsoutcome;(ii)none
ofthereasonsforobjectionsetforthinArticle9.2applies;and(iii)therequirementsofArticle3.3
havebeensatisfied.
AnysuchDocumentshallbeproducedtotheotherPartiesand,iftheArbitralTribunalsoorders,toit.
8.Inexceptionalcircumstances,iftheproprietyofanobjectioncanbedeterminedonlybyreview
oftheDocument,theArbitralTribunalmaydeterminethatitshouldnotreviewtheDocument.In
thatevent,theArbitralTribunalmay,afterconsultationwiththeParties,appointanindependent
andimpartialexpert,boundtoconfidentiality,toreviewanysuchDocumentandtoreportonthe
objection.TotheextentthattheobjectionisupheldbytheArbitralTribunal,theexpertshallnot
disclosetotheArbitralTribunalandtotheotherPartiesthecontentsofthe
Documentreviewed.
9.IfaPartywishestoobtaintheproductionofDocumentsfromapersonororganisationwhois
notaPartytothearbitrationandfromwhomthePartycannotobtaintheDocumentsonitsown,
thePartymay,withinthetimeorderedbytheArbitralTribunal,askittotakewhateverstepsare
legallyavailabletoobtaintherequestedDocuments,orseekleavefromtheArbitralTribunalto
takesuchstepsitself.ThePartyshallsubmitsuchrequesttotheArbitralTribunalandtotheother
Partiesinwriting,andtherequestshallcontaintheparticularssetforthinArticle3.3,asapplicable.
TheArbitralTribunalshalldecideonthisrequestandshalltake,authorizetherequestingPartyto
take,ororderanyotherPartytotake,suchstepsastheArbitral
Tribunalconsidersappropriateif,initsdiscretion,itdeterminesthat(i)theDocumentswouldbe
relevanttothecaseandmaterialtoitsoutcome,(ii)therequirementsofArticle3.3,asapplicable,
havebeensatisfiedand(iii)noneofthereasonsforobjectionsetforthinArticle9.2applies.
10.Atanytimebeforethearbitrationisconcluded,theArbitralTribunalmay(i)requestanyParty
toproduceDocuments,(ii)requestanyPartytouseitsbesteffortstotakeor(iii)itselftake,any
stepthatitconsidersappropriatetoobtainDocumentsfromanypersonororganisation.AParty
towhomsucharequestforDocumentsisaddressedmayobjecttotherequestforanyofthe
66 IN-HOUSE COUNSEL PRACTICAL GUIDE 67
reasonssetforthinArticle9.2.Insuchcases,Article3.4toArticle3.8shallapplycorrespondingly.
11.WithinthetimeorderedbytheArbitralTribunal,thePartiesmaysubmittotheArbitralTribunal
andtotheotherPartiesanyadditionalDocumentsonwhichtheyintendtorelyorwhichthey
believehavebecomerelevanttothecaseandmaterialtoitsoutcomeasaconsequenceofthe
issuesraisedinDocuments,WitnessStatementsorExpertReportssubmittedorproduced,orin
othersubmissionsoftheParties.
12.WithrespecttotheformofsubmissionorproductionofDocuments:
(a)copiesofDocumentsshallconformtotheoriginalsand,attherequestoftheArbitralTribunal,
anyoriginalshallbepresentedforinspection;
(b)DocumentsthataPartymaintainsinelectronicformshallbesubmittedorproducedinthe
formmostconvenientoreconomicaltoitthatisreasonablyusablebytherecipients,unless
thePartiesagreeotherwiseor,intheabsenceofsuchagreement,theArbitralTribunaldecides
otherwise;
(c)aPartyisnotobligatedtoproducemultiplecopiesofDocumentswhichareessentiallyidenti-
calunlesstheArbitralTribunaldecidesotherwise;and
(d)translationsofDocumentsshallbesubmittedtogetherwiththeoriginalsandmarkedastrans-
lationswiththeoriginallanguageidentified.
