October 24, 1997, Geneva, Switzerland
The Administration of Arbitral Cases Under the 1998 Rules of Arbitration of the International Chamber of Commerce
Dr. Horacio A. Grigera Naón
Secretary General, International Court of Arbitration of The International Chamber of Commerce (ICC)
(Paris, France)
1. Introduction
On April 8, 1997, the Council of the International Chamber of Commerce (ICC) meeting in Shanghai, China, adopted new ICC Arbitration Rules which will come into effect on January 1, 1998 (the "1998 Rules" or the "New Rules"). The 1998 Rules - the final product of two years of work - were prepared by the ICC Commission on International Arbitration, in conjunction with the International Court of Arbitration of the ICC (the "Court") and also with the input from National Committees of the ICC from all over the world.
The 1998 Rules (Art. 6(1)) will apply to arbitrations commenced on or after January 1, 1998, unless the parties agree that the ICC Arbitration Rules in effect on the date of their arbitration agreement shall apply.
The Court has issued guidelines giving further precisions as to the application of the New Rules. The underlying spirit is to privilege the application of the New Rules over the current ICC rules. Accordingly, the Court will consider with a flexible eye such guidelines and any agreement of the parties favoring the application of the New Rules. For all practical purposes, the New Rules will govern ICC arbitrations commenced on or after January 1, 1998. Before such date, the parties may also agree to have the 1998 Rules govern ICC arbitrations they intend to initiate prior to January 1, 1998. Even after such date, but ideally (though not necessarily) not later than on the date of the respective terms of reference, the parties may agree that ICC arbitrations commenced before January 1, 1998, shall be governed by the New Rules. The parties may also agree to submit to the ICC rules of arbitration in effect on the date of their arbitration agreement (Art. 6(1) of the New Rules). However, even in such case the Secretariat of the Court will inform the parties at the initiation of the arbitral proceedings that they may agree to submit to the New Rules according to the Courts guidelines mentioned above.
The updated fee scales set forth in Appendix III to the New Rules and the advance payment of US$2,500 corresponding to administrative fees to be made together with the filing of the arbitration request shall be effective as of January 1, 1998, in respect of all arbitrations commenced on or after such date and irrespective of the version of the ICC Arbitration Rules applying to arbitration (Arts. 1(1) and 4(1) of Appendix III to the New Rules). For example, arbitral and administrative fees concerning an arbitration commenced before January 1, 1998, under the New Rules (because the parties have so agreed according to the Courts guidelines) will be calculated according to the current fee scales and not the new ones presently incorporated into the Appendix III to the New Rules.
2. Basic Features of the ICC Arbitration System
The 1998 Rules maintain the basic features that have characterized the ICC arbitration system since its inception in 1923, i.e., (i) the pivotal role played by the Court in the administration of arbitrations under ICC Arbitration Rules in force from time to time throughout its 75 years of existence, which includes confirming arbitrators and scrutinizing draft arbitral awards as to form and substance before being rendered; and (ii) the flexibility and universality of the ICC arbitration system permitting ICC arbitrations to take place in any corner of the world, in any language and against the backdrop of any legal system. In this sense, the New Rules constitute an evolution rather than a revolution in respect of the current text, that had not suffered any major modification since the last substantial overhauling of the ICC Arbitration Rules about 20 years ago. The New Rules are largely the outcome of the experience gathered by the Court and its Secretariat since then and a response to the needs of users. The New Rules incorporate existing practices, adapt the ICC Arbitration Rules to certain developments in the field, introduce greater flexibility and transparency and reduce or prevent delays in the administration and conduct of ICC arbitrations.
Before describing the main substantial innovations introduced through the New Rules, it is useful to look more closely at the basic features of the ICC arbitration system which have remained essentially the same under the new text.
The ICC arbitration system is one of the services rendered to the worlds business community by the ICC, created in 1919. The ICC is the mouthpiece of worlds business interests and initiatives before national and international fora, including more recently the World Trade Organization. It enjoys consultative status at the highest level with the United Nations and its specialized agencies. It has national committees in about 60 different countries representing the respective local business communities. It also has direct members from countries not having an ICC National Committee.
a) The Court
The Court is an autonomous arbitration body attached to the ICC (Art. 1(1) of the New Rules). Each National Committee of the ICC may propose a member of the Court to be appointed by the ICC Council, the supreme governing body within the ICC (Art. 3(3) Appendix I of the New Rules). Thus, the Court has about 60 members representing developed and developing countries alike, and all cultures and legal systems. Its multinational and multicultural composition ensures that all viewpoints and approaches are represented in the Courts debates and in the making of the Courts determinations and decisions. Also, being an autonomous body, it carries its functions in complete independence from the ICC and its organs (Art. 1(2) of Appendix I of the New Rules). The Court members are independent from the National Committees of the ICC, including the one having proposed them for appointment as Court member (Art. 1(3) of Appendix I and Art. 3(1) of Appendix II to the New Rules). These characteristics ensure the cultural neutrality and openness and the impartiality and independence of the Court in the carrying out of its functions and discharging its duties.
