1.1 Introduction:
One of the ways in which international arbitrations [1] can be classified is as either ad hoc or institutional. The most popular rules for ad hoc arbitrations are the Arbitration Rules (1976) (Adopted by the United Nations General Assembly on December 15, 1976). (“UNCITRAL Rules”). UNCITRAL stands for the United Nations Commission on Trading Law. The most popular institutional rules are the Rules of Arbitration of the International Chamber of Commerce, effective as of 1 January 1998. (“ICC Rules”).
In institutional, or administered arbitration there is a supervising institution which may exert a high level of administrative control of the arbitral process, the intention of which is to achieve a suitable procedure and maintain quality control rather than to obstruct or intrude upon the dispute resolution[2] by the arbitrator(s). This is the case with ICC arbitrations which is probably the biggest dispute resolution institution in the world and construction and engineering disputes account for a large amount of these.
1.2 Main Characteristics
Under ICC arbitrations the ICC Court, which is not a courte at all, ensures the ICC Rules are applied. The ICC Court is more an administrative and supervisory body than a court. It approves the main steps in the process (including nomination of arbitrators and the Terms of Reference), determines the cost of the arbitration and reviews every award. Many commentators believe that proper administration by institutions can significantly help the arbitration proceedings to keep moving along and if one of the parties is failing to co-operate an institution may be able to influence a difficult party or an arbitrator who is dragging its feet
[1] Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal”), by whose decision (the “award”) they agree to be bound. It is a settlement technique in which a third party reviews the case and imposes a decision that is legally binding for both sides. Other forms of ADR include mediation (a form of settlement negotiation facilitated by a neutral third party) and non-binding resolution by experts. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts.
[2] A resolution is a written motion adopted by a deliberative body. The substance of the resolution can be anything that can normally be proposed as a motion. For long or important motions, though, it is often better to have them written out so that discussion is easier or so that it can be distributed outside of the body after its adoption. An alternate term for a resolution is a resolve.
Ad hoc arbitrations such as under the UNCITRAL [3] Rules are often considered to be cheaper. This is because the proceedings are administered by the tribunal rather than having the additional services (and costs) of an institution. Ad hoc arbitrations can be much more flexible than institutional arbitration in terms of how the arbitration is conducted but this flexibility is dependent on co-operation between the parties and their lawyers. However, if problems arise, for example in respect of the initiation of the proceedings, it may be necessary for the intervention of a court of law, which could be significantly more than the cost of employing an institution.
1.3 Place of Arbitration
The ICC Rules provide that unless the parties have agreed otherwise the place of the arbitration shall be decided by the ICC Court while under the UNCITRAL Rules the place shall be determined by the tribunal. It should be noted that the place of arbitration is of relevance to the determination and influence of procedural rules and also for the recognition and enforcement of the award.
The place of arbitration is frequently not the place where the parties, the witnesses, or the documents are located. It is also the case that regardless of the place of arbitration the tribunal may convene anywhere and as long as the parties agree, it may arrange hearings anywhere. International arbitration is built around the idea that parties select at least one of the arbitrators and both the ICC Rules. What often happens with international arbitrations is there will be three arbitrators and both parties will select ‘their’ arbitrator and both arbitrators will then appoint the chairman or the presiding arbitrator. Under the ICC Rules.
The ICC Rules deals with how the arbitrator is appointed where the parties have agreed to just one arbitrator. If they do not agree on a nomination then the ICC Court will appoint somebody.
[3] The United Nations Commission on International Trade Law (UNCITRAL) was established by the United Nations General Assembly by its Resolution 2205 (XXI) of 17 December 1966 “to promote the progressive harmonization and unification of international trade law”.
The ICC Rules dictates how three arbitrators should be appointed. This could be by means of each party nominating one arbitrator and the third arbitrator, who would act as chairman, being nominated by the ICC Court unless the parties have agreed on some other procedure. However, if a party fails to nominate any arbitrator the appointment will be made by the ICC Court. It is therefore possible that the ICC Court will be responsible for nominating either none, one, two or all three arbitrators.
1.4 Replacement of Arbitrators
Under both sets of rules a party to arbitration may challenge an arbitrator for alleged lack of independence or impartiality. Under the ICC Rules the challenge must be submitted to the Secretariat within 30 days from receipt of notification of the arbitrator’s appointment whilst under the UNCITRAL Rules the party has 15 days from either the appointment of the arbitrator or from when the relevant circumstances become known to him. Notification of the challenge must be sent to the other party and to all of the arbitrators.
Both sets of rules also allow for an arbitrator to be replaced upon his death, resignation or if is prevented de jure or de facto from fulfilling his functions.
The ICC provisions concerning the content of the parties’ submissions are very general in nature. This is in contrast with the UNCITRAL Rules under which (Article 18) the claimant must file a‘statement of claim including…a statement of facts supporting the claim, the points at issue, and the relief and remedy sought’.
