Consolidation in International Commercial Arbitration –

the ICC and Swiss Rules

D I S S E R T A T I O N of the University of St. Gallen,

School of Management, Economics, Law, Social Sciences

and International Affairs to obtain the title of

Doctor of Philosophy of Law

submitted by

Lara Michaela Pair

from

Germany

Approved on the application of

Prof. Dr. Ivo Schwander

and

Prof. Dr. Markus Müller-Chen

Dissertation no. 3923

Eleven Publishing / 2011, Den Haag

The University of St. Gallen, School of Management, Economics, Law, Social Sciences and International Affairs hereby consents to the printing of the present dissertation, without hereby expressing any opinion on the views herein expressed. St. Gallen, May 17, 2011

The President: Prof. Dr. Thomas Bieger

III

Zusammenfassung Diese Dissertation befasst sich mit der Zusammenlegung von Schiedsverfahren nach den Regeln der Internationalen Handelskammer (ICC Rules) oder der Schiedsordnung der Schweizer Handelskammern (Swiss Rules) . Zu Beginn erfährt der Leser die praktischen und rechtlichen Gründe, welche solche Konsolidierungsnormen als wünschenswert erscheinen lassen. Ausgehend von einem Schiedsgericht mit Sitz in der Schweiz und einer fiktiven Vollstreckung in Deutschland oder den USA werden anschliessend die Implikationen einer Verfahrenszusammenlegung unter den genannten Schiedsordnungen ausgeleuchtet und analysiert.

Angesprochen wird zuerst, ob und unter welchen Voraussetzungen mit dem Verweis auf eine der beiden Schiedsordnungen auch die Zustimmung zu einer Konsolidierung angenommen werden kann. Anschliessend widmet sich die Dissertation dem Spannungsfeld zwischen Gleichbehandlung respektive Autonomie der Partein und zwingendem lokalen Recht. Schlussendlich wendet sich die Analyse den konsoliderungsbedingten Verfahrensanpassungen zu und schliesst mit einer kritischen Gegenüberstellung der eingangs dargestellten Rechtfertigungsgründe und der im Laufe der Dissertation erarbeiteten Konklusionen.

Die These kommt zum Schluss, dass der durch sie beabsichtigte Effekt nur durch eine massvolle Anwendung der bestehenden Konsolidierungsnormen erreicht werden kann. Voraussetzung hierzu bildet die Aufstellung klarer Voraussetzungen für die Verfahrenszusammenlegung. Nur dann halten die behandelten Normen einer richtlichen Überprüfung stand.

IV

Summary This dissertation treats consolidation of arbitral disputes pending before either the International chamber of Commerce or the Swiss Chambers of Commerce. It is mainly concerned with determining both the logical and the legal justifications for these rules. Using Switzerland as the seat country and Germany and the United States as sample enforcement countries, this analysis will go into detail.

First, the validity of choosing consolidation by reference to these institutional rules will be addressed. Second, the choice of arbitrators will be discussed in light of party equality and party autonomy versus mandatory local laws. Third, procedural adjustments, made necessary by the use of a consolidation procedure, will be analyzed. Fourth, the logical justifications for consolidation will be tested.

This dissertation concludes that only a policy of restraint and a spelling out of criteria for consolidation will serve the purposes of consolidation and withstand judicial scrutiny.

V

Preface of the Author Dedicated to my parents and my partner for their love and everything else. I do not know how to express my devotion better.

To Prof. Ivo Schwander, Prof. Markus Müller-Chen, Prof. emertitus Robert N. Coleman, Prof. David J. Bederman, and Chief Judge Benjamin Studdard III, I extend my deepest respect for their guidance throughout my professional life.

Ulrike Demelius, Céline Hofer, Dr. iur. Christoph Bauer and Pascal Rey have supported me wherever they could - to them my heartfelt gratitude.

I would also like to thank the Swiss Chambers of Commerce, specifically the Chamber of Commerce and Industry of Geneva and Zürich, and the International Chamber of Commerce for access to information and exceeding curtesy.

This analysis includes material up to June 28, 2011.

June, 2011 Lara Michaela Pair

VI

Table of Contents 1 Introduction ................................................................................ 1

1.1 Methodology ........................................................................ 1 1.2 Preface .................................................................................. 2 1.3 Limitations ........................................................................... 6

1.3.1 Institutional Rules .......................................................... 7 1.3.2 Jurisdictions .................................................................... 8 1.3.3 Independent Cases .......................................................... 9 1.3.4 Forcible Consolidation ................................................. 10 1.3.5 Accomplished Consolidation ....................................... 10 1.3.6 No Intertemporal Issues ............................................... 11

1.4 Outlook ............................................................................... 11

2 Purpose of Consolidation ......................................................... 13 2.1 Layman’s View .................................................................. 13 2.2 Definition ........................................................................... 14 2.3 Avoidance of Contradictory Judgments ......................... 15 2.4 Efficiency ........................................................................... 16 2.5 Fairness, Truth and Justice .............................................. 16 2.6 Outlook ............................................................................... 17

3 Consolidation Procedures in Institutional Arbitration ........ 21 3.1 Introduction ....................................................................... 21 3.2 UNCITRAL ....................................................................... 22 3.3 American Arbitration Association .................................. 25 3.4 London Court of International Arbitration ................... 26 3.5 International Chamber of Commerce ............................. 28 3.6 Swiss Chambers of Commerce ........................................ 30 3.7 The Austrian Federal Economic Chamber ..................... 34 3.8 Arbitration Institute of the Stockholm International Chamber of Commerce .............................................................. 35 3.9 Other Institutional Rules .................................................. 37 3.10 Summary .......................................................................... 38

4 ICC and Swiss Rules Consolidation in Detail ........................ 39 4.1 The Provisions – ICC Rules 4(6) or 10 and Swiss Rule 4(1) 39 4.2 Applicable Institutional Rules ......................................... 42 4.3 Arbitrators ......................................................................... 43 4.4 Initiation Procedure .......................................................... 45

VII

4.5 Timing ................................................................................ 46 4.5.1 ICC Rules ..................................................................... 47 4.5.2 Swiss Rules .................................................................. 49

4.6 Seat ..................................................................................... 50 4.7 Language ............................................................................ 52 4.8 Secrecy ............................................................................... 54 4.9 Costs ................................................................................... 55 4.10 Connection Between Cases ............................................. 56

4.10.1 ICC Rules ................................................................... 56 4.10.1.1 Parties ................................................................... 57 4.10.1.2 Legal Relationship ............................................... 59

4.10.2 Swiss Rules ................................................................ 60 4.11 Procedural Adjustments in the Consolidated Case ..... 61 4.12 Summary .......................................................................... 63

5 Consent to Consolidation ......................................................... 65 5.1 Applicable Law .................................................................. 67 5.2 Incompatible Clauses ........................................................ 71 5.3 Swiss Law Regarding Validity of Consent to Consolidation .............................................................................. 76

5.3.1 Principles of Interpretation ........................................... 76 5.3.2 Consolidation Not Prohibited ....................................... 81 5.3.3 Violation of the Principle of Undue Surprise ............... 81 5.3.4 Violation of Article 27 Swiss Civil Code ..................... 82

5.3.4.1 One Contract - Same Parties .................................. 86 5.3.4.2 One Contract – Differing Parties ........................... 87 5.3.4.3 Multiple Contracts – Same Parties ......................... 89 5.3.4.4 Multiple Contracts – Differing Parties ................... 91 5.3.4.5 Interim Conclusion ................................................. 92

5.4 Institutional Approach ..................................................... 93 5.5 Alternative Approach ....................................................... 96

5.5.1 Admissible Claims and Parties ..................................... 98 5.5.1.1 Claims .................................................................... 99 5.5.1.2 Parties ................................................................... 101

5.5.2 Interim Conclusion ..................................................... 105 5.6 Advance Consent and Waiver ........................................ 106

5.6.1 Dutco .......................................................................... 106 5.6.2 Swiss Law .................................................................. 108

5.7 Conclusion ....................................................................... 109

6 Background on Consolidation Decisions .............................. 111

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6.1 Secrecy as Obstacle to Consolidation ............................ 111 6.2 Administrative Effect of Consolidation ........................ 116 6.3 Reasoning for (Initially) Placing Decision with Institutions ................................................................................ 117 6.4 Institutional Decision Makers ........................................ 118

6.4.1 ICC Decision Makers ................................................. 118 6.4.2 Swiss Rules Decision Makers .................................... 119

6.5 Judicial Treatment of Consolidation in Arbitral Cases 120

6.5.1 Consolidation of Arbitrations in Switzerland ............. 122 6.5.2 Consolidation of Arbitrations in Germany ................. 123 6.5.3 Consolidation of Arbitrations in United States .......... 124

7 Challenge of the Decision on Consolidation ......................... 129 7.1 Challenge Before Arbitrators ........................................ 130

7.1.1 Opinion Affirmative of a Challenge Before Arbitrators 131 7.1.2 Opinion Against a Challenge Before Arbitrators ....... 133 7.1.3 Author’s Opinion ........................................................ 133

7.1.3.1 Jurisdictional Character ........................................ 133 7.1.3.2 Institutions Retain Sufficient Control .................. 134 7.1.3.3 Limits to Party Autonomy .................................... 135 7.1.3.4 Procedural Authority Rests With Arbitrators ....... 139 7.1.3.5 Practical Considerations ....................................... 140

7.1.4 Summary .................................................................... 140 7.2 Challenge in the Seat Country ....................................... 141

7.2.1 Institutional Decision Cannot Be Challenged Directly 141 7.2.2 Grounds for Challenge ............................................... 144

7.3 Challenge in the Enforcement Countries ...................... 148 7.3.1 Waiver of Challenge ................................................... 149 7.3.2 Lack of Jurisdiction – Articles V(1)(a) and (c) NYC . 151 7.3.3 Violation of Party Agreement – Article V(1)(d) NYC 153

7.4 Conclusion ....................................................................... 155

8 Arbitrators’ Choices .............................................................. 157 8.1 Involuntary Loss of Mandate ......................................... 157 8.2 Arbitrators With Enlarged Case ................................... 158

9 Arbitrator Selection ............................................................... 165

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9.1 Common Selection Methods ........................................... 166 9.2 Composition of the Consolidated Panel ........................ 169 9.3 Right to Party Arbitrators ............................................. 171 9.4 Impact of Qualifications of Arbitrators ........................ 174 9.5 Implications of Arbitrator Selection for Annulment ... 175

9.5.1 Improper Constitution - Article 190(2)(a) SPILA ...... 176 9.5.2 Lack of Equal Treatment - Article 190(2)(d) SPILA . 179

9.5.2.1 Definition of Violations of Equal Treatment ....... 179 9.5.2.2 Waiver of the Right to Equal Treatment .............. 180

9.5.3 Violation of Public Policy - Article 190(2)(e) SPILA 185 9.5.4 Interim Conclusion ..................................................... 186

9.6 Implications for Refusal of Recognition and Enforcement 187

9.6.1 Improper Constitution - Article V(1)(d) NYC ........... 188 9.6.2 Public Policy - Article V(2)(b) NYC ......................... 191

9.6.2.1 Applicable Standard ............................................. 191 9.6.2.2 Content of the Provision ...................................... 193

9.6.3 Summary .................................................................... 197 9.7 Solutions ........................................................................... 197

10 Aside: Duty to Create an Enforceable Award .................. 201

11 Procedural Adjustments Required by the Lex Fori .......... 205 11.1 Impartiality – Article 190(2)(a) SPILA ....................... 206 11.2 Jurisdiction – Article 190(2)(b) SPILA ....................... 208 11.3 Incongruence – Article 190(2)(c) SPILA .................... 210 11.4 Equality and the Right to be Heard - Article 190(2)(d) SPILA ........................................................................................ 210

11.4.1 File Transfer and Confidentiality ............................. 213 11.4.2 Procedural Orders ..................................................... 214 11.4.3 Oral Testimony and Hearings .................................. 215

11.5 Public Policy – Article 190(2)(e) SPILA ..................... 217 11.6 Summary ........................................................................ 218

12 Procedural Adjustments Required by the New York Convention .................................................................................... 219

12.1 Introduction ................................................................... 219 12.2 Agreed Procedure - Article V(1)(d) NYC .................. 222 12.3 Due Process and Public Policy - Articles V(1)(b) and V(2)(b) NYC .............................................................................. 223

12.3.1 Overview .................................................................. 223 12.3.2 Content of Due Process and Public Policy ............... 225

X

12.3.3 Causal Nexus ............................................................ 228 12.3.4 Implications for Procedure ....................................... 229

12.3.4.1 Challenge of Arbitrators ..................................... 229 12.3.4.2 File Transfer and Confidentiality ....................... 230 12.3.4.3 Procedural Orders ............................................... 230 12.3.4.4 Oral Proceedings ................................................ 231

12.4 Summary ........................................................................ 232

13 Usefulness of Consolidation ................................................ 233 13.1 Avoidance of Contradictory Judgments ..................... 233 13.2 Efficiency ....................................................................... 237

13.2.1 Time ......................................................................... 237 13.2.2 Costs ......................................................................... 240

13.2.2.1 Allocation of Costs ............................................. 242 13.2.2.2 Total Cost ........................................................... 243

13.2.3 Conclusion on Efficiency ......................................... 245 13.3 Fairness, Truth and Justice .......................................... 246 13.4 Alternatives to Consolidation ...................................... 247 13.5 Summary ........................................................................ 249

14 Proposed Solutions ............................................................... 251 14.1 Consolidation Requirements ........................................ 251 14.2 Arbitrator Selection ...................................................... 253 14.3 Procedural Adjustments ............................................... 253 14.4 Conclusion ..................................................................... 254

XI

Consolidation is the act or process of uniting several independent proceedings which are pending or initiated into one single case.1

1 Philippe Gilliéron and Luc Pittet, “Article 4 - Consolidation of Arbitral

Proceedings (Joinder), Participation of Third Parties,” in Swiss Rules of International Arbitration: Commentary, ed. Tobias Zuberbuhler, Klaus Müller, and Philipp Habegger (Zurich, Basel, Geneva: Kluwer Law International, 2005), note 3.

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Table of Abbreviations AAA International Rules

International Dispute Resolution Procedures of the American Arbitration Association

ABA American Bar Association ADR Alternative Dispute Resolution AG Aktiengesellschaft art. Article ASA Association suisse de l’arbitrage

AWD Ausenwirtschaftsdienst des Betriebsberaters

BayObLG Bayrisches Oberlandesgericht

BGH Bundesgerichtshof (German Federal Court)

CC Swiss Civil Code of 10 December 1907 (as amended; SR 210)

CEPANI Rules

International Arbitration Rules of the Centre Belge d'Arbitrage et de Médiation

Chambers Chambers of Commerce and Industry of Basel, Berne, Geneva, Ticino, Vaud and Zurich

CHF Swiss Franc Cir. Circuit

CO

Swiss Federal Law of 30 March 1911 concerning the amendment of the Swiss Civil Code (Part 5: Law of Obligations)(as amended; SR 220)

Co. Company

Code of Ethics for Arbitrators

Code of Ethics for Arbitrators in Commercial Disputes (2004) (adopted by the AAA and ABA in 2004)

Concordat or Interncantonal Concordat

Swiss Intercantonal Concordat on Arbitration of 27 March 1969 (SR 279)

Corp. Corporation D. District D.C. District of Columbia Del. Delaware DIS German Arbitration Institution E.D. Eastern District

XIII

e.g. exemplum gratia

ECHR European Convention on Human Rights of 4 November 1950

ECtHR European Court of Human Rights ed(s). Edition, editor(s) et al. Et alibi

et seq(q). Et sequence (one q denotes one page, two q several pages)

etc. Et cetera EU European Union F.2d Federal Reporter 2nd F.3d Federal Reporter 3rd F.Supp Federal Supplement

FAA Federal Arbitration Act (United Stated)

Fed. R. Civ. Pro. Federal Rules of Civil Procedure (United States)

Ga. Georgia, USA GCCP German Code of Civil Procedure

GFCD

German Federal Court Decision (decisions of the highest civil court of Germany, not to be confused with the Supreme Court decisions, civil cases often cited in ist official reporter BGHZ)

GmbH Gesellschaft mit beschränkter Haftung

i.e. Id est IBA International Bar Association ibid. Ibidem

ICC Court ICC International Court of Arbitration

ICC Internal Rules

International Rules of the ICC Court (Appendix II to the Rules)

ICC or CCI International Chamber of Commerce

ICC Rules ICC Rules of Arbitration effective as from 1 January 1998

ICC Statutes Statutes of the ICC Court (Appendix 1 to the Rules)

ICCA International Council for Commercial Arbitration

ICSID International Centre for Settlement of Investment Disputes

ILA International Law Association

XIV

Ill. Illinois Inc. Incorporated Institutional arbitration

Institutional international commercial arbitration

IPRG See SPILA

L.M.A.A. London Maritime Arbitrators Association

LCIA London Court of International Arbitration

LCIA Rules LCIA Arbitration Rules in force as of 1 January 1998

LDIP See SPILA lit. Litera LLC Limited Liability Company Ltd. Limited Md. Maryland N.D. Northern District N.Y. or NY New York no. Number

NYC or New York Convention

United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958

OLG Oberlandesgericht

Panel Arbitral Panel, whether consisting of one or more members, deciding a single case

para. Paragraph Provider organizations

Institutions providing institutional arbitration

Publ. Publishers s. Sentence S.A. Société Anonyme S.D. Southern District

SCC Institute Arbitration Institute of the Stockholm Chamber of Commerce

SCC Rules

International Commercial Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce

SCCP Swiss Code of Civil Procedure of 19 December 2008, in force since 1 January 2011 (SR

XV

sec. Section

SFCD

Swiss Federal Court Decision (decisions of the Highest Court in Switzerland); in German abbreviated BGE

Special Committee Subcommittee under the Swiss Rules

SPILA Swiss Private International Law Act of 18 December 1987 (SR 291)

Swiss Chambers Swiss Chambers' Court of Arbitration and Mediation

Swiss Internal Rules

Administration of the Rules by the Swiss Chamber of Commerce and Industry, Memorandum of 14 November 2006

Swiss Rules Rules of the Swiss Chambers' Court of Arbitration and Mediation in force as of January 1, 2004

U.S. or United States United States of America

UNCITRAL Model Law

UNCITRAL Model Law on International Commercial Arbitration (1985) as amended in 2006

UNICITRAL United Nations Commission on International Trade Law

UNICITRAL Rules

UNICITRAL Arbitration Rules effective as from 15 December 1976 as revised in 2010

USC United States Code v. Versus

VIAC Vienna International Arbitral Centre of the Austrian Federal Economic Chamber

WL Westlaw ZH Zurich, Switzerland

ZR Internal Designation for the German Federal Court case Numbers

Zurich Rules Zurich Chamber of Commerce International Arbitration Rules effective as of 1 January 1989

XVI

Table of Authorities

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GFCD of February 1 2001 - III ZR 332/99 (German Federal Court 2001).

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Laminoirs-Trefilieries-Cableries de Lens v. Southwire Co. 484 F.Supp 1063 (N.D. Ga., USA 1980).

LIV

Marino v. Writers Guild of Am., 484 F.Supp. 1480 (9th Cir., USA 1993). Moses H. Cone Mem’l Hops. v. Mercury Constr., 460 U.S. 1 (United States Supreme Court 1983). OLG Celle of 2001, XXXII Yearbook of Commercial Arbitration 303 (Regional Court Celle, Germany 2007). OLG Celle of 31 May 2007 - 8 Sch 06/06, XXXIII Yearbook of Commercial Arbitration 524 (Regional Court Celle, Germany 2008). OLG Dresden of 20 October 1998 (Regional Court Dresden, Germany 1998). OLG Frankfurt a.M. of 24 November 2005 - 26 Sch 13/05 (2005). OLG Hamburg 3 April 1975 AWD 1975, 432 = Yearbook II (1977), 241 (Regional Court Hamburg, Germany 1975). OLG Karlsruhe of 5 June 2007 (Regional Court Karlsruhe, Germany 2007). OLG Köln of 16 December 1992, 1993 Recht der Internationalen Wirtschaft 499 (Regional Court Cologne, Germany 1992). OLG Stuttgart of 14 October 2003 (Regional Court Stuttgart, Germany 2003). Open Seas Maritimes Inc. v. R. Pyarelal International Pvt. Ltd., 101(2) Bombay Law Review 12 (Bombay High Court, India 1999). Ore & Chem. Corp. v. Stinnes Interoil, Inc., 606 F.Supp 1510 (S.D.N.Y., USA 1985). Oxford Shipping Co. v. Nippon Yusen Kaisha, 3 All England Reporter 835 (Queen’s Bench, England 1984). P.T. Reasuransi Umum Indonesia v. Evanston Ins. Co. 1992 WL 400733 (S.D.N.Y., USA 1992). Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier, 508 F.2d 969 (2nd Cir., USA 1974).

LV

Pemex-Refinancion v. Tblisi 2004 US Dist. LEXIS 17478 (S.D.N.Y., USA 2004).

SFCD 107 Ia 155 (Swiss Federal Court 1981).

SFCD 110 Ia 493 (Swiss Federal Court 1976).

SFCD 110 Ia 59 (Swiss Federal Court 1984).

SFCD 111 Ia 72 (Swiss Federal Court 1985).

SFCD 115 II 294 (Swiss Federal Court 1989).

SFCD 116 Ia 56 (Swiss Federal Court 1990).

SFCD 116 II 373 (Swiss Federal Court 1990).

SFCD 116 II 634 (Swiss Federal Court 1990).

SFCD 116 II 639 (Swiss Federal Court 1990).

SFCD 116 II 80 (Swiss Federal Court 1990). SFCD 117 Ia 166 (Swiss Federal Court 1991).

SFCD 117 II 346 346 (Swiss Federal Court 1991).

SFCD 118 IA 28 (Swiss Federal Court 1992).

SFCD 118 II 193 (Swiss Federal Court 1992).

SFCD 118 II 359 (Swiss Federal Court 1992).

SFCD 118 II 359, 102 ASA Bulletin 359 (Swiss Federal Court 1994).

LVI

SFCD 119 II 271 ASA Bulletin 407 - 408 (Swiss Federal Court 1993).

SFCD 119 II 386 386 (Swiss Federal Court 1993).

SFCD 120 II 155, 415 ASA Bulletin (Swiss Federal Court 1994).

SFCD 121 III 495 (Swiss Federal Court 1995).

SFCD 125 III 305 (Swiss Federal Court 1999).

SFCD 126 III 249 (Swiss Federal Court 2000).

SFCD 127 III 279 (Swiss Federal Court 2001).

SFCD 127 III 576 (Swiss Federal Court 2001).

SFCD 128 III 330 (Swiss Federal Court 2002).

SFCD 128 III 50 (Swiss Federal Court 2001).

SFCD 129 III 271 (Swiss Federal Court 2002).

SFCD 129 III 445 (Swiss Federal Court 2003).

SFCD 129 III 675 (Swiss Federal Court 2003).

SFCD 129 III 727, 22 ASA Bulletin 364 (Swiss Federal Court 2004).

SFCD 130 II 66 (Swiss Federal Court 2003).

SFCD 130 III 125 (Swiss Federal Court 2003).

SFCD 130 III 35 (Swiss Federal Court 2003).

LVII

SFCD 130 III 66 (Swiss Federal Court 2003).

SFCD 130 III 76 (Swiss Federal Court 2003).

SFCD 132 III 389 (Swiss Federal Court 2006).

SFCD 133 III 61 (Swiss Federal Court 2006).

SFCD 134 III 260 (Swiss Federal Court 2008).

SFCD 134 III 565 (Swiss Federal Court 2008).

SFCD 26 II 758 (Swiss Federal Court 1990).

SFCD 31 II 688 (Swiss Federal Court 1905).

SFCD 84 I 39 (Swiss Federal Court 1958). SFCD 98 Ia 337 (Swiss Federal Court 1972). SFCD of 10 December 2002 ASA 591 (Swiss Federal Court 2002). SFCD of 11 January 2010 - 4A_258/2009 (Swiss Federal Court 2010). SFCD of 11 May 1992 ASA Bulletin 390 (Swiss Federal Court 1992). SFCD of 11 November 2002 ASA Bulletin 378 (Swiss Federal Court 2002). SFCD of 13 April 2010 - 4A_490/2009 (Swiss Federal Court 2010). SFCD of 14 December 2004 - 4P.208/2004 (Swiss Federal Court 2004). SFCD of 14 June 1990, 12 ASA Bulletin 226 - 229 (Swiss Federal Court 1990).

LVIII

SFCD of 17 February 2000 ASA Bulletin 783 (Swiss Federal Court 2000). SFCD of 17 February 2002 ASA Bulletin 589 (Swiss Federal Court 2002). SFCD of 19 August 2008 - 4A_128/2008 (Swiss Federal Court 2008). SFCD of 19 February 2009 - 4A_539/2008 (Swiss Federal Court 2009). SFCD of 19 May 2003 - 4C.40/2003 (Swiss Federal Court 2003). SFCD of 23 June 2009 - 4A_62/2009 (Swiss Federal Court 2009). SFCD of 23 September 2008 - 4A_178/2008 (Swiss Federal Court 2008). SFCD of 26 November 2002 ASA Bulletin 413 (Swiss Federal Court 2002).

SFCD of 29 February 2008 - 4A.452/2007 (Swiss Federal Court 2008).

SFCD of 29 October 2008 (Swiss Federal Court 2008).

SFCD of 29 October 2008 (Swiss Federal Court 2008).

SFCD of 3 May 2010 - 4A_456/2009 (Swiss Federal Court 2010).

SFCD of 30 June 1994 - 4P.168/1999 (Swiss Federal Court 1994).

SFCD of 31 October 2005 - 4P.198/2005, 2006/2 ASA Bulletin 339 (Swiss Federal Court 2005).

SFCD of 4 August 2006 - 4P.105/2006 (Swiss Federal Court 2006).

LIX

SFCD of 5 December 2008 - 4A_376/2008 (Swiss Federal Court 2008).

SFCD of 6 June 2007 - 4A_18/2007 (Swiss Federal Court 2007).

SFCD of 7 January 2004 ASA Bulletin (Swiss Federal Court 2004).

SFCD of 9 June 1998 ASA Bulletin 660 (Swiss Federal Court 1998).

SFCD of 9 June 2009 - Urteil 4A_108/2009 (Swiss Federal Court 2009).

Shaw’s Supermarkets, Inc. v. United Food and Comm. Workers Union, 321 F.3d 251 (1st Cir., USA 2003).

Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction Company, 1992 No. 3 Arb. Rev. 470 (Cour de Cassation, France 1992).

Société Cubic Defense Systems Inc. v. Chambre de commerce internationale, 2001 Rev.arb. No. 3 511 (Cour de Cassation, Civ. 1e 2001).

Soviet Danube Steam Navigation Co. v. Travel Agency, 35 Recht der Internationalen Wirtschaft 911 (Regional Court Frankfurt, Germany 1989).

Suovaniemi and Others v. Finland, Admissibility Decision of 23 February 1999, No. 31737/96 (European Court of Human Rights 1999).

Szuts v. Dean Witter Reynolds, Inc., 931 F.2d 830 (11th Cir., USA 1991).

Thomson-CSF, S.A. v. Am. Arbitration Association, 64 F.3d 773 (2nd Cir., USA 1995).

LX

United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574 (United States Supreme Court, USA 1960).

Volt Info. Sciences, Inc. v. Bd. of Trustees, 489 U.S. 468 (United States Supreme Court 1989).

Weyerhaeuser Co. v. Western Seas Shipping Co., 743 F.2d 635 (9th Cir., USA 1984).

Websites http://www.jurisint.org/doc/html/reg/en/2000/2000jiregen32.html.

http://cn.cietac.org/english/rules/rules.htm.

http://www.acica.org.au/arbitration_rules.html#_Toc132016249.

http://www.adr.org/sp.asp?id=33994.

http://www.cpradr.org/Portals/0/finalProvider.pdf.

http://www.dis-arb.de/download/disscho98_05_eng_eur.pdf.

http://www.hkiac.org/documents/Arbitration/Arbitrationpercent20Rules/HKIAC%20Procedures%20for%20International%20Arbitration.pdf.

http://www.iccwbo.org/court/arbitration/id5531/index.html.

http://www.iccwbo.org/policy/arbitration/index.html?id=28796.

http://www.jurisint.org/doc/html/reg/en/2000/2000jiregen32.html.

http://www.jurisint.org/doc/html/reg/en/2003/2003jiregen38.html

http://www.lcia-arbitration.com/.

LXI

http://www.opsi.gov.uk/acts/acts1996/ukpga_19960023_en_1.

http://www.sccinstitute.com/hem-3/statistik-2.aspx

http://www.siac.org.sg/Pdf/Rules2010.pdf.

http://www.uncitral.org/uncitral/en/commission/working_groups/2Arbitration.html

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration.html

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html

http:/www.camex.com.mx/nl35-cont.pdf

https://www.sccam.org/sa/en/organisation.php.

www.uncitral.org.

1

1 Introduction Consolidation is intended to make arbitration easier in many ways. This analysis will show that this intention can be turned into reality without sacrificing the integrity of the arbitral process, although not in every case.

1.1 Methodology

Multi-party arbitration is becoming more and more common and there are many opinions on the subject. Consolidation has received less attention, maybe because it occurs not only between multiple parties, maybe because it is not so common. There is no comprehensive academic work dealing with consolidation in a detailed and fundamental fashion. This may be due partly to the vastness of topics touched by this subject and by the many different implications in various jurisdictions. It is probably impossible to create a work that is all-inclusive. However, this author will attempt to fill a part of the gap with reference to the ICC and Swiss Rules.

In order to be able to do so, this author employs several methods. First, as most legal theses do, this author uses comparative, deductive and inductive reasoning. To this end, this author will strongly rely on scholarly writing and case law. Second, this author has chosen and was afforded the possibility to conduct several interviews with practitioners and administrators of the ICC and Swiss Rules with relation to consolidation as practiced under these rules. Third, consolidation is very complex, so that this author makes use of examples with multiple variants. The variants include the parties, the contracts, the number of claims and cases.

2

• Parties are called Elma Inc., Fido Co., Guido Ltd. and Halo S.A.2 • Contracts are called contract X and Y. • Case names are case A, B and C. • Claims are numbered 1 through 10.

The citation style used herein conforms to the Chicago Manual of Style with full bibliography.3 Emphasis will be made by use of underlines. Italics indicate words in a foreign language. Italics in quotation marks are direct quotes. Block quotes are indented.

American English is used throughout, unless direct quotes are in the English style. This work will be referred to as this analysis. The first level of the outline is referred to as chapter. The second level is called a subchapter. The third level is named section and the fourth level subsection. This author hopes the esteemed reader will find this analysis instructive.

1.2 Preface

We live in a complicated world. Everything is interconnected. Little is left of the simple way of doing business. Life becomes more complicated and so do the disputes arising out of life.

2 Any similarities with existing companies are purely coincidental. 3 University of Chicago Press, The Chicago Manual of Style by University

(Www.Bnpublishing.Com, 2007). The Chicago Manual of Style (abbreviated in writing as CMS or CMOS, or verbally as Chicago) is a style guide for American English published since 1906 by the University of Chicago Press. Its 16 editions have prescribed writing and citation styles widely used in publishing. It is considered the de facto guide for American English style, grammar, and punctuation. The CMS deals with aspects of editorial practice, from American English grammar and usage to document preparation.

3

Once the overwhelming majority of disputes were conducted between two parties;4 today the percentage of multi-party arbitrations is growing.5 Similarly, cases touching on consolidation issues have increased in recent years.6 Consequently, arbitration has evolved.

Moving with the times, dispute resolution procedures must accommodate more complicated set-ups. Dispute resolution methods are mostly tailored to two-party disputes.7 Modern

4 Daniel Girsberger and Nathalie Voser, International Arbitration in

Switzerland (Zurich: Schulthess, 2008), note 362; Jens-Peter Lachmann, Handbuch für die Schiedsgerichtspraxis, 3rd ed. (Cologne: O. Schmidt, 2008), note 2801; Nathalie Voser, “Multi-party Disputes and Joinder of Third Parties,” in 50 Years of the New York Convention, ed. Albert Jan Van Den Berg, International Council for Commercial Arbitration Congress Series 14 (Deventer: Kluwer, 2009), 351.

5 Gary Born, International Commercial Arbitration Volume II, 3rd ed. (Kluwer Law International, 2009), 2069 suggesting that one third of ICC arbitrations alone are multi-party; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2802 estimating an average of 20 percent of multi-party arbitrations in the ICC alone; Voser, “Multi-party Disputes and Joinder of Third Parties,” 343 suggesting 40 percent of international commercial arbitration cases involve more than two parties; Anne Marie Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration Perspective,” in Multiple Party Actions in International Arbitration, ed. Permanent Court of Arbitration (New York: Oxford University Press, 2009), note 6.02 suggesting In 2007, 31.1 percent of ICC cases were multi-party; Frank-Bernd Weigand and Antje Baumann, “Introduction,” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), note 1.284 referring to each year multi-party arbitration represents about 20 percent of ICC cases.

6 Franz Kellerhals, “Highlights from the Arbitration Committee,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg (Basel: Swiss Chambers’ Court of Arbitration and Mediation, 2009), 30; Simon Greenberg, José Ricardo Feris, and Christian Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience,” in Dossier VII - Multiparty Arbitration (Paris: ICC Publishing S.A., 2010), 164, stating that in the ICC there were 24 cases involving consolidation alone between 1 January 2007 and 31 December 2009.

7 Yves Derains, “The Limits of the Arbitration Agreement in Contracts Involving More Than Two Parties,” in Complex Arbitrations - Special Supplement of the ICC Bulletin (Paris: International Chamber of Commerce, 2003), 31; Joachim G. Frick, Arbitration in Complex International Contracts (Kluwer Law International, 2001), 229; Daniel Girsberger, “Pitfalls in Swiss Arbitration Agreements,” in New Developments in International Commercial Arbitration 2008, ed. Christoph Müller and Antonio Rigozzi (Zurich: Schulthess, 2008), 101; Ricardo Ugarte and Thomas Bevilacqua, “Ensuring Party Equality in the Process of Designating Arbitrators in Multiparty Arbitration: An Update on the Governing Provisions,” Journal of International Arbitration 27, no. 1 (2010): 9; Richard Bamforth and Katerina Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” ASA

4

disputes often involve more than just two parties (one claimant and one respondent) and many more than one or two issues.8

Multi-party situations were and still are difficult to accommodate in arbitration.9 Consolidation or joinder10 in international arbitration are far less common and much more difficult to achieve than in national court litigation.11 In order to achieve accommodation, arbitration needed to be adapted. In the search for appropriate tools, arbitration looked to its big brother litigation. Consolidation was effective as a concept in litigation to cope with the altered life in the courtroom, so its application was also suggested in the context of arbitration. Consolidation in arbitration is comparable to consolidation in civil litigation to an extent,12 but consolidation and arbitration are not necessarily compatible.13

The difference between arbitration and litigation makes the concept of consolidation hard to transplant. At its core, arbitration is always based on party agreement.14 Litigation is founded on the universal claim of the state to all (judicial)

Bulletin 27, no. 1 (2009): 8; Burkhard Hess, “Cross-border Collective Litigation and the Regulation Brussels I,” Praxis des Internationalen Privat- und Verfahrensrechts 2010, no. 2 (2010): 116.

8 Carrie J. Menkel-Meadow, Lela Porter Love, and Andrea Kupfer Schneider, Dispute Resolution: Beyond the Adversary Model (Aspen Publishers, 2004), 679; Patricia Izquierdo Piña, “Consolidation of Arbitral Proceedings”, undated, 1, www.camex.com.mx/nl35-cont.pdf.

9 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2801. 10 Consolidation is sometimes referred to as joinder as well. In this context

joinder refers to joining parties or claims to an existing case, whereas consolidation refers to joining two existing cases.

11 Izquierdo Piña, “Consolidation of Arbitral Proceedings”; Voser, “Multi-party Disputes and Joinder of Third Parties,” 350 et seq. Unlike in state court litigation, it is not possible to impose proceedings on the parties and third parties unilaterally.

12 Philip Leboulanger, “Multi-Contract Arbitration,” Journal of International Arbitration 13, no. 4 (1996): 77.

13 Antonio Offenhausen, Mehrparteienschiedsgerichtsverfahren bei der Beteiligung einer Gesellschaft Bürgerlichen Rechts (Frankfurt am Main: Lang, 2007), 78.

14 Joseph Lookofsky and Ketilbjørn Hertz, Transnational Litigation and Commercial Arbitration an Analysis of American, European and International Law, 2nd ed., 2nd printing ed. (Copenhagen: DJØF, 2004), 770.

5

authority in its territory.15 Party agreement gives legitimacy to arbitration and limits it at the same time. Where party agreement ends, governmental authority takes over seamlessly. While consolidation can be highly useful and efficient, inherent differences between litigation and arbitration pose certain challenges, specifically concerning jurisdiction and the choice of arbitrators.16 These differences must be taken into account when applying the concept of consolidation in arbitration.

How these challenges ought to be addressed, or whether consolidation should be part of arbitral proceedings at all, is not clear.17 A majority of institutions have not included consolidation in their rules.18 Even though arbitration may show a tendency toward harmonization,19 institutions seem reluctant to include consolidation.20 Among these rules, details concerning procedure and application of consolidation vary.21

This variation may be due to the need of arbitral institutions to distinguish themselves in order to attract customers.22 This author believes that different approaches are chosen in order to

15 Michael Schweitzer, Staatsrecht III: Staatsrecht, Völkerrecht, Europarecht,

10th ed. (Heidelberg: C.F. Müller, 2010), note 574. 16 Born, International Commercial Arbitration Volume II, 2069. 17 This will be address infra, in chapter 13. 18 See infra chapter 3. 19 Bernhard Berger and Franz Kellerhals, Internationale und interne

Schiedsgerichtsbarkeit in der Schweiz (Bern: Stämpfli, 2006), note 14 This trend may be attributed to the influence of the UNCITRAL Model Law on Arbitration and the UNCITRAL Model Arbitration Rules, the issue of consolidation in arbitration.

20 Andrea Meier, Einbezug Dritter vor internationalen Schiedsgerichten (Schulthess Juristische Medien, 2007), 225; Leboulanger, “Multi-Contract Arbitration,” 64.

21 Maybe because the problems associated with the transfer of a concept from litigation have not yet been resolved satisfactorily by any option offered so far and experimentation will continue for some time, maybe because institutions must be able to distinguish themselves in comparison to competitors.

22 James H. Carter, “AAA & International ADR: Balancing Traditional Methods and Innovation,” in Handbook on International Arbitration and ADR, ed. Thomas E. Carbonneau (Huntington, N.Y: JurisNet, 2006), 33 Arbitration associations need to distinguish themselves to attract business; Russell Thirgood, “International Arbitration: The Justice Business,” Journal of International Arbitration 21, no. 4 (2004): 341 - 354.

6

accommodate different views of the balance between efficiency and procedural justice. Efficiency cannot outweigh a lack of procedural justice in enforcement proceedings.23

1.3 Limitations

The scope of this analysis is limited to in-depth examination of two consolidation provisions in institutional rules and three jurisdictions in which the enforceability of the rules will be tested. The choice of institutional rules, notably the ICC and Swiss Rules, and jurisdictions, notably Switzerland, Germany and the USA, is based on criteria of diversity and practical use for the arbitration community.

During the publication process, the institutional rules specifically treaded in this analysis have undergone revision.

The ICC adopted a revision, which enters into force after the publication of this work. The launch of the new rules is in September 2011. The new version is the result of two years of active work within the ICC Commission on Arbitration, with 620 dispute resolution specialists from 90 countries. Commission members and representatives of the Secretariat of the ICC Court have drawn on their own experience and feedback from a task force to draft the new Rules. The task force was composed of over 175 members from 41 different countries. To accommodate for the changes, this analysis will present the new rule on consolidation along with the one in effect to date.

23 Jens Kleinschmidt, “Die Widerklage gegen einen Dritten im

Schiedsverfahren,” Neue Zeitschrift für Schiedsverfahren 4, no. 3 (2006): 146; Julian D. M. Lew, Loukas A. Mistelis, and Stefan Kröll, Comparative International Commercial Arbitration (The Hague: Kluwer Law International, 2003), notes 16-96.

7

The Swiss Chambers are currently debating a revision. No final version is approved to date. Nevertheless, with the friendly assistance of the task force, this author will introduce the proposed changes alongside the current version.

Further limitations are defined infra.

1.3.1 Institutional Rules

This analysis treats institutional24 arbitration. Consolidation of ad hoc arbitration does not have the same implications as institutional consolidation, so that the UNCITRAL Model Rules are discussed only briefly. Of the surveyed rules on international commercial arbitration, few institutions contain consolidation provisions. Of these, one institution, the VIAC, repeats the principle that consensual consolidation is permissible.25 The SCC Rules, which are also not discussed in detail, provide for a broader time spectrum, but the same approach to multiple parties as the ICC. It falls in its scope between the ICC and the Swiss Rules.26 The CEPANI Rules,27 which are not discussed in more detail, contain a consolidation clause that falls in its scope of application and guidance provided for consolidation between the remaining two and were therefore similarly disregarded for a detailed analysis. The remaining two, the ICC and Swiss Rules, are chosen for an in-depth analysis. Treating all institutions does not add value to this analysis and surpasses its scope.28

24 Institutional arbitration implies the existence of a permanent organization that

administers and not only promotes arbitration. W. Laurence Craig, William W. Park, and Jan Paulsson, International Chamber of Commerce Arbitration, 3rd ed. (Dobbs Ferry, NY: Oceana Publications, 2000), 40.

25 See infra subchapter 3.6. 26 See infra subchapter 3.7. 27 See infra subchapter 3.8. 28 This author encourages readers to study these rules and analyze them, as this

would close another gap.

8

The ICC Rules remain on the conservative end of the spectrum and are commonly used, with more than a decade of case law since the consolidation rule’s inception to draw upon. The Swiss Rules entered into force on 1 January 2004. They contain one of the more recent attempts to include a provision on consolidation. While not the most recent attempt providing for consolidation in the context of international arbitral institutions, they are still the broadest in existence and may thus serve as providing an outer edge for this analysis.29

1.3.2 Jurisdictions

The chosen jurisdictions, notably Switzerland, Germany and the USA, represent three different approaches to international commercial arbitration.

Switzerland was chosen as a frequent seat country. It did not fashion the international arbitration law after the UNCITRAL Model Law.30 Switzerland will serve as fictitious seat country and its lex fori as applicable procedural law.31

Germany was chosen as an enforcement country for the fictitious consolidated Swiss award.32 It represents countries

29 Richard Bamforth and Katerina Maidment, “‘All join in’ or Not? How Well

Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” ASA Bulletin 27, no. 1 (2009): 8; Wolfgang Peter, “Some Observations on the Swiss Rules of International Arbitration,” in The Swiss Rules of International Arbitration, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki, vol. 22, ASA Special Series (presented at the ASA Swiss Arbitration Association conference of January 23, 2004 in Zürich, Basel: Swiss Chambers’ Court of Arbitration and Mediation, 2004), 1.

30 Peter, “Some Observations on the Swiss Rules of International Arbitration,” 1. 31 This author is aware that the fact of being the seat country does not

necessarily indicate, that the lex fori is also the applicable law to the procedure of the arbitration. However, it is often implied that the seat will provide the applicable procedural law. In the absence of a concrete contract, this choice is reasonable. For more detail see infra subchapter 5.1.

32 The seat of the arbitration defines its nationality. Patricia Nacimiento, “Konfliktlösung nach allgemeinen Schiedsordnungen, insbesondere ICC, AAA, und DIS,” Zeitschrift für Urheber- und Medienrecht 11 (2004): 788.

9

that have enacted a law on international commercial arbitration based on the UNCITRAL Model law.33 As UNCITRAL Model law jurisdiction, the comments concerning Germany may thus be useful in many jurisdictions that also enacted the UNCITRAL Model law.

The U.S. will serve as second enforcement country, to provide a broader analysis. It was chosen as representative for the Common Law approach to international commercial arbitration. In addition, U.S. parties are frequent, so that enforcement will frequently be attempted in the USA. Further, it has long tradition of international commercial arbitration.

All countries are parties to the NYC, so that it applies between them.

1.3.3 Independent Cases

This analysis treats only consolidation. This means this analysis treats the unification of two independent cases into one single case. The assumption of the reader must always be that (at least) two procedurally independent cases have been filed. The concept analyzed here is much narrower than what is usually treated under the heading of complex arbitration. Complex arbitration encompasses consolidation, but it also includes addition of claims and parties where only one case exists,34 multi-party one case arbitration and others.35

33 Jean-François Poudret and Sébastien Besson, Comparative Law of

International Arbitration, 2nd ed. (London: Thomson/Sweet & Maxwell, 2007), note 42 et seq.

34 The distinction being that the latter does not require a second case to be filed. 35 For more information on alternative procedural tools see infra subchapter

14.4.

10

1.3.4 Forcible Consolidation

Consolidation as discussed herein only refers to those proceedings to which at least one participant objects at the time of consolidation. This means a consolidation which is not achieved by the consent of all parties to the unification of two or more specific cases at the time of the disputes. There is no doubt that in arbitration the parties may consolidate their cases if they agree to do so after the dispute has arisen.36

This analysis further does not treat cases of consolidation, in which parties unquestionably did not agree at any time to consolidate. Consolidated arbitration without express or implied consent of parties is impermissible.37

Whether agreement can be made at a time prior to the dispute arising is discussed infra in this analysis in chapter 5. This analysis only treats forcible consolidation.

1.3.5 Accomplished Consolidation

This analysis mainly treats cases in which consolidation is granted. While mention is made of certain issues relating to

36 Brian King, “Consistency of Awards in Cases of Parallel Proceedings

Concerning Related Subject Matters,” in Towards a Uniform International Arbitration Law? YAP Seminars, Paris - March 28, 2003, Geneva - March 26, 2004, ed. Emmanuel Gaillard et al. (Huntington, NY: Juris Publishing, 2005), 293 and 316; Wolfgang Hahnkamper, “Der Ablauf von ad-hoc Schiedsverfahren - Teil I: Die ersten Schritte im Verfahren,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), note 75; Andreas Reiner and Werner Jahnel, “ICC-Schiedsgerichtsordnung,” in Institutionelle Schiedsgerichtsbarkeit Kommentar, ed. Rolf A. Schütze, 2nd ed. (Cologne: Carl Heymanns Verlag, 2011), note 20; Michael Pryles and Jeffrey Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” in 50 Years of the New York Convention, ICCA International Arbitration Conference (Alphen aan den Rijn: Kluwer Law International, 2009), 438.

37 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 181.

11

consolidation being denied,38 the vast majority of issues lie with consolidated cases.

1.3.6 No Intertemporal Issues

This analysis does not treat potential intertemporal issues, such as those created by dynamic references concerning provisions not previously contained in the rules. This could be an issue in the Swiss Rules, as previously only the Zurich Rules39 contained provisions on consolidation.

1.4 Outlook

Initially, this analysis will focus on the general purposes of consolidation, only outlining their content. In this fashion the esteemed reader can retain the background for consolidation while being immersed in this analysis. Following this brief outline, this author will give an overview of existing institutional rules with regard to consolidation in chapter 3, before focusing on the ICC and Swiss Rules in detail in chapter 4.

The detailed examination will highlight the implications of consolidation and how, if at all, these implications are addressed by these institutions. This examination will show that many areas are not addressed by the rules. This author will therefore move on to examine the institutional rules in light of the effect these rules will have in an enforcement proceeding40 in the three countries selected.

38 See infra section 8.2.2, referring to SFCD of 11 May 1992 ASA Bulletin 390

(Swiss Federal Court 1992). 39 Available at

http://www.jurisint.org/doc/html/reg/en/2000/2000jiregen32.html. 40 Enforcement is referred to as both domestic enforcement or its counterpart

annulment and international enforcement in recognition and enforcement proceedings.

12

Validity of the consent will form the starting point of the examination concerning enforceability followed by a detailed look into the appointment procedure and the adjustment of the arbitral procedure of the consolidated case. Specifically, this analysis will treat whether and, if yes, how domestic laws require adjustment of the procedure to retain enforceability.

Closing the bracket, this author will address whether the purposes of consolidation are in fact fulfilled by the current rules in light of the finding of this analysis. In conclusion, this author will give a summary and suggest solutions for the problems identified.

In examining the different rules on consolidation in the context of international commercial arbitration, this analysis intends to give both guidelines to practitioners on how to approach the topic and influence the future revisions of institutional rules with a view toward maintaining high levels of international acceptance of arbitral awards.

13

2 Purpose of Consolidation The purposes of consolidation will be addressed only briefly to give the reader a background. An in-depth analysis will follow infra in chapter 13.

2.1 Layman’s View

Expressed at the most basic level, dispute resolution employs a variety of procedural tools to decide claims collectively, rather than in parallel or successive two-party disputes.41 Claims arising out of the same transaction or occurrence appear from a layman’s perspective as a natural whole artificially torn asunder by two-party dispute resolution. To maintain the connection between the claims and parties, procedural tools are used to alleviate the seemingly fragmented approach, allowing separate (two-party one-claim) cases to be treated as one.42

This holistic approach of combining all connected (two-party one-claim) cases into one case is based on the assumption that each aspect of an event affects another. Therefore, the procedurally separate (two-party one-claim) cases affect each other because they all are connected. Treating one (two-party one-claim) case at a time does not take into account the remaining (two-party one-claim) cases. Influences exerted by the other (two-party one-claim) cases will not be perceptible, potentially resulting in the adjudicators missing crucial details or the bigger picture. While lacking the big picture may cause unjust results, the alternative of reconsidering all aspects of the 41 The reasons for this will be address in this chapter infra. 42 One of the tools employed to hear all parties and issues at the same time in

front of a single adjudicator is consolidation. Other tools include joinder, amendment of claims, counterclaim, set off, interpleader, impleader and more. While some use the terms interchangeably, each of these tools is employed in slightly different circumstances. For more information regarding the applicability of the individual tools, see infra subchapter 14.

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whole for each (two-party one- claim) case individually - i.e., disputing the same facts multiple times - is wasteful. Hearing all (two-party one-claim) cases at the same time appears to be an adequate solution.

2.2 Definition

There exist various interpretations of the meaning of the procedural mechanism consolidation, as it is known in international commercial arbitration.43 This analysis will follow GILIÉRON/PITTET who define consolidation as the act or process of uniting into one single case several independent proceedings which are pending or initiated.44 It is the only definition which encompasses all situations possible under the ICC and Swiss Rules.

Having defined consolidation, this analysis will now move to giving a brief overview of its purposes. Consolidation is not an end in itself. It serves avoidance of contradictory judgments, efficiency, and fairness.45 These will be addressed in turn.

43 Michael F. Hoellering, “Consolidated Arbitration: Will it Result in Increased

Efficiency or an Affront to Party Autonomy?,” Dispute Resolution Journal 52 (1997): 41 - 59; Thomas J. Stipanowich, “Arbitration: The ‘New Litigation’,” University of Illinois Law Review 2010 (2010): 505 et seq.; S.I. Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” Michigan Journal of International Law 30 (2009): 1039; Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 163; Bernard Hanotiau, Complex Arbitrations Multiparty, Multicontract, Multi-Issue and Class Actions (The Hague: Kluwer Law International, 2005), 179; Izquierdo Piña, “Consolidation of Arbitral Proceedings,” 4; Stavros L Brekoulakis, Third Parties in International Commercial Arbitration (Oxford University Press, USA, 2010), note 3.53.

44 Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings (Joinder), Participation of Third Parties,” 3.

45 Ibid., 2; John W Cooley, Arbitration Advocacy, 2nd ed., NITA Practical Guide Series (Notre Dame, IN: National Institute for Trial Advocacy, 2003), 49; Wolfgang Hahnkamper, “Der Ablauf von ad-hoc Schiedsverfahren - Teil I: Die ersten Schritte im Verfahren,” 74; Bone, Robert G, Civil Procedure: The Economics of Civil Procedure (New York, NY: Foundation Press, 2003), 146“A rule that reaps large benefits in error cost reduction might still be

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2.3 Avoidance of Contradictory Judgments

Like other procedural tools designed to allow adjudication of multi-party, multi-claim cases, consolidation aims at avoiding contradictory judgments.46 Consistent judgments increase faith in an adjudicative system. In western societies the rule of law reigns supreme. Results appear more just if no contradictions occur. Adjudication appears less arbitrary and more predictable. KING rightly points out that arbitration outcomes are far less predictable than national judicial outcomes as there are no superior courts to correct aberrational results.47 Arbitration decisions have no true precedential effect.48 Any concept allowing for the appearance of predictability, i.e., consistency, therefore serves the goal of increased faith in the adjudicative system. KING, speaking on parallel arbitral proceedings concerning related subject matters, excellently demonstrates this general feeling that contradictory results offend the sensibilities and reduce faith in the system. He points out that it is consequently beneficial to avoid them.

undesirable, if its implementation adds substantially to process costs.”; Bernard Hanotiau, “Complex Multicontract-Multiparty Arbitration,” Arbitration International 14 (1998): 403; Robert H Klonoff, Class Actions and Other Multi-Party Litigation in a Nutshell, 3rd ed. (St. Paul, MN: Thomson/West, 2007), 408; Born, International Commercial Arbitration Volume II, 2069 et seq.; Peter Hartmann, Zivilprozessordnung, 68th ed. (Beck Juristischer Verlag, 2009), notes 147-2; Hans-Joachim Musielak, ed., Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz, 7th ed. (Munich: Vahlen, 2009), notes 147-1; GFCD 68, 81 (German Federal Court 1977).

46 Frick, International Arbitration Law Library, 230; Leboulanger, “Multi-Contract Arbitration,” 54, 62 et seq.; Julie C. Chiu, “Consolidation of Arbitral Proceedings and International Commercial Arbitration,” Journal of International Arbitration 7 (1990): 55 et seq.; Hanotiau, Complex Arbitrations Multiparty, Multicontract, Multi-Issue and Class Actions, 403; Cooley, Arbitration Advocacy, 49; Voser, “Multi-party Disputes and Joinder of Third Parties,” 350; Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 4.

47 King, “Towards a Uniform International Arbitration Law?,” 294. 48 Rolf A. Schütze, “The Precedential Effect of Arbitration Decisions,” Journal

of International Arbitration 11, no. 3 (1994): 69 This author is aware of the fierce discussion on precedential effects of arbitral decisions. This author therefore refers only to the true original effect given to precedent in Common Law jurisdictions.

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2.4 Efficiency

Consolidation also aims at efficiency.49 Efficiency has two prongs, namely money and time.

In both litigation and arbitration cost digression exists. Several cases combined into one will result in less total cost (paid to the court or institution).50 Disputing the same or similar facts repeatedly will consume resources (i.e., time and money) repeatedly. Avoidance of waste and cultivation of arbitral time economy appears similarly but not equally in the context of judicial economy in national courts.