The Court does not itself settle disputes (Art. 1(2) of the New Rules). It does not hear the parties to an arbitral dispute nor establishes the facts of the case. Its central function is to administer and supervise arbitrations conducted under the ICC rules of arbitration, as a result of an agreement of the parties to that effect, by arbitrators chosen by the parties themselves or appointed, if they would fail to do so, according to the ICC Arbitration Rules. The Court is entrusted with ensuring the application of the ICC Arbitration Rules (Art. 1(1) of Appendix I to the New Rules) so as to exercise appropriate quality controls on the conduct of the arbitral proceedings and the award or awards rendered by the arbitral tribunal. The controls exercised by the Court with the assistance of its Secretariat aim at making the arbitral process and its outcome neutral, impartial and reliable so as to prompt the parties to spontaneously abide by the determinations and decisions of the arbitral panel and, if need be, to ensure that the arbitral award shall be enforceable at law before national courts (Art. 35 of the New Rules). The Court administers arbitrations concerning international business disputes but will also take care of domestic business disputes if so agreed by the parties (Art. 1(1) of the New Rules).
An ICC arbitrator must be independent from all parties to the dispute, including the one having nominated him (Art. 7(1) of the New Rules) and must also be able and available to conduct the reference (Art. 9(1) of the New Rules). Should any party fail to nominate his arbitrator or should the parties not agree on the sole arbitrator or the chairman of an arbitral panel, he will be appointed by the Court normally at the proposal of a National Committee of the ICC selected by the Court at the initiative of the Courts Secretariat (Art. 8 of the New Rules). There are no lists of ICC arbitrators and each proposal, nomination and appointment of an arbitrator is done on a case-by-case basis without the help of pre-established lists or rosters. To ensure that every arbitrator is independent from all parties to the dispute he will only get appointed upon having been confirmed by, as the case may be, the Court or its Secretary General (Art. 9 of the New Rules). Though the parties may contract out of the mechanisms for selecting and appointing arbitrators under the ICC Arbitration Rules (Art. 7(6) of the New Rules), they cannot derogate from the cardinal principle that prospective arbitrators must be independent from all the parties and once appointed must remain independent throughout the arbitral proceedings. The Court will also determine the number of arbitrators failing a stipulation or agreement between the parties in this respect (Art. 8(2) of the New Rules).
Another basic principle of the ICC arbitration system is that the fixation of advances to cover arbitration costs and expenses, i.e. administrative fees to pay for the Courts and its Secretariats services, arbitral fees and expenses reimbursable to the arbitrators, as well as of such fees or expenses that will be ultimately paid to the arbitrators or to the ICC for the Courts and its Secretariats services, correspond exclusively to the Court, which will make the respective calculations by applying the fee tables set forth in Appendix III of the ICC Arbitration Rules to the amount of the dispute. Separate fee arrangements between the parties and the arbitrators are contrary to the ICC Arbitration Rules (Art. 2(4) of Appendix III to the New Rules). This is one of the important advantages of agreeing on ICC arbitration since the parties and the arbitrators shall not be exposed to potential animosities or painful bargaining that may be associated with discussions or negotiations related to the financial and economic aspects of an arbitration. Direct dealings of the parties in this respect may conspire against the cooperative atmosphere necessary for the proper conduct of an arbitration and frequently lead to delays in the commencement and the continuation of the reference.
The Court is also charged with deciding any recusations addressed against an arbitrator for his lack of impartiality or independence (Art. 11 of the New Rules). The Court may - after hearing the parties and the arbitrators - also remove at its own initiative an arbitrator who is prevented de jure or de facto from fulfilling his functions (Art. 12(2) of the New Rules).
