Introduction To International Commercial Arbitration: Robert J Gemmell

Introduction to
International Commercial
Arbitration
Robert JOnyema
Dr Emilia Gemmell Lecturer in Law
School of Oriental and African Studies
University of London
© Chartered Institute of Arbitrators 2008
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How to Use this Workbook
This workbook has been specially prepared for use by participants in the International
Commercial Arbitration Entry Course of The Chartered Institute of Arbitrators. It is designed to be
used throughout the course. The distinctive nature of international commercial arbitration raises
the issue of the interplay between laws of various jurisdictions and customs and practice. This
workbook is designed around a standard international ad hoc arbitral proceeding but also contains
references to selected institutional rules for comparison and completeness. A selected bibliography
of three standard textbooks in international commercial arbitration that are readily available is
given for additional study.
Remember that the workbook is not a textbook! Remember too that arbitration, like all alternative
dispute resolution (ADR) procedures is a consent process, that is, it happens only because the
disputing parties have chosen it, directly or indirectly. This means that the parties’ agreement is
all important throughout an arbitration, as will be shown.
Content
The workbook is designed in the format of a standard international ad hoc arbitration proceeding
from commencement to recognition and enforcement of the final award. It is divided into ten
chapters representing various stages of the arbitral process. A checklist of revision topics is given
in bullet point format at the end of each chapter followed in most chapters by revision questions
requiring the recall of knowledge contained within the chapter.
The appendix to this workbook contains the first part of an arbitration scenario. As the course
progresses, more information will be supplied, enabling students to answer the boxed ‘Scenario
Questions’ which are to be found at the end of certain chapters.
The workbook is written to reflect the use of language in legal documents so that, for example,
unless noted otherwise, ‘he’ means ‘he, she or it’ and ‘they’ is always plural.
A large number of international arbitration proceedings are conducted under the arbitration
rules of a given institution. The major difference between ad hoc and institutional arbitration is
the presence of an authority actively involved in administering the arbitral proceedings. Since
this is quite common in international commercial arbitration proceedings, relevant provisions of
the arbitration rules of a number of major institutions are provided for a comparative study and
to give participants a more rounded view of common practices.
Definitions
This workbook discusses the arbitral process generally unless specified otherwise. Arbitration
procedure is flexible and there are very many ways to carry out an arbitration reference. It is not
3
possible to describe all of these and this workbook therefore discusses the main points arising in
arbitral proceedings.
The following terms as referred to in this workbook have the following meanings unless noted
otherwise:
‘arbitration’ means private commercial arbitration, a formal and binding
process where disputes are resolved by an award made by a
tribunal independent of the disputants. Arbitration is a consensual
process, that is, one that is chosen and agreed upon by the parties.
‘award’ is the document which contains the decisions of an arbitral

tribunal.
‘domestic’ means wholly relevant within one jurisdiction, where the

disputants and all the applicable laws are in the one jurisdiction.
‘international’ means where one fundamental element of a dispute relates to a

different jurisdiction from that of another element, such as the
nationality of a disputant or an applicable law.
‘ad hoc’ means specially arranged for the purpose.
‘lex arbitri’ or ‘lex fori’ is the procedural law governing the proceedings of an arbitration.
‘prima facie’ means sufficient on first view to establish something.
‘res judicata’ means something that is already judicially decided.
‘mediation’ means a private form of dispute resolution where an independent

third party facilitates disputants to agree upon a solution to their
dispute. A successful mediation results in an agreement with the
force of a contract and is a process available only by the consent
of the parties.
‘conciliation’ means mediation but where the independent third party proposes
a solution to the dispute for the parties to accept or reject.
Abbreviations
AAA American Arbitration Association
ABA American Bar Association
EAA Arbitration Act 1996, in force in England & Wales and N Ireland
IBA International Bar Association
ICC International Chamber of Commerce
ICJ International Court of Justice
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ICSID International Centre for the Settlement of Investment Disputes
LCIA London Court of International Arbitration
PCA Permanent Court of Arbitration
SIAC Singapore International arbitration Centre
UNCITRAL United Nations Commission on International Trade Law
UNCTAD United Nations Conference on Trade and Development
WTO World Trade Organisation
Recommended reading
Law and Practice of International Commercial Arbitration
Alan Redfern and Martin Hunter with Nigel Blackaby and Constantine Partasides
(4th edn 2004, Sweet & Maxwell)
The Comparative Law of International Arbitration

Jean-François Poudret and Sebastien Besson
(2nd edn 2007, Sweet & Maxwell)
International Commercial Arbtration

Emmanuel Gaillard and John Savage, Fouchard Gaillard and Goldman
(1999, Kluwer Law International)
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Contents
Chapter 1 Essential Features of International Arbitration
Introduction, Objectives
Conciliation/mediation and arbitration .......................................................................................... 1.1
Arbitration and litigation ................................................................................................................ 1.4
Advantages ............................................................................................................................ 1.6
Disadvantages ....................................................................................................................... 1.7
Factors for consideration
Competence and special expertise of decision-maker ................................................. 1.8
Confidentiality ............................................................................................................. 1.9
Enforceability ............................................................................................................. 1.10
Speed and finality ...................................................................................................... 1.12
Neutral forum ............................................................................................................ 1.13
Procedure .................................................................................................................. 1.14
Cost ............................................................................................................................ 1.15
Special powers ........................................................................................................... 1.16
Representation ........................................................................................................... 1.17
Key choices to be made in opting for arbitration ......................................................................... 1.18
Form of the arbitration ........................................................................................................ 1.19
Ad hoc arbitration ...................................................................................................... 1.20
Institutional, supervised or administered arbitration .................................................. 1.22
Seat of the arbitration ......................................................................................................... 1.25
Revision Checklist
Revision Questions
Chapter 2 Laws and Rules of Arbitration

Arbitration laws .............................................................................................................................. 2.1
Model Law ............................................................................................................................ 2.2
Lex loci (law of the place) ...................................................................................................... 2.3
New York Convention ........................................................................................................... 2.7
Rules ........................................................................................................................................... 2.10
UNCITRAL Rules ................................................................................................................ 2.12
Institutional rules ................................................................................................................ 2.13
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Soft laws ....................................................................................................................................... 2.14
UNCITRAL Notes ................................................................................................................ 2.15
Codes of ethics .................................................................................................................... 2.16
IBA Guidelines on Conflicts of Interest ............................................................................... 2.17
IBA Rules of Taking Evidence in International Commercial Arbitration .............................. 2.18
Revision Checklist
Revision Questions
Chapter 3 Composition of the Arbitral Tribunal

Appointment procedures ................................................................................................................ 3.1
Sole arbitrator ....................................................................................................................... 3.2
Three arbitrators .................................................................................................................... 3.3
Multi-party arbitrations ......................................................................................................... 3.4
Appointing authority ............................................................................................................. 3.5
Appointment by court .......................................................................................................... 3.6
Appointment methods
Direct .................................................................................................................................... 3.7
List procedure ....................................................................................................................... 3.8
Default appointments ........................................................................................................... 3.9
Required qualities and qualifications of arbitrators ...................................................................... 3.10
Special background or expertise ......................................................................................... 3.12
Agreed qualifications .......................................................................................................... 3.13
Nationality .......................................................................................................................... 3.14
Challenge and replacement .......................................................................................................... 3.15
Reasons for challenging an arbitrator ................................................................................. 3.16
Procedure for challenging an arbitrator .............................................................................. 3.17
Arbitrator disclosure ........................................................................................................... 3.19
Other grounds terminating an arbitrator’s mandate ............................................................ 3.20
Procedure for replacement ................................................................................................. 3.21
Consequences of replacement
Possible re-hearings ............................................................................................................ 3.22
Truncated tribunals ............................................................................................................. 3.23
Revision Checklist
Revision Questions
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Chapter 4 Jurisdiction and Powers of the Arbitral Tribunal
Sources of jurisdiction and powers
Arbitration agreement, applicable arbitration laws and rules ............................................... 4.1
National laws ........................................................................................................................ 4.2
Jurisdiction
Stay of court proceedings ..................................................................................................... 4.3
Request for stay or dismissal ........................................................................................ 4.4
Conditions of stay or denial of jurisdiction .................................................................. 4.5
Continuation of arbitral proceedings ........................................................................... 4.8
Determination of own jurisdiction ..................................................................................... 4.9 I
Competence to determine jurisdiction ....................................................................... 4.10
Objections to jurisdiction .......................................................................................... 4.11
Ultimate control by national courts .................................................................................... 4.13
Powers during arbitral proceedings .............................................................................................. 4.16
Power to conduct proceedings ........................................................................................... 4.18
Power to order interim measures ........................................................................................ 4.20
Power to make final and other awards ............................................................................... 4.23
Limitation of arbitral powers ........................................................................................................ 4.24
Equal treatment of parties ................................................................................................... 4.25
Opportunity to present case ............................................................................................... 4.26
Court assistance and control ......................................................................................................... 4.27
Assistance in constituting arbitral tribunal .......................................................................... 4.28
Control of jurisdiction and compliance with procedural requirements .............................. 4.29
Recognition and enforcement of awards ............................................................................ 4.30
Revision Checklist
Revision Questions
Chapter 5 Statements of Claim and Defence

Function and content of the statement of claim ............................................................................. 5.1
Comparison with notice of arbitration .................................................................................. 5.3
Defining the claim and issues ............................................................................................... 5.5
Documentation and offers of evidence ................................................................................. 5.6
Function and content of the statement of defence .......................................................................... 5.7
Response to claim ................................................................................................................. 5.8
Set-off or counterclaim ......................................................................................................... 5.9
Amendments to the claim or defence ........................................................................................... 5.10
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Timeliness of amendment or supplement ........................................................................... 5.11
Prejudice and other considerations .................................................................................... 5.12
Possible imposition of costs ................................................................................................ 5.13
Further written statements ............................................................................................................ 5.14
Requiring or allowing further submissions ......................................................................... 5.15
Fixing time limits for submissions ....................................................................................... 5.16
Revision Checklist
Revision Questions
Chapter 6 Organising the proceedings

Means of preparing and organising proceedings ............................................................................ 6.1
Agreement of the parties ....................................................................................................... 6.2
Procedural order .................................................................................................................. 6.3
Possible procedural points .............................................................................................................. 6.4
Deposits for costs .................................................................................................................. 6.5
Language of proceedings ...................................................................................................... 6.6
Place of arbitration ............................................................................................................... 6.7
Administrative services ......................................................................................................... 6.8
Correspondence (means of communication) ........................................................................ 6.9
Appointment of expert witnesses ........................................................................................ 6.10
Preparation for hearing ....................................................................................................... 6.11
Interim measures of protection and security for costs ......................................................... 6.12
Default proceedings and multi-party arbitration ................................................................ 6.13
Revision Checklist
Revision Question
Chapter 7 Hearings
Logistical matters
Hearing room ....................................................................................................................... 7.1
Record-keeping .................................................................................................................... 7.2
Interpretation and translation ............................................................................................... 7.3
Procedures at the hearing
Sequence of oral arguments and taking of evidence ............................................................ 7.4
Testimony of witnesses .......................................................................................................... 7.5
Expert witnesses .................................................................................................................... 7.6
Presentation of new arguments or new evidence ................................................................. 7.7
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Default of a party .................................................................................................................. 7.8
Multi-party arbitration .......................................................................................................... 7.9
Fundamental requirements of justice .................................................................................. 7.10
Revision Checklist
Revision Questions
Chapter 8 Costs and Interest

Costs of the arbitration
Constituents of cost of the arbitration ................................................................................... 8.1
Requests for deposits............................................................................................................. 8.2
Assessment (‘taxation’ or ‘determination’) of costs ................................................................ 8.3
Apportionment of costs ......................................................................................................... 8.4
Interest ............................................................................................................................................ 8.5
Basis of awarding interest ..................................................................................................... 8.7
Rate of interest ...................................................................................................................... 8.8
Simple or compound interest ............................................................................................... 8.9
Start and end dates ............................................................................................................. 8.10
Considerations concerning enforcement ............................................................................ 8.11
Revision Checklist
Revision Questions
Chapter 9 Making of the Award – The Decision-Making Process

Awards and other decisions ............................................................................................................ 9.1
Procedural orders and rulings ............................................................................................... 9.2
Interim measures of protection ............................................................................................. 9.3
Awards .................................................................................................................................. 9.4
Rules applicable to the merits ........................................................................................................ 9.5
Choice of law ....................................................................................................................... 9.6
Friendly composition ............................................................................................................ 9.7
Relevance of contract and trade usage ................................................................................. 9.8
Decision-making by a panel of arbitrators ..................................................................................... 9.9
Majority rule or casting vote ............................................................................................... 9.11
Exception for procedural matters ........................................................................................ 9.12
Confidentiality of deliberations .......................................................................................... 9.13
Content of award and formal requirements .................................................................................. 9.14
Holdings and reasons ......................................................................................................... 9.15
Consent awards ................................................................................................................... 9.16
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Written form ....................................................................................................................... 9.17
Date and place of award .................................................................................................... 9.18
Signatures of arbitrators ...................................................................................................... 9.19
Delivery to parties .............................................................................................................. 9.20
Limits to publication of award ............................................................................................ 9.22
Correction, interpretation, addition .............................................................................................. 9.23
Correction of clerical errors ................................................................................................ 9.24
Interpretation of award ....................................................................................................... 9.25
Additional award ................................................................................................................ 9.26
Revision Checklist
Revision Questions
Chapter 10 Recognition and Enforcement of Awards

Recourse against an award ........................................................................................................... 10.1
Appeal and other types of recourse .................................................................................... 10.2
Setting aside ........................................................................................................................ 10.3
Time period ........................................................................................................................ 10.4
Grounds for setting aside .................................................................................................... 10.5
Remission of award ............................................................................................................ 10.6
Recognition and enforcement ...................................................................................................... 10.7
Recognition ........................................................................................................................ 10.8
Recognition and enforcement ............................................................................................ 10.9
Formal requirements ......................................................................................................... 10.10
Grounds for refusing recognition and enforcement ................................................................... 10.12
Incapacity of party ............................................................................................................ 10.13
Lack of valid arbitration agreement .................................................................................. 10.14
Violation of ‘due process’ ................................................................................................. 10.15
Arbitral tribunal exceeding its authority ........................................................................... 10.16
Irregular composition of arbitral tribunal and irregular procedure .................................. 10.17
Award not binding or set aside ......................................................................................... 10.18
Non-arbitrable subject matter ........................................................................................... 10.19
Violation of public policy ................................................................................................. 10.20
Suspension of enforcement proceedings and order of security .................................................. 10.21
Importance of the New York Convention ................................................................................... 10.23
Revision Checklist
Revision Questions
Appendix Scenario
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Chapter 1
Essential Features of
International Arbitration
Introduction
International arbitration is one of the many private dispute resolution
mechanisms parties involved in international transactions may adopt in resolving
their disputes. The United Nations Commission for International Trade Law
(UNCITRAL) regulates two primary mechanisms, conciliation/mediation and
arbitration, and particular rules govern each mechanism. This chapter examines
the differences between conciliation/mediation, arbitration and litigation and
the factors which require consideration when opting for arbitration as the
preferred method of dispute resolution.
Objectives
By the end of this chapter you should:
• be able to identify the primary differences between arbitration and
conciliation/mediation
• be able to distinguish arbitration from litigation
• understand the decisions involved when opting for arbitration
Conciliation/mediation and arbitration

