InternatIonal CommerCIal arbItratIon, an IntroduCtIon · international transactions and who do not...

1

InternatIonal CommerCIal arbItratIon, an IntroduCtIon2010

In-house Counsel praCtICal guIde

2 IN-HOUSE COUNSEL PRACTICAL GUIDE 3


table of Contents

5

1 Introduction 7

2 Key points 9

3 Arbitration v. Litigation 10

4 Arbitration - pros 12

Neutrality 12

Expert arbitrators 13

Confidentiality 13

Procedural flexibility - Speed and costs 13

Language 13

Place of arbitration 13

Finality of the award 13

Enforcement 14

5 Arbitration - cons 16

Speed and costs 16

Limited power of arbitrators 17

Multi-party disputes 17

6 The Place of arbitration 18

7 Practical issues 20

Russia 20

India 20

China 20

Hong Kong 21

Singapore 22

Mexico 22

8 The Language of the arbitration 24

9 Ad hoc v. Institutional 26

Ad hoc 26

Institutional 27

Permanency 29

Modern rules of arbitration 29

Qualified staff 29

Reasonable charges 29

10 Some well known institutions 30

The International Chamber of Commerce 30

The London Court of International Arbitration 30

The American Arbitration Association and

the International Centre for Dispute Resolution 30

Singapore International Arbitration Centre 31

International Centre for Settlement of Investment Disputes 31

11 The arbitrators 34

12 The arbitration clause 36

13 The arbitral award 40

Punitive damages 40

Discovery 41

Costs 42

14 Challenge of arbitral awards 44

15 Recognition and enforcement of arbitral awards 46

ANNEX1-PartiestoNewYorkConvention 50ANNEX2-LegislationbasedontheUNCITRAL ModelLawonInternationalCommercialArbitration 56ANNEX3-InstitutionalArbitrationClauses 58ANNEX4-IBARulesonTakingEvidence 62

16 Profile 77


IntroduCtIon 1

Adisputeresolutionclauseisnormallyfoundattheveryendofacontract,evenifthecontract

islargeandcomplexandwasheavilynegotiatedbetweeninternationalparties.Indeed,onenormally

findsthedisputeresolutionclauseinbetweenthefinalandmorepracticalstandardclauses,

almostasanafterthought.

Whennegotiatingandconcludingacontract,noneofthepartiesassumethattherewillbea

conflict.However,shouldaconflictarise,thedisputeresolutionclausewillbethefirstclausethat

thepartieswillreferto.Itwillbethedisputeresolutionclausewhichwilldeterminewhichcourt

ortribunalwillconsidertheeffectivenessofthecontractualrightsandduties.

Thisbookletdealswiththeconsiderationsthatshouldbemadewhenincludingdisputeresolu-

tionclausesininternationalcommercialcontracts.Morespecifically,thisbookletfocusesonthe

considerationstobemadewhenthepartiescontemplatetosolvepossibledisputesthrough

arbitration.

Inthisbookletthefocuswillbeoninternationalarbitration,asinternationalarbitrationissubject

todifferentrulesandcustomsthandomesticarbitration.Itisbeyondthescopeofthisbooklet

todealwiththecomplexitiesoftheconductandproceedingsofthearbitrationitself,withthe

technicalitiesofthevariousarbitrationrulesandwiththeinterpretationofthecaselawwhichhas

beendevelopedbyvariouscourtsandarbitrationinstitutes.

DirkKnottenbelt


decidebetweenarbitrationorlitigation;

decideonasuitableformofarbitration;

draftlitigationclauses;

findyourwayamongproceduralrules;and

avoidmakingmistakesinyourarbitrationclause.

thIs guIde on InternatIonal arbItratIon wIll help you:


arbItratIon v. lItIgatIon

Whendraftingadisputeresolutionclause,thepartiesfirsthavetochoosebetweenarbitration

andlitigation.

Indomesticcontracts,i.e.incontractsbetweenpartiesinthesamestate,itisgenerallyexpected

thatthelocalcourtshavejurisdiction.Indeed,ifthepartiesdonotmakeadifferentchoice,this

willbethecase.

Partiestointernationalcontractswillhavetoagreeonwhatwillhappenifadisputearisesorif

thereisalreadyadisputewhichcannotberesolved.

Generally,andapartfromnegotiatingasolutionorsubmittingthedisputetosomeformof

alternativedisputeresolutionmethod,suchasmediation,thepartiestoacontractcanchoose

betweeneitherlitigationbeforenationalcourtsorarbitrationtosettleanypossibledisputes.

Theconceptofarbitrationissimple.Partiesagreetosubmittheirdisputetoapersonoranumber

ofpersonswhoseexpertiseorjudgementtheytrust.Thepartiesalsoagreethatthedecisionof

thispersonorthesepersonsisfinalandbinding.Thatperson-orthesepersons-willlistentothe

parties,willconsiderthefactsandargumentsandmakeadecision.Inshort,arbitrationisthere-

foreaneffectivewayofobtainingafinalandbindingdecisioninadispute,withoutsubmitting

ittoacourtoflaw.

Whywouldpartieschooseforarbitration,ratherthanforanationalcourtoflaw?

arbItratIon - pros

NeutralityPartiestoaninternationalcontractusuallycomefromdifferentcountries.Althoughsuchparties

sometimesagreeonthejurisdictionofanationalcourt,itisoftendifficulttoagreeonthe

competenceofthecourtofeitherparty’scountryorofacourtofathird,neutralcountry.

Anationalcourthasitsownformalities,itsown

rulesandprocedures.Mostlikelysuchrulesand

proceduresaredevelopedtoonlydealwith

domesticmattersandnotwithinternationalcom-

mercialorinvestmentdisputes.Thenationalcourt

ofonepartywillthereforebeaforeigncourttothe

otherparty.Acourtofathirdcountrywillevenbe

foreigntobothparties.Anynationalcourtwillbe“foreign”toeitheroneorbothoftheparties.

Therefore,ifapartytoaninternationalcontractdoesnotinsistonanagreementtoarbitrate,that

partymayfindthat,whenadisputearises,itwillbeobligedtosubmitaclaiminaforeigncourt,

toemployforeignlawyersand–inmanycases-totranslatethecontract,thecorrespondence

betweentheparties,andotherrelevantdocumentsintothelanguageoftheforeigncourt.

Furthermore,chancesarethatifthecaseproceedstoahearing,thelanguageofthehearingwill

bedifficultforonepartytounderstandwithouttheaidofinterpreters.Consequently,thatparty

mayfeeldisadvantagedinpresentingitscasetothecourt.

Inarbitration,adisputeisnormallydeterminedinaneutralforumratherthaninthecountryof

oneparty.Moreover,eachpartywillbeabletoparticipateintheselectionofthetribunal,whether

thetribunalconsistsofasolearbitratororofthreearbitrators.Thearbitratororarbitratorswillbe

requiredtobestrictlyindependentandimpartial.

Ifthepartieshaveagreedononearbitrator,heorshewillbechosenbyagreementoftheparties,

orbysomeindependentinstitutiontowhichthepartieshaveagreed.

Ifthepartieshaveagreedonthreearbitrators,twoofthemarenormallychosenbytheparties

themselves.Thethirdarbitratorisnormallyselectedbythefirsttwoarbitratorsorbytheoutside

institution.

Inanycase,whetherthetribunalconsistsofonearbitratororofthree,itwillbeastrictly“neutral”

tribunalandneitherpartyshouldfeeltobeatadisadvantageinpresentingitscase.

Expert arbitrators Anotherreasonforpreferringarbitrationtolitigationisthatthearbitratorscanbeselectedfor

theirspecificexpertise,forexampleincaseswherespecifictechnicalknowledge,qualifications

andexperiencearerequired.

ConfidentialityAfurtherreasonwhichmakesarbitrationanattractivealternativetolitigationisconfidentiality.

Contrarytolitigation,whichisopentothepublic,arbitrationisprivate.Theprivacyandconfiden-

tialityofarbitralproceedingsisveryattractivetocompaniesandinstitutionswhichareinvolvedin

internationaltransactionsandwhodonotwishfordisputesorthedetailsofsuchtransactionsto

becomepublic.

Procedural flexibility - Speed and costsInarbitration,thepartiescandeterminetheprocedurewhichbestsuitsthecase.Theyarenot

boundbytheproceduralrulesofnationalcourts.Thisflexibilitycanleadtosavingtimeandcosts.

LanguageThepartiescandeterminethelanguageofthearbitration,whichwillnotonlyapplytothelan-

guageinwhichtheoralhearingswillbeconducted,butalsoinwhichthebriefsandsupporting

documentsmustbesubmitted.

Place of arbitrationRatherthanhavingtosubmittoacourtinthecountryoftheotherparty,thepartiescanagreeto

aneutraloraconvenientplace(oracombinationthereof )toconductthearbitration.

Finality of the awardSubjecttocertainprovisionsofnationallawor

aspecificagreementbetweentheparties,an

arbitralawardisfinal:itwillnot,asisthecase

withcourtjudgments,bethefirststeponan

expensiveladderofappeals.


“Any national court will be

“foreign” to either one or both

of the disputing parties.“

“An arbitral award is final: it

will not be the first step on an

expensive ladder of appeals.”

Enforcement Thejudgmentsofalocalcourtcanonlybeenforcedinthatcountry.Insomeinstances,ifthat

countryispartytoatreatyforthereciprocalenforcementofcourtjudgments,thejudgmentcan

beenforcedinothercountries.Mostcountriesare,however,partytoonlyalimitednumberof

suchtreaties.Forinstance,theNetherlandsispartoftheEuropeanUnion,onthebasisofwhich

aDutchjudgmentcanbeenforcedin27Europeancountries2.EnforcingaDutchjudgmentinany

othercountrywillbemuchmoredifficult,timeconsumingandcostly.

Anarbitrationaward,renderedinthe

Netherlands,however,canbeenforcedin

over140countries,undertheprovisionsof

internationaltreatiessuchastheNewYork

Conventionof1958towhichthe

Netherlandsisaparty.

“An arbitration award,

rendered in the Netherlands, can

be enforced in over 140 countries.”


Limited power of arbitratorsIngeneral,arbitratorshavelesspowerthanacourtoflaw.Forexample,thepowertodemandthe

attendanceofwitnessesunderpenaltyofafineorimprisonment,ortoordertheattachmentofa

bankaccountorofassets,arepowerswhichonlystatecourtshave.Theyarenotpowersthatany

stateislikelytodelegatetoaprivatearbitraltribunal,howeverimminentandwellrespectedthat

arbitraltribunalmaybe.

Multi-party disputesArbitrationworksmosteasilywhenthereareonlytwopartiesinvolved-oneastheclaimantand

theotherastherespondent.Anarbitraltribunalhasnopowertojointhirdparties(i.e.persons

whoarenotapartytothearbitrationagreement)intoarbitrationagainsttheirwill.

arbItratIon - Cons

Speed and costsPartiesincreasinglycomplainaboutdelays,particularlyatthebeginningandattheendofthear-

bitration.Atthebeginning,thecomplaintisthatittakestoolongtoconstituteanarbitraltribunal

and,thus,tocommencewiththearbitration.Attheendofthearbitration,thecomplaintisthat

somearbitraltribunalstaketoomuchtimetomaketheiraward.

Forvariousreasons,internationalarbitrationnolongerisarelativelyinexpensivemethodof

disputeresolution.First,thefeesandexpensesofthearbitrator(unlikethesalaryofajudge)must

bepaidbythepartiesandthesechargesmaybesubstantialininternationalarbitrationsofany

significance.

Second,itmaybenecessarytopayadministrativefeesandexpensesofanarbitralinstitution,and

thesetoocanbesubstantialespeciallyifasecretaryorregistrarisappointedtoadministerthe

proceedings.

Finally,itwillbenecessarytohireroomsformeetingsandhearings,ratherthanmakinguseofthe

publicfacilitiesofthecourtsoflaw.Furthercostswillbemadeforcourtreportersandtranslators.

Ontopofthat,thepartieswillhavetobearthecostsforthefeesandexpensesoftheirlegaladvi-

sorsandexpertwitnesses.Inmajorarbitration,thesemayeasilyrunintomillionsofdollars.

Assuch,internationalarbitrationisun-

likelytobecheaperthanproceedingsin

acourtoffirstinstance.However,arbi-

trationisaformof“one-stopshopping”.

Althoughtheinitialcostsarenotlikely

tobelessthanthoseofproceedings

incourt,thecostsofaninternational

arbitrationmaywellcomparefavorably

tothecostsofpursuingaclaimthrough

costlyappealstosuperiornationalcourts.


“The one-stop-shop of international

arbitration is often less costly than

pursuing a claim through appeals in

national courts.”

the plaCe of arbItratIon

Assumingthatthechoicehasbeenmadetoarbitrate,thesecondchoicetobemadewhen

draftinganarbitrationclause,istodeterminetheplaceofarbitration.

Thelegalplaceor“seat”ofthearbitrationdeterminesthelawwhichwillgovernthearbitration

(lex arbitri).Sinceinternationalarbitrationsusuallytakeplaceincountriesthatare“neutral”,thelaw

whichgovernsthearbitrationsnormallyisdifferentfromthelawthatgovernsthecontract,i.e.

themeritsofthedispute.

The lex arbitri,thus,willcoverissuessuchas:

–thedefinitionandformofanarbitrationagreement;

–whetheradisputecanbearbitrated(arbitrability);

–theconstitutionofatribunalandthegroundstochallengethetribunal;

–equaltreatmentoftheparties;

–interimmeasures;

–therighttoahearing;

–courtassistance,ifrequired;

–thevalidityofanawardandtherighttochallengeanaward.

Thechoicefortheplaceofarbitrationcanhaveserious

consequencesandcareshouldbetakenthatlocalcourts

willenforcetheawardandnotundulyinterferewith

thearbitration.Assuch,partiesshouldavoidlocatingan

arbitrationincountrieswhicharenotsignatoriestothe

NewYorkConvention(1958).3

New York Convention of 1958

The New York Convention of 1958 is the most important international treaty relating to inter-

national commercial arbitration. It is one of the cornerstones of international arbitration; and it

is no doubt because of the New York Convention that international arbitration has become the

established method of resolving international trade disputes.

All major trading nations of the world have become party to the New York Convention. At this

moment, the Convention has more than 140 parties.