When one of the parties questions the existence or the validity or the scope of an arbitration clause or such matters are subject to doubt and one party has not answered to the arbitration request, the ICC Court will first consider whether it is satisfied as to the prima facie existence of an arbitration agreement in order to determine, without needing to resort to a national court, if the arbitration may proceed and the file sent to the arbitral panel. Decisions of the Court on the existence of an arbitration clause are of administrative nature and its reasons are not communicated. The fact the Court is prima facie satisfied that an ICC arbitration clause exists does not prevent the intervening arbitral panel from finally ruling on the existence or validity of the arbitral clause. In any case, matters regarding the arbitrability of the dispute fall under the exclusive jurisdiction of the arbitral panel itself and must be entrusted to it without any prima facie consideration by the Court. If the Court concludes on the prima facie non-existence of an ICC arbitration clause, any party retains the right to ask a court of law having jurisdiction whether or not there is a binding arbitration agreement (Art. 6(2) of the New Rules). Though under the New Rules all determinations regarding the prima facie existence of validity or scope of an ICC arbitration clause correspond exclusively to the Court, the Secretariat may invite the parties to make submissions setting forth their respective positions in this respect to be elevated to the Court when required to decide on this matter and warn Claimant shortly after receiving and first examining the arbitration request that doubts about the prima facie existence of an ICC arbitration clause may be conceivably raised to permit him at that early stage to decide if he will pay for the initial cost advances or opt to withdraw the case.
The Court fixes the place of the arbitration when the parties have not agreed on it (Art. 14(1) of the New Rules). This is also a vital function fulfilled by the Court in view of the economic, operational and legal consequences flowing from such a choice or fixation which, among other things, determines the national jurisdiction supervising the conduct of the arbitration and the means of recourse against or for setting aside the award, the place where the award has been rendered (Art. 25(3) of the New Rules) and its enforceability under international conventions including the 1958 New York Convention on the recognition and enforcement of arbitral awards.
The Court is also charged with approving the terms of reference if signed by the arbitrators when one of the parties has failed to do so (Art. 18(3) of the New Rules). This is consistent with another vital principle of the ICC arbitration system, namely, that if one of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration shall proceed notwithstanding such refusal or failure (Art. 6(3) of the New Rules). Nevertheless, non-participation of a party to an ICC arbitration does not release the other party from the burden of arguing and proving his case. In such circumstances, the arbitral panel is not discharged of its duty to "establish the facts of the case by all appropriate means" as soon as possible (Art. 20(1) of the New Rules) and to test against the evidence produced in the course of the proceedings the arguments and allegations of the participating party.
The terms of reference is a document containing a summary of the parties claims and counterclaims and defining the issues in dispute. It is based on the claim, answer to the claim and counterclaims filed by the parties and their latest submissions before and in the process of drafting this document, which is carried out by the arbitrators in conjunction with the parties. It has the advantage of helping the parties and the arbitrators to focus at an early stage of the proceedings on the controverted issues at stake and the merits of the case. For that reason it helps (i) the arbitral tribunal to avoid the danger of not deciding issues actually submitted to it or of omitting to decide questions the parties wanted it to decide, and (ii) the parties to assess their respective strengths and weaknesses and eventually to settle their dispute.
Only after the terms of reference have become effective the actual arbitral case may be tried. In other words, it is only in the post-terms of reference stage that parties and witnesses may be heard or summoned as to the merits of the dispute, evidence produced, hearings held, expert evidence proposed and provided for, etc. Thus the vital importance of the Courts powers to approve terms of reference and permit the case to advance to the post-terms of reference stage despite the sabotaging tactics of a recalcitrant party, or the lack of cooperation of the party absent from the proceedings.
Last, but certainly not least, the Court scrutinizes the arbitral award in draft form both as to form and substance before approving it and having it communicated to the parties. The purpose of this control is both to ensure the quality of the final product of an ICC arbitration and to render it enforceable at law (Art. 27 of the New Rules). All ICC awards are binding on the parties. By agreeing on an ICC arbitration, the parties are not only deemed to have submitted themselves ipso facto to the ICC Arbitration Rules but also undertake to carry out any award without delays and waive any means of recourse insofar as such waiver can be validly made under the applicable law (Arts. 6(1) and 28(6) of the New Rules). This is certainly another reason why the scrutiny of the award is of such vital importance within the context of the ICC arbitration system. Whilst the arbitral tribunal has the obligation to modify its award according to the Courts remarks or indications regarding matters of form, it is free to follow or not the Courts remarks as to the substance of the award. These latter remarks do not in any way compromise the freedom and independence of the arbitrators to decide on the merits of the case. Remarks as to form are aimed at ensuring that the award wont present defects jeopardizing its validity or enforceability. Their objective is to cleanse any mathematical or clerical errors incurred in the making of the award, to help identifying and eliminating incoherences or contradictions in the reasoning of the arbitrators and to assure that the award decides all, and not less or more than all the questions or issues submitted to the arbitral tribunal (infra petita, plus petita), that is to say, that the terms of reference have been complied with. A draft award not modified to satisfy the Courts observations as to form shall not be approved by the Court and may not become an ICC award.