1.1 The terms ‘conciliation’ and ‘mediation’ are used interchangeably in
this chapter. It is acknowledged that they are two different, though very similar
mechanisms. However, UNCITRAL and the International Centre for the
Settlement of Investment Disputes (ICSID) refer to conciliation, whereas most
private and national dispute resolution organisations and rules refer to mediation.
1.2 Conciliation/mediation refers to a private dispute resolution mechanism
where a neutral third party assists the opposing parties to reach a solution in
settlement of their dispute. Conciliation/mediation, when successful, results in
a decision that is usually only binding as a contract. Arbitration refers to a private
dispute resolution mechanism whose outcome is a legally-binding and
enforceable decision with res judicata effect (ie once a dispute has been decided
upon, the same parties cannot attempt to raise the issue again by or during
12
Arbitration and litigation 13
further proceedings). Apart from litigation (see below) no other resolution process
has such universal enforceability.
1.3 In 1980 the General Assembly of the United Nations recommended the
UNCITRAL Conciliation Rules to its member states. Parties have to agree on the
rules by concluding a reference clause or agreement post- or pre-dispute. The
UNCITRAL Conciliation Rules then govern the conciliation procedure. The
conciliator may make settlement proposals to the parties which do not need to
be in writing or accompanied with reasons. In 2002 UNCITRAL published a
Model Law on International Commercial Conciliation which, like the
UNCITRAL Model Law on International Commercial Arbitration 1985 with regard
to arbitration, is intended to guide states in drafting conciliation legislation.
Arbitration and litigation

1.4 Before examining in detail the decisions to be made when opting for
arbitration as the preferred method of dispute resolution, we first need to look at
the advantages and disadvantages of arbitration compared with its main
comparator, litigation.
1.5 Arbitration is most often compared to litigation, logically, since they are
the only two methods capable of producing binding resolution. It should,
however, be appreciated that any possible advantage can, if not exploited
properly, become a disadvantage (and vice versa) and this consideration should
be applied to the advantages and disadvantages of arbitration listed below.
Advantages
1.6
(a) The parties can choose their arbitrator who, with very few exceptions,
can be anyone. This means they can choose a person with particular,
relevant expertise.
(b) The arbitral process is private and confidential between the parties and
the arbitrator. This confidence may only be breached with the consent
of the parties and the arbitrator. Unless agreed by all parties, no outsider
may be involved. This principle extends to sitting in by pupils (although
most parties do not object to this, often welcoming it in a very positive
way).
(c) In choosing their arbitrator, parties will usually ensure that he can start
the arbitration quickly and proceed without unnecessary delay.
(d) An arbitration hearing may be held anywhere that is convenient, at any
suitable time.
(e) Arbitration is flexible and can be tailored to a particular dispute, making
the best use of time while still ensuring a proper consideration of the
matters in hand.
14 Essential Features of International Arbitration
(f) By starting and proceeding without delay, and eliminating unnecessary

procedures, significant corresponding cost savings can be made, even
though arbitration requires the arbitral tribunal and any hearing room
and services to be paid for (while a judge and court and its facilities are
usually free to the parties).
(g) Parties in an arbitration are usually free to choose whomever they wish
to make their case for them (‘advocate’) – the party itself or a friend or a
professional accountant, architect, etc (‘lay advocate’) or a lawyer without
restriction as to type or grade.
(h) An arbitrator’s award may ‘be enforced in the same manner as a
judgment’, provided it is made in accordance with the relevant statute,
that is, it was made with regard to a written arbitration agreement.
Disadvantages
1.7
(a) Arbitration results in a stand-alone decision – it generally has no effect
on any other decisions either in arbitration or in the courts. It has no
‘precedential’ value (in certain circumstances this can be an advantage
to the parties, ensuring confidentiality extends to there being no report
of the arbitration).
(b) If a dispute relates to an important point of law, it may be that the ‘loser’
in arbitration will appeal the arbitrator’s decision. In such a situation, it
would probably be faster and cheaper to litigate the dispute in the courts
rather than go through an arbitration and delay the apparently inevitable
court proceedings.
(c) Unless the parties in an arbitration agree, joining another party (a ‘third
party’, who must also agree) into an arbitration may not be done.
(d) Legal aid is generally not available for arbitration.
Factors for consideration
Competence and special expertise of decision-maker
1.8 In litigation, parties generally have no say as to who will be the judge
assigned to hear and decide their case. They are therefore not in any position to
assess how technically competent the assigned judge is. However, in arbitration,
parties are generally free to choose their arbitrators and so can choose people
with relevant technical expertise to decide their dispute.
Confidentiality
1.9 Litigation is almost always open to the public. Documents filed at court
and the judgment delivered are all public documents. In contrast, arbitration
Arbitration and litigation 15
proceedings, documents and awards are private as between the parties and the
arbitral tribunal (and arbitration institution). However this privacy is not the same
as confidentiality. Thus, an arbitral award enters into the public domain when,
for example, enforcement proceedings are commenced. Various courts have
ruled that in certain circumstances arbitral documents and awards are not
protected by confidentiality.
Enforceability
1.10 Judgments of national courts are enforced through the coercive powers
of the state. However, arbitration awards do not have any automatic coercive
powers of enforcement, which means that an arbitral award is not self-enforcing.
Unless it is voluntarily complied with by the losing party, a winning party in
receipt of an arbitral award will have to seek enforcement by the national court
system.
1.11 National court judgments have territorial limitation and there are no
multilateral conventions for the enforcement of court judgments except within
the European Union. However, under the Convention for the Recognition and
Enforcement of Foreign Arbitral Awards 1958 made in New York (otherwise
known as the New York Convention, currently with 142 members) an award
made in one Convention state can be enforced in any other Convention state
upon the production of minimal documents (arbitration agreement and arbitral
award and translations if necessary).
Speed and finality
1.12 A court judgment is generally subject to appeal on the merits and usually
only becomes final when it is no longer able to be appealed. An arbitral award
is final and subject to appeal on very limited grounds (but not on the facts decided
in it) and within very limited time. An example of this stringency is to be found
under art 34(3) of the UNCITRAL Model Law on International Commercial
Arbitration 1985 (UNCITRAL Model Law) which states that an arbitral award
must be challenged within three months.
Neutral forum
1.13 Litigation takes place before national courts connected geographically

to either the dispute or one or both of the parties. A party litigating before a
national court must have standing to sue before the court. However, parties in
arbitral proceedings can arbitrate before any forum of their choice without the
necessity of such a connection. The neutrality of forum is said to be one of the
major advantages of arbitration, since parties involved in international arbitration
are usually from different countries and prefer to have their arbitration in a neutral
country. This neutrality removes the anxiety of one party getting a home
advantage and therefore the problems of perceived or actual bias.
Procedure
1.14 Court procedure is laid down in procedural rules which are not
necessarily tailored to individual cases. Parties involved in international arbitration
can tailor their procedure to their particular dispute. This is so even where the
arbitration is conducted under specified arbitration rules.
Cost
1.15 The cost of filing court proceedings may be minimal. In comparison, the
costs incurred in arbitration proceedings are usually higher. One reason for this
is that the parties pay the arbitrators, the arbitration institution and administrative
facilities; all in addition to other common legal costs and fees.
Special powers
1.16 In litigation, the powers available to the judge are clear and regulated by
the applicable law and rules. However, arbitrators may exercise wider powers
as conferred upon them by the parties, for example, where parties empower
their arbitrator to decide as amiable compositeur or ex aequo et bono (that is
without strict reference to the law but on the basis of what they judge as fair and
just under the circumstances).
Representation
1.17 In order to represent a party before a court of law within a particular

jurisdiction, legal practitioners must be legally qualified, registered and authorised
under the rules of a local bar or professional body. In international arbitration,
parties can generally be represented by any person of their choice. Such
representatives can include lawyers (but this is not a requirement) and technical
persons with relevant expertise. They are not required to belong to any
professional body in the country where the arbitration proceedings are being
held or be qualified to practice law in such jurisdictions.
Key choices to be made in opting for arbitration

1.18 Once the parties have decided to resolve their dispute by arbitration,
there are certain very important and fundamental decisions they need to make,
some of which are examined below. There are certain, essential elements in the
arbitral process to be satisfied:
(a) there must be a dispute or difference between the parties;
(b) this dispute must be capable of being decided by arbitration (‘arbitrable’)
– disputes related to illegal contracts may not usually be arbitrated;
(c) the parties in dispute must agree to submit themselves to arbitration – if
the agreement is oral, case law applies (if at all) and if it is in writing then
Key choices to be made 17
statute law also applies, overruling case law where applicable;

(d) the arbitration agreement must satisfy all the necessary requirements to
establish it as a binding contract between the parties;
(e) the agreement must also provide for the appointment of another person
or persons chosen by the parties directly or indirectly (eg through an
institution or, by default, the courts) to decide their dispute or difference;
(f) the parties must clearly refer their dispute to be decided by another person
or persons; and
(g) the person or persons chosen by the parties to decide their dispute must
make their decision according to legal principles, unless specifically and
legally directed otherwise by the parties.
Form of the arbitration

1.19 The growth in arbitration references has led to the proliferation of
organisations specialising in administrating arbitration proceedings. These
organisations are known as arbitration institutions. They provide, for a fee, various
services to disputing parties, their representatives and the arbitrators. Parties who
are experienced in international arbitration (or where a state or state enterprise
is involved) may effectively organise the arbitral procedure without the aid of
an arbitration institution. Therefore there are two forms of arbitration
proceedings, ad hoc and institutional.
Ad hoc arbitration
1.20 Ad hoc arbitration occurs where an arbitration agreement does not

specify an arbitration institution to assist the parties in their arbitration. The parties
may agree that the arbitration rules of any particular arbitration institution shall
apply or they may agree on having no specific rules, that is, that their arbitration
shall be conducted ad hoc.
1.21 This implies that the parties and arbitral tribunal will make up the
procedure as they go along. The most important consequence of this option is
that the arbitration law of the place of arbitration may then be frequently resorted
to by the parties and arbitral tribunal. In some jurisdictions, the national arbitration
law applies by virtue of the fact that the arbitral proceeding is held there. An
example is s 2 of the Arbitration Act 1996 (England & Wales and Northern
Ireland). In some other jurisdictions, the national arbitration law does not play
an automatic default role. An example is art 1494, New Code of Civil Procedure
1981 (France). National arbitration laws may contain mandatory rules from which
the parties and arbitrators may not derogate. They also contain non-mandatory
rules which act as default rules to be applied where the parties have not made
any alternative provision. In addition to gap-filling, such provisions also serve
as guidance to the parties and the arbitral tribunal.
Institutional, supervised or administered arbitration
1.22 In some arbitration agreements, the parties opt to conduct their arbitration
proceedings with the assistance of a particular institution. There are various
institutions all over the world that not only provide administrative assistance to
parties, but formulate and publish their own set of arbitration rules and a standard
arbitration agreement. Parties may decide to incorporate this standard arbitration
agreement into their contracts and/or expressly agree to conduct their arbitration
under the arbitration rules of a particular institution.
1.23 It is important to identify a particular institution clearly. This avoids
ambiguity in the arbitration agreement and ensures that the agreement does
not become inoperative or incapable of being performed. Once a particular
institution is chosen to administer an arbitration, the set of arbitration rules of
that institution are automatically incorporated into the arbitration agreement
(incorporation by reference). Thus, the institution will administer the arbitration
in accordance with its arbitration rules and the parties and arbitrators will also
comply with the same rules. The arbitration rules applicable to the arbitration
will be the version of the rules in use at the time the dispute is submitted to the
arbitral institution.
1.24 The principal difference between ad hoc and institutional arbitration is
that, in institutional arbitration, the parties already have a set of arbitration rules
governing the arbitral procedure, while the parties to ad hoc arbitration may
not. Parties in ad hoc arbitration frequently adopt the UNCITRAL Arbitration
Rules 1976 as their applicable procedural rules and this is generally included
in their arbitration agreement.
Seat of the arbitration

1.25 The second key choice the parties must make is the seat or venue of
their arbitration. This is important for various reasons. It is the courts with
supervisory jurisdiction over international arbitration situated in the seat of the
arbitration that will render assistance to the parties before and during their arbitral
proceedings. This assistance may comprise constituting their arbitral tribunal
and granting emergency measures of protection, amongst other things. The
arbitration law governing the seat will be the procedural law of the arbitration,
unless the parties choose otherwise. As such, the arbitration law will lay down
the mandatory requirements for the arbitration and the default provisions in
situations where the rules chosen by the parties are silent. In addition, the award
is deemed made at the seat of the arbitration for the purposes of enforcement
under the New York Convention and the UNCITRAL Model Law. Even if the
parties choose a different procedural law, the seat is the most important and
essential designation in an arbitration.
1.26 Where parties fail to choose a seat for their arbitration, then their arbitral
tribunal, arbitration institution, appointing authority or a national court will make
the decision for them. This decision will bind them as the juridical seat or venue
of the arbitration. The fact that parties have directly or indirectly chosen the seat
Revision Questions 19
of their arbitration does not mean they are bound to hold their hearings or
meetings there. Hearings, meetings and other relevant activities in an arbitration
may be held in any other place, whether in or outside the chosen seat or venue.
This relocation however does not affect the choice or legal relevance of the
seat or venue of the arbitration.
Revision Checklist
• Differences between conciliation/mediation, arbitration and litigation
• Ad hoc v institutional arbitration
• Seat or venue of the arbitration
Revision Questions
(1) What are the essential differences between conciliation/mediation and
arbitration?
(2) What advantages does arbitration have over litigation?
(3) What are the differences between ad hoc and institutional arbitration
proceedings?
(4) What is the relevance of parties choosing the seat or venue of arbitration?
Chapter 2
Laws and Rules of Arbitration
Introduction
The laws and rules that apply to arbitration proceedings must be determined at
the outset. These laws and rules govern the arbitral procedure and contain the
powers exercisable by the arbitrators.
Objectives
• be able to identify the components of the lex arbitri
• understand the application of the lex arbitri to the arbitral procedure
• appreciate the importance and relevance of the lex arbitri to the arbitral
process
• be able to identify other relevant rules, practices and guidelines
applicable in arbitration
Arbitration laws
2.1 This section examines three primary laws relevant in international
arbitration proceedings:
(a) UNCITRAL Model Law on International Commercial Arbitration 1985
(Model Law).
(b) Lex loci (law of the place).
(c) Convention for the Recognition and Enforcement of Foreign Arbitral
Awards 1958 (New York Convention).
The Model Law and the law of the forum are both forms of national laws while
the New York Convention is an international convention ratified by various
states. There are other laws involved in an international arbitration, which are
considered later in this chapter.
Model Law
2.2 In 1985, the United Nations Commission for International Trade Law
(UNCITRAL) proposed its Model Law on International Commercial Arbitration
20
Arbitration laws 21
for adoption or adaptation by member states as their national arbitration law. As

of 1 December 2007 it has been adopted by 60 states and territories and has
influenced most modern arbitration legislation. The provisions of the Model
Law represent a pro-arbitration legal regime. As a model, it only has force of
law when adopted (or adapted) as the national arbitration law of a particular
state. It also operates as a benchmark for modern arbitration law and was updated
in 2006.
Lex loci (law of the place)