The International Chamber of Commerce has issued the ICC ADR Rules (the “Rules”) for the use of parties who wish to settle their disputes or differences amicably with the assistance of a third party, the Neutral, within an institutional framework. It is because of the amicable nature of ICC ADR that ICC has chosen to refer to “ADR [4]” as “amicable dispute resolution” rather than “alternative dispute resolution”, which has been more commonly used in the past. “ADR”, as used by ICC, therefore does not include arbitration but only proceedings which do not result in a decision or award of the Neutral which can be enforced at law.
The Rules replace the ICC Rules of Optional Conciliation in force as from 1 January 1988. Thus, upon receipt by ICC of any request for conciliation based upon the old Conciliation Rules, ICC will ask the parties to reformulate their Request in accordance with the new Rules.
[4] Alternative Dispute Resolution (ADR) (also known as external dispute resolution in some countries, such as Australia) includes dispute resolution processes and techniques that act as a means for disagreeing parties to come to an agreement short of litigation. ADR basically is an alternative to a formal court hearing or litigation. It is a collective term for the ways that parties can settle disputes, with (or without) the help of a third party. ADR are ways and methods of resolving disputes outside the judicial process (formal litigation – court)
1.1 New ICC Arbitration Rules will come into force on January 2012
On 12 September 2011, the International Chamber of Commerce (ICC) has launched a revised version of its Rules of Arbitration with the aim of better serving the existing and future needs of businesses and governments engaged in international commerce and investment.
The new ICC Arbitration Rule (the “Rules”) will come into force on 1 January 2012 and take into account current requirements and developments in arbitration practice and procedure, as well as developments in information technology, since they were last revised in 1998.
The revision process began in 2008 and was undertaken by a small drafting committee of up to 20 members, supported by a wider task force of 202 members and a consultation process with ICC national committees around the world and the ICC Commission on Arbitration. The new Rules were approved in Mexico City by the ICC World Council on 11 June 2011.
Additions to the Rules include provisions to address disputes involving:
- Multiple contracts and parties;
- Updated case management procedures;
- The appointment of an emergency arbitrator to order urgent measures; and
- Changes to facilitate the handling of disputes arising under investment treaties and free trade agreements.
Other amendments have also been made to ensure that the arbitral process is conducted in an expeditious and cost-effective manner.
Unless parties stipulate otherwise, the new ICC Arbitration Rules will automatically apply to all arbitrations under the auspices of the International Chamber of Commerce commenced after 1 January 2012, save for the emergency arbitrator provisions.
In answer to the growing demand for a more holistic approach to dispute resolution techniques, the new Rules are published in a booklet that also includes the ICC ADR Rules, which provide for mediation and other forms of amicable dispute resolution. Both sets of Rules define a structured, institutional framework intended to ensure transparency, efficiency and fairness in the dispute resolution process while allowing parties to exercise their choice over many aspects of procedure.
Chapter – 2
ADR in ICC Documents
2.1 Defination
The International Chamber of Commerce has issued the ICC ADR Rules (the “Rules”) for the use of parties who wish to settle their disputes or differences amicably with the assistance of a third party, the Neutral, within an institutional framework. It is because of the amicable nature of ICC ADR that ICC has chosen to refer to “ADR” as “amicable dispute resolution” rather than “alternative dispute resolution”, which has been more commonly used in the past. “ADR”, as used by ICC, therefore does not include arbitration but only proceedings which do not result in a decision or award of the Neutral which can be enforced at law.
The Rules replace the ICC Rules of Optional Conciliation in force as from 1 January 1988. Thus, upon receipt by ICC of any request for conciliation based upon the old Conciliation Rules, ICC will ask the parties to reformulate their Request in accordance with the new Rules.
2.2 Characteristics of ICC ADR
The essential characteristics of ICC ADR are the following:
1) ICC ADR proceedings are flexible and party-controlled to the greatest extent possible.
2) ADR proceedings under the Rules are intended to be rapid and therefore relatively inexpensive. They permit the parties to seek an amicable solution to their disputes using a minimum of time and resourc es.
3) ICC ADR proceedings allow the parties themselves to choose whichever settlement technique is best suited to help them resolve their particular dispute with the assistance of an experienced Neutral. In the absence of an agreement of the parties upon a settlement technique, mediation will be used. The proceedings can lead to a settlement agreement between the parties which ends their dispute and is binding upon them in accordance with the law that applies to that agreement. The outcome of the ICC ADR proceedings can also be, for example, a non-binding opinion or evaluation of the Neutral, if neutral evaluation is the chosen settlement technique.
4) ICC ADR proceedings are confidential. The Rules put in place maximum safeguards to that effect.
ICC ADR thus differs from arbitration and judicial proceedings in that ICC ADR does not lead to a decision or award which can be enforced at law. In reality, however, ICC ADR and arbitration are complementary. If the parties do not succeed in resolving their dispute through ICC ADR, they can refer it to arbitration. Moreover, ICC ADR proceedings can occur during the course of arbitration.