b) The Courts Secretariat
The Secretariat of the Court is composed of about 40 persons, presently including 16 lawyers or holders of law degrees. As multicultural and multinational as the Court itself, six different languages are spoken in the Courts Secretariat, including Arabic and Cantonese. It is headed by a Secretary General assisted in his functions by a General Counsel and Deputy Secretary General. Its fundamental role is to assist the Court in the performance of its functions (Art. 2 of Appendix I to the New Rules). Not only are ICC arbitrations commenced by the filing of the arbitration request, attached copies and documents with the Secretariat (Art. 4(1) of the New Rules), but also all notifications until the file has been transmitted to the arbitral tribunal are made by or through the Secretariat of the Court.
The Secretariat of the Court is at present comprised of six teams, each led by a Counsel holding a law degree. When an arbitration request is filed, the Secretary General will assign the case to one of the six teams. As from then, such team will be in charge of the administration of the case. Each time the Court has to take a decision or make a determination in the exercise of its powers under the ICC Arbitration Rules, it does so on the basis of an agenda prepared by the Secretariat, which provides the Court with the legal and factual context to adopt its decision. Normally, such agendas include recommendations as to the decisions to be taken, or the course of action to be adopted by the Court in connection with the different issues arising out of the cases submitted to ICC arbitration. Such agendas treat matters as diverse as the confirmation of arbitrators, the selection of National Committees of the ICC to be invited to make proposals for appointing arbitrators, the financial and economic aspects of the case (determination of cost advances and arbitral and administrative fees), joinder of arbitral cases, prima facie existence of ICC arbitration clauses, the fixation of the place of arbitration, the recusation or removal of arbitrators, the prolongation of delays to finalize the terms of reference and render the final award, the approval of terms of reference, the approval of awards submitted in draft form to the Court). One of the central duties of the Secretariat is then to analyze and study different aspects of the case and assist the Court in the ensuing decision-making process.
Another vital duty of the Secretariat of the Court is to serve as the interface between the arbitral tribunal and the parties on one hand and the Court on the other. As indicated before, the Court does not settle disputes nor has any immediate contact with the parties or the arbitrators. The Courts Secretariat, on the contrary, is from the beginning of the case in direct contact with the parties, the arbitrators and the National Committees of the ICC. In general terms, besides keeping the Court informed about the pace and other aspects of the conduct of arbitrations under the ICC Arbitration Rules, it is a source of information for parties and arbitrators on matters related to the understanding of the ICC Arbitration Rules and the way they operate. Without compromising its strict neutrality, the Secretariat of the Court does so through direct exchanges with the parties and the arbitrators or through notes and other documents issued by the Courts Secretariat with the approval of the Court for the information of parties and arbitrators, or as necessary for the proper conduct of arbitral proceedings (Art. 5(2) of Appendix II to the New Rules).
c) The Conduct of Arbitral Proceedings
In general, the organization of ICC arbitral proceedings is left to the parties and the arbitrators. The ICC Arbitration Rules are detached from any national procedural law. When silent, the arbitral panel shall apply the procedural rules stipulated by the parties, or if they failed to do so, those determined by the arbitral tribunal itself, which may do so without necessarily referring to the rules of procedure of a national law (Art. 15(1) of the New Rules). The ICC Arbitration Rules are flexible and universal but entrust the arbitrators with sufficient powers to adopt a pro-active approach to the conduct of the arbitration closer to the inquisitorial system characteristic of continental law. For that reason, the ICC Arbitration Rules provide that ICC arbitrators have the duty to establish the facts of the case by all appropriate means, may at their own initiative summon the parties and witnesses (though at the request of any party they must hear the parties), dispose the production of evidence, including expert evidence and order any party at any stage of the procedure to forward additional evidence (Art. 20 of the New Rules). They may also exclude the production of certain evidence and within the limits traced by the parties determine the way in which parties and witnesses shall be heard and questioned and the powers of the panel to establish limitations as to the length of hearings and interrogatories. Unless otherwise requested by any of the parties, they may decide on documents only. ICC arbitrators must state the reasons upon which their award is based (Art. 25(2) of the New Rules) and can only decide as amiable compositeurs or ex aequo et bono if so expressly authorized by the parties (Art. 17(3) of the New Rules).