2.3 International arbitration takes place within the territory of a particular
state. This may not be the place of the seat or even of an alternatively-chosen
procedural law. The parties may choose the seat of their arbitration directly or
indirectly. The choice of the seat of arbitration is direct when the parties expressly
make such a choice, usually in their arbitration agreement. The choice becomes
indirect when the arbitral tribunal or an arbitration institution makes the choice
for the parties. Appointing authorities and national courts can also choose the
seat of arbitration on behalf of the parties in ad hoc arbitral proceedings.
2.4 Various reasons are proffered to explain why parties opt to arbitrate their
dispute in one place or another, including neutrality and convenience. Most
commentators do not believe that parties choose a particular seat necessarily
because of its arbitration laws. What is generally accepted is that the juridical
seat may be different from where an arbitration actually takes place. Thus, parties
can hold all their hearings in another place than the seat of arbitration for various
reasons, convenience being one of them. Where this happens, the relevant
applicable law is the law of the juridical seat (or of another, different jurisdiction
if chosen) and not that of the geographical place of arbitration. This can create
problems if recourse to a court is required since the court and law of the
jurisdiction will be those belonging to where the arbitration is actually taking
place – lex loci – although this court must take note of the lex arbitri, the chosen
procedural law.
2.5 Default provisions of the applicable arbitration law act as gap fillers when
the parties have not made any particular provisions. Arbitration rules supplement
the applicable procedural law but must not contravene it. The default provisions
in the applicable procedural law are usually non-mandatory so that the parties
can depart from them when they have made express provisions on the relevant
issue or it is provided for in their chosen arbitration rules. Where the law of the
seat of arbitration contains mandatory provisions, the parties and the arbitral
tribunal cannot derogate from them but must comply with such provisions,
even if they choose another procedural law. Examples of such provisions include
art 18 of the Model Law (equal treatment of parties) and s 4 referring to Sch 1 of
the Arbitration Act 1996 which contains a list of such mandatory provisions
applicable to arbitrations with their seat in England, Wales or Northern Ireland.
2.6 Examples of national arbitration laws include the Arbitration Act 1996
(which is not strictly speaking modelled on the Model Law but influenced by it)
22 Laws and Rules of Arbitration
and the French Civil Procedure Code noted in Chapter 1. In some jurisdictions,
the same statute applies to both domestic and international arbitration
proceedings while in other jurisdictions different arbitration laws apply – each
law specifies its scope of application.
New York Convention

2.7 The New York Convention has been said to be the most important
convention in international commercial arbitration. As of 1 December 2007, it
has been ratified by 142 countries. The New York Convention regulates the
recognition and enforcement of arbitration agreements and foreign arbitral
awards. ‘Convention awards’ are recognised and enforced under the
Convention and an award sought to be enforced in a Convention state is prima
facie valid when made in another Convention state. This can apply whether an
award is ‘domestic’ or ‘international’.
2.8 The New York Convention for the most part superseded the two Geneva
Conventions of 1923 and 1927 which regulated the recognition and
enforcement of arbitration agreements and arbitral awards respectively.
Recognition and enforcement of Convention awards has been simplified under
the New York Convention and the onus of proof shifted from the party seeking
enforcement to the party resisting enforcement, a move which embodies the
pro-enforcement bias of the Convention.
2.9 Under the Convention a party seeking recognition and enforcement of
a Convention award only needs to produce the original authenticated arbitral
award or a certified copy, the original arbitration agreement or a certified copy
and, where applicable, certified translations of these documents. The party
resisting enforcement can attack the award only on the limited grounds listed
under art V of the Convention.
Rules
2.10 Arbitration rules regulate the arbitral procedure in conjunction with the
applicable procedural law. These rules detail how the arbitral proceedings should
be conducted and what extra powers are exercisable by the arbitral tribunal
and parties, amongst other things. Such procedural laws and rules are concerned
with procedural issues only. They do not cover substantive issues determining
the rights and obligations in the dispute between the parties. These are governed
by another law to be chosen in arbitration, the law applicable to the merits of
the dispute, discussed further in Chapter 9.
2.11 As mentioned above, there are some arbitration rules that are adopted
for ad hoc proceedings while arbitration institutions draft their own arbitration
rules to be applied to proceedings held under their auspices. Some arbitration
institutions also act as appointing authorities in ad hoc proceedings. In such
cases, the institution does not apply its own arbitration rules and in most
instances the parties choose to adopt the UNCITRAL Arbitration Rules.
Rules 23
UNCITRAL rules
2.12 The UNCITRAL Arbitration Rules were adopted in 1976 by the General
Assembly of the United Nations and recommended for use in the resolution of
international commercial disputes via arbitration. They regulate arbitral
proceedings from commencement to notification of the final award. Their
provisions stand as an industry benchmark and have also influenced the drafting
of many institutional arbitration rules. Following the amendment of the Model
Law, which was originally based upon these rules, the rules themselves are also
being revised.
Institutional rules
2.13 Various arbitration institutions manage arbitration proceedings under
specific published arbitration rules. Arbitration institutions review their arbitration
rules at various times and this helps keep them up-to-date with arbitral practice.
Examples include the International Chamber of Commerce (ICC) Arbitration
Rules 1998, London Court of International Arbitration (LCIA) Rules 1998, Swiss
Arbitration Rules 2004 and Singapore International Arbitration Centre (SIAC)
Rules 2007, among others.
Soft laws
2.14 Soft laws refer to those practices, standards, rules, directions or guidelines
which are not law but do have persuasive force. They must be incorporated by
the parties into their arbitration agreement or agreed by the parties to apply in
their arbitration reference for them to have effect or legal force as a contractual
term. This section introduces some of these ‘soft laws’. The Chartered Institute of
Arbitrators has issued a series of guidelines advising upon many aspects of
international arbitration, including: jurisdiction problems and challenges, multi-
party arbitrations, interim measures of protection and awarding costs. There are
16 guidelines in total which are available on the Institute’s website.
UNCITRAL Notes
2.15 UNCITRAL Notes on Organising Arbitral Proceedings were drafted to
assist parties and arbitrators involved in ad hoc arbitration. They are very useful
and serve as a checklist of items for the arbitral tribunal, the parties and their
counsel on what issues to prepare for and when, both before and during the
arbitral proceedings. The Notes can also be consulted in institutional arbitration
proceedings, although the administrative department of the institution handles
matters regulated by the Notes.
Codes of ethics
2.16 There are various codes of ethics applicable in different professions.
Although the conduct of arbitration is not yet universally recognised as a
24 Laws and Rules of Arbitration
profession, its practitioners are loosely regulated through various codes of ethics
and guidelines applicable to members of the drafting organisation or those sitting
under its rules. Thus the AAA/ABA Code of Ethics for Arbitrators in Commercial
Disputes 2004 applies to AAA/ABA members, the IBA Rules of Ethics for
International Arbitrators applies to IBA members and the SIAC Code of Conduct
for Arbitrators applies to arbitrators sitting under its rules. The IBA Rules of Ethics
also serves as a best practice guideline for arbitrators generally.
IBA Guidelines on Conflicts of Interest

2.17 The IBA Guidelines on Conflicts of Interest in International Arbitrations
2004 contain guidelines on conflict situations and how they should be treated.
The Guidelines are drafted for use by arbitrators as a guide on disclosure issues
and as a guide for national courts (and possibly arbitration institutions) deciding
upon challenges made to arbitrators. They represent best practice and ensure
harmonisation in the application of these principles in international arbitration.
IBA Rules of Taking Evidence in International

Commercial Arbitration
2.18 The IBA Rules on the Taking of Evidence in International Commercial
Arbitrations 1999 deal with various evidential issues and give guidelines on
what evidence is admissible in international arbitration proceedings. The rules
combine best practice from civil and common law legal traditions. Parties seeking
to use these rules in their arbitral proceedings must agree to their adoption.
Revision Checklist
• Arbitration rules applicable to arbitral procedure
• National laws applicable to arbitral procedure
• Mandatory provisions of the law of the seat of the arbitration
• Soft laws
Revision Questions
(1) How do you identify the rules and laws applicable to an international
arbitral proceeding?
(2) Distinguish between the law of the juridical seat, lex arbitri and lex loci.
(3) What is the relevance and role of soft laws in the international arbitration
process?
(4) Identify which laws and rules are applicable in an arbitration.
Chapter 3
Composition of the
Arbitral Tribunal
Introduction
An arbitration cannot effectively commence until an arbitral tribunal is
constituted. The disputing parties need, directly or indirectly, to appoint the
arbitrator or arbitrators to decide upon the matters in issue. In turn, those chosen
have to accept their appointment and the mandate to make a binding decision
on the dispute between the parties.
Objectives
• understand how arbitrators are appointed
• be able to appraise the qualities and qualifications required of arbitrators
• evaluate when and how to challenge arbitrators
• understand how arbitrators are replaced
Appointment procedures
3.1 Once an arbitration is commenced, nothing much can be done until
the arbitral tribunal is appointed. Parties can freely stipulate the number of
arbitrators they want to decide their dispute in the arbitration agreement. This
ability to appoint arbitrators is viewed as one of the most important advantages
and differences between arbitration and litigation where disputants cannot
choose which judge or number of judges is assigned to hear their case in court.
In international arbitration, parties are encouraged to choose an odd-numbered
arbitral tribunal, principally either one or three. Some national laws make a
default provision for a sole arbitrator while others provide for three arbitrators.
The umpire system is not the norm in international arbitration and therefore is
not considered in this Workbook. Some laws expressly provide that, where the
parties provide for two arbitrators, a third arbitrator will automatically be
appointed. The golden rule is that parties can agree on the number of arbitrators
and how they should be appointed.
25
26 Composition of the Arbitral Tribunal
Sole arbitrator
3.2 In an arbitral tribunal composed of a sole arbitrator, the parties may jointly
appoint the sole arbitrator or stipulate a third party to make such appointment.
Three arbitrators
3.3 In an arbitral tribunal of three arbitrators, each party appoints one
arbitrator known as a party-appointed arbitrator. The third and presiding arbitrator
is either jointly appointed by the two party-appointed arbitrators or by a third
party. Whether party-appointed or otherwise, all arbitrators are required to act
impartially, without bias, and to deal fairly and equally with the parties.
Multi-party arbitrations
3.4 Multi-party arbitrations are disputes with more than two disputants. There
are two primary default methods for appointing arbitrators in multi-party disputes.
Where the interests of the disputants can be categorised into claimants and
respondents, then they are so grouped and required to appoint arbitrators on
the basis of such grouping. Where their interests cannot be divided in this manner,
the appointing authority, national court or arbitration institution will make the
appointments.
Appointing authority
3.5 An appointing authority is an independent third party to the arbitration
who provides certain clearly defined assistance to the parties. An appointing
authority may be an individual, office or arbitration institution. Examples of
appointing authorities include the Secretary General of the International Centre
for the Settlement of Investment Disputes (ICSID), the Secretary General of the
Permanent Court of Arbitration (PCA) and the President of the International Court
of Justice (ICJ). The UNCITRAL Rules envisage the presence of an appointing
authority to assist parties in the appointment of arbitrators, in determining
arbitrator challenges and replacement of arbitrators under ad hoc arbitral
proceedings. In appointing arbitrators, where one party fails to make an
appointment, the appointing authority, institution or national court may make
the appointment on its behalf.
Appointment by court
3.6 National courts can assist parties and the arbitral process by appointing
arbitrators. The relevant court is the court at the seat of arbitration where the
parties have chosen a seat. Where they have not chosen a seat, it is then at the
option of the party applying for the appointment. Most national courts will readily
assist parties, especially when their forum is the most convenient to provide
such assistance to the parties.
Required qualities and qualifications 27
Appointment methods
Direct
3.7 The parties (usually through their lawyers) meet with prospective
arbitrators, interview them and choose one to act as either their party-appointed
arbitrator in an arbitral tribunal of three arbitrators or their nominee in a jointly-
appointed sole arbitrator tribunal.
List procedure
3.8 Under the list procedure, each party nominates three or more arbitrators
and either exchanges this list directly with the other party or sends it to an
appointing authority if there is one. The potential arbitrators are ranked in order
of preference or each party may cancel out the arbitrators it does not wish to
appoint. The arbitrator will be appointed from the list. Where there is an arbitrator
nominated by both parties, then he will be appointed.
Default appointments
3.9 National arbitration laws provide default arbitrator appointment rules to
apply where the method chosen by the parties fails or where the parties have
not made any arbitrator appointment provisions. Under institutional arbitration,
the provisions of the institution’s arbitration rules will apply to the arbitrator
appointment mechanism.
Required qualities and qualifications of arbitrators

3.10 The parties are the masters of their dispute. In contractual disputes, it is
the parties and possibly their lawyers who negotiated and performed the contract
and who may be responsible for the resultant dispute. With such detailed
knowledge, the parties should know what professional qualifications or expertise
their arbitrator should possess.
3.11 The parties also know what they want out of the arbitral process. Do
they want a fair resolution of the dispute? Do they want an amicable resolution
of the dispute? Do they want to frustrate their erstwhile business partners? Do
they want to frustrate the arbitral process to buy as much time as they possibly
can before resolving the dispute? Do they want an arbitrator with expertise in
the subject matter of the dispute? These are some of the questions which will
determine the sort of arbitrator the parties will appoint.
Special background or expertise

3.12 In specialist or technical disputes, parties may prefer to appoint an
arbitrator with specialist or technical knowledge or expertise in the relevant
field. This assures the parties that their arbitrator appreciates and understands
the technical aspects or specialist issues and nuances arising in the dispute. In a
dispute that turns on the interpretation of the contractual terms or facts, it may
not be necessary to appoint an arbitrator with specialist or expertise knowledge
in the field.
Agreed qualifications
3.13 Parties may agree, in their arbitration agreement or subsequently after
the dispute has arisen, on the specific qualifications their arbitrator to be
appointed should possess. This is usually agreed with regard to a sole or presiding
arbitrator. Such qualifications may be categorised into:
Professional: In a technical dispute, for example in the

construction industry, parties may want to appoint
an architect, surveyor, or engineer as arbitrator.
Personality: Parties may want to appoint an arbitrator who is a

team player, flexible, possesses common sense and
appreciates the importance of cultural differences.
Nationality
3.14 International arbitration proceedings usually involve parties from more
than one country. The parties may agree that a sole or presiding arbitrator will
be a citizen of a third neutral country. Conversely, the parties are free to choose
arbitrators that share their respective nationalities if they so wish. The Model
Law expressly states that an arbitrator cannot be disqualified purely on the basis
of nationality. However, the practice of most arbitration institutions is to appoint
a sole or presiding arbitrator with a neutral nationality.
Challenge and replacement

3.15 The challenge of, and, if necessary, replacement of arbitrators is one of
the rights parties have against arbitrators during the arbitration. The provisions
regulating the challenge and replacement of arbitrators are contained in national
laws and arbitration rules. The grounds for challenge are usually mandatory
provisions. These laws and rules provide for the mechanism, applicable tests
and grounds to sustain a challenge in addition to specifying the authorities
capable of deciding upon the challenge. A challenge can be decided by one of
four different decision makers:
• the arbitral tribunal itself (without the challenged arbitrator) as specified,
for example, in the ICSID Arbitration Rules;
• the appointing authority; see, for example, the UNCITRAL Arbitration
Rules;
Challenge and replacement 29
• the arbitration institution – this applies to practically all institutional

arbitral proceedings; and
• national courts – in both ad hoc and institutional arbitration proceedings.
Reasons for challenging an arbitrator