In addition, the parties are free to agree in writing that they will comply with a recommendation or decision of the Neutral, even though it is itself unenforceable. In that case their agreement is binding upon them in accordance with the law applicable to that agreement. Finally, it should be noted that the Rules also apply to multiparty disputes.
2.3 Overview of the Rules
ICC ADR proceedings, as that term is used in the Rules, refer to the entire ICC ADR process from the filing of the Request for ADR until the ADR’s termination. Before ICC ADR proceedings can take place, the parties must agree to submit their dispute to the Rules. Such agreement can occur: in a prior agreement of the parties to submit their disputes to the Rules, either in their underlying contract or in a later agreement; or through a Request for ADR submitted by one party to ICC and accepted by the other party.In all cases, a Request for ADR must be submitted to ICC.
The Neutral is selected, either by designation by all of the parties, or by appointment by ICC. In the latter case, the parties may agree upon any desired qualifications or attributes of the Neutral to be appointed, and ICC will make all reasonable efforts to appoint a Neutral having those characteristics. ICC can also take into consideration the suggestions of any party concerning the qualifications or attributes of the Neutral to be appointed.
The cost of the ICC ADR is composed of three elements: ICC administrative expenses, which have an established ceiling; the fees of the Neutral, which are fixed on the basis of an hourly rate set by ICC in consultation with the Neutral and the parties; and the reasonable expenses of the Neutral, which are fixed by ICC.
Finally the Rules contain provisions establishing the confidentiality of the ICC ADR proceedings (see the discussion of Article 7 below).
This Guide is intended to be a brief commentary on the Rules, in simple language, for the benefit of users of ICC ADR. An article-by-article analysis of the Rules is provided below as well as a brief explanation of the four alternative clauses suggested by ICC for inclusion by parties in their contracts.
2.4 Analysis:
Four alternative ICC ADR clauses which may be inserted by parties in their contracts are annexed to the Rules. They do not constitute model clauses but simply suggestions that can be adapted to the needs of the parties. The parties and their counsel are invited to evaluate their enforceability under the law applicable to the contract. The four clauses are presented in order of increasing obligations on the parties to submit to ICC ADR.
The first clause provides simply for the possibility, without any obligation, for the parties to submit their dispute to the Rules. It is therefore purely optional. It is designed to encourage submission to ICC ADR and to provide a basis for one party to propose ICC ADR to the other.
The second clause obligates the parties to consider submitting their dispute to the Rules.
This clause is therefore not purely optional. It requires the parties to discuss the possibility of commencing ICC ADR proceedings. However, the parties retain the right not to do so after their discussion.
The third clause obligates the parties to submit to the Rules any dispute arising in connection with their underlying contract. The clause further provides that after 45 days from the filing of the Request for ADR the parties are no longer obligated to continue the ICC ADR. This time period can be extended by the written agreement of the parties. It is indeed important to provide an automatic expiration mechanism for ADR proceedings in an ADR clause of this type. It allows the parties to know precisely when they are no longer obligated to continue the proceedings. The parties are of course expected to apply this clause in good faith. The clause does not provide for another dispute resolution mechanism in case the ICC ADR fails to resolve the dispute. In that case, the parties are free to agree to submit their dispute to arbitration, or a party may bring an action before a competent court.
The fourth clause is identical to the third, except that it expressly provides that the dispute will be submitted to ICC arbitration if it has not been resolved within 45 days after the filing of the Request for ADR, unless such time period has been extended. In that case, it is up to the claimant to file a Request for Arbitration with the Secretariat of the ICC International Court of Arbitration in accordance with the ICC Rules of Arbitration
Conclusion
The similarities between the ICC Rules and the UNCITRAL Rules are many and it is suggested that they outweigh the differences. Their substantial differences can often be traced to the fact that one is an institutional arbitration and one is an ad hoc arbitration. It would also seem that ICC Rules and other institutional arbitration rules get used significantly more often than ad-hoc rules and the writer concludes that one of the main reasons causing the ICC Rules to get used more frequently is their institutional aspects
The revisions adopted in the new Rules have not only modernised ICC arbitration; they also seek to address many issues perceived as problematic by many users of ICC Arbitration. In numerous instances, revisions reflect a desire to ‘democratise’ the rules by spelling out established ICC Court practice previously known only to experts in the field. As a result, however, the new Rules are longer and may appear more complex than previous versions. The introduction of two new appendices and the reference to a separate booklet on the subject of controlling time and costs could be perceived as complicating rather than simplifying the procedures.
However, the adoption of the new Rules was preceded by a two-year international consultation process through which the views of international arbitration experts from around the world were canvassed. Thus, the new Rules do represent an accumulation of the most innovative practices and up-to-date thinking of the world’s leading arbitration institution, and as such the new Rules are expected to be received enthusiastically by the legal and business communities alike.
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