3. The 1998 Rules: Substantial Innovations
The substantial innovations incorporated through the New Rules and their three appendixes may be classified under two broad categories: (i) modifications or additions primarily aimed at facilitating or rendering more efficient, transparent and expeditious the administration by the Court and its Secretariat of cases submitted to ICC arbitration and the handling of cases by arbitral tribunals conducting arbitrations under the ICC arbitration system; and (ii) adapting the ICC arbitration system to existing Court practices or to recent developments in comparative business arbitration law. This paper only aims to present some of the main innovations introduced by the New Rules and should not be considered an exhaustive description of all the changes incorporated through them and their appendixes.
a) Enhancing the Efficiency, Transparency and Celerity of the ICC Arbitration System
The 1998 Rules vest additional powers in the Courts Secretary General in order to accelerate the transmission of the file to the arbitral tribunal for it to start performing its functions.
Under the New Rules, the Secretary General of the Court may set in motion the arbitration, i.e., transmit the file to the arbitral tribunal as soon as constituted, once the Claimant has paid a provisional advance on costs to cover arbitrators fees, reimbursable arbitral expenses and the fees for the administration of the arbitration, fixed by the Courts Secretary General on the basis of the amount of the Claimants claim (Art. 30(1) of the New Rules).
Such provisional advance is intended to cover such costs and fees incurred until the finalization of the terms of reference only. It must be differentiated from the global advance to be later fixed by the Court which shall cover all arbitrators fees and reimbursable expenses and the administrative fee until the final award shall have been rendered (Art. 30(2) of the New Rules).
The provisional advance fixed by the Secretary General of the Court under the New Rules shall normally not exceed the amount obtained by adding together: (i) the administrative expenses calculated by applying the scale for administrative fees to the amount in dispute set forth in Article 4(2)(A) of the Appendix III to the New Rules; (ii) the arbitral fees calculated by applying the minimum under the scale of arbitrators fees set forth in Article 4(2)(B) of Appendix III to the New Rules; and (iii) the expected reimbursable expenses incurred by the arbitral tribunal in the drafting of the terms of reference (Art. 1(2) of Appendix III to the New Rules).
Under the current rules, the setting in motion of arbitral proceedings (or transmission of the file to the arbitral tribunal) is only possible after the Court has fixed a global advance on costs calculated on all the claims and counterclaims involved in the arbitration, the parties have been given the opportunity of equally sharing the payment of the first half of such advance (or should one of them fail to do so, for the other party to substitute for such payment) and such first half has been actually paid to the ICC. This system, which necessarily depends on the adoption by the Court of different decisions and require affording the opportunity to both parties to make up for any unpaid portion of the cost advance can lead to delays in excess of 60 days in the transmission of the file to the arbitral panel. Additional delays may be later incurred under the current rules even after the first half of the first advance has been paid since terms of reference only become "operational" after the parties or one of them has paid the second half of the global advance. This staggered system of payments of the cost advance and the potential delays it entails have been suppressed by the New Rules.
Under the New Rules, the initial advance paid by the Claimant will be credited against the Claimants share of the global advance to be fixed by the Court as soon as possibly thereafter (Art. 30(2) of the New Rules), i.e., as soon as the Court would have sufficient information regarding all the amounts involved in the dispute on the basis of the parties claims and counterclaims (if any). Such advance, to be paid in equal shares by the parties, may of course be subject to further readjustments.
The New Rules allow the Courts Secretary General to confirm party-nominated arbitrators having filed an unqualified statement of independence or, if qualified, if the qualifications have not raised objections from the other party to the confirmation of such arbitrator (Art. 9(2) of the New Rules). Should the Secretary General consider that such prospective arbitrator should not be confirmed (e.g., because the Secretary General finds that such arbitrators independence is questionable), the Secretary General will defer the decision regarding the confirmation to the Court. The new system permits the saving of time, since it will not be necessary to wait for a Court session for it to take every decision regarding the confirmation of arbitrators.