National judicial systems are based on the finite resources of a court and are financed largely by the community as a whole. Nevertheless, in arbitration, parties simply waste their own money, which is permissible from a societal point of view. When at least one party wishes to economize, it is prudent for an arbitral institution to provide a vehicle.

2.5 Fairness, Truth and Justice

Arbitration proceedings are consolidated because the interest of justice so requires.51

49 Chiu, “Consolidation of Arbitral Proceedings and International Commercial

Arbitration,” 55; critical Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1039; Born, International Commercial Arbitration Volume II, 2069 et seq.; Voser, “Multi-party Disputes and Joinder of Third Parties,” 350; Leboulanger, “Multi-Contract Arbitration,” 54.

50 This will be discussed in more detail infra in section 14.2.2 on costs. 51 Dominique T. Hascher, “Consolidation of Arbitration by American Courts:

Fostering or Hampering International Commercial Arbitration?,” Journal of International Arbitration 1, no. 2 (1984): 133; Leboulanger, “Multi-Contract Arbitration,” 63.

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“In arbitration, fairness requires some measure of efficiency, since justice too long delayed becomes justice denied.”52

Consolidation is also intended to keep things fair on a procedural and substantive level.53 It limits one party’s ability to continue a dispute in several different cases, wearing the less affluent party down with additional costs. It limits the potential to blame a third party not present in the proceeding. This may create odd results, which would be technically not contradictory, but nonetheless unfair.54 In addition, having all facts available will promote the finding of the truth of the underlying facts.

2.6 Outlook

Arbitration is based on a two-party approach.55 In disputes with more than two parties or more than one claim, the ordinary procedural approach may seem inexpedient. Consequently, the

52 Henri Alvarez, “Autonomy of International Arbitration Process,” in Pervasive

Problems in International Arbitration, ed. Loukas A. Mistelis and Julian D. M. Lew (Alphen aan den Rijn: Kluwer Law International, 2006), 144 Note 7-10.

53 Leboulanger, “Multi-Contract Arbitration,” 54. 54 For example: An employee of Elma Inc. has bought caviar from both Fido Co.

and Guido Ltd. He mixes the caviar in a bowl and eats it. Then employee of Elma Inc. has food poisoning as a result of eating the caviar. In a case against Fido Co. the panel finds Fido Co. is not liable because employee of Elma Inc. cannot prove it was Fido Co.’s caviar. In a case against Guido Ltd. the panel finds Guido Ltd. not liable for the same reason. Doubtless someone’s caviar was bad. The results may not be possible when seen together, but they are not contradictory. An example for a contradictory result would be the following: Same scenario as before. Employee of Elma Inc. eats the caviar and is sick for two days. He also ruins his silk shirt while throwing up. In the first case, employee of Elma Inc. sues Fido Co. for the shirt and Fido Co. is found liable because the caviar was spoilt. In a second case, employee of Elma Inc. sues Fido Co. for lost wages and Fido Co. is found not liable because the caviar was not spoilt. At what point of congruence judgments become contradictory is a matter of some discussion in each jurisdiction and will not be discussed in detail here.

55 Poudret and Besson, Comparative Law of International Arbitration, note 237.

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concept of arbitration has evolved into a complex system, including both non-signatories and groups of claimants or respondents, who wish to resolve their disputes in one single arbitration.56

There are a number of situations in which cases are begun separately despite the availability of other procedural tools57 allowing for claims and parties to be added to the traditional two-party one-claim case.58 Consolidation is distinguishable from these other procedural tools because the unification takes place after two separate cases have been filed.59

Usually consolidation is not a necessity.60 Without consolidation both cases would simply be continued as independent and, more importantly, self-contained matters. Lack of consolidation does not prevent the dispute from coming to a conclusion. Each individual case is complete and capable of independent adjudication. The various concepts of necessary parties, without whom a case cannot be decided due to substantive or procedural law and must therefore be dismissed,

56 Michael P. Daly, “Come One, Come All: the New and Developing World of

Non-signatory Arbitration and Class Arbitration,” University of Miami Law Review 62 (2007): 115.

57 Such as a accumulation of claims, addition of counterclaims and others. 58 Roger S. Haydock, “Mediation and Arbitration for Now and the Future,” in

The Arbitration Process, ed. Susan Meek (The Hague: Kluwer Law International, 2002), 8.

59 This author does not use the term pending, as she is aware of at least one case under the Swiss Rules, in which the second case had not yet been formally pending and the provision on consolidation was applied. This case will be discussed further infra section 14.2.1.

60 For example: Rolf A. Schütze, Schiedsgericht und Schiedsverfahren, 4th ed. (Beck Juristischer Verlag, 2007), note 342; Thomas Rüede and Reimer Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 2nd ed. (Zurich: Schulthess, 1993), 255. When rights or obligations are indivisible and the other holder of the right or obligation is not part of the proceeding and furthermore cannot be added by consolidation or other means, the case will have to be dismissed. Under such circumstances, consolidation (or any other tool) would be necessary for the case to continue. This situation will be addressed infra in chapter 5.5.

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address the question of joinder, not consolidation.61 Claims contained in a previously filed case cannot be added to another case by the use of joinder or other procedural tools, due to the prohibition of lis pendens.62

Consolidation has not been accepted universally by either national courts adjudicating arbitration related matters or major arbitral institutions.63 It remains to be seen whether consolidation provisions truly add value to the arbitral system and the skepticism of courts and institutions is unfounded. Skepticism is unfounded if consolidation serves it purposes and balances them with the core values of international commercial arbitration: party autonomy, secrecy, and fairness.64

This chapter briefly outlined the underlying purposes of consolidation: avoidance of contradictory results, increased efficiency and fairness. Whether these purposes are achieved by the ICC or the Swiss Rules will be discussed infra in chapter 13. Keeping both the purposes of consolidation and the sketch of its alternatives in mind, the esteemed reader will now move on to a survey of institutional rules on consolidation.

61 Even though it may be possible to use consolidation to affect joinder, this is

not the true nature of consolidation. Ordinarily a joinder would have to be performed and the second case dismissed for lis pendens reasons.

62 See generally Norah Gallagher, “Parallel Proceedings, Res Judicata and Lis Pendens: Problems and Possible Solutions,” in Pervasive Problems in International Arbitration, ed. Loukas A. Mistelis and Julian D. M. Lew (Alphen aan den Rijn: Kluwer Law International, 2006), 329 - 356; Campbell McLachlan, Lis Pendens in International Litigation (Leiden Boston: Martinus Nijhoff Publishers / Brill Academic, 2009).

63 S.I. Strong, “Intervention and Joinder as of Right in International Arbitration: An Infringement of Individual Contract Rights or a Proper Equitable Measure?,” Vanderbilt Journal of Transnational Law 31 (1998): 938.

64 Edward J. Brunet et al., Arbitration Law in America: A Critical Assessment (New York: Cambridge University Press, 2006), 663 et seqq.; Girsberger and Voser, International Arbitration in Switzerland, note 662; Julian D. M. Lew, “Achieving the Dream: Autonomous Arbitration?,” in Arbitration Insights Twenty Years of the Annual Lecture of the School of Interational Arbitration, Sponsored by Freshfields Bruckhaus Deringer, ed. Julian D. M. Lew and Loukas A. Mistelis (Alphen aan den Rijn: Kluwer Law International, 2007), 457 Note 20-10.

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3 Consolidation Procedures in Institutional Arbitration

This chapter is intended to give an overview of institutional arbitration rules with regard to consolidation. It is not intended to be all-inclusive, but shall provide the esteemed reader with a sense of the prevailing views among arbitration institutions.

3.1 Introduction

Having discussed the purposes of consolidation, this analysis will begin with a survey of institutional rules in search for those containing consolidation clauses. There are numerous institutions for international arbitration.65 Only a few offer solutions for consolidation.66

This author would go beyond the scope of this thesis and not add much value to include all institutions currently in existence. More space and detail is dedicated to the AAA International Rules; the LCIA Rules; the ICC Rules; the Swiss Rules; the VIAC Rules and the SCC Rules.67 Other institutional rules will be mentioned in passing where appropriate.68

65 Marc Blessing, “Comparison of the Swiss Rules with the UNCITRAL Rules

and Others,” in The Swiss Rules of International Arbitration, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki, vol. 22, ASA Special Series (presented at the ASA Swiss Rules of International Arbitration Conference of January 23, 2004 in Zürich, Basel, 2004), 1.

66 Voser, “Multi-party Disputes and Joinder of Third Parties,” 360; Nayla Comair-Obeid, “Consolidation and Joinder in Arbitration - The Arab Middle Eastern Approach,” in 50 Years of the New York Convention, ed. Albert Jan van den Berg, ICCA International Arbitration Conference (Alphen aan den Rijn: Kluwer Law International, 2009), 503; Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 466.

67 Girsberger and Voser, International Arbitration in Switzerland, note 85; Jan Paulsson, Nigel Rawding, and Lucy F. Reed, The Freshfields Guide to Arbitration and ADR: Clauses in National Contracts, 2nd ed. (The Hague: Kluwer Law International, 1999), 52 et seqq.; Gary Born, International Arbitration and Forum Selection Agreements: Drafting Forcing, 2nd ed. (Netherlands: Kluwer Law International, 2006), 45 et seq.; Klaus Lionnet and

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This survey will, however, not begin with an institutional set of rules, but with the UNCITRAL Rules.69

3.2 UNCITRAL

The UNCITRAL Rules70 are not institutional rules.71 Inclusion of these ad hoc rules in this analysis of institutional rules is based on practical considerations. They form an important basis for the understanding of current arbitral culture. It can safely be said that once a rule has found its way into the UNCITRAL Rules, chances are high that the application of such a rule forms an internationally accepted standard generally unlikely to result in annulment or refusal of recognition and enforcement.72 The UNCITRAL Rules of 1976 represent the first attempt to put down a set of international commercial arbitral rules accommodating and consolidating the different cultural approaches to arbitration all around the world. They were, from

Annette Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 3rd ed. (Stuttgart: Boorberg, 2005), note 486 et seqq. The foregoing are only a few among many.

68 No specific significance is attached to the sequence of institutions discussed. 69 Even though these are institutional rules for international commercial

arbitration. The reasoning will be explained further in 3.2. 70 See for current UNCITRAL Arbitration Rules Version 2010 see See

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration.html. 71 See www.uncitral.org. These rules should not be confused with the

UNCITRAL Model Law on International Commercial Arbitration, which serve as a model for governmental law givers to fashion arbitration laws for national jurisdictions.

72 Stefan M. Kröll, “Introduction to §§ 1060, 1061,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 4“In most legal systems, the enforcement rights is a two-step process, involving two separate and different sets if proceedings. The first stage is concerned with making a binding determination of whether an alleged right exists. The second stage, the enforcement proceedings in the proper sense, serve to execute the findings of the first stage against a party or its property, where the judgmnet debtor has not voluntarily complied. Proceedings if the recognition and enforcement of awards pursuant to the NYC 1958 or to §§ 1060, 1061 ZPO, belong to the first stage.”

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the outset, designed for ad hoc arbitrations.73 Consequently, institutional powers are not provided for in the UNCITRAL Rules.74

The presence of a consolidation provision would therefore indicate some international acceptance of consolidation in arbitration. The UNCITRAL Rules do not contain a provision on consolidation. Addition of a consolidation provision in the revised 2010 version was discussed and rejected.75 At its 46th session held in New York on 5-9 February 2007 the UNCITRAL working group on arbitration and conciliation expressed conflicting views on the desirability of consolidation. The report states:

“Consolidation of cases before arbitral tribunals 116. The Working Group noted that, in some cases, under the Rules, consolidation of cases was only possible where the parties specifically so agreed and proceeded to consider whether a provision on that matter should be added to the Rules, as proposed under document A/CN.9/WG.II/WP.145/Add.1. 117. Some support was expressed for inclusion of such a provision. It was said that such a provision could be useful in situations where several distinct disputes arose between the same parties under separate contracts (e.g., related contracts or a chain of contracts) containing separate arbitration clauses or to

73 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 534.

74 The UNCITRAL Rules were adopted by the UN General Assembly on December 15, 1976. Poudret and Besson, Comparative Law of International Arbitration, note 98; Peter, “Some Observations on the Swiss Rules of International Arbitration,” 2.

75 Daniel Wehrli, B. Gino Koenig, and Claudius Triebold, “Management of the Proceedings and Quality Control under the Swiss Rules,” in The Swiss Rules of International Arbitration, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki, vol. 22, ASA Special Series (presented at the ASA Swiss Arbitration Association Conference, Basel, 2004), 87.

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avoid a situation where a party initiated a separate arbitration in respect of a distinct claim under the same contract in order to gain a tactical advantage. Consolidation in such situations might provide an efficient resolution of the disputes between the parties, and also might reduce the possibility of inconsistent awards in parallel arbitrations. 118. (. . .) 119. However, doubts were expressed as to the workability of such a provision particularly when the Rules applied in non-administered cases. As well, it was said that either the provision was intended to deal with new claims under the same contract, and that situation would be better dealt with under provisions on amendment of the statement of claim, or that provision was intended to cover several distinct disputes arising between the same parties under separate contracts containing separate arbitration clauses. In that latter situation, the application of the provision might subject parties to arbitration proceedings under terms, which differed from those, agreed in their arbitration agreement. It was said that that situation raised complex issues, and might result in unfair solutions. A/CN.9/619 120. After discussion, the Working Group agreed that it might not be necessary to provide for consolidation (. . .).“76

Lack of inclusion of a consolidation provision in these rules does not by itself mean that consolidation for international commercial arbitration is unacceptable. WEHRLI suggests that its lack of insertion into the rules may be due to their ad hoc

76 See:

http://www.uncitral.org/uncitral/en/commission/working_groups/2Arbitration.html and follow link of 46th session.

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nature.77 According to BINDER, consolidation was abandoned because it raised too many complex issues, the working group preferring to deal with possibilities to streamline connected cases by reference to set-off.78 WIRTH states that the UNCITRAL working group did not include a consolidation provision from fear of risk of unfairness and other complications.79

This author believes that the discussions in the working group show a certain reluctance to accept consolidation as a viable concept for international commercial arbitration. This reluctance echoed the reluctance of many institutional arbitration organizations.80 It may in part be based on the difficulty of balancing the purposes of consolidation with the realities and values of arbitration, as will be outlined in this analysis in chapter 13.

3.3 American Arbitration Association

The American Arbitration Association offers both domestic and international arbitration. It is the arbitral institution with the least invasive international arbitration rules. It is also the world’s largest arbitration institution.81 The task of the

77 Daniel Wehrli, “The Swiss Rules and the Revision of the UNCITRAL

Arbitration Rules,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg, 2009, 88.

78 Peter Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, 3rd ed. (London: Sweet & Maxwell/Thomson Reuters, 2010), notes 11-009.

79 Markus Wirth, “The Current Revision of the UNCITRAL Rules,” in New Developments in International Commercial Arbitration 2007, ed. Christoph Müller (Zurich: Schulthess, 2007), 10.

80 Strong, “Intervention and Joinder as of Right in International Arbitration: An Infringement of Individual Contract Rights or a Proper Equitable Measure?,” 938.

81 Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 516.

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institution resembles that of a clerk at court.82 The American Arbitration Association strictly respects the arbitrators’ sole discretion and attempts to preserve this discretion,83 which is in harmony with the U.S. court decisions.84

The latest amendment of the AAA International Rules entered into force on 1 June 2009.85 Although dating from 2009, and thus created after other institutions had already included consolidation in their rules, the AAA International Rules do not contain a provision on consolidation.86 This may be explained by the attitude of the courts of the U.S.87

3.4 London Court of International Arbitration

The LCIA Rules also are issued from a very important institution in international commercial arbitration.88 Not only is

82 Michael F. Hoellering, “The Influence of Courts and Arbitral Institutions,” in

Handbook on International Arbitration and ADR, ed. Thomas E. Carbonneau (Huntington, N.Y: JurisNet, 2006), 55; Jenny Power and Hans-Patrick Schroeder, “AAA International Rules,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), note 38.

83 Power and Schroeder, “AAA International Rules,” 41. 84 Okuma Kazutake, “Party Autonomy in International Commercial Arbitration:

Consolidation of Multiparty and Classwide Arbitration,” Annual Survey of International and Comparative Law 9 (2003): 194 The FAA wants to secure enforcement of party wishes, it is not in the business of making the parties choices more efficient for them.

85 See http://www.adr.org/sp.asp?id=33994. 86 Pascale Gola, Karin Graf, and Claudia Götz Staehelin, eds., “Comparison of

Various Arbitration Institutions,” in Institutional Arbitration Tasks and Powers of Different Arbitration Institutions (Zurich: Schulthess, 2009), 11.

87 For further information see infra subsection 6.2.1.4. 88 For statistics concerning the LCIA see Julian D. M. Lew, Loukas A. Mistelis,

and Josephine C.P. Davies, “LCIA Rules,” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), note 18.26 et seqq.; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 511.

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the London Court of International Arbitration one of the oldest institutions89 but it also has a large number of cases.90

The LCIA Rules were last revised in 1998 and are often considered less institutionalized, meaning that LCIA Rules concentrate more on administering than on controlling or overseeing arbitration proceedings.91 Similar to the American Arbitration Association, this Common Law institution considers its task to be “primarily administrative and therefore fairly narrow”.92 In many instances, party autonomy is given more room than in other institutional rules.93 Parties may even impose their wishes concerning procedure on an empanelled panel, so long as agreement persists among them.94

Forcible consolidation was rejected by the LCIA. While the LCIA Rules do contain a provision of joinder of third parties in article 22(1)(h),95 this section cannot be used to join whole cases. For this purpose, it was only invoked a few times,96 and

89 “THE LONDON COURT OF INTERNATIONAL ARBITRATION (LCIA),”

http://www.lcia-arbitration.com/. 90 See the report under the subheading NEWS “LCIA Director General's

Report,” See http://www.lcia-arbitration.com. 91 Peter Turner and Reza Mohtashami, A Guide to the LCIA Arbitration Rules

(Oxford: Oxford University Press, 2009), note 5.05; Poudret and Besson, Comparative Law of International Arbitration, note 103; Sabine Konrad and Robert Hunter, “LCIA-Schiedsregeln,” in Institutionelle Schiedsgerichtsbarkeit Kommentar, ed. Rolf A. Schütze, 2nd ed. (Cologne: Carl Heymanns Verlag, 2011), note 64.

92 Pascale Gola and Ned Beale, eds., “London Court of International Arbitration,” in Institutional Arbitration Tasks and Powers of Different Arbitration Institutions (Zurich: Schulthess, 2009), 149; Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 2.21.

93 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, note 5.05; Simon Nesbitt, “London Court of International Arbitration Arbitration Rules, 1998,” in Concise International Arbitration, ed. Loukas Mistelis (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), 401.

94 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, note 5.16. 95 It has been propounded that consolidation may be introduced using as a back

door the joinder provision as described above, this was rejected. A lack of consolidation provision does not preclude consolidation based on ad hoc party consent. Ibid., note 6.55.

96 Konrad and Hunter, “LCIA-Schiedsregeln,” 18 stating that since 1985, application was made only 6 times.

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was sensibly rejected.97 However, while no provision on consolidation exists, with the consent of all parties consolidation may take place, and has taken place.98

3.5 International Chamber of Commerce

The ICC is the leading institution of its kind and one of the oldest.99 The case statistics are staggering. In 2007, the ICC administered 599 cases; in 2008, 663 cases; and in 2009, 817.100 The ICC Rules, despite flexible directives, follow a continental approach to procedure.101 The current ICC Rules entered into force on 1 January 1998.102

The ICC Rules are widely used. They are also the most institutionalized,103 i.e., restrictive, rules to party autonomy in widespread use. The ICC Rules contain a provision on consolidation. ICC article 4(6) is limited in scope,104 which is one of the reasons it was chosen for this analysis. Article 4(6) of the ICC Rules provides:

97 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, note 6.59;

differing: Ulf Franke, “Institutional Arbitration: Trends and Developments,” in Festschrift für Ottoarndt Glossner zum 70. Geburtstag, ed. Karl-Heinz Böckstiegel, Jens Bredow, and Alain Plantey (Heidelberg: Verlag Recht und Wirtschaft, 1994), 127.

98 Consolidation by consent after the dispute has arisen is always possible as an expression of party autonomy, not only under LCIA Rules. Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, note 6.57 stating that consolidation had been sought 48 times and granted 16 times.

99 Girsberger and Voser, International Arbitration in Switzerland, note 192. 100 For verification and additional information see “ICC Statistics,”

http://www.iccwbo.org/court/arbitration/id5531/index.html. 101 Steven C. Bennett, Arbitration Essential Concepts (New York: ALM Publ.,

2002), 145. 102 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 491.

103 Daniel Girsberger, Nathalie Voser, and Simone Fuchs, International Arbitration in Switzerland (Zurich: Schulthess, 2008), 45 Note 193; Michael W. Bühler and Thomas H. Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, 2nd ed. (London: Sweet & Maxwell, 2008), notes 0-10.

104 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 4-69.

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“When a party submits a Request in connection with a legal relationship in respect of which arbitration proceedings between the same parties are already pending under these Rules, the Court may, at the request of a party, decide to include the claims contained in the Request in the pending proceedings provided that the Terms of Reference have not been signed or approved by the Court. Once the Terms of Reference have been signed or approved by the Court, claims may only be included in the pending proceedings subject to the provisions of Article 19.”

The ICC forcibly consolidates cases sparingly.105 In most related cases before the ICC, the parties agree on consolidation,106 or parties raise claims together from the outset.107

Since October 2008, a task force of over 175 members from 41 countries was revising the rules.108 A new version will be launched in September 2011. The new provision on consolidation is not only in a different place, giving it its own article, but also changes the ICC rules drastically. The new article 10 reads:

105 Ibid., notes 4-77; Greenberg, Feris, and Albanesi, “Consolidation, Joinder,

Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 164, stating that In the three years between 1 January 2007 and 31 December 2009, the Court dealt with 24 contested requests for consolidation, eight of which were accepted and the remainder rejected.

106 Anne Marie Whitesell and Eduardo Silva-Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience,” in Complex Arbitrations, ICC Special Supplement 2003 (Paris, 2003), 16.

107 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 183.

108 See http://www.iccwbo.org/policy/arbitration/index.html?id=28796.

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"The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, provided that either: a) the parties have agreed to consolidation; or b) all of the claims in the arbitrations are made under the same arbitration agreement; or c) where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible. In deciding whether to consolidate, the Court may take into account any circumstances it considers to be relevant including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations and, if so, whether the same or different persons have been confirmed or appointed. When arbitrations are consolidated, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties."

Details of this provision will be further discussed in chapter 4.

3.6 Swiss Chambers of Commerce

The Swiss Chambers of Commerce are comprised of the six original chambers of commerce109 plus the recently added Chamber of Commerce of Neuchâtel. These seven Swiss Chambers jointly form another important arbitration institution in Europe, the Swiss Chambers. The organization is delocalized, with each of the seven chambers administering arbitrations. The

109 Geneva, Bern, Zürich, Ticcino, Basel, Vaud.

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Swiss Chambers jointly administered 68 cases in 2008, 104 new cases in 2009, and 89 cases in 2010.110

Their Swiss Rules entered into force in 2004. The Swiss Rules as a whole have been qualified as having a light form of administration.111 Indeed, it has been stated that the Swiss Rules intended to avoid

“(. . .) any overly-bureaucratic or unduly restrictive regulation, while nevertheless achieving the necessary level of monitoring and administration of procedures.”112

This is true when compared to the ICC Rules.113 Administration of cases is intended to be mainly in the hands of the panel.114 However, Swiss Chambers are offered discretionary powers in many instances, including the question of consolidation.

110 See https://www.sccam.org/sa/en/organisation.php and follow link statistics.

No information is available on 2010 at this time. 111 Peter, “Some Observations on the Swiss Rules of International Arbitration,”

139; Bertrand Moreau, “Arbitrage liés,” in De lege ferenda réflexions sur le droit désirable, ed. Laurent Hirsch and Anne Héritier Lachat (Geneva: Slatkine, 2004), 79 - 85; Christian Oetiker and Sabine Burkhalter, “Swiss Chambers’ Court of Arbitration and Mediation,” in Institutional Arbitration Tasks and Powers of Different Arbitration Institutions, ed. Pascale Gola, Karin Graf, and Claudia Götz Staehelin (Zurich: Schulthess, 2009), 241; Girsberger and Voser, International Arbitration in Switzerland, 46 Note 197.

112 Wolfgang Peter, “Quelques observations sur le nouveau règlement suisse d’arbitrage international,” in De lege ferenda réflexions sur le droit désirable, ed. Laurent Hirsch and Anne Héritier Lachat (Geneva: Slatkine, 2004), 139.

113 ICC provides for mandatory terms of reference, review of the award and information of the ICC Court concerning all communications. Further explanation of this statement and the exact differences will be give infra.

114 Bernhard Meyer-Hauser and Dominik Vock, “Schweizerische Schiedsordnung,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), note 7.

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The Swiss Rules contain the broadest clause on consolidation currently in use. Swiss Rules are broader than the ICC Rules on consolidation.115 Article 4(1) Swiss Rules reads as follows:

“Where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Chambers may decide, after consulting with the parties to all proceedings and the Special Committee, that the new case shall be referred to the arbitral tribunal already constituted for the existing proceedings. The Chambers may proceed likewise where a Notice of Arbitration is submitted between parties that are not identical to the parties in the existing arbitral proceedings. When rendering their decision, the Chambers shall take into account all circumstances, including the links between the two cases and the progress already made in the existing proceedings. Where the Chambers decide to refer the new case to the existing arbitral tribunal, the parties to the new case shall be deemed to have waived their right to designate an arbitrator”

According to some writers, article 4 was an important innovation in the Swiss Rules in comparison to the rules previously applied by the different Swiss Chambers.116 The Swiss Rule on consolidation has also been criticized.117 Its

115 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International

Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 15.

116 Peter, “Some Observations on the Swiss Rules of International Arbitration,” 5; Sébastien Besson, “Introduction,” in Swiss Rules of International Arbitration Commentary, ed. Tobias Zuberbühler, Christoph Müller, and Philipp Habegger (The Hague: Kluwer Law International, 2005), note 20; Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings (Joinder), Participation of Third Parties,” 1; Daniela Jobin-Chiabudini, “Administered Arbitration under Swiss Rules of International Arbitration of the Swiss Chambers of Commerce”, October 2004, 4.

117 ULMER calls the provision on consolidation a dangerous additions. Nicolas Ulmer, “The Cost Conundrum,” Arbitration International 26, no. 2 (2010): 227 et seq.; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4070.

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breadth remains unparalleled by the other important institutional rules, even though other important institutions have revised their rules since the inception of the Swiss Rules. In addition to the comparatively broad scope of the rule, Swiss Chambers and the Special Committee have an attitude favoring consolidation.118

The proposed new rule reads:

“Consolidation and Joinder

Article 4

1. Where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Chambers may decide, after consulting with the parties and any confirmed arbitrator to all proceedings and the Special Committee, that the new case shall be referred to the arbitral tribunal already constituted for the existing proceedings. The Chambers may proceed likewise where a Notice of Arbitration is submitted between parties that are not identical to the parties in the existing arbitral proceedings. When rendering their decision, the Chambers shall take into account all relevant circumstances, including the links between the two cases and the progress already made in the pending arbitral proceedings. Where the Chambers decide to consolidate the new case into the pending arbitral proceeding, the parties to all proceedings shall be deemed to have waived their right to designate an arbitrator and the Swiss Chambers´Court may revoke the appointment and confirmation of arbitrators and

118 Kellerhals, “Highlights from the Arbitration Committee,” 30.

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apply the provisions of Articles 7(1), 9(3-5) and 10.2.”119

Details of this provision will be further expanded upon in chapter 4.

3.7 The Austrian Federal Economic Chamber

“The Austrian Federal Economic Chamber, which is the umbrella organization of the nine Regional Economic Chambers, established the VIAC in 1975 particularly for the settlement of East-West commercial disputes ( . . .). By the end of 2006, fifty-one international arbitration cases were pending before the VIAC with a total amount in dispute of approximately one billion Euros.”120

On average 40 cases are filed each year. In 2009, 60 new cases were filed.121 The VIAC Rules provide for consolidation of cases in article 15(8), which reads:

“In cases other than those mentioned in paragraph 1 of the present Article, the consolidation of two or more disputes shall be admissible only if the same arbitrators have been appointed in all the disputes that are to be consolidated and if all parties and the sole arbitrator (arbitral tribunal) agree.”

119 Underlined sections are new. 120 Werner Melis, “Arbitration in Austria”, January 25, 2011, 3,

http://portal.wko.at/wk/format_detail.wk?angid=1&stid=328065&dstid=8459&opennavid=0.

121 Christopher Liebscher, “Wiener Regeln,” in Institutionelle Schiedsgerichtsbarkeit Kommentar, ed. Rolf A. Schütze, 2nd ed. (Cologne: Carl Heymanns Verlag, 2011), note 5.

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All parties to the cases must have chosen the VIAC Rules, but not necessarily in the same agreement.122 This rule does not suggest substantive consolidation standards.123

This consolidation provision restates the accepted concept that, in international commercial arbitration, parties may agree on procedure and, therefore, on consolidation. Consolidation under VIAC Rules is not admissible if the parties have appointed different arbitrators.

Furthermore, forced consolidation is not possible under the VIAC Rules is but rather based on the principle of party (and arbitrator) consent. In fact, consolidation rarely occurs under these rules.124 It will therefore not be discussed in more detail.

3.8 Arbitration Institute of the Stockholm International Chamber of Commerce

Since the 1990’s the number of cases filed with the Arbitration Institute of the Stockholm International Chamber of Commerce increased considerably.125 The Stockholm International Chamber of Commerce emerged as one of the most important and frequently used arbitration institutions worldwide.126 This is especially true concerning cases of East-West trade.127 It

122 Franz T. Schwarz and Christian W. Konrad, The Vienna Rules: A

Commentary on International Arbitration in Austria (Alphen an den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2009), notes 15-008.

123 Ibid., notes 15-067. 124 Ibid., notes 15-068. 125 Marie Öhrström, “Stockholmer Regeln,” in Institutionelle

Schiedsgerichtsbarkeit Kommentar, ed. Rolf A. Schütze, 2nd ed. (Cologne: Carl Heymanns Verlag, 2011), note 2.

126 See http://www.sccinstitute.com/hem-3/statistik-2.aspx. 127 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 526; Günther J. Horvath and Moritz Keller, “Die Regeln des Schiedsgerichtsinstituts der Stockholmer

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administered 170 cases in 2007, and 176 cases in 2008.128 The institution’s role in the conduct of arbitrations is similar to that of the ICC.129

The SCC Rules are among the most recent institutional international commercial arbitration. The SCC Rules entered into force on 1 January 2010.130 Consolidation is permitted under the 2010 rules, as modified from the previous version of 2007.

Article 11 Stockholm Rules of 2007 reads:

“Upon the submission of a Request for Arbitration concerning a legal relationship in respect of which an arbitration between the same parties is already pending under these Rules, the Board may, at the request of a party, decide to include the claims contained in the Request for Arbitration in the pending proceedings. Such decision will only be made after consulting the parties and the Arbitral Tribunal.”

Article 11 of 2010 reads:

“If arbitration is commenced concerning a legal relationship in respect of which an arbitration between the same parties is already pending under these Rules, the Board may, at the request of a party, decide to include the new claims in the pending proceedings.

Handelskammer,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), 447 and 450 Note 50.

128 Stockholm Chamber of Commerce, “Arbitration - Statistics 2008”, n.d., http://www.sccinstitute.com/statistics-2008.aspx.

129 Horvath and Keller, “Die Regeln des Schiedsgerichtsinstituts der Stockholmer Handelskammer,” 46 et seqq.

130 See http://www.sccinstitute.com/skiljeforfarande-2/regler-4.aspx.

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Such decision may only be made after consulting the parties and the Arbitral Tribunal.”

The substance of the provision, defining which cases can be consolidated, remained the same. The SCC Institute may join claims, so long as the same parties are involved and the same legal relationship is concerned. This is stricter than the standard of the ICC, and a restrictive practice is expected.131 It does, however, provide for a broader possibility to consolidate concerning the timeframe of consolidation. Due to the similarity of the ICC and SCC Rules provisions, only the ICC Rules provision will be discussed further.

3.9 Other Institutional Rules

Other international commercial arbitration institutions’ rules do not contain consolidation clauses, despite most post-dating 1998 in their current versions. To name but a few: the China International Economic and Trade Arbitration Commission does not contain a consolidation provision;132 neither does the German Institution for Arbitration, in effect since July 1998;133 nor do the Australian Center for International Commercial Arbitration Rules;134 nor do the Singapore International Arbitration Center Rules of 2010;135 nor the Hong Kong International Arbitration Center Rules of 2008.136 Even though some institutions have added the possibility of allowing third parties into an existing case, as seen under the LICA Rules, this is not equal to a provision on consolidation through the back door.137 The Centre Belge d’Arbitrage et de Médiation Rules

131 Öhrström, “Stockholmer Regeln,” 32. 132 See http://cn.cietac.org/english/rules/rules.htm. 133 See http://www.dis-arb.de/download/disscho98_05_eng_eur.pdf. 134 See http://www.acica.org.au/arbitration_rules.html#_Toc132016249. 135 See http://www.siac.org.sg/Pdf/Rules2010.pdf. Pryles and Waincymer

however consider the power to consolidate to be encompassed in art. 24 of the rules. Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 440 et seq.

136 See http://www.hkiac.org/documents/Arbitration/Arbitrationpercent20Rules/HKIAC%20Procedures%20for%20International%20Arbitration.pdf.

137 See supra subchapter 3.4.

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article 12 also contains a consolidation provision, which is labeled joinder.138

3.10 Summary

Forcible consolidation is by no means widely accepted in international commercial arbitration. Comparatively few organizations contain consolidation clauses, which vary in the scope of their application.

The VIAC Rules only restate the accepted concept that consolidation by party agreement is permissible. The Stockholm Rules are very similar to the ICC Rules consolidation provision with the exception that no reference to the ‘terms of reference’ exists as cut-off. The Swiss Rules are by far the most expansive rules currently in existence.

As the VIAC only restates an existing rule permitting consolidation by party agreement, and the SCC and ICC Rules are very similar, this analysis will limit itself to presenting the ICC Rules and the Swiss Rules, which offer the greatest variants. These provisions will be discussed in further detail in the following chapter.

138 See CEPANI Rules art. 11 at

http://www.jurisint.org/doc/html/reg/en/2003/2003jiregen38.html.

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4 ICC and Swiss Rules Consolidation in Detail

In this chapter the author will give an overview over the consolidation provisions of both the ICC Rules and the Swiss Rules. When practical guidance is given in the rules itself, it will be discussed. When this is not the case, the problem is highlighted, but left for analysis infra in chapter 5 trhough 13.

Unless otherwise mentioned, the new and proposed rules have the same treatment and the analysis does not change.

4.1 The Provisions – ICC Rules 4(6) or 10 and Swiss Rule 4(1)

As previously described, the ICC as well as the Swiss Rule provision on consolidation will be examined in further detail in this chapter. This chapter is not intended to give an in-depth analysis concerning legal problems (which will be addressed in the subsequent chapters), but only the practical questions and how they are addressed by the rules.

As outlined in chapter 3, the ICC Rules article 4(6) reads:

“When a party submits a Request in connection with a legal relationship in respect of which arbitration proceedings between the same parties are already pending under these Rules, the Court may, at the request of a party, decide to include the claims contained in the Request in the pending proceedings provided that the Terms of Reference have not been signed or approved by the Court. Once the Terms of Reference have been signed or approved by the Court,

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claims may only be included in the pending proceedings subject to the provisions of Article 19.” 139

The new rule 10 reads:

"The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, provided that either: a) the parties have agreed to consolidation; or b) all of the claims in the arbitrations are made under the same arbitration agreement; or c) where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible. In deciding whether to consolidate, the Court may take into account any circumstances it considers to be relevant including whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations and, if so, whether the same or different persons have been confirmed or appointed. When arbitrations are consolidated, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties."

As is immetiately apparent, the rule on consolidation has gained in prominence, detail and scope.

The Swiss Rules take up consolidation in article 4(1), which states:

139 Michael Schöll, ed., Sourcebook of International Arbitration (Switzerland)

(Zürich: Schulthess, 2008), 81.

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“Where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Chambers may decide, after consulting with the parties to all proceedings and the Special Committee, that the new case shall be referred to the arbitral tribunal already constituted for the existing proceedings. The Chambers may proceed likewise where a Notice of Arbitration is submitted between parties that are not identical to the parties in the existing arbitral proceedings. When rendering their decision, the Chambers shall take into account all circumstances, including the links between the two cases and the progress already made in the existing proceedings. Where the Chambers decide to refer the new case to the existing arbitral tribunal, the parties to the new case shall be deemed to have waived their right to designate an arbitrator.”140

The proposed new Swiss Rule 4(1) has not changed in scope, but (important) details.

“1. Where a Notice of Arbitration is submitted between parties already involved in other arbitral proceedings pending under these Rules, the Chambers may decide, after consulting with the parties and any confirmed arbitrator to all proceedings and the Special Committee, that the new case shall be referred to the arbitral tribunal already constituted for the existing proceedings. The Chambers may proceed likewise where a Notice of Arbitration is submitted between parties that are not identical to the parties in the existing arbitral proceedings. When rendering their decision, the Chambers shall take into account all

140 Michael Schöll, ed., Sourcebook of International Arbitration (Switzerland)

(Zurich: Schulthess, 2008), 47.

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relevant circumstances, including the links between the two cases and the progress already made in the pending arbitral proceedings. Where the Chambers decide to consolidate the new case into the pending arbitral proceeding, the parties to all proceedings shall be deemed to have waived their right to designate an arbitrator and the Swiss Chambers´Court may revoke the appointment and confirmation of arbitrators and apply the provisions of Articles 7(1), 9(3-5) and 10.2.”141

Consolidation of cases by the ICC as well as the Swiss Chambers is discretionary.142 This means that the parties do not have a right to demand consolidation.

4.2 Applicable Institutional Rules

Parties have many choices, both of institutional and of ad hoc models.143

Unlike in litigation, in which all procedural rules are interconnected and a cohesive whole exists, arbitration relies on limited jurisdiction.144 Each case is separate and distinct and each panel limited to its case, even when the same institutional rules are chosen. Both the ICC Rules and Swiss Rules require that all cases to be consolidated be subject to the same rules.

Some institutional rules offer a variety of procedures, e.g., “fast track”, summary or expedited arbitration, which will not match the institution's standard procedural rules. In some cases, like 141 Underlined sections are new. 142 For the Swiss Rules see Gilliéron and Pittet, “Article 4 - Consolidation of

Arbitral Proceedings (Joinder), Participation of Third Parties,” 7. 143 See supra chapter 3. 144 Girsberger and Voser, International Arbitration in Switzerland, note 1 et seqq.

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the Swiss Rules, the “expedited procedure” is contained in the same document,145 while other rules provide for separate documents, like the Rules for Expedited Arbitration of the Arbitration Institute of the Finnish Central Chamber of Commerce.146 No mention is made concerning consolidation, whether arbitration with ordinary procedures and one with expedited procedures could be consolidated. However, nothing indicates a prohibition thereof.

A problem arises under the Swiss Rules in connection to the “expedited procedure”. It can apply when specifically chosen by the parties, however, the “expedited procedure” under the Swiss Rules may also apply, when the parties did not specifically choose them but when the threshold amount in controversy of 1 million CHF has not been met.147 Thus, while formally fulfilling the criteria to apply the same set of rules, this may still mean that two different procedures would be mixed.

The wording suggests that the choice or default of the second case A would be irrelevant and simply added to whatever type of proceeding happened to apply in case A. This might create odd results if, e.g., case A was a default “expedited procedure”, while case B was a much larger case. The neither the existing nor the proposed Swiss Rules offer a solution. This topic will be addressed infra in subchapter 5.2.

4.3 Arbitrators

One of the issues most discussed when it comes to consolidation is the choice of arbitrators.148 However, there are more issues related to arbitrators.

145 For example see Swiss Rules article 42. 146 Patrik Lindfors, “New Rules for Fast Track Arbitration in Finland,” Nordic

Journal of Commercial Law 2004, no. 2 (2004): 1 - 3. 147 Article 42(2) Swiss Rules. 148 The selection of arbitrators will be discussed infra in chapter 9 in more detail.

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Three different issues can be determined. First, the arbitrators of the initial case A will be assigned additional claims or parties or both, without the possibility of the parties of case B, be they identical or not, selecting arbitrators.149

Second, neither the ICC Rules nor the Swiss Rules directly address the question of the number of arbitrators. Rather, each rule grants the power to add case B to case A, which will only result in the same number and identity of arbitrators for case B as there were in case A, regardless of the provisions of case B. If considering solely the wording of the rule, it is irrelevant if the arbitration agreement of case B requires a different number of arbitrators.150

Third, neither set of rules makes specific mention of the impact of qualifications imposed on the arbitrators by the parties. Parties are permitted to specify qualifications for arbitrators.151 A literal reading of the rules concludes the same way as before, that the qualifications required for arbitrators in case B are irrelevant and the claims are referred to the case A panel.

The proposed new Swiss Rule does however clarify, that even the arbitrators in case A may be removed, so that an all new panel could be appointed for the case A into which the second case B is consolidated. This is of importance and will be discussed further infra in chapters 8 and 9.

149 See infra chapter 9. 150 The question of arbitrators will be discussed infra in chapters 5 and 9. 151 Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same

Parties,” 328; Girsberger and Voser, International Arbitration in Switzerland, note 472; Klaus Peter Berger, Internationale Wirtschaftsschiedsgerichtsbarkeit: Verfahrens- und materiellrechtliche Grundprobleme im Spiegel moderner Schiedsgesetze und Schiedspraxis (Berlin: de Gruyter, 1992), 142; Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 139.

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4.4 Initiation Procedure

Initiation procedures address the appropriate participant as well as the appropriate procedure for initiating consolidation. Litigation allows parties to move for consolidation.152 Consolidation sua sponte by the judge is also a possibility.153

Options in institutional arbitration encompass three choices for the appropriate participant: institutions, arbitrators and courts.154 Under the ICC Rules, consolidation is initiated by the request of a party. No sua sponte consolidation is permitted.155 The addressee for the initial request is the ICC, which makes a

152 Article 185 Swiss Private International Law Act.152 It reads: “If further assistance of the judicial or administrative authorities is required,

the judge at the seat of the arbitral panel shall have jurisdiction.” German Law requires either express consent of the parties or express

permission in the law for courts to act. This strict interpretation is based on § 1026 GCCP, which provides that no court shall intervene except where so provided in the 10th book of the GCCP, which refers to arbitration and codifies the UNCITRAL Model Law. There is no suggestion that arbitrators would have discretion to order consolidation without prior consent.

153 The Swiss Code of Civil Procedure provides for consolidation in a list of potential actions by a court to streamline and simplify litigation in article 125.

“Zur Vereinfachung des Prozesses kann das Gericht insbesondere Das Verfahren auf einzelne Fragen oder auch einzelne Rechtsbegehren

beschränken; Gemeinsam eingereichte Klagen trennen; Selbstständig eingereichte Klagen vereinigen; Eine Widerklage vom Hauptverfahren trennen.“ The German Code of Civil Procedure provides for consolidation in § 147: “Das Gericht kann die Verbindung mehrerer bei ihm anhängiger Prozesse

derselben oder verschiedener Parteien zum Zwecke der gleichzeitigen Verhandlung und Entscheidung anordnen, wenn die Ansprüche, die den Gegenstand dieser Prozesse bilden, im rechtlichen Zusammenhang stehen oder in einer Klage hätten geltend gemacht werden können.“

Consolidation is found in Rule 42 of the United States Code of Federal Civil Procedure. It states:

“(a) Consolidation. If actions before the court involve a common question of law or fact, the court

may: (1) join for hearing or trial any or all matters at issue in the actions; (2) consolidate the actions; or (3) issue any other orders to avoid unnecessary cost or delay.” 154 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration,

83. 155 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 414; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2835.

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decision without giving reasons (“unreasoned”). The arbitral panel has no jurisdiction to consolidate cases.156

The Swiss Chambers initiate consolidation sua sponte and issue an unreasoned decision. While, according to the Secretariat of the Zurich Chamber of Commerce, initiation could be made upon motion,157 the rules are silent on this matter. If the literal wording is applied, parties would be impotent should Swiss Chambers remain inactive.

4.5 Timing

In both arbitration and litigation, there are time frames in which certain procedural acts must be performed.158 In German litigation, e.g., cases that have already progressed to the point where judgment can be rendered, may not be consolidated.159

A large number of scenarios exist for the procedural stages that two or more cases could be in at the time of consolidation.160 In

156 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 4-65. An example for a legal framework with court driven consolidation are the Netherlands. Article 1046 of the Dutch Civil Code of Procedure gives the judge the authority to consolidate arbitration procedures seated in the Netherlands on request of one party if the subject matters of the different procedures are connected. Moreover, the judge has extensive competence to bindingly define the procedure should the involved parties not reach an agreement in a set time period. However, the parties can expressly exclude court ordered consolidation in their arbitration agreement.

157 Interview with Zurich Chamber of Commerce on 8 April 2010. 158 Such as appeals within a certain timeframe, responses, pleadings, etc. 159 Reinhard Greger, “§§ 128 - 167,” in Zöller Zivilprozessordnung, ed. Richard

Zöller, 27th ed. (Cologne: Schmidt (Otto), 2009), notes 147-5; Hartmann, Zivilprozessordnung, no. 147-13; Hans-Joachim Musielak, ed., Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz, 7th ed. (Munich: Vahlen, 2009), notes 147-1.

160 For example: One case has far progressed and the other is just at the beginning; both cases have far progressed but only at a late stage it becomes apparent that there will be a possibility of at least partially contradicting judgments; both cases have been begun at the same time and contradicting judgment are likely, but the parties choose to lead separate proceedings for reasons of their own; both cases are filed at the same time and seem to belong

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arbitration, what precise procedural stages of both arbitral proceedings consolidaton may still be permissible depends on the policy of the institution and must be addressed in any consolidation provision. It is a question of balancing the purposes of consolidation against the principles of arbitration.161 In this regard, the ICC Rules and Swiss Rules have made different choices.

4.5.1 ICC Rules

Under the ICC Rules, the ICC may order consolidation as long as the terms of reference in either case have been neither signed nor approved.162 As the terms of reference form an early stage of arbitration, the window for consolidation is narrow under the ICC Rules.163

Terms of reference are intended to provide an agreed framework and to give the parties the possibility to shape the proceedings as to their own gusto.164 After the terms of reference are signed or approved, claims may only be added by the use of article 19 ICC Rules.

Article 19 ICC Rules provides:

“After the Terms of Reference have been signed or approved by the Court, no party shall make new claims

together at first glance, but have no issues in common; or anything in between.

161 This will be addressed in more detail infra in chapter 13. 162 Brunet et al., Arbitration Law in America, 29 Brunet argues, that party

autonomy and privacy, as a rule, trump efficiency. 163 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 4-75; Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 183.

164 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 18-5; Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 18-3 et seqq.

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or counter-claims which fall outside the limits of the Terms of Reference unless it has been authorized to do so by the Arbitral Tribunal, which shall consider the nature of such new claims or counter-claims, the stage of the arbitration and other relevant circumstances.”

This means that once the terms of reference are signed or approved, the arbitrators are both the addressee for and the authority to decide the addition of new claims. From this moment on, the ICC Court of Arbitration loses jurisdiction over the procedure.165

The reference to article 19 ICC Rules was added for clarification that the addition of claims is possible under certain circumstances even when consolidation is no longer possible. However, article 19 ICC Rules is not a case of consolidation: no new case is filed, so that the permission to add a claim or counter-claim would not end case B (which was never in existence).166

The new article 10 disposes of both the timing restriction and the reference to article 19, permitting for a far broader timeframe in which consolidation can take place. This change brings the ICC closer to the Swiss Rule 4(1).

165 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, 19-12. 166 Generally speaking article 19 ICC Rules gives the arbitrators wide discretion

to allow claims not within the terms of reference. This discretion is also found under the Swiss Rules, however, afforded not to the arbitration panel but to Swiss Chambers. As this work focuses on forcible consolidation only and does not treat all forms of additions of parties or claims, article 19 ICC Rules will only be discussed again in chapter 13.

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4.5.2 Swiss Rules

As Swiss Chambers initiate consolidation sua sponte, there seems to be no particular timing for consolidation. The wording of the article is silent regarding timing. The English version states, “(w)here notice of arbitration is submitted”, which does not denote timing, but simply the fact that at some point notice of case B was submitted. The German version is similarly unenlightening: “(W)ird eine Einleitungsanzeige (. . .) eingereicht (. . .)” This version does not indicate that the submission is the triggering event. The French version reads: “Lorsqu’une notification d’arbitrage est soumise (. . .)” This also indicates no particular timing after the initiation.

None of the languages specifies timing. Instead, the wording indicates that Swiss Chambers retain the possibility to consolidate even after the second case B has passed from their care and the file is transmitted to the arbitrators.

This is also the view of BAMFORTH/MAIDMENT who state that consolidation can be performed at any stage under the Swiss Rules.167 In contrast to this GILLIÉRON/PITTET suggest that consolidation is to take place only directly upon initiation of case B.168 GEISINGER supports the later authors and explains that consolidating cases at a later date, i.e., after both panels have been chosen, is not provided for in the Swiss Rules.169 However, the wording of the rules does not exclude the option. The Zurich Chamber of Commerce informed this author upon request that consolidations are usually not proceeded with if a

167 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International

Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 15.

168 Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings (Joinder), Participation of Third Parties,” 7.

169 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 15.

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period of six months has elapsed.170 This provision is very inclusive.

4.6 Seat

International commercial arbitration agreements ordinarily contain a choice of the seat of arbitration.171 This raises the question of how to deal with different seats of the cases to be consolidated. Neither the ICC Rules nor the Swiss Rules directly addressed this issue.

It is therefore necessary to fall back to the seat provisions regarding the standard proceedings, which could be applied to a consolidation scenario as well. Article 14 ICC Rules provides:

“(1) The place of the arbitration shall be fixed by the Court unless agreed upon by the parties. (2) The Arbitral Tribunal may, after consultation with the parties, conduct hearings and meetings at any location it considers appropriate unless otherwise agreed by the parties. (3) The Arbitral Tribunal may deliberate at any location it considers appropriate.”

The ICC has so far declined to consolidate proceedings with different explicit seat choices. Under the ICC Rules, the timing requires that case A not have passed the stage of the signature and approval of the terms of reference. This means that the arbitrators can still take into account the seat choice (if any) and circumstances of case B when making the determination. The ICC Rules give no indication of opposing choices in seats.

170 Interview with Zurich Chamber of Commerce on 8 April 2010. 171 Haydock, “Mediation and Arbitration for Now and the Future,” 22 et seq.

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The new rule 10 does indicate, that clauses must be compatible, which this author uspects to be an alteration reflecting previous ICC practice, which is discussed further infra. In this case, different seats would prevent consolidation.

Article 16 Swiss Rules also treat seat selection without specifically addressing issues of consolidation.

“1. If the parties have not determined the seat of the arbitration, or if such designation is unclear or incomplete, the Special Committee shall determine the seat of the arbitration taking into account all relevant circumstances, or shall request the arbitral tribunal to determine the seat. 2. Without prejudice to the determination of the seat of the arbitration, the arbitral tribunal may decide where the proceedings shall be conducted. In particular, it may hear witnesses and hold meetings for consultation among its members at any place it deems appropriate, having regard to the circumstances of the arbitration.”

Under the Swiss Rules, which do not provide for this timing restriction, the chosen seat of case A would either have to be altered (for which the Swiss Rules make no provision) based on the circumstances of case B, or more likely case B would have to accept the language of case A based on the wording of the article 4(1), which adds case B to case A, as is.

GILLIÉRON/PITTET suggest that consolidation of arbitrations with different Swiss seats should be possible.172 The rules do not prevent consolidation in this fashion. However, in the single

172 Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings

(Joinder), Participation of Third Parties,” 8.

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case under the Swiss Rules the involved two different seats, namely Geneva and Zurich, Chambers rejected consolidation.

The case arose under two different arbitration clauses with two different seats. Claimant requested arbitration of cases under both contracts combined in both Geneva and Zurich. Each Chamber rejected one case and permitted the other, simultaneously declining to consolidate the cases.173 This one case is not indicative of a practice and is not required by the wording of the rules.

The ICC and Swiss Rules leave much unanswered in the wording of their provisions. Therefore, the question of incongruent seats will be addressed infra in subchapter 5.2.

4.7 Language

Parties are free to choose the language of their arbitration and most parties do so in their arbitration clauses. International commercial arbitration agreements ordinarily contain a choice of the language clause.174

In relation to consolidation neither the ICC Rules nor the Swiss Rules directly addressed the language question. An indication concerning the treatment of languages may be found in article 16 ICC Rules, which provides:

“In the absence of an agreement by the parties, the Arbitral Tribunal shall determine the language or languages of the arbitration, due regard being given to

173 Kellerhals, “Highlights from the Arbitration Committee,” 30 et seq. Case No.

8 (numbered in timely sequence) concerning consolidation. Details were provided during an Interview with the Zurich Chamber of Commerce on 8 April 2010.

174 Haydock, “Mediation and Arbitration for Now and the Future,” 22 et seq.

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all relevant circumstances, including the language of the contract.”

Article 17(1) Swiss Rules allows the arbitration panel to make a determination of the language.

“Subject to an agreement by the parties, the arbitral tribunal shall, promptly after its appointment, determine the language or languages to be used in the proceedings. This determination shall apply to the Statement of Claim, the Statement of Defense, and any further written statements and, if oral hearings take place, to the language or languages to be used in such hearings.”

If there is no uniformity between the languages chosen in cases A and B, the arbitrators are given full discretion to decide on the language, absent ad hoc party agreement. For consolidated cases this has certain consequences.

Under the ICC Rules, the timing requires that case A not have passed the stage of the signature and approval of the terms of reference. This means that the arbitrators can still take into account the language choice (if any) and circumstances of case B when making the determination. Under the new rules, without the timing restriction, the analysis equals the one given for the Swiss Rule.

Under the Swiss Rules, which do not provide for this timing restriction, the chosen language of case A would either have to be altered (for which the Swiss Rules make no provision) based on the circumstances of case B, or more likely, case B would have to accept the language of case A based on the wording of the article 4(1) Swiss Rules, which adds case B to case A, as is.

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Differing express choices by the parties will be addressed infra in subchapter 5.2.