The New York Convention provides for a more simple and effective method of obtaining recogni-

tion and enforcement of foreign arbitral awards. Although the full title of the Convention suggests

that it is concerned only with the enforcement of foreign awards, this is misleading: the Conven-

tion is also concerned with the recognition

of arbitration agreements. In order to

enforce arbitration agreements, the New

York Convention requires the courts of con-

tracting states to refuse to allow a dispute

that is subject to an arbitration agreement

to be litigated before its courts, if an

objection to such litigation is raised by any party to the arbitration agreement.

Seriousconsiderationshouldbegiventowhetherornotthereisarightofappealtolocalcourts,

permittingsuchcourtstointerferewiththemeritsoftheaward.Ifsuchrightofappealexists,it

shouldbeconsideredifsuchrightcanbeexcludedbyagreementbetweentheparties.

Jurisdictionswhichrequirethattheparties’counselorthearbitratorsshouldbeoflocalnational-

ityoradmittedtothelocalbarshouldalsobeavoided.

Onewaytodeterminewhetheraparticularjurisdictionisarbitratorfriendly,istocheckifthat

countryhasadoptedtheUNCITRALModelLawonInternationalCommercialArbitration(1985).4

UNCITRALModelLaw(1985)

The Model Law was adopted by the United Nations in 1985 and was aimed at the harmonization

of the arbitration laws of the different countries of the world. The Model Law has been a major

success. The text goes through the arbitral process from beginning to end from a simple and

readily understandable form. It is a text that many states have adopted, either as it stands or with

minor changes, as their own law of arbitration. So far, over 60 states have adopted legislation

based on the Model Law.

The UNCITRAL Model Law is based upon

the principle that the local courts in the place of arbitration should support,

but not interfere with, the arbitral process. Oncethelegalissuesrelatingtotheplaceofarbitra-

tionhavebeencontemplated,practicalissuesshouldbeconsidered,suchasgeographical

convenience,availabilityofsuitablearbitrators,locationofwitnessesandevidenceandthe

availabilityofsupportservices,suchashearingrooms,courtreportersandsoforth.

Finally,oncetheplaceofarbitrationhasbeenagreedupon,thepartiesarefreetohavemeetings

andhearingselsewhere.Thiswillnotaffectthechoicefortheplaceofarbitrationand,thus,

ofthelex arbitri.


“The choice for the place

of arbitration can have

serious consequences.”

“The 60 states that have adopted

the UNCITRAL Model Law, are

arbitration-friendly jurisdictions.”


praCtICal Issues

Inthechoiceoftheplaceofthearbitration,thereareanumberofcountrieswithspecificissues.

Itisbeyondthescopeofthispapertogiveanexhaustiveoverview,butbelowthemoreimpor-

tantissuesareaddressedwhichhavearisenwhenselectinganarbitralvenueincertaincountries

outsidethemainstream.

RussiaRussiancourtsaresometimesreluctanttorecognizeandenforceinternationalcommercialarbi-

trationawards.SincethegroundsforrefusingenforcementislimitedbytheNewYorkConven-

tion,contraventionofpublicpolicyoftenservesasthereasonforrejectingenforcement.Insome

instances,courtsinterpretthenotion“publicpolicy”toovaguely.Somecourtstendtoconsider

thecontraventionofmandatoryRussianlawasacontraventionofRussianpublicpolicy.

WherethesubjectofthecontractislocatedinRussia,itmaysometimesbepreferabletochoose

aplaceofarbitrationinRussiaitself.Althoughitmaynotbeeasytheenforcetheawardoutside

Russia,arbitrationinRussiaundertherulesoftheInternationalCommercialArbitrationCourtat

theChamberofCommerceoftheRussianFederation(“ICAC”)maybeconsideredasanalternative

toinstitutionalarbitrationelsewhereforRussian-relateddisputes.Duetotheunpredictabilityof

rulingsofthelocalcourtsandtheuncertainprospectsofenforcement,specialistadviceshould

alwaysbeobtained.

IndiaUntil1996,whenIndiaadoptedtheArbitrationandConciliationAct,Indiancourtshadwiderang-

ingpowerstointerveneinarbitrationproceedings.Althoughthe1996Actaimstoreducecourt

intervention,theIndianSupremeCourthasrenderedanumberofdecisionsinwhichthegrounds

forchallenginganawardhavebeenexpanded.

ChinaAllarbitrationsinChinaareinstitutional.Thepartiesmustchooseanarbitrationinstitutetocon-

ductthearbitration.Theinstitutethenappointsthearbitrators.

PartiesarbitratinginternationaldisputeswithinChinaalmostalwaysdosoaccordingtotherules

oftheChinaInternationalEconomicTradeCommission(“CIETAC”),whichhasavirtualmonopoly

overarbitrationsconductedinChina.

ThelatestversionoftheCIETACrulescameintoeffecton10May1998.Thehearingstendtobe

shortandinformal,withemphasisbeingplacedupondiscoveryofthefactsratherthanlegal

analysis.Lengthyhearingsinvolvingmultiplesessionsoveraperiodofmonthsarealmostun-

heardof.

SomeChinesedomesticarbitrationcommissionsareauthorizedtoacceptinternationalarbitra-

tions,buttheirrulesarelesssophisticatedthanthoseofCIETAC.Itisuncertainwhetherforeign

lawyersmayappearbeforedomesticarbitrationcommissions,andthechoiceofarbitratorsislim-

ited.Moreimportantly,itisnotclearifanawardmadebyadomestictribunalinaninternational

casecanbeenforcedinaNewYorkConventioncountry.IntransactionswithChinesecounterpar-

tieswheretheplaceofarbitrationistobewithinChina,itisthereforeadvisablethatarbitration

clausesrefertoCIETACarbitration.

AwardsmadeoutsideChinainacountrywhichispartytotheNewYorkConventionwillbe

recognizedandenforcedinChina,subject,however,toreviewofboththelocalcourtandthe

SupremeCourt.

Hong KongHongKongisrecognizedasapopularvenueforinternationalarbitrationsinSouth-EastAsia,

mainlyduetoamodernUNCITRAL-basedlaw,theapplicabilityoftheNewYorkConventionand

theavailabilityofhigh-skilledlocalprofessionalsandexcellentfacilities.

Until1997,whenthesovereigntyoverHongKongwastransferredfromtheUKtoChina,awards

madeinHongKongwereenforceableinChinaasforeignawardsundertheNewYorkConvention

withitslimitedgroundsforrefusalofrecognitionandenforcement.Since1997,however,there

havebeenconcernsthataHongKongawardwouldbetreatedasadomesticawardinChina,

thusenablingthepartyagainstwhomenforcementissought,toinvokeamuchwiderrangeof

groundsonwhichtochallengeenforcement.

InNovember1998,theauthoritiesinChinaandHongKongreachedagreementregarding

thereciprocalenforcementofarbitralawards.Untilrecentlyitwasuncertainwhattheactual

effectoftheagreementwas.InNovember2009,China’sSupremePeople’sCourtpublishedthe

“NoticeConcerningQuestionsRelatedtotheEnforcementofHongKongArbitralAwardsinthe

Mainland”,whichclarifiesthatadhocandinstitutionalarbitrationawardsmadeinHongKongare

enforceableinmainlandChina,subjecttocertainspecificgroundsforrefusal.


SingaporeUntiltheamendmentoftheSingaporeLegalProfessionActin1992,foreignlawyerswerenot

allowedtoappearascounselinarbitrationstakingplaceinSingapore.Thathasnowchangedand

foreignlawyersmaynowappearinarbitrationproceedingsinSingaporeprovidedeitherthat

thelawapplicabletothedisputeisnotSingaporelaw,or,ifSingaporelawdoesapply,that

aSingaporelawyerappearsjointlywiththeforeignlawyer.ThishaspushedSingapore’spopularity

andacceptabilityasaninternationalarbitrationvenue,especiallyforarbitrationswhereChina

isaparty.

MexicoMexicoadoptedtheUNCITRALmodellawsomeyearsagoandhasacoreofexpertsinthefield.

MexicoistheLatinAmericanjurisdictionofchoicefortheICC.


the language of the arbItratIon

Ifnochoiceforthelanguageofthearbitrationismade,itwillbeuptothetribunalorthe

arbitrationinstitutetomakethatchoice.Toavoidtheinevitableuncertaintiesoftranslationsand

interpretationsand,thus,toavoidmisunderstanding,thelanguageofthearbitrationshouldbe

seriouslyconsidered.

Whenchoosingthelanguage,considerationshouldbe

giventotheapplicablelawofthecontract,theplaceof

arbitration,thelanguageofthecontract,thelanguage

oftheprincipaldocuments,themothertongueofthe

principalwitnessesandthelanguageofthearbitrators.

“The language of the

arbitration should

be seriously considered.“

ad hoC v. InstItutIonal

Thenextdecisiontobemadeisontheruleswhichwillapplytothearbitration.

Asstatedabove,anyarbitration,whereveritisconducted,issubjecttothelawoftheplaceof

arbitration(lex arbitri).Generally,however,theseruleswillbebroadandnon-specific.Theywillsay,

forexample,thatthepartiesmustbetreatedwithequality,buttheywillnotgointodetailofhow

thisisachievedintermsoftheexchangeofstatementsofcaseanddefense,witnessstatements,

documents,andsoforth.

Therefore,morespecificproceduralrulesarerequiredforwhichthepartieshavethechoice

betweenanarbitrationad hoc,withouttheinvolvementofanarbitralinstitution,oraninstitu-

tionalarbitration,accordingtotherulesofoneoftheestablishedarbitralinstitutions.

Ad hocAnad hocarbitrationisconductedpursuanttorulesagreedbythepartiesthemselvesorlaid

downbythearbitraltribunal.Partiestoanad hocarbitrationmayestablishtheirownrulesof

procedure,providedthattherulestheyagreeupontreatthepartieswithequalityandalloweach

partyareasonableopportunityofpresentingitscase.Draftingownrulesofprocedureisamajor

taskandshouldnotbeundertakenwithoutspecialistadvice.Assuch,itcanbetime-consuming

andexpensiveandfar-reachingmistakescanbemadeiftherulesdonotanticipatecertaincase

relatedproblems.

Alternatively,thepartiesmayagreethatthearbitrationwillbeconductedaccordingtoanestab-

lishedsetofrules,suchastheUNCITRALArbitrationRules(1976).5TheUNCITRALArbitrationRules

areintendedtobeusedbypartieswhowishtoavoidinvolvinganarbitralinstitutionbutwish

touseasetofgenerallyaccepted

rules.Thisensuresaframeworkwithin

whichthetribunalandtheparties

candevisedetailedrules;anditsaves

spendingtimeandmoneyindrafting

aspecialsetofrules.

Properlystructured,ad hocarbitrationshouldbelessexpensivethaninstitutionalarbitration

and,thus,bettersuitssmallerclaimsandlessaffluentparties.Ad hocarbitrationplacesmoreofa

burdenonthearbitrator(s),andtoalesserextentupontheparties,toorganizeandadministerthe

arbitrationinaneffectivemanner.

Adistinctdisadvantageofthead hocapproachisthatitseffectivenessmaybedependentupon

thewillingnessofthepartiestoagreeuponproceduresatatimewhentheyarealreadyindis-

pute.Failureofoneorbothofthepartiestocooperateinfacilitatingthearbitrationcanresultin

anundueexpenditureoftimeinresolvingtheissues.Itisnotdifficulttodelayarbitralproceed-

ings,forinstancebyrefusingtoappointanarbitrator,sothatfromthebeginningoftheproceed-

ingsthereisnoarbitraltribunalinexistence,andnorulesavailabletodealwiththesituation.In

thatcase,apartymayseekcourtinterventionandthelitigationcostsnegatenotonlythecost

advantageofad hocarbitrationbutalsotheparties’intentiontoarbitrate.

InstitutionalAninstitutionalarbitrationisoneinwhichaspecializedinstitutionwithapermanentcharacter

intervenesandassumesthefunctionsofaidingandadministeringthearbitralprocess,aspro-

videdbytherulesofthatinstitution.Itispertinenttonotethattheseinstitutionsdonotarbitrate

thedispute,itisthearbitratorswhoarbitrate,andsothetermarbitrationinstitutionissomewhat

inappropriateasonlytherulesoftheinstitutionapply.

Theadvantagesofinstitutionalarbitrationareapparent.Foremostare:(i)availabilityofpre-estab-

lishedrulesandprocedureswhichassurethatarbitrationwillgetoffthegroundandproceedto

conclusionwithdispatch;(ii)administrativeassistancefrominstitutionsprovidingasecretariator

courtofarbitration;(iii)listsofqualifiedarbitrators,oftensplitupinfieldsofexpertise;(iv)appoint-

mentofarbitratorsbytheinstitutionshouldthepartiesrequestit;(v)physicalfacilitiesandsupport

servicesforarbitrations;(vi)assistanceinencouragingreluctantpartiestoproceedwitharbitration

and(vii)anestablishedformatwithaprovenrecord.

ThebestknowninternationalarbitrationinstitutesaretheInternationalChamberofCommerce

(ICC),theLondonCourtofInternationalArbitration(LCIA),

theInternationalCentreforSettlementofInvestment

Dispute(ICSID),andtheAmericanArbitrationAssociation

(AAA).Therearealsoregionalarbitralinstitutionsandthere

areChambersofCommercewithanestablishedreputation,

suchasinStockholm,SwitzerlandandVienna.


“The UNCITRAL Arbitration Rules can

be used by parties who wish to avoid

involving an arbitral institution.”

“An arbitral institute can

effectively deal with an

obstructing party.”


Byincorporatingtheapplicabilityoftherulesofsuchinstitutionsintoacontract,thepartiesincor-

porateadetailedbookofrules,whichwillgovernanyarbitrationthatmaytakeplaceinthefuture.

If,atsomefuturestage,anarbitratorischallengedonthegroundsoflackofindependenceor

impartialityorifonepartyprovesreluctanttogoaheadwitharbitrationproceedingsandrefuses

toappointanarbitrator,itwillneverthelessbepossibleforthepartyorpartieswhowishtofilea

claimtodosoeffectively.Therewillbeasetofrulestoregulateboththewayinwhichthearbitral

tribunalistobeappointedandthewayinwhichthearbitrationistobeconductedandcarried

throughtoitsconclusion.

TheclauserecommendedbytheICC,forinstance,states:

All disputes arising in connection with the present contract shall be finally settled under the Rules

of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbi-

trators appointed in accordance with the set of rules.

Ruleslaiddownbytheestablishedarbitralinstitutionswillgenerallyhaveprovedtoworkwell.