3.16 The reasons for challenging an arbitrator are very similar between the
different sets of arbitration rules. Four leading rule sets provide:
UNCITRAL Arbitration Rules: The challenge and replacement of arbitrators is

regulated under arts 10-14. An arbitrator can be
challenged if circumstances exist that ‘give rise
to justifiable doubts as to the arbitrator’s
impartiality or independence.’
ICC Arbitration Rules: An ICC arbitrator can be challenged for ‘an

alleged lack of independence or otherwise’
(art 11).
LCIA Arbitration Rules: The parties themselves can challenge an

arbitrator if ‘circumstances exist that give rise to
justifiable doubts as to his impartiality or
independence’ (art 10(3)).
Swiss Arbitration Rules: An arbitrator may be challenged, ‘where

circumstances exist that give rise to justifiable
doubts as to the arbitrator’s impartiality or
independence’ (arts 10-11).
Procedure for challenging an arbitrator

3.17 In order to make a challenge to an arbitrator, parties must follow the
procedure dictated by the arbitration rule set governing their procedure.
Examples include:
UNCITRAL Rules: The challenging party shall, within 15 days of

the cause of action arising, send a notice of the
challenge to the members of the tribunal and the
other party. The notice shall be in writing and
contain the reasons for the challenge. Where the
other party agrees to the challenge or the
challenged arbitrator withdraws, a replacement
arbitrator is appointed. Where the challenged
arbitrator fails to withdraw or the other party
disagrees with the challenge, the decision will
be made by an appointing authority.
ICC Rules: The challenging party shall submit a written

statement to the ICC Secretariat within 30 days
from the cause of action arising, ‘specifying the
facts and circumstances on which the challenge
is based’. The ICC Secretariat will notify the
arbitrator concerned, other members of the
tribunal and the other party and receive
comments in writing from them. The comments
will be communicated to all parties before the
ICC Court of Arbitration makes a decision. The
ICC Court does not state the reasons for its
decision. It either upholds the challenge or
rejects it. In 2005, the ICC Secretariat received
37 challenge applications and the ICC Court
upheld just 2 (ICC 2005 Statistical Report).
LCIA Rules: The challenging party shall, within 15 days from

the cause of action arising, send a written
statement to the LCIA Court, the arbitral tribunal
and other party. Where the challenged arbitrator
fails to withdraw or all the parties fail to agree to
the challenge, the LCIA Court will decide the
challenge within 15 days of receipt of the written
statement.
Swiss Rules: The Swiss Rules make little reference to any

special procedure for challenges. Articles 10 and
11 provide the following:
‘Article 10
1. Any arbitrator may be challenged if

circumstances exist that give rise to
justifiable doubts as to the arbitrator’s
impartiality or independence.
2. A party may challenge the arbitrator

appointed by it only for reasons of which it
becomes aware after the appointment has
been made.
Article 11
1. If the arbitrator being challenged does not

withdraw, the Special Committee shall
decide on the challenge.
2. The decision of the Special Committee is

final. The Special Committee has no
obligation to give reasons.’
Consequences of replacement 31
3.18 Where the appointing authority or institution has rejected a challenge

application and the challenging party is not satisfied with the decision, the
arbitration law at the seat of arbitration will dictate the next step. Article 13(3) of
the Model Law provides that an unsatisfied party may request the national court
for a final decision within 30 days of receiving the first decision. This appeal
applies to challenge decisions emanating from both ad hoc and institutional
arbitration proceedings.
Arbitrator disclosure
3.19 Before accepting an appointment to act, or as soon as any relevant
information comes to his notice, an arbitrator is under an obligation to disclose
any circumstance likely to affect impartiality. The time for a party to challenge
starts to run from the time the party becomes aware of the circumstances that
may give rise to a sustainable challenge. This obligation of disclosure and the
right to challenge continue throughout the arbitration process and an award
may be set aside or annulled if disclosure is not made.
Other grounds terminating an arbitrator’s mandate

3.20 Other grounds for terminating an arbitrator’s mandate include where he
does not possess the required qualifications specified by the parties for
appointment and where he can no longer act. Under art 10 of the LCIA Arbitration
Rules, an arbitrator’s appointment may be revoked by the LCIA Court itself where
the arbitrator ‘acts in deliberate violation of the Arbitration Agreement (including
the LCIA Rules) or does not act fairly and impartially as between the parties or
does not conduct or participate in the arbitration proceedings with reasonable
diligence, avoiding unnecessary delay or expense.’
Procedure for replacement

3.21 Where a challenge to an arbitrator is successful or where an arbitrator is
removed for any other reason, a vacancy in the arbitral tribunal results and a
new arbitrator will have to be appointed. Arbitration laws and rules provide for
a repeat of the initial arbitrator appointment procedure.
Consequences of replacement
Possible re-hearings
3.22 Where an arbitrator is replaced, the laws and rules provide for different
solutions to the question of whether to repeat the already-concluded stages. A
great deal depends on the stage at which the replacement occurs and which
arbitrator is replaced. If one of the party-appointed arbitrators is replaced, as a
matter of due process and fair hearing, the affected party may wish for the
hearings to be repeated in accordance with art 14 of the UNICTRAL Arbitration
Rules. Where, however, the presiding (or sole) arbitrator is replaced, the
UNCITRAL Arbitration Rules provide that the previous hearings ‘shall’ be
repeated; there is no discretion to be exercised.
Truncated tribunals
3.23 If, in a panel of three (or more) arbitrators, one (or more) arbitrators resigns/
becomes incapable of continuing with the proceedings/is disqualified/fails to
continue in the proceedings, then the arbitral tribunal is said to be ‘truncated’.
3.24 The problem this raises is, where a particular arbitrator is not replaced,
what happens to the arbitral proceedings and the eventual award? Should the
remaining arbitrators continue with the proceedings and render an award?
Would such award be recognisable and enforceable under the New York
Convention?
Revision Checklist
• Procedures and methods for the appointment of arbitrators
• Qualities and qualifications of arbitrators
• Reasons and procedure for challenge of arbitrators
• Disclosure requirements for arbitrators
• Replacement of arbitrators
• Truncated arbitral tribunals
Revision Questions
(1) What are the advantages and disadvantages of sole arbitrators and of
three-member tribunals?
(2) What personal and professional qualities should an arbitrator possess
and why?
(3) Compare the challenge provisions of the UNCITRAL Arbitration Rules
and ICC Arbitration Rules.
(4) Under what circumstances following the replacement of an arbitrator
should the arbitral hearings be repeated?
Scenario Question
Are there any grounds on which one of the arbitrators in the scenario may
be challenged?
Chapter 4
Jurisdiction and Powers of the

Arbitral Tribunal
Introduction
In order to determine a dispute effectively, an arbitral tribunal must have valid
jurisdiction. It is now a well-established principle of international arbitration that
an arbitral tribunal can determine its own jurisdiction, which may be reviewed
by a national court. Arbitrators require particular powers to perform their mandate
effectively. These powers must be granted to them either by the parties (expressly
or in arbitration laws and rules) or applicable international treaties.
Objectives
• understand how the jurisdiction of an arbitrator is determined
• be able to determine what powers an arbitrator possesses in any given
arbitration proceeding
• understand the role national courts play in international arbitration
Sources of jurisdiction and powers
Arbitration agreement, applicable arbitration laws

and rules
4.1 The primary source of the powers exercisable by an arbitrator is the
arbitration agreement between the parties. Consensual arbitration is contractual
in nature as between the parties, arbitrator, and arbitration institution if involved.
An arbitration agreement is supplemented by provisions of the applicable
arbitration law and any supporting rules. These arbitration laws and rules confer
specific powers and rights upon the arbitrator.
National laws
4.2 Where the parties have not provided otherwise, national arbitration laws
also contain certain default powers and rights which may be exercised by an
arbitrator.
33
34 Jurisdiction and Powers of the Arbitral Tribunal
Jurisdiction
Stay of court proceedings

4.3 Where parties have contracted to arbitrate any present or future disputes
arising from a contractual and/or tortious/delictual relationship between them,
almost all national courts will recognise such a contractual provision and give
effect to it.
Request for stay or dismissal
4.4 Some courts will deny their jurisdiction in the face of a prima facie valid
arbitration agreement while others will stay their jurisdiction and refer the parties
to arbitration. Either path leads to the same goal – getting the parties to arbitrate
their dispute in accordance with their agreement, rather than resort to litigation.
Conditions of stay or denial of jurisdiction
4.5 In determining whether the conditions for a stay of proceedings or denial

of jurisdiction have been met by an applicant, each court will apply its own
arbitration law or implement the New York Convention. Article II(3) of the New
York Convention provides: ‘The court of a Contracting State when seized of an
action in a matter … shall at the request of one of the parties, refer the parties to
arbitration …’
4.6 New York Convention states have undertaken to recognise agreements
in which the parties clearly agree to arbitrate their disputes. Various national
courts have held that all this requires is the existence of a prima facie arbitration
agreement. It does not require the court to conduct a detailed analysis into the
validity of the agreement because an arbitral tribunal will examine it as part of
its inquiry into its own jurisdiction and the courts can look at it again on appeal.
4.7 There is some debate as to whether a national court should at this stage
also examine the arbitrability of the dispute and whether the relationship is
contractual or not. Under art I(3) of the New York Convention a state ‘may also
declare that it will apply the Convention only to differences arising out of legal
relationships, whether contractual or not, which are considered as commercial
under the national law of the State making such declaration.’ If a state does
make such a reservation, then questions of arbitrability and the nature of the
relationship become highly relevant.
Continuation of arbitral proceedings
4.8 Once the court of a Convention state dismisses an application or grants

a stay of proceedings, it will generally refer the parties to arbitration. Where an
arbitral tribunal has been constituted, arbitral proceedings will commence or,
where proceedings were stayed, continue. Where an arbitral tribunal has not
Jurisdiction 35
yet been constituted the parties will deal with constituting it followed by the
commencement of arbitral proceedings.
Determination of own jurisdiction
4.9 It is fully accepted by practically all national arbitration laws that

arbitrators are empowered to determine their own jurisdiction, with national
courts having the power to adjudicate upon an arbitrator’s decision if appealed.
Competence to determine jurisdiction
4.10 The concept of ‘competence-competence’ refers to the power of an

arbitral tribunal to determine and rule on its own jurisdiction over a particular
arbitral dispute. This power is provided for in various laws and arbitration rules.
Article 16(1) of the Model Law, includes the arbitral tribunal deciding on, ‘the
existence or validity of the arbitration agreement’ in the determination of its
own jurisdiction.
Objections to jurisdiction
4.11 A party can contest the jurisdiction of an arbitral tribunal over either
itself (subjective arbitrability) or over the subject matter of the dispute (objective
arbitrability) before the arbitral tribunal in the first instance. An objection over
the jurisdiction of an arbitral tribunal is an issue which can be waived by the
objecting party voluntarily subjecting itself to the jurisdiction of the arbitral
tribunal.
4.12 An arbitral tribunal may decide to bifurcate the proceedings and give a
ruling on the jurisdictional phase of the dispute in an interim award or, where
the issues are so intertwined that, in arguing the jurisdiction of the arbitral tribunal
the merits will be entered into, the tribunal may decide to hear the merits as
well and decide on both its jurisdiction and the merits in its final award. The
party challenging the jurisdiction of an arbitral tribunal may reserve its right to
mount a jurisdictional challenge until after the final award, citing the
jurisdictional point as a ground for setting aside the award.
Ultimate control by national courts

4.13 Where a party is dissatisfied with the jurisdiction decision of its tribunal
and has not waived its right of challenge, that party can challenge the arbitral
tribunal’s decision in a relevant national court. After a substantive award has
been made, the challenge will be in the form of an application to nullify the
award on the grounds of lack of jurisdiction. If a substantive award has not yet
been made, the dissatisfied party can challenge the decision on jurisdiction in
an application to have the final award set aside.
4.14 Where the national court grants the challenge application and a
substantive award has been made, the court will nullify the award and the parties
can commence fresh proceedings either by arbitration or litigation. Where a

substantive award has not been made and the jurisdictional challenge is
sustained, a fresh arbitral tribunal may be constituted or litigation commenced.
4.15 Where the jurisdictional challenge is dismissed, the award may be upheld
or arbitral proceedings recommenced or continued. The decision of the national
court is a final determination of the challenge which shall not be re-litigated.
Powers during arbitral proceedings

4.16 There are principally five stages in any arbitration reference:
(a) pre-commencement
(b) composition of the arbitral tribunal
(c) hearing
(d) post-hearing
(e) post-award
4.17 The arbitral tribunal is relevant from stages (b) – (d) (and arguably the
early part of (e)). It is after an arbitral tribunal has been composed that it then
enters into its mandate to decide the dispute between the parties in accordance
with the arbitration agreement. The powers examined in this section are those
exercisable during the hearing and post-hearing stages of the arbitration. These
powers are broadly divided into: the power to conduct proceedings, the power
to order interim measures and the power to make final and other awards.
Power to conduct proceedings

4.18 All arbitration laws and rules provide guidance on how an arbitral tribunal
should conduct its proceedings. It is recognised that it is the arbitrators who
direct the arbitral proceedings. Article 15(1) of the UNCITRAL Arbitration Rules
opens with, ‘Subject to these Rules, the arbitral tribunal may conduct the
arbitration in such manner as it considers appropriate …’
4.19 The wide powers granted to an arbitral tribunal to conduct proceedings
are subject to treating the parties equally and giving them full opportunity to
present their case (‘natural justice’ or ‘due process’) as provided under art 15(1)
of the UNCITRAL Arbitration Rules. This can be compared with art 15(2) of the
ICC Arbitration Rules which calls on the arbitral tribunal to act fairly and
impartially giving each party a reasonable opportunity to present its case.
Power to order interim measures

4.20 Once proceedings are under way, a party may need to seek interim
measures of protection. Under most arbitration laws, a party can obtain such
measures from the arbitral tribunal or from the relevant national court. In applying
to the arbitral tribunal, a party may only seek a measure which the applicable
Limitation of arbitral powers 37
law empowers the arbitral tribunal to grant, and generally one which the very
consensual nature of arbitration permits an arbitral tribunal to grant. The other
limitation is the difficulty in enforcing interim orders. It is generally agreed that
such orders cannot be enforced under the New York Convention, however,
national courts lend their support to enforcement in various ways. An arbitral
tribunal cannot enforce its own orders since it lacks coercive authority or power,
but can draw an adverse inference from a party’s non-compliance with its orders
and take that into consideration in making its final decision on the dispute.
4.21 Note that in some jurisdictions such as Italy, Brazil and Argentina, arbitral
tribunals cannot order interim measures. Also note that this is one of the powers
an arbitral tribunal and national courts usually exercise concurrently. The relevant
national court can generally grant an order for interim measures at any time
during the arbitral proceedings. In some jurisdictions the courts refer parties
back to the arbitral tribunal when an order that an arbitral tribunal is able to
grant is sought before it.
4.22 A party may require an interim order before the commencement of an
arbitration. In such situations, the party may apply directly to a national court
since there is as yet no arbitral tribunal seized of the dispute. Some arbitration
institutions have adopted rules, for example the ICC Pre-Arbitral Referee Rules,
providing for the constitution of an interim arbitral tribunal or arbitrator to
determine an interim application and make a decision. This remains binding
on the parties until the arbitral tribunal is constituted.
Power to make final and other awards

4.23 The power to make a final award deciding the issues in dispute between
the parties can be said to be the most important power possessed by an arbitral
tribunal. An arbitral tribunal may, however, make different types of awards. The
main types of awards are:
• Interim or interlocutory or partial award
• Consent award
• Final award
Limitation of arbitral powers