4.8 Secrecy

Secrecy is used here to refer jointly to terms privacy and confidentiality. Privacy refers only to a lack of the public in arbitrations.175  Confidentiality refers to the enforceable duty not to disclose any information gleaned during the arbitration, or the fact of the arbitration itself.176

 

No specific provisions exist to provide for general secrecy. Under the ICC Rules, when only the same parties are involved in cases for consolidation, the concern for information leakage is minimal concerning parties to the new case. In ICC arbitrations, secrecy is up to the parties’ agreement. Article 20(7) only states: “The Arbitral Tribunal may take measures for protecting trade secrets and confidential information.”

A protective order under the ICC Rules is not intended to give confidentiality inside the proceedings, but only from outsiders. This is known as relative confidentiality.177

Under the Swiss Rules additional parties can be added, creating a potential migration of information. The Swiss Rules are more concerned with secrecy than are other rules. Article 43(1) Swiss Rules provides for secrecy as default.

175 Kyriaki Noussia, Confidentiality in International Commercial Arbitration: A

Comparative Analysis of the Position under English, US, German and French Law (Springer, Berlin, 2010), 39 et seq.

176 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 9.06; Noussia, Confidentiality in International Commercial Arbitration, 40 et seq.

177 Yves Derains, “Evidence and Confidentiality,” in Confidentiality in Arbitration, ICC 2009 Special Supplement (Paris, 2009), 67.

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“Unless the parties expressly agree in writing to the contrary, the parties undertake as a general principle to keep confidential all awards and orders as well as all materials submitted by another party in the framework of the arbitral proceedings not otherwise in the public domain, save and to the extent that a disclosure may be required of a party by a legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a judicial authority. This undertaking also applies to the arbitrators, the tribunal-appointed experts, the secretary of the arbitral tribunal and the Chambers.”

No specific rule on secrecy in consolidated proceedings exists. This seems odd, as the Swiss Rules are more secrecy conscious and at the same time are more vulnerable to leakage of information. Under the Swiss Rules article 4(1)(s.2) new parties may be added by consolidation. This opens up the possibility of more persons having access to the information than previously contemplated, specifically if more than one contract is concerned. This analysis will address secrecy in more detail infra in subchapter 6.1.

4.9 Costs

Neither the ICC Rules nor the Swiss Rules make special provisions for the allocation of costs in consolidated cases. The ordinary rules apply.

ICC Rule article 31(2) provides:

“The Court may fix the fees of the arbitrators at a figure higher or lower than that which would result

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from the application of the relevant scale should this be deemed necessary due to the exceptional circumstances of the case. Decisions on costs other than those fixed by the Court may be taken by the Arbitral Tribunal at any time during the proceedings.” (Emphasis added)

Swiss Rule article 40(1) provides:

“Except as provided in paragraph 2, the costs of arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.” (Emphasis added)

The issue of costs will be further addressed infra in section 13.2.2.

4.10 Connection Between Cases

Consolidation is usually attempted when cases share a connection. The extent of this required connection is not uniformly defined, as described supra in chapter 3. This required connection will also play an important role for the remainder of this analysis.

4.10.1 ICC Rules

The connection required for consolidation under article 4(6) ICC Rules is rather strict: The same parties must be involved in

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both cases,178 and the same legal relationship must be concerned.179

The new rule 10 is more inclusive, but also requires strict connectivity. No additional connection is required when all claims are made under the same agreement, which would tend to supply a strong connection. When different agreements are the subject of claims to be consolidated, 10(c) ICC Rules imposes three requirements: the same parties, the same legal relationship, and compatible agreements.

The first two are also found in the old ICC rule, while the third reflects ICC practice as it referred to language and seat. Compatibility of clauses will be discussed infra.

In addition, the ICC takes into account the subsequent will of the parties as indicated by the choice of arbitrators for all proceedings.

4.10.1.1 Parties

By far the most common reason for the ICC Court to reject an application for consolidation is non-satisfaction of identical parties.180 That requirement can sometimes appear restrictive in

178 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 4-67; Reiner / Jahnel; ICC Schiedsordnung Pierre A. Karrer, “Internationale Schiedsordnung der Schweizerischen Handelskammer,” in Institutionelle Schiedsgerichtsbarkeit Kommentar, ed. Rolf A. Schütze, 2nd ed. (Cologne: Carl Heymanns Verlag, 2011), note 19; Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 19 Here it is interesting to note the overlap between e.g. the group of companies doctrine.

179 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 4-67; Reiner / Jahnel; ICC Schiedsordnung Karrer, “Internationale Schiedsordnung der Schweizerischen Handelskammer,” 19; Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 19.

180 It has been suggested, that this is even narrower, requiring the same “economic transaction”. Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration Perspective,” 6.29 and 6.31.

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situations where two parties are intricately related. Doctrines such as the group of companies doctrine are not accepted.181

Case law confirms this restrictive view. The ICC refused to consolidate three arbitrations in which all of the parties to the first two arbitrations were involved in the third arbitration because the parties in the first two cases were not identical.182

In two arbitrations filed in 2008, the parties were closely related but not identical. While the respondents were identical in both cases, the claimants were slightly different members of the same group of companies with the same corporate address but had different names and different company identification numbers.183

The ICC refused to consolidate when the respondents to both cases were not the same, even though the group of companies doctrine was argued.184

This means that the ICC will not join the proceedings when additional parties join compared to another case.185 For example, if case A is between parties Elma Co., Fido Inc., and Guido Ltd., while case B is between parties Elma Co., Fido Inc., Guido Ltd., and Halo S.A., the cases cannot be consolidated.

181 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims,

Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 164; Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 4-72.

182 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 164.

183 Ibid., 165. 184 Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration

Perspective,” 6.36. 185 Ibid.; Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 4-19.

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The ICC Court does consider the same parties to be involved even when groups of claimants and respondents are not identical, i.e., the roles are interchangeable,186 as long as no additional parties are involved. It thus makes no difference if case A was between Elma Co. and Fido Inc., versus Guido Ltd., while case B was between Elma Co., versus Fido Inc. and Guido Ltd.

This is now different, when the same contact forms the basis of all arbitrations, as indicated in article 10(b) ICC Rules. The requirement stays intact, when different underlying agreements are concerned as stated in article 10(c) ICC Rules.

4.10.1.2 Legal Relationship

The requirement of “connection with a legal relationship” is a more undefined term. It may include a legal or factual connection. It has been suggested that this means the same economic transaction in the ICC context.187 Unfortunately, this is a vague term as well and must be regarded in light of previous cases.

The same legal transaction was found to exist when two separate agreements between the same parties, signed the same day and relating to products with the same definition, were subject to a dispute. In both cases the matter turned on whether the claimant had terminated the contracts. Relief sought was identical and most of the evidence involved both contracts. 188

186 Michael W. Bühler and Sigvard Jarvin, “The Arbitration Rules of the

International Chamber of Commerce (ICC),” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), note 15.270.

187 Yves Derains and Eric A. Schwartz, A Guide to the ICC Rules of Arbitration, 2nd ed. (The Hague: Kluwer Law International, 2005), 74.

188 Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration Perspective,” 6.34; Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 4-19.

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In a different instance, the ICC consolidated two cases based on the same project, when one claim was based on the original contract and the second on the amended contract.189

Under the new rule 10, this requirement only remains for cases of different underlying contracts, as a connection is presumed for the same contract.

Both requirements will be addressed further in this analysis.

4.10.2 Swiss Rules

Requirements for consolidation under the Swiss Rules are very few. Chambers must take into account all circumstances, including the links between the two cases and the state of advancement of the existing proceedings when consolidating cases.190 PETER suggests that criteria for consolidation will be up to Chambers to define.191

Since the inception of the Swiss Rules, the Swiss Chambers experienced fewer than 20 cases in which consolidation was even an issue.192 Sufficient detail for analysis of a practice was not available.

189 Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration

Perspective,” 6.35. 190 Wolfgang Peter, “Die neue Schweizerische Schiedsordnung - Anmerkungen

für die Praxis,” Neue Zeitschrift für Schiedsverfahren 2004 (2004): 60; Meyer-Hauser and Vock, “Schweizerische Schiedsordnung,” 56; Peter, “Some Observations on the Swiss Rules of International Arbitration,” 5.

191 Peter, “Some Observations on the Swiss Rules of International Arbitration,” 5. 192 Interview on 8 April 2010, not all of these cases were forced consolidations.

Only 4 cases were in fact consolidated. According to a telephone conference with Ms. Veronique Schlaepfer, Chairwomen of the National Arbitration Committee of the Swiss Chambers’ Court of Arbitration and Mediation, on 12 April 2010, between 2-5 cases had occurred in Geneva as of 2010.

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Some have argued that arbitration is also based on flexibility and the expertise of arbitrators, so that any rules too detailed contravene the nature of arbitration.193 This author propounds, however, that there must be balance between flexibility and predictability, so as to avoid arbitrariness.194

Unfortunaltely the proposed new rule 4(1) Swiss Rules does not require a legal connection either. The required connection will be discussed in detail infra in subsections 5.4. and 5.5. of this analysis.

4.11 Procedural Adjustments in the Consolidated Case

Consolidation does not only involve the decision on consolidation itself. The unification of two previously separate proceedings requires certain adjustments.195 The arbitrators who have not heard the previous stages must be informed. Furthermore, not all parties have had the opportunity to be heard on every issue, so that certain allowances must be made. Many procedural difficulties can be avoided when consolidation occurs in the early stages of both proceedings.

The Rules of both the ICC and the Swiss Chambers are silent regarding explicit provisions relating to procedural adjustments

193 Xavier Favre-Bulle, “Are Arbitration Proceedings Still Exclusively Reserved

for Parties?,” in Towards a Uniform International Arbitration Law?, ed. Anne Véronique Schlaepfer, Philippe Pinsolle, and Louis Degos (Huntington, NY: Juris Publishing, 2005), 241 et seq.

194 No pun intended. 195 Speaking of multi-party arbitration: Girsberger, “Pitfalls in Swiss Arbitration

Agreements,” 101. The same reasoning applies, even when only the same two parties are involved.

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following consolidation. General guidelines for arbitrators are of little assistance.196

Under the ICC Rules, the panel has discretion to decide the procedure within the bounds of article 15(2) ICC Rules:

“In all cases, the Arbitral Tribunal shall act fairly and impartially and ensure that each party has a reasonable opportunity to present its case.”

In short, fairness, impartiality and the right to be heard are the guideposts for arbitrators.

Concerning consolidation, the Swiss Rules are equally silent on the subject of the conduct of the proceedings after consolidation. Commentators of article 4 have attempted to give guidance, which does not prove overly helpful. KARRER states that the panel decides the details of how to proceed after the consolidation.197

Article 15 Swiss Rules gives arbitrators discretion for the conduct of the proceeding.

“1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that it ensures equal treatment of the parties and their right to be heard. (. . .)

196 In all fairness, institutional rules rarely treat the conduct of the proceedings as

such. 197 Karrer, “Internationale Schiedsordnung der Schweizerischen

Handelskammer,” 4.

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6. All participants in the arbitral proceedings shall act in accordance with the requirements of good faith.” (Emphasis added)

Swiss Rules attempt to avoid repetition. Speaking about replacement of arbitrators, KARRER believes that a review of appropriate protocols can be sufficient.198

As neither of the sets of rules provide much guidance to the stressed arbitrator, this analysis will move on to interpreting the requirements provided by the lex arbitri and the laws of the enforcement countries.199 Parties must be given due process of law, which includes the right to be heard and the right to equal treatment.200 This will be discussed infra in chapters 11 and 12.

4.12 Summary

Many important issues concerning consolidation remain unaddressed in both sets of Rules. Nevertheless, concerning the ICC Rules it has been suggested that they “(. . .) work tolerably well in practice.”201

From a practical standpoint the institution seems best placed to know of potential cases suitable for consolidation as it receives and administers them.202 Each institution provides that the

198 Ibid., 14-2. 199 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 12-31. 200 Article 18 UNCITRAL Model Law, article 15(1) UNCITRAL Arbitration

Rules, 15(2) ICC Rules, article 182(3) SPILA, § 1042(1) GCCP. 201 John Marrin, “Multiparty Arbitration in the Construction Industry,” in

Multiple Party Actions in International Arbitration, ed. Permanent Court of Arbitration (New York: Oxford University Press, 2009), note 17.29.

202 Of course this is not true to the same extent in all institutions. While the ICC is included in all communications, the Swiss Chambers have, true to the Swiss tradition of decentralization, different administrative locations, which might not communicate. In addition the Swiss Chambers are not copied on all communications. This federalism is somewhat eased by the mandatory involvement of the Special Committee.

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choice of arbitrators for case B is nonexistent and that the first panel will assume the second case. Neither institution provides specifically adjusted rules for costs, procedural adjustments, secrecy, seat or language. The rules as to initiation procedures, requirements, and timing of consolidation differ substantially between the ICC Rules and the Swiss Rules. The Swiss Rules are far more inclusive than the ICC Rules and can accommodate many more situations.

From the next chapter on, this analysis will face the task of putting these rules in the context of the chosen jurisdictions and thus into practice. Chapter 5 will address one of the central topics in, and the basis of, arbitration: consent.

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5 Consent to Consolidation A fundamental aspect of arbitration is that it is consent-based.203 This means that parties are free to agree on their method and procedure204 of dispute resolution.205 This principle is called party autonomy and is still the principle basis of arbitration.206 Party autonomy gives arbitration both its legitimacy and its boundaries.207 Only those disputes can be arbitrated that the parties have agreed to arbitrate. Consent to arbitration is a waiver of the right of access to the courts.208 Beyond the scope of the party agreement lies the realm of governmental judicial authority.

Party autonomy has limits.209 Party preferences have always been weighed against other concerns, such as due process or

203 Richard Garnett et al., A Practical Guide to International Commercial

Arbitration (Dobbs Ferry, N.Y: Oceana Publications, 2000), 3. 204 Exemplum gratia article 182(1) SPILA, § 1042(4) GCCP, article 15(1) ICC

Rules, article 15(1) UNCITRAL Rules and others. 205 Markus A. Petsche, The Growing Autonomy of International Commercial

Arbitration, Beiträge zum Internationalen Wirtschaftsrecht (Munich: Sellier European Law Publishers, 2005), 16.

206 Lew, “Achieving the Dream: Autonomous Arbitration?,” 457 Note 20-10; Girsberger and Voser, International Arbitration in Switzerland, note 23; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 54; Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 327; Weigand and Baumann, “Introduction,” 1.172; Gerald Ghikas, “Kompetenz-Kompetenz: A Principle of Law or an Agreement,” VJ 14 (2010): 129; Karl-Heinz Böckstiegel, “Party Autonomy,” in Handbook on International Arbitration and ADR, ed. Thomas E. Carbonneau (Huntington, N.Y: JurisNet, 2006), 115 - 126.

207 Jaime Dodge Byrnes and Elizabeth Pollman, “Arbitration, Consent and Contractual Theory: The Implications of EEOC v. Waffle House,” Harvard Negotiation Law Review 8 (2003): 289; In Germany party autonomy is derived from article 92 GBL. Hanns Prütting, “Schiedsgerichtsbarkeit und Verfassungsrecht,” in Grenzüberschreitungen - Beiträge zum Internationalen Verfahrensrecht und zur Schiedsgerichtsbarkeit. Festschrift für Peter Schlosser zum 70. Geburtstag., ed. Birgit Bachmann et al. (Tübingen: Mohr Siebeck, 2005), 708.

208 Georgios Petrochilos, Procedural Law in International Arbitration (Oxford Univ Press, 2004), note 4.11.

209 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 0-17 et seq.; Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 5.04 speaking of the LCIA Rules; Berger and Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in der Schweiz, note 11.

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public policy.210 Party autonomy is subject to mandatory laws of the lex arbitri,211 be they procedural or substantive.212 Which laws are mandatory depends on each jurisdiction.213 Generally speaking, fundamental rights are violated when the weaker party is forced into a disadvantage which is no longer tolerable by the legal system.214

Speaking about forcible consolidation seems to be an inherent contradiction. As willing as courts and commentators are to enter into a debate about consolidating arbitrations, many authorities have traditionally been hesitant to require consolidation without the explicit consent of the parties.215 Even so, forcible consolidation and consent as concepts can be reconciled under certain conditions. In principle, the same

210 Marc Blessing, “Mandatory Rule of Law versus Party Autonomy in

International Arbitration,” Journal of International Arbitration 14 (1997): 23; Donald Francis Donovan and Alexander K. A. Greenawalt, “Mitsubishi After Twenty Years: Mandatory Rules Before Courts and International Arbitrators,” in Pervasive Problems in International Arbitration, ed. Loukas A. Mistelis and Julian D. M. Lew (Alphen aan den Rijn: Kluwer Law International, 2006), 11.

211 María Elena Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes (Frankfurt am Main: Peter Lang, 2009), 205; Michael Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte (Frankfurt am Main: Peter Lang, 2001), 325; Blessing, “Mandatory Rule of Law versus Party Autonomy in International Arbitration,” 23; Donovan and Greenawalt, “Mitsubishi After Twenty Years: Mandatory Rules Before Courts and International Arbitrators,” 11; Girsberger and Voser, International Arbitration in Switzerland, note 667.

212 Poudret and Besson, Comparative Law of International Arbitration, note 545 et seqq.; Weigand and Baumann, “Introduction,” 1.228.

213 Weigand and Baumann, “Introduction,” 1.229. Mandatory laws are the opposite of default rules. While both are outside the contract, mandatory laws must be observed in every case and are usually designed to protect the public interest rather than the interest of the individual, while default rules only need be observed in cases when the contract does not provide.

214 See generally Florian Nikolaus Rehm, Die Schiedsgerichtsbarkeit im Rechtssystem (Baden-Baden: Nomos, 2009), 28 et seqq.

215 Fritz Nicklisch, “Multi-Party Arbitration and Dispute Resolution in Major Industrial Projects,” Journal of International Arbitration 11, no. 4 (1994): 59; Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1039. That hesitancy may be changing.

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reasoning applies as with forcing a party to honor an arbitration agreement previously made.

5.1 Applicable Law

The following analysis wishes to be of practical use. The seat of a fictitious consolidated arbitration is somewhere in Switzerland, the award is then to be enforced in Germany and the United States. These choices have practical implications.

The law applied to arbitral procedure is the lex arbitri.216 What content the lex arbitri has is determined, unless chosen by the parties,217 by the law applicable to the substance of the contract,218 or the law of the seat.219 The seat retains great importance for the arbitration in any case,220 as it defines the nationality of the award221 and determines which courts have

216 Poudret and Besson, Comparative Law of International Arbitration, 112;

Nigel Blackaby et al., Redfern and Hunter on International Arbitration, 5th ed. (Oxford: Oxford University Press, 2009), note 3.07. Lex arbitri encompasses all rules and regulations applicable to the arbitration.

217 This choice is to be determined by interpretation. This analysis presumes there is no choice explicit or implicit, so that default rules are applied.

218 Blackaby et al., Redfern and Hunter on International Arbitration, note 3.10. 219 For a detailed analysis see e.g. Julian D. M. Lew, The Law Applicable to the

Form and Substance of the Arbitration Clause, ICCA Congress Series No. 9: Improving The Efficiency of Arbitration Agreements and Award: 40 Years of Application and the New York Convention (Paris: International Council for Commercial Arbitration - ICCA, May 3, 1998), para. 136.

220 Claude R. Thomson and Annie M. K. Finn, “Managing an International Arbitration - A Practical Perspective,” Dispute Resolution Journal 60, no. 2 (2005): 4; August Reinisch, “Die internationale Handelsgerichtsbarkeit und andere Formen der Streitbeilegung im internationalen Wirtschaftsrecht,” in Internationales Wirtschaftsrecht (Berlin: de Gruyter Recht, 2009), note 38; Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1064; Klaus Sachs and Torsten Lörcher, “§ 1043 - Place of Arbitration,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 1; Girsberger, “Pitfalls in Swiss Arbitration Agreements,” 98; Justus Wilke, Interessenkonflikte in der internationalen Schiedsgerichtsbarkeit: Unparteilichkeit, Unabhängigkeit und Offenlegungspflichten / vorgelegt von Justus Wilke (Berlin: dissertation.de, 2006), 162; Derains and Schwartz, A Guide to the ICC Rules of Arbitration, 200.

221 Nacimiento, “Konfliktlösung nach allgemeinen Schiedsordnungen, insbesondere ICC, AAA, und DIS,” 788.

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jurisdiction during the arbitration.222 Absent contractual choice, the conflicts of laws of the seat also determines which procedural law applies to the arbitration.223 Article 176(1) SPILA states that it applies to international arbitrations with a seat in Switzerland.

In Switzerland, two different laws pertain to arbitration; the SCCP applies to domestic arbitration,224 while chapter 12 SPILA applies to international arbitration.225 Even though adopted roughly three years after the UNCITRAL Model Law was accepted by the United Nations, SPILA does not implement the UNCITRAL Model Law.226 Article 182(2) SPILA permits a choice by the panel. This author applies the law of the seat, i.e., Swiss procedural law, as stated supra in section 1.3.2.

The hierarchy of applicable rules to the arbitral procedure consists of the mandatory laws of the lex fori,227 agreement of the parties,228 the applicable institutional rules,229 procedural

222 Instead of many see: Blackaby et al., Redfern and Hunter on International

Arbitration, note 3.67 et seqq. 223 Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat

und IPRG, 199; Filip De Ly, “Conflicts of law in international arbitration - an overview,” in Conflict of Laws in International Arbitration, ed. Franco Ferrari and Stefan Kröll (Sellier European Law Publ., 2010), 7.

224 On 1.1.2011 the Swiss Civil Procedure Code replaced the former Intercantonal Concordat.

225 See generally Peter Probst, Das Verhältnis zwischen dem Konkordat über die Schiedsgerichtsbarkeit und dem 12. Kapitel IPRG (Zurich: Schulthess, 1999).

226 Ibid., 11; Poudret and Besson, Comparative Law of International Arbitration, note 61; Bernhard Meyer-Hauser, “The Swiss Rules of International Arbitration - Five Years of Experience,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg (Basel: Swiss Chambers’ Court of Arbitration and Mediation, 2009), 10; Peter, “Some Observations on the Swiss Rules of International Arbitration,” 1.

227 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 5.25. 228 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1072.

229 If institutional rules are incorporated into the agreement, they take precedence over the statutory default rules. Gerhard Wagner, “§ 1027 - Loss of Right to Object,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 6; Blackaby et al., Redfern and Hunter on International Arbitration, note 3.42.

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orders by the panel, and the non-mandatory lex fori.230 These together form the lex arbitri.231 The lex arbitri encompasses all provisions governing the arbitration, from the validity of the agreement to the assistance of the courts.232 Party agreement only prevails over non-mandatory laws.233

Arbitrators need to know whether a particular principle of law is considered mandatory or is simply a default rule, since no derogations from the former are permitted.234

Mandatory laws, as well as the public policy of the countries treated in this analysis, encompass certain human rights, in specific the right to due process and access to the courts. Governments are the primary addressees of the conventions on

230 Here Anglo-American and European theories differ slightly. While European

countries are more likely to accept institutional rules as governing, US courts prefer to apply national procedural law of the seat (lex arbitri). Matti S. Kurkela and Hannes Snellman, Due Process in International Commercial Arbitration (Dobbs Ferry, New York: Oceana Publications, 2005), 25; Wilke, Interessenkonflikte in der internationalen Schiedsgerichtsbarkeit, 96 et seq.; George A. Bermann, “Building the Civilization of Arbitration: Ascertaining the Parties’ Intentions in Arbitral Design,” Penn State Law Review 113 (2009): 113; Garnett et al., A Practical Guide to International Commercial Arbitration, 21; Szuts v. Dean Witter Reynolds, Inc., 931 F.2d 830, 831 et seq. (11th Cir., USA 1991).

231 This author does not wish to make a contribution to the ongoing debate over what constitutes lex arbitri or lex fori, but simply wishes to establish the parameters of the terminology used herein. For a comprehensive overview see Blackaby et al., Redfern and Hunter on International Arbitration, note 3.39 et seqq.; Poudret and Besson, Comparative Law of International Arbitration, note 112 et seqq.

232 Bernhard Berger and Franz Kellerhals, International and Domestic Arbitration in Switzerland, 2nd ed. (London: Sweet & Maxwell/Thomson Reuters, 2010), note 376; Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, note 5.24.

233 Poudret and Besson, Comparative Law of International Arbitration, note 249; Karsten Thorn and Walter Grenz, “The effect of overriding mandatory rules on the arbitration agreement,” in Conflict of Laws in International Arbitration, ed. Franco Ferrari and Stefan Kröll (Sellier European Law Publ., 2010), 193.

234 Donovan and Greenawalt, “Mitsubishi After Twenty Years: Mandatory Rules Before Courts and International Arbitrators,” 1 et seqq.; Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1064.

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human rights.235 For example, article 35(3) of the Federal Constitution of the Swiss Confederation states:

“The authorities shall ensure that fundamental rights, where appropriate, apply to relationships among private persons.”

Regardless of which opinion one follows as to whether an arbitral panel must give effect to human rights conventions,236 an arbitral panel wishing to render an enforceable award should be aware of the public policy implications of the human rights conventions on the enforceability of the award.237 The influence of human rights is limited mainly to the procedural guarantees in article 6(1) ECHR238 or the article 8 American Convention on Human Rights.239

The validity of the agreement and the procedures performed there under are determined solely by the lex arbitri. A proceeding which has observed the lex arbitri cannot be refused recognition or enforcement under the NYC unless following the lex arbitri would result in an award the enforcement of which 235 Petrochilos, Procedural Law in International Arbitration, note 4.07. 236 Pro applicability Ben Steinbrück, Die Unterstützung ausländischer

Schiedsverfahren durch staatliche Gerichte: Eine rechtsvergleichende Untersuchung des Deutschen, Österreichischen, Englischen, Schweizerischen, Französischen und US-Amerikanischen Schiedsrechts (Tübingen: Mohr Siebeck, 2009), 57; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 95; Christoph Müller, International Arbitration: A Guide to the Complete Swiss Case Law (Unreported and Reported) (Cologne: O. Schmidt, 2004), 6; Petrochilos, Procedural Law in International Arbitration, note 4.96; Poudret and Besson, Comparative Law of International Arbitration, note 86; contra: Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 5-74; SFCD 117 Ia 166 (Swiss Federal Court 1991).

237 Thorn and Grenz, “The effect of overriding mandatory rules on the arbitration agreement,” 199 et seqq. Concerning the arbitrator’s duty to issue an enforceable award see infra chapter 10.

238 Poudret and Besson, Comparative Law of International Arbitration. 239 American Convention on Human Rights, O.A.S.Treaty Series No. 36, 1144

U.N.T.S. 123, entered into force July 18, 1978, reprinted in Basic Documents Pertaining to Human Rights in the Inter-American System, OEA/Ser.L.V/II.82 doc.6 rev.1 at 25 (1992).

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violated the public policy of the enforcement country.240 Mandatory laws of the enforcement country are only relevant insofar as they reach the level of public policy.241 This will be addressed further infra in subchapter 9.6 and chapter 12. This analysis shall now turn to whether an agreement to consolidate by choosing the ICC or Swiss Rules is valid.

5.2 Incompatible Clauses

In cases of a single arbitration agreement, incompatible clauses cannot occur. In multi-contract situations, there are two arbitration clauses to consider. When two arbitration clauses contain incompatibilities, these would supersede the institutional rules permitting consolidation by indicating opposition thereto by the parties.242 If parties indicated different wishes for different arbitration clauses, consolidation would not only be unforeseeable but also amount to a violation of party agreement.

The current practice of the ICC requires that the dispute resolution provisions of the contracts involved must be compatible.243 The new ICC rule 10(c) requires as much. Conceptually speaking, there are fewer problems consolidating proceedings if the different arbitration agreements contain identical language.244 Indeed,

240 Patricia Nacimiento, “Article V(1)(a) NYC,” in Recognition and Enforcement

of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Kluwer Law International, 2010), 224. For further explanation see infra chapters 13.

241 See infra chapters 9 and 12 242 Leboulanger, “Multi-Contract Arbitration,” 81; Poudret and Besson,

Comparative Law of International Arbitration, note 240; Born, International Commercial Arbitration Volume II, 2075.

243 Whitesell, “Multiparty Arbitration: The ICC International Court of Arbitration Perspective,” 6.29.

244 Hanotiau, “Complex Multicontract-Multiparty Arbitration,” 376; Whitesell and Silva-Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience,” 15.

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"it is generally legitimate to presume that by including identical arbitration clauses in the various related contracts, the parties intended to submit the entire operation to a single arbitral tribunal."245

When cases are consolidated in the United States, the clauses were compatible.246 What exactly constitutes incompatibility is not uniformly agreed upon. BÜHLER/WEBSTER do not require that the arbitration agreements be worded the same.247 However, the clauses may not be significantly different.248 For LEW ET AL. all contracts contain identical clauses249 BERGER/KELLERHALS define incompatibility as either concurring or identical.250 Concurring means that there is no difference between the clauses with respect to certain core features, such as applicable rules, place of arbitration, number of arbitrators, language of arbitration.251

Certainly, for consolidation, all parties must have agreed to the same arbitral institution.252 By ICC practice it is not permissible

245 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1041; Fouchard, Emmanuel Gaillard, and John Savage, Fouchard Gaillard Goldman on International Commercial Arbitration (Aspen Publ., 1999), 521.

246 Kazutake, “Party Autonomy in International Commercial Arbitration: Consolidation of Multiparty and Classwide Arbitration,” 197.

247 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 4-69.

248 Ibid. 249 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-57. 250 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 478. 251 Ibid. 252 Justus Wilke, Interessenkonflikte in der Internationalen

Schiedsgerichtsbarkeit: Unparteilichkeit, Unabhängigkeit und Offenlegungspflichten (Berlin: dissertation.de, 2006), 71; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1369; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 295 et seqq.; Blackaby et al., Redfern and Hunter on International Arbitration, notes 3-72 et seqq.

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to consolidate arbitrations with differing seats.253 A similar practice is followed by the Swiss Chambers. Two different contracts providing for two different procedures with two different seats (though both in Switzerland) were not consolidated by the Zurich and Geneva Chambers.254

The Swiss Federal Court decided a case in which two companies had concluded a number of related contracts, two of which were exclusive delivery agreements and the others delivery agreements. All agreements contained incompatible arbitration clauses, choosing different institutions, seats and applicable laws.255 The panel had rejected hearing the cases together and the Swiss Federal Court agreed that the inconsistencies of the two contracts between the same parties indicated that no consolidation was intended.256

This view is supported by a number of scholars, such as BORN257 and LACHMANN.258 Other scholars expand incompatibility even further. Incompatibility is given when the seat, constitution of the arbitral panel or the applicable procedure differ.259 Different seats are given even when they are located in same country.260

253 Poudret and Besson, Comparative Law of International Arbitration, note 248;

Torsten Lörcher, “The Swiss Rules of International Arbitration Seen from Abroad,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg (Basel: Swiss Chambers’ Court of Arbitration and Mediation, 2009), 69.

254 Kellerhals, “Highlights from the Arbitration Committee,” 30 et seq. Case No. 8 (numbered in timely sequence) concerning consolidation. Details were provided during an Interview with the Zurich Chamber of Commerce on 8 April 2010.

255 SFCD of 29 February 2008 - 4A.452/2007 (Swiss Federal Court 2008). 256 Ibid., para. C. 2.5.3. 257 Born, International Commercial Arbitration Volume II, 2090. 258 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4074. 259 Poudret and Besson, Comparative Law of International Arbitration, note 240;

Paul D. Friedland, Arbitration Clauses for International Contracts, 2nd ed. (Huntington, NY: Juris Publishing, 2007), 135; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-59.

260 See supra chapter 4.

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The language of the proceeding may have considerable impact on the proceedings.261 However, determining the wrong language may only lead to setting aside of the award on exceptional cases.262 To illustrate, this author gives a few examples. Lack of knowledge of the language is not sufficient to refuse recognition and enforcement,263 as language capabilities of the parties can be adjusted through the use of an interpreter.264 Using English as the common language of international arbitration cannot be regarded as a ground for refusal of recognition and enforcement.265

Different constitutions of panels are given when different numbers of arbitrators are selected, when different qualifications for the arbitrators are selected, or even when different methods of choosing the arbitrators are selected. Different applicable procedures are given when one is ad hoc and one institutional, when one is ordinary and one is 261 Klaus Sachs and Torsten Lörcher, “§ 1045 - Language of Proceedings,” in

Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 4.

262 Ibid., 5; Stefan M. Kröll, “§ 1061 - Foreign Awards,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Alphen aan den Rijn, The Netherlands: Wolters Kluwer Law & Business, Kluwer Law International, 2007), note 76; OLG Köln of 16 December 1992, 1993 Recht der Internationalen Wirtschaft 499, 501 (Regional Court Cologne, Germany 1992).

263 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2588; Klaus Sachs and Torsten Lörcher, “§ 1042 - General Rules of Procedure,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Alphen aan den Rijn, The Netherlands: Wolters Kluwer Law & Business, Kluwer Law International, 2007), note 17; GFCD of 20 January 2003 - III ZB 6/02 Int. A.L.R. N-59; Clout Case No. 559 (2003); Patricia Nacimiento, “Article V(1)(d) NYC,” in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Alphen aan den Rijn, The Netherlands: Kluwer Law International, 2010), 294; differing: OLG Celle of 31 May 2007 - 8 Sch 06/06, XXXIII Yearbook of Commercial Arbitration 524 (Regional Court Celle, Germany 2008).

264 GFCD of 20 January 2003 - III ZB 6/02; OLG Celle of 2001, XXXII Yearbook of Commercial Arbitration 303, 307 (Regional Cout Celle, Germany 2007).

265 Andrés Jana, Angie Armer, and Johanna Klein Kranenberg, “Article V(1)(b) NYC,” in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), 251.

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expedited,266 or when different institutions administer the proceedings.

Different selection of arbitrators after the cases have commenced is not an indicator. Subsequent absence of the wish to consolidate does not denote lack of forseeability of consolidation at the conclusion of the contract. 267

This author therefore concludes that in multiple contract scenarios consolidation by reference to institutional rules is superseded by party agreement in the following circumstances: 1) incompatible seats; 2) incompatible languages; 3) incompatible choice of institutions; 4) incompatible choice of procedures within the institutions; 5) incompatible applicable law either on the merits or procedurally; and 6) different number, qualification or selection procedures for arbitrators.268

This, however, does not mean that all compatible clauses result in consolidation. This analysis will therefore move to a determination on validity of the reference to consolidation. For the remainder of this analysis, the esteemed reader should assume that this author only speaks of scenarios with compatible clauses unless specified otherwise.

266 This only applies when different procedures are chosen, rather than when

different procedures are applicable by operation of the rules, article 42(2) Swiss Rules.

267 Differing opinion to author: Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-93. It will be a rare occurrence in any case, that in the narrow time window permissible for consolidation under the ICC Rules both sole arbitrators will have been chosen. In the face the appointment of two different arbitrators the will of the parties not to consolidate is so clear that the ICC is unlikely to force the issue.

268 Blackaby et al., Redfern and Hunter on International Arbitration, notes 3-82; Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 112.

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5.3 Swiss Law Regarding Validity of Consent to Consolidation

The SPILA provides in article 178(2):

“As to substance, the arbitration agreement shall be valid if it complies with the requirements of the law chosen by the parties or the law governing the object of the dispute and, in particular, the law applicable to the principal contract, or with Swiss law.”

Choosing this wording SPILA intends to give the greatest possibility of validity to an agreement.269 In addition, the principle of in favorem validitatis applies,270 once it has been established that the parties generally wish to arbitrate.271 Article 178(2) SPILA is mandatory in itself.272 The options chosen by article 178(2) SPILA are permissible under article V(1)(a) NYC, which allows the determination of validity to stand if it conforms with the standards of the law of the seat country, failing any other agreement.273

5.3.1 Principles of Interpretation

The principles of interpretation of an arbitration agreement have changed over the last century from restrictive to very broad.274

269 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 368; Werner Wenger, “Article 178 SPILA,” in International Arbitration in Switzerland an Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute, ed. Stephen V. Berti et al. (Basel: Helbing & Lichtenhahn, 2000), note 24.

270 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 369. This will be explained further infra in this subchapter.

271 SFCD 128 III 50 (Swiss Federal Court 2001); Girsberger, “Pitfalls in Swiss Arbitration Agreements,” 91.

272 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 370 undecided; Girsberger and Voser, International Arbitration in Switzerland, note 284.

273 Nacimiento, “Article V(1)(a) NYC,” 224. 274 Kurkela and Snellman, Due Process in International Commercial Arbitration,

69.

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Nevertheless, ordinary principles of contract interpretation apply when determining whether the parties did intend to arbitrate.275 In construing the contract, the common intention or will of the parties276 in light of the particular circumstances of the case277 is sought.278

In Switzerland, the general rules of formation and interpretation of a contract apply,279 as the Swiss Federal Court states:

“(. . .) in an international arbitration governed by PILA, and considering the clear intent of the parties to apply Swiss law, the arbitration clause must be interpreted according to the Swiss rules relating to the interpretation of contracts. The contents of a contract are determined primarily through subjective interpretation, namely by seeking the true and reciprocal intent of the parties, instead of

275 SFCD of 14 June 1990, 12 ASA Bulletin 226 - 229 (Swiss Federal Court

1990); Girsberger and Voser, International Arbitration in Switzerland, note 222; Kurkela and Snellman, Due Process in International Commercial Arbitration, 71 t is there argued that the arbitration agreement is a contract sui generis and thus must be interpreted accordingly. Wenger, “Article 178 SPILA,” 30; SFCD 130 III 66 71 (Swiss Federal Court 2003); SFCD of 3 May 2010 - 4A_456/2009 C. 3.3 (n.d.).

276 Werner Wenger, “Article 186 SPILA,” in International Arbitration in Switzerland: An Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute, ed. Stephen V. Berti et al. (Basel: Helbing u. Lichtenhahn, 2000), note 28 whether this hypothetical will can be expressed (solely) by choosing institutional rules shall be discussed elsewhere.

277 Rolf Trittmann and Inka Hanefeld, “§ 1029 - Definition,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 31; OLG Karlsruhe of 5 June 2007 (Regional Court Karlsruhe, Germany 2007).

278 SFCD of 3 May 2010 - 4A_456/2009, note C. 3.3.1; SFCD 133 III 61 67 (Swiss Federal Court 2006).

279 SFCD of 29 February 2008 - 4A.452/2007, sec. c. 2.3 “Die Auslegung einer Schiedsvereinbarung folgt den für die Auslegung privater Willenserklärungen allgemein geltenden Grundsätzen. Massgebend ist in erster Linie das übereinstimmende tatsächliche Verständnis der Parteien. Kann ein solcher tatsächlicher Parteiwille nicht festgestellt werden, ist die Schiedsvereinbarung objektiviert auszulegen, d.h. die Willenserklärungen sind nach dem Vertrauensprinzip so auszulegen, wie sie vom Empfänger nach Treu und Glauben verstanden werden durften und mussten.” ; SFCD 130 III 66, sec. E. 3.2; Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 421.

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relying on the inaccurate denominations or words they may use, mistakenly or in order to disguise the true nature of the contract (Art. 18 (1) CO). Whenever (. . .), there are no factual certainties as to the real and reciprocal intent of the parties or when the court finds that one party did not understand the other’s intent, their (presumed) intent must be determined interpreting their statements according to the principle of trust (so called objective interpretation), namely with the meaning that each contractive party could and should reasonably attribute to the statements of intent of the other under the specific circumstances. Not only the text and the context of the statements must be considered for that purpose, but also the circumstances which preceded or accompanied the stipulation of the contract, but not the behaviourbehavior subsequently adopted by the parties. Finally, it must be recalled that the principle of trust allows the attribution to a party of the objective meaning of its statement or its behaviour, even though this may not correspond to its intimate will.”280

The first canon of interpretation of contracts in Swiss law is the “common actual intention” as per article 18(1) CO. This is a subjective test. Only when this cannot be found can an objective test be employed, seeking a presumed intention.281 This intention is ascertained by the way the recipient was reasonably entitled to understand it.282

280 SFCD of 5 December 2008 - 4A_376/2008 E. 7.3.1 (Swiss Federal Court

2008), translation provided by praetor.ch. 281 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 415. 282 SFCD 125 III 305 308 (Swiss Federal Court 1999); Ingeborg Schwenzer,

Schweizerisches Obligationenrecht Allgemeiner Teil, 3rd ed. (Berne: Stämpfli, 2003), note 27.41; SFCD of 3 May 2010 - 4A_456/2009, para. C. 3.3.1.

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This analysis assumes that each contract contains a standard arbitration clause.283 These clauses are valid as to the parties of the respective agreement. Consolidation is referred to only via the inclusion of the institutional rules. This analysis will therefore move to determine whether the consolidation reference invalidates the otherwise valid clause or is in itself invalid. The scope of the arbitration agreement is to be interpreted broadly.284 This presupposes that the general agreement to arbitrate disputes arising from a certain relationship with certain parties has been made. Therefore, the principle of in favorem validitatis applies.285

Under Swiss law, an agreement may be invalid due to its content, if it violates mandatory rules of law or public policy according to article 19(2) and article 20(1) CO.286 However, pursuant to article 20(2) CO, invalidity only affects those parts which are offensive.287 Invalidity of the reference to consolidation would therefore not invalidate the arbitration agreement itself, so long as it can be determined that the parties would have agreed to arbitration without the offending clause.288 As a rule, the entire affected part is invalid.289 However, concerning arbitration agreements, a different

283 This analysis further presupposes the formal validity of the agreements. 284 Gerhard Walter, “Die Internationale Schiedsgerichtsbarkeit in der Schweiz,”

in Internationale Schiedsgerichtsbarkeit, ed. Peter Gottwald (Bielefeld: Gieseking, 1997), 823.

285 Wenger, “Article 178 SPILA,” 24 et seqq. 286 Andreas Furrer and Markus Müller-Chen, Obligationenrecht - Allgemeiner

Teil (Zurich: Schulthess, 2008), notes 5-60 et seq. 287 SFCD 130 II 66 74 (Swiss Federal Cout 2003), the Federal Court applies

article 20(2) CO in analogy to uphold an arbitration agreement where the will of the parties to submit their case to arbitration was unambiguous but the provision relating to the appointment of the arbitrators had an impossible content. In such a case, the invalid provision has to be interpreted teleological in order to be valid, to be deleted without replacement or to be substituted by a replacing state law provision; Furrer and Müller-Chen, Obligationenrecht - Allgemeiner Teil, notes 5-120.

288 Furrer and Müller-Chen, Obligationenrecht - Allgemeiner Teil, notes 5-121. 289 Theo Guhl et al., Das Schweizerische Obligationenrecht: Mit Einschluss des

Handels- und Wertpapierrechts, 9th ed. (Zurich: Schulthess Juristische Medien, 2000), notes 7-39 et seq.

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solution is permissible.290 It may employ an interpretation to the reference which preserves the maximum permissible content.291

The Swiss Federal Court applies article 20(2) CO in analogy to uphold an arbitration agreement when the will of the parties to submit their case to arbitration was unambiguous but the provision relating to the appointment of the arbitrators had an impossible content.292 In such a case, the invalid provision has to be interpreted as teleological in order to be valid, to be deleted without replacement or to be substituted by a replacing state law provision.293

The agreement should be interpreted in a way in which the scope of the agreement would retain validity, unless it is found that the parties would not have concluded the agreement without the offending provision.294 In multi-party arbitration, it is particularly important to show that the parties have actually specifically consented to this type of arbitration.295

Under a standard arbitration clause, it can be assumed that the parties had generally agreed to arbitration. However, even though the parties have agreed to arbitration under specific rules, which is permissible, the agreement to consolidation can still be invalid, unless it can be interpreted in a way that retains validity.

290 SFCD 130 III 66, 74; Gary Born, International Commercial Arbitration

Volume I, 3rd ed. (Austin, TX: Wolters Kluwer Law & Business, 2009), 657; Blackaby et al., Redfern and Hunter on International Arbitration, note 2.179.

291 Guhl et al., Das Schweizerische Obligationenrecht, notes 7-40 et seqq.; Peter Gauch et al., Schweizerisches Obligationenrecht allgemeiner Teil ohne ausservertragliches Haftpflichtrecht, 8th ed. (Zurich: Schulthess, 2003), notes 6-89 et seqq.

292 SFCD 130 III 66, 74. 293 Ibid. 294 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 552. 295 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-3.

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5.3.2 Consolidation Not Prohibited

In Switzerland there is no mandatory law forbidding consolidation in international arbitration. In the contrary, some authors support the view that under article 185 SPILA, which deals with the cooperation of state courts, the juge d’appui would be permitted to consolidate cases.296 However, even such interpretation of article 185 SPILA does not amount to a mandatory monopoly of the state judge when it comes to consolidation.

5.3.3 Violation of the Principle of Undue Surprise

Reference to institutional rules are a reference to terms and conditions.297 As such, these terms and conditions are subject to review. Should certain terms and conditions be surprising to the exent that a reasonable person should not have expected them, the reference may be invalid.298 This requires however, that the disadvantaged party is in some way inferior to the advantaged party.299 In this context the principle is diffcult to apply, as no person is yet identified as either disadvantaged or inferior.

It is also questionable whether this defense would be successful. Consolidation is not unknown in arbitration and established in litigation. The Swiss Rules are well known and so is its special oddity, the particulary broad rule on consolidation. The Rules are freely available online and elsewhere. They have been in force for a period of 6 years at the time of writing. In this 296 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 534; Stephen V. Berti, “Article 185 SPILA,” in International Arbitration in Switzerland: An Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute, ed. Stephen V. Berti et al. (Basel: Helbing & Lichtenhahn, 2000), note 12; Girsberger and Voser, International Arbitration in Switzerland, note 880 et seqq.

297 Menno Aden, Internationale Handelsschiedsgerichtsbarkeit, 2nd ed. (Beck Juristischer Verlag, 2002), notes 8-15.

298 Schwenzer, Schweizerisches Obligationenrecht Allgemeiner Teil, note 28.67. 299 Furrer and Müller-Chen, Obligationenrecht - Allgemeiner Teil, notes 5-129 et

seqq.

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author’s opinion it would be difficult to convince a judge or an arbitrator deciding on jurisdiction, that the disadvantaged person (a disadvantage would also have to be found and proven) was reasonble in being uninformed. Most users of international commercial arbitration are consulted when preparing international contracts.

5.3.4 Violation of Article 27 Swiss Civil Code

Indirectly, consolidation may still violate mandatory provisions of Swiss law. While the arbitration agreement might be valid as such, defining one contractual relationship as a basis for arbitration, an agreement to consolidate may enlarge this consent in an impermissible way.

Such impermissible enlargement may be covered by the provision on the protection of personal rights, one of the mandatory rules in Swiss law.300   For example, article 27 CC states that

 

“(n)o person may surrender his or her freedom or restrict the use of it to a degree which violates the law or public morals.”

Violation of this article occurs, e.g., when intensity, duration or domination are excessive.301 In the context of the arbitration agreement, the safeguard of the parties’ personal rights provides that a certain amount of specificity concerning the scope of the disputes subjected to arbitration must exist for the agreement to

300 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 548; Werner Wenger, “Article 354 SCCP,” in Kommentar zur Schweizerischen Zivilprozessordnung (ZPO), ed. Thomas Sutter-Somm, Franz Hasenböhler, and Christoph Leuenberger (Zurich: Schulthess, 2010), note 6.

301 Furrer and Müller-Chen, Obligationenrecht - Allgemeiner Teil, notes 5-103.

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be valid.302 Minimum consent for the arbitration agreement specifies the object of the dispute or the legal relationship of the arbitration.303 An arbitration agreement that does not relate to a defined or objectively definable legal relationship is deemed invalid, because it creates an excessive commitment.304

A global reference to “this and future contracts” is invalid as being too vague.305 The Swiss Federal Court stated, in this respect, that an arbitration agreement has to relate to “existing or determined future disputes”.306 Agreement to one contract cannot be interpreted without further evidence as extending to other contracts,307 even if they are related. It would be sufficiently specific consent to non-traditional two-party one-claim arbitration proceedings, if parties who wish to submit several legal relationships to arbitration at the same time specify all relationships in the clause.308 As an agreement to arbitrate is a waiver of the right of access to the courts, parties are only 302 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der

Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 214; Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 548; Myriam Gehri, “Die Anfechtung internationaler Schiedssprüche nach IPRG - eine Analyse der bundesgerichtlichen Rechtsprechung,” in Internationales Zivilprozess- und Verfahrensrecht IV, ed. Karl Spühler (Zurich: Schulthess, 2005), 77 et seq.; Markus Müller-Chen and Rahel Egger, “Article 357 SCCP,” in Kommentar zur Schweizerischen Zivilprozessordnung (ZPO), ed. Thomas Sutter-Somm, Franz Hasenböhler, and Christoph Leuenberger (Zurich: Schulthess, 2010), note 35.

303 Girsberger, “Pitfalls in Swiss Arbitration Agreements,” 90; Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 214.

304 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 214; Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 548; Gehri, “Die Anfechtung internationaler Schiedssprüche nach IPRG - eine Analyse der bundesgerichtlichen Rechtsprechung,” 77 et seq.

305 Wenger, “Article 178 SPILA,” 34. 306 SFCD 130 II 66, 69; SFCD 129 III 675 679 et seq. (Swiss Federal Court

2003); SFCD of 29 October 2008 E. 3.1 (Swiss Federal Court 2008). 307 Wenger, “Article 178 SPILA,” 34; Rüede and Hadenfeldt, Schweizerisches

Schiedsgerichtsrecht nach Konkordat und IPRG, 67 et seqq. 308 Girsberger and Voser, International Arbitration in Switzerland, note 315.

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permitted to derogate from the governmental litigation insofar as they can anticipate the nature of the dispute and its importance.309

References to institutional rules are usually sufficient to apply all procedural rules contained therein.310 According to the Swiss Federal Court, a reference to the institutional rules is a sufficient agreement to support application of the entire system.311 For example, a reference to the ICC Rules is sufficient agreement and includes the rules of appointment of arbitrators.312 The reference to the arbitration rules of an institution is acceptable, when interpreted in accordance with the institutions’ organs, so long as such interpretation is not untenable or unforeseeable.313

A limitation applies. A reference is acceptable, and provides the required specificity, so long as the application of the rules are foreseeable for the parties. Excessive domination to the will of another or excessive extension is avoided in these cases.

The sentiment that a general reference to institutional rules suffices as a valid consent to consolidation in all cases possible is held by GILLIÉRON/PITTET, POUDRET/BESSON, and PRYLES/WAINCYMER.314 The latter propound the view that when parties have chosen a lex arbitri or arbitral rules containing consolidation, party agreement would not be infringed by consolidations.

309 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 286. 310 SFCD 110 Ia 493 63 et seq. (Swiss Federal Court 1976). 311 Ibid. 312 Ibid. 313 SFCD 110 Ia 59 65 et seq. (Swiss Federal Court 1984). 314 Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same

Parties,” 469; Poudret and Besson, Comparative Law of International Arbitration, note 239; Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings (Joinder), Participation of Third Parties,” 4.

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BERGER/KELLERHALS also state that selection of the Swiss Rules overcomes a lack of specific agreement.315 KARRER/STRAUB state that for one-contract multi-party arbitrations, consent from the outset is possible and assumed, even when not specifically mentioned.316

VOSER argues that in light of party autonomy, parties’ interests in predictability are defeated when regulations are in place that put parties in unknowable situations.317 She elaborates at a different point by warning that any parties having chosen the institutional rules could be forced to arbitrate together. At the current figures that would mean more than 100 potential parties.318 Along the same line BORN argues that it is one thing for parties to agree to arbitrate under a certain set of rules with certain parties, and quite another to agree to arbitrate with just anybody.319 To LEW ET AL. it is similarly doubtful whether a mere reference to a set of rules is sufficient as consent to a certain kind of arbitration.320 MOREAU advocates that, in addition to a reference to institutional rules, a clause linking the different contracts is required.321

Unfortunately, none of the above authors give an in-depth analysis referring to the lack of specificity. In order to make an informed statement about the validity of consolidation clauses in the ICC and Swiss Rules with respect to the forseeability of disputes involved, this analysis needs to be more concrete.

315 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 478. 316 Pierre A. Karrer and Peter A. Straub, “Switzerland,” in Practitioner’s

Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), note 12.25.

317 Voser, “Multi-party Disputes and Joinder of Third Parties,” 413. 318 Ibid., 395. 319 Born, International Commercial Arbitration Volume II, 2072. 320 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-65 specifically preferring to multiparty arbitration. 321 Moreau, “Arbitrage liés,” 80.

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The ICC Rules permit only the same parties in consolidated arbitrations.322 The same is true for cases under article 4(1)(s.1) Swiss Rules. The new ICC rule 10(c) permits different parties, when the same contract is involved. This limits the types of disputes a consolidated arbitration could involve considerably. Each party knows the connections it has with the other party(ies) and the potential conflicts which may arise with them, when the contract is signed.

5.3.4.1 One Contract - Same Parties

In one instance of ICC arbitration, the claimant of two claims against the same party from the same contract requested consolidation, which was granted.323 The Zurich Chamber of Commerce also reports cases number 3 and 10.324

In principle and simply put, Elma Inc. arbitrates in case A against Fido Co. because of delivery of a car pursuant to contract X; Fido Co. then initiates an arbitration in case B against Elma Inc. for payment of the purchase price pursuant to contract X.

The above scenario was in principle the same as under case number 10 of the Zurich Chamber of Commerce.325 Considerable support for the proposition of the permissibility of this type of consolidation can be had when only one contract is involved. BERGER/KELLERHALS,326 VOSER,327 and the otherwise

322 See supra subchapter 4.10. 323 Whitesell and Silva-Romero, “Multiparty and Multicontract Arbitration:

Recent ICC Experience,” 16. 324 Interview with the Zurich Chamber of Commerce of 8 April 2010. 325 Interview with the Zurich Chamber of Commerce of 8 April 2010. 326 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 475. 327 Voser, “Multi-party Disputes and Joinder of Third Parties,” 360.

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critical LACHMANN328 are but three supporters of this view. This category is not contentious, as the cases could also be brought together and the parties have already agreed to arbitrate issues under the one contract together.329

Any claims by the claimants could have been bought together as any counter-claims by the respondents are equally permissible under lex arbitri. Even the permissibility of cross-claims between respondents or claimants can no longer be doubted.330 Until recently, it was the view that the claimant determined who was to be party to proceedings, as no provision explicitly stated the respondents’ rights to do so.331

5.3.4.2 One Contract – Differing Parties

In pinciple, and again simply put, Elma Inc. and Fido Co. agreed to deliver one car and one bike to Guido Ldt. and Halo S.A. in contract X. Guido Ltd. now initiates arbitration against Elma Inc. for delivery of the car in case A. Halo S.A. initiates arbitration in case B against Fido Co. concerning the car as well. Both arbitrations turn on who was to receive delivery of the car according to the contract.