Theruleswillhaveundergoneperiodicrevisioninconsultationwithexperiencedpractitioners,

takingintoaccountnewdevelopmentsinthelawandthepracticeofinternationalarbitration.

Someinstitutions,suchastheICC,reviewthearbitraltribunal’sawardindraftform,beforeitis

senttotheparties.Suchareviewservesasameasureof “quality control”.Theinstitutiondoesnot

commentonthesubstanceoftheaward,ordoesnotinterferewiththedecisionsofthearbitral

tribunal,butitdoesensurethatthetribunalhasdealtwithalltheissuesbeforeitandthatits

awardalsocoverssuchmattersasinterestandcost.

Institutionalarbitrationhassomedisadvantages.Undermostinstitutionalrules,thepartiesnot

onlypaythearbitrators,butalsotheinstitution,whichincreasesthecostsofthearbitration.

Further,certainrulesprovideforcertainstepstobetakeninthearbitrationbeforebeingableto

proceed,whichmayleadtoadelayofthearbitration.

Giventhegreatnumberofarbitralinstitutionsorcentresintheworldandthefactthatnewones

continuetocomeintoexistence,itisnotpracticaltolistthemall.Thereare,however,certain

considerationswhichthepartiesshouldhaveinmindwhenchoosinganarbitralinstitution.The

basicrequirementsforanarbitralinstitutionarethefollowing.

PermanencyDisputesbetweenpartiestoanagreementfrequentlyarisemanyyearsaftertheagreementwas

made,particularlyinmajorprojectagreementsandinlong-termcontracts.Itisimportantthat

theinstitutionwhichthepartiesagreeshouldadministerthearbitrationisstillinexistencewhen

thedisputearises.Otherwisethearbitrationagreementmayprovetobe “inoperative or incapable

of being performed”,asstatedintheNewYorkConvention.

Modern rules of arbitrationThepracticeofinternationalarbitrationchangesanddevelops,asnewlaws,rules,andprocedures

comeintoexistence.Itisimportantthattherulesofthearbitralinstitutionshouldbeup-to-date

toreflectthesechanges.

Qualified staffOneoftheimportantmeritsofinstitutionalarbitrationisthatthepartiesandthearbitratorscan

seekassistanceandadvicefromtheinstitutionalstaff,responsibleforadministratinginternational

commercialarbitrationsundertheinstitutionalrules.Thisassistancemayextendnotonlyto

explainingtherules,butalsotomakesurethattimelimitsareobserved,feesarecollected,visas

arrangedandaccommodationreserved.

Reasonable chargesSomearbitralinstitutionsassesstheirownadmin-

istrativefeesandexpensesandthefeespayableto

thearbitratorbyreferringtoaslidingscalebased

ontheamountsindispute.Otherinstitutions,such

astheLCIA,assesstheiradministrativecostsand

expensesandthefeesofthearbitratorsbyreferring

tothetimespentonthecase.

“An arbitral institute bases its

fees on either the amount in

dispute or the time spent.”


some well known InstItutIons

The International Chamber of Commerce6 TheInternationalCourtofArbitrationoftheInternationalChamberofCommercewasestablished

inParisin1923.TheICCCourtdoesnotdecidemattersbutappointsarbitraltribunalstodealwith

suchmatters.TheICCisknownfortwospecificfeatures,namelytheTermsofReferenceandthe

scrutinyofawards.

TheTermsofReferencearedrawnupatanearlystageofthearbitrationandsetsout,inter alia,the

namesandaddressesofthepartiesandtheirrepresentatives,asummaryoftheirclaims,theplace

ofarbitration,andalistofissuestobedetermined.Thishelpstofocustheattentionofboththe

partiesandthearbitratorsonwhatisreallyatstake.

Whenthearbitraltribunalisreadytodeliveritsaward,thetribunalisrequiredtosubmititindraft

formfor “scrutiny”bytheICCCourt.TheCourtdoesnotinterferewiththearbitrator’sdecisionbut

checkstheformalcorrectnessoftheaward,toensurethatitdealswithallthematterswithwhich

itisrequiredtodealandthattherearenoobviousmisprintsorarithmeticalerrors.

ThefeesandexpensesoftheICCandthearbitratorsarecalculatedonthebasisoftheamountin

dispute.

The London Court of International Arbitration7 TheLCIAwasfoundedin1892.TheLCIA,liketheICC,doesnotdecidemattersbutappoints

arbitraltribunals.

ThefeesoftheLCIAandthearbitratorsarecalculatedonthebasisoftimespent.

The American Arbitration Association and the International Centre for Dispute Resolution8 TheAAAwasestablishedin1926.Inordertodealwiththedramaticexpansioninthenumberof

disputesbeingreferredtointernationalarbitration,theAAAestablishedaseparateinternational

division:theICDR.IthasacentrallocationinNewYorkwithofficesinDublinandMexicoCity.

AAAarbitrationsaddressavarietyofindustry-specificsituationsthroughgeneralcommercialand

industry-specificrules.

TheadministrativefeesoftheAAAarecalculatedonthebasisoftheamountindispute.AAA

arbitratorsarecompensatedonthebasisoftimespent.

Singapore International Arbitration Centre9

Asdiscussedabove,internationalarbitrationinSingaporeusedtobelessfavoredduetorestric-

tionsontheappearanceofforeigncounsel.SincesuchrestrictionshavebeenremovedtheSIAC

hasincreasedinpopularity,alsoasanalternativetoHongKongarbitration.

ThefeesandexpensesoftheSIAandthearbitratorsarecalculatedonthebasisoftheamount

indispute.

International Centre for Settlement of Investment Disputes10

Sinceitsinception60yearsago,theprincipalaimoftheWorldBankhasbeentostimulatethe

economicgrowthandsocialdevelopmentofdevelopingcountriesthroughtheprovisionof

financialresourcesandthestimulationofprivateinvestment.

Asaresult,theWorldBankhasovertimebeenincreasinglyrequiredtofacilitatetheamicableset-

tlementofdisagreementsthatarosebetweenprivateinvestorsandstates.Onthatbasis,in1965,

theConventionontheSettlementofInvestmentDisputesbetweenStatesandNationalsofOther

Stateswasdrafted,therebycreatingICSID.

ICSIDisanautonomousintergovernmentalorgan,withitsowngoverningbody,theAdministra-

tiveCouncil,andaSecretariat.ICSIDdoesnotarbitratedisputes.Rather,theseresponsibilitiesare

carriedoutbyarbitrationtribunals,whicharecreatedonan “ad-hoc” basisbythepartiesforeach

individualproceeding.Assuch,thefunctionsofICSIDarebasicallythoseofasecretariatproviding

supporttothetasksofthearbitraltribunals.

Inthepast50years,ICSIDhasbecometheleadingarbitralforumonaninternationallevelfor

theresolutionofdisputesbetweeninvestorsandstates.Thisisdueinlargeparttothesixmain

characteristicsoftheCentre.

First,theuniversalityofICSID’ssystem.ICSIDcurrentlycomprises142memberstates.Thevast

majorityofbilateralinvestmenttreaties(BITs)containdisputesettlementprovisionswithconsents

fromthestatepartytoarbitrationadministeredbyICSID.


Second,theuniqueandautonomouslegalframeworkoftheinstitution.ICSIDisbasedexclusively

onitsownconstitutingtreaty,theICSIDConvention,andissubjecttoitsownrules,theICSID

RulesofProcedure.ICSIDisoneofthefewinternationalforumstowhichinternationalinvestors

havedirectaccess.ThatistosaythatinordertoaccessICSID,aninvestordoesnotneedtogo

throughgovernmentalchannels,butcandosodirectly.

ThethirdcharacteristicofICSIDisthatitisaspecializedforum,limitedtoinvestmentrelated

disputesofalegalnature.

ThefourthcharacteristicofICSIDisitsconsensualnature.TheICSIDConventiondoesnotimpose

anyobligationoncontractingstatestosubmittoarbitralorconciliatorymechanismsofICSID.

Theseobligationsonlyariseonceastatehasexpresslyaccepted,inwriting,thatacertaintypeof

disputeisthesubjectofarbitration.Suchisoftenthecasewithinthecontextofbilateralinvest-

menttreaties(BITs).

ThefifthcharacteristicofICSIDarbitrationisitsindependencefromthejudicialmechanismsof

contractingstates.Inaddition,ArbitralAwardsdictatedbyTribunalsconstitutedinaccordance

withICSIDproceduresarebindingandcannotbereviewedbylocalcourts.Therevision,recti-

fication,interpretationandannulmentofDecisionsandAwardsaretheonlyviableavenuesto

pursue,andtheymustbecarriedoutinaccordancewithICSIDnormsandregulations.

Finally,thesixthcharacteristicofISCIDisitseffectiveness.TheConventionhasgrantedICSIDthe

toolsnecessarytodealwiththepotentiallackofcooperationbyaparty,whichcoulddisruptor

delaythearbitrationprocess.Thecontractingstateshavecometorealizethebindingnatureof

ICSIDAwardsandDecisions,givingthemequalauthorityasdefinitivesentencesemanatingfrom

localcourts.

Thesesixcharacteristics:universality,itslegalframework,specialization,consensualnature,inde-

pendence,andeffectiveness,aretheinternalfactorsthathaveturnedICSIDintothemainarbitra-

tionforumworldwideforthesettlementofdisputesbetweenforeigninvestorsandstates.


the arbItrators

Oncetheformallegalrequirementshavebeenagreedupon,thearbitraltribunalmustbechosen.

Asthequalityofthearbitraltribunalmakesorbreaksthearbitration,thisisanimportantchoice

fortheparties.

Inchoosingtherightarbitrator,notonlyanappropriateknowledgeoftherelevantareaoflaw

isimportant,butalsoanestablishedexperienceinarbitration,particularlyforasolearbitratoror

thepresidingarbitrator,whomusteffectivelytakecontroloftheproceedings.Therightsofthe

parties,andinparticulartherighttoafairhearing,mustbemeticulouslyobserved.Procedural

rulesmustbedraftedaswellasatime-tableforthevariousstepstobetakenduringthearbitra-

tion.Theyarealltasksthatcallforskilland,aboveall,experienceinthepracticeofinternational

arbitration.

Theestablishmentofanarbitraltribunalinvolvesmanyconsiderations.Thereis,first,thequestion

ofnumbers.Shouldtherebeonearbitratorormore?Isthereanygeneralruleastothenumber

ofarbitratorsthatshouldbeappointedordoesthisdependuponthecircumstancesofthe

particulardispute?

Thelawsofsomecountriessensiblyprovidethatthenumberofarbitratorsmustbeuneven.In

commercialcases,thechoiceinpracticeisbetweenoneandthree.Modernpreferenceisfor

internationaldisputestobereferredtoanarbitraltribunalofthreearbitrators,unlesstheamount

indisputeissmall.Eachofthepartieswillusuallyhavetherighttonominateatleastonearbitra-

tor,leavingthethirdarbitratortobechosenbyagreement,bytheappointedarbitratorsorbythe

arbitrationinstitution.

Theadvantagetoapartyofbeingabletonominateanarbitratoristhatitgivesthepartiescon-

cernedasenseofinvolvementinthearbitraltribunal.Eachpartywillhaveatleastone‘judgeof

itschoice’tohearitscase.Thisisparticularlyimportantinaninternationalarbitrationwhere,apart

fromthemeritsofthecase,therearedifferences

inlanguage,traditionandculturebetweenthe

partiesand,indeed,betweenthemembersofthe

arbitraltribunalthemselves.Apartynominated

arbitratorwillbeabletomakesurethatthecase

oftheappointingpartyisproperlyunderstoodby

thearbitraltribunal.Inparticular,suchanarbitrator

shouldbeabletoensurethatanymisunderstand-

ingsthatmayarisebetweenthearbitratorsareclarifiedanddonotleadtoinjustice.Itmayappear

tobedifficultinpractice,butitisquitepossibleforanarbitratortofulfilausefulroleinrepresenting

theinterestofdueprocessofthepartywhonominatedhimorherwithoutsteppingoutsidethe

boundsofindependenceandimpartiality.

Athree-membertribunalismoreexpensivethananarbitrationconductedbyasolearbitrator.

Furthermore,itwillusuallytakelongertoobtainanaward.Ingeneral,however,andespeciallyin

largerarbitrations,anarbitraltribunalwiththreearbitratorsislikelytoprovemoresatisfactoryto

theparties.Indeed,sinceinmostarbitrationsnoeffectiveappealprocedureonthemeritsexists,

theriskofanerroroflaworfactbyathree-membertribunalisfarlowerthaninthecaseofasole

arbitrator.

“Three party appointed

arbitrators instead of one

will help bridge cultural and

language differences.”

Allmajorarbitrationinstitutesprovidefortheirownmodelclauses.

Asageneralpurposemodelclauseforinstitutionalarbitrationmayserve:

Any dispute, controversy, or claim arising out of or in connection with this contract, including any

question regarding its existence, validity, or termination, shall be finally resolved by arbitration un-

der the Rules of [name institute] in force at [the date hereof / the date of the request for arbitration],

which Rules are deemed to be incorporated by reference into this clause.

The tribunal shall consist of [a sole / three] arbitrator[s].

The place of arbitration shall be [city].

The language of the arbitration shall be [language].

Asageneralpurposeclauseforad hocarbitrationcanserve:

1. Any dispute, difference, controversy or claim arising out of or in connection with this agreement

shall be referred to and determined by arbitration in [place].

2. The arbitral tribunal shall be composed of three arbitrators appointed as follows:

– each party shall appoint an arbitrator, and the two arbitrators so appointed shall appoint a

third arbitrator who shall act as president of the tribunal;

– if either party fails to appoint an arbitrator within 30 days of receiving notice of the appointment

of an arbitrator by the other party, such arbitrator shall at the request of that party be appointed

by [the appointing authority];

– if the two arbitrators to be appointed by the parties fail to agree upon a third arbitrator within

30 days of the appointment of the second arbitrator, the third arbitrator shall be appointed by

the [appointing authority] at the written request of either party;

– should a vacancy arise because any arbitrator dies, resigns, refuses to act, or becomes incapable

of performing his functions, the vacancy shall be filled by the method by which that arbitrator

was originally appointed. When a vacancy is filled the newly established tribunal shall exercise

its discretion to determine whether any hearing shall be repeated.

3. As soon as practicable after the appointment of the arbitrator to be appointed by him, and in any

event no later than 30 days after the tribunal has been constituted, the claimant shall deliver to

the respondent (with copies to each arbitrator) a statement of case, containing particulars of his

claims and written submissions in support thereof, together with any document relied on.