4.24 An arbitral tribunal’s powers may be limited by provisions in the
arbitration agreement, national arbitration law or arbitration rules. In the
arbitration agreement, parties can expressly exclude certain powers. They can
also exclude particular powers under non-mandatory provisions of national
laws. Generally, as noted in 4.19, above, the exercise of arbitral powers is subject
to the fundamental principles of natural justice and due process which
encompass the requirements to grant the parties a fair hearing, an equal
opportunity of presenting their cases and of responding to the case of their
opponent.
Equal treatment of parties

4.25 Parties before an arbitral tribunal must be treated equally. This includes
putting parties on notice of the proceedings, ensuring pleadings and other written
communications are sent to all parties in good time. It does not include the
parties necessarily being represented by the same calibre of lawyers or other
representatives.
Opportunity to present case

4.26 Each party must be heard and given the opportunity to respond to its
opponent’s case. This right, however, does not permit unreasonable requests
from the parties. Examples of such requests are unreasonable adjournments
and unwarranted disclosure of documents.
Court assistance and control

4.27 While courts may be relevant at all stages of arbitral proceedings, they
are mainly involved at the first and last stages, that is, pre-commencement and
post-award. At the pre-commencement stage, courts may be requested to stay
proceedings or deny jurisdiction in support of the arbitration agreement. Courts
may also be requested to assist the parties in the appointment of arbitrators, as
discussed in Chapter 3, and to grant interim measures of protection to maintain
the status quo between the parties and prevent dissipation of assets. Courts play
little or no part in the arbitral process itself.
Assistance in constituting arbitral tribunal

4.28 Parties can request a court to appoint arbitrators on their behalf or, more
often, on behalf of a defaulting party. National arbitration laws empower courts
to assist parties in constituting an arbitral tribunal where the parties’ appointing
mechanism fails.
Control of jurisdiction and compliance with

procedural requirements
4.29 As mentioned earlier, arbitrators may generally determine their own
jurisdiction in the first instance. Where a party is dissatisfied with a determination
by the arbitral tribunal, it can always appeal to the relevant national court for a
final decision on the question of jurisdiction. Under some national laws, an
arbitral tribunal can also request the assistance of the court to ensure compliance
with certain procedural requirements. Article 27 of the Model Law provides for
assistance in summoning witnesses to take witness statements and produce
documents.
Recognition and enforcement of awards

4.30 At the end of proceedings, the arbitral tribunal issues a final award on
all the matters in dispute between the parties. The losing party is usually ordered
to do or refrain from doing something. The losing party can voluntarily comply
with the order of the arbitral tribunal, or, if not, the winning party may seek
recognition and enforcement of the award wherever the losing party has assets
against which enforcement can be made. A party may also seek recognition of
an award, but not its enforcement. For example, the award may be declaratory
or made to ensure that the finality of the decisions s achieved, giving the issues
a res judicata effect.
Revision Checklist
• Sources of arbitral jurisdiction and power
• Arbitrator’s power to determine own jurisdiction
• Arbitrator’s control over the conduct of the arbitral proceedings
• Interim measures
• Limitations on arbitrator’s powers
• Assistance and control by national courts
Revision Questions
(1) Compare the powers granted to arbitrators under the Model Law and
the Arbitration Act 1996 (England & Wales and Northern Ireland).
(2) Compare the powers granted to arbitrators under the UNCITRAL
Arbitration Rules and ICC Rules.
(3) What procedural issues may arise during the conduct of arbitral
proceedings?
(4) What types of interim measures can arbitrators grant?
(5) Can interim measures be enforced under the New York Convention?
Why is this so?
(6) What do you understand by ‘fair hearing’ and ‘opportunity to present a
party’s case’?
(7) Is there a material difference between ‘an’, ‘full’ and ‘reasonable’
opportunity of presenting a party’s case?
(8) How would an applicant determine which national court to approach
in requesting the appointment of arbitrators?
Chapter 5
Statements of Claim
and Defence
Introduction
Parties in international arbitration proceedings plead their case by written

statements. These written statements contain accounts of facts relied on in support
of their claim or defence and the relief they request from the arbitral tribunal.
Objectives
• understand the function and contents of written pleadings in international

arbitration proceedings
• appreciate the use of other written statements in international arbitration
proceedings
Function and content of the statement of claim
5.1 A statement of claim contains a factual account of the contractual or

other relationship between the parties and how the dispute arose. It contains
allegations of wrongdoing by the respondent and a description of what the
arbitral tribunal is required to decide. It also presents or refers to all the documents
and other evidence in support of the claims made in the statement.
5.2 Article 23 of the Model Law recommends that the statement of claim
contains facts in support of the claim, the points at issue and the relief or remedy
sought. Under art 18(2) of the UNCITRAL Arbitration Rules, the statement of
claim should include the following:
• names, (description) and addresses of the parties;

• a statement of facts supporting the claim;
• the points at issue;
• the relief or remedy sought.
40
Function and content of the statement of claim 41
Comparison with notice of arbitration

5.3 The notice of arbitration is a statement notifying the other party to the
arbitration agreement (and arbitration institution) of the notifying party’s intention
to commence arbitration proceedings under the agreement. This notice is the
first document in a reference and is important because its date is the recognised
start date of the arbitration. It may be a request for arbitration under some
arbitration rules, for example art 4 of the ICC Arbitration Rules. Article 3(3) and
(4) of the UNCITRAL Arbitration Rules states that a notice of arbitration should
contain the following:
• a demand for arbitration;
• names, (description) and addresses of the parties;
• reference to the arbitration agreement;
• reference to the underlying contract;
• general nature of the claim and amount involved;
• the relief or remedy sought;
• the number of arbitrators;
• arbitrator appointment method;
• notification of party appointed arbitrator;
• statement of claim.
5.4 The applicable arbitration law or rule will also usually contain a provision
defining the time for submitting the statement of claim. All other documents
relied upon to substantiate the allegations in the statement of claim may be
submitted with it or referenced in it. Article 18 of the UNCITRAL Arbitration
Rules provides, for example:
‘1. Unless the statement of claim was contained in the notice of
arbitration, within a period of time to be determined by the arbitral
tribunal, the claimant shall communicate his statement of claim in
writing to the respondent and to each of the arbitrators. A copy of the
contract, and of the arbitration agreement if not contained in the
contract, shall be annexed thereto.
2. The statement of claim shall include the following particulars:

(a) The names and addresses of the parties;
(b) A statement of the facts supporting the claim;
(c) The points at issue;
(d) The relief or remedy sought.
The claimant may annex to his statement of claim all documents he

deems relevant or may add a reference to the documents or other
evidence he will submit.’
42 Statements of Claim and Defence
Defining the claim and issues

5.5 A claimant defines its claim and formulates what issues are in dispute in
its statement of claim. The issues formulated by the claimant may be modified or
amended either by the claimant or arbitral tribunal after the respondent has
filed a defence. There may be issues or claims that are admitted or agreed,
dispensing with the need for determination by the arbitral tribunal.
Documentation and offers of evidence

5.6 Evidence upon which the parties rely in substantiating their claims or
defence may be contained in documents, plans, photographs, and any electronic
medium. (It may also be ‘real’ that is, the production and inspection of material
objects.) These will need to be presented to the arbitral tribunal. The goal is to
make such presentation as user-friendly as possible by numbering, paginating
and arranging documents in bundles as appropriate. Generally, arbitral tribunals
will admit whatever relevant evidence is placed before them (whether it is a
copy or original) and then decide what weight to attach to such evidence. The
provisions of the IBA Rules of Evidence contain useful guidance in this regard.
Function and content of the statement of defence

5.7 A statement of defence also contains facts regarding the particular
underlying transaction between the parties. It tells the story from the respondent’s
viewpoint. It specifically seeks to deny (or confirm) allegations made in the
statement of claim and may also raise its own claims or counter-claims against
the claimant.
Response to claim
5.8 A statement of defence answers the allegations or claims made against
the respondent in the statement of claim. The respondent submits its statement
of defence within the agreed time as granted by the arbitral tribunal or provided
in the applicable arbitration law or rules. For example, art 15(3) of the LCIA
Arbitration Rules provides for the statement of defence to be sent to the LCIA
Registrar within 30 days from the receipt of the statement of claim. The respondent
may also submit with the statement of defence all other documents it relies upon
to substantiate its defence or repudiate the claimant’s claims.
Set-off or counterclaim
5.9 A respondent may also have a claim against the claimant or a set-off
against the claimant’s claims. A respondent is generally permitted to make such
claims for a set-off or counterclaim in its statement of defence. It is a form of
consolidation of two possible proceedings into one. The applicable arbitration
law or rules may lay down conditions upon which a set-off or counterclaim
Amendments to the claim or defence 43
may be made. Article 19(4) of the UNCITRAL Arbitration Rules notes that the
same conditions apply as for a statement of claim.
Amendments to the claim or defence
5.10 The issue of granting permission to amend a statement of claim or

statement of defence is for the arbitral tribunal to decide. This power to grant
permission is within the discretion of an arbitral tribunal, which will take into
account its obligations to the parties and the principle of due process (fair hearing
and giving the parties the opportunity to present their case). Article 20 of the
UNCITRAL Arbitration Rules further provides that such amendment may not
be ‘in such a manner that the amended claim falls outside the scope of the …
arbitration agreement’. The general approach is that amendments are to be
permitted unless there are forceful reasons against them.
Timeliness of amendment or supplement

5.11 The timing of an application for an amendment and the nature of the
amendment may be a factors in determining the fairness of granting the
application. The same considerations will apply to applications to supplement
either a claim or a defence. An overarching consideration is the fact that any
such amendments must fall within the scope of the arbitration agreement. Where
such amendment raises new issues falling outside the scope of the arbitration
agreement, the arbitral tribunal lacks jurisdiction over such issues.
Prejudice and other considerations

5.12 In deciding whether to grant an application to amend or supplement a
claim or defence, an arbitral tribunal must keep the principle of due process in
mind by giving each party an opportunity to address it on whether or not to
grant the amendment or supplement. Where the parties agree to the amendment
or supplement there is no problem. Where one party opposes such an
application, and is heard, and the matter is determined either way, that party
cannot claim unfairness for lack of opportunity to make its case. An arbitral
tribunal protects its award by ensuring at all times that the parties are heard
fairly with impartiality and independence.
Possible imposition of costs

5.13 In making any application before an arbitral tribunal, parties incur further
legal and arbitration costs. A party opposing an application can always ask for
its costs to be borne by the applying party. The arbitral tribunal may grant such
application to balance the inconvenience and interests of the parties. Such
interim costs may be awarded and reserved for inclusion in the final award or
granted immediately.
44 Statements of Claim and Defence
Further written statements

5.14 Parties can agree to the number of further written statements but this is
usually agreed with the arbitral tribunal during the first procedural meeting or
discussion when a timetable for the proceedings is agreed. Such further
statements include:
• replies
• requests to produce documents (‘discovery’ or ‘disclosure’)
• closing submissions
• list of authorities.
Requiring or allowing further submissions

5.15 A party may apply to its arbitral tribunal for further submissions. Such
submissions may be oral or written. They are usually written, especially after the
close of oral hearings. Where the other party opposes such an application, the
arbitral tribunal will make a decision having received representations from both
parties; in accordance with due process. All parties are always given the
opportunity to respond or simultaneously file further submissions. Oral
submissions at this stage are rare.
Fixing time limits for submissions

5.16 An arbitral tribunal has an obligation to manage the arbitral proceedings.
In discharging this obligation, a tribunal must see that the interests of the parties
are balanced by ensuring that one party does not unduly delay the proceedings
or that another party is not forced into a tight time frame within which to present
its case. In conducting the proceedings, the key principles to observe are those
of due process or natural justice. The arbitral tribunal agrees with the parties (or
imposes if the parties do not agree) time schedules within which various aspects
of the proceedings will be performed and documents submitted. Such time limits
are usually not set in stone and can for good reasons be amended. In agreeing
such time limits, the parties also commit to complying with them.
Revision Checklist
• Statement of claim
• Statement of defence
• Amendments and supplements
• Further written statements
• Due process or natural justice
Revision Question 45
Revision Question
What should an arbitral tribunal do in the following situations?
(a) An application for amendment of the claim is made after the close of
hearings.
(b) An application to amend the statement of defence is obviously made to
delay the arbitral proceedings.
(c) An amendment of a claim or a defence introduces new issues not falling
within the scope of the arbitration agreement.
Scenario Question
Prepare a statement of claim and defence from the arbitration scenario.

Chapter 6
Organising the Proceedings
Introduction
In this chapter practical issues encountered in organising arbitral proceedings
are examined. The arbitral tribunal and parties (and their lawyers) will hold
several meetings to agree on various procedural issues at different times during
the arbitral proceedings until after the closing briefs have been filed and the
arbitral tribunal proceeds to prepare its award.
Objectives
• understand the issues relevant in the organisation of an international
arbitral proceeding
• appreciate the main procedural issues that may arise and make adequate
preparations
• be ready to draft a procedural order
Means of preparing and organising proceedings

6.1 The preparation and organisation of arbitral proceedings can be made
by the parties or their lawyers between themselves or in consultation with their
arbitrators. The parties may equally decide to leave such administrative matters
solely to their arbitral tribunal.
Agreement of the parties

6.2 Before constituting an arbitral tribunal, parties can agree the necessary
logistics for the arbitration proceedings. This depends heavily on what past
arbitration experience the parties (and their lawyers) possess. They may also
decide to wait and agree on the various procedural issues with their arbitral
tribunal in order to take the availability and convenience of the arbitrators into
consideration.
Procedural order
6.3 Upon constitution of the arbitral tribunal, and where parties have not
made any arrangements regarding the organisation of the arbitral proceedings,
46
Possible procedural points 47
the arbitral tribunal will make the necessary arrangements. It may consult the
parties or issue a procedural order informing the parties of its decision if the
parties have agreed it may do this, either directly or indirectly, through the
selection of a set of rules. For reasons of transparency, it is preferable for the
arbitral tribunal to consult with the parties, thus ensuring that the parties can
make representations, know what is expected of them and when to perform. It
also engenders congeniality between the arbitral tribunal and the parties.
Possible procedural points

6.4 The UNCITRAL Notes on Organising Arbitral Proceedings contain
information upon organisation of the various steps usual in the conduct of arbitral
proceedings. An arbitral tribunal will draw up a timetable for the proceedings,
including meetings, hearings, exchange of statements, inspection and visits to
sites as required. This timetable will be agreed with the parties and communicated
to them. If an amendment is required due to changed circumstances, all parties
(including the tribunal) are notified and their opinions considered before any
revised timetable is communicated to all.
Deposits for costs