13.AnyDocumentsubmittedorproducedbyaPartyornon-Partyinthearbitrationandnot
otherwiseinthepublicdomainshallbekeptconfidentialbytheArbitralTribunalandtheother
Parties,andshallbeusedonlyinconnectionwiththearbitration.Thisrequirementshallapply
exceptandtotheextentthatdisclosuremayberequiredofaPartytofulfilalegalduty,protect
orpursuealegalright,orenforceorchallengeanawardinbonafidelegalproceedingsbefore
astatecourtorotherjudicialauthority.TheArbitralTribunalmayissueorderstosetforththe
termsofthisconfidentiality.Thisrequirementshallbewithoutprejudicetoallotherobligationsof
confidentialityinthearbitration.
14.Ifthearbitrationisorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary
determinations,liabilityordamages),theArbitralTribunalmay,afterconsultationwiththeParties,
schedulethesubmissionofDocumentsandRequeststoProduceseparatelyforeachissueorphase.
Article 4 Witnesses of Fact1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallidentifythewitnesseson
whosetestimonyitintendstorelyandthesubjectmatterofthattestimony.
2.Anypersonmaypresentevidenceasawitness,includingaPartyoraParty’sofficer,employee
orotherrepresentative.
3.ItshallnotbeimproperforaParty,itsofficers,employees,legaladvisorsorotherrepresentatives
tointerviewitswitnessesorpotentialwitnessesandtodiscusstheirprospectivetestimonywith
them.
4.TheArbitralTribunalmayordereachPartytosubmitwithinaspecifiedtimetotheArbitralTri-
bunalandtotheotherPartiesWitnessStatementsbyeachwitnessonwhosetestimonyitintends
torely,exceptforthosewitnesseswhosetestimonyissoughtpursuanttoArticles4.9or4.10.If
EvidentiaryHearingsareorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary
determinations,liabilityordamages),theArbitralTribunalorthePartiesbyagreementmaysched-
ulethesubmissionofWitnessStatementsseparatelyforeachissueorphase.
5.EachWitnessStatementshallcontain:
(a)thefullnameandaddressofthewitness,astatementregardinghisorherpresentandpast
relationship(ifany)withanyoftheParties,andadescriptionofhisorherbackground,qualifica-
tions,trainingandexperience,ifsuchadescriptionmayberelevanttothedisputeortothe
contentsofthestatement;
(b)afullanddetaileddescriptionofthefacts,andthesourceofthewitness’sinformationasto
thosefacts,sufficienttoserveasthatwitness’sevidenceinthematterindispute.Documentson
whichthewitnessreliesthathavenotalreadybeensubmittedshallbeprovided;
(c)astatementastothelanguageinwhichtheWitnessStatementwasoriginallypreparedand
thelanguageinwhichthewitnessanticipatesgivingtestimonyattheEvidentiaryHearing;
(d)anaffirmationofthetruthoftheWitnessStatement;and
(e)thesignatureofthewitnessanditsdateandplace.
6.IfWitnessStatementsaresubmitted,anyPartymay,withinthetimeorderedbytheArbitral
Tribunal,submittotheArbitralTribunalandtotheotherPartiesrevisedoradditionalWitness
Statements,includingstatementsfrompersonsnotpreviouslynamedaswitnesses,solongas
anysuchrevisionsoradditionsrespondonlytomatterscontainedinanotherParty’sWitness
Statements,ExpertReportsorothersubmissionsthathavenotbeenpreviouslypresentedinthe
arbitration.
7.IfawitnesswhoseappearancehasbeenrequestedpursuanttoArticle8.1failswithoutavalid
reasontoappearfortestimonyatanEvidentiaryHearing,theArbitralTribunalshalldisregard
anyWitnessStatementrelatedtothatEvidentiaryHearingbythatwitnessunless,inexceptional
circumstances,theArbitralTribunaldecidesotherwise.