4. Within 30 days of receipt of the claimant’s statement of case, the respondent shall deliver to the

claimant (with copies to each arbitrator) a statement of case in answer, together with any coun-

terclaim and any document relied upon.


the arbItratIon Clause

Onceagreementhasbeenreachedonallpreviouslymentionedissues,thepartiescandraftthe

arbitrationclausetobeincludedinthecontract.

Thearbitrationclausewillconstitutetheagreementtoarbitratebetweentheparties.Theagree-

menttoarbitrateisthecornerstoneofinternationalarbitration.Itrecordstheconsentofthe

partiestosubmittoarbitrationwhichisessentialtoconductanyprocessofdisputeresolution

outsidestatecourts.

Therearetwobasictypesofarbitrationagreement:thearbitrationclauseandthesubmission

agreement.Anarbitrationclauselookstothefuture,whereasasubmissionagreementlooksto

thepast.Thefirst,whichismostcommon,isusuallyincludedinthecontractbetweentheparties

andisanagreementtosubmitfuturedisputestoarbitration.Thesecondisanagreementto

submitexistingdisputestoarbitration.

Anarbitrationagreementthatprovides

forinternationalarbitrationmusttakeinto

accounttheinternationalrequirements,

providedininternationalconventions.If

itfailstodoso,thearbitrationagreement,

andanyawardmadeunderit,maynot

qualifyforinternationalrecognitionand

enforcement.

TheinternationalrequirementsarestipulatedintheNewYorkConvention.UndertheConvention

eachcontractingstateundertakestorecognizeandgiveeffecttoanarbitrationagreementwhen

thefollowingrequirementsarefulfilled:

–theagreementisinwriting;

–itdealswithexistingorfuturedisputes;

–thesedisputesariseinrespectofadefinedlegalrelationship,whethercontractualornot;

–theyconcernasubjectmattercapableofsettlementbyarbitration.

“An international arbitration

agreement must take into account

international conventions in order

to be recognised.”


5. Within 30 days of the receipt by the claimant of any statement of counterclaim by the respondent,

the claimant may deliver to the respondent (with copies to each arbitrator) a reply to counter-

claim together with any additional document relied upon.

6. As soon as practicable after its constitution, the tribunal shall convene a meeting with the parties

or their representatives to determine the procedure to be followed in the arbitration.

7. The procedure shall be as agreed by the parties or, in default of agreement, as has been determined

by the tribunal. However, the following procedural matters shall in any event be taken as agreed:

– the language of the arbitration shall be [language];

– the tribunal may in its discretion hold a hearing and make an award in relation to any prelimi-

nary issue at the request of either party and shall do so at the joint request of both parties;

– the tribunal shall hold a hearing, or hearings, relating to substantive issues unless the parties

agree otherwise in writing;

– the tribunal shall issue its final award within 60 days of the last hearing of the substantive issues

in dispute between the parties.

8. In the event of default by either party in respect of any procedural order made by the tribunal, the

tribunal shall have power to proceed with the arbitration and to make its award.

9. If an arbitrator reported by one of the parties fails or refuses to participate in the arbitration at any

time after the hearings on the substance of the dispute have started, the remaining two arbitra-

tors may continue the arbitration and make an award without vacancy being deemed to arise if,

in their discretion, they determine that the failure or refusal of the other arbitrator to participate is

without reasonable excuse.

10. Any award or procedural decision of the tribunal shall, if necessary be made by a majority and, in

the event that no majority may be formed, the presiding arbitrator shall proceed as if he were a

sole arbitrator.

Mistakescaneasilybemade,renderinganarbitrationclauseinvalid.Examplesare:

– The Parties shall seek to amicably resolve any dispute arising out of this agreement as soon as

possible after such dispute occurs.

– If the Parties fail to reach an amicable settlement

pursuant to (1) above, either Party may refer the

dispute to a neutral adviser to resolve the dispute.

– If the Parties fail to resolve the disputes pursuant

to the mechanisms provided for in (1) or (2), either

party may refer the dispute to the ICC London.”

“All disputes and differences originating in connection with the present contract, non-authorized by

negotiations, are subject to final settlement by arbitration of the Dutch court. The applicable right –

Dutch law.”

“The two Parties shall endeavour to carry out the recommen¬dations issued by the conciliation com-

mission for the settlement of their disputes and claims. In case the disagreement persists, the difference

shall be submitted by one or the other Party, to the appropriate Algerian jurisdiction.”

“Disputes hereunder shall be referred to arbitration, to be carried out by arbitrators named by

the International Chamber of Com¬merce in accordance with the arbitration procedure set forth in the

Civil Code of Venezuela and the Civil Code of France, with due regard for the law of the place of arbitration.”

“All questions which cannot be solved by negotiations, are the subject to consideration in the Interna-

tional Arbitration Court in the Hague (Netherlands) according to the legislation of the Kingdom

of Netherlands.”

“All disputes arising out of or in connection with this agency contract shall be finally settled under

the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in

accordance with the said Rules. Arbitration shall be conducted at the Netherlands Arbitrage Instituut,

Rotterdam, the Netherlands.”

“In case of arbitration, the ICC Rules of Arbitration shall apply; in case of litigation, any dispute shall be

brought before the Courts of England.”

“Arbitration, if any, by ICC Rules in London.”

“Disputes to be resolved through arbitration by the AA.”

“All disputes arising out of or in connection with this Bill of Lading shall, in accordance with Chinese

Law, be resolved in the Courts of the People’s Republic of China, all be arbitrated in the People’s Republic

of China.”

“If despite our hopes we are unable to find a basis for agreement at our proposed meetings then we

would agree with your suggestion that arbitration under the auspices of the International Chamber of

Commerce of Paris would be an acceptable alternative solution.”

“Mistakes in your arbitration

clause can render it invalid.”

the arbItral award

Thepowersofanarbitraltribunalarenotnecessarilythesameasthoseofastatecourt.Atribunal

cannotimprisonanyone;nordoesithavethepowertoimposepenaltiesintheformofpayment

offinestothestate.Thesearesovereignpowersconstitutionallyreservedtojudgesappointedby,

andoperatingunder,theauthorityofthestateitself.

Afewissuesmayariseininternationalarbitrationwhichshouldbebroughttotheattentionof

Europeanpartiesagreeingonarbitration.

Punitive damagesInEuropeancivillawcountries,theAmericanconceptofpunitivedamageisalwaysobserved

somewhatcritically.Indeed,underFrench,GermanandDutchlaw,punitivedamagesarenot

recoverable.UnderEnglishlaw,punitivedamagesmaybeawardedonlyincertainlimitedactions

intort.

Theissueofpunitivedamagesraisestwoissues.Thefirstconcernsthepowerofthearbitraltribu-

naltoimposepunitivedamages.Thesecondrelatestoenforceability.

Thequestiononwhetheranarbitraltribunalhasthepowertoimposepunitivedamagesdepends

onthelawoftheplaceofarbitration(thelex arbitri -forinstance,claimsforpunitivedamagesare

permissibleintheUS)andthetermsofthearbitrationagreement.

WhenagreeingtoarbitrationwithaUSparty,itmay,therefore,beadvisabletoexplicitlyexclude

thepossibilitytoclaimpunitivedamages.

Withregardtoenforcement,thequestionis

whetheranawardofpunitivedamageswould

beenforceableundertheNewYorkConvention

inacountrythatdoesnotitselfrecognizesuch

aremedy.Thegroundforrefusalofenforce-

mentwouldbearticleV.2oftheConvention,

whichallowsforrefusalofrecognitionor

enforcementofanawardifrecognitionorenforcementwouldbecontrarytopublicpolicy.


“An arbitral tribunal in the US

or the UK may have the power

to impose punitive damages.”

DiscoveryTheavailabilityofdiscoverydependsonthelawofthejurisdictioninwhichthearbitrationisheld

andtheapplicablerules.Mostinternationalarbitrationrulesprovidethatthearbitratorsmayorder

thepartiestosubmitorexchangedocumentsinadvanceofthehearing.Forexample,theUNCITRAL

Rulesprovidethat

“[a]t any time during the arbitral proceedings the arbitral tribunal may require the parties to produce

documents, exhibits or other evidence within such a period of time as the tribunal shall determine.”

TheICCRulesstate:

“Atanytimeduringtheproceedings,theArbitralTribunalmaysummonanypartytoprovide

additionalevidence.”

TheAAAInternationalArbitrationRulesstate:

“Atanytimeduringtheproceedings,theTribunalmayorderpartiestoproduceotherdocu-

ments,exhibitsorotherevidenceitdeemsnecessaryorappropriate.”

TheLCIARuleslistamongthepowersofthearbitratorstheability

“toorderanypartytoproducetotheArbitralTribunal,andtotheotherparties...anydocu-

mentsorclassesofdocumentsintheirpossession,custodyorpowerwhichtheArbitral

Tribunaldeterminestoberelevant.”

Theserulesreflectthecommonpracticeinin-

ternationalarbitrationwithrespecttodiscovery.

Inshort,somedocumentdiscoveryisgenerally

permitted,eveninarbitrationsinLatinAmerica

wherediscoveryisrarelypermittedinlitigation.

Thedifficultyineverycaseisforthearbitratorsto

determinehowmuchdiscoveryisappropriate.

“It is up to the arbitrators to

determine, on a case-by-case

basis, how much discovery

is appropriate.”


TribunalsnowfrequentlyapplytheprinciplesoftheIBARulesofEvidence,whichgenerallypermit

thepartiestoobtaindocumentsnecessaryforthemtoprovetheircase,buttoavoidthepossibil-

ityoffishingexpeditions.11TheIBARulesofEvidenceprovidethatthepartiesshallfirstsubmitto

eachotherandtheArbitralTribunalthedocumentsonwhichtheyintendtorely.Followingsuch

anexchange,anypartymaysubmittotheArbitralTribunalarequestthattheothersideproduce

additionaldocuments.TherequesttoproducemustbemoredetailedthananAmericanlitigation

documentrequest.

Theuseofelectroniccommunicationhasmadedealingwiththesediscoveryissuessubstantially

moredifficult.Evenwhendiscoveryrequestsarenarrowlyandproperlyframed,theymaystill

requireapartytoreviewandtoproducethousandsofemailexchanges.Thishascomplicated

thearbitrators’taskofdetermining,generallyatarelativelyearlystageofthecase,whatdiscovery

shouldbepermittedandwhatshouldbedeniedasbeingirrelevant,excessiveorimproperfor

otherreasons.Thechallengeforarbitratorsnowwillbetoexercisethiscontrolandtodevelop

innovativetechniques-forexample,potentiallybyrulingthatonlydocumentsfittingcertainelec-

tronicsearchtermsshallbeproduced-inordertoallowdiscoveryofrelevantmaterialwithout

overwhelmingthearbitrationprocess.

CostsAnawardmayincludeanawardofcosts.Costsmaybedividedintotwobroadcategories:the

costofthearbitrationandthecostsoftheparties.

Thecostofthearbitrationusuallyincludethefees,travellingandotherexpensespayableto

theindividualmembersofthearbitraltribunalthemselves,andrelatedexpensesincluding-for

instance-thefeesandexpensesofanyadministrativeinstitutionorofexpertsappointedbythe

tribunal.Alsoincludedinthecostsarethefeesandexpensesofanyadministrativesecretaryor

registrarandanyotherincidentalexpensesincurredbythetribunalfortheaccountofthecase.

Thecostsofthepartiesincludenotonlythefeesandexpensesofthelawyersengagedtorepre-

sentthepartiesinthearbitralproceedings,butalsomoneyspentinthepreparationandpresen-

tationofthecase.Therewillbeotherprofessionalfeesandexpensessuchasthoseofaccountants

orexpertwitnesses,aswellasthehotelandtravellingexpensesofthelawyers,witnessesand

othersconcerned.Copyingchargesandtheexpensesoftelephone,fax,emailandsoonwillalso

formpartoftheparties’so-calledlegalcostsandexpenses.

Insomecountries,suchastheUS,theusualpracticeisforeachpartytobearitsowncosts,

includingthecostsofcallingwitnessesandtosharetheadministrativecostsequally.

Ingeneral,however,theprocedureininternationalcommercialarbitrationisforthearbitral

tribunaltohavepowertorequirethelosingpartytopayorcontributetowardsthelegalcosts

ofthewinningparty.


Somearbitrationrulesprovidefor“internal”challenges.Themostextensiveprovisionforthe

challengeofarbitralawardsbymeansofaninternalreviewprocedureistobefoundintheICSID

arbitrationrules.Incaseofanapplicationfortheannulmentoftheaward,an ad hoccommittee

ofthreemembersisconstitutedbyICSIDtodeterminetheapplication.Iftheawardisannulled,

inwholeorinpart,eitherpartymayaskforthedisputetobesubmittedtoanewtribunal,which

tribunalwillconsiderthedisputeagainandthendeliveranew(andfinal)award.

Challenge of arbItral awards

Whatifanarbitrationislost?Isappealoranyotherreviewpossible?Itdepends.

First,itdependsonwhethertherelevantrulesofarbitrationestablishaninternalappealproce-

dure,asisthecaseinmanymaritimeandcommodityarbitrationsystems.

Second,itdependsonwhetherthelawoftheseatofthearbitrationcontainsanyprovisionsfor

challenginganarbitralaward;and,ifso,onwhatbasis.

Evenwheretherelevantrulesofarbitration

providethatanawardistobefinalandbind-

ingonthepartiesandthatthepartiesagree

tocarryitoutwithoutdelay,thelawofthe

seatofthearbitrationusuallyprovidessome

wayofchallenginganarbitralaward.

Thepurposeofchallenginganawardistohaveitmodifiedinsomewaybythestatecourt,or

moreusuallytohavethecourtdeclarethattheawardistobedisregarded(annulled,orsetaside)

inwholeorinpart.Ifanawardissetasideorannulledbytherelevantcourt,itwillusuallybe

treatedasinvalidandaccordinglyunenforceable,notonlybythecourtsoftheseatofarbitration

butalsobynationalcourtselsewhere.Thisisbecause,underboththeNewYorkConventionand

theUncitralModelLaw,thecompetentcourtmayrefusetograntrecognitionandenforcementof

anawardthathasbeensetasidebyacourtoftheseatofarbitration.

Mostchallengeswillbemadebeforecourts.Althougheachcountrywhichhasalawgoverning

arbitrationwillhaveitsownconceptforchallengingarbitralawards,threegeneralgroundsfor

suchchallengescanbeidentified.

