Source: BOOK: International Handbook on Commercial Arbitration, J. Paulsson (ed.

),
Suppl. 11 (January/1990)

UNCITRAL - Commentary On The Model Law

Introduction
2
Article 1 - Scope of application
5
Article 2 - Definitions and rules of interpretation
25
Article 3 - Receipt of written communications
28
Article 4 - Waiver of right to object
30
Article 5 - Scope of court intervention
31
Article 6 - Court or other authority for certain functions of arbitration assistance and
supervision
36
Article 7 - Definition and form of arbitration agreement
38
Article 8 - Arbitration agreement and substantive claim before court
43
Article 9 - Arbitration agreement and interim measures by court
51
Article 10 - Number of arbitrators
53
Article 11 - Appointment of arbitrators
55
Article 12 - Grounds for challenge
58
Article 13 - Challenge procedure
61
Article 14 - Failure or impossibility to act
64
Article 15 - Appointment of substitute arbitrator
68
Article 16 - Competence of arbitral tribunal to rule on its jurisdiction
70
Article 17 - Power of arbitral tribunal to order interim measures
86
Article 18 - Equal treatment of parties
90
Article 19 - Determination of rules of procedure
 91
Article 20 - Place of arbitration
96
Article 21 - Commencement of arbitral proceedings
102
Article 22 - Language
105
Article 23 - Statements of claim and defence
108
Article 24 - Hearings and written proceedings
114
Article 25 - Default of a party
119
Article 26 - Expert appointed by arbitral tribunal
123
Article 27 - Court assistance in taking evidence
126
Article 28 - Rules applicable to substance of dispute
129
Article 29 - Decision-making by panel of arbitrators
142
Article 30 - Settlement "1"
145
Article 31 - Form and contents of award
148
Article 32 - Termination of proceedings
152
Article 33 - Correction and interpretation of the award; additional award
157
Introduction to Articles 34, 35 and 36 - Recourse against award; recognition and
enforcement of award
162
Article 34 - Application for setting aside as exclusive recourse against arbitral award
171
Article 35 - Recognition and enforcement
187
Article 36 - Grounds for refusing recognition or enforcement
192

Introduction

The purpose of the Commentary is to present a description, explanation and, where