328 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4073. 329 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 475; Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 180.

330 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims, Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 179. While the ICC Rules are silent, ICC practice permits these claims; citing a case of the ICC from 1995 without case No. Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-9 the ICC in 1995, under a similar rule, held that consent of one contract only includes claims from one set of claimants to one set of respondents, but not any cross claims; Wenger, “Article 186 SPILA,” 29; Hanotiau, “Complex Multicontract-Multiparty Arbitration,” 387 et seqq.

331 Christopher Koch, “Judicial Activism and the Limits of Institutional Arbitration in Multiparty Disputes,” ASA Bulletin 28, no. 2 (2010): 383 et seq. This approach may be changing.

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Consolidation under this category can only occur under the Swiss Rules article 4(1)(s.2) and under the new rule 10(c) of the ICC Rules. An occurrence of this category was case number 7 in the Zurich Chamber of Commerce. Fourteen parties in 4 cases were disputing a resolution taken in accordance with the statutes of a business entity, which contained an arbitration clause.332 Under the old ICC Rules, the parties to the cases to be consolidated must be the same.333 Scholars supporting the position that consent to consolidation should be permitted point to the forseeability of all parties being forced to litigate together at the conclusion of the agreement.

KLEINSCHMIDT334 and POUDRET/BESSON335 plead foreseeable anticipation of joint proceedings. HAMANN/LENNARZ also favor consolidation under such circumstances.336 LEW ET AL.337 along with KARRER/STRAUB,338 MEIER,339 VOSER,340 CAPRASSE,341 SCHWARTZ,342 and HANEFELD343 assume that in scenarios where multiple parties sign a single contract, awareness and thus consent, of a multi-party arbitration should be assumed.

332 Interview with the Zurich Chamber of Commerce of 8 April 2010. 333 This does not mean it is impossible to arbitrate these cases together. However,

consolidation cannot occur in this situation under the ICC Rules. 334 Kleinschmidt, “Die Widerklage gegen einen Dritten im Schiedsverfahren,”

146. 335 Poudret and Besson, Comparative Law of International Arbitration, note 240. 336 Hartmut Hamann and Thomas Lennarz, “Parallele Verfahren mit identischem

Schiedsgericht als Lösung für Mehrparteinenkonflikte?,” Neue Zeitschrift für Schiedsverfahren 2006, no. 6 (2006): 294 addition of parties is permissible so long as there is an arbitration agreement between the parties.

337 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-8.

338 Karrer and Straub, “Switzerland,” 12.25. 339 Meier, Einbezug Dritter vor internationalen Schiedsgerichten, 222. 340 Voser, “Multi-party Disputes and Joinder of Third Parties,” 355. 341 Oliver Caprasse, “The Setting up of the Arbitral Tribunal in Multi-Party

Arbitration,” La Revue de Droit des Affaires Internationales / International Business Law Journal 2006, no. 2 (2006): 199.

342 Eric A. Schwartz, “Multi-Party Arbitration and the ICC in the Wake of Dutco,” Journal of International Arbitration 10 (1993): 7.

343 Inka Hanefeld, “Germany,” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), note 7.23.

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RAU344 AND LIONNET/LIONNET345 state that the fact that parties are bound by the same contract does not mean that they agree to arbitrate jointly in a non-traditional proceeding.

The ICC Court has typically assumed, on a prima facie basis, that it is the intention of all parties to a single contract to arbitrate in one single proceeding.346

5.3.4.3 Multiple Contracts – Same Parties

Consolidation in this category could occur under both the ICC (old and new) and the Swiss Rules. An occurrence of this category under the auspices of the ICC was reported by WHITESELL.347

Simply put, Elma Inc. agrees to sell Fido Co. a car in contract X. Fido Co. agrees to sell a computer to Elma Inc. in contract Y. In case A, Elma Inc. sues Fido Co. for payment under contract Y. In case B, Fido Co. sues Elma Inc. for payment under contract X.

Supporters of the view that this category should be consolidated include HAMANN/LENNARZ,348 and LEW ET AL.349 Critical voices occur more frequently in this category, requiring additional 344 Alan Scott Rau, “‘Consent’ to Arbitral Jurisdiction: Disputes With Non-

Signatories,” in Multiple Party Actions in International Arbitration, ed. Permanent Court of Arbitration (New York: Oxford University Press, 2009), note 3.05.

345 Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 416.

346 Schwartz, “Multi-Party Arbitration and the ICC in the Wake of Dutco,” 7 et seq.

347 Whitesell and Silva-Romero, “Multiparty and Multicontract Arbitration: Recent ICC Experience,” 16.

348 Hamann and Lennarz, “Parallele Verfahren mit identischem Schiedsgericht als Lösung für Mehrparteinenkonflikte?,” 293.

349 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-88.

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criteria. The ICC Rules themselves require a connection that will make the contracts appear to belong to the same economic transaction.350

When the cases that are to be consolidated involve more than one contract, the ICC Court will, in addition to the conditions set out in Article 4(6) ICC Rules, apply the conditions derived from its practice with respect to multi-contract arbitrations.351

BERGER/KELLERHALS also focus on the connection of the contracts rather than on the fact that the same parties are concerned, arguing that ordinarily an agreement to arbitrate covers subsequent, related disputes.352

CAPRASSE believes that in cases of multi-contract arbitrations, it must be considered if the parties intended for joint arbitration.353 HANEFELD states that in Germany, multi-contract situations will only rarely be interpreted as interrelated and subject to the same arbitration.354 TENCATE suggests that it may be more difficult to find intent to arbitrate jointly when a horizontal or chain relationship is concerned.355 GIRSBERGER/VOSER and the Swiss Federal Court state that general arbitration clause wordings such as “all disputes arising from or in connection with the contract” are insufficient to give a panel jurisdiction over another contract containing an arbitration clause or a forum selection clause.356 The argument rightly focuses on the principle ius posterior

350 See supra. 351 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims,

Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 163. 352 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 475. 353 Caprasse, “The Setting up of the Arbitral Tribunal in Multi-Party Arbitration,”

201. 354 Hanefeld, “Germany,” 7.17. 355 Irene M. TenCate, “Multi-Party and Multi-Contract Arbitrations: Procedural

Mechanisms and Interpretation of Arbitration Agreements under U.S. Law,” The American Review of International Arbitration 15 (2004): 156.

356 Girsberger and Voser, International Arbitration in Switzerland, note 317 citing SFCD of 20 Feb. 2008 (4a 452/2007) cons. 5.1.

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derogat priori.357 POUDRET/BESSON require parties to have concluded the same arbitration agreement358 and reject multi-contract situations. Explanations concerning forseeability are mostly and sadly lacking again.

5.3.4.4 Multiple Contracts – Differing Parties

GREENBERG ET AL. report two cases under this category, in which consolidation was refused by the ICC.359 Even under the new rules, this scenario will not be possible. Under this category the Zurich Chamber of Commerce does not report any successful cases which did not result from party consent at the time.360

Simply put, Elma Inc. agrees to sell a car to Fido Co. in contract X. Guido Ltd. agrees to sell a truck to Halo S.A. Elma Inc. arbitrates against Fido Co. in case A and Guido Ltd. arbitrates against Halo S.A. in case B. Both contracts are identical with identical clauses. All companies have the same address.

Consolidation under this category could occur only under the Swiss Rules article 4(1)(s.2). To make the breadth of the Swiss Rule article 4(1)(s.2) clear, this author would like to argue, along with VOSER, that under the Swiss Rules article 4(1)(s.2), however, new parties and cases can be added that are not bound to each other by contractual relations but with any person having a contract specifying arbitration under the Swiss Rules as method of dispute resolution. In practice, using the numbers provided in the Swiss Chambers statistics on the website, a party with a Swiss Rules clause could be faced with about 200

357 SFCD 121 III 495 E. 5a (Swiss Federal Court 1995). 358 Poudret and Besson, Comparative Law of International Arbitration, note 239. 359 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims,

Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 164. 360 Interview with the Zurich Chamber of Commerce of 8 April 2010.

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additional parties361 per year. In the worst-case scenario, the parties do not know the other parties at all and have never heard from them.

Support for these kinds of consolidations lessens in comparison to the previous category. LACHMANN criticizes the assumption of forseeabilty as unwarranted.362 LEW/MISTELIS/KRÖLL state that whether a multi-party arbitration can be compelled depends on the provisions of the various contracts.363 Without this specification it may be impossible to make an advance determination of how many and which parties and contracts will be involved in any given consolidated case.364

5.3.4.5 Interim Conclusion

This author considers the reference to institutional rules to be valid with regard to the prohibition against article 27 CC. The agreement is defined and limited as to the possibility of consolidation itself. The parties have chosen their contractual partners and the disputes which they are willing to arbitrate together. Without consolidation, cases under these two categories could be raised in one case from the outset. No right worthy of protection will be catered to by refusing permit the validity of the reference.

This conclusion does not mean that this author considers consolidation under these categories to be advisable at all times. This will be discussed infra in chapter 13. Whether the procedures applied are permissible is not a question of validity

361 100 new cases on average, each at least 2 parties, not allowing for

duplications. However, these are only the cases, not the number of contracts, containing Swiss Rules clauses, which are even higher.

362 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4074. 363 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-38. 364 Girsberger and Voser, International Arbitration in Switzerland, note 362.

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of consolidation itself. The procedures will be addressed infra in chapters 11 and 12.

This author concludes further, that consolidation permitted under article 4(1)(s.2) Swiss Rules creates an excessive commitment and would be invalid. The number of possible parties as well as the potential claims are excessive and not foreseeable for the parties. In addition, the decision on consolidation is made in complete discretion by Chambers, creating excessive influence of a third party over the extent of the commitment. It may, however, be possible to retain a limited validity of the reference to article 4(1)(s.2) Swiss Rules, which will be discussed infra in this chapter.

This author would like to reserve judgment with reference to multiple contracts scenarios when the same parties are involved. In this author’s opinion that the categorization is not sufficient to draw a conclusion on whether commitment to consolidation is excessive pursuant to article 27 CC.

5.4 Institutional Approach

The attempt to ensure validity chosen under the ICC Rules is to add a requirement of connexity. In addition to its requirement of the same parties in all proceedings to be consolidated, this provides a fairly narrow range of cases which could be consolidated. Parties are foreseeable and connected claims are also limited to the same economic transaction. Absent a second arbitration clause, these contracts would presumably fall under the usually broad standard arbitration clauses.

Under the ICC practice, two contracts were found to have a sufficient connection when, without the materials delivered

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under one contract, the main contract could not be fulfilled.365 For rule 4(6) or 10(c) new rules ICC Rules to apply, the same legal relationship means the same economic transaction.366 This view was repeated in an interview with the current ICC Deputy Secretary General on 25 May 2010 with the caveat that this is a very imprecise definition. However, as some authors suggest. it would not depend on the number of facts or issues that the cases have in common. In case 6829 of 1992, a single legal relationship was not found, as language of the contracts and intention of the parties pointed to a different conclusion.367

Some provisions define the required connection as implying “questions of law and fact in common,” adding that these common questions “arise out of the same events or circumstances.”368 Other texts require that there be a risk of conflicting decisions if the matters are handled separately.369 Still others simply refer to cases concerning the same subject matter on account of the connection between them, without specifying the nature of this connection, and allow consolidation whenever there are reasons that make it desirable.370

According to LEBOULANGER, there are two situations in which multiple contracts should be interpreted as one legal relationship: a) when the reciprocal obligations have a common origin, identical sources and an operational unit,371 or b) when

365 ICC Case No. 122/85 - Poland, 1989 Yearbook of Commercial Arbitration

187, 189 (ICC 1987). 366 Whitesell and Silva-Romero, “Multiparty and Multicontract Arbitration:

Recent ICC Experience,” 16. 367 ICC Case No. 6829 of 1992, XIX Yearbook of Commcercial Arbitration 167

(ICC 1994). 368 Izquierdo Piña, “Consolidation of Arbitral Proceedings,” 23. 369 Ibid. 370 Ibid. 371 Leboulanger, “Multi-Contract Arbitration,” 52 et seq.

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the agreements are concluded on the same date, for the same duration or for the same purpose.372

According to LEBOULANGER, a framework agreement with its contracts, a main agreement with its ancillary agreements, and successive or simultaneous agreements should be treated as one transaction.373

The Swiss Rules only impose on Chambers a requirement to take into account the connection and timing of the cases. Neither a firm requirement nor guidance as to the required connection exists, even though LÖRCHER suggests that the Chamber’s taking a connection into account establishes sufficient firmness of the requirement.374

This author is well aware that cases without connection, or with immaterial connections as in the example given supra in subsection 5.3.3.4 will not likely raise the question of consolidation. However, this example is meant to show the overly broad commitment under the Swiss Rules article 4(1)(s.2).

Alternatively, it may occur in a string sale that the sole issue is the quality of a good, but a number of different sales contracts and parties are involved.375 For example, a producer sells bricks to a builder for the renovation of house. In such cases, it may well be foreseeable that, in a dispute concerning the bricks, the owner and the producer will both be present.

372 Ibid., 53 et seq. 373 Ibid., 78. 374 Lörcher, “The Swiss Rules of International Arbitration Seen from Abroad,”

68. 375 This occurs in the commodities trade, in which a unique fashion of dispute

resolution is permitted whereby only the original seller and the final buyer participate in the arbitration and the other seller-buyers are bound by the outcome of this dispute.

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Even with more connections, it may still be unforeseeable for the parties. It is also difficult to draw the line without guidance from the Swiss Rules. As a connection requirement is not available for the Swiss Rules, this author suggests an alternative approach to retain validity and avoid violation of article 27 CC.

5.5 Alternative Approach

Whether a multi-contract multi-party (could be both, same and differing) proceeding is possible depends on the language found in the arbitration agreements.376 PRYLES/WAINCYMER begin the question of permissibility of consolidation by examining the scope of each arbitration agreement as such, not just the choice of rules.377 This means that each agreement would be analyzed to determine if it encompassed the disputes of the other case as well.

Figure 1: own creation

The circles represent the scope of the jurisdiction of each arbitral contract in each case. Only where they overlap will consolidation be possible. The consolidation clause in the Swiss Rules would only serve to give the procedural tool. As disputes that could be consolidated would already be in the scope of the 376 Frick, International Arbitration Law Library, 230; Leboulanger, “Multi-

Contract Arbitration,” 62 et seq.; Chiu, “Consolidation of Arbitral Proceedings and International Commercial Arbitration,” 55 et seq.

377 Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 440 et seq.

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permissible arbitration clause of each contract, no element of lack of specificity would arise.

The same reasoning was already propounded by VOSER

concerning article 4(1) (s.2) Swiss Rules. VOSER advocates the interpretation of the Swiss Rules in a way that is declaratory, i.e., restating the arbitral panel’s power to include parties that would be included in the original agreement.378

The provision on consolidation permits only the procedural mechanism, but does not expand the original arbitration clause. The claims and parties that cannot be added by interpretation of the clause itself, or by other doctrines, such as the group of companies doctrine, would not be able to be consolidated.

In this case the question of validity would no longer depend on the interpretation of the rules, but solely on the clause. This question would then become jurisdictional. If clauses were compatible and if the both cases have congruent jurisdiction, then the reference to consolidation is valid.

This author would like to expand this point. Some courts consider arbitration agreements “inoperative” in multi-party situations as a misinterpretation of article II(3) NYC.379 Some say that contract interpretation reaches its limits when disputes relate to several contracts.380 BORN considers the inference of party intent with regard to arbitration as artificial, as procedural details are rarely an issue.381 In this author’s opinion, even when a reference to institutional rules is given, ordinary contract

378 Voser, “Multi-party Disputes and Joinder of Third Parties,” 396 et seq.

However, referring only to joinder. The same reasoning can apply. 379 For an overview see: Lew, Mistelis, and Kröll, Comparative International

Commercial Arbitration, notes 16-85. 380 Trittmann and Hanefeld, “Arbitration in Germany,” 32. 381 Born, International Commercial Arbitration Volume II, 2072.

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construction still applies.382 This means that any contract, including its reference to institutional rules and the breadth intended hereunder, needs to be interpreted individually.383 While the reference to institutional rules can be indicative, it is not determinative.

Specificity requires that a legal relationship be defined or definable. Even an economic transaction of a number of parts can be regarded as one legal relationship, as the same goal and purpose is served. However, whether the transactions to be arbitrated together do identify a legal relationship or several different ones, cannot be determined by category alone.

Institutional rules are not reviewed in the abstract. The principle of in favorem validitatis allows for an interpretation which retains the validity of the clause with the jurisdictional approach.

5.5.1 Admissible Claims and Parties

Although arbitration is a contractual matter based on party consent,384 there are exceptions. As a rule,

"arbitrators may extend their jurisdiction to connected agreements only if the intention of the parties and the

382 Girsberger, Voser, and Fuchs, International Arbitration in Switzerland, note

222. 383 This interpretation has to be performed by the arbitrators as a part of their

duty to determine jurisdiction and can be reviewed by the courts. 384 United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574,

582 (United States Supreme Court, USA 1960) “Arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” ; Thomson-CSF, S.A. v. Am. Arbitration Association, 64 F.3d 773, 776 (2nd Cir., USA 1995) “Arbitration is contractual by nature (. . .).”

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language of the relevant instruments permit such an extension."385

The Common Law doctrine of privity of contract, which in its pure form means that no contract can bind a third party and that no third party can interfere with the contract,386 prohibits extending arbitration agreements beyond the contract, except for exceptional circumstances.387 BERGER/KELLERHALS argue that consent under the arbitration agreements must be respected in order to maintain party autonomy and privity of contract.388 This means that the connection is only close enough if the case is covered by the same contract. Lack of privity of contract is a major obstacle to consolidation.389 Extending arbitration agreements to include non-signatories may weaken or even destroy this important foundation of the arbitral process.390

To determine whether both cases are covered by both arbitration clauses, the ordinary methods of interpretation and extension of clauses over parties and claims are permitted.391

5.5.1.1 Claims

Claims that could have been brought at the same time by the claimant are sufficiently specific. 385 Leboulanger, “Multi-Contract Arbitration,” 51; Hanotiau, “Complex

Multicontract-Multiparty Arbitration,” 378. 386 Olagoke O. Olatawura, “The ‘Privity to Arbitration’ Doctrine: The Withering

of the Common - Law Privity of Contract Doctrine in Arbitration Law,” American Review of International Arbitration 16 (2005): 432.

387 Trittmann and Hanefeld, “Arbitration in Germany,” 36 et seqq.; Kurkela and Snellman, Due Process in International Commercial Arbitration, 71.

388 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 534.

389 S.I. Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” University of Pennsylvania Journal of International Law 2008, no. 30 (2008): 938.

390 Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 122.

391 This topic is not covered by this analysis in detail. Information can generally be found in works on third parties, multi-party arbitration and non-signatories writings. It is included here only as an aside, is not limited to situations of consolidation and merits its own analysis.

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Counter-claims are permissible in arbitration.392 Counter-claims are not mentioned in the SPILA but are sufficiently common in arbitration that the parties should at least have foreseen their potential appearance,393 unless they have provided for a different arbitration or forum selection clause for the particular claim.394 A case related closely enough to be a counter-claim would not be invalid for lack of specificity.

Set-offs are permitted under the Swiss Rules article 21(5) and generally permitted under Swiss law,395 even though SPILA is silent on the issue. While the previous law for domestic arbitration could not be applied in absence of regulations in the SPILA,396 the SCCP may possible supply some guidance397 as set-offs are permissible under article 377 SCCP, which corresponds to article 21(5) Swiss Rules.398 The final word on permissibility of set-offs has not yet been spoken.399

392 Dolf Weber, “Wider den Verlust des Betellungsrechts bei Nichteinigung der

Mehrparteiengegenseite auf einen Schiedsrichter,” in Grenzüberschreitungen - Beiträge zum Internationalen Verfahrensrecht und zur Schiedsgerichtsbarkeit. Festschrift für Peter Schlosser zum 70. Geburtstag, ed. Birgit Bachmann et al. (Tübingen: Mohr Siebeck, 2005), 1076.

393 Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, notes 1-058.

394 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 490.

395 Domenic Gross, Das rechtliche Schicksal von Verrechnungsansprüchen im Schiedsverfahren (Zurich: Schulthess, 1999), 29; Wenger, “Article 186 SPILA,” 41.

396 Instead of many: Pierre Lalive, Jean-François Poudret, and Claude Reymond, Le droit de l’arbitrage interne et international en suisse édition annotée et commentée du concordat sur l’arbitrage du 27 Mars 1969 (Lausanne: Payot, 1989), 276 et seq.; Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 10 et seqq.

397 Contra: Joachim G. Frick, “Article 354 SCCP,” in Schweizerische Zivilprozessordnung (ZPO), ed. & McKenzie (Zürich) Baker (Berne: Stämpfli, 2010), note 19.

398 Stephan Netzle, “Article 377 SCCP,” in Kommentar Zur Schweizerischen Zivilprozessordnung (ZPO), ed. Thomas Sutter-Somm, Franz Hasenböhler, and Christoph Leuenberger (Zurich: Schulthess, 2010), note 4.

399 For an overview see: Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 490.

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Generally speaking, “in relation to this agreement” must not be understood as meaning that other claims arising from other contracts with arbitration clauses differently worded should be included. Rather, arbitration clauses formulated in this way also include disputes as to the entry into force or the validity of the contract as well as claims resulting from the termination of the contract or claims based on illicit acts.400

5.5.1.2 Parties

Arbitration agreements will apply only to such non-signatories "in rare circumstances."401 Non-signatory involvement in international arbitration has been described as a "delicate" and critical aspect of international arbitration.402

“According to the principles of relativity of the obligations arising from a contract and of the legal independence of corporations, Swiss law sets some strict requirements as to the extension of an arbitration agreement to a third party not mentioned there.”403

Internationally,   non-signatories may become involved in international arbitration through the private law of assignment, agency, and succession.404 Application of group of companies doctrine,405 or by piercing the corporate veil also allow for

400 Wenger, “Article 178 SPILA,” 35. 401 Bridas Sociedad Anonima Petrolera, Industrial y Comercial v. Government of

Turkm., 345 F.3d 347, 358 (5th Cir., USA 2003); Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 95.

402 Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 102; Jan Paulsson, “Arbitration Without Privity,” ICSID Review - Foreign Investment Law Journal 10 (1995): 257.

403 SFCD of 19 August 2008 - 4A_128/2008 C. 4.1.2 (Swiss Federal Court 2008). Translation provided by praetor.ch.

404 Blackaby et al., Redfern and Hunter on International Arbitration, notes 3-34. 405 Pietro Ferrario, “The Group of Companies Doctrine in International

Commercial Arbitration: Is There any Reason for this Doctrine to Exist?,”

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extention of an agreement to arbitrate.406 United States courts have applied the doctrine of agency to bind agents to arbitrate claims in international disputes.407 An agent may be bound to an agreement which works to his or her benefit.408 Similarly, courts have applied the doctrine of equitable estopple to international disputes by compelling arbitration between companies who had not signed an arbitration agreement, if the claims were "inherently inseparable."409

Under the group of companies doctrine, the benefits and duties arising from an arbitration agreement may be extended to other members of the same group of companies or to the shareholders, officers, or directors of a signatory company.410 For example, in Dow Chemical France v. ISOVER Saint Gobain,411 the ICC arbitral panel determined that non-signatory parent companies and affiliates to an arbitration agreement can be treated by the parties to the agreement as "one and the same economic reality" with the signatories.412

Journal of International Arbitration 26 (2009): 647 - 673; Schütze, Schiedsgericht und Schiedsverfahren, note 86.

406 SFCD 128 III 50; SFCD 120 II 155, 415 ASA Bulletin (Swiss Federal Court 1994); Georg Naegeli and Chris Schmitz, “Switzerland: Strict Test for Extension of Arbitration Agreements to Non-Signatories: Note on an Important Decision Rendered by the Swiss Federal Tribunal,” Neue Zeitschrift für Schiedsverfahren 2009 (2009): 188; Schütze, Schiedsgericht und Schiedsverfahren, note 110 et seqq.

407 Alamria v. Telcor International, Inc., 920 F. Supp 658, 669 et seqq. (District Md. 1996) holding non-signatory Saudi Arabian agent of U.S. manufacturer bound by an ICC arbitration clause under principles of apparent authority.

408 American Bureau of Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (2nd Cir., USA 1999) holding that Italian agent who signed arbitration agreement with boat classification society on behalf of French principal could be bound to arbitrate claim against society because agent derived benefit from the contract.

409 JLM Indus., Inc. v. Stolt-Nielsen S.A., 387 F.3d 163, 177 et seq. (2nd Cir., USA 2004) permitting non-signatory subsidiaries of companies from the Netherlands, Norway, and Luxembourg to compel signatory customers to arbitrate claims that were “undeniably intertwined”; Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 104.

410 Blackaby et al., Redfern and Hunter on International Arbitration, notes 3-31. 411 Dow Chemical France v. ISOVER Saint Gobain, 1984 Revue Arbitrale 98

(Regional Court of Appeal, Paris, France 1983). 412 Daly, “Come One, Come All: the New and Developing World of Non-

signatory Arbitration and Class Arbitration,” 103 et seq.

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Under Swiss law, third parties (i.e., not parties to the underlying contract) can be permitted to participate in an arbitration by an express agreement in the arbitration clause or other clear and unambiguous indications of the parties wishes.413 Cases of assignment permit extention to a non-original third party.414 Assumption of an obligation (simple or joint) or the transfer of a contractual relationship, can result in third parties being bound.415 Succession permits extension to third parties.416 The extension to the piercing of the corporate veil has not been well received.

In Switzerland, strict requirements for the extension to third parties must be met.417 A prime example for this reluctance is the Westland case.418  In that case Egypt was found not to have been a party to an arbitration, even though it was part of a consortium that had signed the agreement to arbitrate. The group of companies doctrine fare little better on the whole.  419    

Parties may be added under the concept of “Streitgenossenschaft”. HABSCHEID and MARKFORT advocate the necessity of common questions of law or fact similar to the Streitgenossenschaft,420 LEW ET AL. that all contracts be

413 Bernhard Berger and Franz Kellerhals, Internationale und interne

Schiedsgerichtsbarkeit in der Schweiz (Bern: Stämpfli, 2006), note 514. 414 SFCD 128 III 50, 55 et seq.; see more generally: Juan Carlos Landrove,

Assignment and Arbitration a Comparative Study (Zurich: Schulthess, 2009). 415 SFCD 129 III 727, 22 ASA Bulletin 364, 735 (Swiss Federal Court 2004). 416 Wenger, “Article 186 SPILA,” 25. 417 Naegeli and Schmitz, “Switzerland: Strict Test for Extension of Arbitration

Agreements to Non-Signatories: Note on an Important Decision Rendered by the Swiss Federal Tribunal,” 187; For further information on binding non-signatories under Swiss law see Philipp Fischer, “When Can an Arbitration Clause be Binding on Non-Signatories Under Swiss Law?,” Jusletter (January 4, 2010).

418 SFCD 120 II 155, 415:172. 419 Wenger, “Article 186 SPILA,” 29. 420 Walther J. Habscheid, “Zum Problem der

Mehrparteienschiedsgerichtsbarkeit,” in Schweizer Beiträge zur Internationalen Schiedsgerichtsbarkeit, ed. ASA (Zurich: Schulthess, 1994),

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concluded in connection to the same economic venture.421 BERGER/KELLERHALS require identical or factually related claims between the same parties.422 They add that the required connection is always present when the parties are jointly and severally liable.423

However, the Swiss Federal Court found, e.g., that the phrase ‘all disputes arising from or in connection with the contract’ was insufficient to permit an extension of arbitral jurisdictions to other contracts,424 not to mention other parties, regardless of the asserted connection between the cases. In this case, two companies had concluded a number of related contracts, two of which were exclusive delivery agreements and the others delivery agreements. The agreements contained incompatible arbitration clauses, involving different institutions, seats and applicable laws.425

The topic of addition of parties is vast and has been addressed very well elsewhere.426 This analysis only needs to point out that jurisdiction over both cases must exist, and that extensions of agreements to non-signatories or unrelated claims are fraught with difficulties.

181; Rainer Markfort, Mehrparteien-Schiedsgerichtsbarkeit im Deutschen und ausländischen Recht (Cologne, Berlin, Bonn: Heymanns, 1994), 114.

421 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-57.

422 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 478.

423 Ibid., note 515. 424 SFCD of 29 February 2008 - 4A.452/2007, sec. c. 2.5.1. 425 Ibid. „Die Formulierung “im Zusammenhang mit diesem Vertrag” muss nicht

so verstanden werden, dass damit auch Ansprüche aus anderen Verträgen mit anderslautenden Schiedsvereinbarungen gemeint sind.“.

426 Voser, “Multi-party Disputes and Joinder of Third Parties,” 370 et seqq.; Boris Niklas, Die subjektive Reichweite von Schiedsvereinbarungen: Eine systematische Darstellung unter besonderer Berücksichtigung der Mehrparteienschiedsgerichtsbarkeit (Tübingen: Mohr Siebeck, 2008).

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5.5.2 Interim Conclusion

If cases have no connection, it would certainly be unforeseeable for the parties to be forced to arbitrate them together. If a commitment is unforeseeable, it is excessive and therefore invalid. If there were no connection, an affirmative decision on consolidation would amount to giving the institution the ability to bestow jurisdiction to the panel.427

In order to make a prima facie determination on jurisdiction, as is customary for institutions, a full scale jurisdictional inquiry is neither possible nor practicable. To determine a close connection is therefore difficult for chambers. Neverthelss, it is workable and corresponds to the duty to deterime prima facie jurisdiction in any case.

Extensions of jurisdiction is only permissible within the bounds of the doctrines described above, which usually depend on a connection between the arbitration and the non-party.428 Beyond these extensions, a panel has no jurisdiction. It is reasonable to combine the inquiry as to lack of specificity with jurisdiction, as a valid agreement to consolidate must also pass the test of whether a panel has personal and subject matter jurisdiction over the additional case. When the determination of jurisdiction reveals the scope of the clause, it reveals also if the clause had been specific enough.

Jurisdiction is more likely when a close connection is given, and vice versa. Both approaches, the jurisdictional approach and the

427 This is not the case, as will be discussed infra in chapter 7. 428 See generally Brekoulakis, Third Parties in International Commercial

Arbitration; Niklas, Die subjektive Reichweite von Schiedsvereinbarungen; Chittharanjan Felix Amerasinghe, Jurisdiction of Specific International Tribunals (Leiden: Brill, 2009); Mohamed S. Abdel Wahab, “Extension of arbitration agreements to third parties: A never ending legal,” in Conflict of Laws in International Arbitration, ed. Franco Ferrari and Stefan Kröll (Sellier European Law Publ., 2010), 137 - 185.

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ICC approach concerning the requirement of connexity would therefore guartee validity with respect the an overextention of the commitment of the parties.

No forcible consolidation case has yet come before the Swiss Federal Court.429 It is therefore difficult to conjecture how the Swiss Federal Court would interpret two compatible arbitration agreements.

5.6 Advance Consent and Waiver

The question has been raised whether consent to consolidation can be given in advance, or whether the dispute must have already arisen. The question was first raised in the famous Dutco430 case.

5.6.1 Dutco

While Dutco addresses joinder of parties rather than consolidation, its holding and reasoning are important for any multi-party case. The case concerned a single agreement and three parties and originated with the ICC. The French court held that agreement to consolidation is not possible before the actual dispute had arisen.431

In Dutco, BKMI, Siemens and Dutco had entered into a consortium agreement for the execution of a construction contract to build a cement plant for which BKMI was the main contractor. Dutco alleged that it incurred additional cost due to

429 Only a case in which consolidation had been rejected by the arbitrators. This

will be described infra. 430 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction

Company, 1992 No. 3 Arb. Rev. 470 (Cour de Cassation, France 1992). 431 Ibid.

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BKMI’s delay in providing the drawings for the design of the project and to the changes made by Siemens in the design of electrical equipment. Dutco had very distinct claims against BKMI and Siemens due to the non-performance of their respective obligations under the agreement. Dutco filed one single case with the ICC to avoid conflicting awards. Siemens and BKMI did not want to arbitrate as one, as they also had diverse interests, and initially refused to nominate a joint arbitrator. After not obtaining bifurcation from the ICC, they reserved their rights and proceeded with the arbitration. The interim award on proper constitution was then challenged. The challenge went through the instances and was finally decided by the Cour de Cassation on 7 January 1992.

The court held that the agreement(s) must, in addition to covering the applicability of arbitration, cover the parties, the substantive claim, and an agreement to arbitrate cases together.432 While the French Cour de Cassation did not object to the joint proceeding, or that the parties had agreed thereto by signing a single contract, it did object to the parties being permitted to consent to institutional rules which, in these circumstances, would result in inequality in the selection of arbitrators.433 In Dutco, it held that such agreement was impermissible when made in advance.434

This does not mean that the parties could not have chosen the rules and joint proceedings, only that when unequal selection resulted, such was against public policy and could not be agreed to. An advance waiver of equal treatment is not permissible.435

432 Ibid. 433 Schwartz, “Multi-Party Arbitration and the ICC in the Wake of Dutco,” 13. 434 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction

Company, 1992 No. 3:. 435 Schwartz, “Multi-Party Arbitration and the ICC in the Wake of Dutco,” 13.

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While Dutco is not binding on Swiss Courts, it had a dramatic impact and its holding was adopted by many jurisdictions.436 Nevertheless, Some scholars have expressed doubts as to whether Dutco is good law generally.437 BORN questions the interpretation of the Dutco decision in a way that prohibits all advance waivers, especially as the parties in international commercial transactions can be said to be savvy enough.438 VOSER explicitly condemns the Dutco decision as too broad.439

The selection of arbitrators will be discussed infra in chapter 9. However, whether the right to consent to consolidation only exists after the dispute has arisen or leads to invalidity of that part of the clause shall be discussed here. The case raises the question of whether it would be permissible for parties to contract out of the requirement of specificity. If this were the case, consent to the Swiss Rules article 4(1)(s.2) would never result in invalidity for lack of specificity.

5.6.2 Swiss Law

Consent denotes an agreement to act or omit to act; waiver denotes the concept of allowing a violation of one’s rights either expressly or implicitly.440 While consent can also be a waiver of a right, such as the right to a governmental judge guaranteed by article 6 ECHR,441 article 8 American Convention on Human Rights, and various national constitutions,442 a difference exists.

436 See: GFCD of 29 March 1996, 1996 Neue Juristische Woche 1753, 1755

(German Federal Court ). 437 See for example Petrochilos, Procedural Law in International Arbitration,

note 4.83. 438 Born, International Commercial Arbitration Volume II, 2101 et seq. 439 Voser, “Multi-party Disputes and Joinder of Third Parties,” 363 et seq. 440 Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same

Parties,” 482. 441 Petrochilos, Procedural Law in International Arbitration, note 4.04 et seqq. 442 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 443.

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In principle, consent and waiver can occur before and after a specific situation has arisen. At this point, only the permissibility of consent to consolidation, not the waiver of a potential right to a party arbitrator, is discussed. While the extent of the consent to arbitrate is construed broadly,443 the concept of waiver is construed narrowly.

Under Swiss law, mandatory provisions of law cannot be waived in advance.444 As discussed supra, specificity of the agreement is a mandatory law. This means that parties cannot contract out of the requirement of specificity in advance but may waive the right when the violation thereof occurs. Concerning consolidation, WENGER445 and POUDRET/BESSON446 have spoken out for the possibility of advance waiver.

The interpretation of the clauses remains the only feasible method of determining the validity of multi-contract scenarios.

5.7 Conclusion

This author considers the reference to institutional rules to be valid with regard to cases in which the same parties are involved in arbitration under the same contract. When different 443 Girsberger, “Pitfalls in Swiss Arbitration Agreements,” 91; Karrer and Straub,

“Switzerland,” 12.21; Girsberger and Voser, International Arbitration in Switzerland, note 223; Kurkela and Snellman, Due Process in International Commercial Arbitration, 71; Hanefeld, “Germany,” 7.16; Peter Bowman Rutledge, Rachel Kent, and Christian Henel, “United States,” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand, 2nd ed. (Oxford: Oxford University Press, 2009), 13.31; Nacimiento, “Article V(1)(a) NYC,” 228; SFCD of 19 May 2003 - 4C.40/2003 (Swiss Federal Court 2003); SFCD 129 III 675, c. 2.3; SFCD 116 Ia 56 c. 3.b (Swiss Federal Court 1990).

444 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 547; Wenger, “Article 354 SCCP,” 6.

445 Wenger, “Article 186 SPILA,” 15; notably speaking of the former Zurich Rules consolidation. In light of the concept of specificity, Wenger is more restraint. See Wenger, “Article 354 SCCP,” 6.

446 Poudret and Besson, Comparative Law of International Arbitration, note 248 et seq.

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parties arbitrate under the same contract, this author similarly considers the reference valid.

When different arbitration agreements are concerned and they are compatible, determination on validity depends on a number of circumstances. Under the ICC Rules, a legal relationship is required that prevents the extension of the arbitration agreement to an unbearable extent. Under the Swiss Rule article 4(1)(s.2), however, such requirement does not exist. As a consequence, the reference would be invalid if it could not be interpreted in a restricted fashion.

The author has suggested the jurisdictional method, which permits consolidation insofar as the original agreement to arbitrate stretches and is also covered by the second agreement.

It is not possible to waive the lack of specificity, so that consent to the institutional rules does not free the parties from the obligation to be sufficiently specific.

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6 Background on Consolidation Decisions

In order to put the remainder of this analysis into perspective, it is necessary for the esteemed reader to have some background information on the decision on consolidation. This chapter will address concerns that consolidation could result in a violation of arbitral secrecy. Thereafter, the chapter will describe the administrative effect of consolidating cases, then explore the reasoning for placing the decision with an institution, next describe the institutional decision makers, and finally discuss how national jurisdictions treat consolidation of arbitral cases.

6.1 Secrecy as Obstacle to Consolidation

One of the core values of arbitration is secrecy.447

"Many parties choose to arbitrate their disputes rather than litigate them precisely because they do not want certain information, such as trade secrets, revenue, and other sensitive data, to become public."448

The private character of arbitration is often viewed as a good reason not to consolidate, as it may violate the secrecy of the process.449 Some authors have gone so far as to claim secrecy to be an obstacle to consolidation.450 This author does not agree.

447 Brunet et al., Arbitration Law in America, 663 et seqq.; Girsberger and Voser,

International Arbitration in Switzerland, note 662; Lew, “Achieving the Dream: Autonomous Arbitration?,” 457 Note 20-10.

448 Strong, “Intervention and Joinder as of Right in International Arbitration: An Infringement of Individual Contract Rights or a Proper Equitable Measure?,” 933; see also: Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 124.

449 Leboulanger, “Multi-Contract Arbitration,” 65; Nicklisch, “Multi-Party Arbitration and Dispute Resolution in Major Industrial Projects,” 427; Michael Collins Q.C., “Symposium on International Commercial Arbitration:

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As stated supra in chapter 3, secrecy is subdivided into privacy and confidentiality.451 This term is by no means universally recognized or even uniform.452  For example, COLLINS refers to the right to privacy rather than confidentiality.453 Neither concept is violated by consolidation.

 

In the United States, a duty to confidentiality in international arbitration per se is not recognized.454 Generally, protection for arbitral confidentiality is actually quite minimal.455 In most countries non-publicity is not found in the law, but treated as a principle.456 Instead, privacy and confidentiality are only protected under the New York Convention to the extent such requirements are reflected in the parties' arbitration agreement.457

Privacy and Confidentiality in Arbitration Proceedings,” Texas International Law Journal 30 (1995): 121 - 134; Öhrström, “Stockholmer Regeln,” 32; Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 5 et seq.

450 Cristián Conejero Roos, “Multi-party Arbitration and Rule-making: Same Issues, Contrasting Approaches,” in 50 Years of the New York Convention, ed. Albert Jan Van Den Berg, ICCA Congress Series 14 (Deventer: Kluwer, 2009), 432; Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 6. The private nature of international commercial arbitration is at odds with the concept of permitting addition of parties after commencement of the proceedings.

451 Noussia, Confidentiality in International Commercial Arbitration, 24 et seqq. 452 Michael Hwang and Katie Chung, “Protecting Confidentiality and its

Expectations - The Way Forward?,” ICC Bulletin 2009, no. Special Supplement (20009): 39; Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 125; Noussia, Confidentiality in International Commercial Arbitration, 37 et seqq.

453 Collins Q.C., “Symposium on International Commercial Arbitration: Privacy and Confidentiality in Arbitration Proceedings,” 122.

454 Steven Kouris, “Confidentiality: Is International Arbitration Losing One of Its Major Benefits?,” Journal of International Arbitration 22, no. 2 (2005): 134.

455 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1088.

456 Philipp Ritz, Die Geheimhaltung im Schiedsverfahren nach Schweizerischem Recht (Tübingen: Mohr Siebeck, 2007), 57.

457 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1088.

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What arbitration does is exclude the public.458 Excluding the public is said to be one of the reasons for arbitration.459 Parties to arbitration often wish to keep the fact of the dispute and its details between themselves and the panel.460 A non-public proceeding is less hard on business relationships than a public proceeding.461

Arbitrations have generally been more secretive than litigation because arbitral decisions have traditionally been unpublished, and commercial arbitral proceedings usually occur in the private confines of rented hotel rooms rather than in public courtrooms.462

However, publicly held corporations that become involved in arbitral proceedings may have to disclose information about any such disputes to their shareholders and to the general public, e.g., under securities regulations.463

Privacy is not violated when the same parties participate in the consolidated proceeding, as parties are by definition not the public. Similarly, additional parties are hardly the public as they become parties. There should not be a concern about privacy on account of the numbers involved. It is hard to imagine that a consolidated case would reach the proportions of, e.g., a class

458 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International

Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 6. Stating that only the notion that international commercial arbitration is essentially private rather than public is universally accepted.

459 Ritz, Die Geheimhaltung im Schiedsverfahren nach Schweizerischem Recht, 56.

460 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 5.

461 Ritz, Die Geheimhaltung im Schiedsverfahren nach Schweizerischem Recht, 57.

462 Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 124.

463 Ibid., 125.

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arbitration, so that additional parties do not threaten the private nature of the proceedings.

Confidentiality is not violated when the same parties participate in the old and in the consolidated arbitrations.464 When new parties from differing contracts are added, these parties will receive access to information that was previously unknown to them. However, this is not a violation of confidentiality.

Confidentiality applies between the parties, including new parties. These parties are bound by the same confidentiality as the previous parties.465 The wish to protect certain information from another party is not protected in arbitration.

 

Even though an English case, Oxford Shipping Co. v. Nippon Yusen Kaisha,466 forbade non-consensual consolidation due, at least in part, to concerns about confidentiality and the assumption that additional parties would be strangers to the proceedings, this cannot apply in general.

The ICC Rules, as stated supra in chapter 3, do not contain generalized secrecy arrangements, but only contain protection of specific business secrets. The Swiss Rules are strict in comparison to other institutional rules.467

“1. Unless the parties expressly agree in writing to the contrary, the parties undertake as a general principle to

464 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-87. 465 Alexander Jolles and Maria Canals de Cediel, “Chapter 6 - Confidentiality,”

in International Arbitration in Switzerland a Handbook for Practitioners, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki (The Hague: Kluwer Law International, 2004), 100 et seqq.

466 Oxford Shipping Co. v. Nippon Yusen Kaisha, 3 All England Reporter 835 (Queen’s Bench, England 1984).

467 Meyer-Hauser and Vock, “Schweizerische Schiedsordnung,” Note 52.et. seq.

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keep confidential all awards and orders as well as all materials submitted by another party in the framework of the arbitral proceedings not otherwise in the public domain, save and to the extent that a disclosure may be required of a party by a legal duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a judicial authority. This undertaking also applies to the arbitrators, the tribunal-appointed experts, the secretary of the arbitral tribunal and the Chambers. 2. The deliberations of the arbitral tribunal are confidential.” 468

Nevertheless, confidentiality is limited to the deliberation of the panel, awards, orders and materials.469 Even so, as mentioned supra, many legal duties will make certain information public. Also, the addition of other parties or claims that would have been foreseeable, as outlined supra in chapter 5, cannot violate confidentiality. The possibility of arbitrating with all the parties to the contract existed from the outset. These parties and claims could already have been parties and, as parties, are bound by the same obligation to secrecy.

In addition, given the shift toward increased transparency in bilateral arbitration, particularly in cases involving matters of public interest, it would be difficult to oppose joint arbitration simply on the claim that the procedure violates principles of privacy or confidentiality.470

468 See articles 43(1) and 43(2) Swiss Rules. 469 Fabrizio La Spada, “Article 43 - Confidentiality and the Exclusion of

Liability,” in Swiss Rules of International Arbitration Commentary, ed. Tobias Zuberbühler, Christoph Müller, and Philipp Habegger (The Hague: Kluwer Law International, 2005), note 7.

470 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1089; Disagreeing: Kurkela and Snellman, Due Process in International Commercial Arbitration, 71; Hamann and Lennarz,

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In this author’s opinion, consolidation is not hampered by considerations of secrecy when interpreted in the fashion outlined in this analysis. In case of doubt, TENCATE suggests separate confidentiality agreements.471 These could render otherwise compatible arbitration clauses incompatible and thus unfit for consolidation.472

6.2 Administrative Effect of Consolidation

Consolidation under the ICC and the Swiss Rules merges the previously independent cases into one single case. In this single case, only one identifying name or number exists. When cases are heard at the same time, i.e., when only the oral hearing takes place at the same time and location, the cases themselves remain independent, with the need to submit pleadings and evidence for both cases.473 Consolidation goes beyond hearing the cases together.

Consolidation does not, however, create a new single case, but rather merges one case into the other. The ICC Rules specify that the claims of the new case be added to the previous one. The new ICC Rule even specifies, that the second case is merged into the first. The Swiss Rules state that the new case be added to the existing case. In both instances, one case continues on as an enlarged version, while the other case ceases to exist.474 This means case A retains its indentifying number or name.

“Parallele Verfahren mit identischem Schiedsgericht als Lösung für Mehrparteinenkonflikte?,” 291.

471 TenCate, “Multi-Party and Multi-Contract Arbitrations: Procedural Mechanisms and Interpretation of Arbitration Agreements under U.S. Law,” 138.

472 See supra chapter 5. 473 Joint hearings form an alternative to consolidation, which will be discussed in

chapter 13. 474 Bühler and Jarvin, “The Arbitration Rules of the International Chamber of

Commerce (ICC),” 15.271.

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Figure 2: own creation

6.3 Reasoning for (Initially) Placing Decision with Institutions

Three main reasons for charging institutions with the decision on consolidation exist. First, an institution is aware of all cases commenced under its auspices, so that it can identify potential cases for consolidation whereas others without such a bird’s eye view could not.475 Different arbitrations are generally not aware of one another.

Second, only institutions can render a single decision for all cases concerned.476 Depending on the stages all cases are in, there could already be all panels in place. Unlike in most national jurisdictions, one panel cannot bind another panel to a decision on consolidation.477 It would be difficult to coordinate

475 More so for the centralized ICC, less so for the Swiss Chambers. 476 With the exception of those jurisdictions, which permit judges to consolidate

arbitral cases. 477 There may be ways for an arbitral panel to bind another informally in the form

of persuasive precedent, but no formal power to bind another panel in arbitration exists. For a discussion on binding precedent see Klaus Peter Berger, “The International Arbitrators’ Application of Precedents,” Journal of Int’l Arbitration (n.d.): 5-22; Schütze, “The Precedential Effect of Arbitration Decisions”; Legum Barton, “The Definition of ‘Precedent’ in International Arbitration,” in Precedent in International Arbitration, ed. Yas Banifatemi (Huntington, N.Y.: Juris Publ., 2008), 5 - 14; Yas Banifatemi, ed., Precedent in International Arbitration (Huntington, N.Y: Juris Pub, 2008); Alexis Mourre, “Precedent and Confidentiality in International Commercial Arbitration: The Case for the Publication of Arbitral Awards,” in Precedent in International Arbitration, ed. Emmanuel Gaillard and Yas Banifatemi (Huntington, N.Y: Juris Publ, 2008), 39 - 65; Francois Perret, “Is There a Need for Consistency in International Commercial Arbitration?,” in The

Case A

– Claims

1, 2, 3

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the decisions. Potential for conflicting orders results. If none or just one panel is installed, no authority to order consolidation exists for the other parties or claims.478

Third, institutional arbitration institutions are charged with administration of cases, much in the same way a governmental clerk of court and court would in ad hoc proceedings.479 Making administrative decisions and aiding the initiation of the arbitration is a raison d’être of arbitral institutions.480 The extent of the institutional task, roughly speaking, encompasses all things arbitrators cannot, in all practicality, be expected do so.

6.4 Institutional Decision Makers

Arbitrators derive their power directly from party agreement when the parties participate in their selection.481 To understand the nature of the institution and the interplay of independence and authority, this analysis will not proceed to outline who the institutional decision makes are and where their authority is derived from.

6.4.1 ICC Decision Makers

Under the ICC Rules, the decision maker is the ICC Court.482 According to the ICC Statutes article 2, the “Court consists of a Chairman, Vice-Chairmen, members and alternate members.”

Precedent in International Arbitration, ed. Yas Banifatemi and Emmanuel Gaillard (25 - 37: JurisNet, LLC, 2008).

478 See e.g. SFCD 120 II 155, vol. 415, note c. 3. 479 Petsche, The Growing Autonomy of International Commercial Arbitration, 90. 480 Girsberger and Voser, International Arbitration in Switzerland, note 82 et seq. 481 Ibid., note 1. 482 ICC Rules article 4(6).

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The world council483 elects members of the ICC Court from among the national committees for a three-year term.484 Including the surrogate, the ICC Court currently consists of 125 members.485

6.4.2 Swiss Rules Decision Makers

Under the Swiss Rules the decision maker is Chambers, which denotes the seven chambers of commerce and industry of Bern, Basel, Geneva, Neuchâtel, Ticino, Vaud and Zurich.486 When referred to in the Swiss Rules concerning any administrative tasks, the Arbitration Committee in fact exercises the powers of Chambers.487

“The Arbitration Committee is comprised of experienced practitioners of international arbitration.”488

The members of the Chambers of Commerce489 appoint the Arbitration Committee. To date this Arbitration Committee consists of 36 members.490

483 This also means businesses which are members of the International Chamber

of Commerce. 484 ICC Internal Rules article 3(1) and (2). Robert Briner and Rudolf Hömberg,

“Der Internationale Schiedsgerichtshof der Internationalen Handelskammer,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), 363 Note 2.

485 See http://iccwbo.org/iccdafdg/index.html. 486 Rainer Füeg, “The Swiss Chambers’ Court of Arbitration and Mediation,” in

The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg (Basel, 2009), 4 The Chamber of Neuchâtel joined the original six Chambers of Commerce in 2008. Besson, “Introduction,” 1.

487 Introduction to the Swiss Rules on International Arbitration lit. d. “ (. . .) Chambers have appointed an Arbitration Committee (. . .) which shall exercise the powers vested in the Chambers under these Rules (. . .)”.

488 Introduction to the Swiss Rules of International Arbitration lit. e, s.1. 489 This means businesses that hold membership. 490 “Swiss Arbitration - Organization,” October 1, 2010,

https://www.sccam.org/sa/en/organisation.php. Filip De Ly, Mark Friedman, and Luca G. Radicati di Brozolo, “International Law Association International Commercial Arbitration Committee’s Report and Recommendations on

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The Arbitration Committee is advised by the Special Committee,491 which consists of one member and one alternate from each local Chamber.492 Among the group of experts represented in the Arbitration Committee, the members of the Special Committee are those who have “very important international arbitration experience”.493

The Arbitration Committee and the Special Committee are governed by the Unified Internal Rules issued by the member Chambers.494

6.5 Judicial Treatment of Consolidation in Arbitral Cases

In principle, governmental courts do not interfere with the arbitral procedure.495 This restraint does not mean that courts do not have the power to do so. Competences of courts in connection to arbitration can be subdivided into two groups:

‘Ascertaining the Contents of the Applicable Law in International Commercial Arbitration’,” Arbitration International 26, no. 2 (2010): 72; Besson, “Introduction,” 12; Peter, “Some Observations on the Swiss Rules of International Arbitration,” 1.

491 Swiss Rules Introduction lit. e; Paolo Michele Patocchi, “The Practice of the Special Committee of the Swiss Chambers of Commerce in the Administration of Arbitrations Conducted Under the Swiss Rules of International Arbitration (2004 - 2007),” in New Developments in International Commercial Arbitration 2007, ed. Christoph Müller (Zurich: Schulthess, 2007), 109; Peter, “Some Observations on the Swiss Rules of International Arbitration,” 3.

492 Patocchi, “The Practice of the Special Committee of the Swiss Chambers of Commerce in the Administration of Arbitrations Conducted Under the Swiss Rules of International Arbitration (2004 - 2007),” 96; Besson, “Introduction,” 13.

493 Peter, “Some Observations on the Swiss Rules of International Arbitration,” 3. 494 See https://www.sccam.org/sa/en/organisation.php. 495 Aden, Internationale Handelsschiedsgerichtsbarkeit, notes 7-26; Steinbrück,

Die Unterstützung ausländischer Schiedsverfahren durch staatliche Gerichte: Eine rechtsvergleichende Untersuchung des Deutschen, Österreichischen, Englischen, Schweizerischen, Französischen und US-Amerikanischen Schiedsrechts, 1; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1620, stressing the requirement of the panel or parties to approach the court.

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measures in support of the arbitral proceeding and measures to supervise and control the arbitral proceedings.496

When consolidation of arbitral cases is addressed in national legal systems,497 these national legal systems vary in their treatment of consolidation of arbitral proceedings.498 Some jurisdictions allow either the courts499 or the arbitral panel500 to order consolidation, others allow consolidation only upon unanimous ad hoc agreement of all parties.501 Some countries providing for consolidation in arbitral cases by court order set many preconditions, so that the practice, in the opinion of MOREAU, creates more problems than it solves.502 Certainly, forced consolidation is rare in national arbitration laws.503

496 Ragnar Harbst, Die Rolle der Staatlichen Gerichte im Schiedsverfahren: Ein

Rechtsvergleich zwischen dem Englischen Arbitration Act 1996 und Deutschem Schiedsverfahrensrecht (Heidelberg: Verlag Recht und Wirtschaft, 2002), 19; Piero Bernardini, “Arbitral Justice, Courts and Legislation,” in Arbitration in the Next Decade, ed. Fabien Gélinas, ICC Special Supplement 1999 (ICC Publishing S.A., 1999), 19 et seqq.; Steinbrück, Die Unterstützung ausländischer Schiedsverfahren durch staatliche Gerichte: Eine rechtsvergleichende Untersuchung des Deutschen, Österreichischen, Englischen, Schweizerischen, Französischen und US-Amerikanischen Schiedsrechts, 7 et seqq.; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1621 et seqq.; Margaret L. Moses, The Principles and Practice of International Commercial Arbitration (Cambridge: Cambridge University Press, 2008), 84 et seqq.