8.IftheappearanceofawitnesshasnotbeenrequestedpursuanttoArticle8.1,noneoftheother
PartiesshallbedeemedtohaveagreedtothecorrectnessofthecontentoftheWitnessState-
ment.
9.IfaPartywishestopresentevidencefromapersonwhowillnotappearvoluntarilyatitsre-
quest,thePartymay,withinthetimeorderedbytheArbitralTribunal,askittotakewhateversteps
68 IN-HOUSE COUNSEL PRACTICAL GUIDE 69
arelegallyavailabletoobtainthetestimonyofthatperson,orseekleavefromtheArbitralTribunal
totakesuchstepsitself.InthecaseofarequesttotheArbitralTribunal,thePartyshallidentifythe
intendedwitness,shalldescribethesubjectsonwhichthewitness’stestimonyissoughtandshall
statewhysuchsubjectsarerelevanttothecaseandmaterialtoitsoutcome.TheArbitralTribunal
shalldecideonthisrequestandshalltake,authorizetherequestingPartytotakeororderany
otherPartytotake,suchstepsastheArbitralTribunalconsidersappropriateif,initsdiscretion,it
determinesthatthetestimonyofthatwitnesswouldberelevanttothecaseandmaterialtoits
outcome.
10.Atanytimebeforethearbitrationisconcluded,theArbitralTribunalmayorderanyPartyto
providefor,ortouseitsbesteffortstoprovidefor,theappearancefortestimonyatanEvidentiary
Hearingofanyperson,includingonewhosetestimonyhasnotyetbeenoffered.APartytowhom
sucharequestisaddressedmayobjectforanyofthereasonssetforthinArticle9.2.
Article 5 Party-Appointed Experts1.APartymayrelyonaParty-AppointedExpertasameansofevidenceonspecificissues.Within
thetimeorderedbytheArbitralTribunal,(i)eachPartyshallidentifyanyParty-AppointedExpert
onwhosetestimonyitintendstorelyandthesubject-matterofsuchtestimony;and(ii)theParty-
AppointedExpertshallsubmitanExpertReport.
2.TheExpertReportshallcontain:
(a)thefullnameandaddressoftheParty-AppointedExpert,astatementregardinghisorher
presentandpastrelationship(ifany)withanyoftheParties,theirlegaladvisorsandtheArbitral
Tribunal,andadescriptionofhisorherbackground,qualifications,trainingandexperience;
(b)adescriptionoftheinstructionspursuanttowhichheorsheisprovidinghisorheropinions
andconclusions;
(c)astatementofhisorherindependencefromtheParties,theirlegaladvisorsandtheArbitral
Tribunal;
(d)astatementofthefactsonwhichheorsheisbasinghisorherexpertopinionsandconclusions;
(e)hisorherexpertopinionsandconclusions,includingadescriptionofthemethods,evidence
andinformationusedinarrivingattheconclusions.DocumentsonwhichtheParty-Appointed
Expertreliesthathavenotalreadybeensubmittedshallbeprovided;
(f )iftheExpertReporthasbeentranslated,astatementastothelanguageinwhichitwas
originallyprepared,andthelanguageinwhichtheParty-AppointedExpertanticipatesgiving
testimonyattheEvidentiaryHearing;
(g)anaffirmationofhisorhergenuinebeliefintheopinionsexpressedintheExpertReport;
(h)thesignatureoftheParty-AppointedExpertanditsdateandplace;and
(i)iftheExpertReporthasbeensignedbymorethanoneperson,anattributionoftheentiretyor
specificpartsoftheExpertReporttoeachauthor.