The New Rules maintain the requirement that the arbitrators and the parties should prepare and execute terms of reference inter alia summarizing the claims and counterclaims of the parties and setting forth the controverted issues. Nevertheless, practice has proved that listing the controverted issues in the terms of reference is not always necessary if, for example, they appear with sufficient precision and clarity in the parties submissions on the basis of which the terms of reference are to be prepared. Also, under certain circumstances, recalcitrant parties adopt dilatory tactics when it comes to discussing or defining the controverted issues to be listed with the purpose of sabotaging the normal progress of the proceedings. For all these reasons, Article 18(1)(d) of the 1998 Rules authorizes the arbitral tribunal, if it finds the listing of the controverted issues to be inappropriate, to go without this requirement.
Finally, under the New Rules (and unlike the current rules), the terms of reference will not require, to become effective or "operative", the payment of the global or any other advance on costs fixed by the Court. However, when an advance on costs fixed by the Court has not been satisfied, and after having consulted with the arbitrators, the Secretary General of the Court may direct the arbitral tribunal to suspend its work and grant a period of not less than 15 days on the expiry of which, if such advance on costs has not been paid, the relevant claims or counterclaims shall be considered as withdrawn (Art. 30(4) of the New Rules) and shall not then be considered by the arbitral tribunal for the further conduct of the proceedings and the making of the award. Of course, the arbitrators may only suspend their work in respect of specific claims or counterclaims if so expressly invited by the Courts Secretary General (Art. 1(3) of Appendix III).
Accordingly, terms of reference come into effect once signed by the parties and the arbitrators, or should one of the parties fail to sign them, once approved by the Court. Immediately afterwards, as soon as the provisional timetable for conducting the arbitration required by Article 18(4) of the New Rules shall have been established (see Art. 1(3) of Appendix III), the arbitrators can - and indeed must - take all appropriate measures for setting in motion the post-terms of reference stage of the procedure. According to a strict interpretation of the current rules, it would not be possible to get post-terms of reference proceedings under way unless payment to the ICC of the full advance on costs has been satisfied first.
Under the current rules, if one of the parties does not sign the terms of reference, they are submitted for the approval of the Court. In case of approval, the recalcitrant or non-participating party is then given a time period for signing the terms of reference. This latter requirement has been eliminated under the New Rules in view of the fact that in most cases such delay would expire without the recalcitrant or non participating party signing the terms of reference.
In line with the idea of further minimizing delays, Article 19 of the 1998 Rules has eliminated the requirement under the current rules that any new claim or counterclaim falling outside the limits of the terms of reference may only be considered by the arbitral tribunal if agreed by the parties and incorporated into an addendum to the terms of reference which shall be communicated to the Court. Under the New Rules, if there is no agreement by the parties in this respect, it will be for the arbitral tribunal to decide whether the new claims or counterclaims shall be admitted, without the need of incorporating them into an addendum to the terms of reference or making any communication to the Court.
The New Rules facilitate fast track arbitrations, inter alia, by expressly permitting the parties to shorten procedural delays contemplated in the New Rules in order to expedite arbitral proceedings; however, it is also provided that the Court may extend delays contemplated in the New Rules but shortened by the parties (Art. 32, New Rules). In this way, the Court will have discretion not to permit the shortening of certain delays which may negatively affect the proper discharge of the duties of the relevant arbitral tribunal or of the Court.
The Court meets four times a month: once in plenary session open to all Court members and three times in Courts Committee sessions presided by the Chairman of the Court or one of its Vice-Chairmen and also attended by two other Court members. Whilst previous Appendix II identified certain matters which could not be decided in Courts Committee sessions (challenges of arbitrators, removal of arbitrators alleged not to be fulfilling their functions and approval of draft awards other than those made with the consent of the parties) new Appendix II of the 1998 Rules provides that "...the Court shall determine the decisions that may be taken by a Committee" (Art. 4(5) of Appendix II to the New Rules). In that respect, in its working session of September 29, 1997, the Court issued guidelines whereby Court Committee sessions may decide on any issue falling under the jurisdiction of the Court, including approval of awards, except for recusation, challenge or removal of arbitrators and approval of awards either involving substantial dissenting opinions, matters of particular legal complexity or interest or a state as a party. Decisions approved in a Courts Committee session are reported to the next plenary session of the Court. As a result of this expansion of the powers of Courts Committees, substantial time will be saved since in most cases it will no longer be necessary to await a plenary session of the Court for obtaining the approval of an award and having it communicated to the parties once signed and dated by the arbitral tribunal.