First,anawardmaybechallengedonjurisdictionalgrounds,i.e.thenon-existenceofavalidand

bindingarbitrationclause.

Second,anawardmaybechallengedonwhatmaybebroadlydescribedas“procedural”grounds,

suchasthefailuretogivepropernoticeoftheappointmentofanarbitrator.

Third,anawardmaybechallengedonsubstantivegrounds,onthebasisthatthearbitraltribunal

madeamistakeoflaworonthegroundsofamistakeoffact.

“The national law of the seat of

the arbitration may allow a party

to challenge the arbitral award.”


reCognItIon and enforCement of arbItral awards

Thevastmajorityoftheawardsareperformedvoluntarily.However,ifthelosingpartyfailstocarry

outanaward,thewinningpartyneedstotakestepstoenforceperformanceofit.

Tousetheawardtotakeactionagainstassetsofthelosingparty,theawardmustberecognized

byanationalcourtandsubsequentlybeenforcedagainstthelosingparty.Internationally,itis

generallymucheasiertoobtainrecognitionandenforcementofaninternationalarbitralaward

thanofaforeigncourtjudgment.Thisisbecausethenetworkofinternationalandregional

treatiesprovidingfortherecognitionandenforcementofinternationalarbitralawardsismore

wide-spreadandbetterdevelopedthan

correspondingprovisionsfortherecogni-

tionandenforcementofforeignjudgments.

Indeed,thisisoneoftheprincipaladvan-

tagesofarbitrationasmethodofresolving

internationalcommercialdisputes.

Theenforcementofanarbitralawardinthecountrythatistheseatofarbitrationisusuallyarela-

tivelyeasyprocess.Itgenerallyinvolvesthesameprocessesasarerequiredfortheenforcement

ofanawardinadomesticarbitration.Enforcementofanawardthatisregardedbytheplaceof

enforcementasa“foreign”or“international”awardisamorecomplexmatter.

Courtproceedingsaregenerallynecessarytoobtainatitleonthebasisofwhichstepscanbe

takenagainstthedefaultingparty.

Ofcourse,withintheEuropeanUnion,theEuropeanCounselRegulation44/2001providesforthe

enforcementofEuropeanNationalCourtJudgmentswithinEurope.OutsideEurope,nogeneral

conventiondealingwithjurisdictionandtherecognitionandenforcementofforeignjudgments

yetexists.

TheNewYorkConventionfacilitatestherecognitionandenforcementofforeignarbitralawardsin

theterritoryofitsmorethan140signatorystates,irrespectiveofthearbitrationrulesunderwhich

theproceedingswereconducted.

TheformalitiesrequiredforobtainingrecognitionandenforcementofawardstowhichtheNew

YorkConventionappliesaresimple.Thepartyseekingsuchrecognitionandenforcementis

merelyrequiredtosubmittotherelevantcourt:

–thedulyauthenticatedoriginalawardoradulycertifiedcopythereof;and

–theoriginalagreementreferredtoinArticleIIoradulycertifiedcopythereof.

Iftheawardandthearbitrationagreementarenotintheofficiallanguageofthecountryinwhich

recognitionandenforcementissought,certifiedtranslationsareneeded.Oncethenecessary

documentshavebeensupplied,thecourtwillgrantrecognitionandenforcementunlessoneor

moreofthegroundsforrefusal,listedinArticleVoftheNewYorkConvention,arepresent.

Thegroundsforrefusalare:

–thearbitrationagreementisnotvalidunderthelawtowhichthepartieshavesubjectedit;

–thepartyagainstwhomtheawardisinvokedwasnotgivenpropernoticeoftheappointment

ofthearbitratororofthearbitrationproceedings;

–theawarddealswithmattersbeyondthescopeofthesubmissiontoarbitration;

–Thecompositionofthetribunalorthearbitralprocedurewasnotinaccordancewiththe

agreementoftheparties;

–theawardhasnotyetbecomebindingontheparties.

IftheNewYorkConventiondoesnotapply,therecognitionprocedureasprovidedbythe

nationallawofthecountryinwhichenforcementissought,mustbefollowed.Thiscouldresultin

alengthyandcostlyprocedurewithnoguaranteeonafavorableoutcome,sincethedefending

partymaybeabletochallengeeveryaspectoftheaward.

“It is easier to obtain enforcement

of an international arbitral award

than of a foreign court judgment.”


1Thisbookletisanadaptationofapaperwhichwaspresentedatthe5thGermanCommercialandCorporate

Conference(DeutscherHandels-undGesellschaftsrechtstag)inBerlinon17September2010.

2CouncilRegulation(EC)No44/2001of22December2000onjurisdictionandtherecognitionandenforcement

ofjudgmentsincivilandcommercialmatters.

3ThetextandstatusoftheNewYorkConventionof1958canbefoundat:

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

4ThetextoftheModelLaw(1985),asamended,canbefoundat:

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html

5TheUNCITRALArbitrationRules(1976)canbefoundat:

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1976Arbitration_rules.html

TheArbitrationRuleswererevisedin2010:

http://www.uncitral.org/pdf/english/texts/arbitration/arb-rules-revised/arb-rules-revised-e.pdf

6FormoreinformationandforthetextoftheICCArbitrationRules,see:

http://www.iccwbo.org/policy/arbitration/id2882/index.html

7FormoreinformationandforthetextoftheLCIAArbitrationRules,see:

http://www.lcia.org/Dispute_Resolution_Services/LCIA_Arbitration.aspx.

8FormoreinformationandforthetextoftheAAAandICDRArbitrationRules,see:

http://www.adr.org/arb_med>and<http://www.adr.org/sp.asp?id=28819

9FormoreinformationandforthetextoftheSIACArbitrationRules,see:

www.siac.org.sg/cms>.

10FormoreinformationandforthetextoftheICSDArbitrationRules,see:

http://icsid.worldbank.org/ICSID/Index.jsp

11ThetextoftheIBARulesofEvidencecanbefoundat:

http://www.int-bar.org/images/downloads/IBA%20rules%20on%20the%20taking%20of%20Evidence.pdf.


State Signature Ratification, Entry into force Accession or Succession

Afghanistan(a),(b) 30November2004(a) 28February2005

Albania 27June2001(a) 25September2001

Algeria(a),(b) 7February1989(a) 8May1989

AntiguaandBarbuda(a),(b) 2February1989(a) 3May1989

Argentina(a),(b) 26August1958 14March1989 12June1989

Armenia(a),(b) 29December1997(a) 29March1998

Australia 26March1975(a) 24June1975

Austria 2May1961(a) 31July1961

Azerbaijan 29February2000(a) 29May2000

Bahamas 20December2006(a) 20March2007

Bahrain(a),(b) 6April1988(a) 5July1988

Bangladesh 6May1992(a) 4August1992

Barbados(a),(b) 16March1993(a) 14June1993

Belarus(e) 29December1958 15November1960 13February1961

Belgium(a) 10June1958 18August1975 16November1975

Benin 16May1974(a) 14August1974

Bolivia(PlurinationalStateof ) 28April1995(a) 27July1995

BosniaandHerzegovina(a),(b),(f ) 1September1993(s) 6March1992

Botswana(a),(b) 20December1971(a) 19March1972

Brazil 7June2002(a) 5September2002

BruneiDarussalam(a) 25July1996(a) 23October1996

Bulgaria(a),(e) 17December1958 10October1961 8January1962

BurkinaFaso 23March1987(a) 21June1987

Cambodia 5January1960(a) 4April1960

Cameroon 19February1988(a) 19May1988

Canada(h) 12May1986(a) 10August1986

CentralAfricanRepublic(a),(b) 15October1962(a) 13January1963

Chile 4September1975(a) 3December1975

China(a),(b),(j) 22January1987(a) 22April1987

Colombia 25September1979(a) 24December1979

anneX 1 - partIes to new york ConventIon(October 2010)

CookIslands 12January2009(a) 12April2009

CostaRica 10June1958 26October1987 24January1988

Côted’Ivoire 1February1991(a) 2May1991

Croatia(a),(b),(f ) 26July1993(s) 8October1991

Cuba(a),(b) 30December1974(a) 30March1975

Cyprus(a),(b) 29December1980(a) 29March1981

CzechRepublic 30September1993(s) 1January1993

Denmark(a),(b),(c) 22December1972(a) 22March1973

Djibouti(a),(b) 14June1983(s) 27June1977

Dominica 28October1988(a) 26January1989

DominicanRepublic 11April2002(a) 10July2002

Ecuador(a),(b) 17December1958 3January1962 3April1962

Egypt 9March1959(a) 7June1959

ElSalvador 10June1958 26February1998 27May1998

Estonia 30August1993(a) 28November1993

Fiji 27September2010 26December2010

Finland 29December1958 19January1962 19April1962

France(a) 25November1958 26June1959 24September1959

Gabon 15December2006(a) 15March2007

Georgia 2June1994(a) 31August1994

Germany(a) 10June1958 30June1961 28September1961

Ghana 9April1968(a) 8July1968

Greece(a),(b) 16July1962(a) 14October1962

Guatemala(a),(b) 21March1984(a) 19June1984

Guinea 23January1991(a) 23April1991

Haiti 5December1983(a) 4March1984

HolySee(a),(b) 14May1975(a) 12August1975

Honduras 3October2000(a) 1January2001

Hungary(a),(b) 5March1962(a) 3June1962

Iceland 24January2002(a) 24April2002

India(a),(b) 10June1958 13July1960 11October1960

Indonesia(a),(b) 7October1981(a) 5January1982


Iran(IslamicRep.of )(a),(b) 15October2001(a) 13January2002

Ireland(a) 12May1981(a) 10August1981

Israel 10June1958 5January1959 7June1959

Italy 31January1969(a) 1May1969

Jamaica(a),(b) 10July2002(a) 8October2002

Japan(a) 20June1961(a) 18September1961

Jordan 10June1958 15November1979 13February1980

Kazakhstan 20November1995(a) 18February1996

Kenya(a) 10February1989(a) 11May1989

Kuwait(a) 28April1978(a) 27July1978

Kyrgyzstan 18December1996(a) 18March1997

LaoPeople’sDemocraticRepublic 17June1998(a) 15September1998

Latvia 14April1992(a) 13July1992

Lebanon(a) 11August1998(a) 9November1998

Lesotho 13June1989(a) 11September1989

Liberia 16September2005(a) 15December2005

Lithuania(e) 14March1995(a) 12June1995

Luxembourg(a) 11November1958 9September1983 8December1983

Madagascar(a),(b) 16July1962(a) 14October1962

Malaysia(a),(b) 5November1985(a) 3February1986

Mali 8September1994(a) 7December1994

Malta(a),(f ) 22June2000(a) 20September2000

MarshallIslands 21December2006(a) 21March2007

Mauritania 30January1997(a) 30April1997

Mauritius(a) 19June1996(a) 17September1996

Mexico 14April1971(a) 13July1971

Moldova(a),(f ) 18September1998(a) 17December1998

Monaco(a),(b) 31December1958 2June1982 31August1982

Mongolia(a),(b) 24October1994(a) 22January1995

Montenegro(a),(b),(f ) 23October2006(s) 3June2006

Morocco(a) 12February1959(a) 7June1959

Mozambique(a) 11June1998(a) 9September1998

Nepal(a),(b) 4March1998(a) 2June1998

Netherlands(a),(d) 10June1958 24April1964 23July1964

NewZealand(a) 6January1983(a) 6April1983

Nicaragua 24September2003(a) 23December2003

Niger 14October1964(a) 12January1965

Nigeria(a),(b) 17March1970(a) 15June1970

Norway(a),(i) 14March1961(a) 12June1961

Oman 25February1999(a) 26May1999

Pakistan(a) 30December1958 14July2005 12October2005

Panama 10October1984(a) 8January1985

Paraguay 8October1997(a) 6January1998

Peru 7July1988(a) 5October1988

Philippines(a),(b) 10June1958 6July1967 4October1967

Poland(a),(b) 10June1958 3October1961 1January1962

Portugal(a) 18October1994(a) 16January1995

Qatar 30December2002(a) 30March2003

RepublicofKorea(a),(b) 8February1973(a) 9May1973

Romania(a),(b),(e) 13September1961(a) 12December1961

RussianFederation(e) 29December1958 24August1960 22November1960

Rwanda 31October2008 29January2009

SaintVincentandtheGrenadines(a),(b) 12September2000(a) 11December2000

SanMarino 17May1979(a) 15August1979

SaudiArabia(a) 19April1994(a) 18July1994

Senegal 17October1994(a) 15January1995

Serbia(a),(b),(f ) 12March2001(s) 27April1992

Singapore(a) 21August1986(a) 19November1986

Slovakia(i) 28May1993(s) 1January1993

Slovenia(f ),(k) 6July1992(s) 25June1991

SouthAfrica 3May1976(a) 1August1976

Spain 12May1977(a) 10August1977

SriLanka 30December1958 9April1962 8July1962

Sweden 23December1958 28January1972 27April1972

Switzerland 29December1958 1June1965 30August1965

SyrianArabRepublic 9March1959(a) 7June1959

Thailand 21December1959(a) 20March1960

TheformerYugoslavRepublicofMacedonia(b),(f ),(l) 10March1994(s) 17November1991

TrinidadandTobago(a),(b) 14February1966(a) 15May1966

Tunisia(a),(b) 17July1967(a) 15October1967


Turkey(a),(b) 2July1992(a) 30September1992

Uganda(a) 12February1992(a) 12May1992

Ukraine(e) 29December1958 10October1960 8January1961

UnitedArabEmirates 21August2006(a) 19November2006

UnitedKingdomofGreatBritainandNorthernIreland(a),(g) 24September1975(a) 23December1975

UnitedRepublicofTanzania(a) 13October1964(a) 11January1965

UnitedStatesofAmerica(a),(b) 30September1970(a) 29December1970

Uruguay 30March1983(a) 28June1983

Uzbekistan 7February1996(a) 7May1996

Venezuela(BolivarianRepublicof )(a),(b) 8February1995(a) 9May1995

Vietnam(a),(b),(e),(e) 12September1995(a) 11December1995

Zambia 14March2002(a) 12June2002

Zimbabwe 29September1994(a) 28December1994

a.Declarationsandreservations.ThisstatewillapplytheConventiononlytorecognitionand

enforcementofawardsmadeintheterritoryofanothercontractingstate.

b.Declarationsandreservations.ThisstatewillapplytheConventiononlytodifferencesarising

outoflegalrelationships,whethercontractualornot,thatareconsideredcommercialunderthe

nationallaw.

c.On10February1976,DenmarkdeclaredthattheConventionshallapplytotheFaeroeIslands

andGreenland.

d.On24April1964,theNetherlandsdeclaredthattheConventionshallapplytotheNetherlands

Antilles.

e.Declarationsandreservations.Withregardtoawardsmadeintheterritoryofnon-contracting

states,thisstatewillapplytheConventiononlytotheextenttowhichthosestatesgrantrecipro-

caltreatment.

f.Declarationsandreservations.ThisstatewillapplytheConventiononlytothosearbitralawards

whichwereadoptedaftertheentryintoeffectoftheConvention.

g.TheUnitedKingdomextendedtheterritorialapplicationoftheConvention,forthecaseof

awardsmadeonlyintheterritoryofanothercontractingstate,tothefollowingterritories:Gibral-

tar(24September1975),IsleofMan(22February1979),Bermuda(14November1979),Cayman

Islands(26November1980),Guernsey(19April1985),Jersey(28May2002).

h.Declarationsandreservations.CanadadeclaredthatitwouldapplytheConventiononlyto

differencesarisingoutoflegalrelationships,whethercontractualornot,thatwereconsidered

commercialunderthelawsofCanada,exceptinthecaseoftheProvinceofQuebec,wherethe

lawdidnotprovideforsuchlimitation.

i.ThisstatewillnotapplytheConventiontodifferenceswherethesubjectmatteroftheproceed-

ingsisimmovablepropertysituatedinthestate,orarightinortosuchproperty.