497 Born, International Commercial Arbitration Volume II, 2076 even though there may not be an express provision, some countries judiciaries have addressed the issue.

498 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 4-74.

499 Bermuda Arbitration Act, § 9; British Columbia Commercial Arbitration Act, § 21; Ontario International Commercial Arbitration Act of 1990, Article 7.

500 For further examples see. Australian International Arbitration Act, § 24; Irish Arbitration Act 1998, § 9; Singapore Arbitration Act, § 26. For further examples are French Arbitration law, that does not allow for the court to assist in arbitration, see Jean-Louis Delvolvé, French Arbitration Law and Practice a Dynamic Civil Law Approach to International Arbitration, 2nd ed. (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2009).

501 Born, International Commercial Arbitration Volume II, 2076 According to Born, absent agreement the NYC does not allow for forced consolidation.

502 Moreau, “Arbitrage liés,” 81. 503 Born, International Commercial Arbitration Volume II, 2078. For examples of

such see: Netherlands Code of Civil Procedure, Article 1046; New Zealand Arbitration Act, Second Schedule, Article 2; Hong Kong Arbitration Ordinance, Article 6B.

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The lex arbitri determines how consolidation should be treated in arbitration.504 However, BORN rightly states that the more specific intent of the parties should prevail in any case over, e.g., the lex fori or arbitration institution, which could contain a provision on consolidation.505 Incompatible clauses supercede institutional rules, because they are the more specific option.506 To provide a firm background, this author describes Swiss, German and U.S. American law on consolidation of arbitrations.

6.5.1 Consolidation of Arbitrations in Switzerland

Switzerland does not allot the authority to consolidate cases to either courts or arbitrators. Swiss authorities, according to GIRSBERGER/VOSER, disagree on whether courts would be entitled to consolidate arbitral proceedings.507 Supporters508 of the argument base the approval on the wording of article 185 SPILA.509 It reads:

“If further assistance of the judicial or administrative authorities is required, the judge at the seat of the arbitral tribunal shall have jurisdiction.”

This can be interpreted to mean that courts may assist the arbitral proceedings when it comes to requests concerning

504 Ibid., 2076; Craig, Park, and Paulsson, International Chamber of Commerce

Arbitration, 473. 505 Born, International Commercial Arbitration Volume II, 2075. See also chapter

5. 506 See supra subchapter 5.1. 507 Girsberger and Voser, International Arbitration in Switzerland, note 880. 508 Berti, “Article 185 SPILA,” 12; Lalive, Poudret, and Reymond, Le droit de

l’arbitrage interne et international en suisse édition annotée et commentée du concordat sur l’arbitrage du 27 Mars 1969, 378.

509 Berti, “Article 185 SPILA,” 12; Lalive, Poudret, and Reymond, Le droit de l’arbitrage interne et international en suisse édition annotée et commentée du concordat sur l’arbitrage du 27 Mars 1969, no. 378 N. 12.

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acceleration of procedures; extension of term of office of the panel; decisions regarding the repetition of proceedings after the replacement of an arbitrator.510

Opponents of this view permit consolidation only upon agreement of all parties and base this opinion on party autonomy, pointing to the lack of explicit permission and customary actions by the courts.511

No Swiss author suggests that arbitrators could force consolidation absent consent.

6.5.2 Consolidation of Arbitrations in Germany

The UNCITRAL Model Law makes no provision for consolidation. Germany did not add such a provision upon the UNCITRAL Model Law’s adoption.

Courts may support the arbitration in the taking of evidence and in service of process by ordering interim measures providing assistance in establishing the arbitral panel or by enforcing arbitration agreements.512

There is no suggestion in jurisprudence or scholarly writing that the general assistance clause, contained in § 1050 GCCP, which is similar to article 185 SPILA, would permit courts to

510 Girsberger and Voser, International Arbitration in Switzerland, note 879. 511 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 1115; Marcel Schneider, Funktionen des staatlichen Richters am Sitz des Internationalen Schiedsgerichts gemäss 12. Kapitel des IPRG (Zurich: Dike, 2009), 166 et seqq.; Wenger, “Article 186 SPILA”, "consolidation (...) requires the consent of all concerned.

512 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1621; Karl-Heinz Böckstiegel et al., eds., “§ 1026 - Extent of Court Intervention,” in Arbitration in Germany: The Model Law in Practice (Austin, TX: Wolters Kluwer Law & Business, Kluwer Law International, 2007), note 2.

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consolidate cases. Similarly, there is no suggestion that arbitrators would have discretion to order consolidation without prior consent.513   In Germany, no forcible consolidation for arbitral proceedings exists.514

 

6.5.3 Consolidation of Arbitrations in United States

In the United States, “(t)he problem is that too much law covers the subject.”515 There are International conventions, the FAA, State arbitration acts, party agreements.516 It is clear, however, that in principle federal law supersedes state law.517 The only uniformly applied law is the FAA. The FAA provides a nationwide supplement to the NYC.518 This analysis is therefore limited to federal cases.

The FAA does not address the issue of consolidation directly.519 Over time courts have not decided uniformly on whether they have the power to force consolidation in arbitration. In early cases, the United States federal courts held that courts could order consolidation. After several United States Supreme Court

513 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 414; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2835 If this can be done soley by reference to institutional rules as part of party agreement will be discussed elsewhere. Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 43.

514 Karl Heinz Schwab and Gerhard Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, 7th ed. (Munich: Beck, 2005), notes 16-20.

515 Daniel M. Kolkey, “Reflections on the U.S. Statutory Framework for International Commercial Arbitrations: Its Scope, Its Shortcomings, and the Advantages of U.S. Adoption of the UNCITRAL Model Law,” American Review of International Arbitration 1 (1990): 504.

516 Ibid., 496. 517 Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die

Rechtsprechung US-Amerikanischer Gerichte, 43; Linda R. Hirshman, “The Second Arbitration Trilogy: The Federalization of Arbitration Law,” Virginia Law Review 71 (1985): 1353.

518 Lookofsky and Hertz, Transnational Litigation and Commercial Arbitration an Analysis of American, European and International Law, 783.

519 Born, International Commercial Arbitration Volume II, 2079.

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in not directly consolidation related decisions, this approach was modified to allow the court to order consolidation only when there was evidence that parties agreed thereto.520 There is no United States Supreme Court decision on whether this agreement by the parties seems to have to be explicit. The United States Supreme Court has already denied certiorari for at least four consolidation cases.521

On this issue of consent, the federal circuits are split.522 In Compania Espanola de Petroleos v. Nereus Shipping, the Second Circuit forced consolidation.523 By contrast, in 1984 the Ninth circuit refused to follow the Second Circuit, even though in this case both arbitration clauses were identical.524 A later case by the United States district court for the Southern District of New York found that strict adherence to the arbitration clauses was necessary and would thus not consolidate without consent.525 In Karaha, the Fifth Circuit enforced a decision on consolidation based solely on the agreement with the UNCITRAL Rules, which do not even contain explicit consolidation provisions.526 Furthermore, the leading case prohibiting the non-consensual consolidation of arbitrations -

520 Peter Ashford, Handbook on International Commercial Arbitration

(Huntington, N.Y: JurisNet, LLC, 2009), 31; Connecticut General Life Insurance Co. v. Sun Life Assurance Company of Canada, 210 F.3d 771 (7th Cir., USA 2000).

521 Dean  Witter  Reynolds,   Inc.   v.   Byrd,   470  U.S.   213   (United   States   Supreme  Court  1985);  Volt  Info.  Sciences,  Inc.  v.  Bd.  of  Trustees,  489  U.S.  468  (United  States   Supreme   Court   1989);   Moses   H.   Cone   Mem’l   Hops.   v.   Mercury  Constr.,  460  U.S.  1  (United  States  Supreme  Court  1983);  Weyerhaeuser  Co.  v.  Western  Seas  Shipping  Co.,  743  F.2d  635  (9th  Cir.,  USA  1984).

522 David J. Branson and Richard E. Wallace, “Court-ordered Consolidated Arbitrations in the United States: Recent Authority Assures Parties the Choice,” Journal of International Arbitration 4 (1987): 89 - 94; Ashford, Handbook on International Commercial Arbitration, 31.

523 Compania Espanola de Petroleos v. Nereus Shipping, 527 F.2d 966, 975 (2nd Cir., USA 1975); William M. Barron, “Court-ordered Consolidation of Arbitration Proceedings in the United States,” Journal of International Arbitration 4, no. 1 (1987): 82.

524 Weyerhaeuser Co. v. Western Seas Shipping Co., 743:637. 525 Ore & Chem. Corp. v. Stinnes Interoil, Inc., 606 F.Supp 1510, 1513

(S.D.N.Y., USA 1985). 526 Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, 364 F.3d 274, 295 et seq. (5th Cir., USA 2004).

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the Seventh Circuit's holding in Champ v. Siegel Trading Co.527 - has since been discredited, with the Second Circuit recently noting that Champ does "not represent a governing rule of contract interpretation" in all cases, nor is it "adhered to in every jurisdiction."528

The current consensus seems to be that courts are disinclined to force consolidation absent party agreement.529 Nevertheless, POUDRET/BESSON conclude that in the United States it is possible to file in court for the consolidation of arbitral cases.530 COOLEY concludes that consolidation will be granted, even though jurisprudence is not uniform, when the issues are substantially the same and no party will be prejudiced by consolidation.531 MOREAU states more cautiously that United States courts seem to consolidate under certain circumstances, but do so only reluctantly.532 None of the cases related to institutional provisions permitting consolidation.

In Green Tree, a decision made in 2003, the United States Supreme Court addressed the issue in an indirect fashion.533 Justice Stephen Breyer, writing for a plurality of the United States Supreme Court, reasoned that because the question relates to "what kind of arbitration proceeding the parties agreed to" - i.e., the procedure to be followed - rather than "the validity of the arbitration clause (. . .) or its applicability," the issue can and should be addressed by the arbitrator, unless the

527 Champ v. Siegel Trading Co, 55 F.3d 269 (7th Cir., USA 1995). 528 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1027.

529 Government of U.K. of Gr. Brit. v. Boeing, 998 F.2d 68 (2nd Cir., USA 1993); Ashford, Handbook on International Commercial Arbitration, 31.

530 Poudret and Besson, Comparative Law of International Arbitration, note 245. 531 Cooley, Arbitration Advocacy, 50. 532 Moreau, “Arbitrage liés,” 81. 533 Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 453 (U.S. Supreme

Court 2003) noting that the question “concerns contract interpretation and arbitration procedures” and that “arbitrators are well situated” to address those issues.

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arbitration agreement clearly requires these jurisdictional questions to be decided by a judge, an approach that has subsequently been adopted by various federal circuit courts.534

The consequences of this decision on consolidation in the United States remain unclear.535 Some have named this “the most important legal development in recent years”.536 In the wake of Green Tree, the First, Third, Fourth, Seventh and Ninth Circuits held that arbitrators must decide the issue of consolidation,537 and refused to take their own decision.

534 Ibid. noting that the question “concerns contract interpretation and arbitration

procedures” and that “arbitrators are well situated” to address those issues. 535 Hanotiau, Complex Arbitrations Multiparty, Multicontract, Multi-Issue and

Class Actions, note 415. 536 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1026; Green Tree Financial Corp. v. Bazzle,539:.

537 Certain Underwriters at Lloyd’s London v. Westchester Fire Inurance Co., 489 F.3d 580 (3rd Cir., USA 2007); Employers Insurance Co. of Wausau v. Century Indem. Co., 443 F.3d 573 (7th Cir., USA 2006); Dockser v. Schwartzberg, 433 F.3d 421 (4th Cir., USA 2006); Shaw’s Supermarkets, Inc. v. United Food and Comm. Workers Union, 321 F.3d 251 (1st Cir., USA 2003); Molly L. Pease and David J. Grais, “Consolidation of Arbitrations: Courts Have Punted to Arbitrators; Now What?,” Mealey’s Litigation Report 18, no. 5 (2007): 1.

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7 Challenge of the Decision on Consolidation

BLESSING remarks that consolidation and joinder

“(. . .) require a very careful, thoughtful and cautious handling by the administering body (. . .)”.538

Having described the parameters for the validity of consent to consolidation, the procedures and prerequisites, the analysis turns to the matter of who, if anyone, can review the decision of the institution to consolidate cases. Neither in litigation nor in arbitration can every decision be challenged.

It is necessary to distinguish between a challenge of the decision on consolidation and a challenge to any effects that occur as a result of a consolidation having occurred.539 This chapter only analyzes the decision of consolidation by the institution itself. Neither the procedure which leads to the decision,540 nor whether any other effects for which the decision will play a role, are discussed here. The latter will be discussed infra in chapters 11 and 12.

A decision is any conclusion or resolution reached after consideration.541 Several possibilities for a challenge of a decision exist. No reconsideration within the arbitration

538 Blessing, “Comparison of the Swiss Rules with the UNCITRAL Rules and

Others,” 31. 539 This will be addressed in chapters 11 and 12. Any violations resulting from

the procedure following consolidation must be challenged when they occur. The selection of arbitrators will be addressed in chapter 9.

540 Both the ICC Court and the Swiss Chambers issue unreasoned decisions after inviting the views of the parties. Neither does a contradictory proceeding take place, nor a hearing nor an appeal to the institution.

541 Girsberger and Voser, International Arbitration in Switzerland, note 954.

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institution will take place.542 Challenge of the institutional decision could take place in front of the arbitrators (once they are in place).543 Parties could resist in front of the court at the seat either with or without recourse first having been sought from the arbitral panel. Finally, challenge could be made after the final award in the courts of an enforcement country. The following analysis will determine which options are viable.

7.1 Challenge Before Arbitrators

Institutional powers are not absolute principles.544 Decisions that are not reviewed are rare indeed.545 Initially, one may think of negative prima facie decisions concerning the existence of an arbitral agreement.546 However, parties are not prevented from raising the question of jurisdiction in front of a court of law.547 Similarly, an affirmative prima facie rulings on jurisdiction do not bind the arbitrators.548 A de novo review occurs.549 One may also consider the appointment decisions concerning

542 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, para. 7-43 et seq. 543 Blackaby et al., Redfern and Hunter on International Arbitration, notes 10-11. 544 Fabien Gélinas and Horacio A. Grigera Naón, “The Powers of the ICC

International Court of Arbitration vis-à-vis Parties and Arbitrators,” in Arbitration in the Next Decade, ICC Special Series 1999 (Paris: ICC Publishing S.A., 1999), 57.

545 Bühler and Jarvin, “The Arbitration Rules of the International Chamber of Commerce (ICC),” 15.111.

546 Rau, “‘Consent’ to Arbitral Jurisdiction: Disputes With Non-Signatories,” 3.39.

547 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 173.

548 Pierre Heitzmann, “The International Chamber of Commerce,” in Institutional Arbitration Tasks and Powers of Different Arbitration Institutions, ed. Pascale Gola, Karin Graf, and Claudia Götz Staehelin (Zurich: Schulthess, 2009), 130; Briner and Hömberg, “Der Internationale Schiedsgerichtshof der Internationalen Handelskammer,” 370, Note 22; Gabrielle Kaufmann-Kohler and Antonio Rigozzi, Arbitrage international droit et pratique à la lumière de la LDIP (Bern: Editions Weblaw, 2010), note 423 et seq.; Poudret and Besson, Comparative Law of International Arbitration, note 468.

549 Rau, “‘Consent’ to Arbitral Jurisdiction: Disputes With Non-Signatories,” 3.39.

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arbitrators.550 However, the appointment of an arbitrator may also be reviewed by courts, even if indirectly.551

A challenge before the arbitrators of an institutional decision requires that the arbitrators not be bound by the institutional decision. Whether the decision on consolidation can be reviewed remains unclear, as the latest revisions of the rules do not clarify the issue.

7.1.1 Opinion Affirmative of a Challenge Before Arbitrators

A majority opinion speaks in favor of a de novo decision concerning jurisdiction by the panel.552

Without further elaboration KARRER states, regarding the Swiss Rules, that Chambers may initially order consolidation.553 This appears to suggest that there will be a review. What form the review should take is not revealed.

LEW AT AL. assert that in an ICC arbitration, the initial decision is made by the ICC Court, which does not prevent the panel thereafter from deciding the request.554 BÜHLER/JARVIN note

550 SFCD 110 Ia 59, 61. 551 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 0-24; SFCD 118 II 359 E. 3b (Swiss Federal Court 1992); Gerhard Walter, Internationales Zivilprozessrecht der Schweiz: Ein Lehrbuch, 4th ed. (Stuttgart: UTB, 2007), 548.

552 Stephanie Reed Traband, “American Arbitration Association,” in Institutional Arbitration Tasks and Powers of Different Arbitration Institutions, ed. Pascale Gola, Claudia Götz Staehelin, and Karin Graf (Zurich: Schulthess, 2009), 33.

553 Karrer, “Internationale Schiedsordnung der Schweizerischen Handelskammer,” 4, emphasis added.

554 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-90.

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more generally that the ICC decisions are not necessarily binding on the arbitrators.555

VOSER believes that an institution would not bind arbitrators, but rather that the arbitrators have the final decision of admissibility of consolidation under the contract(s).556 BORN argues for leaving the decision on consolidation to the panel because of its stewardship of the proceedings and procedural efficiency and fairness.557 BREKOULAKIS is of the same opinion, when speaking about addition of third party claims.558

Swiss Courts have generally denied that arbitrators are bound by institutional decisions.559 The Swiss Federal Court went so far as to state that institutional decisions do not have res judicata effect, and therefore the decision leaves any questions to the arbitrators and then subsequently to the courts.560

Similarly, the institutional practice permits that arbitrators reconsider the decision on consolidation. As example, in one case before the Zurich Chamber of Commerce, the panel decided to bifurcate a case previously consolidated by Chambers.561

555 Bühler and Jarvin, “The Arbitration Rules of the International Chamber of

Commerce (ICC),” 15.111. 556 Voser, “Multi-party Disputes and Joinder of Third Parties,” 360;

Kleinschmidt, “Die Widerklage gegen einen Dritten im Schiedsverfahren,” 147.

557 Born, International Commercial Arbitration Volume II, 2092. 558 Brekoulakis, Third Parties in International Commercial Arbitration, note

3.59. 559 SFCD of 29 October 2008 c. 3.3.1.6 (Swiss Federal Court 2008); SFCD of 11

January 2010 - 4A_258/2009 3.2.1 (Swiss Federal Court 2010); SFCD 128 III 330 332 (Swiss Federal Court 2002). Save the decision on dismissal or appointment of arbitrators, as arbitrators cannot be judges in their own cause.

560 SFCD 110 Ia 59, 61. 561 Interview with Zurich Chamber of Commerce on 8 April 2010.

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In his final report for the ICC on multi-party arbitration DELVOLÉ states that in the event of a challenge it is the panel which decides whether it has jurisdiction as regards all of the parties to the proceeding in question.562

7.1.2 Opinion Against a Challenge Before Arbitrators

A different opinion states that when consolidation arises from chosen arbitration rules, the institution and not the panel decides.563 The parties must be deemed to have assented to the minimum of control by the institution.564 GILLIÉRON/PITTET do not mention the possibility of a review by the arbitrators.565 LÖRCHER stresses the discretionary nature of the rule and only mentions review at the enforcment stage.566

7.1.3 Author’s Opinion

This author agrees with the majority and will show infra the reason therefor.

7.1.3.1 Jurisdictional Character

Consolidation is more than a procedural detail which does not require review, e.g., how many pleadings should be exchanged. Rather, consolidation is closely bound up with consent to

562 Jean-Louis Delvolvé, “Final Report on Multi-Party Arbitrations,” ICC

Bulletin 6, no. 1 (June 14, 1995): 37. 563 Perret, “Is There a Need for Consistency in International Commercial

Arbitration?,” 33. 564 Kurkela and Snellman, Due Process in International Commercial Arbitration,

167. 565 Gilliéron and Pittet, “Article 4 - Consolidation of Arbitral Proceedings

(Joinder), Participation of Third Parties.” 566 Lörcher, “The Swiss Rules of International Arbitration Seen from Abroad,”

68.

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arbitrate and significantly changes the ordinary proceeding.567 Consent to consolidated arbitration in effect means agreeing to arbitration with the party/ies of the other/second case. PETSCHE states that there are things too substantial to be addressed by an institution without recourse.568 In multi-party arbitration, which will often be the case in instances of consolidation, it is particularly important to show that the parties have actually consented to this type of arbitration.569

It has an aspect of jurisdiction and procedure.570 Consolidation is considered a procedural issue in the United States,571 but it is also within the realm of contract interpretation and thus jurisdiction.572 The similarities to jurisdiction are striking, as in both cases the institutions must determine whether a valid agreement exists, either a valid agreement to arbitrate or a valid agreement to consolidate.573

7.1.3.2 Institutions Retain Sufficient Control

The criticism that a modicum of control is given by agreement to an institution does not prevent review by arbitrators. An institution does render a prima facie decision. With this decision, it sets the initial parameters for the proceedings. In addition, the decision will not be directly challengeable in front of the courts, as it neither ends a case nor disposes of any

567 Frick, International Arbitration Law Library, 237. 568 Petsche, The Growing Autonomy of International Commercial Arbitration, 91. 569 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-3. 570 Born, International Commercial Arbitration Volume II, 2076. This can be

observed in the approach taken concerning a challenge. Some challenge consolidation as jurisdictional question, some as procedural one. For further information see chapter 7.

571 Pease and Grais, “Consolidation of Arbitrations: Courts Have Punted to Arbitrators; Now What?,” 1. This will be addressed infra in subchapter 7.3.

572 Green Tree Financial Corp. v. Bazzle,539:. 573 The jurisdictional character is also addressed in chapters 5.

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material aspect of the case.574 In case of refusal of consolidation, the proceedings will continue separately, as the arbitrators of different cases cannot bind one another to consolidate the cases.575 A certain control is exercised by an institution regardless.

7.1.3.3 Limits to Party Autonomy

Party autonomy cannot transfer decision-making power to just any entity.576 A transfer of final decision-making power to the institution requires certain safeguards. Refusing arbitrators the right to review an institutional decision on consolidation overlooks the required standards for decision makers.

In order for arbitration to be a valid alternative to litigation, certain standards of independence and legitimacy of deciding authorities must be met.577 Although the competence, i.e., legitimacy of arbitral institutions with regard to managing and supervising arbitrations is recognized in principle, it does not remain uncriticized or even clearly defined.578 According to PETSCHE, judicial attitudes towards institutional decision-making are

“an – unsatisfactory – compromise between the autonomy of institutional decision making and the concern with independence and impartiality of arbitrators.”579

574 This will be further addressed in subchapter 7.2 concerning the nature of

decisions which can be attacked in front of court. 575 SFCD of 11 January 2010 - 4A_258/2009. In this case, the ICC arbitrators had

rejected consolidation. The Swiss Federal Court upheld the decision. 576 This refers to both independence, impartiality, and legitimacy. 577 This is already implied by the European Convention on Human Rights. 578 Poudret and Besson, Comparative Law of International Arbitration, note 94. 579 Petsche, The Growing Autonomy of International Commercial Arbitration, 91

here referring to the decision on challgenes of arbitrators.

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The institutions’ powers and functions must be distinguished from the arbitrators’ powers.580 Institutions are purely administrative in nature581 and do not settle disputes.582 Final decisions on matters relating to substance or procedure are usually left to the arbitrators in order to prevent disgruntled parties from asserting due process violations against the institution.583 Arbitrators derive their powers from private agreement and not by the authority of the state.584 In essence, party agreement forms its legitimacy in a much more confined way.585 Even more confined is the legitimacy of an institution, which does not provide for safeguards of independence and impartiality.

In most countries the independence and impartiality of the arbitrators is a matter of public policy.586 It has been argued that the institution has a duty to ensure that a fundamentally fair and impartial proceeding under its auspices exists and is carried out by careful scrutiny of conflicts of interest.587 In consequence, institutions uniformly guard against biased arbitrators as a means to ensure enforceability of the awards.588 There are numerous ethical standards for arbitrators in place.589 Not all of them are congruent or even compatible.590 In other words, the

580 Speaking about the ICC: Bühler and Jarvin, “The Arbitration Rules of the

International Chamber of Commerce (ICC),” 15.109. 581 Voser, “Multi-party Disputes and Joinder of Third Parties,” 416. 582 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims,

Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 162. 583 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration,

381. 584 Girsberger and Voser, International Arbitration in Switzerland, note 1. 585 Bennett, Arbitration Essential Concepts, 59; Petsche, The Growing Autonomy

of International Commercial Arbitration, 111. 586 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 11-7. 587 Gunnar Sachs, Verhaltensstandards für Schiedsrichter (Cologne: Heymanns,

2008), 159. 588 Petsche, The Growing Autonomy of International Commercial Arbitration, 33. 589 To name but a few, the AAA/ABA Code of Ethics for Arbitrators in

Commercial Disputes, the IBA Rules of Ethics for International Arbitration and Guidelines on Conflict of Interest in International Arbitration, the Charted Institute of Arbitrators Code of Professional Conduct and more. For an overview, please see Sachs, Verhaltensstandards für Schiedsrichter.

590 Ibid., 148 et seqq.

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impartiality of arbitrators is secured in various ways and subject to strict review, while the impartiality of institutions is not.

The existing standards for institutions do not suffice to satisfy the necessary standard. Admittedly, many of the members of the ICC Court or the Swiss Chambers Arbitration Committee591 are lawyers and are bound personally (even if not when acting as attonreies) by ethical standards. Additionally, some concessions to impartiality in the decision-making are made. The members of the ICC Secretariat and the chairman may not participate in any ICC arbitrations.592 Vice-chairmen are not to be appointed as arbitrators. Chairmen, vice-chairmen or members of the ICC Court in an ongoing arbitration will be prohibited from participating in or being present at ICC Court decisions relating to this matter.593 They will also be prohibited from receiving any material in this case.594 Nevertheless, these standards do not approach the standards required for judges or arbitrators. Even in literature concerned solely with bias in international commercial arbitration, bias of international organizations does not enter the analysis.595 It is only recently that the field has begun to look at the ethical requirements that should apply to provider organizations as distinct from the ethical requirements of the neutrals themselves.596

On an international level there has been an attempt to introduce standards for institutions. In 2002, the CPR-Georgetown Commission on Ethics and Standards of Practice in ADR issued

591 See supra subchapter 6.4 for a description of the decision makers. 592 Internal Rules of the ICC article 2(1). 593 ICC Internal Rules articles 2(3) and (4). 594 ICC Internal Rules article 2(5). 595 See, e.g., Sam Luttrell, Bias Challenges in International Commercial

Arbitration the Need for a “Real Danger” Test (Alphen aan den Rijn: Kluwer Law International, 2009).

596 Sharon Press, “Ethics for Provider Organizations,” in Dispute Resolution Ethics: A Comprehensive Guide, ed. Phyllis Bernard and Bryant G Garth (Washington, DC: American Bar Association, Section of Dispute Resolution, 2002), 155.

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the Principles for Provider Organizations.597 Among these principles is the principle of assuring neutrality of the organization.

“The ADR Provider Organization’s policies relating to confidentiality, organizational and individual conflicts of interests, and ethical standards for neutrals and the Organization;”

It requires disclosure of organizational bias.598 It is also requires that complaint and grievance mechanisms be offered.599 To date, neither the ICC Court nor the Swiss Chambers have adopted these principles.

Without similar standards for institutions, judges and arbitrators, any final decision making authority allocated to institutions must remain exceptional and be based on other important reasons. In the case of consolidation, it cannot. It is therefore difficult to justify a lack of review by the arbitrators.

597 “Ethics for Provider Organizations” See

http://www.cpradr.org/Portals/0/finalProvider.pdf. 598 “V. Disclosure of Organizational Conflicts of Interest a. The ADR Provider Organization should disclose the existence of any

interests or relationships which are reasonably likely to affect the impartiality or independence of the Organization or which might reasonably create the appearance that the Organization is biased against a party or favorable to another, including (i) any financial or other interest by the Organization in the outcome; (ii) any significant financial, business, organizational, professional or other relationship that the Organization has with any of the parties or their counsel, including a contractual stream of referrals, a de facto stream of referrals, or a funding relationship between a party and the organization; or (iii) any other significant source of bias or prejudice concerning the Organization which is reasonably likely to affect impartiality or might reasonably create an appearance of partiality or bias.”

599 “VI ADR Provider Organizations should provide mechanisms for addressing grievances about the Organization, and its administration or the neutral services offered, and should disclose the nature and availability of the mechanisms to the parties in a clear, accurate and understandable manner. Complaint and grievance mechanisms should also provide a fair and impartial process for the affected neutral or other individual against whom a grievance has been made.”

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7.1.3.4 Procedural Authority Rests With Arbitrators

Arbitrators enjoy great freedom in managing the procedure.600 BORN suggests that the decision on consolidation should be in the hands of the arbitrators due to their stewardship of the proceedings.601 Absent party agreement concerning the procedure, arbitrators have discretion to conduct the proceedings within the confines of mandatory laws.602

All institutional rules recognize the arbitrators’ power, in the silence or disagreement of the parties, to direct the proceeding subject to his own discretion and the respect of procedural due process.603 Even in the very highly institutionalized system of the ICC, the arbitrator is to determine procedure, while the institution only provides a framework and administrative assistance, also with the goal of ensuring enforceability.604 Further guidelines for arbitrators’ discretion are provided by non-binding “best practices” or ethical rules.605 Procedural questions which grow out of the dispute and bear on its final disposition are for the arbitrators to decide.606

A final decision on consolidation does not only influence the procedure that follows, but determines it in many ways as will be shown infra. Consolidation is not a purely administrative action, inspite of its administrative consequences outlined in

600 Kurkela and Snellman, Due Process in International Commercial Arbitration,

66. 601 Born, International Commercial Arbitration Volume II, 2092. 602 Poudret and Besson, Comparative Law of International Arbitration, note 525. 603 Kurkela and Snellman, Due Process in International Commercial Arbitration,

152. 604 See infra chapter 10. 605 Christian Borris, “The Reconciliation of Conflicts Between Common Law and

Civil Law Principles in the Arbitration Process,” in Conflicting Legal Cultures in Commercial Arbitration, Old Issues, ed. Stefan Frommel, vol. 4, Studies in Comparative Corporate and Financial Law (Kluwer Law International, 1996), 4.

606 Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (United States Supreme Court 2002).

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subchapter 6.2. Procedural implications far outweigh the administrative ones, so that the arbitrators as masters of the procedure would be entitled to make the final determination on consolidation.

7.1.3.5 Practical Considerations

Finally, there are practical limitations that make a final determination by institutions unlikely. When the institution orders consolidation, the cases are usually in very early stages. Institutions will not make a detailed inquiry into the facts and will decide on consolidation based on whatever information is available at the time. The Swiss Chambers sent to the Special Committee a summary of the cases, which is also based on redacted information available to Chambers at the time.607 In this case a detailed analysis is not possible. If an arbitral panel made a determination on jurisdiction based on such cursory inquiry, the decision would not stand scrutiny but be remanded.608 As stated supra in chapter 4, the ICC Rule explicitly requires a connection, and the Swiss Rule requires a connection to avoid invalidity of the consent to consolidation.609 Finality makes little sense when limited information is available.

7.1.4 Summary

As a mixture of administrative action, procedural order and jurisdicational decision, the decision on consolidation falls into the sphere of arbitrator authority and responsibility. Arbitrators can make administrative decisions, should make procedural decisions and must make jurisdictional decisions. In summary,

607 Interview with the Zurich Chamber of Commerce on 8 April 2010. 608 SFCD 128 III 50. 609 This applied to the previous and applies to the new (or proposed new)

versions of the ICC and Swiss Rules.

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it is this author's position, that the arbitral panel will have to make an independent decision on whether consolidation met the criteria of the institutional rules and is covered by agreement of the parties. Refusal to review the institutional decision (implicitly or explicitly) would amount to a denial of justice and as such be reviewable by the courts.610

7.2 Challenge in the Seat Country

Swiss judges have jurisdiction over questions in relation to the arbitral proceedings with a seat in Switzerland. Applicable law is the SPILA. In the recognition and enforcement phase the New York Convention is applicable. Under both SPILA and NYC only awards may be challenged.611 This excludes administrative and procedural decisions, which can be challenged, if at all, only indirectly.612

This analysis will first have to answer the question whether the the decision on consolidation (either by the institution or by the arbitrators) is an award and can thus be challenged directly.

7.2.1 Institutional Decision Cannot Be Challenged Directly

The definition of which decisions are also awards is left to national courts, as no international convention contains a final definition.613 Generally speaking, an award is a decision by

610 The remainder of this analysis will proceed on the assumption that parties

make the appropriate objections to the panel. 611 Girsberger and Voser, International Arbitration in Switzerland, note 1045. 612 With the exception of jurisdictional decisions, which must be challenged or

are waived. 613 Thierry Augsburger and Lara M. Pair, “Note to SFCD 136 III 200 of 13 April

2010,” Aktuelle Juristische Praxis 12/2010 (2010): 1618.

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which formal requests of the parties are disposed of.614 Procedural decisions, which either have an effect on the existence of a proceeding615 or jurisdiction,616 are also classified as awards.617 Included in the term award are preliminary, interim618 or partial awards,619 which are distinguished by their binding effect on the arbitrators.620 A final award terminates the arbitral proceeding by granting, dismissing or deciding not to hear a claim.621 A preliminary award does not terminate any aspect of the merits, but decides a preliminary issue concerning either a procedural or substantive matter, so long as it does not end any part of the proceeding.622 Orders are decisions which are not awards.623

Even though a positive decision on consolidation effectively terminates one case,624 its substance of all claims remains unaltered and must still be decided.625 Similarly, no prayer for relief is answered by consolidation. It is this author’s conclusion, that the decision by the institution does not, in effect, have an impact on the existence of the claims.

This view is supported by courts and scholars. It has been the long-standing practice of courts in Switzerland and elsewhere to disallow direct challenges of decisions of arbitration

614 Girsberger and Voser, International Arbitration in Switzerland, note 954;

SFCD 116 II 80 82 et seq. (Swiss Federal Court 1990). 615 SFCD 116 II 80, 82 et seq. 616 Girsberger and Voser, International Arbitration in Switzerland, note 961. 617 Rolf A. Schütze, “Die gerichtliche Überprüfung von Entscheidungen des

Schiedsgerichts,” Neue Zeitschrift für Schiedsverfahren 2009 (2009): 246 et seq.

618 Intermin awards no longer considered awards according to Augsburger and Pair, “Note to SFCD 136 III 200 of 13 April 2010.”

619 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1522.

620 Girsberger and Voser, International Arbitration in Switzerland, note 955. 621 SFCD 130 III 76 78 et seq. (Swiss Federal Court 2003). 622 Ibid., 79. 623 Günter Henn, Schiedsverfahrensrecht: Handbuch für die Praxis, 3rd ed. (C.F.

Müller, 2000), note 336. 624 See subchapter 6.2 on administrative effect of consolidation. 625 See subchapter 6.2.

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institutions.626 Only an indirect challenge of the institutional decision is permitted.627

Challenges of procedural orders or other decisions dealing with primarily procedural matters are equally inadmissible.628 Even the indirect examination of the award takes no heed of the offensive institutional decision, as this decision is rendered in a non-contradictory fashion,629 but only of the panel decisions or the procedures that are a result thereof.

The institutional decision by itself cannot form the basis for a challenge, only the decision of the panel that treats the insitituional act. The inquiry thus turns to which form the panel decision has, which can be challenged. Is it a procedural or a jurisdictional challenge?

626 SFCD 118 II 359, 102 ASA Bulletin 359, 361 (Swiss Federal Court 1994);

Société Cubic Defense Systems Inc. v. Chambre de commerce internationale, 2001 Rev.arb. No. 3 511 (Cour de Cassation, Civ. 1e ); SFCD 115 II 294 296 (Swiss Federal Court 1989); SFCD 120 II 155,415:; SFCD 118 II 359, 361; SFCD of 17 February 2000 ASA Bulletin 783 (Swiss Federal Court 2000); SFCD 128 III 330, 332; SFCD of 11 January 2010 - 4A_258/2009, para. C. 3.1.2; Stephen V. Berti and Anton K. Schnyder, “Article 190 SPILA,” in International Arbitration in Switzerland: An Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute, ed. Stephen V. Berti et al. (Basel: Helbing u. Lichtenhahn, 2000), 22; Pierre A. Karrer and Natasa Muric Maier, “Swiss Rules of International Arbitration,” Croation Arbitration Yearbook 12 (2005): 230; Poudret and Besson, Comparative Law of International Arbitration, note 536; Kaufmann-Kohler and Rigozzi, Arbitrage international droit et pratique à la lumière de la LDIP, note 723; Kurkela and Snellman, Due Process in International Commercial Arbitration, 80 etseq.

627 SFCD 120 II 155, 415:415; SFCD 118 II 359, 361; SFCD of 17 February 2000; SFCD 118 II 359 (30 June 1994), 102:102; showing disapproval: Berti and Schnyder, “Article 190 SPILA,” 29; showing approval Pierre A. Karrer, “Buchstabensuche, Buchstabenseuche – Leichte Polemik zu Art. 190 IPRG,” ASA Bulletin 1994 (1994): 333.

628 Pro: Stefan M. Kröll and Peter Kraft, “§ 1059 - Setting Aside of Awards,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 12; Girsberger and Voser, International Arbitration in Switzerland, note 700; Karrer, “Buchstabensuche, Buchstabenseuche – Leichte Polemik zu Art. 190 IPRG,” 333; contra: Berti and Schnyder, “Article 190 SPILA,” 29.

629 SFCD of 11 May 1992.

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7.2.2 Grounds for Challenge

When the arbitral panel reviews the institutional decision, it must do so in the context of determining its jurisdiction.

Overwhelming scholarly and judicial opinion places the decision on consolidation by the panel in the realm of contract interpretation as to the scope of jurisdiction.630 This means that the panel will examine each of the accepted theories for extension or interpretation of an arbitration agreement. An argument could be made, that agreement to arbitral rules grants the power to extend jurisdiction beyond the actual contractual or consensual approach of the original contract on the basis and scope of the arbitral rules. (Brekoulakis) This argument is to be rejected insofar as the institution would make the choice for want of procedural safeguards. A consolidation order itself does not amount to a final determination on jurisdiction.631

The principle of competence-competence states that arbitrators have the power to decide on their own jurisdiction.632 In light of competence-competence, the panel can decide whether a certain form of combined arbitration is covered by the agreement.633

630 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1026; Wenger, “Article 186 SPILA,” 15; Voser, “Multi-party Disputes and Joinder of Third Parties,” 361; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-61; William W. Park, “Determining an Arbitrator’s Jurisdiction: Timing and Finality in American Law,” Nevada Law Journal 8 (2007): 151; contra: Rau, “‘Consent’ to Arbitral Jurisdiction: Disputes With Non-Signatories”, who considers it a question of arbitrability.

631 Jan Willem Bitter, “Consolidation of Arbitral Proceedings in the Netherlands,” in Multiple Party Actions in International Arbitration, ed. Permanent Court of Arbitration (New York: Oxford University Press, 2009), note 8.30.

632 Bowman Rutledge, Kent, and Henel, “United States,” 13.56; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 6-9.

633 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-10.

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The extent of competence-competence is dependant on the lex arbitri.634

In Switzerland the principle of competence-competence is recognized without reservation according to article 186(1) SPILA. Commentators are unanimous that this norm is mandatory.635 Parties cannot deprive the arbitral panel of this power and confer it to someone else, be it an institution or a court.636

The Swiss Federal Court explicitly decided that the preliminary decisions on jurisdiction by the institution do not establish jurisdiction of the panel.637 In this decision Swiss Federal Court decided that the decision on joinder had to be determined by the arbitrator, even if the institution were to make a determination itself. 638 The decision on consolidation must thus be made by the arbitrators as well.

634 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 6.86. 635 Instead of many more: Wenger, “Article 186 SPILA,” 3; Poudret and Besson,

Comparative Law of International Arbitration, note 462; Andreas Bucher, Le nouvel arbitrage international en suisse (Basel: Helbing & Lichtenhahn, 1988), 52; Lalive, Poudret, and Reymond, Le droit de l’arbitrage interne et international en suisse édition annotée et commentée du concordat sur l’arbitrage du 27 Mars 1969, 380.

636 Poudret and Besson, Comparative Law of International Arbitration, note 462; SFCD 128 III 50; Bucher, Le nouvel arbitrage international en suisse, note 341; Gabriele Nater-Bass, “‘Prima Facie’ Zuständigkeitsentscheide in internationalen Schiedsgerichtsverfahren aus der Sicht der Parteien”, 2002; SFCD 118 IA 28 (Swiss Federal Court 1992).

637 SFCD of 5 December 2008 - 4A_376/2008, sec. c. 8. 638 Ibid. The facts of the case can be summarized as follows: An English company sold

all the shares of a UAE company to a buyer, pursuant to a sales contract entered into by the parties and by the director and creditor of the UAE company. On the same day, the buyer was appointed managing director of the company by virtue of an employment contract entered into by the buyer and the company represented by its unique partner (also creditor of the UAE company), who was himself represented by the seller. Both contracts contained identical clauses. The buyer requested that the arbitration be extended to the seller, because of the interplay between the two contracts. Both the ICC Court (after a prima facie examination pursuant to Article 6(2) of the ICC Rules) and the arbitral panel admitted their jurisdiction, but refused the extension holding that, in the absence of a specific provision in the ICC Rules allowing third party intervention, such intervention cannot occur

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In addition, in decisions on consolidation, the arbitrator must decide not only the traditional question, whether both cases are included within the scope of the respective agreements, but also the less traditional ones, whether the second case also falls within the material and personal scope of the other agreement and whether the parties validly consented to hearing cases together.639 In making these jurisdictional determinations particular attention must be paid to the relationship between the contracts or claims.640 The required connection was already discussed supra in chapter 5. The same procedure was followed in the Dutco641 and the Westland cases.642 Whether the choice of specific rules extends the jurisdiction of the panel indepently of the scope of the arbitration clause itself was discussed in chapter 5.

Once the arbitral panel has rendered a decision on its jurisdiction, Swiss courts can review this decision. A challenge would fall under article 190(2)(b) SPILA, unless an interim award had been issued, in which case article 190(3) SPILA in connection with article 190(2)(b) SPILA would apply.

Absent objection, the jurisdictional challenge is lost.643 To raise an objection means more than simply registering it with the

without the consent of the interested parties. The arbitrator denied his jurisdiction based on the ICC Court decision.

639 Meredith R. Miller, “Contracting Out of Process, Contracting Out of Corporate Accountability: An Argument Against Enforcement of Pre-Dispute Limits of Process,” Tennessee Law Review 75 (2008): 374 et seq.; Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 474; Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction Company, 1992 No. 3:.

640 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 474.

641 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction Company, 1992 No. 3:.

642 SFCD 120 II 155,415:. 643 Ibid.

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panel.644 It means to take all appropriate steps to remedy the alleged violation as soon as possible.645 The challenge must be made within 30 days of notification.646 Failure to protest within the time limit constitutes an irrevocable waiver of the challenge to jurisdiction.647 If a lack of jurisdiction is not pleaded in the arbitration itself, it may not be raised in annulment proceedings.648 If a party proceeds to the merits without reservation it is considered to have assented to jurisdiction by then, even if jurisdiction had not existed previously.649 An exception is only possible in the context of 190(2) SPILA, a challenge is only possible if the grounds were unknown and unknowable at the time, or raised and rejected by the panel.650 Each of the grounds listed in article 190 SPILA is interpreted narrowly.651

Article 190(2)(b) states that the award “can be challenged only: (. . .) b. If the arbitral panel erroneously held that it had or did not have jurisdiction”. Article 190(2)(b) SPILA does not only apply to the whole dispute, but to aspects of contention of jurisdiction.652 Article 190(2)(b) SPILA permits a challenge both of the subjective and the objective scope of jurisdiction.653 Similarly, if the panel accepted jurisdiction on a summary or preliminary examination, the award may be challenged.654

644 AAOT Foreign Economic Association Technostroyexport v. International

Development and Trade Services, Inc., 139 F.3d 980 (2nd Cir., USA 1998). 645 Petrochilos, Procedural Law in International Arbitration, note 4.23. 646 Karrer and Straub, “Switzerland,” 12.36 et seqq.; Berger and Kellerhals,

International and Domestic Arbitration in Switzerland, note 682. 647 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 682. 648 SFCD 130 III 125 129 (Swiss Federal Court 2003). 649 SFCD 128 III 50, 57 et seq. 650 SFCD 119 II 271 ASA Bulletin 407 - 408 (Swiss Federal Court 1993); SFCD

118 II 359 (30 June 1994), 102:360 et seq. 651 Elliott Geisinger and Viviane Frossard, “Challenge and Revision of the

Award,” in International Arbitration in Switzerland: A Handbook for Practitioners - Five Years of Experience, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki (The Hague: Kluwer Law International, 2004), 135.

652 SFCD 118 II 359 (30 June 1994),102:. 653 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 1551; Berti and Schnyder, “Article 190 SPILA,” 47. 654 SFCD 128 III 50.

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Whether this challenge would be successful depends on the circumstances. The categories and indicators propounded supra in chapter 5 on validity will also be employed to determine whether the contracts can be interpreted to encompass both cases and an agreement to consolidate.

7.3 Challenge in the Enforcement Countries

As previously stated, institutional decisions are generally reviewed indirectly.655 Challenges may take place on two levels, in the country of the seat via an annulment action, and in the countries of enforcement via opposition to enforcement.656 The applicable law concerning a Swiss award in Germany and the United States is the New York Convention,657 which binds 145 countries.658

In Germany the NYC was transformed by § 1061(1) GCCP without alteration. The United States did likewise in USC, title 9, chapter 2, § 201,659 also known as the FAA. The jurisprudence developed under the FAA has construed the grounds enumerated in the NYC for refusal and enforcement to

655 Petsche, The Growing Autonomy of International Commercial Arbitration, 91. 656 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 680. 657 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den

Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 59-1.

658 Fabien Gélinas, “Peeking Through the Form of Uniform Law: International Arbitration Practice and Legal Harmonization,” Journal of International Arbitration 27, no. 3 (2010): 322. For the exact number see http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html

659 “The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, shall be enforced in United States courts in accordance with this chapter.“

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be both exclusive and narrowly construed.660 Federal courts have jurisdiction to hear these cases.661

7.3.1 Waiver of Challenge

Raising a defense under the NYC depends to a certain extent on the previous actions of the parties. Failure to raise a jurisdictional defense at the earliest possible moment will result in a loss of the defense. In this context, this means that failure to object in front of the arbitral panel will result in the loss of the defense, as it would in the seat country. 662

Many national jurisdictions contain provisions that prohibit the

assertion of the violation of rights after a substantial amount of

time has passed or in cases of venire contra factum proprium,663

expecting the wronged party to object the seat country within a

time limit when the objectionable facts become known.664

Nevertheless, it is highly controversial whether the party also

660 Marc J. Goldstein and Julian Wilson, “Enforcement of Foreign Arbitral

Awards Under United States and English Law,” in Transatlantic Commercial Litigation and Arbitration, ed. John Fellas (Dobbs Ferry, N.Y: Oceana Publications, 2004), 631.

661 Elisabeth M. Senger-Weiss, “Enforcing Foreign Awards,” in Handbook on International Arbitration and ADR, ed. Thomas E. Carbonneau (Huntington, N.Y: JurisNet, 2006), 168; Brunet et al., Arbitration Law in America, 63 et seq.

662 Born, International Commercial Arbitration Volume II, 2795; Hanefeld, “Germany,” 7.38; Nacimiento, “Article V(1)(d) NYC,” 299; Laminoirs-Trefilieries-Cableries de Lens v. Southwire Co. 484 F.Supp 1063, 1066 (N.D. Ga., USA 1980); Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 19; AAOT Foreign Economic Association Technostroyexport v. International Development and Trade Services, Inc.,139:.

663 Petsche, The Growing Autonomy of International Commercial Arbitration, 123.

664 Born, International Commercial Arbitration Volume II, 2593; Kurkela and Snellman, Due Process in International Commercial Arbitration, 191-193; Andrew Tweeddale and Keren Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice (Oxford: Oxford University Press, 2005), note 12.67.

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needs to have exhausted its remedies under the laws of the seat

country.665 The New York Convention is silent on the subject.

Whether resiting enforcement also requires raising the defense

at the seat in an annulment proceeding is questionable. In

Germany, the public policy defense need not be raised at the

seat of the arbitration.666 The appellant has a choice between the

two options. This view is supported by scholars,667 even though

there used to be some disagreement.

KRÖLL advocates that the defense should be precluded when

equal protection as in German Courts would be available.668 In

Switzerland, as previously seen it would not be. In Germany,

the public policy defense need not be raised at the seat of the

arbitration.669 German courts held specifically, that the appellant

has a choice between the two options.

For both Germany and the United States, a challenge of jurisdiction or validity, which has not been raised in the seat country with available relief, is lost for the enforcement proceeding.670 In short, articles V(1)(a), (c), and (d) NYC will be lost if not raised in the seat country.671

665 Kröll, “§ 1061 - Foreign Awards,” 50. 666 Andrés Jana, Angie Armer, and Johanna Klein Kranenberg, “Article V(2)(b)

NYC,” in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), 408.

667 Dirk Otto and Omania Elwan, “Article V(2) NYC,” in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), 409.

668 Kröll, “§ 1061 - Foreign Awards,” 50. 669 Jana, Armer, and Klein Kranenberg, “Article V(2)(b) NYC,” 408. 670 Tweeddale and Tweeddale, Arbitration of Commercial Disputes International

and English Law and Practice, note 13.77; Born, International Commercial

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If it has been raised and rejected, res judicata may prevent the renewed assertion in relation to defenses that relate to the same applicable law,672 namely most defenses under article V(1) NYC,673 not, however, defenses under article V(2) NYC.

In Germany, a challenge to the consolidation decision would be regarded as a challenge to jurisdiction, not one under article V(1)(d) NYC. In the United States, it is considered a question of violation of party agreement pursuant to article V(1)(d) NYC.674 The standard of interpretation is that of the lex arbitri.

7.3.2 Lack of Jurisdiction – Articles V(1)(a) and (c) NYC

A lack of jurisdiction V(1)(c) NYC and invalidity V(1)(a) NYC are closely connected. Both articles V(1)(a) and V(1)(c) NYC are implicated in consolidation decisions. Article V(1)(a) NYC will apply to the parties, article V(1)(c) to the scope of the claims.675

As an illustrative example, Elma Inc. arbitrates against Fido Co. in case A. Their claims are W and X. Guido Ltd. arbitrates against Halo S.A. in case B. Their claims are Y and Z. In this case, Elma Inc. and Fido Co. could assert lack of a valid arbitration agreement V(1)(a) NYC with either Guido Ltd. or

Arbitration Volume II, 2862; Soviet Danube Steam Navigation Co. v. Travel Agency, 35 Recht der Internationalen Wirtschaft 911, 35 (Regional Court Frankfurt, Germany 1989); International Standard Electric Corporation v. Bridas Sociedad Anonima Petrolera, Industrial y Comercial, 745 F.Supp. 172 (S.D.N.Y., USA 1990).

671 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2542 et seqq.; Born, International Commercial Arbitration Volume II, 2862; Kröll, “§ 1061 - Foreign Awards,” 88.

672 Kröll, “§ 1061 - Foreign Awards,” 51. 673 This does not refer to article V(1)(a) NYC. 674 Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, 364 F.3d 274, 40 et seqq. (5th Cir., USA 2004). 675 Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die

Rechtsprechung US-Amerikanischer Gerichte, 187.

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Halo S.A., and vice versa. Elma Inc. and Fido Co. could further raise article V(1)(c) NYC against the claims 1 and 2, while Guido Ltd. and Halo S.A. could raise the same for claims 3 and 4.

Assuming the defenses can still be raised, in both Germany and the United States, there is a presumption that the arbitrators acted within their authority.676

“(. . .) the Convention recognizes that an award may not be enforced where predicated on a subject matter outside the arbitrator’s jurisdiction, it does not sanction second-guessing of arbitrator’s construction of the parties’ agreement.”677

This jurisdictional analysis has traditionally allowed for a wide interpretation.678 As long as there is a plausible legal reasoning for the authority exercised by the arbitrators, the court will not find that there was exceeding of authority.679

German courts assume that split jurisdiction is to be avoided and therefore construe arbitration agreements broadly.680 German authorities have been reluctant to refuse enforcement for invalidity due to a lack of specificity,681 which was

676 Nicholas Christine Port, Scott Ethan Bowers, and Bethany Davis Noll,

“Article V(1)(c) NYC,” in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, ed. Herbert Kronke et al. (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), 260 et seqq.; Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier, 508 F.2d 969, 976 (2nd Cir., USA 1974).

677 Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier,508:.

678 Kurkela and Snellman, Due Process in International Commercial Arbitration, 27.

679 Fertilizer Corp. of India v. IDI Management, 517 F.Supp 948, 958 (S.D. Ohio, USA 1981).

680 Kröll, “§ 1061 - Foreign Awards,” 83. 681 Ibid., 66.

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discussed in connection with validity in chapter 5. The enforcement courts should thus not reach a different conclusion from that outlined previously.682

7.3.3 Violation of Party Agreement – Article V(1)(d) NYC

Precedent exists in the United States that even wrongfully consolidated cases are not to be refused recognition and enforcement.683 Karaha Bodas was, at its outset, a Swiss arbitral case which concluded that sufficient interconnectedness between the cases existed. It must, however, be stated that the Fifth Circuit considered consolidation not as a jurisdictional violation, but as a violation of party agreement pursuant to article V(1)(d).684

Karaha (“KBC”) signed two contracts to produce electricity from geothermal sources in Indonesia. Under the Joint Operation Contract ("JOC"), KBC had the right to develop geothermal energy sources in the Karaha area of Indonesia; Pertamina was to manage the project and receive the electricity generated. Under the Energy Sales Contract ("ESC"), PLN agreed to purchase from Pertamina the energy generated by KBC's facilities. Both contracts contained almost identical broad arbitration clauses requiring the parties to arbitrate any disputes in Geneva, Switzerland under the Arbitration Rules of the United Nations Commission on International Trade Law ("UNCITRAL"). Swiss procedural law applied to the arbitration. An award was rendered and in February 2001, Pertamina appealed the Award to the Supreme Court of

682 In practice it will be difficult to say whether the German Court would indeed

reach the same result. 683 Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara,364:. 684 Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, vol. 364, para. 40 et seqq.