Furthering the organization of arbitral proceedings by the arbitrators and the parties in order to minimize delays and appropriately meet the explicit requirement set forth in Article 15(2) of the New Rules that the arbitral tribunal must "...act fairly and impartially and ensure that each party has a reasonable opportunity to present its case" is another important principle advanced by the New Rules. Accordingly, Article 18(4) of the New Rules provides that when drawing up the terms of reference or as soon as possible thereafter, the arbitral tribunal shall, after having consulted with the parties, establish in a separate document a provisional timetable that it intends to follow in the conduct of the arbitration. Such timetable and any subsequent modifications shall be communicated to the Court and the parties. Also, Article 22 of the New Rules provides that after being satisfied that the parties have had a reasonable opportunity to present their respective cases, the arbitral tribunal shall declare the proceedings closed and shall indicate to the Secretariat the approximate date by which the draft award shall be submitted to the Court for scrutiny. After such declaration, the parties may not make any further submissions, produce any evidence or advance any argument unless requested or authorized by the arbitral tribunal.
The New Rules also enhance the transparency of the ICC arbitration system by providing, when an arbitrator is challenged, that comments on the challenge from such arbitrator, the other arbitral panel members and the parties shall be communicated to all arbitrators and parties involved in the arbitration in order to permit maximum transparency of challenge proceedings (Art. 11(3) of the New Rules). A similar principle applies when an arbitrator is replaced by the Court at the latters initiative (Art. 12(3) of the New Rules).
b) Adapting the Current Rules to Existing Practices and Recent Developments
The 1998 Rules include a provision (Art. 10) dealing with the constitution of arbitral tribunals in multiple-party arbitration scenarios, which normally may arise in case of arbitration agreements with more than two parties.
This new provision was incorporated mainly on the basis of experience gathered as a result of the Dutco case decided by the French Cour de Cassation (1). In that case, the Claimant named as co-defendants two different companies bound by the same arbitration clause providing for the resolution of disputes under the ICC Arbitration Rules. However, the Claimant introduced a different claim against each of them, albeit based on the same contract. The co-defendants were holding different positions since they were defending themselves from different claims. In addition, they did not agree on having one and the same arbitrator nominated on behalf of the defendant side (the arbitration clause provided for a three member panel so that there was no discretion for the Court to appoint a sole arbitrator under the ICC rules). The Court followed its practice in such circumstances and appointed one arbitrator on behalf of the multiple-party defendant side of the dispute. The co-defendants, who had objected to that decision but nonetheless continued the arbitration attacked the award on the basis that they had been deprived of their respective right to freely appoint their arbitrator. The matter finally reached the Cour de Cassation. The Cour de Cassation decided that under the circumstances, the principle of equality is violated if one arbitrator is designated on behalf of the multiple-party defendant side by the appointing authority while the single-party Claimant is totally free to designate his own arbitrator.
A way of avoiding any unequal treatment of the parties in such a scenario would be to vest the appointing authority with the power to appoint all three panel members. This is precisely the solution now afforded by Article 10 of the New Rules, which also permits the Court, in order to avoid further delays, to directly appoint the panel members without observing the normal procedure for appointing arbitrators which would usually require resorting to National Committees of the ICC to obtain proposals of prospective arbitrators to be appointed by the Court. It should be noted that, under such circumstances, the Court may follow the path offered by Article 10 but is not bound to do so. If jurisdictions concerned by the arbitration in question do not apply a Dutco rationale in multiple-party scenarios, there may be no reason for the Court not to follow its usual practice of appointing one party arbitrator only on behalf of the multiple-party side of the dispute if the arbitration agreement provides for a three member panel and the parties on that side do not agree on a single party arbitrator.
Article 12(5) of the 1998 Rules now provides the ICC arbitration system with an additional tool to deal with truncated tribunal scenarios. These would be situations in which the conditions for replacing an arbitrator under the New Rules are present (when he has been removed, has died or has resigned), but for practical reasons, intimately associated with the efficient and expeditious completion of arbitral proceedings, such replacement is not advisable. Such scenario is more likely to appear at the end of arbitral proceedings, when the tribunal has commenced its deliberations towards the rendering of the award, and one of the arbitrators is prevented from participating or refuses to participate in the deliberations. Though there are justified causes to remove such an arbitrator, under the circumstances his replacement may be ill-advised if, for example, there would be good reason to believe that his successor would be equally uncooperative or that substantial part of the proceedings would have to be repeated with participation of the new arbitrator. To handle this type of eventuality occurring after the arbitral tribunal has declared the arbitral proceedings closed, the 1998 Rules empower the Court to remove the non-participating arbitrator and authorize the two-member panel to continue its deliberations and make the award. The Court will take this decision after having considered all relevant circumstances and having heard the remaining arbitrators and the parties. Though Article 12(5) of the New Rules is likely to be seldom applied in practice, its very presence should deter disloyal or obstructionist conduct aimed at paralyzing the deliberations of the arbitral panel.