6.5 This refers to the costs of the arbitration which include the remuneration
of the arbitral tribunal and other expenses incurred in administering the arbitral
proceedings. (The costs of the parties, in pursuing or defending the arbitration,
are considered later.) The arbitral tribunal is generally empowered to demand a
deposit from the parties towards its costs. It will make disbursements for
administrative and other arbitral costs from the deposit paid and can also receive
fees in advance and/or as the arbitration proceeds.
Language of proceedings
6.6 Where the parties have not agreed or chosen the language of their arbitral
proceedings, the arbitral tribunal will have to determine the language in which
the proceedings, documents and award will be made. This is an important issue
to be determined at the beginning of an arbitration, which ensures that adequate
arrangements are made and in good time if the services of translators and
interpreters will be required. This also is in satisfaction of the principle of due
process and natural justice.
Place of arbitration
6.7 Arbitration proceedings will often have to be held in one or more
geographical locations. Where the parties have not agreed on a juridical seat,
the arbitral tribunal will make that decision. The arbitral tribunal, in consultation
48 Organising the Proceedings
with the parties, will also decide whether hearings and inspections will be
conducted in the seat or other locations. The location of evidence, witnesses
and the convenience of both parties and arbitrators will all be taken into
consideration in deciding upon the venue of arbitral hearings.
Administrative services
6.8 In ad hoc arbitral proceedings, the arbitral tribunal is fully responsible
for the administration of the arbitration. An arbitral tribunal can engage the
services of a tribunal secretary to assist with administrative services including
booking hearing rooms and arranging and booking accommodation and flights
for the arbitrators.
Correspondence (means of communication)

6.9 This includes the form and means of transmitting written communications
between the parties and their arbitral tribunal. Examples include letter post (which
may be registered or recorded), fax, telex, couriers, and e-mail with attachments.
Which methods are chosen depend upon the locations involved as postal (and
other) services vary considerably from place to place. The important point to
note is that whatever the form(s) or means of communication, they should be
agreed with the parties and included in the procedural directions or orders.
Appointment of expert witnesses

6.10 It is for the parties to agree, or for their arbitral tribunal to decide when
the parties disagree, on whether there is a need for expert witnesses. If there is,
the next decision is whether each party will appoint its own expert witness and/
or the arbitral tribunal appoints a ‘tribunal appointed expert witness’. Aspects of
the decision are the remit or scope of the investigation to be conducted by the
experts, possible expert conferencing and exchange of draft reports, examination
of the experts by the tribunal and the parties and when their reports are to be
filed with the arbitral tribunal. A party-appointed expert witness is paid by the
appointing party (as part of its costs in the arbitration) while a tribunal-appointed
expert is paid by the arbitral tribunal as part of the costs of the arbitration.
Preparation for hearing

6.11 It is the responsibility of the parties to ensure that their witnesses’
statements are received by the arbitral tribunal and other parties within the agreed
time. It is also the parties’ responsibility to ensure that their witnesses are present
at the hearing and that everything necessary for them to give their evidence is
available. Each party pays the costs of the witnesses it calls (part of its arbitration
costs). The arbitral tribunal on its part ensures that it is prepared for and present
Revision Checklist 49
at the hearings. In circumstances requiring the cancellation or change in venue

or time of a hearing, the arbitral tribunal must ensure that the parties are
notified. Such cancellations or changes will affect the costs of the arbitration.
Interim measures of protection and security for

costs
6.12 Arbitral tribunals are empowered under most arbitration laws and
arbitration rules to order interim measures of protection. For example, art 26
of the UNCITRAL Arbitration Rules empowers an arbitral tribunal to order
and grant various interim measures ‘it deems necessary in respect of the subject
matter in dispute …’ The arbitral tribunal has a discretion to grant the order if
it deems it necessary to preserve the subject matter of the dispute. Remember
that arbitrators lack this power in some jurisdictions (for example Italy, Brazil
and Argentina) and that limitations to the exercise of this power differ under
various arbitration laws and rules. To balance the interests of the parties, an
arbitral tribunal may request that the applicant party post security for the costs
of the application or lodge a sum of money as security for payment of the
opposing party’s costs, should that party be successful in the arbitration.
Default proceedings and multi-party arbitration

6.13 In conducting arbitral proceedings in the absence of one party, an
arbitral tribunal must be very careful in ensuring that the absent party is not
prejudiced by the mere fact of its absence. Some arbitration laws and rules
empower an arbitral tribunal to conduct default proceedings in the absence
of one party. The relevant point here is that a tribunal must ensure that the
absent party has been duly notified of the arbitral proceedings and all
documents are communicated to it. Where the claimant is the party in default,
the arbitral tribunal is generally empowered to dismiss the claim, whereas the
proceedings continue where the respondent is in default.
6.14 In multi-party arbitral proceedings, the arbitral tribunal ensures that
each party is heard and given an opportunity to present its case. The peculiarity
of multi-party arbitrations is evident in appointing arbitrators and ensuring
that each party to the arbitration is heard and given the opportunity to present
its case.
Revision Checklist
• Preparing and organising arbitral proceedings
• Procedural issues
• Procedural orders
• Arbitral hearings
• Expert witnesses
50 Organising the Proceedings
• Default proceedings
• Interim measures
Scenario Question
Draft a procedural order from the scenario.

Chapter 7
Hearings
Introduction
Some arbitration proceedings are conducted, with the agreement of the parties,
on the basis of documents-only without any oral hearings. The standard
procedure is to hold an oral hearing phase where witnesses of fact and opinion
(expert witnesses) are heard and the veracity of their testimony tested by both
the other party and the arbitral tribunal. Throughout this chapter, reference is
made to relevant provisions in arbitration laws, rules and guidance.
Objectives
• understand the usual practical requirements in international arbitration

hearings
• appreciate the various stages in international arbitral hearings
• understand the fundamental requirements of natural justice in practice
Logistical matters
Hearing room
7.1 In ad hoc arbitration proceedings, the parties and arbitral tribunal will
decide and agree upon where hearings and further meetings will be held. One
or both of the parties or the arbitral tribunal may book the hearing rooms as
appropriate. The administrative facilities of an arbitration institution may be used.
In arbitrations under institutional rules; the institution often arranges these
administrative matters. Usually in two-party disputes, at least four rooms are
booked: the room where the hearing will take place, one room for each party
and the arbitral tribunal for private meetings and discussions. In the hearing
room, the seating arrangements are organised with the arbitral tribunal sitting at
one end of a large table with the parties on either side of the tribunal. The seating
arrangements may be in a conference or meeting style, whatever is convenient
51
52 Hearings
for the parties and the arbitral tribunal along with the number of people on
either side.
Reference
UNCITRAL Notes, paras 24-25
Record-keeping
7.2 Where the parties and arbitral tribunal have engaged the services of a
tribunal secretary or transcribers, a record of the hearings is produced at the end
of each hearing day, cross-checked by the parties and the arbitral tribunal. The
arbitral tribunal takes its own notes as do the parties and their teams of lawyers.
The arbitral tribunal maintains custody of the documents and exhibits presented
and admitted by it during the proceedings.
Reference
UNCITRAL Rules, art 25(3)
Interpretation and translation

7.3 Where the language of the arbitral proceedings is foreign to one or more
party or arbitrator, and the services of translators or interpreters is requested and
granted, the arbitral tribunal should at the onset make directions as to which of
the parties pays the additional costs incurred.
References
Model Law, art 22(2)
UNCITRAL Rules, arts 17(2), 25(3)
Procedures at the hearing
Sequence of oral arguments and taking of

evidence
7.4 The parties and arbitral tribunal will agree on the sequence of oral
arguments and taking of evidence. The claimant is usually heard first in an
opening speech with the respondent replying. These opening speeches give a
summary of what the dispute is about, the issues in dispute and what is claimed
or denied. The claimant then presents its witnesses of fact and of opinion, calling
each in turn and examining them, after which the respondent cross-examines
each witness. The claimant then gets another opportunity to re-examine each
witness. When the claimant has called all its witnesses, the respondent opens its
case and presents its own witnesses, calling and examining them in the same
Logistical matters 53
manner, the claimant cross-examining each witness and the respondent re-
examining thereafter. Where witness statements are filed, the parties and the
arbitral tribunal can agree that such witness statements stand as the examination-
in-chief. This saves time by eliminating the first stage of examination of the
witnesses and this is usual in international arbitrations. There is a difference
between the common law and civil law approach, the former relying on
evidence given under oath or affirmation (with a statement of truth in written
statements) while the civil law approach rarely requires such pledges. Often, an
arbitral tribunal will examine witnesses, usually after the parties’ examinations
but sometimes before them or even instead of them. After the examination of
the witnesses of fact and expert witnesses (if any) the parties make closing
speeches, usually with the respondent first followed by the claimant, and file
closing briefs. These briefs may be filed consecutively or sequentially. The arbitral
tribunal then closes the hearing stage of the arbitral proceedings. Frequently
there will be more than one hearing, dealing with a preliminary point of
interpretation or liability only, for example, before continuing with quantum.
The above describes a single hearing and outlines all the stages that would
generally occur.
References
Model Law, art 24
UNCITRAL Rules, arts 24, 25 and 29
Testimony of witnesses
7.5 Witnesses of fact tell the story of the dispute within their knowledge in
their witness statements. It is common knowledge that the lawyers of the parties
sometimes assist witnesses in preparing these statements of fact. There is a cultural
divide in this respect between civil and common law traditions. In the civil law
tradition, generally, lawyers do not assist parties in preparing their witness
statements while this is quite widespread in common law jurisdictions.
References
IBA Evidence Rules, article 4
UNCITRAL Notes, Paragraphs 59-68
Expert witnesses
7.6 As already stated, expert witnesses can be appointed by each party, by
the arbitral tribunal or by both parties and the tribunal. It is presumed that a
party-appointed expert witness’ evidence is brought in support of that party’s
case. This explains why such evidence is to be tested by cross-examination. A
tribunal-appointed witness, on the other hand, is independent of the parties
and files his report as instructed by the arbitral tribunal, with each party having
an opportunity to question him. The arbitral tribunal can also ask its expert
54 Hearings
witness questions. The arbitral tribunal is not bound to accept the evidence of its
appointed expert (or any other) witness. Such expert evidence assists the arbitral
tribunal in determining the issues in dispute. The decision on the liability of the
parties must always be that of the arbitral tribunal.
References
IBA Evidence Rules, arts 5 and 6
Presentation of new arguments or new evidence

7.7 As an arbitral hearing progresses, parties may discover new information
or evidence which may materially affect their claim or defence. A party in that
situation would apply to the arbitral tribunal, putting the other party on notice,
for permission in the form of an order to admit such evidence or argument. The
guiding principle in such matters is to ensure that parties are heard and treated
fairly and equally.
References
Model Law, art 23 (2)
UNCITRAL Rules, art 20
Default of a party
7.8 Where a claimant is in default of a material nature – for example in not
continuing with its claim – the arbitral tribunal can dismiss the claim. Where, on
the other hand, a respondent is in default of a material nature, for example by
not continuing with its defence of the claim, the arbitral tribunal will continue
with the proceedings and make an award in default. Again, the only caveat to
such proceedings is to ensure that the defaulting party has been duly notified of
the proceedings and all relevant communications and given a fair and equal
opportunity to defend itself.
References
Model Law, art 25
Multi-party arbitration
7.9 The peculiarity of multi-party arbitrations is that there can be many parties
involved. Once the arbitral tribunal has been successfully constituted, it has to
manage the proceedings effectively, ensuring that all the parties are treated
equally and given a fair opportunity to present their cases and defend the cases
against them.
Reference
Fundamental requirements of justice

7.10 All procedural matters are subject to the mandatory provisions of the
applicable procedural law (which is usually that of the seat of arbitration). These
almost always include and expand on the rules of natural justice or due process.
References
Model Law, arts 18 and19
Revision Checklist
• Booking hearing rooms

• Arranging for record-keeping
• Interpreters and translators
• Sequence of oral arguments
• Witnesses of fact
• Expert witnesses
• Due process
Scenario Questions
What administrative arrangements are needed for your arbitration in the

scenario?
What procedural issues do you need to prepare for in your hearing in the
scenario?
Chapter 8
Costs and Interest
Introduction
The issue of the cost of the arbitration is regulated by most arbitration laws and
rules. However most arbitration laws do not stipulate details of such costs but
list what expenses are included in such costs or the heads of arbitration costs.
Throughout this chapter, reference is made to relevant provisions in arbitration
laws, rules and guidance.
Objectives
• understand what constitutes costs in international arbitration

• appreciate how costs are measured
• understand the basis on which interest is awarded in international
arbitration
Costs of the arbitration
Constituents of cost of the arbitration

8.1 The UNCITRAL Rules declare that ‘the arbitral tribunal shall fix the costs
of arbitration in its award’. The cost of arbitration includes:
• fees and reimbursable expenses of the arbitral tribunal

• administrative costs of the arbitral proceedings
• fees paid to an arbitration institution or appointing authority
• cost of expert advice or assistance required by the arbitral tribunal
• the legal costs of the parties if claimed during the arbitration.
References
UNCITRAL Rules, arts 38 and 39
ICC Rules, art 31
56
Costs of the arbitration 57
LCIA Rules, art 28

Swiss Rules, arts 38 and 39
Requests for deposits

8.2 Parties in both administered and ad hoc arbitral proceedings are usually
required to make deposits for the cost of the arbitration either immediately after
the commencement of the arbitral proceedings, before the arbitral tribunal is
constituted, or upon constitution of the tribunal. Under institutional arbitration
proceedings, each institution generally maintains in its rules scale of fees or
how fees are to be calculated. Such scales are incorporated into the parties’
arbitration agreement and apply along with the rules. The parties generally pay
the arbitration institution which then pays the arbitrators. Some institutions
expressly forbid arbitrators to discuss fees directly with the parties, while some
expect arbitrators to award their fees in their award, as in ad hoc arbitral
proceedings. Under ad hoc proceedings, the parties and arbitrators agree on
the scale of fees or how the fees will be calculated. They also agree on the
amount and times when deposits should be paid into the tribunal’s account,
which is established for the purposes of the arbitration.
References
ICC Rules, art 30
LCIA Rules, art 24
Swiss Rules, art 41
Assessment (‘taxation’ or ‘determination’) of costs

8.3 Under administered arbitral proceedings, the relevant institution fixes
the costs of arbitration and collects the sums due from the parties for
disbursement. In ad hoc proceedings, the arbitral tribunal fixes the costs of the
arbitration (in some cases in consultation with the appointing authority) sets up
an account and makes demands for deposits and further payments from the
parties and makes disbursements from the account. At the conclusion of the
proceedings, the tribunal produces a statement of account to the parties,
refunding any excess moneys paid or demanding any outstanding sums due.
Where a party disputes the rate of fees or charges of the arbitrators, such sums
can be assessed or taxed by an officer of the relevant court.
Reference
UNCITRAL Rules, arts 39 and 41(5)
Apportionment of costs
8.4 The parties may agree on how arbitration costs will be apportioned as
between them. In some jurisdictions such agreement is valid only if made after
58 Costs and Interest
the dispute arises. The parties in their statements will usually claim the costs of
the arbitration as well as legal costs for prosecuting the arbitration. The practice
in international arbitration is to apportion costs between the parties on the basis
that ‘costs follow the event’ which means that the successful party recovers its
costs from the other party, barring any extenuating reasons. The award of costs
is primarily left to the discretion of the arbitral tribunal which is required to justify
whatever basis of apportionment it applies.
Reference
Interest
8.5 Arbitrators can award interest on a claim or counterclaim for payment
under the underlying contract or on any claim for compensation or restitution
awarded. The parties can agree on the rate and basis of interest to be awarded
by the arbitral tribunal as a term of their main contract. In some jurisdictions, the
award of interest is treated as a procedural issue while in others it is treated as a
substantive issue.
8.6 As a procedural issue, the applicable procedural law will determine

whether the arbitrators can award interest and the rate of interest. As a substantive
issue, the law applicable to the merits of the dispute (the law of the contract) will
determine the rate and terms to apply. The rate of interest, start and end dates
and currency of payment are left to the discretion of the arbitral tribunal under
most laws. Unless otherwise restricted by law, arbitral tribunals generally award
interest from the date on which the cause of action arose to the date of the
award and from the date of the award to the actual date of payment. The arbitral
tribunal typically invites submissions from the parties on these matters and is
guided by such, always remembering that an award of interest is made to
compensate the party who had suffered the loss of use of the money and not to
penalise the paying party.
Basis of awarding interest