LegislationbasedontheUNCITRALModelLawonInternationalCommercialArbitrationas

adoptedin1985hasbeenenactedin(asofOctober2010):

Armenia (2006),

Australia (1989,2010*),

Austria (2005),

Azerbaijan (1999),

Bahrain (1994),

Bangladesh (2001),

Belarus (1999),

Bulgaria (2002),

Cambodia (2006),

Canada (1986),

Chile (2004),

China (theHongKongSpecialAdministrative

Region(1996)andtheMacaoSpecial

AdministrativeRegion(1998)),

Croatia (2001),

Cyprus,

Denmark (2005),

DominicanRepublic (2008),

Egypt (1994),

Estonia (2006),

Georgia (2009*),

Germany (1998),

Greece (1999),

Guatemala (1995),

Honduras (2000),

Hungary (1994),

India (1996),

Iran(IslamicRepublicof ) (1997),

Ireland (1998,2010*),

Japan (2003),

Jordan (2001),

Kenya (1995),

Lithuania (1996),

Madagascar (1998),

Malta (1995),

Mauritius (2008*),

Mexico (1993),

NewZealand (1996,2007*),

Nicaragua (2005),

Nigeria (1990),

Norway (2004),

Oman (1997),

Paraguay (2002),

Peru (1996,2008*),

thePhilippines (2004),

Poland (2005),

theRepublicofKorea (1999),

theRussianFederation (1993),

Rwanda (2008*),

Serbia (2006),

Singapore (2001),

Slovenia (2008*),

Spain (2003),

SriLanka (1995),

Thailand (2002),

theformerYugoslavRepublicofMacedonia (2006),

Tunisia (1993),

Turkey (2001),

Uganda (2000),

Ukraine (1994),

theUnitedKingdomofGreatBritainandNorthernIreland(Scotland(1990)andBermuda,an

overseasterritoryoftheUnitedKingdom),theUnitedStatesofAmerica(theStatesofCalifornia

(1996),Connecticut(2000),Florida(2010*),Illinois(1998),Louisiana(2006),OregonandTexas),

Venezuela(BolivarianRepublicof ) (1998),

Zambia (2000)

Zimbabwe (1996).

*IndicateslegislationbasedonthetextoftheUNCITRALModelLawonInternationalCommercial

Arbitrationwithamendmentsasadoptedin2006.

anneX 2 - legIslatIon based on the unCItral model law on InternatIonal CommerCIal arbItratIon


anneX 3 - InstItutIonal arbItratIon Clauses

American Arbitration Association (AAA)Anycontroversyorclaimarisingoutoforrelatingtothiscontract,orthebreachthereof,shallbe

determinedbyarbitrationadministeredbytheAmericanArbitrationAssociationinaccordance

withitsInternationalArbitrationRules.

Thepartiesmaywishtoadd:

Thenumberofarbitratorsshallbe[oneorthree];

Theplaceofarbitrationshallbe[cityand/orcountry];

Thelanguage(s)ofthearbitrationshallbe[…].

China International Economic and Trade Arbitration Commission (CIETAC)AnydisputearisingfromorinconnectionwiththisContractshallbesubmittedtotheChinaInter-

nationalEconomicandTradeArbitrationCommissionforarbitrationwhichshallbeconductedin

accordancewiththeCommission’sarbitrationrulesineffectatthetimeofapplyingforarbitration.

Thearbitralawardisfinalandbindinguponbothparties.

Thepartiesmayalsostipulatethefollowingmattersinthearbitrationclause:

theplaceofarbitrationand/orhearing;

thelanguageofthearbitration;

thenumberofarbitrators;

thenationalityofthearbitrators;

themethodofselectionofthearbitrators;

theapplicablelawofthecontract;and/or

theapplicationofgeneralprocedureorsummaryprocedure.

International Chamber of Commerce (ICC)Alldisputesarisingoutoforinconnectionwiththepresentcontractshallbefinallysettledunder

theRulesofArbitrationoftheInternationalChamberofCommercebyoneormorearbitrators

appointedinaccordancewiththesaidRulesofArbitration.

London Court of International Arbitration (LCIA)Anydisputearisingoutoforinconnectionwiththiscontract,includinganyquestionregardingits

existence,validityortermination,shallbereferredtoandfinallyresolvedbyarbitrationunderthe

LCIARules,whichRulesaredeemedtobeincorporatedbyreferenceintothisclause.

Thenumberofarbitratorsshallbe[one/three].

Theseat,orlegalplace,ofarbitrationshallbe[Cityand/orCountry].

Thelanguagetobeusedinthearbitralproceedingsshallbe[…].

Thegoverninglawofthecontractshallbethesubstantivelawof[…].

Netherlands Arbitration Institute (NAI)Alldisputesarisinginconnectionwiththepresentcontract,orfurthercontractsresulting

therefrom,shallbefinallysettledinaccordancewiththeArbitrationRulesoftheNetherlands

ArbitrationInstitute.

Additionally,variousmattersmaybeprovidedfor:

Thearbitraltribunalshallbecomposedofonearbitrator/threearbitrators.

Theplaceofarbitrationshallbe[city].

Thearbitralprocedureshallbeconductedinthe[…]language.

ConsolidationofthearbitralproceedingswithotherarbitralproceedingspendingintheNether-

lands,asprovidedinSection1046oftheNetherlandsCodeofCivilProcedure,isexcluded.


Singapore International Arbitration Centre (SIAC)Anydisputearisingoutoforinconnectionwiththiscontract,includinganyquestionregarding

itsexistence,validityortermination,shallbereferredtoandfinallyresolvedbyarbitrationinSin-

gaporeinaccordancewiththeArbitrationRulesoftheSingaporeInternationalArbitrationCentre

(“SIACRules”)forthetimebeinginforce,whichrulesaredeemedtobeincorporatedbyreference

inthisclause.

TheTribunalshallconsistof[…]arbitrator(s).

Thelanguageofthearbitrationshallbe[…].

Stockholm Chamber of Commerce (SCC)Anydispute,controversyorclaimarisingoutoforinconnectionwiththiscontract,orthebreach,

terminationorinvaliditythereof,shallbefinallysettledbyarbitrationinaccordancewiththe

ArbitrationRulesoftheArbitrationInstituteoftheStockholmChamberofCommerce.

Recommendedadditions:

Thearbitraltribunalshallbecomposedofthreearbitrators/asolearbitrator.

Theseatofarbitrationshallbe[…].

Thelanguagetobeusedinthearbitralproceedingsshallbe[…].

Thiscontractshallbegovernedbythesubstantivelawof[…].

UNCITRALAnydispute,controversyorclaimarisingoutoforrelatingtothiscontract,orthebreach,termina-

tionorinvaliditythereof,shallbesettledbyarbitrationinaccordancewiththeUNCITRALArbitra-

tionRules.

Partiesshouldconsideradding:

Theappointingauthorityshallbe[nameofinstitutionorperson];

Thenumberofarbitratorsshallbe[oneorthree];

Theplaceofarbitrationshallbe[townandcountry];

Thelanguagetobeusedinthearbitralproceedingsshallbe[...].


anneX 4 - Iba rules on takIng evIdenCePreamble1.TheseIBARulesontheTakingofEvidenceinInternationalArbitrationareintendedtoprovide

anefficient,economicalandfairprocessforthetakingofevidenceininternationalarbitrations,

particularlythosebetweenPartiesfromdifferentlegaltraditions.

Theyaredesignedtosupplementthelegalprovisionsandtheinstitutional,adhocorotherrules

thatapplytotheconductofthearbitration.

2.PartiesandArbitralTribunalsmayadopttheIBARulesofEvidence,inwholeorinpart,togovern

arbitrationproceedings,ortheymayvarythemorusethemasguidelinesindevelopingtheirown

procedures.TheRulesarenotintendedtolimittheflexibilitythatisinherentin,andanadvan-

tageof,internationalarbitration,andPartiesandArbitralTribunalsarefreetoadaptthemtothe

particularcircumstancesofeacharbitration.

3.ThetakingofevidenceshallbeconductedontheprinciplesthateachPartyshallactingood

faithandbeentitledtoknow,reasonablyinadvanceofanyEvidentiaryHearingoranyfactor

meritsdetermination,theevidenceonwhichtheotherPartiesrely.

DefinitionsIntheIBARulesofEvidence:

‘ArbitralTribunal’meansasolearbitratororapanelofarbitrators;

‘Claimant’meansthePartyorPartieswhocommencedthearbitrationandanyPartywho,through

joinderorotherwise,becomesalignedwithsuchPartyorParties;

‘Document’meansawriting,communication,picture,drawing,programordataofanykind,

whetherrecordedormaintainedonpaperorbyelectronic,audio,visualoranyothermeans;

‘EvidentiaryHearing’meansanyhearing,whetherornotheldonconsecutivedays,atwhich

theArbitralTribunal,whetherinperson,byteleconference,videoconferenceorothermethod,

receivesoralorotherevidence;

‘ExpertReport’meansawrittenstatementbyaTribunal-AppointedExpertoraParty-Appointed

Expert;

‘GeneralRules’meantheinstitutional,adhocorotherrulesthatapplytotheconductof

thearbitration;

‘IBARulesofEvidence’or‘Rules’meantheseIBARulesontheTakingofEvidenceinInternational

Arbitration,astheymayberevisedoramendedfromtimetotime;

‘Party’meansapartytothearbitration;

‘Party-AppointedExpert’meansapersonororganizationappointedbyaPartyinordertoreport

onspecificissuesdeterminedbytheParty;

‘RequesttoProduce’meansawrittenrequestbyaPartythatanotherPartyproduceDocuments;

‘Respondent’meansthePartyorPartiesagainstwhomtheClaimantmadeitsclaim,andanyParty

who,throughjoinderorotherwise,becomesalignedwithsuchPartyorParties,andincludesa

Respondentmakingacounterclaim;

‘Tribunal-AppointedExpert’meansapersonororganizationappointedbytheArbitralTribunalin

ordertoreporttoitonspecificissuesdeterminedbytheArbitralTribunal;and

‘WitnessStatement’meansawrittenstatementoftestimonybyawitnessoffact.

Article 1 Scope of Application1.WheneverthePartieshaveagreedortheArbitralTribunalhasdeterminedtoapplytheIBA

RulesofEvidence,theRulesshallgovernthetakingofevidence,excepttotheextentthatany

specificprovisionofthemmaybefoundtobeinconflictwithanymandatoryprovisionoflaw

determinedtobeapplicabletothecasebythePartiesorbytheArbitralTribunal.

2.WherethePartieshaveagreedtoapplytheIBARulesofEvidence,theyshallbedeemedto

haveagreed,intheabsenceofacontraryindication,totheversionascurrentonthedateofsuch

agreement.

3.IncaseofconflictbetweenanyprovisionsoftheIBARulesofEvidenceandtheGeneralRules,

theArbitralTribunalshallapplytheIBARulesofEvidenceinthemannerthatitdeterminesbestin

ordertoaccomplishthepurposesofboththeGeneralRulesandtheIBARulesofEvidence,unless

thePartiesagreetothecontrary.

4.IntheeventofanydisputeregardingthemeaningoftheIBARulesofEvidence,theArbitral

Tribunalshallinterpretthemaccordingtotheirpurposeandinthemannermostappropriatefor

theparticulararbitration.

5.InsofarastheIBARulesofEvidenceandtheGeneralRulesaresilentonanymatterconcerning

thetakingofevidenceandthePartieshavenotagreedotherwise,theArbitralTribunalshallcon-

ductthetakingofevidenceasitdeemsappropriate,inaccordancewiththegeneralprinciplesof

theIBARulesofEvidence.

Article 2 Consultation on Evidentiary Issues1.TheArbitralTribunalshallconsultthePartiesattheearliestappropriatetimeintheproceedings

andinvitethemtoconsulteachotherwithaviewtoagreeingonanefficient,economicalandfair

processforthetakingofevidence.

2.Theconsultationonevidentiaryissuesmayaddressthescope,timingandmannerofthetaking

ofevidence,including:

(a)thepreparationandsubmissionofWitnessStatementsandExpertReports;

(b)thetakingoforaltestimonyatanyEvidentiaryHearing;

(c)therequirements,procedureandformatapplicabletotheproductionofDocuments;


(d)thelevelofconfidentialityprotectiontobeaffordedtoevidenceinthearbitration;and

(e)thepromotionofefficiency,economyandconservationofresourcesinconnectionwith

thetakingofevidence.

3.TheArbitralTribunalisencouragedtoidentifytotheParties,assoonasitconsidersittobeap-

propriate,anyissues:

(a)thattheArbitralTribunalmayregardasrelevanttothecaseandmaterialtoitsoutcome;and/or

(b)forwhichapreliminarydeterminationmaybeappropriate.

Article 3 Documents1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallsubmittotheArbitralTribunal

andtotheotherPartiesallDocumentsavailabletoitonwhichitrelies,includingpublicDocu-

mentsandthoseinthepublicdomain,exceptforanyDocumentsthathavealreadybeensubmit-

tedbyanotherParty.