3.IfExpertReportsaresubmitted,anyPartymay,withinthetimeorderedbytheArbitralTribunal,
submittotheArbitralTribunalandtotheotherPartiesrevisedoradditionalExpertReports,
includingreportsorstatementsfrompersonsnotpreviouslyidentifiedasParty-Appointed
Experts,solongasanysuchrevisionsoradditionsrespondonlytomatterscontainedinanother
Party’sWitnessStatements,ExpertReportsorothersubmissionsthathavenotbeenpreviously
presentedinthearbitration.
4.TheArbitralTribunalinitsdiscretionmayorderthatanyParty-AppointedExpertswhowill
submitorwhohavesubmittedExpertReportsonthesameorrelatedissuesmeetandconfer
onsuchissues.Atsuchmeeting,theParty-AppointedExpertsshallattempttoreachagreement
ontheissueswithinthescopeoftheirExpertReports,andtheyshallrecordinwritinganysuch
issuesonwhichtheyreachagreement,anyremainingareasofdisagreementandthereasons
therefore.
5.IfaParty-AppointedExpertwhoseappearancehasbeenrequestedpursuanttoArticle8.1fails
withoutavalidreasontoappearfortestimonyatanEvidentiaryHearing,theArbitralTribunalshall
disregardanyExpertReportbythatParty-AppointedExpertrelatedtothatEvidentiaryHearing
unless,inexceptionalcircumstances,theArbitralTribunaldecidesotherwise.
6.IftheappearanceofaParty-AppointedExperthasnotbeenrequestedpursuanttoArticle8.1,
noneoftheotherPartiesshallbedeemedtohaveagreedtothecorrectnessofthecontentofthe
ExpertReport.
Article 6 Tribunal-Appointed Experts1.TheArbitralTribunal,afterconsultingwiththeParties,mayappointoneormoreindependent
Tribunal-AppointedExpertstoreporttoitonspecificissuesdesignatedbytheArbitralTribunal.
TheArbitralTribunalshallestablishthetermsofreferenceforanyTribunal-AppointedExpert
ReportafterconsultingwiththeParties.Acopyofthefinaltermsofreferenceshallbesentbythe
ArbitralTribunaltotheParties.
2.TheTribunal-AppointedExpertshall,beforeacceptingappointment,submittotheArbitral
TribunalandtothePartiesadescriptionofhisorherqualificationsandastatementofhisorher
independencefromtheParties,theirlegaladvisorsandtheArbitralTribunal.Withinthetimeor-
deredbytheArbitralTribunal,thePartiesshallinformtheArbitralTribunalwhethertheyhaveany
objectionsastotheTribunal-AppointedExpert’squalificationsandindependence.TheArbitral
Tribunalshalldecidepromptlywhethertoacceptanysuchobjection.Aftertheappointmentofa
Tribunal-AppointedExpert,aPartymayobjecttotheexpert’squalificationsorindependenceonly
70 IN-HOUSE COUNSEL PRACTICAL GUIDE 71
iftheobjectionisforreasonsofwhichthePartybecomesawareaftertheappointmenthasbeen
made.TheArbitralTribunalshalldecidepromptlywhat,ifany,actiontotake.
3.SubjecttotheprovisionsofArticle9.2,theTribunal-AppointedExpertmayrequestaParty
toprovideanyinformationortoprovideaccesstoanyDocuments,goods,samples,property,
machinery,systems,processesorsiteforinspection,totheextentrelevanttothecaseandmate-
rialtoitsoutcome.TheauthorityofaTribunal-AppointedExperttorequestsuchinformationor
accessshallbethesameastheauthorityoftheArbitralTribunal.ThePartiesandtheirrepresenta-
tivesshallhavetherighttoreceiveanysuchinformationandtoattendanysuchinspection.Any
disagreementbetweenaTribunal-AppointedExpertandaPartyastotherelevance,materiality
orappropriatenessofsucharequestshallbedecidedbytheArbitralTribunal,inthemannerpro-
videdinArticles3.5through3.8.TheTribunal-AppointedExpertshallrecordintheExpertReport
anynon-compliancebyaPartywithanappropriaterequestordecisionbytheArbitralTribunal
andshalldescribeitseffectsonthedeterminationofthespecificissue.