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Switzerland. In April 2001, the Swiss Supreme Court dismissed Pertamina's claim because of untimely payment of costs. Pertamina moved for reconsideration; the Swiss court denied that motion in August 2001.

The 5th Circuit found that, based on the UNCITRAL Rules, the panel could do everything appropriate and that the panel’s finding that consolidation was appropriate had not been shaken. The panel had considered “connexity”, costs and risk of differing judgments.685

“(T)he Preliminary Award, the Tribunal set out the basis for concluding that the two contracts were integrated such that "the parties did not contemplate the performance of two independent contracts but the performance of a single project consisting of two closely related parties." The Tribunal continued: In such circumstances, the conclusion of this Arbitral Tribunal is that KBC's single action should be admitted, provided it is appropriate. The Arbitral Tribunal has not the slightest doubt in this respect. Due to the integration of the two contracts and the fact that the Presidential Decrees, the consequences of which are at the origin of the dispute, affected both of them, the initiation of two separate arbitrations would be artificial and would generate the risk of contradictory decisions. Moreover, it would increase the costs of all the parties involved, an element of special weight in the light of difficulties faced by the Indonesian economy, to which counsel for (Pertamina) legitimately drew the Arbitral Tribunal's attention.” 686

685 Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, vol. 364, para. 43 et seq. 686 Ibid.

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The Court further found that even if a procedural violation had taken place, there had been no prejudice to the parties, so that no refusal of enforcement could be granted.687 This decision further indicates that the U.S. is not following the Dutco688 approach with respect to the impermissibility to consent to consolidation in advance.

7.4 Conclusion

The previous analysis has shown that the institutional decision can and must be challenged in front of the arbitrators. It is a quasi-jurisdictional decision for the institution on a prima facie basis, and a jurisdictional decision for the panel. The decision then taken by arbitrators could be attacked both in front of the seat country immediately or once the final award is rendered. In Switzerland and Germany ground for the challenge would be made concerning the proper jurisdiction of the panel, while the challenge in the United States would likely be treated as one violation of agreed procedure. Based on precedent, it is safe to say that the United States is disposed to accept awards based on forcible consolidation, while German courts will likely not deviate from the findings of Swiss courts.

687 Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bumi Negara, vol. 364, note 47. 688 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction

Company, 1992 No. 3:.

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8 Arbitrators’ Choices This chapter focuses on the point of view of the arbitrator, i.e., on whether an arbitrator has the right to resign from her appointment in either case, based on the alteration of circumstances.689 Arbitrators are affected by consolidation in one of two ways. Either they are faced with an enlarged dispute or they lose a mandate. A parallel to judges, who may not resign, cannot be drawn.690 Judges must serve. In international arbitration, when arbitrators agree to serve,691 different criteria apply. Initially, this analysis addresses the involuntary loss of a mandate, followed by voluntary resignation.

8.1 Involuntary Loss of Mandate

Arbitrators who lose their mandate for whatever reason have no possibility of retaining their case.   692 While removed arbitrators693 are reimbursed for services already performed,694  no entitlement to continued appointment exists.695 The proposed Swiss Rules even clarify, that no arbitrator in a situation involving consolidation has an absolute right to remain.

Additionally, this lack of entitlement to continue a mandate is illustrated in all jurisdictions by the fact that arbitrators can be

689 This aspect of resignation is unique to arbitration, as governmental judges are

not permitted to resign from adjudication of a case absent partiality or health reasons.

690 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2813. 691 Emilia Onyema, International Commercial Arbitration and the Arbitrator’s

Contract (London: Routledge, 2010), chap. 4. 692 Franz Hoffet, Rechtliche Beziehungen zwischen Schiedsrichtern und Parteien

(Zurich: Schulthess, 1991), 320 et seqq. 693 Arbitrators who are removed are excluded from performing services by an

authority such as a court or an institution. Arbitrators who resign actively discontinue their functions.

694 Onyema, International Commercial Arbitration and the Arbitrator’s Contract, 177; Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 164.

695 Girsberger and Voser, International Arbitration in Switzerland, note 587.

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removed for a variety of reasons,696 many of which are bias related, or to a lack of ability to fulfill their functions.697 Removal without reason is permissible as well. 698

Consolidation does not warrant different treatment. As a consequence, agreement of the arbitrators of the first case is not required for consolidation.699

8.2 Arbitrators With Enlarged Case

Arbitrators who find themselves in a position in which they must decide a case larger than originally anticipated when accepting appointment are in a different situation.700 The question is not one of retaining a mandate, but whether an arbitrator may resign.701

Laying down the mandate at any given time is not permitted.702

The relationship between arbitrator and party, however it may technically be qualified or construed, has both a contractual and a procedural aspect influencing the possibilities arbitrators have

696 Ibid., note 566. 697 Article 12(1) Swiss Rules; article 12(2) ICC Rules. 698 Hoffet, Rechtliche Beziehungen zwischen Schiedsrichtern und Parteien, 319

et seqq.; Girsberger and Voser, International Arbitration in Switzerland, note 567; speaking against a right to dismiss the arbitrator freely: Dorothée Schramm, Andreas Furrer, and Daniel Girsberger, “Articles 176 - 194 SPILA,” in Handkommentar zum Schweizer Privatrecht: Art. 1 - 200 IPRG, ed. Andreas Furrer, Daniel Girsberger, and Markus Müller-Chen, re-issued 1st ed. of 2007 ed. (Zurich: Schulthess, 2010), notes 179-3.

699 Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 4-17. 700 This analysis does not address potential damage claims against the resigning

arbitrator. 701 The question of increased remuneration need not be addressed here. If the

value of the case increases, so do the fees. 702 Girsberger and Voser, International Arbitration in Switzerland, note 573;

Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 24 article 7; Born, International Commercial Arbitration Volume I, 1613; Kleinschmidt, “Die Widerklage gegen einen Dritten im Schiedsverfahren,” 149; Schramm, Furrer, and Girsberger, “Articles 176 - 194 SPILA,” 179-5.

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in these situations.703 In all jurisdictions arbitrators have the option to resign their mandate704 under certain circumstances.705 Even institutional rules expressly mention arbitrators’ resignation.706 When an arbitrator takes a case, he is bound by a contractual relationship with the parties and governed by procedural law, while private law applies by analogy.707 Due to the dual nature of an arbitrator’s contract as a substantive law contract with procedural elements, the procedural aspect of the contract also disallows an arbitrator to terminate his or her contract with the parties or institution at an inopportune time.708

Circumstances permitting resignation involve “good”, “important” or “serious” reasons.709 Good reasons could be,

703 Much ink has been spilled over the nature of the relationship in the triangle of

institution-arbitrator-party. It is not this author’s intention to repeat everything that has previously been said, as its influence on this analysis is marginal. See generally Onyema, International Commercial Arbitration and the Arbitrator’s Contract, 68 et seq.

704 Girsberger and Voser, International Arbitration in Switzerland, note 566; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4369; Poudret and Besson, Comparative Law of International Arbitration, note 450; Born, International Commercial Arbitration Volume I, 1612; SFCD 117 Ia 166.

705 Girsberger and Voser, International Arbitration in Switzerland, note 573; SFCD 117 Ia 166; Born, International Commercial Arbitration Volume I, 1612; Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 168.

706 For example article 13 Swiss Rules; UNCITRAL article 11(3); ICC Rules 12(1); LCIA Rules 10(1) and (4); CEPANI Rules article 18(4).

707 SFCD 111 Ia 72 76 (Swiss Federal Court 1985); Hoffet, Rechtliche Beziehungen zwischen Schiedsrichtern und Parteien, 10 et seqq.; Girsberger and Voser, International Arbitration in Switzerland, note 604 et seqq.; Rüede and Hadenfeldt, Schweizerisches Schiedsgerichtsrecht nach Konkordat und IPRG, 151.

708 Patricia Nacimiento and Amelie Abt, “§ 1034 - Composition of Arbitral Tribunal,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Patricia Nacimiento, and Stefan M. Kröll (Alphen aan den Rijn, The Netherlands: Wolters Kluwer Law & Business, Kluwer Law International, 2007), note 32 et seq.; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4369; Born, International Commercial Arbitration Volume I, 1605 et seqq.; Poudret and Besson, Comparative Law of International Arbitration, note 437 et seqq.; Nathalie Voser and Pascale Gola, “The Arbitral Tribunal,” in International Arbitration in Switzerland: A Handbook for Practitioners - Five Years of Experience, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki (The Hague: Kluwer Law International, 2004), 35.

709 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 8-11 and 13-10; Lachmann, Handbuch für die

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e.g., health reasons or issues of bias.710 The ICC Rules require that the arbitrator’s resignation be approved by the ICC Court according to article 12(1) ICC Rules, which serves the same function as court approval in Switzerland and the prohibition to resign at an inopportune time in Germany.

A sufficient reason may exist when the terms of service change drastically. Regardless of the underpinnings of the contract which binds arbitrators,711 regardless of the law governing the relationship,712 arbitrators (at one point) must have agreed to serve. This agreement is often encompassed in written contracts, the terms of reference,713 oath of office,714 operation of law,715 or otherwise,716 and relates only to the controversy brought before the arbitrator at the time of agreement.717

The concept of significant change of circumstances and consequent resignation of an arbitrator due thereto is accepted in Switzerland,718 where absent agreement by the parties a

Schiedsgerichtspraxis, note 4370; Born, International Commercial Arbitration Volume I, 1634 quoting the AAA/ABA Code of Ethics; SFCD 117 Ia 166, 169.

710 IBA Rules on Ethics. For additional adequate reasons, not related to the topic of consolidation see Born, International Commercial Arbitration Volume I, 1636.

711 Onyema, International Commercial Arbitration and the Arbitrator’s Contract, 102 et seqq.; Pierre A. Karrer, “Konstituierung des Schiedsgerichts,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), note 61 et seq.

712 Instructive for the different possibilities which law is the govern the relationships between parties and arbitrators as well as arbitrators and institutions: Onyema, International Commercial Arbitration and the Arbitrator’s Contract.

713 For ICC arbitrations. 714 Karrer, “Konstituierung des Schiedsgerichts,” 83, referring to an oath of office

practiced in Nepal. 715 Office of Public Sector Information and United Kingdom Parliament,

“Arbitration Act 1996,” Text, Sec. 33, http://www.opsi.gov.uk/acts/acts1996/ukpga_19960023_en_1.

716 Article 7(5) ICC Rules “By accepting to serve, every arbitrator undertakes to carry out his responsibilities in accordance with these Rules.”

717 Michael J. Mustill Sir and Stewart C. Boyd, Law and Practice of Commercial Arbitration in England, 2nd ed. (Lexis Law Publ., 1989), 129.

718 Girsberger and Voser, International Arbitration in Switzerland, note 594 et seq.

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national court must ultimately decide whether resignation is based on a sufficient reason. In Germany, the discussion concerning sufficient reason is on a more theoretical level and the answer depends on the categorization of the arbitrator’s contract. SCHWAB/WALTER and the German Federal Court consider arbitrators’ contracts to be substantive law contracts with certain modifications,719 i.e., of dual (i.e., substantive and procedural) nature.720 Substantively, the obligations of an arbitrator are based on a service contract.721 The service rendered is the participation in the proceeding.722

Whether arbitrators can terminate a contract is determined by assessing service contract law. Whether an important reason for resignation exists depends on a balancing of all circumstances.723 According to LACHMANN, the mere increase of workload is not a sufficient reason,724 while BORN disagrees.725 POUDRET/BESSON require the arbitrators’ consent for the addition of new claims.726 According to MEIER, the agreement of the arbitrators is not necessary for the addition of parties, unless the workload is greatly exaggerated.727

719 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den

Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 11-8.

720 Ibid., notes 12-9. 721 Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 32 et seq.

“Dienstvertrag” § 611 German Civil Code. But also a contract sui generis. 722 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den

Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 12-1.

723 Tweeddale and Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice, note 22.35; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4377.

724 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2814. 725 Born, International Commercial Arbitration Volume I, 1636. 726 Poudret and Besson, Comparative Law of International Arbitration, note 241;

Born, International Commercial Arbitration Volume I, 1636; Kleinschmidt, “Die Widerklage gegen einen Dritten im Schiedsverfahren,” 148; disagreeing: Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1370.

727 Meier, Einbezug Dritter vor internationalen Schiedsgerichten, 222; ageeing: Hamann and Lennarz, “Parallele Verfahren mit identischem Schiedsgericht als Lösung für Mehrparteinenkonflikte?,” 291.

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Whether the change or addition of a party is sufficiently grave must then be considered in the light of the clause upon which the arbitrator agreed to serve. It is true that in non-consolidation cases the arbitrators cannot reject additional claims, set-offs or similar enlargements of their mandate. Unlike the addition of claims, amendment of claims, or addition of individual parties to an existing case, arbitrators of existing cases initially have no input into the matter of consolidation. There is a crucial difference between this and other cases of enlargement, where the clause is interpreted to see if there is jurisdiction, i.e., whether their obligation to perform their function exists. In this author’s opinion, such circumstances may lead to justified resignation.728

Agreement of the panel of the first case is not required for consolidation under the ICC Rules.729 Under the ICC Rules, consolidation is only possible until the terms of reference have been either signed or approved by the ICC. According to article 7(2) ICC Rules, arbitrators must submit a statement of independence with their acceptance of the case. The statement of impendence is based on general information provided by the ICC or the appointing parties, such as names of parties, names of counsel, amount in dispute, characteristics of the dispute, place of arbitration, applicable law and any specific issues of the arbitration.730 The agreement to serve is thus based on the barest information concerning the case. It is unlikely that any additional claim between the same parties which could meet the criteria of consolidation would not be encompassed by such a broad consent.

728 Elliott Geisinger, “How to Work with the Swiss Rules - the Arbitrator’s

View,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg, 2009, 43.

729 Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 4-17. 730 Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents,

Materials, notes 9-2.

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In addition, the arbitrators are aware of the institutional rules which form part of the framework of their mandate,731 including the rules on consolidation as experts in their field. As such, any claim of surprise of substantial alteration of circumstances would be hard to prove. Specifically, under the ICC Rules, the exact nature of the dispute and the issues are to be clarified in the Terms of Reference, which the arbitrators will only draft once empanelled and after the completion of which no consolidation will take place.

As a result, for the ICC Rules no potential for a justified resignation exists. Under the Swiss Rules, the danger is more pronounced. While the consent of the arbitrators concerning new claims can be inferred even at a later stage in the proceeding, as the basis for the consent is equally broad and the rules even broader, the same cannot be stated for the addition of parties.

The analysis changes for the new rule 10, which does not contain time limits. It is equal to the analysis concerning the Swiss Rules.

Whether a resignation is indeed permissible is irrelevant for the continuation of the arbitral dispute. Instruments that force an arbitrator to continue his duties, such as specific performance, are not contemplated.732 However, damages will be incurred if a resignation is not justified.733

731 Onyema, International Commercial Arbitration and the Arbitrator’s

Contract, 121 et seq. 732 Hoffet, Rechtliche Beziehungen zwischen Schiedsrichtern und Parteien, 288

et seqq. 733 Ibid., 301 et seqq.; Onyema, International Commercial Arbitration and the

Arbitrator’s Contract, 121 et seq.

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9 Arbitrator Selection Having discussed the issues in relation to the decision on consolidation itself, the analysis now moes on to the effects of consolidation on the conduct of the proceedings. In most works addressing consolidation, the selection of arbitrators forms the main focus.734 Some authors consider the choice of arbitrator the most important choice in any proceeding.735

Ordinarily, all parties have certain rights in the selection of the panel.736 When unifying two or more cases the usual selection process is disrupted, becoming either impractical or downright impossible to maintain while at the same time affording each party the rights it would enjoy in the usual selection process.737 This discrepancy may lead to annulment of the award according to articles 190(2)(a); (2)(b) or (2)(e) SPILA, or refusal of recognition and enforcement according to articles V(1)(d) or (2)(b) NYC.

This chapter will outline commonly accepted methods of arbitrator selection, in subchapter 10.1, to give the esteemed reader the background necessary to follow the analysis in this chapter. Subchapter 10.2 will outline the selection of arbitrators in consolidated cases. Subchapter 10.3 will discuss whether an absolute right to a party appointed arbitrator exists. Subchapter 10.4 will address implications of specified qualifications or

734 Frick, International Arbitration Law Library, 233; Strong, “The Sound of

Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1089; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4078 et seqq.

735 José Maria Abascal, “Barcelona Afterthoughts,” Journal of International Arbitration 20 (2003): 116; Gerald Asken, “The Tribunal’s Appointment,” in The Leading Arbitrator’s Guide to International Arbitration, ed. Lawrence W. Newman and Richard D. Hill, 2nd ed. (Huntington, NY: Juris Publishing, 2008), 31.

736 Concerning the usual methods of selection see infra subchapter 10.1. 737 See infra subchapter 10.3.

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selection criteria of the arbitrators. Subchapters 10.5 and 10.6 will in turn focus on the consequences of the practical effects for annulment and recognition.

9.1 Common Selection Methods

The selection of arbitrators can occur in a range of ways and varies with the number of arbitrators selected.738 The most common number of arbitrators is three.739 Some procedural rules provide for a default of one arbitrator for smaller or expedited cases.740 In some instances, the administering institutions confirm arbitrators. In some cases arbitrators are chosen from a list provided by the institution.741

When multiple arbitrators conduct the arbitration, it is common for each party to select an arbitrator, also known as party arbitrators, who in turn agree on the chairman.742 When a single arbitrator conducts the arbitration, this arbitrator is agreed upon by the parties or chosen by an appointing authority.743 The

738 Moses, The Principles and Practice of International Commercial Arbitration,

120. 739 Christopher R. Drahozal and Richard W. Naimark, eds., “Commentary (on

Arbitrator Selection),” in Towards a Science of International Arbitration: Collected Empirical Research (The Hague: Kluwer Law International, 2005), fig. 2 page 149, giving exact figures for ICC arbitrations. Kurkela and Snellman, Due Process in International Commercial Arbitration, 108 claiming that the sole arbitrator is most frequent, while a three member panel is merely common. Walter, “Die Internationale Schiedsgerichtsbarkeit in der Schweiz,” 827; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 777.

740 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 781. Swiss Rules article 42.

741 Onyema, International Commercial Arbitration and the Arbitrator’s Contract, 97 et seq.

742 Ibid., 99; Moses, The Principles and Practice of International Commercial Arbitration, 121; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 798 et seqq.

743 Moses, The Principles and Practice of International Commercial Arbitration, 127; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 795 et seqq.

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appointing authority can be an institution, a court or any neutral.744

The ICC Rules, as well as the Swiss Rules, provide articles on the topic of appointment, opting for a default number of one arbitrator.745 Neither ICC nor Swiss Rules contain curtailment of choice in form of a list, but require confirmation of arbitrators.746

Often in cases of multi-party arbitration, parties are aligned according to joint interests and then must jointly agree on their (single party) arbitrator.747 If aligned parties cannot agree, an institution or a neutral third party appoints either this one arbitrator or the entire panel.

The old ICC Rule 10 provides

“1) Where there are multiple parties, whether as Claimant or as Respondent, and where the dispute is to be referred to three arbitrators, the multiple Claimants, jointly, and the multiple Respondents, jointly, shall nominate an arbitrator for confirmation pursuant to Article 9. 2) In the absence of such a joint nomination and where all parties are unable to agree to a method for the constitution of the Arbitral Tribunal, the Court may appoint each member of the Arbitral Tribunal and shall designate one of them to act as chairman. In such case, the Court shall be at liberty to choose any person it

744 Girsberger and Voser, International Arbitration in Switzerland, note 493 et

seqq.; Onyema, International Commercial Arbitration and the Arbitrator’s Contract, chap. 4.

745 Swiss Rules section II, in particular article 6(2). The ICC provides for a preference of a sole arbitrator in article 8(2).

746 Article 5 (1) Swiss Rules, article 9 ICC Rules. 747 Girsberger and Voser, International Arbitration in Switzerland, note 498.

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regards as suitable to act as arbitrator, applying Article 9 when it considers this appropriate.”

The Swiss Rule 8 provides

“1. Where a dispute between two adverse parties is referred to a three-member arbitral tribunal, each party shall designate one arbitrator, unless the parties have agreed otherwise. 2. If a party fails to designate an arbitrator within the time-limit set by the Chambers or resulting from the arbitration agreement, the Chambers shall appoint the arbitrator. Unless the parties’ agreement provides otherwise, the two arbitrators so appointed shall designate, within thirty days from the confirmation of the second arbitrator, a third arbitrator who shall act as the presiding arbitrator of the arbitral tribunal. Failing such designation, the Chambers shall appoint the presiding arbitrator. 3. In multi-party proceedings, the arbitral tribunal shall be constituted in accordance with the parties' agreement. 4. If the parties have not agreed upon a procedure for the constitution of the arbitral tribunal in multi-party proceedings, the Chambers shall set an initial thirty-day time limit for the Claimant or group of Claimants to designate an arbitrator and set a subsequent thirty-day time limit for the Respondent or group of Respondents to designate an arbitrator. If the group or groups of parties have each designated an arbitrator, Article 8, paragraph 2 shall apply by analogy to the designation of the presiding arbitrator. 5.Where a party or group of parties fail(s) to designate an arbitrator in multiparty proceedings, the Chambers

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may appoint all three arbitrators and shall specify the presiding arbitrator.”

The methods supra are generally accepted. This analysis shall now turn to the concrete compotition of the panel in consolidated cases.

9.2 Composition of the Consolidated Panel

The composition of the consolidated case panel under the ICC or Swiss Rules after consolidation does not correspond entirely to the methods described above.

Under the ICC Rules, the Court may

“(. . .) include the claims contained in the [new] Request in the pending proceedings (. . .).”748

The new rule 10 permits simply an addition of the entire case B to case A. In both cases, this means that the second case B will be added to the earlier case with the latter’s arbitrators.749 The selection of arbitrators in the earlier case will proceed according to the ordinary selection procedures.750

748 ICC Rules Article 4(6)(s.1). 749 This presupposes that arbitrators for the earlier case have been chosen. There

is a potential, that the composition of the initial panel is not complete or that the selection of arbitrators for the later case has already begun. It can be assumed, even though this author is not aware of any cases with this fact pattern, that the second panel does not receive confirmation and the selection of the initial case will proceed.

750 If there are multiple parties in the cases, not just a two-party scenario, the selection of the first case will have been affected in accordance with Rule 10 ICC Rules, according to which aligned parties must choose their arbitrator jointly. The propriety of this selection shall not be discussed here and has created much dispute among scholars. This analysis is focused on consolidation specific, which this is not. Problem when claims are added later i.e. also with consolidation is shifting alignment. The problem of shifting alignments is not addressed here as it is a fide issue. In case of consolidation

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Under the Swiss Rules, the second case B is also referred to the arbitrators of the first case A. In a two-party situation in which a new case is submitted between the same parties, the institution may refer the new case to the existing panel.751 When the parties are not identical, the institution may do likewise.752 The parties to the second case are

“(. . .) deemed to have waived their right to designate an arbitrator.”753

Both sentence 2 and 3 form a significant difference from the ICC Rules under both the current and the proposed Swiss Rules.

In relation to both sets of rules, the parties to the second cases B experience a different selection procedure than expected if each case were conducted separately. Under all circumstances of consolidation, the second case B loses either its arbitrators or the right to participate in the selection of arbitrators. Qualifications agreed upon by the parties of the second case B remain unconsidered.754 Consequently, parties to the second case may claim improper constitution. In extreme cases, when filing occurs very close in time, which party is disadvantaged by losing its rights, as in the ordinary appointment process, as laid out supra in subchapter 9.1, is entirely random.

in a multi-party situation, again the same arbitrators as in the initial case will administer the enlarged case. The complications connected to a mixing of alignments due to the addition of claims are not addressed. The same issue may arise where alignments i.e. interests are unclear or when they shift for reasons of counterclaims or set offs. These issues however cannot be discussed here in detail. They are addressed by writings concerning multi-party arbitration as such.

751 Article 4(1)(s.1) Swiss Rules. 752 Article 4(1)(s.2) Swiss Rules. 753 Article 4(1)(s.3) Swiss Rules. 754 The possibility to include the parties’ qualification requirements into the

choice of the arbitrators under certain circumstances will be discussed infra in subchapter 10.4.

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These changes in appointment procedure have an impact for annulment and refusal of recognition and enforcement of an award in various respects: violation of party agreement and lack of equal treatment. In order to put in further perspective the violation of party agreement and equal treatment, this analysis will first discuss the commonly propounded notion of the right to a party arbitrator.

The proposed Swiss Rule 4(1) permits Chambers an out by providing that case A may also loose its arbitrators. Which concrete method of appointment is used in such cases is not fully clear.

9.3 Right to Party Arbitrators

The right to your own party arbitrator does not exist.755 The right to appoint an arbitrator is an important right in arbitration.756 However, parties are not entirely free to choose arbitrators all the time.757 Party autonomy is, quite simply, not the only policy at issue. Instead, courts and arbitrators must take

755 Lachmann, Handbuch für die Schiedsgerichtspraxis, 461; Offenhausen,

Mehrparteienschiedsgerichtsverfahren bei der Beteiligung einer Gesellschaft Bürgerlichen Rechts, 96.

756 Karl Heinz Schwab, “Mehrparteienschiedsgerichtsbarkeit und Streitgenossenschaft,” in Festschrift für Walther J. Habscheid zum 65. Geburtstag, 6. April 1989 (Bielefeld: Gieseking, 1989), 290.

757 Fouchard, Gaillard, Goldman on International Commercial Arbitration (The Hague: Kluwer Law International, 1999), 783 et seqq.; stating that parties are free to choose any person, Lachmann, Handbuch für die Schiedsgerichtspraxis, note 815; Poudret and Besson, Comparative Law of International Arbitration, note 401; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 9-9 et seq.; Offenhausen, Mehrparteienschiedsgerichtsverfahren bei der Beteiligung einer Gesellschaft Bürgerlichen Rechts, 99; Born, International Commercial Arbitration Volume I, 1439 et seq.

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other competing interests and principles into account.758 Within the limits of mandatory laws, parties are permitted to consent to any kind of arbitration procedure.759 Known mandatory rules are the right to equal treatment and the right to be heard.760

WILKE strongly advocates a party’s right to nominate its own arbitrator with the argument that taking away this right would sever the roots of international arbitration and put into question the whole idea of thinking the parties capable of settling their disputes by ADR rather than in a court.761 WEBER describes the right to a party appointed arbitrator as a fundamental right.762 SCHWAB and LIONNET/LIONNET maintain that this right may only be curtailed in circumstances in which material law forces the parties to make a unified choice,763 such as with the recalcitrant or defaulting party.764 POUDRET/BESSON reject an

758 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1045.

759 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1376. According to § 1042 III GZPO, parties are free to decide the procedure or choose arbitration rules with the exception of violation of mandatory provisions. The choice of institutional rules does not free the parties from mandatory provisions of the law.

760 Donovan and Greenawalt, “Mitsubishi After Twenty Years: Mandatory Rules Before Courts and International Arbitrators,” 13 Note 1-4; TenCate, “Multi-Party and Multi-Contract Arbitrations: Procedural Mechanisms and Interpretation of Arbitration Agreements under U.S. Law,” 926; George A. Bermann and Loukas A. Mistelis, Mandatory Rules in International Arbitration, 2010.

761 Justus Wilke, Interessenkonflikte in der internationalen Schiedsgerichtsbarkeit Unparteilichkeit, Unabhängigkeit und Offenlegungspflichten (Berlin: dissertation.de, 2006), 153.

762 Weber, “Wider den Verlust des Betellungsrechts bei Nichteinigung der Mehrparteiengegenseite auf einen Schiedsrichter,” 1065.

763 Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 411; Schwab, “Mehrparteienschiedsgerichtsbarkeit und Streitgenossenschaft,” 293.

764 Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 417. (outlines 3 different opinions)

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absolute right to appoint one’s own arbitrator,765 and so do REINER/JAHNEL766 and others.767

This author propounds that no right to a party arbitrator exists. In a single arbitrator situation, not every party gets to choose one arbitrator, although all parties must agree. In many instances, the single arbitrator is chosen by a neutral third party,768 such as the institution.769 Having to choose arbitrators from a list is permissible, so long as no party had undue influence on the composition of this list.770 In cases of a defaulting or dilatory party, this party may not choose its own arbitrator.771 In short, there are many instances in which it is already accepted that no right to a party appointed arbitrator exists.

This does not mean that the parties do not have the right to be treated equally, as will be addressed in more detail infra in subchapters 9.5 and 9.6.

765 Poudret and Besson, Comparative Law of International Arbitration, note 242. 766 Liebscher, “Wiener Regeln,” 3; Reiner and Jahnel, “ICC-

Schiedsgerichtsordnung,” 10-1 et seqq. 767 Offenhausen, Mehrparteienschiedsgerichtsverfahren bei der Beteiligung einer

Gesellschaft Bürgerlichen Rechts, 94 other opnions find the right to nominate ones arbitrator fundamental.

768 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 10-3; Girsberger and Voser, International Arbitration in Switzerland, note 492.

769 SFCD 84 I 39 6 (Swiss Federal Court 1958). 770 Poudret and Besson, Comparative Law of International Arbitration, note 404;

SFCD 107 Ia 155 161 (Swiss Federal Court 1981); SFCD 129 III 271 276 et seq. (Swiss Federal Court 2002); Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 14.

771 SFCD 84 I 39, 51.

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9.4 Impact of Qualifications of Arbitrators

Parties are free to set qualifications for arbitrators,772 which, when not fulfilled, violate party agreement and may lead to annulment or refusal of recognition and enforcement.773 For example, in construction cases, solid knowledge of the business is required for an arbitrator to be effective.774 As a consequence parties may mandate such expertise in their arbitrators.

When consolidation is ordered at an early stage, an option to allow the choosing of arbitrators by the parties of cases A and B jointly is a possibility. Similarly, the criteria set for qualifications of the arbitrators could be applied at the same time. Under the old ICC Rules, consolidation must take place rather early in both proceedings so that the option seems reasonable. Under new ICC and the Swiss Rules, there is no time limitation for consolidation, so that it is as likely as not that the first panel has already been chosen without cooperation. However, these thoughts are too practical.

It is impermissible to limit the parties’ choices of case A,775 not based on a list of arbitrators (which is permissible) but based on the subjective criteria set by the parties to case B and vice versa. Even if the parties to both cases were the same, the subject matters may require different types of agreed upon expertise. The ICC and Swiss Rules themselves do not specify such cooperation.

772 Wilke, Interessenkonflikte in der Internationalen Schiedsgerichtsbarkeit, 59;

Lachmann, Handbuch für die Schiedsgerichtspraxis, note 908; Born, International Commercial Arbitration Volume I, 1453 et seqq.; Girsberger and Voser, International Arbitration in Switzerland, note 473 et seqq.; Moses, The Principles and Practice of International Commercial Arbitration, 120.

773 Girsberger and Voser, International Arbitration in Switzerland, note 480; Born, International Commercial Arbitration Volume I, 1458 et seq.

774 Paul Hobeck, Volker Mahnken, and Max Koebke, “Schiedsgerichtsbarkeit im internationalen Anlagenbau - Ein Auslaufmodell?,” Neue Zeitschrift für Schiedsverfahren 2007, no. 5 (2007): 232.

775 This would amount to a contract to the detriment of third parties.

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Some argue that an award will not be set aside when the agreement of the parties or the rules of the institution on composition are violated in a minor fashion.776 WALTER/BOSCH/BRÖNIMANN argue that any lack of compliance with the party agreement must be sanctioned.777 In addition, even when contractual qualifications of an arbitrator are not met, courts are unlikely to set aside the award.778 The same is true for Switzerland.779

Having discussed the underlying principles, this analysis will now turn to the consequences of the composition of the panel of the consolidated case. This analysis will address, in turn, the potential grounds for annulment and refusal due to the effects on the arbitral panel composition after consolidation.

9.5 Implications of Arbitrator Selection for Annulment

A ground for anulment in relation to the selection of arbitrators is 190(2)(a) SPILA. According to article 190(2)(a) SPILA, an award may be annulled if the arbitrator or the panel was not properly constituted. The award may also be annulled if the principle of equal treatment was violated (article 190(2)(d) SPILA) or if the award is incompatible with public policy (article 190(2)(e) SPILA). These grounds will be addressed in turn.

776 Girsberger and Voser, International Arbitration in Switzerland, note 1069. 777 Gerhard Walter, Wolfgang Bosch, and Jürgen Brönnimann, Internationale

Schiedsgerichtsbarkeit in der Schweiz: Kommentar zu Kapitel 12 des IPR-Gesetzes (Berne: Stämpfli Verlag, 1991), 216.

778 OLG Dresden of 20 October 1998 (Regional Court Dresden, Germany 1998). 779 SFCD of 30 June 1994 - 4P.168/1999 (Swiss Federal Court 1994).

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9.5.1 Improper Constitution - Article 190(2)(a) SPILA

According to art. 190(2)(a) SPILA, annulment of an award can be sought on the grounds of wrongful composition of the arbitral panel. The protection of article 190(2)(a) SPILA originates both in article 6(1) ECHR and the Swiss Constitution article 29.780 Typically this is the case when an arbitrator was appointed in violation of the lex arbitri,781 i.e., in violation of the rules applicable in the hierarchy indicated supra in chapter 5. This means that mandatory Swiss laws must be observed, and individual agreement supersedes institutional rules. Even if the panel is appointed in accordance with institutional rules, if the appointment was contrary to either party agreement or mandatory law, annulment might follow.

Swiss courts have set aside an award due to improper composition only rarely.782 Parties are free to agree to an appointment procedure.783 This can be accomplished by way of reference to institutional rules.784 A reference to, e.g., ICC Rules is sufficient for the application on the rules of the choice of arbitrator.785

It is assumed when reference to institutional rules is made that the rules are to be applied in their entirety, unless the parties specifically agree otherwise. Complete integration of the institutional rules into the contract means that the choice of the

780 Voser and Gola, “The Arbitral Tribunal,” 42; SFCD 129 III 445 3.3.3 (Swiss

Federal Court 2003). 781 Franz Satmer, Verweigerung der Anerkennung Ausländischer Schiedssprüche

wegen Verfahrensmängeln (Zurich: Schulthess, 1994), 59; Martin Wiebecke, “Das Anfechtungsverfahren,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007), note 37.

782 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1549.

783 Berti and Schnyder, “Article 190 SPILA,” 25. 784 Girsberger and Voser, International Arbitration in Switzerland, note 517;

SFCD 129 III 675; SFCD 130 III 66. 785 Reiner and Jahnel, “ICC-Schiedsgerichtsordnung,” 4; SFCD 110 Ia 493, 498

et seqq.

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parties of institutional rules would suffice to permit the choice of arbitrators, as set out in section 9.2. This would include not only the common appointment procedure but also exceptional circumstances, as outlined in articles 10 old ICC Rules, 8 or 4(1)(s.3) Swiss Rules. This assumption is not overturned lightly.

This author has already propounded her view that this agreement only validly refers to such cases in which consolidation is foreseeable, in chapter 5. This author has also already concluded that no absolute right to a party appointed arbitrator exists. So assuming the mandates as outlined in this analysis are maintained, this analysis will turn to a violation of mandatory law.

Equal treatment of the parties during the entirety of the arbitral process is firmly established in mandatory law.786 Switzerland also forbids derogation from equal treatment.787

Under the ICC Rules article 4(6) and new 10, as well as the Swiss Rules article 4(1)(s.1), and with compatible clauses, the same parties are involved in both cases. Both parties have participated in the creation of the panel under the rules (usually) without application of exceptional, unforeseeable alterations in the procedure. The parties have a panel they have chosen for a dispute with their opponent.

786 Offenhausen, Mehrparteienschiedsgerichtsverfahren bei der Beteiligung einer

Gesellschaft Bürgerlichen Rechts, 94 other opnions find the right to nominate ones arbitrator fundamental.

787 Voser, “Multi-party Disputes and Joinder of Third Parties,” 366; Martin Platte, “Multi-Party Arbitration: Issues Arising out of Joinder and Consolidation,” in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice, ed. Emmanuel Gaillard and Domenico Di Pietro (Cameron May, 2008), 76; SFCD 118 II 359 (30 June 1994),102:; SFCD 120 II 155,415:; SFCD 107 Ia 155, 161 et seq.

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All parties had the same rights in the first case A, and both parties had the same rights in case B concerning selection of the arbitrators. It does not seem to give rise to concern to refuse the parties the option to choose a second panel in the same way. This remains true even if different qualifications for arbitrators in both cases had been decided upon.788

In this author’s opinion, the parties do not need to be afforded the right to appoint a panel for each case.789 These cases do not violate equal treatment, and so party agreement rules the composition. The procedure chosen by the rules is foreseeable to the parties and thus validly chosen. Article 190(2)(a) SPILA is not violated by ICC Rules old article 4(6) or new article 10 or Swiss Rules article 4(1)(s.1).

When different parties are involved in cases A and B, as permitted under article 4(1)(s.2) Swiss Rules, difficulties arise. The parties to the second case B lose their right to participation as per the ordinary appointment procedure. Parties to the initial case A retain their influence on the composition. As a consequence, inequality in the appointment process ensues. This inequality is not justified by any action of the parties. Random inequalities are not entitled to deference under Swiss law.

Whether this inequality will result in an actionable lack of equal treatment should be determined in accordance with article 190(2)(d) SPILA, even though challenging it in a preliminary award would have to be through article 190(2)(a).790

788 See supra chapters 5 and 7. 789 Correctly also: Bühler and Webster, Handbook of ICC Arbitration

Commentary, Precedents, Materials, para. 4-70. 790 Girsberger and Voser, International Arbitration in Switzerland, note 1091;

Georg von Segesser and Dorothée Schramm, “Swiss Private International Law Act (Chapter 12),” in Concise International Arbitration, ed. Loukas A. Mistelis (Aspen Publ, 2010), 960; Berti and Schnyder, “Article 190 SPILA,” 77. See article 190(3) SPILA.

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9.5.2 Lack of Equal Treatment - Article 190(2)(d) SPILA

When 190 (2)(d) SPILA is violated, the award may be set aside regardless of the reason for the violation or the impact the violation had on the award.791 Article 190(2)(d) SPILA requires parties to be treated equally only in comparable situations.792 It protects the general notion of equal treatment,793 without requiring exact equality. It outlaws unjustified congruent discrimination against parties.794 Article 190(2)(d) SPILA relates to a formal denial of justice.795

9.5.2.1 Definition of Violations of Equal Treatment

In the context of the selection of arbitrators, unequal treatment occurs, e.g., when a party has a disproportionate influence over the composition of the panel.796 A disproportionate or predominant influence over the appointment of the arbitral panel is sufficient.797 A party has disproportionate influence if it is allowed to appoint a majority of the arbitrators, or more

791 Karrer and Straub, “Switzerland,” 12.207; von Segesser and Schramm, “Swiss

Private International Law Act (Chapter 12),” 958; Gehri, “Die Anfechtung internationaler Schiedssprüche nach IPRG - eine Analyse der bundesgerichtlichen Rechtsprechung,” 85; disagreeing: Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1592.

792 Girsberger and Voser, International Arbitration in Switzerland, note 1087; SFCD of 17 February 2002 ASA Bulletin 589 (Swiss Federal Court 2002); SFCD of 10 December 2002 ASA 591 (Swiss Federal Court 2002); SFCD of 26 November 2002 ASA Bulletin 413 (Swiss Federal Court 2002); SFCD 129 III 445; SFCD of 11 November 2002 ASA Bulletin 378 (Swiss Federal Court 2002).

793 Geisinger and Frossard, “Challenge and Revision of the Award,” 147; Moreau, “Arbitrage liés,” 80; Bernard Dutoit, Droit international privé suisse commentaire de la loi fédérale du 18 décembre 1987, 3rd ed. (Basel: Helbing & Lichtenhahn, 2001), notes 182-6.

794 Berti and Schnyder, “Article 190 SPILA,” 61; Walter, Bosch, and Brönnimann, Internationale Schiedsgerichtsbarkeit in der Schweiz, 223.

795 Geisinger and Frossard, “Challenge and Revision of the Award,” 148. 796 Girsberger and Voser, International Arbitration in Switzerland, note 520. 797 SFCD 107 Ia 155, 158.

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arbitrators than another party.798 This is also true if the sole arbitrator is appointed by a single party.

A lack of equal treatment does not arise in cases in which the institutions selected all arbitrators for all cases, so that no party had any influence.799 The existence of unequal treatment in cases of differing parties is unquestioned.800 It is equally unquestioned that unequal treatment may be justified, e.g., in the case of default of a party or agreement of the parties.801 When unequal influence is due to alignment of interest on the basis of substantive law, such unequal influence is permissible. No material reasons, such as default of a party or alignment of interest, necessarily exist in the circumstances of consolidation. However, the parties could have waived their rights to challenge the composition of the panel.

9.5.2.2 Waiver of the Right to Equal Treatment

A waiver of rights is only permissible within certain limitations.802 Waiver can ocurr by conduct or omission.803 It can be ex ante or ex post,804 with ex post waivers being more

798 Girsberger and Voser, International Arbitration in Switzerland, note 519;

SFCD 26 II 758 (Swiss Federal Court 1990); SFCD 31 II 688 693 (Swiss Federal Court 1905).

799 Poudret and Besson, Comparative Law of International Arbitration, note 242; Born, International Commercial Arbitration Volume II, 2070.

800 Swiss Rules of International Arbitration Commentary (The Hague: Kluwer Law International, 2005), 39 also art. 4 sec 1 last sentence. Unequal treatment may also result from the fact that one set of parties had more time to get to know, present to and influence the panel. This is however not an issue of selection of arbitrators but a question of procedure and timing. Procedure is discussed infra in chapters 11 and 12.

801 As explained in subchapter 10 concerning the right to a party appointed arbitrator.

802 Born, International Commercial Arbitration Volume II, 2735. 803 Kurkela and Snellman, Due Process in International Commercial Arbitration,

30. 804 Valentine Gétaz Kunz, Rechtsmittelverzicht in der internationalen

Schiedsgerichtsbarkeit der Schweiz mit Rechtsvergleichung (Bern: Stämpfli, 1993), 26.

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prominent.805 Some authors806 interpret the choice of institutional rules containing consolidation to be a waiver of the right to challenge the appointment of the arbitrators according to the procedure outlined for consolidated procedures. This view confuses consent with waiver. The reference to a set of institutional rules does not permit the interpretation as challenge waiver.807

Both the ICC Rules and the Swiss Rules contain general waivers.

Article 33 of the ICC Rules states:

“A party which proceeds with the arbitration without raising its objection to a failure to comply with any provision of these Rules, or of any other rules applicable to the proceedings, any direction given by the Arbitral Tribunal, or any requirement under the arbitration agreement relating to the constitution of the Arbitral Tribunal, or to the conduct of the proceedings, shall be deemed to have waived its right to object.”

Similarly, article 30 of the Swiss Rules reads:

“A party who knows that any provision of, or requirement under, these Rules has not been complied with and yet proceeds with the arbitration without promptly stating its objection to such non-compliance, shall be deemed to have waived its right to object.”

805 Kurkela and Snellman, Due Process in International Commercial Arbitration,

30 et seq. 806 Poudret and Besson, Comparative Law of International Arbitration, note 248. 807 SFCD of 6 June 2007 - 4A_18/2007 c. 3 (Swiss Federal Court 2007);

Girsberger and Voser, International Arbitration in Switzerland, note 1045.

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Both waiver provisions speak of concrete violations which have been ignored and can no longer be challenged after a certain time. An objection must be made when the violation occurs.808 This does not mean at the conclusion of the contract, but when the violation materializes.809 The challenge to proper constitution is waived when the appointment of the arbitrators is not objected to expediently upon completion of the appointment.810

Advance waivers must therefore be qualified (specific) and cannot be limited to reference to institutional rules.811 Abstract waivers require awareness812 or, at a minimum, forseeability of the rights which are surrendered by the waiver. Boilerplate language or broad references are insufficient.813 The drafters of the Swiss Rules have attempted to circumvent this problem of unequal treatment by inserting a specific waiver into article 4(1)(s.3) Swiss Rules.814 For this reason the Swiss Rules have been criticized,815 and scholars have expressed doubt concerning the enforceability of awards based on consolidation under this rule.816 LEW said that "it is doubtful whether an award arising out of consolidated arbitration proceedings would be enforceable under the New York Convention," even in cases

808 Berti and Schnyder, “Article 190 SPILA,” 62. 809 Satmer, Verweigerung der Anerkennung Ausländischer Schiedssprüche wegen

Verfahrensmängeln, 155. 810 Girsberger and Voser, International Arbitration in Switzerland, note 1071;

Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1588; Karrer and Straub, “Switzerland,” 12.210.

811 Satmer, Verweigerung der Anerkennung Ausländischer Schiedssprüche wegen Verfahrensmängeln, 160.

812 Wagner, “Arbitration in Germany,” 3; Binder, International Commercial Arbitration and Conciliation in UNCITRAL Model Law Jurisdictions, notes 1-093.

813 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-19.

814 This provision is also in the proposed new rules. 815 Voser, “Multi-party Disputes and Joinder of Third Parties,” 366, 388; Berger

and Kellerhals, International and Domestic Arbitration in Switzerland, note 547; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4078; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-97 et seq.

816 Conejero Roos, “Multi-party Arbitration and Rule-making: Same Issues, Contrasting Approaches,” 426 et seq.

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where the relevant law or arbitral rules give the necessary authority to a court, arbitrator, or appointing authority.817

Swiss Rules contain a specific waiver in article 4(1)(s.3). This specific waiver is directed at the composition of the panel and provides:

“Where the Chambers decide to refer the new case to the existing arbitral tribunal, the parties to the new case shall be deemed to have waived their right to designate an arbitrator.”

Whether the specific waiver inserted in the Swiss Rules withstands scrutiny is debatable.818 While the Swiss Federal Court permits waivers in the abstract relatively freely,819 certain limitations apply. Mandatory laws are not at the disposal of the parties and cannot be waived.

Equal treatment is a matter of public policy and can neither be waived820 nor derogated from.821 Nevertheless, according to POUDRET/BESSON, the presumption of waiver to the right to appoint an arbitrator is valid under Swiss law and difficult to reconcile with Dutco.822 Dutco is the French case introduced supra in section 5.6.1. The court found that it was impermissible to agree to institutional rules which resulted in

817 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-97 et seq. 818 Voser, “Multi-party Disputes and Joinder of Third Parties,” 366, 388; Berger

and Kellerhals, International and Domestic Arbitration in Switzerland, note 547; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 4078; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-97 et seq.

819 Actual awareness of the violation not required. François Carrard, SFCD of 4 August 2006, 25 ASA Bulletin 105, 105 (Swiss Federal Court 2006).

820 SFCD 107 Ia 155, 161. 821 Voser, “Multi-party Disputes and Joinder of Third Parties,” 366. 822 Poudret and Besson, Comparative Law of International Arbitration, note 248.

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inequality during the selection process.823 However, France is not Switzerland.

The difference may be especially marked, as in Switzerland the parties are permitted to waive review of the final award in advance under limited circumstances.824 Should none of the parties have their domicile, habitual residence or business in Switzerland, article 192(1) SPILA even permits a waiver of any judicial review within Switzerland.825 This includes no review of public policy.826 Such waiver will only apply to Switzerland and does not deprive parties of review at the enforcement stage.827

The requirements for a formally valid waiver are strict.828 The waiver under article 192 SPILA is very specific to situations in which Switzerland has no interest in the case as neither party is connected to the country and its public policy or legal regime, so no issues of propriety exist. One could conclude that the

823 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction

Company, 1992 No. 3:. 824 Petrochilos, Procedural Law in International Arbitration, note 4.36.

Switzerland, Belgium, Sweden, Turkey, and Tunesia allow waivers to judicial review.

825 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 683.

826 SFCD of 31 October 2005 - 4P.198/2005, 2006/2 ASA Bulletin 339, 246 (Swiss Federal Court 2005); Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 296.

827 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 683; Marc Blessing, “Das neue internationale Schiedsgerichtsrecht der Schweiz,” in Die Internationale Schiedsgerichtsbarkeit in der Schweiz (II). Das neue Recht ab 1. Januar 1989., ed. Karl-Heinz Böckstiegel, vol. 2, Schriftenreihe des Deutschen Instituts für Schiedsgerichtswesen (Cologne, Berlin, Bonn, Munich: Carl Heymanns Verlag, 1988), 85; Gétaz Kunz, Rechtsmittelverzicht in der internationalen Schiedsgerichtsbarkeit der Schweiz mit Rechtsvergleichung, 117.

828 SFCD 134 III 260 (Swiss Federal Court 2008); , for a differentiated view on the Swiss Federal Court´s jurisprudence on waivers see Nora Krausz, “Waiver of Appeal to the Swiss Federal Tribunal: Recent Evolution of the Case Law and Compatibility with ECHR, Article 6,” Journal of International Arbitration 28, no. 2 (2011): 137 - 162.

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waiver contained in article 4(1)(s.3) Swiss Rules is thus valid under the same circumstances as a general waiver of review, but this seems farfetched. Absent the waiver of final review, the right of equal treatment in the constitution of the panel cannot be waived before the dispute has arisen.829

This point had already been decided by Swiss Federal Court. Complaints against inequality in the choice of arbitrators cannot be waived in advance if not raised at the time of the violation or discovery thereof.830 Hence, specific waiver in article 4(1)(s.3) Swiss Rules is not permissible and has no effect. Article 4(1)(s.2) Swiss Rules violates the right to equal treatment in the appointment of arbitrators.

9.5.3 Violation of Public Policy - Article 190(2)(e) SPILA

Article 190(2)(e) SPILA is interpreted narrowly.831 Special grounds for setting aside article 190(2)(a-d) SPILA prevail over 190(2)(e) SPILA.832 Procedural public policy protects against violations not included in the other grounds.833 An award is only reversed when it is not only in its reasoning, but also in its result, contrary to public policy.834

Annulment on this ground occurs if the award violates fundamental legal principles and is therefore incompatible with

829 SFCD 118 II 359 (30 June 1994),102:; Martin Platte, “When Should an

Arbitrator Join Cases?,” Arbitration International 18 (2002): 76. 830 SFCD 120 II 155,415:. 831 SFCD 126 III 249 253 (Swiss Federal Court 2000). 832 SFCD of 4 August 2006 - 4P.105/2006 c. 5.3 (Swiss Federal Court 2006). 833 SFCD 117 II 346 346, 347 (Swiss Federal Court 1991); SFCD of 7 January

2004 ASA Bulletin (Swiss Federal Court 2004). 834 SFCD 132 III 389 2.2 et seq. (Swiss Federal Court 2006); SFCD 120 II 155,

415:E. 6.a; SFCD 116 II 634 E. 4 (Swiss Federal Court 1990).

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Swiss law and values.835 While public policy is based on Swiss values, the effects may be limited concerning international circumstances.836 This includes both substantive and procedural public policy.837 Not every violation will lead to an annulment, only such which violate essential assurances of fairness.838 In this, ‘une approche pragmatique de la question’ is used by the Swiss Federal Court.839 The Swiss Federal Court developed a case-by-case analysis and has so far amassed a catalogue of principles of public policy encompassing, amongst other things, the right to equal treatment and the prohibition against abuse of rights.840

This ground for annulment is very rare. In fact on 13 April 2010, the first award was annulled for a violation of public policy by the Swiss Federal Court.841 As a violation of equal treatment does occur, article 190(2)(e) SPILA will be violated as well.

9.5.4 Interim Conclusion

The ICC Rules have safeguarded against the possibility of inequalities in appointment by limiting the scope of

835 Berti and Schnyder, “Article 190 SPILA,” 71; Alvarez de Pfeifle, Der Ordre

Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 144; SFCD 116 II 634, note 4.

836 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 143; SFCD 120 II 155, vol. 415, note 6a.

837 Girsberger and Voser, International Arbitration in Switzerland, note 1089. 838 SFCD 129 III 445, 464. 839 SFCD 120 II 155,415:. 840 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der

Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 144.

841 SFCD of 13 April 2010 - 4A_490/2009 (Swiss Federal Court 2010).

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consolidation dramatically, while the Swiss Rules sought a more inclusive approach. Far from missing the issue of equality, the drafters of the Swiss Rules inserted an unorthodox waiver provision concerning the right to participate in the selection of arbitrators.

Nevertheless, article 4(1)(s.2) Swiss Rules violates equal treatment and Swiss public policy. Appointment provisions concerning the same parties as can be found in article 4(6) old and article 10 new ICC Rules and article 4(1)(s.1) Swiss Rules are permissible. The proposed new Swiss Rule speficying that arbitrators could all be replaced might bring a solution to the issue of equality, if it is used to replace the panel for all parties. Whether this will be done remains to be seen, should the proposed solution be adopted.

As a consequence, arbitration based on consolidated cases with previously different parties would be annulled, with the exception of the case that all arbitrators are appointed by the institution from the outset.

9.6 Implications for Refusal of Recognition and Enforcement

According to article V(1)(d) NYC, which applies if enforcement is sought in Germany842 or the United States,843 refusal of enforcement of an award in relation to the composition of a panel can be based on the improper constitution of the panel.

842 Entry into force 28 September 1961, Schöll, Sourcebook of International

Arbitration (Switzerland), 22. 843 Entry into force on 29 December 1970, Ibid., 25.

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Similarly, a violation of public policy article V(2)(b) NYC can844 lead to refusal of enforcement.

In cases in which no lack of equal treatment can be found, no refusal would be appropriate. When all arbitrators have been appointed by a neutral third, such as an institution, no unequal treatment arises.845 Similarly, when the same parties are concerned, all parties have the same rights.846 The sole question here is thus whether article 4(1)(s.3) Swiss Rules could be enforced in Germany or the United States.

In Germany the NYC was transformed by § 1061(1) GCCP without change. The United States did likewise in USC, title 9, chapter 2, § 201.847 Recognition of awards occurs automatically provided no grounds exist to resist enforcement.848

9.6.1 Improper Constitution - Article V(1)(d) NYC

Article V(1)(d) NYC provides that enforcement of an award may be refused when the agreement of the parties or the law applicable to the procedure was violated.849 It is permissible

844 Whether the courts have discretion is debated. For a good and brief analysis

see: Nacimiento, “Article V(1)(a) NYC,” 208 et seq. For the purposes of this analysis, this is immaterial, as the practice of the courts will be considered in general terms and no specific factual situation can be analyzed.

845 Voser, “Multi-party Disputes and Joinder of Third Parties,” 363. 846 There may be situations, when the first case A was already a multi-party case,

in which aligned parties agreed to one arbitrator. If the alignment changes due to the addition of the second case B or because not all parties of A are also parties of B, some inequalities may arise. Under such circumstances a detailed analysis of equality would be necessary. It is neither feasible nor sensible to attempt generalized statements on this issue in this analysis.