appropriate, clarification of the UNCITRAL Model Law on International Commercial
Arbitration (the “Law”).
In order to give this Commentary a self-contained character and to keep it within
reasonable length, I have had to resist the temptation to venture outside the four corners
of the Law's legislative history. Thus, the reader will find virtually no reference to the
expanding literature on the Law. I do however, draw attention to the exhaustive
presentation and analysis of the travaux préparatoires by Howard M. Holtzmann and
Joseph E. Neuhaus which contains the text of all documents cited in this Commentary.(1)
Nor have I referred to the growing number of national enactments based in whole or in
part on the Law. These developments are reported on in the National Reports on the
respective countries in this Handbook. The text of the Law is reproduced in this Handbook
immediately following this Commentary.
This Commentary may be of use in the interpretation of provisions of national law based
on the Law. In addition, the comprehensive commentary may assist legislative work in
countries which are looking to the Law for guidance in the modernisation of their
arbitration legislation.
Although most of the users of this Commentary will be generally familiar with the Law it
may be useful in the Introduction to give a brief account of the Law's origin and of the
process leading to its adoption, and to identify the relevant documentation developed in
the process to which I shall refer in this Commentary.
In the late 1970's there were in existence two major instruments generated "2"within the
United Nations system relating to international commercial arbitration, the 1958 United
Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards(2)
(“New York Convention”) and the UNCITRAL Arbitration Rules.(3)
The two instruments differ as to their legal nature as well as coverage. The first is a treaty
whose scope is limited to recognition and enforcement of foreign arbitral awards and of
arbitration agreements. The second is limited to arbitral procedure and has effect as a
contractual instrument applying only to the extent that the parties have so agreed and
subject, moreover, to the proviso that “where any of these Rules is in conflict with a
provision of law applicable to the arbitration from which the parties cannot derogate, that
provision shall prevail.” (Art. 1(2))
A proposal by UNCITRAL's Secretariat to commence work on a project the scope of
which would exceed that of the two existing instruments taken together was developed in
the context of consideration during 1977-1978 of a recommendation addressed to the
Commission by the Asian-African Legal Consultative Committee (“AALCC”) relating to the
New York Convention.(4)
At its twelfth session (1979), the Commission decided that the Secretariat(5) should be
requested to prepare a preliminary draft of a model law on arbitral procedure in
consultation with interested international organizations, primarily AALCC and ICCA. The
scope of application of the draft provisions was to be restricted to international commercial
arbitration and the draft should take into account the provisions of both the New York
Convention and the UNCITRAL Arbitration Rules.(6)
Two years later, in 1981, after considering the Secretariat's report entitled “Possible
features of a model law on international commercial arbitration” (“the Possible features
paper”)(7) the Commission decided to proceed with work towards the preparation of a
draft model law and to entrust this task to a Working Group.(8) Since budgetary
constraints stood in the way of the creation of a separate working group, the work was
assigned to UNCITRAL's existing Working Group on International Contract Practices. The
"3"five two-week sessions devoted to the model law are identified by UNCITRAL as the
third to seventh sessions of the Working Group on International Contract Practices. I shall,
however, refer to them in this Commentary as the first to fifth sessions of the Working
Group.
Lack of funds was also the reason why the Working Group's request to have summary
records prepared of the statements made during its meetings could not be granted. The
record of these meetings is therefore limited to the resumés in the form of reports on its
sessions prepared by the Secretariat, and to Secretariat papers referred to therein as
having been considered.
The references to the reports are as follows:
First Session (16-26 February 1982) Doc.
 A/CN.9/216
Second Session (4-15 October 1982) Doc.
A/CN.9/232
Third Session (22 February-4 March 1983)
Doc. A/CN.9/233
Fourth Session (29 August-9 September 1983)
Doc. A/CN.9/245
Fifth Session (6-17 February 1984) Doc.
A/CN.9/246
After the completion of the work of the Working Group, the Commission at its seventeenth
session in June 1984 requested the Secretary-General to transmit the resulting “Working
Group draft” (Annex to Doc. A/CN.9/246) to all governments and interested international
organizations for their comments in preparation for its consideration by the plenary
Commission at its eighteenth session, which took place from 3-21 June 1985.
In addition to the Working Group draft, the Commission had before it two papers prepared
by the Secretariat at the Commission's request, namely, an analytical compilation of
comments received and an analytical commentary on the Working Group draft. The first
paper (“written observations”) is Doc. A/CN.9/263 and Add.1 and 2, and the second
(“Analytical Commentary”) is Doc. A/CN.9/264.
The documentation of the work of the Commission to which I shall refer consists of
Summary Records of its sessions (Docs. A/CN.9/SR.305-333) and of its report
(“Commission Report”, Doc. A/40/17, paras. 11-333 and Annex I).
The Commission adopted the Law on 21 June 1985. On 11 December 1985 the UN
General Assembly adopted without a vote Resolution 40/72 recommending “that all States
give due consideration to the Model Law on International Commercial Arbitration, in view
of the desirability of uniformity of the law of arbitral procedures and the specific needs of
international commercial arbitration practice”.
In its initial decision to take up the subject of international commercial arbitration, the
Commission had instructed the Secretariat to work in consultation with interested
international organizations, in particular the "4"AALCC and the ICCA. ICCA had
contributed in various ways to the formulation and adoption of the UNCITRAL Arbitration
Rules.(9) It had also welcomed the new UNCITRAL initiative(10) and was represented
throughout the work of the Working Group and the Commission by an observer.(11)
The sessions of the Working Group as well as the Commission itself were conducted with
flexibility and informality. The Commission staff played an active role in the discussions
and by tacit consent observers representing States as well as governmental and non-
governmental international organizations were permitted to participate in the deliberations
on the same footing as representatives of States members of the Commission. They did
not, of course, participate in the decision-making process.
This Commentary has been written against the background of the author's participation in
the preparatory work, but represents his personal views only.

Article 1 - Scope of application(1)

(*)

1. Under the title “Scope of Application”, this article

(a) defines the Law's subject-matter-scope of

 application, namely, “international commercial
arbitration” (paragraph (1))
(b) defines the term “international” (paragraph (3))
(c) illustrates the term “commercial” and suggests
that it be given a broad interpretation (footnote
to “commercial” in paragraph (1))
(d) provides that except for four of its articles this
Law applies only if the place of arbitration is in
“this State” (paragraph (2));
(e) provides that its application is subject to
international agreements of “this State”
(paragraph (1)); and
(f) provides that the Law leaves unaffected the
law of “this State” on the subject of arbitration
(paragraph (5)).

