20 January 1995, Geneva, Switzerland
Commentary: Commencement of Arbitration Proceedings and Constituting the Arbitral Tribunal
by Eric A. Schwartz
Secretary General, International Court of Arbitration,
International Chamber of Commerce (ICC), Paris
Introduction
The theme -- constituting the arbitral tribunal -- is a deceptively simple one. I say deceptively because lurking beneath the relatively straightforward general propositions are a number of potentially complex, and sometimes difficult, issues. That the subject may be complex is evident enough, I think, from Albert van den Bergs charts.
Of course, the most important element really with respect to the constitution of the arbitral tribunal is one that has not been addressed by Dr. van den Berg and that is the human element referred to at the beginning of the morning by Dr. Blessing. The questions that really matter most are: who are the arbitrators? How good are they?
With respect to matters of procedure, both the ICC and WIPO systems allow the parties a great deal of freedom -- both as to the number of arbitrators and the manner of their appointment. I had originally thought that I might describe the ICC scheme, but I think it is well-known to most of you. So I will instead focus on a few of the formal differences between the two sets of Rules.
Certain Differences Between the ICC and WIPO Systems
The time periods laid down in the Rules for the appointment of the sole arbitrator by the parties or of their co-arbitrators if there are to be three arbitrators
All time periods in the ICC Rules begin to run in the ICC Rules from the date of receipt by the Defendant of the Request for Arbitration. However, under Articles 15 and 16 of the WIPO Rules (unlike, however, Articles 17 and 18), the time limits begin to run as from the date of commencement of the arbitration, which is defined in Article 7 as the date on which the Request for Arbitration is received by the Center. Thus, if there are difficulties in notifying the Request for Arbitration to the Respondent, there is a risk that the time-limits in Articles 15 and 16 will have run (or nearly run) by the time the Request is received by the Respondent. This is possible a drafting hiccup that WIPO may wish to attend to. But I note that the situation can be saved, in any event, by the extension provisions contained in Article 4(g).
When is an arbitrator appointed?
Potentially more important, however, is the matter of identifying precisely when an arbitrator has been appointed and the tribunal established and consequently whether the various relevant time-limits have been satisfied.
In ICC arbitration, this is a relatively simple matter as no arbitrator can be considered to have been appointed until confirmed by the ICC Court. Thus, a co-arbitrator is not appointed simply by virtue of a partys naming that person; nor is a presiding arbitrator appointed simply by virtue of being proposed by the co-arbitrators or anyone else. The Court must review the matter, including the arbitrators curriculum vitae and Statement of Independence in order to ensure that there is no impediment to his serving, in which case he is confirmed.
The WIPO scheme is different. When there are to be three arbitrators, under Article 17(b), for example, the Claimant shall appoint in the Request, the Respondent within 30 days after receipt of the Request, and the two co-arbitrators within 20 days of the appointment of the second arbitrator. But what does this mean exactly and how is this to work, given that:
Article 23 (b) at the same time says that each arbitrator shall accept appointment in writing and communicate his acceptance to the Center. (What about to the parties?)
Queries: Has an arbitrator been appointed, for the purposes of Article 17(b), before he has accepted the appointment?
Is the Respondent required to make an appointment before such acceptance?
What happens if the arbitrator does not accept? Is the party who proposed him to be considered to have defaulted in such circumstances? (Moreover, with respect to defaults, what if the Claimant fails to appoint an arbitrator in the Request? Is the Defendant still required to do so within 30 days? The Rule doesnt really take into account the fact that it might take the Center a little time to make a default appointment under Article 19.)
And what is the impact on Article 17(b) of Article 22(b), which requires each prospective arbitrator, before accepting appointment, to disclose to the Center and the parties information that might give rise to doubts as to his independence? What happens if he makes such a disclosure? If such disclosure is to be made before accepting appointment, when can he accept appointment, if at all? Immediately thereafter? Must he await the comments of the parties? If he accepts and is challenged by a party pursuant to Article 24(a), are the time periods in Article 17(b) suspended pending the determination of the challenge?
Undoubtedly, reasonable answers can be given to all of these questions, but they are not expressly provided in the Rules, which means that the Center will have to develop certain practices in this regard.
Qualifications of arbitrators
Another difference between the WIPO and ICC systems, arising out of the absence of institutional scrutiny of the arbitrators being appointed in the WIPO system (other than when arbitrators are appointed by WIPO itself, of course), is that there is no review by WIPO of the qualifications of the arbitrators being proposed. Although the ICC rarely will refuse to confirm an arbitrator for this reason, it did so once where the arbitrator proposed did not speak the language of the arbitration. How would such a problem be dealt with under the WIPO Rules? What if a party fails to appoint an arbitrator with the qualifications that he may be required to have? Would this be covered by Article 32? I note, in this connection, that, under Article 24 of the WIPO Rules, unlike under the ICC Rules, an arbitrator may be challenged only with respect to impartiality or independence. There is no such limitation under the ICC Rules, which do not restrict the possible grounds of a challenge.