847 “The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, shall be enforced in United States courts in accordance with this chapter.“

848 Kröll, “§ 1061 - Foreign Awards,” 2. 849 Stefan M. Kröll, “Die Vollstechbarerklärung von Schiedssprüchen nach

Deutschem Recht - Rechtsgrundlagen und prozessuale Fragen des Exequaturverfahrens,” in Die Vollstreckung von Schiedssprüchen, ed. Gerhard Wagner and Peter Schlosser (Heymanns, 2007), 75; Kröll, “§ 1061 - Foreign

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under the NYC for the parties to select the procedure of the appointment of arbitrators by reference to institutional rules.850 "(I)f consolidation is based on the parties' implied consent, then article V(1)(d) NYC would presumably not be offended."851 Article V(1)(d) may be precluded if not raised according to the law of the seat.852

Article V(1)(d) NYC states that enforcement could be refused if:

“The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;”

Whether refusal of recognition and enforcement is proper is determined using the law applicable to the procedure.853 Party autonomy concerning the arbitrator selection is only limited by certain articles of the NYC, notably articles V(2)(a) and (b) NYC, not, however, article V(1)(d) NYC.854

This would indicate that the same conclusions as in the previous subchapter apply. However, the situation is more complex. Both the agreement of the parties or the law of the seat would be

Awards,” 94; BayObLG of 24 February 1999, 2000 Neue Juristische Woche - Rechtsprechungsreport, 361 (Regional Court Bavaria, Germany 1999).

850 Nacimiento, “Article V(1)(d) NYC,” 283. 851 Gary Born, International Commercial Arbitration in the United States

Commentary & Materials (Deventer: Kluwer Law and Taxation Publishers, 1994), 695.

852 Thomas Henkel, Konstituierungsbezogene Rechtsbehelfe im schiedsrichterlichen Verfahren nach der ZPO, Dissertation. (Berlin: e-doc, 2007), note 413, http://www.openthesis.org/documents/Konstituierungsbezogene-Rechtsbehelfe-im-schiedsrichterlichen-Verfahren-524105.html.

853 Ibid.; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1323. 854 Nacimiento, “Article V(1)(d) NYC,” 284; Joseph Müller AG v. Bergesen 108

Ib 85, 4. a et seq. (Swiss Federal Court 1982).

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permissible options, giving, however, the agreement of the parties preference in case of deviating results.855

While preponderant influence of one or more parties over the composition of the panel would serve as improper constitution in principle on the basis of lack of equality,856 this is not so when the agreed upon procedure is followed.857 Mandatory law of the enforcement country is irrelevant for article V(1)(d) NYC. This does not mean that a violation of article V(2)(b) NYC cannot have occurred.858 Seeming lack of protection against certain procedural agreements is balanced by article V(2) NYC.859 An award which violates due process or public policy cannot be enforced.860 When the panel is chosen in accordance with the institutional rules, and subject to the limitations outlined supra, article V(2)(d) NYC is not violated.

855 Kröll, “§ 1061 - Foreign Awards,” 89, stating that the mandatory law of the

seat is only protected through article V(1)(e) NYC; Peter Schlosser, “Anhang zu § 1061,” in Kommentar zur Zivilprozessordnung, ed. Friedrich Stein and Martin Jonas, vol. 9, 22nd ed. (Tübingen: Mohr Siebeck, 2002), note 122; Poudret and Besson, Comparative Law of International Arbitration, note 915; Fouchard, Gaillard, and Savage, Fouchard Gaillard Goldman on International Commercial Arbitration, para. 1702.

856 Kröll, “§ 1061 - Foreign Awards,” 92. 857 If the arbitration was conducted in Germany, the composition of the tribunal

according to the agreement of the parties under article 4 (1)(s.3) Swiss Rules violates §1034 GZPO. If relief was sought, a German judge would override party agreement to preserve the application of German law, otherwise the award could be annulled. In turn, this violation of party autonomy would then most likely result in an application of article V(1)(d) NYC, refusing enforcement to the award rendered under these conditions. The principle is explained in Nacimiento, “Article V(1)(d) NYC,” 285; Tweeddale and Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice, note 13.25 et seq.

858 Nacimiento, “Article V(1)(d) NYC,” 291. 859 Giorgio Gaja, “Introduction,” in International Commercial Arbitration: New

York Convention, Part I, ed. Giorgio Gaja (Dobbs Ferry, NY: Oceana Publications, 1987), note I.C.3.

860 Nacimiento, “Article V(1)(d) NYC,” 286 et seq.; Ulrich Haas, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, June 10, 1958,” in Practitioner’s Handbook on International Commercial Arbitration, ed. Frank-Bernd Weigand (Oxford: Oxford University Press, 2002), note V - 66; Kröll, “§ 1061 - Foreign Awards,” 89; GFCD 110, 104 106 et seq. (German Federal Court 1990).

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In conclusion, all variations of consolidation under the ICC and Swiss Rules, foreseeable for the parties, would be proper under article V(1)(d) NYC.

9.6.2 Public Policy - Article V(2)(b) NYC

As article V(1)(d) NYC does not prevent enforcement, as shown above, article V(2)(b) NYC will be examined. Article V(2)(b) NYC is lex generalis to the provisions of article V(1) NYC, even though some courts consider public policy grounds simultaneously with other grounds.861 Article V(2)(b) NYC has to be considered ex officio.862 Even though often raised863 the fact is that article V(2)(b) NYC fails more often than other grounds for refusal of recognition and enforcement.864

9.6.2.1 Applicable Standard

Only when the enforcement of the award would violate public policy (not the award itself) will enforcement be denied.865 Procedural mistakes also must have had the potential of an impact on the result, i.e., the award, to be objectionable.866

861 Otto and Elwan, “Article V(2) NYC,” 366. 862 Kröll, “§ 1061 - Foreign Awards,” 111. 863 Wolfgang Kühn, “Aktuelle Fragen zur Anwendung der New Yorker

Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” Neue Zeitschrift für Schiedsverfahren 2009, no. 1 (2009): 57.

864 Otto and Elwan, “Article V(2) NYC,” 365; Bowman Rutledge, Kent, and Henel, “United States,” 13.301; Tweeddale and Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice, note 13.43; Loukas A. Mistelis and Domenico Di Pietro, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958,” in Concise International Arbitration, ed. Loukas Mistelis (Alphen aan den Rijn: Kluwer Law International, Wolters Kluwer Law & Business, 2010), note 19.

865 Otto and Elwan, “Article V(2) NYC,” 366. 866 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der

Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 161; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2612; Kröll, “§ 1061 - Foreign

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Much literature exists concerning the question of whether a domestic or internationalized standard for public policy needs to be applied.867 According to MISTRELIS/DI PIETRO and MOSES, the only relevant public policy is that of the enforcing state.868 This view is correct as article V(2)(b) NYC states: “The recognition or enforcement of the award would be contrary to the public policy of that country.“

Both Germany and the United States follow an international public policy standard.869 Each country applies its own version of this standard, but variations are a question of degree rather than of substance due to the narrow notion applied.870 The

Awards,” 112; Otto and Elwan, “Article V(2) NYC,” 389; OLG Stuttgart of 14 October 2003 (Regional Court Stuttgart, Germany 2003); BayObLG of 23 September 2004 DIS Online Datenbank (Regional Court Bavaria, Germany 2004).

867 For an overview see Otto and Elwan, “Article V(2) NYC,” 366. 868 Mistelis and Di Pietro, “Convention on the Recognition and Enforcement of

Foreign Arbitral Awards (New York Convention), 1958,” 17; Moses, The Principles and Practice of International Commercial Arbitration, 218; Tweeddale and Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice, note 13.58.

869 Hanefeld, “Germany,” 7.273; Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 165 et seqq.; Poudret and Besson, Comparative Law of International Arbitration, note 933; GFCD of 18 January 1990, 1990 Neue Juristische Woche 2199, 2199 et seqq. (German Federal Court ); Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier,508:; Jon Newman, “The Bench: Judicial Application of the Convention (US part),” in Enforcing Arbitration Awards under the New York Convention - Experience and Prospects (New York (NY): United Nations Publications, 1999), 31; Kühn, “Aktuelle Fragen zur Anwendung der New Yorker Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” 57.

870 Kröll, “§ 1061 - Foreign Awards,” 111; Reinhard Bork, “Internationale Schiedsgerichtsbarkeit in Deutschland,” in Internationale Schiedsgerichtsbarkeit, ed. Peter Gottwald (Bielefeld: Gieseking, 1997), 310; Kühn, “Aktuelle Fragen zur Anwendung der New Yorker Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” 57; Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,364:; Ukrvneshprom State Foreign Economic Enterprise v. Tradeway Inc., XXII Yearbook of Commercial Arbitration 958 (S.D.N.Y., USA 1996). The basis for the international standard remains the law of the country where enforcement is sought.

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enforcement countries are bound by the determinations of neither the panel nor a court in the seat country.871

9.6.2.2 Content of the Provision

DERAINS describes public policy as the safety valve of domestic courts.872 Article V(2)(b) NYC is narrow and applies only when the most basic notions of morality and justice are violated.873 Procedural public policy is directed at the proper constitution of the panel, the independence of the arbitrators, the limits and extent of the arbitral mandate, principles of equal treatment and the right to be heard.874 Equal influence of the composition of the arbitral panel forms part of public policy.875

Violation of domestic or foreign procedural law is insufficient in this regard.876 A certain severity is required.877 Only the principles behind the laws are applied.878

In Germany,

871 Otto and Elwan, “Article V(2) NYC,” 368. 872 Yves Derains, “State Court and Arbitrators,” in Arbitration in the Next

Decade, ed. Fabien Gelinas, ICC Special Series 1999 (Paris: ICC Publishing S.A., 1999), 31.

873 Mistelis and Di Pietro, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958,” 21; Otto and Elwan, “Article V(2) NYC,” 389.

874 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 160; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1290; Homayoon Arfazadeh, Ordre public et arbitrage international à l’épreuve de la mondialisation une théorie critique des sources du droit des relations transnationales (Brussels: Bruylant, 2006), 52.

875 GFCD 98, 70, 1986 Neue Juristische Woche 3027, 76 (German Federal Court ); GFCD 132, 278 (German Federal Court 1996); Kröll, “§ 1061 - Foreign Awards,” 124; Kurkela and Snellman, Due Process in International Commercial Arbitration, 109.

876 Kröll, “§ 1061 - Foreign Awards,” 120. 877 Otto and Elwan, “Article V(2) NYC,” 389. 878 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der

Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 160; GFCD 48, 327 333 (German Federal Court 1968).

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“(p)rocedural public policy is violated if the award has been rendered in proceedings which deviate from the basic principles of German procedural law in a way that the procedure can no longer be considered to be in accordance with the basic principles of a ‘fair trial’.”879

In principle, the parties’ freedom to agree on an appointment procedure exists, however, public policy limits this right.880 Equal treatment at its core requires equal chances.881 It is not unequal when a party defaulted and as a result thereof the party arbitrator decides; it is, however, unequal when default is not the cause.882 Any actual inequality is sufficient. It is irrelevant whether the inequality was actually known or foreseeable.883

That the parties are not treated equally has already been demonstrated. Whether the waiver provision of article 4(1)(s.3) Swiss Rules is more effective in Germany and the United States than in Switzerland is questionable.

The German BGH adopted the French decision made in Dutco.884 This means that advance waivers are impermissible.885

879 Kröll, “§ 1061 - Foreign Awards,” 120. 880 Trittmann and Hanefeld, “Arbitration in Germany,” 5 et seq.; Henkel,

Konstituierungsbezogene Rechtsbehelfe im schiedsrichterlichen Verfahren nach der ZPO, 413; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1324 et seqq.

881 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1292. 882 Kröll, “§ 1061 - Foreign Awards,” 124; Lachmann, Handbuch für die

Schiedsgerichtspraxis, note 932. 883 Lachmann, Handbuch für die Schiedsgerichtspraxis, 938; differing: OLG

Frankfurt a.M. of 24 November 2005 - 26 Sch 13/05 (2005). 884 GFCD of 29 March 1996, 1996:1755. 885 Born, International Commercial Arbitration Volume II, 2735; Lachmann,

Handbuch für die Schiedsgerichtspraxis, notes 2346, 2818; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 15-1; Musielak, Kommentar zur Zivilprozessordnung mit Gerichtsverfassungsgesetz, notes 1059-39;

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In particular, the choice of institutional rules does not free the parties from non-waivable provisions of the law.886 PETSCHE argues that parties cannot waive such rights that may be raised by courts ex officio.887 Under German law, the agreement would not be invalid, but would result in the right of the party to request neutral appointment of the entire panel.888

It is unclear how U.S. courts would treat advance waivers; however, where article V(2)(b) NYC is concerned, waivers will likely fail.889

In some jurisdictions this would not raise an issue. In 1999 an Indian court found that the predominant influence of one party over the appointment of the panel was acceptable.890

A violation of equal treatment may be harmless if a cure has been affected or a waiver ex post occurred.891 A party that has

Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 8 et seq.; GFCD of 29 March 1996 - II ZR 124/95 834 (German Federal Court 1996); Tweeddale and Tweeddale, Arbitration of Commercial Disputes International and English Law and Practice, note 13.81.

886 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 15-32.

887 Petsche, The Growing Autonomy of International Commercial Arbitration, 125; Suovaniemi and Others v. Finland, Admissibility Decision of 23 February 1999, No. 31737/96 (n.d.).

888 Any imbalance sufficient. Lachmann, Handbuch für die Schiedsgerichtspraxis, note 932.

889 Born, International Commercial Arbitration Volume II, 2736; Marino v. Writers Guild of Am., 484 F.Supp. 1480, 1484 (9th Cir., USA 1993).

890 Open Seas Maritimes Inc. v. R. Pyarelal International Pvt. Ltd., 101(2) Bombay Law Review 12 (Bombay High Court, India 1999).

891 Petrochilos, Procedural Law in International Arbitration, note 4.82; Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction Company, 1992 No. 3:; Lachmann, Handbuch für die Schiedsgerichtspraxis, notes 1205, 2613; Kröll, “§ 1061 - Foreign Awards,” 49, 124; Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 24; Hartmann, Zivilprozessordnung, notes 1059-2; Girsberger and Voser, International Arbitration in Switzerland, note 1192; La Société Nationale pour la Recherche, la Production, le Transport et la Commercialisation des Hydrocarbures v. Shaheen Natural Resources Co., 585 F.Supp 57 (S.D.N.Y., USA 1983); Laminoirs-Trefilieries-Cableries de Lens v. Southwire Co.; OLG Stuttgart of 14 October 2003.

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cooperated with the appointment of an imbalanced panel has forfeited its right to object.892 Similarly, even signing a contract with an arbitrator can be seen as tacit consent to the arbitrator and defeat the argument against his plea for equal treatment.893

When a party has knowledge of facts that entitle it to an objection, that party cannot remain silent and only attempt challenge at the enforcement stage.894 The right to claim a public policy defense may also be lost if available remedies in the seat country remain unused.895 If the violation can or has been cured during the proceedings or in the appellate proceedings, the violation will no longer be of importance.896

In a German case, arbitration in front of the L.M.A.A. was conducted. The sole arbitrator had been appointed by one of the parties, and, pursuant to the L.M.A.A., this arbitrator decided the case because the other party refused to appoint an arbitrator. The German Federal Court granted recognition and enforcement.897 While the court applied the ground of partiality, the same reasoning is applicable to any public policy defense.

892 Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 27. 893 Nacimiento, “Article V(1)(d) NYC,” 290; Nacimiento and Abt, “§ 1034 -

Composition of Arbitral Tribunal,” 25. 894 AAOT Foreign Economic Association Technostroyexport v. International

Development and Trade Services, Inc., 139:982. 895 GFCD of February 1 2001 - III ZR 332/99 (German Federal Court 2001);

Kühn, “Aktuelle Fragen zur Anwendung der New Yorker Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” 59; , arguing that article V(2) defesnes can never be waived: Petsche, The Growing Autonomy of International Commercial Arbitration, 125; Poudret and Besson, Comparative Law of International Arbitration, note 943.

896 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 161.

897 GFCD of February 1 2001 - III ZR 332/99.

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The public policy defense may only be raised if it could still be raised in the seat country,898 or the raising of the defense would be or was fruitless.899 This has been addressed supra in subchapter 7.3. As the defense would indeed prove effective, it would have had to be asserted.

9.6.3 Summary

Both the German and the United States courts would refuse the recognition and enforcement of consolidated arbitrations that are based on article 4(1)(s.2) Swiss Rules, provided it had been raised in Switzerland.

9.7 Solutions

Numerous solutions for lack of equal treatment in the appointment process have been proposed over the years.900 Adding arbitrators does not solve the problem but rather creates more.901

Many authors suggest, for consolidation in particular, the solution is that the arbitral institution select the entire panel.902

898 GFCD 52, 184 189 (German Federal Court 1969). 899 GFCD of February 1 2001 - III ZR 332/99, note 25; Kühn, “Aktuelle Fragen

zur Anwendung der New Yorker Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” 59; GFCD of 27 March 2006 - 9 Sch 2/05 (German Federal Court 2006).

900 Compania Espanola de Petroleos v. Nereus Shipping,527:; Government of U.K. of Gr. Brit. v. Boeing,998:; Frick, International Arbitration Law Library, 234.

901 Patricia Nacimiento and Amelie Abt, “§ 1035 - Appointment of Arbitrators,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 38.

902 Meier, Einbezug Dritter vor internationalen Schiedsgerichten, 223; Chiu, “Consolidation of Arbitral Proceedings and International Commercial Arbitration,” 60 et seq.; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 10-15; Martin Bartels,

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The same solution is offered in Germany and the Netherlands. The German domestic solution of § 1034(2) GCCP as well as its model,903 the Netherlands Code of Civil Procedure § 1028, suggest:

“Privileged position of a party in appointing arbitrators If the arbitration agreement gives one of the parties a privileged position with regard to the appointment of the arbitrator or arbitrators, the other party may, despite the method of appointment laid down in that agreement, request the Provisional Relief Judge of the District Court within one month after the commencement of the arbitration to appoint the arbitrator or arbitrators. The other party shall be given an opportunity to be heard. The provisions of Article 1027(4) shall apply accordingly.“904

In ordinary multi-party situations, the ICC and the Swiss Rules attempt to achieve equal treatment by appointing the whole panel when parties cannot agree.905 As most commentators suggest the same solution for consolidation, it appears reasonable that the institution simply use a reference to its own rules on multiple parties. When one or all panels have already been appointed, VOSER suggests that the entire panel be replaced. LACHMANN suggests that consolidation should only be permitted when no panel has been constituted.906 These last suggestions will be more closely considered in chapter 13.

“Multiparty Arbitration Clauses,” Journal of International Arbitration 2, no. 2 (1985): 63; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 411; Ottoarndt Glossner, Jens Bredow, and Michael Bühler, Das Schiedsgericht in der Praxis, 4th ed. (Heidelberg: Recht und Wirtschaft GmbH, 2002), note 159.

903 Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 7. 904 http://www.dutchcivillaw.com/legislation/civilprocedure044.htm. 905 See article 10 ICC Rules, article 8 Swiss Rules. 906 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2838.

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Unfortunately, the proposed revision of the Swiss Rules do not offer clear solutions.

Even where equality is maintained in the selection of arbitrators, other procedural problems may arise in the context of the conduct of the proceedings.907

907 Moreau, “Arbitrage liés,” 83.

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10 Aside: Duty to Create an Enforceable Award

Having discussed the formative stage of the arbitral proceeding, this analysis will move on to the procedural adjustments of consolidated case. As outlined in chapter 4, the ICC and Swiss Rules do not offer adequate guidance to arbitrators wishing to ensure enforceability of resulting award. Arbitrators should pay attention to both the lex fori and the laws of potential enforcement countries not because they are forced to, but because it is good practice.908

Enforceability of arbitral awards is one of the goals arbitration institutions attempt to achieve through their case management and quality control.909 In principle the arbitrators should provide an award capable of execution.910 From the point of view of the parties, an unenforceable award does not finally resolve the dispute.911 Even though statistics reveal that arbitral awards are often complied with and do not require formal recognition and enforcement,912 it is possible that the easy enforcement of arbitral awards creates this tendency and is an important

908 Garnett et al., A Practical Guide to International Commercial Arbitration, 29 et

seq. 909 Wehrli, Koenig, and Triebold, “Management of the Proceedings and Quality

Control under the Swiss Rules,” 87; Bühler and Webster, Handbook of ICC Arbitration Commentary, Precedents, Materials, notes 0-33 et seq.; Daly, “Come One, Come All: the New and Developing World of Non-signatory Arbitration and Class Arbitration,” 113.

910 Kröll, “Die Vollstechbarerklärung von Schiedssprüchen nach Deutschem Recht - Rechtsgrundlagen und prozessuale Fragen des Exequaturverfahrens,” 86 et seqq.; Thorn and Grenz, “The effect of overriding mandatory rules on the arbitration agreement,” 199 et seq.

911 Jens Gal, Die Haftung des Schiedsrichters in der internationalen Handelsschiedsgerichtsbarkeit (Tübingen: Mohr Siebeck, 2009), 132; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, chap. 12 note 3.

912 Laure Leservoisier, “Enforcing Arbitration Awards and Important Convention,” in The Arbitration Process, ed. Susan Meek (The Hague: Kluwer Law International, 2002), 255.

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consideration in favor of choosing arbitration.913 In any case, a panel cannot rely on such compliance.

Many institutional rules also oblige arbitrators to make every reasonable effort to render a legally enforceable award914 in order to preserve their reputation.

“ (. . .) an enforcing court can be assured that an award rendered under the aegis of an established arbitral institution has ensued from a proceeding under well-tested rules applied by accomplished arbitrators (. . .)”915

Even so, according to KARRER, arbitrators are not required to create an award that is enforceable.916 This statement may be misleading and requires explanation. LEW ET AL. state the duties of the arbitrator as follows: to settle the dispute, to complete the mandate, to stay impartial, to conduct the arbitration fairly and without delay, and to maintain confidentiality.917 The arbitrator shall actively advance the proceedings and refrain from all acts which would jeopardize the orderly conduct of the proceedings. This obligation presents an accessory contractual duty of the arbitrator.918

913 Bernhard Meyer-Hauser, “Stärkung des Schiedsplatzes Schweiz: Neue

internationale Schiedsordnung in Kraft,” in The Swiss Rules of International Arbitration, ed. Gabrielle Kaufmann-Kohler and Blaise Stucki, vol. 22, ASA Special Series (presented at the ASA Swiss Arbitration Association Conference of January 23, 2004 in Zürich, Basel, 2004), 291.

914 See for example article 32(2) LCIA Rules. 915 Friedland, Arbitration Clauses for International Contracts, 40. 916 Karrer, “Konstituierung des Schiedsgerichts,” Note 90. 917 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 12-04 et seqq.; see also: Voser and Gola, “The Arbitral Tribunal,” 34. 918 SFCD 111 Ia 259, 262; 111 Ia 72, 75.

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Arbitrators do not have a duty to render an enforceable award, which could lead to liability of the arbitrator.919 The arbitrator must participate in the proceeding to the best of her ability.920

This duty of participation includes doing everything just and reasonable to produce an enforceable award.921 If an award proves to be unenforceable, liability for the arbitrators is not automatic. It only leads to liability when intentional behavior leads to an unenforceable award.922 Therefore, many authors cannot agree with KARRER’S statement.923 Understanding that the statement refers more to the technical meaning of an enforceable duty, KARRER is correct.

For the procedural adjustments which will be described in the following chapters, this means that arbitrators should indeed alter the ordinary two-party procedure when indicated to ensure enforceability.

919 Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 15 et seqq.

where the duties of the arbitrator are enumerated. Gal, Die Haftung des Schiedsrichters in der internationalen Handelsschiedsgerichtsbarkeit, 130; Onyema, International Commercial Arbitration and the Arbitrator’s Contract, 119.

920 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 12-1; Gal, Die Haftung des Schiedsrichters in der internationalen Handelsschiedsgerichtsbarkeit, 127 et seqq.; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1155.

921 Gal, Die Haftung des Schiedsrichters in der internationalen Handelsschiedsgerichtsbarkeit, 128; GFCD of 5 May 1986 - III ZR 223/84 3077, 3078 (German Federal Court 1986).

922 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 12-9; GFCD 15, 12, 1954 Neue Juristische Woche 1763 (German Federal Court ); Bork, “Internationale Schiedsgerichtsbarkeit in Deutschland,” 297; Walter, “Die Internationale Schiedsgerichtsbarkeit in der Schweiz,” 829.

923 Of the same opinion: Günther J. Horvath, “Duty of the Arbitral Tribunal to Render an Enforceable Award,” in The Arbitration Process, ed. Susan Meek (The Hague: Kluwer Law International, 2002), 229 et seqq. In great detail.... Institutional rules must ensure that proceedings do not hinder later recognition and enforcement. Gabriele Nater-Bass, “How to Work with the Swiss Rules: The Counsel's Perspective,” in The Swiss Rules of International Arbitration - Five Years of Experience, ed. Rainer Füeg, 53.

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11 Procedural Adjustments Required by the Lex Fori

Absent party agreement the panel is permitted to proceed according to its own discretion,924 limited by the lex fori.925 The arbitrators' procedural powers constitute a particularly fertile ground for conflict.926 As the procedural rules of the institutions do not provide sufficient guidance to the arbitrator concerning to the necessity of adjustments in various procedural stages, as discussed supra in subchapter 4.10, this chapter is intended to provide such guidelines.

Generally speaking, awards are rarely vacated in their seat countries.927 Judicial review leaves much license to arbitrators. Absent concrete circumstances this analysis must remain vague and can only give orientation as to the required adjustments. It is certainly clear that specific procedural difficulties concerning multi-contract arbitration exist.928 LEW ET AL. argue that it is impossible to deal with the procedural issues of multi-party arbitration on a generalized basis, beyond the principle of equal treatment.929

According to VOSER and KLEINSCHMIDT, important procedural steps must be repeated.930 This analysis will address the procedural adjustments in more detail, initially focusing on the Swiss lex fori before moving to the laws of the enforcement

924 Girsberger and Voser, International Arbitration in Switzerland, note 669. 925 Ibid., note 671 et seqq. 926 Park, “Determining an Arbitrator’s Jurisdiction: Timing and Finality in

American Law,” 151. 927 Lookofsky and Hertz, Transnational Litigation and Commercial Arbitration

an Analysis of American, European and International Law, 854. 928 Leboulanger, “Multi-Contract Arbitration,” 43. 929 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 16-32. 930 Voser, “Multi-party Disputes and Joinder of Third Parties,” 388;

Kleinschmidt, “Die Widerklage gegen einen Dritten im Schiedsverfahren,” 146.

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countries in chapter 13. This analysis will structure its review by following article 190(2) SPILA.

11.1 Impartiality – Article 190(2)(a) SPILA

The challenge of arbitrators has been addressed, to an extent, supra in chapter 9. This subchapter will concentrate on the hitherto unaddressed aspects.

“(The award) can be challenged only: a) If a sole arbitrator was designated irregularly or the arbitral tribunal was constituted irregularly;”931

Article 190(2)(a) SPILA also protects the right to an impartial and independent tribunal.932

“More precisely, it shall protect the parties’ right of access to independent and impartial arbitrators, (. . .)”933

Article 180(1) SPILA gives concrete instances for possible challenges:

“An arbitrator must be challenged: a) If he does not possess the qualification agreed upon by the parties; b) If there exist grounds for challenge in the rules of arbitration adopted by the parties; or c) If

931 Article 190(2)(a) SPILA. 932 Girsberger and Voser, International Arbitration in Switzerland, note 1069;

Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1546; SFCD 129 III 445, para. 3.1.

933 Berger and Kellerhals, International and Domestic Arbitration in Switzerland, note 1546.

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the circumstances permit legitimate doubt about his independence.”934

Much has been said about independence and impartiality of arbitrators.935 LUTTRELL defines bias in international commercial arbitration in two categories: preference for a party and preference for an outcome.936

The arbitrators have an ongoing duty to disclose facts giving rise to concerns regarding bias requires revelation and challenges. 937 Thus, a challenge may be made when new information becomes available.938 For consolidation concerning the same parties, only new grounds should be raised, as decisions have already been rendered.

Parties which are added under Swiss Rule article 4(1)(s.2) have the right to challenge the (new to them) arbitrators on any ground pertinent to them.939 This includes grounds for which the arbitrator has been challenged previously. Any challenge is specific to the party.

For the previous parties of case A this means that, through consolidation, new grounds for challenge may arise. Previously decided challenges are not reopened by virtue of a new party raising the same facts as they pertain to them. As an example,

934 It is unnecessary to go into the details of the existence of a concrete

circumstance. This analysis is only concerned with the procedural effect of this article on the consolidated procedure.

935 See e.g. Wilke, Interessenkonflikte in der internationalen Schiedsgerichtsbarkeit Unparteilichkeit, Unabhängigkeit und Offenlegungspflichten.

936 Luttrell, Bias Challenges in International Commercial Arbitration the Need for a “Real Danger” Test, 14 et seqq.

937 Wilke, Interessenkonflikte in der Internationalen Schiedsgerichtsbarkeit, 69; Schramm, Furrer, and Girsberger, “Articles 176 - 194 SPILA,” 180-15.

938 Moses, The Principles and Practice of International Commercial Arbitration, 140.

939 Article 180(2) SPILA.

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Elma Inc. challenged an arbitrator because of his holding stock in Fido Co. If the newly added party Guido Ltd. raises the same challenge again, permission must be granted, as Guido Ltd. cannot be bound by a decision it did not have the opportunity to comment on. This would not only violate the right to an impartial arbitrator, but also the right to equal treatment and the right to be heard.940 However, Elma Inc. should not be allowed to re-comment as the opportunity to do so had already been granted.941

The right to challenge is not lost by the specific waiver in article 4(1)(s.3) Swiss Rules. The waiver only refers to the selection process, not subsequent challenges.942

11.2 Jurisdiction – Article 190(2)(b) SPILA

A challenge of jurisdiction is covered by article 190(2)(b) SPILA. In any given case, arbitrators943 initially must decide on their jurisdiction, should there be a challenge944 as to whether jurisdiction is granted to them to hear a case. This means the arbitrators must decide if a valid arbitration agreement945 exists and whether the dispute at hand falls hereunder.946 This analysis has already treated validity supra in chapter 5.

940 See infra subchapter 11.4. 941 The righ to comment and submit evidence is not limitless. Girsberger and

Voser, International Arbitration in Switzerland, note 674. 942 Even in cases where the arbitrators are chosen by the institution alone, see

LCIA and in Swiss Rules and ICC Rules, the right to challenge based on bias is never waived. It is an expression of most basic due process

943 The concept of competence-competence is followed in most jurisdictions. Girsberger and Voser, International Arbitration in Switzerland, note 409.

944 It will be assumed from hereon out, that there is a challenge, as it has been explained before that consolidation by consent of all parties is possible.

945 SFCD 128 III 50, 54. 946 Moses, The Principles and Practice of International Commercial Arbitration,

88 et seqq.

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Article 190(b) SPILA covers both jurisdiction over the whole dispute and other contentious issues relating thereto.947 The contentious issues encompass which persons and claims are included in the arbitration agreement. 948

This analysis assumes that each contract involved in the consolidated arbitration individually covers the dispute of its arbitration. However, this does not mean that no inquiry into jurisdiction must be made following consolidation.

It has previously been stated with reference to the Dutco949 case, and supra in chapter 5, that the arbitral panel, which is to adjudicate the case, must not only have jurisdiction over each case individually, but also over the type of procedure, i.e., consolidated procedure. In addition, each of the contracts X and Y must also cover the claims raised under the respective other contract. This is so because each party only agreed to arbitrate the issues under its contract with its parties. Extension of this agreement is only permissible within accepted narrow boundaries explained supra in chapter 5. The basic question is always who and what fits under a clause.950 This means that the arbitrators need to (re-)evaluate the extent of the arbitration clause(s) to determine whether that dispute is also covered under the respective other agreement.

947 SFCD 134 III 260, 265; SFCD 118 II 193 195 (Swiss Federal Court 1992). 948 SFCD 134 III 565 567 (Swiss Federal Court 2008); Berti and Schnyder,

“Article 190 SPILA,” 32; Bernard Dutoit, Droit international privé suisse commentaire de la loi fédérale du 18 décembre 1987 - Supplement pour la 4ième édition (Basel: Helbing Lichtenhahn, 2011), notes 190-7.

949 Siemens AG and BKMI Industrieanlagen GmbH v. Dutco Construction Company, 1992 No. 3:.

950 Bernard Hanotiau, “Problems Raised by Complex Arbitrations Involving Multiple Contracts - Parties - Issues,” Journal of International Arbitration 18, no. 3 (2001): 255.

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Whether or not a decision on jurisdiction on the existence and coverage of the individual cases has been made, when new parties are added these parties must be permitted to comment on the jurisdictional decision of the other case. The parties of the first case A must be permitted to comment on the jurisdictional question concerning the second case B.951

In addition, the panel must determine whether a consolidated procedure was indeed agreed upon, as outlined supra in section 7.1.3 Consolidating two cases, the institutional determination only decides whether the procedural prerequisites, such as whether the same rules are applicable, whether the same parties arbitrate in both cases (ICC Rules), whether the timing requirements (ICC Rules) and others are met.952 The scope of an arbitration clause is to be determined in the finding on jurisdiction by the arbitrators, and is subject to a challenge in front of court.

11.3 Incongruence – Article 190(2)(c) SPILA

Article 190(2)(c) SPILA applies when a discrepancy between award and pleas occurs,953 and is of no consequence in this context.

11.4 Equality and the Right to be Heard - Article 190(2)(d) SPILA

Article 190(2)(d) SPILA requires equal treatment and the right to be heard. In Switzerland, the right to be heard is embedded in 951 This is again a question of the right to be heard and equal treatment discussed

in subchapter 11.4. 952 It has been discussed that the institutional decision itself does not confer

jurisdiction in chapters 5 and 9. 953 Schramm, Furrer, and Girsberger, “Articles 176 - 194 SPILA,” 190-10;

Girsberger and Voser, International Arbitration in Switzerland, note 1076.

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article 29(2) of the Swiss Federal Constitution.954 It applies to arbitral proceedings. 955 If the parties are not all heard concerning a question in an adversarial proceeding, these rights will be violated.956 The right to equal treatment and the right to be heard are closely related.957

Each party must have an equal opportunity to present its case, within reasonable non-discriminatory bounds.958 Justified inequalities are permitted.959 The right to equal treatment only means that the parties have to be treated equally in comparable situations.960

The right to be heard is violated if one party cannot bring forth its point of view in the proceedings, making its right of participation meaningless.961 The right to adversarial proceedings guarantees the right to take a position with regard to the allegation of the opposing party.962 The parties must have the opportunity to participate in the proceedings, especially the evidentiary stage, as expression of their right to be heard.963

954 SFCD of 9 June 2009 - Urteil 4A_108/2009 C 2.1 (Swiss Federal Court 2009). 955 SFCD of 7 January 2004; SFCD 127 III 576 2 c (Swiss Federal Court 2001);

SFCD 119 II 386 386, 1b (Swiss Federal Court 1993); SFCD of 19 February 2009 - 4A_539/2008 c. 5.1 (Swiss Federal Court 2009).

956 Ritz, Die Geheimhaltung im Schiedsverfahren nach Schweizerischem Recht, 63; SFCD 130 III 35 35, 38 (Swiss Federal Court 2003); SFCD 117 II 346, 347.

957 SFCD 116 II 639 643 (Swiss Federal Court 1990); Lalive, Poudret, and Reymond, Le droit de l’arbitrage interne et international en suisse édition annotée et commentée du concordat sur l’arbitrage du 27 Mars 1969, 182-6 et seqq.

958 SFCD 129 III 445; Karrer, “Internationale Schiedsordnung der Schweizerischen Handelskammer,” 15-1; SFCD of 11 November 2002.

959 Berti and Schnyder, “Article 190 SPILA,” 61. 960 SFCD of 17 February 2002; SFCD of 10 December 2002; SFCD of 26

November 2002. 961 SFCD 127 III 576, 579 et seq.; SFCD of 23 September 2008 - 4A_178/2008

(Swiss Federal Court 2008). 962 SFCD 130 III 35, 38; SFCD 119 II 386, 388 et seq.; SFCD 117 II 346, 347 et

seq. 963 SFCD 98 Ia 337 (Swiss Federal Court 1972).

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Equal treatment of the parties, guaranteed by articles 182(3) and 190(2)(d) SPILA, implies that the proceedings must be organized and conducted in such a way that each party has the same possibilities to present its case. Under that principle, which also applies to the time limits within which the briefs must be filed, the arbitral panel must treat the parties in the same way at all stages of the proceedings.964

In cases in which the same parties are involved, the procedural adjustments will certainly be fewer, as the parties to case A are the same as to case B and have had the opportunity to comment on each issue. Concerning procedural tactics, parties may have held arguments (and other things) back, or would have adjusted their position depending on the inclusion or exclusion of other cases.965 However, this must remain un-regarded, first, because of the standard that only a “reasonable” opportunity must be granted, not one that covers all eventualities, and second because parties have a duty to cooperate in good faith.966

In cases of addition of parties, concerns for procedural adjustments grow. At this point it is important to remember that only cases with compatible arbitration clauses can be consolidated as outlined supra in subchapter 5.2. Therefore, choice of seat and language of the arbitration does not cause concern.

964 SFCD of 29 February 2008 - 4A.452/2007, para. C. 4.1; Kaufmann-Kohler

and Rigozzi, Arbitrage international droit et pratique à la lumière de la LDIP, note 486. (Emphasis added).

965 Michael Hwang and Katie Chung, “Defining the Indefinable: Practical Problems of Confidentiality in Arbitration,” Journal of International Arbitration 2009, no. 26(5) (2009): 613.

966 Frick, International Arbitration Law Library, 234; Leboulanger, “Multi-Contract Arbitration,” 91.

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11.4.1 File Transfer and Confidentiality

File transfer and confidentiality in arbitral proceedings can be difficult to reconcile. As outlined supra in subchapter 6.1, confidentiality of the proceedings depends on specific party agreement. However, once a party to an arbitration, that party is entitled to equal treatment and the right to be heard. This means that it has access to the documents which have already been exchanged.967 Business secrets and other special documentation are protected in any case by agreement or law outside the lex arbitri.

BAMFORTH argues that disclosure of documents may result in difficulties after consolidation, due to the party autonomy.968 However, absent business secrets, the parties have a right to access and comment on the content of the file. The right to be heard includes the right to introduce evidence and comment on the evidence of another party.969 Reasonable time must be afforded to review and comment.970 These rights would be curtailed if the parties were not granted access to information available to other parties as a matter of course. A consolidation cannot be a legitimate justification for this lack of equal treatment.

967 von Segesser and Schramm, “Swiss Private International Law Act (Chapter

12),” 933. 968 Bamforth and Maidment, “‘All join in’ or Not? How Well Does International

Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 16 et seq. citing a report of the English Departmental Advisory Committee on Arbitration Law.

969 Berti and Schnyder, “Article 190 SPILA,” 69; SFCD 130 III 35, 38; SFCD 119 II 386, 388 et seq.; SFCD 117 II 346, 347 et seq.

970 SFCD of 23 June 2009 - 4A_62/2009 (Swiss Federal Court 2009); SFCD 127 III 576, 579 et seq.; SFCD of 23 September 2008 - 4A_178/2008.

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11.4.2 Procedural Orders

Since they are not awards, procedural orders are not normally subject to direct judicial review.971 An exception is made for the denial of right to be heard or a breach of public policy.972

Procedural orders must be adjusted. When such procedural orders were issued, no res judicata effect ensues, so that the panel can alter its orders.973 However, not every detail must be discussed with the new parties. If the procedural order is based on party consent, the new parties must be permitted to have the same input.

How the lack of such input would endanger the existence of an award, however, is difficult to imagine. A certain impact on the award must have resulted.974 Potential for such impact exists when procedural orders relate to evidence. When arbitration proceedings are organized in such a way as to prevent a party from commenting on new evidence, such is a violation of the right to be heard.975

Parties that come later do not fail to organize themselves properly, but they genuinely have less time and thus have a valid ground for annulment.976 The right to be heard is not

971 Poudret and Besson, Comparative Law of International Arbitration, note 536;

Kaufmann-Kohler and Rigozzi, Arbitrage international droit et pratique à la lumière de la LDIP, note 723; Kurkela and Snellman, Due Process in International Commercial Arbitration, 80 et seq.; SFCD of 11 January 2010 - 4A_258/2009, para. C. 3.1.2; SFCD 128 III 330, 332; SFCD 118 II 359, 360 et seq.

972 Poudret and Besson, Comparative Law of International Arbitration. 973 von Segesser and Schramm, “Swiss Private International Law Act (Chapter

12),” 932. 974 Kurkela and Snellman, Due Process in International Commercial Arbitration,

80 et seq. 975 Otto and Elwan, “Article V(2) NYC,” 388. 976 SFCD of 14 December 2004 - 4P.208/2004 (Swiss Federal Court 2004).

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infringed when the parties fail to follow established procedure.977

The right to adversarial proceedings guarantees the right to take a position with regard to the allegation of the opposing party.978 The parties must have the opportunity to participate in the proceedings.979 The parties must have the right to comment on opponent’s submissions and offer submissions in rebuttal.980 This is especially relevant, as the proper time for preparation must be granted to all parties.

It is therefore vital that the parties could in fact follow these procedures and had time to organize themselves. In many cases, this will require re-organization of the proceedings and re-drafting of the procedural orders.

11.4.3 Oral Testimony and Hearings

When the same parties are involved, the issues that would threaten annulment are not as pressing. Parties have already participated in hearings and had the opportunity to examine. This does not mean that there might not be instances in which additional claims might necessitate re-calling a witness or re-opening a hearing to add submissions pertaining to the new claims. The parties must have the opportunity to participate in the proceedings, especially the evidentiary stage, as expression of their right to be heard.981

977 SFCD of 19 February 2009 - 4A_539/2008, para. c. 5.2. 978 SFCD 130 III 35, 38; SFCD 119 II 386, 388 et seq.; SFCD 117 II 346, 347 et

seq. 979 SFCD 98 Ia 337. 980 von Segesser and Schramm, “Swiss Private International Law Act (Chapter

12),” 934. 981 SFCD 98 Ia 337.

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Concerning the addition of parties, the right to be heard equally within an adversarial proceeding may be threatened. Oral testimony should be repeated to afford each new party the opportunity to question the witnesses. The parties must have the opportunity to participate in the proceedings, especially the evidentiary stage, as expression of their right to be heard.982 Limiting the new parties to transcripts is insufficient. There is no substitute for actual situational perception. The parties would also be treated unequally, as some parties had the opportunity to question directly, while others did not.

The right to present witnesses and their testimony was subject to a recent Swiss Federal Court case. The Swiss Federal Court denied a violation of article 190(2)(d) SPILA,983 but the reasoning of the Swiss Federal Court is instructive for the extent of deference granted to the panel.

In this case, appellant sent various documents, including some written witness statements from two witnesses to the ICC. They were not signed. Respondent asked to cross-examine the witnesses. Shortly before a scheduled hearing it became apparent that the witnesses declined to appear. Appellant sought his assistance of the arbitrator on the basis of the applicable rules. The witnesses continued to be recalcitrant. Respondent witnesses duly appeared and were heard. Subsequently, the arbitrator decided not to accept the unsigned statement as evidence.

“On December 6, 2007 the Arbitrator issued Procedural Order n°2 in which he rejected the Appellant’s request of November 26, 2007. According

982 Ibid. 983 SFCD of 19 February 2009 - 4A_539/2008, para. c. 5.2.

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to the Arbitrator it was inappropriate for the Appellant to file on October 2, 2007 two documents entitled witness statements and to wait until November 15, 2007, i.e. four days before the hearing to point out that they refused to sign the statements. By doing so, the Appellant had given the erroneous impression that V.________ and W.________ were ready to cooperate.”984

While not a case on consolidation, the Swiss Federal Court shows that the parties’ right to present evidence can be restricted quite easily. For the purposes of this analysis, this author must therefore come to the conclusion that a repletion of the oral hearings may be substituted by receiving the file and commenting on the issues therein, thereby waiving the right to a repeat hearing.

Even if the hearing is not fully repeated, the new parties as well should be afforded a hearing on the same issues, as an expression of equal treatment. Any results from the previous hearing should be null and void, so as to create a new replacement hearing.

11.5 Public Policy – Article 190(2)(e) SPILA

The provision was explained supra in section 9.5.3 As previously stated, a violation of procedural public policy occurs if none of the grounds of article 190(2)(a-d) apply.985 The application of public policy requires a severe standard986 No more specific duties than previously stated can be described than would be particular to consolidated cases. 984 Ibid. Translation provided by Praetor.ch. 985 Berti and Schnyder, “Article 190 SPILA,” 77. 986 Satmer, Verweigerung der Anerkennung Ausländischer Schiedssprüche wegen

Verfahrensmängeln, 73.

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11.6 Summary

In a collective procedure, the courts should protect the procedural rights of the participants by adjusting the ordinary two-party procedure.987

“By leaving procedural matters to the arbitrators’ discretion, institutions side-step the hard choices about what exactly it means to conduct a fair and efficient proceeding.”988

Due to the lenient standard applied by the panel with respect to arbitrator decisions, only severe misapplications will lead to annulment. A lack of jurisdictional analysis, or severe cases of inequality in the right to present their case can cause such a result. This author hopes to have effectively provided guidelines drawn from Swiss law.

987 Lucy Gordon-Vrba, Vielparteienprozesse: Kollektive Durchsetzung

gleichartiger, individueller Kompensationsansprüche unter dem Aspekt der prozessualen Effizienz und Fairness (Zurich: Schulthess, 2007), 132.

988 William W. Park, “Arbitration’s Protean Nature: The Value of Rules and the Risk of Discretion,” in Arbitration Insights Twenty Years of the Annual Lecture of the School of International Arbitration, Sponsored by Freshfields Bruckhaus Deringer, ed. Julian D. M. Lew and Loukas A. Mistelis (Alphen aan den Rijn: Kluwer Law International, 2007), 339 Note 17-21.

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12 Procedural Adjustments Required by the New York Convention

Not only the laws of the seat country may lead to an unenforceable award. If the award is to be enforced in the countries chosen for this analysis, Germany or the United States, the NYC in their domestic incarnations989 have some influence on the conduct of the procedure if an enforceable award is to be rendered.990

12.1 Introduction

As a procedural backdrop it is interesting to consider that upon replacement of arbitrators by a court,991 both Germany and the United States require that the proceedings must begin anew.992 Any results of previous steps may only be used at the consent of the parties.993 Insofar as this may be necessary in the context of consolidation, the subject will be discussed in this chapter.

This chapter will treat neither articles V(1)(a) nor (1)(c) NYC, as validity and jurisdiction have been discussed in chapter 5. This analysis will treat neither articles V(1)(e) nor (2)(a) NYC, as they are not implicated.

989 In Germany the NYC was transformed by § 1061(1) GCCP without change.

The United States did likewise in U.S. Code, Title 9, Chapter 2, § 201. 990 Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die

Rechtsprechung US-Amerikanischer Gerichte, 203; Alvarez, “Autonomy of International Arbitration Process,” 6-3.

991 This is similar in situation for the parties of the second case B. For these parties it is as if all arbitrators have been replaced.

992 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 16-33; Pemex-Refinancion v. Tblisi 2004 US Dist. LEXIS 17478 (S.D.N.Y., USA 2004).

993 Nacimiento and Abt, “§ 1034 - Composition of Arbitral Tribunal,” 32.

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According to the New York Convention Article V,

“1. (. . .)(b) The party against whom the award is invoked (. . .) was otherwise unable to present his case; (. . .) or (d) (. . .) the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; ( . . .) 2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: (. . .)(b) The recognition or enforcement of the award would be contrary to the public policy of that country.”

The New York Convention makes international arbitral awards more readily enforceable than foreign judgments.994 United States courts have embraced arbitration wholeheartedly995 and are extremely reluctant to refuse enforcement of international arbitral awards.996 German courts also tend to uphold arbitral awards.997 To ensure the goal of easy enforceability, the exceptions to article V NYC must be interpreted narrowly.998 In

994 Friedland, Arbitration Clauses for International Contracts, 11 et seq.;

Bamforth and Maidment, “‘All join in’ or Not? How Well Does International Arbitration Cater for Disputes Involving Multiple Parties or Related Claims?,” 6.

995 Thomas E. Carbonneau, Alternative Dispute Resolution Melting the Lances and Dismounting the Steeds (Urbana, Ill.: University of Illinois Press, 1989), 105.

996 Thomas E. Carbonneau, “International Arbitration - The United States,” in Internationale Schiedsgerichtsbarkeit, ed. Peter Gottwald, 1997, 889; Lookofsky and Hertz, Transnational Litigation and Commercial Arbitration an Analysis of American, European and International Law, note 871; Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 150.

997 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2148. 998 Rona G. Shamoon and Irene M. TenCate, “Absence of Consent Trumps

Arbitral Economy: Consolidation of Arbitrations under U.S. Law,” American Review of International Arbitration 12 (2001): 55; Barbara Steindl, “Durchsetzung ausländischer Schiedssprüche,” in Praxishandbuch Schiedsgerichtsbarkeit, ed. Hellwig Torggler (Baden-Baden: Nomos, 2007),

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fact only about ten percent of all attempts at hindering enforcement are successful.999

Article V NYC enumerates specific grounds on which a court with secondary jurisdiction may refuse enforcement. In contrast to the limited authority of secondary-jurisdiction courts to review an arbitral award, courts of primary jurisdiction, i.e., the seat country courts, usually the courts of the country of the arbitral situs, have much broader discretion to set aside an award.1000 Under the New York Convention, the rulings of the panel interpreting the parties' contract are entitled to deference.1001

Authors nonetheless warn of consolidation as a source for lack of enforcement.1002 According to VOSER, a concern in multi-party arbitration is also enforceability, which, however, should not be over-emphasized.1003 POUDRET/BESSON believe that consolidation provisions do not endanger enforcement under the NYC.1004

The individual grounds will now be addressed in turn. Articles V(1)(b) and (2)(b) NYC are very similar and neither is based on

note 27; Troy L. Harris, “The ‘Public Policy’ Exception to Enforcement of International Arbitration Awards Under the New York Convention,” Journal of International Arbitration 24, no. 1 (2007): 11; Mistelis and Di Pietro, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958,” 15; Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 55.

999 Albert Jan Van Den Berg, “Refusals of Enforcement under the New York Convention of 1958: the Unfortunate Few,” in Arbitration in the Next Decade, ed. Fabien Gélinas, ICC Special Bulletin 1999 (Paris: ICC Publishing S.A., 1999), 75.

1000 Karaha Bodas Co. L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, vol. 364, para. 27.

1001 Ibid., vol. 364, para. 31. The court provides further references in footnote 27. 1002 Voser, “Multi-party Disputes and Joinder of Third Parties,” 413; Leboulanger,

“Multi-Contract Arbitration,” 70; Öhrström, “Stockholmer Regeln,” 32; Frick, International Arbitration Law Library, 237.

1003 Voser, “Multi-party Disputes and Joinder of Third Parties,” 352. 1004 Poudret and Besson, Comparative Law of International Arbitration, note 249.

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the law of the seat. They will, therefore, be treated together, after article V(1)(d) NYC.

12.2 Agreed Procedure - Article V(1)(d) NYC

Failure to abide by the rules determined by the parties may lead to refusal of recognition and enforcement.1005 This challenge is rarely successful.1006 Further, article V(1)(d) NYC overlaps with article V(1)(b) NYC and (2)(b) NYC.1007

The procedural requirements to be observed are those of the seat country,1008 as outlined supra in chapter 11. Combined with the considerable freedom of the arbitrator to conduct the proceedings described in section 7.1.3, this defense will be hard to prove.1009

As described supra in chapter 5, only in those cases in which consolidation was validly agreed to were the subsequent adjustments in procedure agreed to as well, insofar as they are described in the institutional rules. Consequently, article V(1)(d) NYC does not provide further guidance.

1005 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den

Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 15-33.

1006 Moses, The Principles and Practice of International Commercial Arbitration, 212; Nacimiento, “Article V(1)(d) NYC,” 282.

1007 Nacimiento, “Article V(1)(d) NYC,” 282; Kröll, “§ 1061 - Foreign Awards,” 95.

1008 Alvarez de Pfeifle, Der Ordre Public-Vorbehalt als Versagungsgrund der Anerkennung und Vollstreckbarerklärung internationaler Schiedssprüche unter Berücksichtigung des Deutschen, Schweizerischen, Französischen Und Englischen Rechts sowie des UNCITRAL-Modellgesetzes, 242 et seq.; Lionnet and Lionnet, Handbuch der internationalen und nationalen Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis, 122; Böckstiegel, “Party Autonomy.”

1009 Kröll, “§ 1061 - Foreign Awards,” 95.

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12.3 Due Process and Public Policy - Articles V(1)(b) and V(2)(b) NYC

The abstract evaluation of when due process instead of public policy is violated does not advance the goal of this analysis, as both violations are very similar and will lead to the same basic procedural adjustments. This analysis will nevertheless give a very brief discussion of the distinction between the two provisions for the sake of accuracy. After this overview a description of the content of the provisions shall be given, followed by the impact thereof on arbitral procedure. In order to maintain a separation of the two concepts, this analysis shall refer to due process violations when article V(1)(b) NYC is meant, and violation of public policy when article V(2) NYC is referred to.

12.3.1 Overview

Much overlap exists between the defenses of article V(1)(b) and V(2)(b) NYC.1010 Article V(1)(b) NYC is more specific1011 and should precede article V(2)(b) NYC in any analysis. Furthermore, article V(1)(b) NYC must be raised by the parties,

1010 Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 18; Lachmann,

Handbuch für die Schiedsgerichtspraxis, notes 2106, 2582; Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 15-1; Kröll and Kraft, “§ 1059 - Setting Aside of Awards,” 42; Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 55; Shamoon and TenCate, “Absence of Consent Trumps Arbitral Economy: Consolidation of Arbitrations under U.S. Law,” 67; Steindl, “Durchsetzung ausländischer Schiedssprüche,” 23, citing OLG Köln 23.04.2004, YCA XXX (2005) 560.

1011 Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 175.