Paragraph (1)

2. This paragraph deals with two different subjects, the Law's substantive scope of
application and its relation to the international agreements of “this State”."6"

3. Scope of Application. When the Commission decided in 1979 to request the

Secretariat to prepare a preliminary draft of a model law on arbitral procedure, it specified
that the scope of application of the draft provisions was to be restricted to international
commercial arbitration.(1.1) The principal reason why the Commission decided to limit its
terms of reference to a law governing international commercial arbitration was that States
might be willing to accept departures from their arbitration law more easily if those
departures could serve to facilitate international trade. This restriction of the scope of the
model law would, however, not prevent States which were willing to do so from adopting
the model provisions for domestic arbitration as well, as the Commission itself
recognized.(1.2) Nor would it prevent a State from eliminating the restriction to
“commercial” arbitration.(1.3)

4. The adoption of a law limited to international commercial arbitration means that there
will be two sets of arbitration provisions within a single jurisdiction with the attendant risk
of controversy as to which law applies.(1.4) It was a reasonable assumption that in most
cases the model law would be more favorable to arbitration than the general arbitration
law of the countries adopting it. Some were on that ground in favor of the widest possible
interpretation of the terms “international” and “commercial”, while others saw dangers to
national sovereignty in such an interpretation. But regardless of whether these terms were
widely or narrowly interpreted or defined, the very fact that the model law would differ from
the general arbitration law made it necessary to provide a precise formula for determining
whether to apply the model law or the general arbitration law in a given case. Much of the
time of the Working Group and the Commission was devoted to this task.

5. International agreements. As stated in nr. 2 above, paragraph (1) deals not only with
the Law's substantive scope of application but also with the different and unrelated subject
of the hierarchical relationship of the Law and the international agreements of “this State”.
By providing that the Law applies “subject to any agreement in force between this State
and any other State”, paragraph (1) establishes the priority as a matter of national law of
these international agreements, whether antedating or enacted subsequently to their
conclusion.(1.5)"7"

6. The rule, whose substance was generally agreed by the Working Group and which
was approved by the Commission without discussion, was first considered as a proviso to
draft provisions on recognition and enforcement of an award. The Working Group felt,
however, that the principle was not only relevant in the context of recognition and
enforcement and should therefore be expressed as a general rule.(1.6)

7. The proviso will be primarily relevant to international agreements, whether bilateral or

unilateral, whose subject is arbitration, but it also extends to provisions on arbitration in
agreements dealing with other matters.(1.7)

8. The degree to which an international agreement will prevail over conflicting provisions
of national law may be limited by the terms of the agreement itself. For example, Art. VII
of the New York Convention states that its provisions shall not “deprive any interested
party of any right he may have to avail himself of an arbitral award in the manner and to
the extent allowed by the law ... of the country where such award is sought to be relied
upon”.

Paragraph (2)

9. Territorial criterion. While paragraph (1), dealing with the Law's substantive scope of
application, defines its subject matter as “international commercial arbitration”, this
paragraph addresses a quite different aspect of scope of application in providing that its
provisions, with the exception of Arts. 8 (Arbitration agreement and substantive claim
before court), 9 (Arbitration agreement and interim measures by court), 35 (Recognition
and enforcement), and 36 (Grounds for refusing recognition or enforcement) apply only if
the place of arbitration is in the territory of “this State”.

10. The issue of what throughout the preparatory work was somewhat confusingly
referred to as the Law's territorial scope (since the very issue was whether or not its
application was to be determined exclusively on the basis of a territorial criterion) surfaced
when the Working Group at its fourth and penultimate session considered drafts of what
finally became Arts. 6 and 34(1) of the Law.

11. In the discussion of Art. 6, which dealt with the designation of a court or other
authority for certain functions of assistance and supervision, the question arose of which
court, that is, the court of which State, would be competent to act in a given case(1.8)
where the provision did not state a "8"connecting factor. The issue arose in a more
general form in relation to the draft of the provision on setting aside which applied only to
awards “made under this Law”. The Working Group noted that other provisions of the draft
referred to “awards made in the territory of this State”.(1.9)

12. It was thereupon decided to consider the scope of application of the individual
provisions of the model law at the Working Group's final session in the light of a general
study which the Secretariat was requested to prepare. This study was to include the
question of the choice of a procedural law of a country other than the place of arbitration
and some suggestions as to possible rules on conflicts of law.(1.10)