4.TheTribunal-AppointedExpertshallreportinwritingtotheArbitralTribunalinanExpertRe-
port.TheExpertReportshallcontain:
(a)thefullnameandaddressoftheTribunal-AppointedExpert,andadescriptionofhisor
herbackground,qualifications,trainingandexperience;
(b)astatementofthefactsonwhichheorsheisbasinghisorherexpertopinionsandconclusions;
(c)hisorherexpertopinionsandconclusions,includingadescriptionofthemethods,evidence
andinformationusedinarrivingattheconclusions.DocumentsonwhichtheTribunal-Appointed
Expertreliesthathavenotalreadybeensubmittedshallbeprovided;
(d)iftheExpertReporthasbeentranslated,astatementastothelanguageinwhichitwas
originallyprepared,andthelanguageinwhichtheTribunal-AppointedExpertanticipatesgiving
testimonyattheEvidentiaryHearing;
(e)anaffirmationofhisorhergenuinebeliefintheopinionsexpressedintheExpertReport;
(f )thesignatureoftheTribunal-AppointedExpertanditsdateandplace;and
(g)iftheExpertReporthasbeensignedbymorethanoneperson,anattributionoftheentiretyor
specificpartsoftheExpertReporttoeachauthor.
5.TheArbitralTribunalshallsendacopyofsuchExpertReporttotheParties.ThePartiesmay
examineanyinformation,Documents,goods,samples,property,machinery,systems,processes
orsiteforinspectionthattheTribunal-AppointedExperthasexaminedandanycorrespondence
betweentheArbitralTribunalandtheTribunal-AppointedExpert.
WithinthetimeorderedbytheArbitralTribunal,anyPartyshallhavetheopportunitytorespond
totheExpertReportinasubmissionbythePartyorthroughaWitnessStatementoranExpert
ReportbyaParty-AppointedExpert.TheArbitralTribunalshallsendthesubmission,WitnessState-
mentorExpertReporttotheTribunal-AppointedExpertandtotheotherParties.
6.AttherequestofaPartyoroftheArbitralTribunal,theTribunal-AppointedExpertshallbe
presentatanEvidentiaryHearing.TheArbitralTribunalmayquestiontheTribunal-Appointed
Expert,andheorshemaybequestionedbythePartiesorbyanyParty-AppointedExpertonis-
suesraisedinhisorherExpertReport,theParties’submissionsorWitnessStatementortheExpert
ReportsmadebytheParty-AppointedExpertspursuanttoArticle6.5.
7.AnyExpertReportmadebyaTribunal-AppointedExpertanditsconclusionsshallbeassessed
bytheArbitralTribunalwithdueregardtoallcircumstancesofthecase.
8.ThefeesandexpensesofaTribunal-AppointedExpert,tobefundedinamannerdetermined
bytheArbitralTribunal,shallformpartofthecostsofthearbitration.
Article 7 InspectionSubjecttotheprovisionsofArticle9.2,theArbitralTribunalmay,attherequestofaPartyoron
itsownmotion,inspectorrequiretheinspectionbyaTribunal-AppointedExpertoraParty-Ap-
pointedExpertofanysite,property,machineryoranyothergoods,samples,systems,processes
orDocuments,asitdeemsappropriate.TheArbitralTribunalshall,inconsultationwiththeParties,
determinethetimingandarrangementfortheinspection.ThePartiesandtheirrepresentatives
shallhavetherighttoattendanysuchinspection.
Article 8 Evidentiary Hearing1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallinformtheArbitralTribunal
andtheotherPartiesofthewitnesseswhoseappearanceitrequests.Eachwitness(whichterm
includes,forthepurposesofthisArticle,witnessesoffactandanyexperts)shall,subjectto
Article8.2,appearfortestimonyattheEvidentiaryHearingifsuchperson’sappearancehasbeen
requestedbyanyPartyorbytheArbitralTribunal.Eachwitnessshallappearinpersonunless
theArbitralTribunalallowstheuseofvideoconferenceorsimilartechnologywithrespecttoa
particularwitness.