2.WithinthetimeorderedbytheArbitralTribunal,anyPartymaysubmittotheArbitralTribunal

andtotheotherPartiesaRequesttoProduce.

3.ARequesttoProduceshallcontain:

(a)(i)adescriptionofeachrequestedDocumentsufficienttoidentifyit,or

(ii)adescriptioninsufficientdetail(includingsubjectmatter)ofanarrowandspecificrequested

categoryofDocumentsthatarereasonablybelievedtoexist;inthecaseofDocumentsmain-

tainedinelectronicform,therequestingPartymay,ortheArbitralTribunalmayorderthatitshall

berequiredto,identifyspecificfiles,searchterms,individualsorothermeansofsearchingforsuch

Documentsinanefficientandeconomicalmanner;

(b)astatementastohowtheDocumentsrequestedarerelevanttothecaseandmaterialtoits

outcome;and

(c)(i)astatementthattheDocumentsrequestedarenotinthepossession,custodyorcontrolof

therequestingPartyorastatementofthereasonswhyitwouldbeunreasonablyburdensomefor

therequestingPartytoproducesuchDocuments,and

(ii)astatementofthereasonswhytherequestingPartyassumestheDocumentsrequestedarein

thepossession,custodyorcontrolofanotherParty.

4.WithinthetimeorderedbytheArbitralTribunal,thePartytowhomtheRequesttoProduce

isaddressedshallproducetotheotherPartiesand,iftheArbitralTribunalsoorders,toit,allthe

Documentsrequestedinitspossession,custodyorcontrolastowhichitmakesnoobjection.

5.IfthePartytowhomtheRequesttoProduceisaddressedhasanobjectiontosomeorallofthe

Documentsrequested,itshallstatetheobjectioninwritingtotheArbitralTribunalandtheother

PartieswithinthetimeorderedbytheArbitralTribunal.

ThereasonsforsuchobjectionshallbeanyofthosesetforthinArticle9.2orafailuretosatisfyany

oftherequirementsofArticle3.3.

6.Uponreceiptofanysuchobjection,theArbitralTribunalmayinvitetherelevantPartiesto

consultwitheachotherwithaviewtoresolvingtheobjection.

7.EitherPartymay,withinthetimeorderedbytheArbitralTribunal,requesttheArbitralTribunal

toruleontheobjection.TheArbitralTribunalshallthen,inconsultationwiththePartiesandin

timelyfashion,considertheRequesttoProduceandtheobjection.TheArbitralTribunalmay

orderthePartytowhomsuchRequestisaddressedtoproduceanyrequestedDocumentinits

possession,custodyorcontrolastowhichtheArbitralTribunaldeterminesthat(i)theissuesthat

therequestingPartywishestoprovearerelevanttothecaseandmaterialtoitsoutcome;(ii)none

ofthereasonsforobjectionsetforthinArticle9.2applies;and(iii)therequirementsofArticle3.3

havebeensatisfied.

AnysuchDocumentshallbeproducedtotheotherPartiesand,iftheArbitralTribunalsoorders,toit.

8.Inexceptionalcircumstances,iftheproprietyofanobjectioncanbedeterminedonlybyreview

oftheDocument,theArbitralTribunalmaydeterminethatitshouldnotreviewtheDocument.In

thatevent,theArbitralTribunalmay,afterconsultationwiththeParties,appointanindependent

andimpartialexpert,boundtoconfidentiality,toreviewanysuchDocumentandtoreportonthe

objection.TotheextentthattheobjectionisupheldbytheArbitralTribunal,theexpertshallnot

disclosetotheArbitralTribunalandtotheotherPartiesthecontentsofthe

Documentreviewed.

9.IfaPartywishestoobtaintheproductionofDocumentsfromapersonororganisationwhois

notaPartytothearbitrationandfromwhomthePartycannotobtaintheDocumentsonitsown,

thePartymay,withinthetimeorderedbytheArbitralTribunal,askittotakewhateverstepsare

legallyavailabletoobtaintherequestedDocuments,orseekleavefromtheArbitralTribunalto

takesuchstepsitself.ThePartyshallsubmitsuchrequesttotheArbitralTribunalandtotheother

Partiesinwriting,andtherequestshallcontaintheparticularssetforthinArticle3.3,asapplicable.

TheArbitralTribunalshalldecideonthisrequestandshalltake,authorizetherequestingPartyto

take,ororderanyotherPartytotake,suchstepsastheArbitral

Tribunalconsidersappropriateif,initsdiscretion,itdeterminesthat(i)theDocumentswouldbe

relevanttothecaseandmaterialtoitsoutcome,(ii)therequirementsofArticle3.3,asapplicable,

havebeensatisfiedand(iii)noneofthereasonsforobjectionsetforthinArticle9.2applies.

10.Atanytimebeforethearbitrationisconcluded,theArbitralTribunalmay(i)requestanyParty

toproduceDocuments,(ii)requestanyPartytouseitsbesteffortstotakeor(iii)itselftake,any

stepthatitconsidersappropriatetoobtainDocumentsfromanypersonororganisation.AParty

towhomsucharequestforDocumentsisaddressedmayobjecttotherequestforanyofthe


reasonssetforthinArticle9.2.Insuchcases,Article3.4toArticle3.8shallapplycorrespondingly.

11.WithinthetimeorderedbytheArbitralTribunal,thePartiesmaysubmittotheArbitralTribunal

andtotheotherPartiesanyadditionalDocumentsonwhichtheyintendtorelyorwhichthey

believehavebecomerelevanttothecaseandmaterialtoitsoutcomeasaconsequenceofthe

issuesraisedinDocuments,WitnessStatementsorExpertReportssubmittedorproduced,orin

othersubmissionsoftheParties.

12.WithrespecttotheformofsubmissionorproductionofDocuments:

(a)copiesofDocumentsshallconformtotheoriginalsand,attherequestoftheArbitralTribunal,

anyoriginalshallbepresentedforinspection;

(b)DocumentsthataPartymaintainsinelectronicformshallbesubmittedorproducedinthe

formmostconvenientoreconomicaltoitthatisreasonablyusablebytherecipients,unless

thePartiesagreeotherwiseor,intheabsenceofsuchagreement,theArbitralTribunaldecides

otherwise;

(c)aPartyisnotobligatedtoproducemultiplecopiesofDocumentswhichareessentiallyidenti-

calunlesstheArbitralTribunaldecidesotherwise;and

(d)translationsofDocumentsshallbesubmittedtogetherwiththeoriginalsandmarkedastrans-

lationswiththeoriginallanguageidentified.

13.AnyDocumentsubmittedorproducedbyaPartyornon-Partyinthearbitrationandnot

otherwiseinthepublicdomainshallbekeptconfidentialbytheArbitralTribunalandtheother

Parties,andshallbeusedonlyinconnectionwiththearbitration.Thisrequirementshallapply

exceptandtotheextentthatdisclosuremayberequiredofaPartytofulfilalegalduty,protect

orpursuealegalright,orenforceorchallengeanawardinbonafidelegalproceedingsbefore

astatecourtorotherjudicialauthority.TheArbitralTribunalmayissueorderstosetforththe

termsofthisconfidentiality.Thisrequirementshallbewithoutprejudicetoallotherobligationsof

confidentialityinthearbitration.

14.Ifthearbitrationisorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary

determinations,liabilityordamages),theArbitralTribunalmay,afterconsultationwiththeParties,

schedulethesubmissionofDocumentsandRequeststoProduceseparatelyforeachissueorphase.

Article 4 Witnesses of Fact1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallidentifythewitnesseson

whosetestimonyitintendstorelyandthesubjectmatterofthattestimony.

2.Anypersonmaypresentevidenceasawitness,includingaPartyoraParty’sofficer,employee

orotherrepresentative.

3.ItshallnotbeimproperforaParty,itsofficers,employees,legaladvisorsorotherrepresentatives

tointerviewitswitnessesorpotentialwitnessesandtodiscusstheirprospectivetestimonywith

them.

4.TheArbitralTribunalmayordereachPartytosubmitwithinaspecifiedtimetotheArbitralTri-

bunalandtotheotherPartiesWitnessStatementsbyeachwitnessonwhosetestimonyitintends

torely,exceptforthosewitnesseswhosetestimonyissoughtpursuanttoArticles4.9or4.10.If

EvidentiaryHearingsareorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary

determinations,liabilityordamages),theArbitralTribunalorthePartiesbyagreementmaysched-

ulethesubmissionofWitnessStatementsseparatelyforeachissueorphase.

5.EachWitnessStatementshallcontain:

(a)thefullnameandaddressofthewitness,astatementregardinghisorherpresentandpast

relationship(ifany)withanyoftheParties,andadescriptionofhisorherbackground,qualifica-

tions,trainingandexperience,ifsuchadescriptionmayberelevanttothedisputeortothe

contentsofthestatement;

(b)afullanddetaileddescriptionofthefacts,andthesourceofthewitness’sinformationasto

thosefacts,sufficienttoserveasthatwitness’sevidenceinthematterindispute.Documentson

whichthewitnessreliesthathavenotalreadybeensubmittedshallbeprovided;

(c)astatementastothelanguageinwhichtheWitnessStatementwasoriginallypreparedand

thelanguageinwhichthewitnessanticipatesgivingtestimonyattheEvidentiaryHearing;

(d)anaffirmationofthetruthoftheWitnessStatement;and

(e)thesignatureofthewitnessanditsdateandplace.

6.IfWitnessStatementsaresubmitted,anyPartymay,withinthetimeorderedbytheArbitral

Tribunal,submittotheArbitralTribunalandtotheotherPartiesrevisedoradditionalWitness

Statements,includingstatementsfrompersonsnotpreviouslynamedaswitnesses,solongas

anysuchrevisionsoradditionsrespondonlytomatterscontainedinanotherParty’sWitness

Statements,ExpertReportsorothersubmissionsthathavenotbeenpreviouslypresentedinthe

arbitration.

7.IfawitnesswhoseappearancehasbeenrequestedpursuanttoArticle8.1failswithoutavalid

reasontoappearfortestimonyatanEvidentiaryHearing,theArbitralTribunalshalldisregard

anyWitnessStatementrelatedtothatEvidentiaryHearingbythatwitnessunless,inexceptional

circumstances,theArbitralTribunaldecidesotherwise.

8.IftheappearanceofawitnesshasnotbeenrequestedpursuanttoArticle8.1,noneoftheother

PartiesshallbedeemedtohaveagreedtothecorrectnessofthecontentoftheWitnessState-

ment.

9.IfaPartywishestopresentevidencefromapersonwhowillnotappearvoluntarilyatitsre-

quest,thePartymay,withinthetimeorderedbytheArbitralTribunal,askittotakewhateversteps


arelegallyavailabletoobtainthetestimonyofthatperson,orseekleavefromtheArbitralTribunal

totakesuchstepsitself.InthecaseofarequesttotheArbitralTribunal,thePartyshallidentifythe

intendedwitness,shalldescribethesubjectsonwhichthewitness’stestimonyissoughtandshall

statewhysuchsubjectsarerelevanttothecaseandmaterialtoitsoutcome.TheArbitralTribunal

shalldecideonthisrequestandshalltake,authorizetherequestingPartytotakeororderany

otherPartytotake,suchstepsastheArbitralTribunalconsidersappropriateif,initsdiscretion,it

determinesthatthetestimonyofthatwitnesswouldberelevanttothecaseandmaterialtoits

outcome.

10.Atanytimebeforethearbitrationisconcluded,theArbitralTribunalmayorderanyPartyto

providefor,ortouseitsbesteffortstoprovidefor,theappearancefortestimonyatanEvidentiary

Hearingofanyperson,includingonewhosetestimonyhasnotyetbeenoffered.APartytowhom

sucharequestisaddressedmayobjectforanyofthereasonssetforthinArticle9.2.

Article 5 Party-Appointed Experts1.APartymayrelyonaParty-AppointedExpertasameansofevidenceonspecificissues.Within

thetimeorderedbytheArbitralTribunal,(i)eachPartyshallidentifyanyParty-AppointedExpert

onwhosetestimonyitintendstorelyandthesubject-matterofsuchtestimony;and(ii)theParty-

AppointedExpertshallsubmitanExpertReport.

2.TheExpertReportshallcontain:

(a)thefullnameandaddressoftheParty-AppointedExpert,astatementregardinghisorher

presentandpastrelationship(ifany)withanyoftheParties,theirlegaladvisorsandtheArbitral

Tribunal,andadescriptionofhisorherbackground,qualifications,trainingandexperience;

(b)adescriptionoftheinstructionspursuanttowhichheorsheisprovidinghisorheropinions

andconclusions;

(c)astatementofhisorherindependencefromtheParties,theirlegaladvisorsandtheArbitral

Tribunal;

(d)astatementofthefactsonwhichheorsheisbasinghisorherexpertopinionsandconclusions;

(e)hisorherexpertopinionsandconclusions,includingadescriptionofthemethods,evidence

andinformationusedinarrivingattheconclusions.DocumentsonwhichtheParty-Appointed

Expertreliesthathavenotalreadybeensubmittedshallbeprovided;

(f )iftheExpertReporthasbeentranslated,astatementastothelanguageinwhichitwas

originallyprepared,andthelanguageinwhichtheParty-AppointedExpertanticipatesgiving

testimonyattheEvidentiaryHearing;

(g)anaffirmationofhisorhergenuinebeliefintheopinionsexpressedintheExpertReport;

(h)thesignatureoftheParty-AppointedExpertanditsdateandplace;and

(i)iftheExpertReporthasbeensignedbymorethanoneperson,anattributionoftheentiretyor

specificpartsoftheExpertReporttoeachauthor.

3.IfExpertReportsaresubmitted,anyPartymay,withinthetimeorderedbytheArbitralTribunal,

submittotheArbitralTribunalandtotheotherPartiesrevisedoradditionalExpertReports,

includingreportsorstatementsfrompersonsnotpreviouslyidentifiedasParty-Appointed

Experts,solongasanysuchrevisionsoradditionsrespondonlytomatterscontainedinanother

Party’sWitnessStatements,ExpertReportsorothersubmissionsthathavenotbeenpreviously

presentedinthearbitration.