13. After a brief discussion the Working Group decided against giving the parties the right
to exclude the applicability of the procedural law of the place of arbitration by agreeing on
foreign procedural law. It thus opted in general for the place of arbitration as the exclusive
determining factor for the applicability of the model law, but decided not to deal with it
expressly in its text. Moreover, under pressure of time the Group did not review individual
articles in order to consider whether there were grounds for a wider scope of application in
respect of any of them, a point examined at length in the Secretariat study.(1.11) Thus the
matter was left entirely for decision by the Commission. The Commission arrived at its
decision expressed in paragraph (2) after a lengthy and rather unstructured
discussion.(1.12)

14. The basic issue before the Commission was: which connecting factor or factors
should determine the applicability of the model law in a given State? It was common
ground that the territorial criterion, as evidenced by the place of arbitration, was one such
factor, but there was a difference of opinion among delegates as to whether that should,
at least as a rule, be the sole connecting factor or whether the model law adopted by a
State might also apply when the connecting factor was the choice by the parties of that
State's law even though the place of arbitration was in another State (“mixed
territorial/autonomy criterion”). The majority of the Commission confirmed the Working
Group's decision in favor of the territorial criterion on both doctrinal and pragmatic
grounds. I shall deal only with the latter.

15. Application of the model law on the basis of the choice of a State's procedural law
even though the place of arbitration is elsewhere would risk "9"conflicting judicial
decisions and conflicts of competence particularly as between the courts of the State in
question and those of the State of the place of arbitration. Moreover, the limiting effect of
the territorial criterion on party autonomy (and therefore the strength of the argument in
favor of the autonomy criterion) is greatly reduced by the fact that by virtue of Art. 20 of
the Law the choice of a place of arbitration in a State does not mean that the proceedings,
or even any part thereof, must be conducted at that place.

16. The reverse situation, in which the place of arbitration is in the State in question, but
the parties have chosen the procedural law of another State, would create problems for
the parties in the courts of the first State only if the chosen foreign procedural law
conflicted with mandatory provisions of the law of that State.

17. Having decided the general rule, the Commission moved on to consider exceptions. It
rejected proposals that would have permitted court assistance under Arts. 11
(Appointment of arbitrators), 13 (Challenge procedure) or 14 (Failure or impossibility to
act) before the place of arbitration was known, leaving the parties to seek such assistance
under national arbitration laws.(1.13) It did accept without debate the four exceptions
listed in paragraph (2).

18. None of the four exceptions imply acceptance of the autonomy criterion. The first, Art.
8(1),(1.14) is an autonomous national enactment of the obligation of a court to recognize
and respect arbitration agreements, which is the subject of Art. II of the New York
Convention. Arts. 35 and 36 (Recognition and enforcement) likewise enact as
autonomous national law the obligations under Arts. III and V of that Convention. Finally,
Art. 9 (Arbitration agreement and interim measures by court) establishes in a sense an
exception to Art. 8(1) in distinguishing interim measures from the court actions with which
that article deals, and there was no reason why it should not, like Art. 8(1), apply
regardless of the place of arbitration. As the Commission Report notes, the functions
envisaged in those articles were entrusted “to the courts of the particular State adopting
the model law irrespective of where the place of arbitration was located or under which
law the arbitration was conducted.”(1.15)

19. After the substance of both the rule and the exceptions had been agreed, there
remained the question how these should be expressed in the text of the model law. A
general statement that the model law would apply if the place of arbitration was within the
territory of the State adopting it was criticized as being a statement of a legally self-
evident proposition.(1.16) The qualification of that statement by the words “except Article
8, 9, 35 and 36” was also criticized since it could be misconstrued as meaning that these
articles would apply only if the place of arbitration were not in the territory of the State
concerned.(1.17) Both points were met by the insertion in the draft before the Commission
of the word “only” to produce the final version of paragraph (2).(1.18)

20. In view of the decision to have a single provision state explicitly that certain articles
were excepted from the territorial scope of application of the model law there was no need
for an explicit restatement of the global scope of those articles in their text and in the
opinion of the Secretariat to do so would risk a misinterpretation(1.19) This advice was
followed with regard to Arts. 8 and 9, while the text of Arts. 35 and 36 of the Law states
explicitly that they cover awards irrespective of the countries in which they were rendered.
The explanation of this partial duplication of paragraph (2) is the wish to make the scope
of application of these important provisions immediately clear on a first reading. It should
not be regarded as raising any doubt concerning the interpretation of that paragraph.