2.TheArbitralTribunalshallatalltimeshavecompletecontrolovertheEvidentiaryHearing.The
ArbitralTribunalmaylimitorexcludeanyquestionto,answerbyorappearanceofawitness,ifit
considerssuchquestion,answerorappearancetobeirrelevant,immaterial,unreasonablyburden-
some,duplicativeorotherwisecoveredbyareasonforobjectionsetforthinArticle9.2.Questions
toawitnessduringdirectandre-directtestimonymaynotbeunreasonablyleading.
3.WithrespecttooraltestimonyatanEvidentiaryHearing:
(a)theClaimantshallordinarilyfirstpresentthetestimonyofitswitnesses,followedbytheRe-
spondentpresentingthetestimonyofitswitnesses;
72 IN-HOUSE COUNSEL PRACTICAL GUIDE 73
(b)followingdirecttestimony,anyotherPartymayquestionsuchwitness,inanordertobede-
terminedbytheArbitralTribunal.ThePartywhoinitiallypresentedthewitnessshallsubsequently
havetheopportunitytoaskadditionalquestionsonthemattersraisedintheotherParties’
questioning;
(c)thereafter,theClaimantshallordinarilyfirstpresentthetestimonyofitsParty-Appointed
Experts,followedbytheRespondentpresentingthetestimonyofitsParty-AppointedExperts.
ThePartywhoinitiallypresentedtheParty-AppointedExpertshallsubsequentlyhavetheoppor-
tunitytoaskadditionalquestionsonthemattersraisedintheotherParties’questioning;
(d)theArbitralTribunalmayquestionaTribunal-AppointedExpert,andheorshemaybe
questionedbythePartiesorbyanyParty-AppointedExpert,onissuesraisedintheTribunal-
AppointedExpertReport,intheParties’submissionsorintheExpertReportsmadebytheParty-
AppointedExperts;
(e)ifthearbitrationisorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary
determinations,liabilityanddamages),thePartiesmayagreeortheArbitralTribunalmayorder
theschedulingoftestimonyseparatelyforeachissueorphase;
(f )theArbitralTribunal,uponrequestofaPartyoronitsownmotion,mayvarythisorderof
proceeding,includingthearrangementoftestimonybyparticularissuesorinsuchamanner
thatwitnessesbequestionedatthesametimeandinconfrontationwitheachother(witness
conferencing);
(g)theArbitralTribunalmayaskquestionstoawitnessatanytime.
4.Awitnessoffactprovidingtestimonyshallfirstaffirm,inamannerdeterminedappropriateby
theArbitralTribunal,thatheorshecommitstotellthetruthor,inthecaseofanexpertwitness,
hisorhergenuinebeliefintheopinionstobeexpressedattheEvidentiaryHearing.Ifthewitness
hassubmittedaWitnessStatementoranExpertReport,thewitnessshallconfirmit.TheParties
mayagreeortheArbitralTribunalmayorderthattheWitnessStatementorExpertReportshall
serveasthatwitness’sdirecttestimony.
5.SubjecttotheprovisionsofArticle9.2,theArbitralTribunalmayrequestanypersontogiveoral
orwrittenevidenceonanyissuethattheArbitralTribunalconsiderstoberelevanttothecaseand
materialtoitsoutcome.AnywitnesscalledandquestionedbytheArbitralTribunalmayalsobe
questionedbytheParties.
Article 9 Admissibility and Assessment of Evidence1.TheArbitralTribunalshalldeterminetheadmissibility,relevance,materialityandweightof
evidence.