4.TheArbitralTribunalinitsdiscretionmayorderthatanyParty-AppointedExpertswhowill

submitorwhohavesubmittedExpertReportsonthesameorrelatedissuesmeetandconfer

onsuchissues.Atsuchmeeting,theParty-AppointedExpertsshallattempttoreachagreement

ontheissueswithinthescopeoftheirExpertReports,andtheyshallrecordinwritinganysuch

issuesonwhichtheyreachagreement,anyremainingareasofdisagreementandthereasons

therefore.

5.IfaParty-AppointedExpertwhoseappearancehasbeenrequestedpursuanttoArticle8.1fails

withoutavalidreasontoappearfortestimonyatanEvidentiaryHearing,theArbitralTribunalshall

disregardanyExpertReportbythatParty-AppointedExpertrelatedtothatEvidentiaryHearing

unless,inexceptionalcircumstances,theArbitralTribunaldecidesotherwise.

6.IftheappearanceofaParty-AppointedExperthasnotbeenrequestedpursuanttoArticle8.1,

noneoftheotherPartiesshallbedeemedtohaveagreedtothecorrectnessofthecontentofthe

ExpertReport.

Article 6 Tribunal-Appointed Experts1.TheArbitralTribunal,afterconsultingwiththeParties,mayappointoneormoreindependent

Tribunal-AppointedExpertstoreporttoitonspecificissuesdesignatedbytheArbitralTribunal.

TheArbitralTribunalshallestablishthetermsofreferenceforanyTribunal-AppointedExpert

ReportafterconsultingwiththeParties.Acopyofthefinaltermsofreferenceshallbesentbythe

ArbitralTribunaltotheParties.

2.TheTribunal-AppointedExpertshall,beforeacceptingappointment,submittotheArbitral

TribunalandtothePartiesadescriptionofhisorherqualificationsandastatementofhisorher

independencefromtheParties,theirlegaladvisorsandtheArbitralTribunal.Withinthetimeor-

deredbytheArbitralTribunal,thePartiesshallinformtheArbitralTribunalwhethertheyhaveany

objectionsastotheTribunal-AppointedExpert’squalificationsandindependence.TheArbitral

Tribunalshalldecidepromptlywhethertoacceptanysuchobjection.Aftertheappointmentofa

Tribunal-AppointedExpert,aPartymayobjecttotheexpert’squalificationsorindependenceonly


iftheobjectionisforreasonsofwhichthePartybecomesawareaftertheappointmenthasbeen

made.TheArbitralTribunalshalldecidepromptlywhat,ifany,actiontotake.

3.SubjecttotheprovisionsofArticle9.2,theTribunal-AppointedExpertmayrequestaParty

toprovideanyinformationortoprovideaccesstoanyDocuments,goods,samples,property,

machinery,systems,processesorsiteforinspection,totheextentrelevanttothecaseandmate-

rialtoitsoutcome.TheauthorityofaTribunal-AppointedExperttorequestsuchinformationor

accessshallbethesameastheauthorityoftheArbitralTribunal.ThePartiesandtheirrepresenta-

tivesshallhavetherighttoreceiveanysuchinformationandtoattendanysuchinspection.Any

disagreementbetweenaTribunal-AppointedExpertandaPartyastotherelevance,materiality

orappropriatenessofsucharequestshallbedecidedbytheArbitralTribunal,inthemannerpro-

videdinArticles3.5through3.8.TheTribunal-AppointedExpertshallrecordintheExpertReport

anynon-compliancebyaPartywithanappropriaterequestordecisionbytheArbitralTribunal

andshalldescribeitseffectsonthedeterminationofthespecificissue.

4.TheTribunal-AppointedExpertshallreportinwritingtotheArbitralTribunalinanExpertRe-

port.TheExpertReportshallcontain:

(a)thefullnameandaddressoftheTribunal-AppointedExpert,andadescriptionofhisor

herbackground,qualifications,trainingandexperience;

(b)astatementofthefactsonwhichheorsheisbasinghisorherexpertopinionsandconclusions;

(c)hisorherexpertopinionsandconclusions,includingadescriptionofthemethods,evidence

andinformationusedinarrivingattheconclusions.DocumentsonwhichtheTribunal-Appointed

Expertreliesthathavenotalreadybeensubmittedshallbeprovided;

(d)iftheExpertReporthasbeentranslated,astatementastothelanguageinwhichitwas

originallyprepared,andthelanguageinwhichtheTribunal-AppointedExpertanticipatesgiving

testimonyattheEvidentiaryHearing;

(e)anaffirmationofhisorhergenuinebeliefintheopinionsexpressedintheExpertReport;

(f )thesignatureoftheTribunal-AppointedExpertanditsdateandplace;and

(g)iftheExpertReporthasbeensignedbymorethanoneperson,anattributionoftheentiretyor

specificpartsoftheExpertReporttoeachauthor.

5.TheArbitralTribunalshallsendacopyofsuchExpertReporttotheParties.ThePartiesmay

examineanyinformation,Documents,goods,samples,property,machinery,systems,processes

orsiteforinspectionthattheTribunal-AppointedExperthasexaminedandanycorrespondence

betweentheArbitralTribunalandtheTribunal-AppointedExpert.

WithinthetimeorderedbytheArbitralTribunal,anyPartyshallhavetheopportunitytorespond

totheExpertReportinasubmissionbythePartyorthroughaWitnessStatementoranExpert

ReportbyaParty-AppointedExpert.TheArbitralTribunalshallsendthesubmission,WitnessState-

mentorExpertReporttotheTribunal-AppointedExpertandtotheotherParties.

6.AttherequestofaPartyoroftheArbitralTribunal,theTribunal-AppointedExpertshallbe

presentatanEvidentiaryHearing.TheArbitralTribunalmayquestiontheTribunal-Appointed

Expert,andheorshemaybequestionedbythePartiesorbyanyParty-AppointedExpertonis-

suesraisedinhisorherExpertReport,theParties’submissionsorWitnessStatementortheExpert

ReportsmadebytheParty-AppointedExpertspursuanttoArticle6.5.

7.AnyExpertReportmadebyaTribunal-AppointedExpertanditsconclusionsshallbeassessed

bytheArbitralTribunalwithdueregardtoallcircumstancesofthecase.

8.ThefeesandexpensesofaTribunal-AppointedExpert,tobefundedinamannerdetermined

bytheArbitralTribunal,shallformpartofthecostsofthearbitration.

Article 7 InspectionSubjecttotheprovisionsofArticle9.2,theArbitralTribunalmay,attherequestofaPartyoron

itsownmotion,inspectorrequiretheinspectionbyaTribunal-AppointedExpertoraParty-Ap-

pointedExpertofanysite,property,machineryoranyothergoods,samples,systems,processes

orDocuments,asitdeemsappropriate.TheArbitralTribunalshall,inconsultationwiththeParties,

determinethetimingandarrangementfortheinspection.ThePartiesandtheirrepresentatives

shallhavetherighttoattendanysuchinspection.

Article 8 Evidentiary Hearing1.WithinthetimeorderedbytheArbitralTribunal,eachPartyshallinformtheArbitralTribunal

andtheotherPartiesofthewitnesseswhoseappearanceitrequests.Eachwitness(whichterm

includes,forthepurposesofthisArticle,witnessesoffactandanyexperts)shall,subjectto

Article8.2,appearfortestimonyattheEvidentiaryHearingifsuchperson’sappearancehasbeen

requestedbyanyPartyorbytheArbitralTribunal.Eachwitnessshallappearinpersonunless

theArbitralTribunalallowstheuseofvideoconferenceorsimilartechnologywithrespecttoa

particularwitness.

2.TheArbitralTribunalshallatalltimeshavecompletecontrolovertheEvidentiaryHearing.The

ArbitralTribunalmaylimitorexcludeanyquestionto,answerbyorappearanceofawitness,ifit

considerssuchquestion,answerorappearancetobeirrelevant,immaterial,unreasonablyburden-

some,duplicativeorotherwisecoveredbyareasonforobjectionsetforthinArticle9.2.Questions

toawitnessduringdirectandre-directtestimonymaynotbeunreasonablyleading.

3.WithrespecttooraltestimonyatanEvidentiaryHearing:

(a)theClaimantshallordinarilyfirstpresentthetestimonyofitswitnesses,followedbytheRe-

spondentpresentingthetestimonyofitswitnesses;


(b)followingdirecttestimony,anyotherPartymayquestionsuchwitness,inanordertobede-

terminedbytheArbitralTribunal.ThePartywhoinitiallypresentedthewitnessshallsubsequently

havetheopportunitytoaskadditionalquestionsonthemattersraisedintheotherParties’

questioning;

(c)thereafter,theClaimantshallordinarilyfirstpresentthetestimonyofitsParty-Appointed

Experts,followedbytheRespondentpresentingthetestimonyofitsParty-AppointedExperts.

ThePartywhoinitiallypresentedtheParty-AppointedExpertshallsubsequentlyhavetheoppor-

tunitytoaskadditionalquestionsonthemattersraisedintheotherParties’questioning;

(d)theArbitralTribunalmayquestionaTribunal-AppointedExpert,andheorshemaybe

questionedbythePartiesorbyanyParty-AppointedExpert,onissuesraisedintheTribunal-

AppointedExpertReport,intheParties’submissionsorintheExpertReportsmadebytheParty-

AppointedExperts;

(e)ifthearbitrationisorganisedintoseparateissuesorphases(suchasjurisdiction,preliminary

determinations,liabilityanddamages),thePartiesmayagreeortheArbitralTribunalmayorder

theschedulingoftestimonyseparatelyforeachissueorphase;

(f )theArbitralTribunal,uponrequestofaPartyoronitsownmotion,mayvarythisorderof

proceeding,includingthearrangementoftestimonybyparticularissuesorinsuchamanner

thatwitnessesbequestionedatthesametimeandinconfrontationwitheachother(witness

conferencing);

(g)theArbitralTribunalmayaskquestionstoawitnessatanytime.

4.Awitnessoffactprovidingtestimonyshallfirstaffirm,inamannerdeterminedappropriateby

theArbitralTribunal,thatheorshecommitstotellthetruthor,inthecaseofanexpertwitness,

hisorhergenuinebeliefintheopinionstobeexpressedattheEvidentiaryHearing.Ifthewitness

hassubmittedaWitnessStatementoranExpertReport,thewitnessshallconfirmit.TheParties

mayagreeortheArbitralTribunalmayorderthattheWitnessStatementorExpertReportshall

serveasthatwitness’sdirecttestimony.

5.SubjecttotheprovisionsofArticle9.2,theArbitralTribunalmayrequestanypersontogiveoral

orwrittenevidenceonanyissuethattheArbitralTribunalconsiderstoberelevanttothecaseand

materialtoitsoutcome.AnywitnesscalledandquestionedbytheArbitralTribunalmayalsobe

questionedbytheParties.

Article 9 Admissibility and Assessment of Evidence1.TheArbitralTribunalshalldeterminetheadmissibility,relevance,materialityandweightof

evidence.

2.TheArbitralTribunalshall,attherequestofaPartyoronitsownmotion,excludefromevidence

orproductionanyDocument,statement,oraltestimonyorinspectionforanyofthefollowing

reasons:

(a)lackofsufficientrelevancetothecaseormaterialitytoitsoutcome;

(b)legalimpedimentorprivilegeunderthelegalorethicalrulesdeterminedbytheArbitral

Tribunaltobeapplicable;

(c)unreasonableburdentoproducetherequestedevidence;

(d)lossordestructionoftheDocumentthathasbeenshownwithreasonablelikelihoodtohave

occurred;

(e)groundsofcommercialortechnicalconfidentialitythattheArbitralTribunaldeterminestobe

compelling;

(f )groundsofspecialpoliticalorinstitutionalsensitivity(includingevidencethathasbeenclas-

sifiedassecretbyagovernmentorapublicinternationalinstitution)thattheArbitralTribunal

determinestobecompelling;or

(g)considerationsofproceduraleconomy,proportionality,fairnessorequalityofthePartiesthat

theArbitralTribunaldeterminestobecompelling.

3.InconsideringissuesoflegalimpedimentorprivilegeunderArticle9.2(b),andinsofaras

permittedbyanymandatorylegalorethicalrulesthataredeterminedbyittobeapplicable,the

ArbitralTribunalmaytakeintoaccount:

(a)anyneedtoprotecttheconfidentialityofaDocumentcreatedorstatementororalcommuni-

cationmadeinconnectionwithandforthepurposeofprovidingorobtaininglegaladvice;

(b)anyneedtoprotecttheconfidentialityofaDocumentcreatedorstatementororalcommuni-

cationmadeinconnectionwithandforthepurposeofsettlementnegotiations;

(c)theexpectationsofthePartiesandtheiradvisorsatthetimethelegalimpedimentorprivilege

issaidtohavearisen;

(d)anypossiblewaiverofanyapplicablelegalimpedimentorprivilegebyvirtueofconsent,

earlierdisclosure,affirmativeuseoftheDocument,statement,oralcommunicationoradvice

containedtherein,orotherwise;and

(e)theneedtomaintainfairnessandequalityasbetweentheParties,particularlyiftheyaresub-

jecttodifferentlegalorethicalrules.

4.TheArbitralTribunalmay,whereappropriate,makenecessaryarrangementstopermitevidence

tobepresentedorconsideredsubjecttosuitableconfidentialityprotection.

5.IfaPartyfailswithoutsatisfactoryexplanationtoproduceanyDocumentrequestedina

RequesttoProducetowhichithasnotobjectedinduetimeorfailstoproduceanyDocumentor-

deredtobeproducedbytheArbitralTribunal,theArbitralTribunalmayinferthatsuchdocument

wouldbeadversetotheinterestsofthatParty.


6.IfaPartyfailswithoutsatisfactoryexplanationtomakeavailableanyotherrelevantevidence,

includingtestimony,soughtbyonePartytowhichthePartytowhomtherequestwasaddressed

hasnotobjectedinduetimeorfailstomakeavailableanyevidence,includingtestimony,ordered

bytheArbitralTribunaltobeproduced,theArbitralTribunalmayinferthatsuchevidencewould

beadversetotheinterestsofthatParty.

7.IftheArbitralTribunaldeterminesthataPartyhasfailedtoconductitselfingoodfaithinthe

takingofevidence,theArbitralTribunalmay,inadditiontoanyothermeasuresavailableunder

theseRules,takesuchfailureintoaccountinitsassignmentofthecostsofthearbitration,includ-

ingcostsarisingoutoforinconnectionwiththetakingofevidence.

7776 IN-HOUSE COUNSEL PRACTICAL GUIDE

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profIle

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arbitrationaswellasbeinganarbitrator.

T:31102172472

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