With respect to the related issue of nationality, there is a slight difference between Article 20 of the WIPO Rules and Article 2(6) of the ICC Rules. The ICC Rules afford a little more flexibility, especially in cases of default.
Method of appointment
a. The WIPO Rules, unlike the ICC Rules, have a built-in bias in favor of allowing the parties to try to agree on a sole arbitrator (Article 16(a)) or the co-arbitrators to agree on a presiding arbitrator (Article 17). The ICC Rules permit this, but do not make it a rule. In practice, in ICC cases, agreement is not often reached by the parties with respect to the sole arbitrator, but is about half the time in respect of the presiding arbitrator. Co-arbitrators, rather than parties, thus, appear more likely to reach agreement in ICC cases.
b. The WIPO Rules, also unlike the ICC Rules, provide for the use of a list procedure when the Center is called upon to appoint a sole arbitrator or a presiding arbitrator. The parties can agree to this in ICC arbitration. But otherwise the ICC simply makes a direct appointment, usually after requesting a proposal from a National Committee.
Whatever may be the advantages of a list system, it does take time to administer. First, it is necessary to identify and contact several candidates. Presumably before the Center puts their names forward, it will wish to ensure that they are all available and independent -- although there is language in Article 19(b)(v) that raises a question as to this. This takes time. Then, the parties are allowed 20 days to consider and mark up the lists.
Added on to the 20 days that the co-arbitrators enjoy under Article 17 to try to agree on a chairman, this means that a minimum of 40 days may go by before the Chairman can be appointed, not counting the time the Center itself may require. There are no similar periods written into the ICC Rules for the appointment of the Chairman, which I believe does permit greater flexibility.
Multi-party cases
Finally, I come to Article 18. It is to be noted, of course, that that provision deals only with the situation where three arbitrators are to be appointed and does not come into play if there is to be a sole arbitrator or more than three arbitrators, which the WIPO Rules do not expressly prohibit (although the fee schedule does not contemplate more than three arbitrators).
There is not comparable ICC Rule at present, although we have been fortunately able to manage without so far in most cases. A possible new rule is nevertheless under consideration at the moment within the Court.
I have only a few brief comments to make on the WIPO provision:
1. Article 18(b) provides that where the Request for Arbitration names more than one Respondent, the Respondents shall jointly appoint an arbitrator, but that if they fail to do so within 30 days after receiving the Request for Arbitration, both co-arbitrators shall be appointed by the Center and any appointment previously made by the Claimant shall be considered void.
I first have a little worry about the 30-day deadline. Should it really apply where the parties have not agreed on the number of arbitrators, and the Center decides that there shall be three pursuant to Article 14(b)? Indeed, in that case, the Centers decision could probably not be made until after the Respondent has commented on the number of arbitrators to be appointed. So that by the time the Center makes its decision, the deadline will have run and where will that leave things? What deadline, if any, then applies?
Apart from this, I wonder whether the appointment of both arbitrators by the Center in the circumstances of Article 18(b) should really be automatic. I wonder, in other words, about the use of the word "shall". The Claimant, after all, is being deprived of its right to appoint an arbitrator. What if the Respondents do not make an appointment simply because they have chosen not to participate in the proceedings and are defaulting? Are they, in those circumstances, in any way prejudiced, even under the Dutco rationale, if the Claimant names the arbitrator of its choice? What if the Respondents are all part of a single corporate group and under common control? Should they, by virtue of that mere fact, be able to deprive the Claimant of the arbitrator of its choice? These are some of my worries. So I wonder whether the shall should not have been a may.
2. Article 18(c) meanwhile excludes the application of the appointment procedure agreed upon by the parties unless they at the same time expressly exclude the application of Article 18. But doesnt this too go awfully far? what if the procedure agreed upon by the parties does not in any way offend the Dutco principles -- what if, e.g., the parties simply provide that all three arbitrators are to be appointed by Albert van den Berg, but they forget to include language expressly excluding Article 18? Why should such an agreement not apply?
Lastly, what is an "express" agreement? Who decides? Does this provision still leave the door open to a Dutco problem if the parties expressly exclude the application of Article 18 but draft a clause inconsistent with Dutco?
Commentary - François Knoepfler
Discussion
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