In any case, the New Rules maintain a provision (Art. 12(2) and (3)) permitting the Court, at its own initiative, to replace an arbitrator when the Court finds that he is prevented de jure or de facto from fulfilling his functions or when he is not fulfilling such functions according to the ICC Arbitration Rules or within the required time limits. The Court may exercise such prerogative at any stage of the arbitration, including prior to the closing of the proceedings or thereafter. In addition, the New Rules provide that when an arbitrator is to be replaced under Article 12(2) and (3) of the New Rules, the Court will have discretion to decide whether or not it shall follow the original nominating process for appointing the new arbitrator (Art. 12(4) of the New Rules). Thus, the Court will have sufficient flexibility to opt for a nomination procedure that will reasonably ensure that the new arbitrator wont be affected by the same circumstances that led to the removal of his predecessor.
Article 29 of the 1998 Rules incorporates a new provision whereby the arbitral tribunal, on his own initiative or at the request of a party, may correct clerical or mathematical errors incurred in the award. Also at the request of a party, an arbitral tribunal may interpret its award when its meaning is not clear. A partys request to any of these purposes must be filed with the Courts Secretariat within a 30-day period after the date of the award. After hearing the parties, the arbitral tribunal shall have a 30-day period to render its decision to correct or interpret the award, which shall take the form of an addendum and will be subject to the scrutiny of the Court. Article 2(7) of the Appendix III to the New Rules incorporates for the first time a provision leaving to the Courts discretion the fixation of: (i) a cost advance to cover fees and expenses originated in the additional activity involved by the correction or interpretation of an award; and (ii) the fees for remunerating the arbitrators for such activity. The transmission of the file to the arbitral panel for it to consider correcting or interpreting the award shall be subordinated to the payment to the ICC of such cost advance.
Under Article 17(1) of the New Rules, the parties may agree that the dispute be decided according to "rules of law" selected by them. If there is no stipulation of the parties on the applicable law, the arbitral tribunal will apply the "rules of law" it shall determine to be appropriate. This reflects the wide choices available to and actually made by parties and arbitrators as to the selection of the applicable law, which are not limited to opting for the application of a national legal system or going through the voie indirecte requiring the prior application of a national or a-national conflict-of-laws rule.
Article 23(1) of the New Rules permits arbitral tribunals to order any type of interim or conservative measures of protection, subject, if needed, to appropriate security, either in the form of a procedural order or a partial award. The current rules do not have an equivalent explicit provision, though nothing in their text could be read as not vesting ICC arbitral tribunals with sufficient powers to take this type of measure. Also, the New Rules authorize ICC arbitral tribunals to take measures in order to protect trade secrets and confidentiality (Art. 20(7)). Such powers will allow arbitrators to properly take care of the parties concerns in this respect.
The 1998 Rules incorporate a new Article 34 excluding the liability of arbitrators, the Court, the ICC, its members or employees and of ICC National Committees for any act or omission in connection with an ICC arbitration. In tune with current developments in the field, this rule is not aimed at excluding mandatory provisions under the applicable law, and particularly those regarding liability in case of bad faith or willful wrongdoing.
4. Conclusions
Recent developments in the field of international commercial arbitration indicate that the next millennium will open with increasing demands from arbitration users to have access to forms of business arbitral case management universal, efficient and flexible enough to satisfy the needs posed by the globalization of the world economy. Such developments also imply the incorporation of new players into the world of international commercial arbitration, be they businessmen, private or public entities, arbitrators or counsel. More than ever before, arbitration systems wishing to meet the changing needs of these heterogeneous array of existing and future players must enhance the universality, efficiency and flexibility of their rules and practices if they are to satisfactorily play the role expected from them. As its long history has proved and its invariable vocation for invigorating change keeps showing, the ICC business arbitration system, now provided with its brand new 1998 Rules, is certainly placed in an excellent position to meet these challenges.
Notes
1. BKMI Industrienlagen GmbH v. Dutco Construction Co (PVT) Ltd., No. 89-28.708Y; Siemens AC v. Dutco Construction Co (PVT) Ltd., No. 89-18.726Y combined, Cour de Cassation I Civil Chamber, January 7, 1992.