8.7 As noted, the basis of awarding interest in an award is to compensate
the winning party for the loss of the use of the sums due which have remained
unpaid. Interest may be awarded as a general right accruing against a party in
breach. The arbitral tribunal clarifies whether the interest awarded is calculated
on the basis of simple or compound interest and the time when the interest
begins to accrue to when it ceases. The power to award interest is usually granted
either expressly by the parties in their contract or arbitration agreement or by
the applicable arbitration law and rules.
Rate of interest
8.8 The parties may agree the rate of interest to be applied by the arbitral
tribunal. Such rate may be imposed by statute or the tribunal may determine
the rate in its sole discretion. The arbitral tribunal must justify the basis of the
rate of interest awarded and other factors such as whether simple or compound
and start and end dates.
Simple or compound interest

8.9 Simple interest refers to a percentage rate calculated on the principal
sum once only for the whole duration decided by the tribunal. Compound
interest is the capitalisation of interest and further interest accrued on the
capitalised interest. Generally in civil law jurisdictions arbitrators award a
statutory, legal or simple rate of interest while in common law jurisdictions the
arbitrator is more likely to award compound interest. There is no settled practice.
The arbitral tribunal generally tries to decide interest in a commercial manner,
but has to exercise its discretion subject to the mandatory provisions of the
applicable law.
Start and end dates

8.10 In awarding interest, the arbitral tribunal also determines when interest
starts to accrue. It may start from the date the cause of action arose or some
defined time thereafter until full payment. Different rates of interests may apply
at different times. The award of post-award interest is at the arbitral tribunal’s
discretion. The rate of post-award interest is generally (but not always) the same
as the rate that applies to judgments of the court at the place where the award is
made (seat of arbitration).
Considerations concerning enforcement

8.11 An arbitral tribunal must ensure that the basis upon which interest is
awarded is reasonable and clearly justified in the award. This transparency will
assist the court, should the award need to be reviewed. In jurisdictions where
an award of interest is prohibited, the arbitral tribunal should comply with such
restriction. The arbitral tribunal can in such circumstances separate the award
of interest from other parts of the award.
Revision Checklist
• Fees and expenses that make up costs of the arbitration
• Fixing and apportionment of arbitration costs generally
• Deposits
• Awards of interest and enforcement considerations
60 Costs and Interest
Revision Question
Why would a tribunal ask the parties to pay a deposit towards the cost of the
arbitration?
Scenario Questions
How will you apportion costs between the parties in our scenario?
Will you award interest on the apportioned costs and how will you justify it?
Chapter 9
Making of the Award –

The Decision-Making Process
Introduction
A tribunal is contracted by the parties to make a binding decision over their

dispute, contained in a document called an ‘award’. This chapter examines the
decision-making mechanism resulting in the making of an award and reference
is made throughout to relevant provisions in arbitration laws, rules and guidance.
Objectives
• understand the decision-making process of the tribunal in international

arbitration
• differentiate awards from other decisions of an arbitral tribunal
• appraise the formal requirements for a valid award
• identify the contents of an award
Awards and other decisions

9.1 An arbitral tribunal makes different decisions over various issues,
procedural and substantive. These decisions may be contained in an award,
order or direction.
Procedural orders and rulings

9.2 As the names imply, these are orders, rulings or directions made by an
arbitral tribunal over procedural matters, that is, how the arbitral process is
managed and organised. An arbitral tribunal may need to issue several
procedural orders or directions at various stages of the arbitral proceedings.
These orders and directions will reflect the state of the proceedings and will
cover such matters as when and how a party is to make a submission or provide
in detail the procedure for presentation of evidence at an oral hearing.
61
62 Making of the Award
Interim measures of protection

9.3 As already noted, tribunals in international commercial arbitration are
generally empowered to grant interim measures of protection to varying degrees.
Such orders apply only for a certain period or until the award is performed.
They are usually not determinative of the issues in dispute between the parties
but are ordered to regulate the proceedings fairly.
References
Model Law, art 17 – refers to orders (greatly expanded in 2006 version)

UNCITRAL Rules, art 26 (1) and (2) – refers to interim award (but not in the
version being revised)
Awards
9.4 An award may be interim or interlocutory, partial or final and refers to a
decision on a substantive issue or issues between the parties. An interim,
interlocutory or partial award does not dispose of all the issues in dispute, but is
a final determination of one or more of the substantive issues. A final award is
the last award, finally determining all or the remaining substantive issues in
dispute. The special nature of an award which distinguishes it from all other
decisions by an arbitral tribunal (directions, orders, rulings) is that, once made,
an award cannot be reviewed by the tribunal, except for corrections or omissions
as permitted by the applicable law.
Rules applicable to the merits

9.5 Unless the parties have already chosen their substantive law, the arbitral
tribunal determines what law or rules of law it will apply to determine the issues
in dispute between the parties. Exceptionally, the parties may mandate their
tribunal to decide on the basis of fairness or without reference to strict law, as
amiables compositeurs (permitting the arbitrators to decide the dispute according
to the legal principles they believe to be just, without being limited to any
particular national law) or ex aequo et bono (deciding on the basis of what is
just and fair under the circumstances, and not strict rules of law).
Choice of law
9.6 Where the parties have made an express choice in their contract, then
the arbitral tribunal applies the law chosen by the parties. It is possible that the
parties may not have made any choice or that their choice does not cover all
the issues in dispute. In both situations the arbitral tribunal will have to determine
what law or rules of law to apply to fill such gaps. By law, this usually means a
body of national law but may be with reference to non-national laws, standards
or principles, such as the UNIDROIT principles or Incoterms. If there is no express
Rules applicable to the merits 63
choice or a lacuna in the choice, the arbitral tribunal then looks at the arbitration
agreement to determine how it has been empowered to find the law to apply. A
direction may be contained in the applicable procedural law or arbitration rules
applicable to the dispute or the national arbitration law of the seat. Some
arbitration rules mandate the arbitral tribunal to determine directly what law or
rules of law to apply while other rules require the arbitral tribunal to apply a
conflicts of law principle in determining what law to apply.
References
Model Law, art 28
ICC Rules, art 17(1)
LCIA Rules, art 22 (3)
Swiss Rules, art 33(1)
Friendly composition
9.7 Under some international contracts, parties expressly agree not to apply
any body of law or rules in determining their contractual rights and obligations.
They empower their tribunal to decide their dispute on the basis of what it
considers to be fair and just: ‘in equity’ or ‘according to equitable principles’.
The tribunal does not then need to justify its decision on the basis of any law
but solely on its perception of what is fair and equitable between the parties.
(While the terms amiable compositeur and ex aequo et bono have varying
meanings depending on the relevant jurisdiction, they are generally understood
as described here.)
References
LCIA Rules, art 22(4)
Swiss Rules, art 33 (2)
Relevance of contract and trade usage

9.8 The UNCITRAL Rules provide that ‘in all cases, the arbitral tribunal shall
decide in accordance with the terms of the contract and shall take into account
the usages of the trade applicable to the transaction’. Therefore even where the
parties have made an express choice of a national law or rules of law, the arbitral
tribunal is mandated to interpret the contract provisions and apply whatever
trade usages are relevant to the transaction. These trade usages clarify and verify
the contract terms as usages within the relevant industry.
References

Decision-making by a panel of arbitrators

9.9 An arbitral tribunal may consist of a single or multiple arbitrators to decide
the dispute. In arbitral tribunals with more than one arbitrator, the arbitrators
deliberate between themselves and make their decision. A sole arbitrator does
not need to deliberate with anyone in making his decision. In either case, each
arbitrator’s decision is personal to him and cannot be delegated to another.
9.10 Deliberation by an arbitral tribunal becomes relevant where there is more
than one arbitrator forming the tribunal. The arbitrators may set aside time to
meet and discuss and decide the issues after the hearings. It is at such deliberations
that party-appointed arbitrators may play the very important role of ensuring
that the arbitral tribunal understands and appreciates the case of its appointing
party. The tribunal may then divide up the issues to each arbitrator to write up
for incorporation into the award, or it may assign one of its members to write a
draft award and circulate it for comments and endorsement by the other members
of the tribunal. The presiding arbitrator plays a very important role at the
deliberation and award writing stages.
References
Model Law, art 29
Majority rule or casting vote

9.11 In an arbitral tribunal of three or more arbitrators, a decision by a majority
is generally accepted as the decision of the arbitral tribunal. A dissenting arbitrator
may decide to write a dissenting opinion which some laws and rules allow him
to attach to the majority opinion. Other laws and rules do not allow such
attachments. One of the major advantages of an odd-numbered arbitral tribunal
comes into play where there is disagreement between the party-appointed
arbitrators and the presiding arbitrator has to exercise a casting vote. Such a
vote automatically creates a majority decision for purposes of the award.
References
Exception for procedural matters

9.12 As noted, procedural orders and directions assist the conduct of the
arbitral proceedings and are not decisions on substantive disputes between the
Content of award and formal requirements 65
parties. Arbitration laws and rules recognise and empower a presiding arbitrator
(or one of the arbitrators) where the whole arbitral tribunal is unable to meet, to
hold procedural hearings and/or make procedural decisions in the name of the
tribunal which are binding on the other members of the arbitral tribunal.
References
LCIA Rules, art 14(3)
Confidentiality of deliberations
9.13 The deliberation between the members of an arbitral tribunal is
confidential to them and is not to be divulged to third parties or to the disputing
parties, except where they form part of a subsequent award.
Content of award and formal requirements

9.14 It is important to determine which law governs the validity of an award
so as to ensure the award complies with its requirements. Since there are currently
142 contracting states to the New York Convention, it is most likely that the final
award may be a Convention award, thus the requirements of the Convention
should be complied with at least.
Holdings and reasons

9.15 A final award determines all the substantive issues in dispute between
the parties not already decided in any previous awards. Unless the parties choose
otherwise, every award must be reasoned and dispose of the issues it decides.
Consent awards
9.16 During arbitral proceedings, before a final award is issued, the parties
may agree a settlement of their dispute. The terms of their agreement may be
adopted as an award by the arbitral tribunal. It is not a decision of the arbitral
tribunal but of the parties which is endorsed by the arbitral tribunal to give it the
same force as an award. Consent awards are also known as awards ‘on agreed
terms’.
Written form
9.17 An award must be in writing. The reason for this requirement is self-
evident. The parties need to know what their arbitrators have decided, what
they have been ordered to do and what they have been awarded. Where an
award is not voluntarily complied with and enforcement is sought before a
national court, the contents of the award reveal to the enforcing court what it is
the arbitrators have decided and the reasons why. Where an award is challenged
by one of the parties, the court will need to read the award to determine whether
such a challenge can be upheld and how it will exercise its discretion.
Date and place of award

9.18 An award must be dated and state the place where it was made. This
place is known as the place of origin or seat of the award and, under art 1 of the
New York Convention, is necessary in determining whether it is a Convention
award. The dispositive part of the award takes effect from the date on the award.
If any limitation period applies to enforcement, setting aside or nullification of
the award, such time begins to run from the date of the award.
Signatures of arbitrators
9.19 An award contains the decisions of the arbitrators and their signatures
verify that the contents of the award emanate from them. It also signifies the
completion of their mandate and discharge of their obligations under their
contract with the parties and, consequently, any outstanding fees owed by the
parties.
Delivery to parties
9.20 After writing, signing and dating an award, it must be delivered to the
parties. Certain obligations begin to run from the date of the award and not
from the time it is delivered to the parties. This makes it imperative that an award
is delivered as soon as possible after it is made. In many jurisdictions, there is
formal notification of an award, where the tribunal notifies the parties that its
award is ready for delivery.
9.21 Under some arbitration laws, an award needs to be registered with the
local courts before becoming effective and ready for delivery to the parties.
Under some institutional arbitration rules, an award needs to be scrutinised
and approved as to its form before delivery to the parties. It is for the arbitral
tribunal to check and comply with whatever pre-conditions are necessary for
the delivery of its award.
Reference
ICC Rules, art 27
Limits to publication of award

9.22 An award is a private document of the parties until it may enter into the
public domain before a national court. Some arbitration institutions publish
awards from proceedings under its rules with the consent of the parties. In
arbitrations that affect the public, especially where a state or state entity is a
party (notably in investment arbitrations), a case may be made for the need to
Correction, interpretation, addition 67
publish the awards for public interest purposes. Parties still need to consent to
such publications. Consent may be contained in the enabling statute, applicable
rules or treaty.
References
Model Law, arts 29-31
UNCITRAL Rules, arts 31 and 32
ICC Rules, arts 25-28
LCIA Rules, art 26
Swiss Rules, arts 31 and 32
Correction, interpretation, addition

9.23 These are actions that may apply to an award after it has been made and
delivered to the parties.
Correction of clerical errors

9.24 A party to arbitral proceedings may apply, within the time allowed in
the applicable law or rules, to the arbitral tribunal (or institution) on notice to
the other party for the arbitral tribunal to correct any errors in computation, or
of a clerical or typographical nature. The arbitral tribunal then makes such
corrections in writing.
Interpretation of award
9.25 A party to arbitral proceedings may within the time allowed by the
relevant rules or laws and on notice to the other party request the arbitral tribunal
to give an interpretation of the whole or a portion of an award. The interpretation
shall be given in writing by the arbitral tribunal and forms part of the award.
Additional award
9.26 A party to arbitral proceedings may within the time allowed by the
relevant law and rules and on notice to the other party request the arbitral tribunal
to make an additional award on claims presented and argued in the arbitral
proceedings but omitted in the award. A party cannot use this mechanism to
raise new issues not put before the tribunal during the arbitral proceedings but
may, for example, ask for reasons for a decision. Such an additional award
must comply with all the formal requirements for a valid award.
References
Model Law, art 33
UNCITRAL Rules, arts 35-37
ICC Rules, art 29
LCIA Rules, art 27

Swiss Rules, arts 35-37
Revision Checklist
• Decisions of the arbitral tribunal evidenced in directions, orders, rulings

and awards
• Identifying the laws or rules of law applicable to the merits of the dispute
• Deciding as amiable compositeur or ex aequo et bono
• Decision-making by a panel of arbitrators
• Formal requirements of an award
• Amendments/additions to an award after it has been issued to the parties
Revision Questions
(1) Describe the types of awards that may be made.
(2) What are the formal requirements for an award?
(3) What kind of post-issue amendments or additions may be made to an
award? In what circumstances will they be made?
Scenario Questions
How would you determine the law or rules of law to apply to the substantive
dispute in the scenario?
Deliberate on the issues from the arbitral hearings and documents in the
scenario and agree on how your tribunal would prepare the award. Write out
your agreement.
Chapter 10
Recognition and Enforcement

of Awards
Introduction
At the conclusion of an arbitration, a final award is delivered to the parties. The
losing party may opt to comply with the award voluntarily. However, where a
losing party fails or refuses to comply with the award, the successful party will
need to seek the assistance of a national court to recognise and enforce the
award. The losing party may equally seek the assistance of a national court to
set aside or nullify the arbitral award. Throughout this chapter, reference is made
to relevant provisions in arbitration laws, rules and guidance.
Objectives
• be able to assess conditions for the recognition and enforcement of
awards
• evaluate conditions for recourse against an award
• identify the relevant forum for enforcement purposes
Recourse against an award