2.TheArbitralTribunalshall,attherequestofaPartyoronitsownmotion,excludefromevidence
orproductionanyDocument,statement,oraltestimonyorinspectionforanyofthefollowing
reasons:
(a)lackofsufficientrelevancetothecaseormaterialitytoitsoutcome;
(b)legalimpedimentorprivilegeunderthelegalorethicalrulesdeterminedbytheArbitral
Tribunaltobeapplicable;
(c)unreasonableburdentoproducetherequestedevidence;
(d)lossordestructionoftheDocumentthathasbeenshownwithreasonablelikelihoodtohave
occurred;
(e)groundsofcommercialortechnicalconfidentialitythattheArbitralTribunaldeterminestobe
compelling;
(f )groundsofspecialpoliticalorinstitutionalsensitivity(includingevidencethathasbeenclas-
sifiedassecretbyagovernmentorapublicinternationalinstitution)thattheArbitralTribunal
determinestobecompelling;or
(g)considerationsofproceduraleconomy,proportionality,fairnessorequalityofthePartiesthat
theArbitralTribunaldeterminestobecompelling.
3.InconsideringissuesoflegalimpedimentorprivilegeunderArticle9.2(b),andinsofaras
permittedbyanymandatorylegalorethicalrulesthataredeterminedbyittobeapplicable,the
ArbitralTribunalmaytakeintoaccount:
(a)anyneedtoprotecttheconfidentialityofaDocumentcreatedorstatementororalcommuni-
cationmadeinconnectionwithandforthepurposeofprovidingorobtaininglegaladvice;
(b)anyneedtoprotecttheconfidentialityofaDocumentcreatedorstatementororalcommuni-
cationmadeinconnectionwithandforthepurposeofsettlementnegotiations;
(c)theexpectationsofthePartiesandtheiradvisorsatthetimethelegalimpedimentorprivilege
issaidtohavearisen;
(d)anypossiblewaiverofanyapplicablelegalimpedimentorprivilegebyvirtueofconsent,
earlierdisclosure,affirmativeuseoftheDocument,statement,oralcommunicationoradvice
containedtherein,orotherwise;and
(e)theneedtomaintainfairnessandequalityasbetweentheParties,particularlyiftheyaresub-
jecttodifferentlegalorethicalrules.
4.TheArbitralTribunalmay,whereappropriate,makenecessaryarrangementstopermitevidence
tobepresentedorconsideredsubjecttosuitableconfidentialityprotection.
5.IfaPartyfailswithoutsatisfactoryexplanationtoproduceanyDocumentrequestedina
RequesttoProducetowhichithasnotobjectedinduetimeorfailstoproduceanyDocumentor-
deredtobeproducedbytheArbitralTribunal,theArbitralTribunalmayinferthatsuchdocument
wouldbeadversetotheinterestsofthatParty.
74 IN-HOUSE COUNSEL PRACTICAL GUIDE 75
6.IfaPartyfailswithoutsatisfactoryexplanationtomakeavailableanyotherrelevantevidence,
includingtestimony,soughtbyonePartytowhichthePartytowhomtherequestwasaddressed
hasnotobjectedinduetimeorfailstomakeavailableanyevidence,includingtestimony,ordered
bytheArbitralTribunaltobeproduced,theArbitralTribunalmayinferthatsuchevidencewould
beadversetotheinterestsofthatParty.
7.IftheArbitralTribunaldeterminesthataPartyhasfailedtoconductitselfingoodfaithinthe
takingofevidence,theArbitralTribunalmay,inadditiontoanyothermeasuresavailableunder
theseRules,takesuchfailureintoaccountinitsassignmentofthecostsofthearbitration,includ-
ingcostsarisingoutoforinconnectionwiththetakingofevidence.
7776 IN-HOUSE COUNSEL PRACTICAL GUIDE
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profIle
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78 IN-HOUSE COUNSEL PRACTICAL GUIDE 79
80 IN-HOUSE COUNSEL PRACTICAL GUIDE
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