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while public policy concerns can be raised either by the parties or by the court ex officio.1012

The difference in content between the articles V(1)(b) and V(2)(b) NYC is twofold: First, article V(1)(b) NYC concerns violations of due process only, while article V(2)(b) NYC protects all rules and regulations of a country that form "(. . .) the fundamental economic, legal, moral, political, religious, and social standards (. . .)"1013 of the enforcement countries.1014 Second, not all V(1)(b) NYC violations are grave enough to be violations of V(2)(b) NYC, so that there is a certain discrepancy.1015

This means, as to the first point, that article V(2) NYC is broader because it protects more kinds of violations;1016 and as to the second, that it is narrower in its protection of due process violations than the due process provision. Due process is part of public policy,1017 but not all due process violations are also violations of public policy.1018

1012 TenCate, “Multi-Party and Multi-Contract Arbitrations: Procedural

Mechanisms and Interpretation of Arbitration Agreements under U.S. Law,” 55; Harris, “The ‘Public Policy’ Exception to Enforcement of International Arbitration Awards Under the New York Convention,” 10; Goldstein and Wilson, “Enforcement of Foreign Arbitral Awards Under United States and English Law,” 633.

1013 Kurkela and Snellman, Due Process in International Commercial Arbitration, 264; Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 66.

1014 Mistelis and Di Pietro, “Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958,” 21; Otto and Elwan, “Article V(2) NYC,” 389; GFCD of 5 May 1986 - III ZR 223/84; GFCD 123, 268, 1993 Neue Juristische Woche 1993, 640, 270 (German Federal Court ).

1015 Kröll, “§ 1061 - Foreign Awards,” 68. 1016 Ibid., 121; Petrochilos, Procedural Law in International Arbitration, note

4.05. 1017 Schwab and Walter, Schiedsgerichtsbarkeit systematischer Kommentar zu den

Vorschriften der Zivilprozessordnung, des Arbeitsgerichtsgesetzes, der Staatsverträge und der Kostengesetze über das privatrechtliche Schiedsgerichtsverfahren, notes 15-1.

1018 Kröll, “§ 1061 - Foreign Awards,” 111.

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Yet another difference is the applicable standard of review. Article V(1)(b) NYC applies the law of the enforcement country. Conformity with the lex fori is irrelevant1019 unless it is substantially similar to the enforcement country’s. Article V(2)(b) applies an internationalized version of the enforcement countries’ public policy.1020

12.3.2 Content of Due Process and Public Policy

Arbitral due process involves that the parties know in advance what to expect.1021 Article V(1)(b) NYC allows for the refusal of recognition if a party “(. . .) was otherwise unable to present his case (. . .)”. Being unable to present one’s case has been divided into two categories: a violation of the right to be heard and unequal treatment.1022

A violation of the right to be heard has been defined by the United States Court of Appeals for the Seventh Circuit1023 as a fundamentally fair hearing with minimum standards, a hearing on the evidence, and an impartial decision of the arbitrators. The concept of a fair hearing is stressed under German law also.

1019 Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die

Rechtsprechung US-Amerikanischer Gerichte, 174; Jana, Armer, and Klein Kranenberg, “Article V(1)(b) NYC,” 238; , speaking of lex arbitri as law of the forum: Kröll, “§ 1061 - Foreign Awards,” 69; Parsons & Whittemore Overseas Co. v. Societé Generale de L’Industrie du Papier,508:; , differing: Hans-Jochem Lüer, “German Court Decisions Interpreting and Implementing the New York Convention,” Journal of International Arbitration 7 (1990): 130; Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 651; Iran Aircraft Industries v. AVCO Corp. 980 F.2d 141 (2nd Cir., USA 1992).

1020 Arfazadeh, Ordre public et arbitrage international à l’épreuve de la mondialisation une théorie critique des sources du droit des relations transnationales, 130 et seq. Differing opinions in ...

1021 Park, “Arbitration’s Protean Nature: The Value of Rules and the Risk of Discretion,” 364 Note 17-97.

1022 Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 56.

1023 Generica Ltd. v. Pharmaceutical Basics, Inc., 123 F.3d 1123 (7th Cir., USA 1997).

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Some national laws, among them Germany’s, interpret this as a full opportunity to present one’s case,1024 whereas others only require a reasonable opportunity to do so.1025

It must be guaranteed that the party can actively participate in the proceedings by commenting and submitting its own views and receiving consideration thereon.1026 Some aspects include the right to be duly informed, the opportunity to comment of the relevant facts and points of law, and the right to have one’s arguments considered.1027

No party may be given advantage over the other.1028 This means that the parties of the consolidated case each must have an equal opportunity to present their case,1029 “at a meaningful time and in a meaningful manner”.1030

The right to be heard is not limitless, does not extend to the same breadth as national litigation,1031 and does not entitle a party to obstruct proceedings by dilatory tactics.1032

1024 Mistelis and Di Pietro, “Convention on the Recognition and Enforcement of

Foreign Arbitral Awards (New York Convention), 1958,” 18. 1025 Shamoon and TenCate, “Absence of Consent Trumps Arbitral Economy:

Consolidation of Arbitrations under U.S. Law,” 63. 1026 Kröll, “§ 1061 - Foreign Awards,” 70 et seqq.; GFCD 96, 40 48 (German

Federal Court 1985); GFCD 110, 104; Poudret and Besson, Comparative Law of International Arbitration, note 550; Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 8, 11; GFCD 85, 288 Neue Juristische Woche 1983, 867, 291 (German Federal Court 1982).

1027 Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 9, 12; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1299.

1028 Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 4. 1029 Reinhold Geimer, “§§ 1025 - 1066,” in Zöller Zivilprozessordnung, ed.

Richard Zöller, 27th ed. (Cologne: Schmidt (Otto), 2009), note 2. 1030 Iran Aircraft Industries v. AVCO Corp., 146; Generica Ltd. v. Pharmaceutical

Basics, Inc.,123:. 1031 Generica Ltd. v. Pharmaceutical Basics, Inc., 123:1130; the United States

courts consider the flexibility of arbitration in exchange for certain procedural rights afforded in litigation to be voluntary and acceptable: Goldstein and Wilson, “Enforcement of Foreign Arbitral Awards Under United States and English Law,” 641 et seq.; Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 185.

1032 Sachs and Lörcher, “§ 1042 - General Rules of Procedure,” 14.

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Public policy is not defined in the New York Convention.1033 In 2002, the International Law Association adopted a resolution concerning public policy in the enforcement context.1034 It reads:

“. . . the body of principles and rules recognized by a State, which, by their nature, may bar the recognition or enforcement of an arbitral award rendered in the context of international commercial arbitration when recognition or enforcement of said award would entail their violation on account of either the procedure pursuant to which it was rendered or of its contents.”1035

Article V(2) NYC serves as a catchall to protect the enforcement countries’ interests.1036

“Public policy is a broad concept, covering manifold subjects, constantly changing and likely to draw the

1033 Strong, “Enforcing Class Arbitration in the International Sphere: Due Process

and Public Policy Concerns,” 53; Harris, “The ‘Public Policy’ Exception to Enforcement of International Arbitration Awards Under the New York Convention,” 16; Francesco Trezzini, “The Challenge of Arbitral Awards for Breach of Public Policy according to Art. 190 para. 2 lit. e of the Swiss Private International Law,” in Three Essays on International Commercial Arbitration (Lugano: ADV Publishing, 2003), note 59; Kurkela and Snellman, Due Process in International Commercial Arbitration, 11.

1034 Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 66; Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards (“ILA Final Report”), 2002, available at http://www.ila-hq.org/en/committees/index.cfm/cid/19 (follow link for “Conference Report New Delhi 2002”); Report on Public Policy as a Bar to Enforcement of International Awards (“ILA Interim Report”), 2000, available at http://www.ila-hq.org/en/committees/index.cfm/cid/19 (follow link for “Conference Report London 2000”).

1035 Kurkela and Snellman, Due Process in International Commercial Arbitration, 12 citing the ILA resolution adopted at the 70th conference held in New Dehli, India, April 2-6, 2002.

1036 Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 55; William W. Park and Alexander A. Yanos, “Treaty Obligation and National Law: Emerging Conflicts in International Arbitration,” Hastings Law Journal 58 (2006): 259.

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attention of judicial activists. Public policy is subject to shifting interpretations depending upon political trends.”1037

The public policy defense, however, is narrow.1038 Public policy may encompass procedural and substantive issues.1039 The exact content and application of these principles vary greatly.1040 They will be addressed infra, when applicable.

12.3.3 Causal Nexus

In order to result in refusal of recognition, there must be some effect of the violation on the award. Scholars argue about whether there need be a substantial defect or, with respect to causality, the necessary extent of the effect on the award.1041

For both due process and public policy violations a causal nexus is required.1042 There must be the potential of causality of the violation to the award.1043 In general, it is sufficient that it

1037 Robert Coulson, “So Far, So Good: Enforcement of Foreign Awards in US

Courts,” in Contemporary Problems in International Arbitration, ed. Julian D. M. Lew (Dordrecht: Nijhoff, 1987), 357.

1038 Goldstein and Wilson, “Enforcement of Foreign Arbitral Awards Under United States and English Law,” 631.

1039 Strong, “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns,” 67; Kurkela and Snellman, Due Process in International Commercial Arbitration, 11.

1040 Arfazadeh, Ordre public et arbitrage international à l’épreuve de la mondialisation une théorie critique des sources du droit des relations transnationales, 53.

1041 For an overview see: Nacimiento, “Article V(1)(d) NYC,” 298. 1042 Kröll, “§ 1061 - Foreign Awards,” 112; Kronenburg, Vollstreckung

ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 203; Aden, Internationale Handelsschiedsgerichtsbarkeit, notes 7-23; Kühn, “Aktuelle Fragen zur Anwendung der New Yorker Konvention von 1958 im Hinblick auf die Anerkennung und Vollstreckung ausländischer Schiedssprüche,” 57; Steindl, “Durchsetzung ausländischer Schiedssprüche,” 27; Nacimiento, “Article V(1)(d) NYC,” 298; OLG Hamburg 3 April 1975 AWD 1975, 432 = Yearbook II (1977), 241, 241 (Regional Court Hamburg, Germany 1975); Lachmann, Handbuch für die Schiedsgerichtspraxis, note 1358.

1043 Harbst, Die Rolle der Staatlichen Gerichte im Schiedsverfahren: Ein Rechtsvergleich zwischen dem Englischen Arbitration Act 1996 und

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cannot be excluded that the award would have been different without the violation.1044

American courts favor a substantial prejudice standard,1045 which expresses that the violation must have substantially diminished the chances of success. Substantial prejudice or nexus depends on the gravity of the violation and may be presumed, if it cannot be excluded, that prejudice resulted.1046 In any case, there has to be a potential difference in the outcome.1047

12.3.4 Implications for Procedure

Having discussed the basic tenets of refusal of recognition and enforcement under German and United States law, this analysis will now proceed to the potential impact of the NYC on the consolidated arbitration.

12.3.4.1 Challenge of Arbitrators

Decisions by biased arbitrators violate public policy.1048 The procedure must ensure that all parties had the opportunity to

Deutschem Schiedsverfahrensrecht, 133; Jana, Armer, and Klein Kranenberg, “Article V(1)(b) NYC,” 252; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2612; OLG Stuttgart of 14 October 2003; BayObLG of 23 September 2004; Nacimiento, “Article V(1)(d) NYC,” 298.

1044 OLG Hamburg 3 April 1975; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2586; Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 177.

1045 Campagnie des Bauxites de Guinee v. Hammermills, Inc. U.S. Dist. LEXIS 8046, 16 (D.C. 1992); P.T. Reasuransi Umum Indonesia v. Evanston Ins. Co. 1992 WL 400733, 1 et seq. (S.D.N.Y., USA 1992); Kronenburg, Vollstreckung ausländischer Schiedssprüche in den USA: Die Rechtsprechung US-Amerikanischer Gerichte, 207; Goldstein and Wilson, “Enforcement of Foreign Arbitral Awards Under United States and English Law,” 643 et seq.

1046 Jana, Armer, and Klein Kranenberg, “Article V(1)(b) NYC,” 253. 1047 GFCD 31, 43 48 (German Federal Court 1960). 1048 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration,

notes 5-68.

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challenge, even when added after a challenge had already been decided. Bias is determined between arbitrator and party and not universally.1049 It is therefore necessary to allow all new parties to challenge arbitrators, regardless of the choice to select the arbitrators being taken from the parties.

12.3.4.2 File Transfer and Confidentiality

As stated supra in subchapter 11.4, files need to be transferred to prevent refusal. In a German case, an arbitral panel considered documents not made available to another party; the court refused recognition.1050 A party must be informed about the factual and legal arguments of the other side.1051

As previously discussed supra in subchapter 6.1, a right to secrecy does not impose limitations on the right of access to the file. As a consequence, all materials available to the other parties need to be forwarded to the new parties. As this is already the case under Swiss law, no further adjustments are required.

12.3.4.3 Procedural Orders

As outlined supra in chapter 11.4, procedural orders must be altered when they could have an effect on the outcome and have been drafted with unequal influence.

1049 Otto and Elwan, “Article V(2) NYC,” 369 et seqq. 1050 OLG Hamburg 3 April 1975; Sachs and Lörcher, “§ 1042 - General Rules of

Procedure,” 9; Poudret and Besson, Comparative Law of International Arbitration, note 549.

1051 Otto and Elwan, “Article V(2) NYC,” 388; OLG Hamburg 3 April 1975.

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12.3.4.4 Oral Proceedings

In literature concerning oral proceedings, opinion is divided. SCHLOSSER consider due process to be adequately protected without repetition, while LACHMANN and RASCHKE-KESSLER believe it necessary to do re-hearings to an extent. 1052 The parties have the right to participate in the oral proceeding.1053

This is particularly the case when credibility of witnesses is examined.1054 Neither scholar gives a detailed analysis for these opinions. Violation of the right to be heard is particularly important in the American context, where witness statements have high value.

To the knowledge of this author, no case law exists on consolidated proceedings concerning this topic. This author believes, however, that the right to be heard is not adequately protected if oral hearings are not repeated, or if the parties did not have the opportunity to participate in the hearing at the outset.

The right to participate includes the right to take part in the taking of evidence and commenting on it, whether in documentary form or by witnesses.1055 While presenting one’s case is not impaired when subject matter is limited during questioning of a witness or party,1056 this does not condone absolute lack of questioning, which would be the case in consolidation.

1052 Patricia Nacimiento and Amelie Abt, Ҥ 1039 - Appointment of Substitute

Arbitrator,” in Arbitration in Germany: The Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Kluwer Law International, 2008), note 19 get original sources; Lachmann, Handbuch für die Schiedsgerichtspraxis, note 643; Hilmar Raeschke-Kessler and Klaus Peter Berger, Recht und Praxis des Schiedsverfahrens, 3rd ed. (RWS Verlag, 2002), note 558.

1053 Lachmann, Handbuch für die Schiedsgerichtspraxis, notes 1328, 1418. 1054 Ibid., note 1420; Raeschke-Kessler and Berger, Recht und Praxis des

Schiedsverfahrens, note 558. 1055 GFCD of 26 October 1972 - VII ZR 181/71 (German Federal Court 1972);

Kröll, “§ 1061 - Foreign Awards,” 72. 1056 Generica Ltd. v. Pharmaceutical Basics, Inc.,123:.

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It is true that only abuse of discretion of the panel will be sanctioned, as arbitrators must decide what is relevant;1057 lack of repetition would constitute such abuse.

12.4 Summary

The main influence of the NYC on consolidated proceedings which can be felt stems from articles V(1)(b) and V(2)(b) NYC. Swiss law also requires many of the changes required by the NYC. The enforcement-friendly attitude and the required nexus between the violation and the award make concrete guidance difficult. When case law already exists, this author has provided it.

1057 Laminoirs-Trefilieries-Cableries de Lens v. Southwire Co., 1067 This case is

cited in connection with the NYC even though it was not decided thereunder.

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13 Usefulness of Consolidation Consolidation is useful so long as it serves its functions, which have been outlined supra in chapter 2. This chapter focuses on whether these purposes are met by the consolidation provisions of the ICC and Swiss Rules.

This chapter will first discuss to what extent the purpose of avoidance of contradictory judgments is served. Second, this chapter will move on to determine the time and cost efficiency of consolidation under the provisions, and third, whether truth and justice are served by these consolidating provisions. At the end of this chapter the author will discuss alternatives to consolidation.

13.1 Avoidance of Contradictory Judgments

Avoiding contradictory judgments preserves the faith in an adjudicatory system and is, as such, a good idea. Contradictory judgments do threaten enforceability of awards. It is contrary to public policy if in one jurisdiction two contradictory decisions on the same claim between the same parties exist, if both are equally and simultaneously in execution.1058 If public policy were thus violated, enforcement consequences would follow. Consolidation of cases certainly preempts the existence of contradictions. This author, however, wonders if consolidation is truly the tool of choice in all cases.1059

1058 Geisinger and Frossard, “Challenge and Revision of the Award,” 152 et seq.;

SFCD 127 III 279 283 (Swiss Federal Court 2001); Poudret and Besson, Comparative Law of International Arbitration, note 42 et seq.

1059 Devoting an article to contradictory judgements and how to avoid them: Frank Spoorenberg and Jorge E. Viñuales, “Conflicting Decisions in International Arbitration,” The Law and Practice of International Courts and Tribunals 8 (2009): 91 - 113.

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Cases in which consolidation may have been useful was the series of arbitrations between CMS and LG&E.1060 A major reason why the awards have generated considerable commentary from practitioners and academics alike is that the two panels reached conflicting conclusions on the issue of necessity, despite similar factual backgrounds. Indeed, both cases concerned a number of restrictive measures taken by the Argentine government to cope with the economic crisis that unfolded in Argentina starting in late 1999.

Only an unusual fact pattern like this one will lead to outright conflict of jurisdiction between two panels.1061 Results that appear contradictory to the naked eye may occur even in judicial proceedings. When regarded more closely, the contradiction disappears.

Concepts of which issues or facts have been determined by a judicial decision vary from country to country.1062 While the United States knows a system of issue preclusion, which disallows the same issue decisive for the case to be decided differently in other circumstances,1063 Germany does not have such a concept.1064 The number of cases which, in either litigation or arbitration, would in fact produce contradictory results as interpreted by more than one country at a time, is slight. It is difficult to achieve perfect consistency even in court adjudications.1065

1060 CMS Gas Transmission Co. v. Argentina, ICSID (W. Bank), Case No. ARB/

01/8 (12 May 2005); CMS Gas Transmission Co. v. Argentina, Decision of Annulment, ICSID (W. Bank), Case No. ARB/01/8 (25 Sept. 2007); LG&E Energy Corp. v. Argentina, Decision on Liability, ICSID (W. Bank), Case No. ARB/02/1 (3 Oct. 2006).

1061 McLachlan, Lis Pendens in International Litigation, 214. 1062 McLachlan, Lis Pendens in International Litigation. 1063 Steven S Gensler, Federal Rules of Civil Procedure - Rules and Commentary,

3rd ed. (Eagan, MN: Thomson/West, 2007). 1064 Klaus Reichold and Rainer Hüsstege, “Einleitung II,” in Zivilprozeßordnung,

31st ed. (Munich: C.H. Beck, 2010), note 1 et seqq. 1065 King, “Towards a Uniform International Arbitration Law?,” 293.

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In arbitration, contradictory judgments are not prohibited.

“The world of arbitral decisions is, however, full of inconsistencies (and so are the interests of multiple parties involved).”1066

In fact, this risk is inherent in the arbitral system and must be accepted.1067 Arbitration is not a homogenous system.1068 However, individual categories can be identified, for which consolidation more likely than not avoid contradictions.

In cases of indivisible rights or necessary parties, consolidation could be the only option to avoid a case having to be dismissed entirely. In such cases, avoidance of contradictory results would not be the issue.

In cases of one contract and same parties, the cases could have been brought together. Allowing consolidation could indeed prevent two judgments with the same parties and issues that are directly opposed, even when the same issues are decided differently.

1066 Gerold Herrmann, “Does the World Need Additional Uniform Legislation on

Arbitration,” in Arbitration Insights Twenty Years of the Annual Lecture of the School of Interational Arbitration, Sponsored by Freshfields Bruckhaus Deringer, ed. Julian D. M. Lew and Loukas A. Mistelis (Alphen aan den Rijn: Kluwer Law International, 2007), 263 Note 13-41.

1067 Sometimes parties are aware of the effect and choose to litigate separately nonetheless. This author does not comment at this point on whether these contradictory judgments could both be enforceable at the same time.

1068 Rolf A. Schütze, Ausgewählte Probleme des Deutschen und internationalen Schiedsverfahrensrecht (Cologne: Heymann, 2006), 103; Barton, “The Definition of ‘Precedent’ in International Arbitration,” 13; Ashford, Handbook on International Commercial Arbitration, 191; Mourre, “Precedent and Confidentiality in International Commercial Arbitration: The Case for the Publication of Arbitral Awards,” 41; Perret, “Is There a Need for Consistency in International Commercial Arbitration?,” 34; SFCD 127 III 279, 283.

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In cases of one contract and different parties, the risk of the same issues being decided differently is still present but may not lead to directly contradictory judgments.

In cases of several contracts between the same parties, the risk of contradictory judgments becomes more remote.

In cases of unrelated contracts, there is no risk of contradictory judgments. The more closely the contracts are intertwined, the greater the risk of contradictory judgments.

In cases of several contracts and different parties, the risk of contradictory judgments is remote. Only when the contracts are very closely related, as is sometimes the case in joint ventures, and the issues concern contract interpretation rather than determination of the law and the facts, does there exist a danger of contradictory judgments.

Nevertheless, arbitrators attempt to give the business community a reliable and acceptable standard of international adjudication1069 by taking other judgments into account, even when not forced to do so.1070

The benefit of avoidance of contradictory judgments thus depends on the connections of cases. As pointed out supra in chapter 5, certain presumptions based on the number of parties and the number of contracts can give an indication of a sufficient connection. The ICC Rule provides for a mandatory close connection that reaches the level of one economic transaction. The Swiss Rule, however it may in fact be 1069 Mourre, “Precedent and Confidentiality in International Commercial

Arbitration: The Case for the Publication of Arbitral Awards,” 42. 1070 See chapter 13 for further discussion of possibilites to take the other

proceeding into account.

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administered, does not provide for a mandatory connection. This lack of specific criteria is dramatic with reference to article 4(1)(s.2) Swiss Rules, which does not require the involvement of the same parties or the same contract.

13.2 Efficiency

Efficiency is a major motivating factor in consolidating proceedings in court, although it may not be determinative in arbitration because of arbitration's simultaneous need to consider matters of consent.1071 FRICK doubts whether multi-party arbitration is in fact faster or more efficient.1072

The definition of efficiency in multi-party arbitration is also notoriously vague, referring to everything from the avoidance of duplicative dispute resolution procedures in different fora to the prevention of inconsistent results and minimization of costs.1073 In this context efficiency can be subdivided into time and cost efficiency.

13.2.1 Time

Efficiency is only guaranteed if both cases would be heared one after the other and with the party actually having to dispute in both.1074 This analysis shall assume that efficiency of time means that the consolidated proceeding is not significantly prolonged for any party, in comparison to the original 1071 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally

Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1039.

1072 Frick, International Arbitration Law Library, 231. 1073 Ibid., 230; Leboulanger, “Multi-Contract Arbitration,” 62 et seq.;

Stipanowich, “Arbitration: The ‘New Litigation’,” 343; Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1046.

1074 Frick, International Arbitration Law Library, 235.

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proceeding this party was involved in. This definition has been chosen over the definition that any consolidated proceeding that is shorter than its parts put one after the other. This preference was fueled by the consideration that arbitrations could run parallel. While the total hours spent are closer to running the proceedings one after the other, this presumes that all parties are active in all aspects of all cases. The present definition takes a more party centered than holistic approach.

Time efficiency depends on the stages that the arbitrations have already undergone and the stages which have to be repeated. According to GORDON-VRBA, the usefulness of consolidation of cases in terms of procedural economy is limited by the necessity to grant the right to be heard fully.1075 For this reason a number of scholars suggest limiting consolidation to cases in their earliest stages. HANOTIAU suggests that cases should only be consolidated until they have entered the pleading stage.1076 LET

ET AL. and CONEJERO ROOS suggest that consolidation should not be ordered if two arbitration panels have been constituted.1077 LACHMANN propounds that consolidation should only be permitted when no panel has been constituted, or when both are constituted with the same arbitrators and no progress has been made in either case.1078

As indicated by this analysis, preliminary matters, such as challenge of arbitrators, choice of language and seat, transfer of files and even procedural orders must be adjusted in order to satisfy mandatory lex fori and public policy of the enforcement countries. These changes can be made with limited time and 1075 Gordon-Vrba, Vielparteienprozesse: Kollektive Durchsetzung gleichartiger,

individueller Kompensationsansprüche unter dem Aspekt der prozessualen Effizienz und Fairness, 171. See also supra chapters 12 and 13.

1076 Hanotiau, Complex Arbitrations Multiparty, Multicontract, Multi-Issue and Class Actions, 379.

1077 Conejero Roos, “Multi-party Arbitration and Rule-making: Same Issues, Contrasting Approaches,” 427; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-93.

1078 Lachmann, Handbuch für die Schiedsgerichtspraxis, note 2838.

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work-hours lost. If case A (or B) is uncomplicated or had few issues, it may not be worth the time to repeat, when comparing the hours already past (and progress made) to the hours still required.

Apart from repetition, there is also a concern of incongruence. If one case is very complicated and has many issues, consolidation may result in overburdening the consolidated case. If one case has many issues that are unimportant for the other case (and vice versa), each individual case is prolonged.

As an illustration of the problem, consider case A and B, independent of the parties or contracts involved. The panel in case A has to decide claims 1, 2 and 3. The panel in case B has to decide issues 2, 3, and 4. Consolidation would appear to be reasonable. What happens if case A contains claims 1 – 5 and case B claims 5 – 10? How about case A contains claims 1 – 9 and case B claims 9 and 10?

Many different circumstances are addressed by consolidation and whether they are efficient does not depend so much on hearing all claims together, but on minimizing repetition. The categories presented in chapter 5 are a slight indicator of likelihood of combined claims or issues. Nothing more.

Whether time efficiency would in fact ensue for each party depends on the individual cases. As stated supra in chapter 4, the lack of mandatory connection in the Swiss Rules makes fulfilling of this purpose difficult to predict. A benefit under the ICC Rules is not only the required connection, but also the restriction on the time in which consolidation can be accomplished. Choosing an early procedural stage, rather than a time limit, allows for the flexible approach required. The Swiss Rules do not contain such limitation. It is true that the Swiss

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Rules do not have terms of reference, but the first procedural order could serve the same purpose.

13.2.2 Costs

For many parties costs are an important factor in many decisions,1079 even though only 41 percent of practitioners found arbitration generally less expensive than litigation.1080 In terms of annulment or enforcement, an award to costs does not violate public policy even if not in accordance with prevailing of the parties.1081 Any allocation so unfair as to provoke the application of public policy defenses would be rare. The effect on costs that consolidation can have will therefore be addressed in this section. First the allocation of cost and second the total cost will be treated.

Consolidation is said to save cost and time, although that view is disputed in the arbitral realm.1082 However, the benefits of efficiency in arbitration are not aimed at third parties, the courts, or the public at large. Indeed, that is why arguments based on efficiency rationales have not been uniformly successful when raised in the context of consolidated arbitrations.

1079 John Uff, “Predictability in International Arbitration,” in International

Commercial Arbitration Practical Perspectives, ed. Andrew Berkeley and Jacqueline Mimms (London: Centre of Construction Law & Management, 2001), 152 et seq. Speaking of amendment of claims under the LCIA Proceeding.

1080 Christian Bühring-Uhle, Arbitration and Mediation in International Business, 2nd ed. (Alphen aan den Rijn: Kluwer Law International, 2006), 145.

1081 SFCD 116 II 373 (Swiss Federal Court 1990); SFCD of 9 June 1998 ASA Bulletin 660 (Swiss Federal Court 1998).

1082 Chiu, “Consolidation of Arbitral Proceedings and International Commercial Arbitration,” 55; critical Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1039; Born, International Commercial Arbitration Volume II, 2069 et seq.; Voser, “Multi-party Disputes and Joinder of Third Parties,” 350; Leboulanger, “Multi-Contract Arbitration,” 54.

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Principles of mere efficiency are also often overcome when the consolidated proceeding would involve a third party stranger (either as a party or an arbitrator) to the arbitration, since permitting non-parties to participate in an arbitration would violate the type of proceeding to which the original signatories to the contract agreed.1083

Interestingly, concerns about third party strangers have also arisen in situations in which the strangers involved were the same parties or arbitrators that were involved in the initial arbitration. In these cases, the fact that the parties had agreed to arbitration under different contracts or relating to different types of disputes was sufficient to block consolidation, since it was decided that each of the proceedings was meant to be individual, not combined.1084

Consolidation may be used, like many other tools, as strategic device.1085 Parties may not want to consolidate precisely because of the potential additional cost involved, not only of the repetition of stages but also because it increases attorney’s fees when parties are confronted with issues that are not necessarily of concern for their part of the case.1086 The principle of efficiency must contend with other principles, such as procedural fairness. In order to make any determinations on efficiency, this analysis will first go into more detail.

1083 Hanotiau, “Complex Multicontract-Multiparty Arbitration,” 389 et seq.;

Platte, “When Should an Arbitrator Join Cases?,” 5-8; Frick, International Arbitration Law Library, 237.

1084 Strong, “The Sound of Silence: Are U.S. Arbitrators Creating Internationally Enforceable Awards When Ordering Class Arbitration in Cases of Contractual Silence or Ambiguity?,” 1046.

1085 Haydock, “Mediation and Arbitration for Now and the Future,” 8. 1086 Bone, Robert G, Civil Procedure, 146; Cooley, Arbitration Advocacy, 50.

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13.2.2.1 Allocation of Costs

Neither ICC nor Swiss Rules make provisions for the potential effect of consolidation but rely on general rules. This means that the arbitrators are relatively free to determine the allocation of cost and must fall back on generalized rules.

The panel must take all aspects into consideration to ensure due process and the right to be heard when considering the distribution of costs.1087

The ICC Rules article 31(3) provides:

“The final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.”

The Swiss Rules article 40(1) provides:

“Except as provided in paragraph 2, the costs of arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.”

Costs are not awarded on the basis of individual procedural steps but based on the outcome of the case. Nevertheless, the arbitrators can take into account which parties should be burdened with additional costs caused by the consolidation or incurred before the consolidation took place. The Swiss Rules are worded more flexibly than the ICC Rules in this regard.

1087 Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 6.18.

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It is difficult, however, to make these considerations fair, particularly when new parties are added or procedural steps need to be repeated.

13.2.2.2 Total Cost

Total cost of the arbitration is divided into two blocks, the first being the administrative costs of the institution and the panel and the second the costs of the parties.1088 Even rough estimates of which percentage of the total costs is found with the administration versus the party costs are difficult and have a great range.1089

Most authors and institutions praise consolidation as method of monetary efficiency.1090 While this may certainly be true for some cases, a global statement of such nature cannot be supported and depends on the precise circumstances of the cases. An exact statement would require statistical analysis of data, which is neither currently available nor easily procured.1091 Logical deduction alone supports only the statement that the more the claims involved share facts and legal arguments and the earlier consolidation takes place, the more monetarily efficient a proceeding is.

1088 Bühring-Uhle, Arbitration and Mediation in International Business, 151; Paul

Baumgartner, Die Kosten des Schiedsgerichtsprozesses (Zurich: Schulthess, 1981), 75.

1089 Christian Bühring-Uhle, Arbitration and Mediation in International Business, 2nd ed. (Alphen aan den Rijn: Kluwer Law International, 2006), 151 et seq.

1090 Disagreeing: Born, International Commercial Arbitration Volume II, 2070 et seq.

1091 Detailed information on averages of necessary hours, hourly rates, likelyhood of repetitions, percentage of reusable work and so on would be needed for parallel and consolidated cases. Even the studdy used herein is to be taken with a grain of salt, as its author confesses Bühring-Uhle, Arbitration and Mediation in International Business, 155.

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Arbitral institutions offer a service for a fee, thus they are in essence a commercial organization,1092 often attached to chambers of commerce or associations of legal practitioners.

“Courts and arbitrators are in the same business, namely the administration of justice. The only difference is that the courts are in the public and the arbitrators in the private sector of the industry.”1093

Financial interests of the institutions will speak against consolidation.1094 The total cost for the institution and the arbitrators will indeed be cheaper in comparison to having two full cases next to one another for reasons of cost digression. This saving will be reduced with additional work done (by the arbitrators,1095 as the institutional fee is a flat rate). The more issues are added, the larger the workload of the arbitrator. Any issue present in only one of the cases will thus decrease the margin of savings for combining the cases.

Concerning the cost of the parties, there is no digression, as attorneys are paid at an hourly rate.1096 MOHAN/TECK suggest that in consolidated cases cost may even be higher for (some of) the parties.1097 Attorneys usually make some use of previously drafted memoranda with the same issues for both cases. Only hearing times would create the double cost. The same is true when considering that procedural steps may have to be repeated in order to satisfy due process, which reduces the savings as

1092 Berger and Kellerhals, Internationale und interne Schiedsgerichtsbarkeit in

der Schweiz, note 14. 1093 Bremer Vulkan Schiffbau und Maschinenfabrik v. South India Shipping Corp.

Ltd., 3 W.L.R. 471, 479 (1979). 1094 Aden, Internationale Handelsschiedsgerichtsbarkeit, 137. 1095 Onyema, International Commercial Arbitration and the Arbitrator’s

Contract, 136 et seqq. 1096 Bühring-Uhle, Arbitration and Mediation in International Business, 152. 1097 R. Chandra Mohan and Lim Wee Teck, “Some Contractual Approaches to the

Problem of Inconsistent Awards in Multi-party, Multi-contract Arbitration Proceedings,” Asian International Arbitration Journal 1, no. 2 (2005): 164.

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well. According to BÜHRING-UHLE, lawyers’ time is roughly evenly spread throughout the proceedings, with 19,8 percent of time spent before the constitution of the panel, 16,3 percent of time spent between constitution and first hearing, 26,3 percent of time between the initial hearing and the main evidence hearing, 24,8 percent for hearings, and finally 12,8 percent of time form post hearing to award.1098 This leads to the conclusion that the later consolidation is effected, the less cost efficient it is.

When disputes involve similar subject matter, common questions of law and fact, and related issues and defenses, the advantages of consolidation are apparent.1099 There are no conflicting decisions, no waste through duplication.1100 However, parties that only participate because of a small or limited issue are disadvantaged due to the cost and time involved for them, which they would otherwise not have encurred.1101

13.2.3 Conclusion on Efficiency

Efficiency is a due process principle, but of lesser significance than impartiality or the right to be heard.1102 Whether consolidation is more efficient depends on the individual case in light of the requirement of the lex fori and the enforcement countries’ law. Under the ICC Rules the mandatory criteria provide a modicum of certainty that efficiency is truly served. However, the Swiss Rules, in particular article 4(1)(s.2.), cause 1098 Bühring-Uhle, Arbitration and Mediation in International Business, 152 et

seq. 1099 TenCate, “Multi-Party and Multi-Contract Arbitrations: Procedural

Mechanisms and Interpretation of Arbitration Agreements under U.S. Law,” 137.

1100 Ibid., 137 et seq. 1101 Ibid., 138; Chiu, “Consolidation of Arbitral Proceedings and International

Commercial Arbitration,” 55. 1102 Kurkela and Snellman, Due Process in International Commercial Arbitration,

185.

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concern. The savings decrease, the fewer similarities appear between the cases or the more advanced the proceedings are. Too often the inclusion of more parties or cases to already complex proceedings will prolong the proceedings significantly.1103

13.3 Fairness, Truth and Justice

This author takes a (maybe excessively) cynical view concerning the strength of the principles justice and fairness in arbitration when compared to the other goals pursued. Multi-party proceedings create tension between procedural economy and fairness.1104 It is not fair, and sometimes even impermissible, to consider the total cost or total time spent, rather than the time and cost to the individual. It is true that all facts will be revealed in a consolidated arbitration and tactics become more limited with the gain of access to all information. However, litigation and arbitration are not the same. Arbitration strives to settle a dispute between parties privately, while litigation must also preserve the peace, create predictable rules, preserve its resources and aim at the objective truth.

What is economical for one party or the system may not be for all, so that due consideration should be given to the parties’ wishes.

1103 Detlev Kühne, “ICC Arbitration in Germany,” in Arbitration in Germany: The

Model Law in Practice, ed. Karl-Heinz Böckstiegel, Stefan M. Kröll, and Patricia Nacimiento (Austin, TX: Wolters Kluwer Law & Business, Kluwer Law International, 2007), note 49.

1104 Gordon-Vrba, Vielparteienprozesse: Kollektive Durchsetzung gleichartiger, individueller Kompensationsansprüche unter dem Aspekt der prozessualen Effizienz und Fairness, 117.

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13.4 Alternatives to Consolidation

To determine usefulness, one further piece is missing from this analysis: a comparison to alternatives. Consolidation is not the only tool available to streamline arbitration and avoid contradictory results.

One of the ways often employed in litigation is the prohibition of hearing a case already pending elsewhere, known as lis pendens, or the prohibition to adjudicate the same claim anew, known as res judicata.1105 The application of such principles as res judicata and lis pendens are accepted as general principles of international law.1106

One method is to wait for the outcome in a related case by a stay of the proceedings.1107 Critics consider a stay to cause too much delay and breach the privacy of the process.1108 While this is true for arbitrations that are not between the same parties, it would be effective. Awards rendered in disregard of legally binding previous judgments or awards may constitute a violation of public policy, if the conflict is obvious.1109 Whether cases are consolidated, parallel or subsequently treated, the panels cannot ignore the existence of the other proceedings.1110

A solution often propounded and used for cases which do not meet one or the other criterion for consolidation is parallel

1105 Gallagher, “Parallel Proceedings, Res Judicata and Lis Pendens: Problems and

Possible Solutions,” 335 Note 17-11. 1106 Ibid., 334 Note 17-10. 1107 Michael McIlwrath and John Savage, International Arbitration and Mediation

a Practical Guide (Austin, TX: Wolters Kluwer Law & Business, Kluwer Law International, 2010), notes 1-171 et seqq.

1108 Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-83.

1109 Kröll, “§ 1061 - Foreign Awards,” 128. 1110 Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same

Parties,” 438 et seq.

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arbitration.1111 Parallel cases with the same arbitrators also allow for the arbitrators’ taking other cases into account.1112 The parallel arbitrators would also be unlikely to decide the cases differently.

As pointed out supra in chapter 5, the traditional methods of counter-claims, cross-claims,1113 set-offs and simply bringing all related cases together (accumulation)1114 or adding them by, e.g., the use of article 19 ICC Rules, are also an option to streamline related cases.1115

Another solution for strings of contracts can be found in maritime or commodity arbitrations.1116 The practice is to hold a single arbitration between the first seller and the last buyer, which is then binding on all, including the middle ones.1117

The above-mentioned methods all serve the same purposes as consolidation and are true alternatives, well suited to their particular applications.

1111 Greenberg, Feris, and Albanesi, “Consolidation, Joinder, Cross-Claims,

Multiparty and Multicontract Arbitrations: Recent ICC Experience,” 165; McIlwrath and Savage, International Arbitration and Mediation a Practical Guide, notes 1-171 et seq.; speaking only for LCIA practice: Turner and Mohtashami, A Guide to the LCIA Arbitration Rules, 165.

1112 Craig, Park, and Paulsson, International Chamber of Commerce Arbitration, 180 et seq.

1113 Wenger, “Article 186 SPILA,” 29. 1114 Berger and Kellerhals, International and Domestic Arbitration in Switzerland,

note 533. 1115 Ibid., note 486. 1116 Iris Goldner, “Multi-Party Arbitration,” Croatian Arbitration Yearbook. 8

(2001): 117; Lew, Mistelis, and Kröll, Comparative International Commercial Arbitration, notes 16-85.

1117 Goldner, “Multi-Party Arbitration,” 117.

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13.5 Summary

Tensions between efficiency, party autonomy and the fair administration of justice exist when parties (or cases) are joined.1118 Utilizing the method proposed supra in chapter 5 would ensure the jurisdictional connection between the cases. A jurisdictional connection would in turn insure that a sufficiently close connection between the cases exists to avoid consolidated arbitrations in which one or the other party is involved in issues not pertaining to its case. Ensuring a minimum of tension.

“The worthy desire to secure the rapidity of arbitral proceedings and the finality of awards must be balanced against the equally important need to protect the basic procedural rights.”1119

In the end, only a careful balancing of interests will permit a rule on consolidation to fulfill all its purposes satisfactorily.

When the purposes of consolidation cannot be achieved with certainty, more disadvantages than advantages ensue and consolidation should not be sought.1120 The benefits of consolidation do not necessarily outweigh the necessary adjustments to the agreed procedure,1121 which are drastic.1122 It is this author’s conclusion, therefore, that consolidation should not be expanded, but carefully limited. Other tools are able to fill gaps that consolidation leaves, so that an over inclusive rule, such as article 4(1)(s.2) Swiss Rules, should not stand as is. On

1118 Conejero Roos, “Multi-party Arbitration and Rule-making: Same Issues,

Contrasting Approaches,” 432. 1119 Amazu A. Asouzu, “A Threat to Arbitral Integrity,” Journal of International

Arbitration 12, no. 4 (1995): 160. 1120 Lionnet and Lionnet, Handbuch der internationalen und nationalen

Schiedsgerichtsbarkeit: Systematische Darstellung der privaten Handelsschiedsgerichtsbarkeit für die Praxis.

1121 Chiu, “Consolidation of Arbitral Proceedings and International Commercial Arbitration,” 57.

1122 Frick, International Arbitration Law Library, 237.

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the other hand the ICC Rule prohibits consolidations of cases in a wasteful fashion, if the cases are very closely connected.

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14 Proposed Solutions Many of the issues raised in this analysis could be addressed from the drafter’s side. This means to include not only the contractual drafters but also the drafters of institutional rules.

Arbitration clauses are often midnight clauses.1123 However, even for a midnight clause, suitable examples for consolidation provisions in contracts exist. SCHÜTZE recommends that the parties specify additional procedural rules, even when choosing institutional rules, because there still remains the possibility that parties do not anticipate all procedural rules, thereby influencing their position in the proceeding immensely.1124 Similarly, FRIEDLAND, SHAMOON and TENCATE suggest certain drafting options.1125

14.1 Consolidation Requirements

Practitioners, in the service of their clients, employ more and more tricks they have learned from litigation or other savvy international practitioners. The absence of precise procedural rules in arbitration is considered one of arbitration’s assets.1126 However, PARK suggests that the benefits of arbitrator discretion are overrated.1127 “Unrealistic expectations are resentments waiting to happen.”1128 As the complexity of arbitration grows, its flexibility is lost. In order to maintain the

1123 Blackaby et al., Redfern and Hunter on International Arbitration, note 2.04;

Weigand and Baumann, “Introduction,” 5. 1124 Schütze, Einleitung, in Liebscher, “Wiener Regeln,” 32 p. 13. 1125 Friedland, Arbitration Clauses for International Contracts Chapter 9. This

will be adressed in more detail supra. Shamoon and TenCate, “Absence of Consent Trumps Arbitral Economy: Consolidation of Arbitrations under U.S. Law,” 360.

1126 Park, “Arbitration’s Protean Nature: The Value of Rules and the Risk of Discretion,” 334 Note 17-12.

1127 Ibid., 336 Note 17-16; Uff, “Predictability in International Arbitration,” 151. 1128 Park, “Arbitration’s Protean Nature: The Value of Rules and the Risk of

Discretion,” 337 Note 17-17.

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expectations of practitioners and clients alike, more guidance, more rigidity if you will, is required. RAU states that “pre-arbitral expectations” must be satisfied.1129 The sentiment is echoed by MCILWRATH/SAVAGE and PRYLES/WAINCYMER, who lament the lack of exact circumstances in which the institution will accept or reject consolidation.1130

FAVRE-BULLE advocates, for the sake of predictability, that parties should know what to expect when they choose a system of dispute resolution which allows for consolidation.1131 This is only possible if the discretion afforded to the decision maker is based on prescribed criteria. These criteria should be “reasonably precise” to avoid any surprise and maintain efficiency, while avoiding delay or obstacles to the arbitration process.1132

In this author’s opinion, more guidance should be given by the institutions concerning incompatible clauses and the required connection between the cases. In addition, the Swiss Rules should add timing constraints connected to an early procedural stage as well as connection requirement. In this fashion, many of the procedural problems following consolidation could be minimized.

This author applauds the efforts of the ICC to carefully broaden the scenarios in which consolidation can be used. However, the abandonment of a time restriction was a mistake, as following procedural problems may become more prevalent than up to this point. 1129 Rau, “‘Consent’ to Arbitral Jurisdiction: Disputes With Non-Signatories,”

3.40. 1130 McIlwrath and Savage, International Arbitration and Mediation a Practical

Guide, notes 1-169; Pryles and Waincymer, “Multiple Claims in Arbitration Between the Same Parties,” 482.

1131 Favre-Bulle, “Are Arbitration Proceedings Still Exclusively Reserved for Parties?,” 240 et seq.

1132 Ibid., 241 et seq.

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14.2 Arbitrator Selection

Arbitrator selection can be addressed either by the drafters of arbitration clauses, or by reference of the arbitral rules to their provisions on multi-party selection. Traditionally, arbitration was a contractually agreed upon procedure in which the parties selected an arbitrator to reach a binding resolution of their dispute.1133 However, as the arbitral procedure unfolds, the initial contractual agreement is transformed into a phenomenon with jurisdictional dimensions.1134

Consolidation of cases is just one of the phenomena that arbitration has been faced with. In litigation, consolidation is reasonable and beneficial, because the resources protected belong to the public. In consolidated arbitration only the resources of individuals can be protected, often at the expense of another individual. The justification applicable to litigation does not apply. In order to minimize the occurrences of individual loss due to procedural mechanism, a close link between the issues to be arbitrated in both cases should exist.

The provision on the dismissal of arbitrators added in the proposed Swiss Rule may prove a good tool to deal with inequality in the appointment process, if used in a fashion that ensures equality.

14.3 Procedural Adjustments

Most procedural adjustments can be avoided, when consolidation takes place at an early stage, as suggested supra 1133 Ariana R. Levinson, “Lawyering Skills, Principles and Methods Offer Insight

as to Best Practices for Arbitration,” Baylor Law Review 60 (2008): 6. 1134 Stavros L Brekoulakis, “The Effect of an Arbitral Award and Third Parties in

International Arbitration: Res Judicata Revisited,” American Review of International Arbitration 16 (2005): 179.

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in chapter 13, the efficiency of the consolidated procedure would be increased without the necessity of repetitions.

14.4 Conclusion

Consolidation was intended to make arbitration easier in many ways. In order to achieve this goal, consolidation needs to be applied with care. This analysis has shown that positive effects can be achieved without sacrificing the integrity of the arbitral process, although not in every case.

This analysis began with a reference to litigation and will now go full circle and end with a comparison to litigation and the two-party process.

Consolidation encompasses a number of different scenarios. As varied as the possibilities are, as varied must an answer to the question be whether the concept can be and has been transplanted from litigation to arbitration. In order to achieve more efficiency, more predictability and more fairness, the arbitration process needs to be adapted.

Arbitration is often praised for its flexibility, but flexibility is more and more limited the more complicated a situation becomes. To retain reliability, a certain predictability is needed. Unfortunately, with reliability and predictability, flexibility is lost. The ICC and Swiss Rules on consolidation are good examples.

Under the ICC Rules, the transition has yielded results that are predictable, workable and enforceable, but also very limited in scope. This limited scope in the end denies one of the benefits of consolidation, namely to join cases that are so related that

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their issues appear to be an economic transaction, even though additional parties are involved. The rare number of cases which have been consolidated under the ICC Rules show that the intended benefit is limited. More complex contractual structures cannot be accommodated.

Under the Swiss Rules, the transition has yielded a broad rule, not even paralleled by consolidation provisions in litigation. It allows for maximum flexibility, as all circumstances and all timings are coupled with almost limiting no requirements. The Swiss Rule - current and proposed new - is therefore riddled with difficulties and uncertainties in its application. The permission to consolidate itself requires restricting interpretation to retain validity. The rule on the selection of arbitrators in multi-party situations contains a violation of equal treatment with an invalid waiver. In the proceedings themselves, due to the unlimited timing, the arbitrators are left without guidance and may have to repeat many steps, destroying the intended efficiency and fairness.

Both institutional rules would benefit from slight adjustments to the text of the rules. This author suggests that an adjustment of expectations in what a rule on consolidation should do would yield equally beneficial results. Consolidation in arbitration is yet young. This author is looking forward so seeing how it will develop.

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Lehrgang Zertifikat Hochschuldidaktik (berufsbegleitend)

Jan. – Okt. 2009 ARBER Verlag, Suttgart, D Ausbildung zur Fachanwältin „Handels- und Gesellschaftsrecht“

Berufserfahrung (in umgekehrt chronologischer Reihenfolge)

Seit Sept. 2009 UNIVERSITÄT ST. GALLEN, RWA, LEHRSTUHL FÜR PRIVATRECHT, INTERNATIONALES PRIVAT- UND HANDELSRECHT SOWIE RECHTSVERGLEICHUNG, PROF. DR. MARKUS MÜLLER-CHEN Wissenschaftliche Mitarbeiterin Headcoach HSG-Moot Court Team

Jan. 2009 – Nov. 2010 NIETZER & HÄUSLER RECHTSANWÄLTE, Heilbronn, D Associate / Of Counsel Internationales & USA

Okt. 2007 – Okt. 2008 VISCHER ANWÄLTE UND NOTARE, Zürich, CH

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Foreign Associate (Litigation/Arbitration sowie europäische Verträge und Gesellschaften)

Sept. 2008 LANDGERICHT WALDSHUT-TIENGEN, Referendarsausbildung, D Lehrbeauftragte für "Legal English"

Okt. 2006 – Okt. 2008 LANDGERICHT WALDSHUT-TIENGEN, D Referendarin (Stationen u.a. in Paris und Zürich)

Nov. – Dez. 2006 INTERNATIONALER STRAFGERICHTSHOF (ISTGH), Den Haag, NL Juristin (projektbezogen)

Okt. 2004 – Okt. 2006: UNIVERSITÄT DES SAARLANDES, RECHTS- UND WIRTSCHAFTSWISSENSCHAFTLICHE FAKULTÄT, Saarbrücken, D Lehrbeauftragte für engl. Rechtsterminologie

März 2005 – Dez. 2005: UNIVERSITÄT DES SAARLANDES, LEHRSTUHL FÜR RECHTSINFORMATIK, Saarbrücken, D Wissenschaftliche Mitarbeiterin

Nov. 2003 – Aug. 2004: PUBLIC DEFENDER FOR THE MOUNTAIN JUDICIAL CIRCUIT, USA Assistant Public Defender (Pflichtstrafverteidigerin)

März 2003 – Nov. 2003: PRIVATE PRACTICE, Atlanta, GA, USA Trial Attorney / Prozessanwältin

Okt. 2002 – März 2003: HENRY COUNTY STATE COURT, GA, USA Staff Attorney / Gerichtsschreiberin

Mai 2002 – Okt. 2002: EMORY UNIVERSITY SCHOOL OF LAW, Atlanta, GA, USA Emory Scholar

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Jan. 2002 – April 2002: COUR PERMANENTE D'ARBITRAGE (CPA/PCA), Den Haag, NL Praktikantin

Juni 2001 – Aug. 2001 MORGAN LEWIS & BOCKIUS LLP, New York, USA / Frankfurt GER Praktikantin

Mitgliedschaften · Schiedsrichter bei Lewiatan (polnische

Schiedsinstitution) · RAK Stuttgart · Bar of Georgia · Deutscher Anwalts Verein -

Länderbeauftragte für die USA · Schlichterin beim Mediations- und

Schlichtungszentrum der IHK Franken-Heilbronn

· ASA below 40 · DIS und DIS unter 40 · ICDR Young & International · Arbitral Women

Sprachen · Deutsch Muttersprache

· Englisch Zweisprachigkeit · Französisch Gute Kenntnisse · Spanisch Grundkenntnisse

Lehrveranstaltungen und Vorträge

Ab Herbstsemester 2011 UNIVERSITÄT ST. GALLEN, RWA, CH Lehrbeauftragte für „C. Vis International Commercial Moot Court “

Herbstsemester 2011 EMORY UNIVERSITY

SCHOOL OF LAW, USA Lehrbeauftragte für

„International Commercial Arbitration“ und „International Business Transactions“

Seit Feb. 2011 UNIVERSITÄT ST.

GALLEN, MBA-HSG, CH Lehrbeauftragte für „International Business Transactions“

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Seit Sept. 2009 UNIVERSITÄT ST.

GALLEN, RWA, CH Hilfsdozentin für OR BT, Haftpflichtrecht und Rechtsvergleichung auf Bachelor-, Master- und Doktorandenstufe

Feb. 2011 KONFERENZ „CONFIDENTIALITY V.

TRANSPARENCY IN INTERNATIONAL ARBITRATION“, UNIVERSITÄT WARSCHAU, PL Vortrag „Confidentiality in German Arbitration“

Sept. 2010 UNIVERSITÄT ZÜRICH, SWISS MOOT SCHOOL, CH Unterrichtseinheit "Written Advocacy"

Mai. 2010 UNIVERSITÄT ZÜRICH, CUREM MASTER OF ADVANCED STUDIES IN REAL ESTATE, CH Unterrichtseinheit "Einführung ins Recht“

Veröffentlichungen · Praxishandbuch zum Geschäftsverkehr mit

den USA für deutschsprachige Anwälte, De Gruyter Verlag (in Bearbeitung).

· Authority Allocation – Decision Making Authority of Arbitration Institutions, in: Festschrift für Prof. Dr. Ivo Schwander (in Bearbeitung, erscheint 2011).

· Consolidation in International Commercial Arbitration (Dissertation, Eleven Publishing, erscheint 2011).

· Kommentierung von Art. 1, 2 und 42 Swiss Rules sowie Art. 17, 22, 30 und 31 ICC Rules, in: Manuel Arroyo (Ed.), Arbitration in Switzerland – The Practitioner’s Guide, erscheint 2012 (Co-Autor Markus Müller-Chen).

· Avoidance for Non-conformity of Goods under Art. 49 (1) (a) CISG, in: Stefan Kroll, Loukas Mistelis, Pilar Perales Viscasillas and Vikki Rogers. eds. International Arbitration and International Commercial Law: Synergy, Convergence and Evolution (Kluwer Law International, 2011) (Co-Autor Markus Müller-Chen).

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· Urteilsbesprechung BGE 136 III 360, in: AJP 12/2010 (Co-Autor Thierry Augsburger).

· Cross Cultural Arbitration: Do the Differences Between Cultures Still Influence International Commercial Arbitration Despite Harmonization?, 9 ILSA J. Int’l& Comp. L. (2002).

· Judicial Activism in the ICJ (UN) Charter Interpretation, 8 ILSA J. Int’l & Comp. L., 181 (Fall 2001).

· Cyber Confusion over being haled into Court, The Internet Law Journal, March Issue 2001.