10.1 A losing party does not need to wait for the winning party to seek
recognition and enforcement before challenging an award. It can challenge an
award to have it nullified, set aside in whole or in part, or seek a variation or
remission of it back to the arbitral tribunal.
Appeal and other types of recourse

10.2 Almost all national arbitration laws provide limited and exhaustive
grounds of recourse against awards made pursuant to an international
commercial arbitration agreement. In common law jurisdictions the terminology
is to ‘appeal’ against the award. This may be recourse to an internal appeal
mechanism as provided in the relevant arbitration rules or more generally to a
competent court under the applicable law. The traditional reference in civil law
jurisdictions is to have ‘recourse’ to a court of law against an award. The Model
69
70 Recognition and Enforcement of Awards
Law refers to ‘recourse’ against an award. Whatever the terminology, the same
effect is achieved, which is to challenge the award.
Setting aside
10.3 Most laws provide for the setting aside of arbitral awards and in some
cases remission of an award back to the arbitral tribunal. The result of setting
aside an award is a declaration from the competent court at the seat of arbitration
that the award is to be disregarded in whole or in part, with the effect that courts
everywhere else will usually treat the award as invalid and unenforceable to the
extent of that declaration. When an award is remitted back to the arbitral tribunal,
the court will give directions as to what the arbitral tribunal should do or consider.
Remission may have a bearing on issues of interpretation, correction or additional
awards discussed in Chapter 9.
Time period
10.4 Each law provides the time period within which an applicant seeking to
challenge an award may do so. It is for an applicant party to ensure that its
application is within time. It is therefore important to determine when time begins
to accrue. This is usually when the award has become ‘final’, ie where there is
no further available internal appeal system or review by a court. In some
jurisdictions an award becomes final after any correction, interpretation or
additional award is made.
Reference
Model Law, art 34(3) – three months
Grounds for setting aside

10.5 The grounds for setting aside an award are the same as some of the
grounds for refusing recognition and enforcement of the award under the Model
Law. The grounds for setting aside an award under art 34 of the Model Law are
grouped into two broad categories of jurisdictional and procedural issues.
Jurisdictional issues
• Incapacity of a party to the arbitration agreement

• Invalidity of the arbitration agreement under the law to which it was
subject, or, if no such choice, under the law of the Model Law state
• Decision on a dispute outside the scope of the arbitration agreement
• Composition of the arbitral tribunal or arbitral procedure was not in
accordance with the parties’ agreement or in breach of a mandatory
Recognition and enforcement 71
provision of the applicable law

• Lack of objective arbitrability
• Award in conflict with the public policy of the state
Procedural issue
• The applicant party was not given proper notice of the appointment of
an arbitrator or of the arbitral proceedings, or otherwise was unable to
present its case
Reference
Model Law, art 34
Remission of award
10.6 Awards may be remitted back to an arbitral tribunal for such action as
would remove the grounds for the application to the court.
Reference
Recognition and enforcement

10.7 A losing party may comply with an award voluntarily or negotiate with
the winning party with a view to complying with it. It is estimated that the
majority of arbitration awards are complied with voluntarily. However, where a
losing party fails, neglects or refuses to comply voluntarily with an award, it can
be compelled to do so by law.
Recognition
10.8 A party with an award in its favour may only be seeking recognition of
it. Recognition of such an award may be sought for finality purposes regarding
the issues determined between the parties in the award (res judicata).
Recognition and enforcement

10.9 In some jurisdictions (for example Brazil) an award must be recognised
in the first instance (possibly by one court) and enforcement granted in the
second instance (possibly by another court). In most jurisdictions, both
recognition and enforcement orders are granted at the same time by the same
court.
Formal requirements
10.10 An applicant party makes a written application for recognition and
enforcement before the competent court and supplies the following documents
in support of its application:
• the authenticated original award or a certified copy;

• the original arbitration agreement or a certified copy;
• certified translations if the award or arbitration agreement is not in the
official language of the state where such recognition and enforcement is
sought;
• the necessary court fees.
10.11 The Model Law does not contain a time period within which a winning
party may apply for recognition and enforcement of an award. An award
represents a debt due and is subject to whatever limitation periods apply in the
relevant jurisdiction. This makes it a matter to be determined under the relevant
statute of limitation.
Reference
Model Law, art 35
Grounds for refusing recognition and enforcement

10.12 A losing party can challenge the recognition and enforcement of an
award by way of a defence to an application for enforcement. An award will
ordinarily be recognised and enforced if the losing party fails to prove any of the
grounds for refusing the recognition and enforcement. Where one or more of
the grounds are proved by a losing party, the court will exercise its discretion
whether to enforce or nullify the award.
Incapacity of party
10.13 Parties to any contract must have the capacity to enter into that contract.
The same applies to arbitration agreements. If a party lacks the capacity to enter
into the arbitration agreement, this incapacity can be raised from the very
beginning of the proceedings or by challenging the award as affected by the
invalidity of the agreement. As regards an individual, the determining law is his
personal law while for corporations it is the law of its place of incorporation.
States and state entities may by restricted by their law from entering into arbitration
agreements.
Grounds for refusing recognition and enforcement 73
Lack of valid arbitration agreement

10.14 An arbitration agreement should meet any formal validity requirements
imposed by law and at least those imposed by art II of the New York Convention.
The agreement should be in writing, clearly stating the parties’ intention to resolve
finally all (or any) disputes arising between them by arbitration.
Violation of ‘due process’

10.15 ‘Due process’ or ‘natural justice’ represents the minimum procedural
standards for fair and proper conduct of international commercial arbitration
proceedings. This demands that parties are treated equally and given a fair
hearing with the opportunity to present their case and respond to the case of
their opponent(s). It also involves giving parties the opportunity to attend any
sittings, oral hearings, be present at the taking of evidence and be represented
or assisted by a representative of their choice, amongst other things.
Arbitral tribunal exceeding its authority

10.16 Where an arbitral tribunal exceeds its authority, it acts without power
or authority and therefore outside the scope of the parties’ agreement. A
consequent award may be set aside to the extent of the excess.
Irregular composition of arbitral tribunal and ir-

regular procedure
10.17 The composition of an arbitral tribunal and the procedure adopted by
it must comply with the parties’ arbitration agreement or, if the agreement is
silent, with the lex arbitri. Examples of such irregularity occur where an arbitrator
does not fulfil any particular qualifications expressed in the arbitration agreement
or renders an award without reasons, unless reasons have been dispensed with.
Whatever the parties agree is always subject to the mandatory provisions of the
applicable procedural law and this implies that the arbitral tribunal must
disregard the parties’ agreement in favour of such mandatory provisions.
Award not binding or set aside

10.18 The effect of an award which has been set aside or nullified by a
competent court is to make it no longer binding on the parties or before any
other court for recognition and enforcement purposes as discussed in this
chapter.
Non-arbitrable subject matter

10.19 The subject matter of a dispute must be capable of resolution by
arbitration under the applicable laws. There are some subject matters which
states reserve for resolution solely in its national courts. It is a breach of such a
state’s public policy principles to arbitrate disputes which are said to be non-
arbitrable. Examples of non-arbitrable disputes are those regarding the validity
of patents, trademarks and criminal matters. Most commercial matters are
arbitrable.
Violation of public policy

10.20 Generally, public policy refers to principles which are fundamental to
the legal or economic system of any given state. A breach of such principles is a
violation of that state’s public policy. Different states have different concepts of
public policy, implying that an act which breaches the public policy of one
state may not breach that of another state. Some commentators have called for
only international public policy principles to apply to international commercial
arbitrations. Such international public policy principles are narrower than
domestic public policy, comprising universal principles or fundamental rules of
natural law and universal justice, among others.
Suspension of enforcement proceedings and order

of security
10.21 Upon the application of a party, a competent court may suspend the
setting aside proceedings for a period of time stated in the suspension order and
remit an award back to an arbitral tribunal to cure the grounds for the setting
aside application. This obviously has a bearing on the ground on which the
objection was raised. Where it is a ground alleging lack of jurisdiction, validity
of the award, due process, non-arbitrability or public policy, it may not be
curable. However, if the ground is whether an arbitrator exceeded his authority
and the issues are separable, then setting aside can be suspended.
10.22 A competent court may require the party applying for remission to
post security for the suspended award. An order for security safeguards the award
and compensates the winning party for the lack of immediate benefit of the
award in its favour.
Importance of the New York Convention

10.23 The New York Convention regulates the recognition and enforcement
of Convention awards made in one Convention state and sought to be enforced
in another Convention state. Courts have enforced foreign awards, international
awards and domestic awards made in another Convention state. The
requirements to be satisfied for recognition and enforcement or challenge of an
award under the New York Convention are the same as those already discussed
in this chapter.
10.24 These requirements and conditions are exhaustive and represent

minimum standards. A final award made in any of the 142 Convention states
can be recognised and enforced upon satisfaction of the same requirements in
any of the Convention states. This makes for ease of enforcement and engenders
harmonisation of the enforcement regime for foreign arbitral awards.
References
Model Law, art 35
New York Convention, arts I-VII
Revision Checklist
• Types of recourse against an award

• Relevant state for recognition and enforcement of award
• Grounds for setting aside and challenging an award
• Requirements for remission of award
• Requirements for recognition and enforcement of award
• Relevance of the New York Convention
Revision Questions
(1) What types of recourse does a party have against an award?
(2) What are the possible grounds for refusing recognition and enforcement
of an award?
Scenario Question
Critically analyse your award and determine on what grounds (if any) the
losing party can challenge it and where it could mount such a challenge.
Appendix
Scenario
Introduction
Set out below is the first part of an arbitration you will be discussing thoughout
the course. Further information will be added at the relevant stages which will
enable you to answer the Scenario Questions to be found at the end of certain
chapters.
Scenario
1. In March 1995 the Concrete Bridge Company of the UK was
commissioned by the Ruritanian Ministry of Transport to design and
construct a road bridge.
2. The contract included provisions:
(a) that it was to be ‘construed, applied and acted upon in accordance with
French law’;
(b) that in carrying out design CBC was to use ‘the skill and care to be
expected of professional engineers’. Liability for breach of this obligation
was limited to US$1m;
(c) ‘the currency of the contract and all transactions thereunder’ were to be
carried out in US$.
3. The Ministry of Transport appointed Mick Carno & Partners as the
Engineer under the contract. The Engineer had no responsibility for the
design or specifications.
4. The Concrete Bridge Company designed a reinforced concrete structure
utilising cast-in-situ beams between concrete abutments with tapering
wingwalls.
5. Construction commenced in January 1996. For the first nine months of
the project (until October 1996) the Concrete Bridge Company used
water extracted from a nearby salt water lagoon both in the concrete
mix and to cure concrete. The specifications, drafted by the Concrete
Bridge Company, provided that water used for mixing concrete should
be ‘suitable for the production of durable reinforced concrete’ and were
silent as to the quality of water to be used for curing.
6. In June 1997 the Engineer condemned the practice of using salt water
in the concrete mix or for curing and instructed the Concrete Bridge
76
Matters to be determined in the arbitration 77
Company to use only drinking water for the purpose of mixing concrete
and for curing.
7. Following the Engineer’s instruction, the Concrete Bridge Company
began using water imported by tanker.
8. Construction was substantially completed in January 1998. In the Final
Account the Concrete Bridge Company submitted an application for
payment of US$500,000 representing the additional cost of importing
water for the project. The Engineer refused to certify this additional sum.
The Maintenance Certificate was issued in January 1999.
9. In December 2005 it was discovered that the reinforcement in several
elements of the bridge was severely corroded and this had caused
extensive cracking and delamination of the concrete. Some spalling of
the concrete had occurred. It was also discovered that concrete cover
to the reinforcement in areas of spalling was generally 10mm to 20mm
less than the specified minimum of 40mm. In February 2006, there was
a partial collapse and the bridge cannot now be used.
10. Following negotiations (which broke down) in June 2006 the Ministry
of Transport lodged a claim for US$23m, blaming bad workmanship,
and a month later gave notice of Arbitration.
Matters to be determined in the arbitration

A. What has caused the reinforcement to corrode?
B. Were the design and specifications adequate?
C. Has the poor workmanship caused or contributed to the corrosion?
D. What sum should the Ministry of Transport be awarded in respect of the
Concrete Bridge Company’s liability, if any, for defective design and/or
poor workmanship?
E. What sum, if any, should the Concrete Bridge Company be awarded for
the additional cost of importing water?
78

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Introduction to

‘award’ is the document which contains the decisions of an arbitral

‘domestic’ means wholly relevant within one jurisdiction, where the

‘international’ means where one fundamental element of a dispute relates to a

‘ad hoc’ means specially arranged for the purpose.

‘prima facie’ means sufficient on first view to establish something.

‘res judicata’ means something that is already judicially decided.

‘mediation’ means a private form of dispute resolution where an independent

The Comparative Law of International Arbitration

International Commercial Arbtration

Chapter 2 Laws and Rules of Arbitration

Chapter 3 Composition of the Arbitral Tribunal

Chapter 5 Statements of Claim and Defence

Chapter 6 Organising the proceedings

Chapter 8 Costs and Interest

Chapter 9 Making of the Award – The Decision-Making Process

Chapter 10 Recognition and Enforcement of Awards

Conciliation/mediation and arbitration

Arbitration and litigation

(f) By starting and proceeding without delay, and eliminating unnecessary

Factors for consideration

Competence and special expertise of decision-maker

Speed and finality

1.13 Litigation takes place before national courts connected geographically

1.17 In order to represent a party before a court of law within a particular

Key choices to be made in opting for arbitration

statute law also applies, overruling case law where applicable;

Form of the arbitration

1.20 Ad hoc arbitration occurs where an arbitration agreement does not

Institutional, supervised or administered arbitration

Seat of the arbitration

Laws and Rules of Arbitration

for adoption or adaptation by member states as their national arbitration law. As

Lex loci (law of the place)

New York Convention

IBA Guidelines on Conflicts of Interest

IBA Rules of Taking Evidence in International

Required qualities and qualifications of arbitrators

Special background or expertise

Professional: In a technical dispute, for example in the

Personality: Parties may want to appoint an arbitrator who is a

Challenge and replacement

• the arbitration institution – this applies to practically all institutional

Reasons for challenging an arbitrator

UNCITRAL Arbitration Rules: The challenge and replacement of arbitrators is

ICC Arbitration Rules: An ICC arbitrator can be challenged for ‘an

LCIA Arbitration Rules: The parties themselves can challenge an

Swiss Arbitration Rules: An arbitrator may be challenged, ‘where

Procedure for challenging an arbitrator

UNCITRAL Rules: The challenging party shall, within 15 days of

ICC Rules: The challenging party shall submit a written

LCIA Rules: The challenging party shall, within 15 days from

Swiss Rules: The Swiss Rules make little reference to any

1. Any arbitrator may be challenged if

2. A party may challenge the arbitrator

1. If the arbitrator being challenged does not

2. The decision of the Special Committee is

3.18 Where the appointing authority or institution has rejected a challenge

Other grounds terminating an arbitrator’s mandate

Procedure for replacement

Jurisdiction and Powers of the

Sources of jurisdiction and powers

Arbitration agreement, applicable arbitration laws