Paragraphs (3) and (4)

21. Places of business. Since paragraph (4) is limited to providing how the term “places
of business” used in paragraph (3)(a) is to be understood when a party has more than one
place of business, or does not have any place of business, it may conveniently be
discussed in conjunction with paragraph (3)(a).

22. The fact that the model law would differ from the general arbitration law of a given
country meant that the definition of the term “international” should be as precise as
possible in order that parties to arbitration agreements might know in advance which law
would apply.

23. It was common ground within the Working Group, that the starting point for the
definition would be that the parties have their places of business in different States. This
provided a reasonably precise criterion, but it was regarded as too narrow to serve as the
exclusive criterion. The Working Group added, in ascending order of width of application
and descending order of precision, a number of additional criteria for cases in which the
parties have their places of business in the same State. All but one of those were
accepted by the Commission without change, although not without discussion.

24. The broadest criterion adopted by the Working Group, namely, that the subject matter
of the arbitration agreement is “related to more than one "11"State” was rejected by the
Commission as too vague, and in the opinion of some too broad, but the Commission
replaced it by an “opting-in” provision, thus accepting an even broader criterion. I shall
now address the three subparagraphs.

25. Subparagraph (a). “Places of business in different States”. This basic criterion,
modelled on the 1980 Vienna Sales Convention, was accepted without difficulty. It is
irrelevant whether any of these States is the State which adopted the Law (“this State” in
the Law's parlance).

26. The Law deals in subparagraph (4)(a) with the case in which a party has more than
one place of business, and in (4)(b) with the rare case in which a party has no place of
business. Divergent views were expressed in the Working Group with respect to what
became (4)(a).(1.20) Some felt that where a party had more than one place of business,
its principal place of business should be regarded as its place of business for the
application of subparagraph (3), since this would provide a clear criterion. The prevailing
view in the Working Group was, however, in favor of the place of business which has the
closest relationship to the arbitration agreement, a criterion which was similar to Art. 10(a)
of the 1980 Vienna Sales Convention. The relationship between a place of business and
an arbitration agreement is not a very clear concept. It should probably be understood as
meaning, or at least including, the implementation of the agreement and the subject
matter of the dispute.(1.21)

27. The decisions of the Working Group were approved by the Commission without
discussion.(1.22) Its report states that it was agreed that the provision would cover the
bulk of cases encountered in international commercial arbitration.

28. Subparagraph (b). Places of business in the same State. This subparagraph is written
for the case in which the parties have their places of business in the same State, and
accepts as criterion of internationality that specified aspects of the arbitration are related
to places outside that State. Subparagraph (b) is therefore strictly speaking irrelevant
where the parties have their places of business in different States. If, on the other hand,
this is or may become a matter of dispute, the party which claims that the Law applies
may invoke subparagraph (b) as an alternative basis for its contention.

29. Suggestions for broadening the criteria of internationality beyond the single one of
places of business being in different States were first discussed at the third session of the
Working Group. Examples of international elements in arbitrations between parties of the
same State included foreign "12"subject matter of the dispute and the fact that one of the
parties was foreign-owned or controlled. It was suggested that a general formula might be
used modelled after the definition of international arbitration in the French Code of Civil
Procedure, such as “transaction involving international trade interests”.

30. Another suggestion was to permit parties to agree on the application of the model law
provided there was an international element in their relationship. A majority of the Working
Group was in agreement that the term “international” should be given a wide interpretation
but was not ready to take a decision on the various suggestions to that effect which had
been offered.(1.23) It requested the Secretariat to prepare a draft provision containing a
“wider and more general definition, possibly with an enumeration of objective
criteria”.(1.24)
31. The Secretariat draft considered by the Working Group at its fourth session provided
that an arbitration would be regarded as “international” if the parties had so stipulated and,
according to one alternative, the relationship involved international trade interests or,
according to the other, one of a list of enumerated connecting factors was situated outside
the State where the parties had their places of business.(1.25) This combination of “opting
in” and objective criteria did not commend itself to the Working Group. The Working
Group also decided against the use of a general formula which might be interpreted
differently by the courts of the various States adopting the model law. Its decision was that
the standard of subparagraph (a) should be widened by adding other objective criteria, in
particular, the place of performance of contractual obligations, the location of the subject
matter of the transaction and the place of arbitration if determined in the arbitration
agreement.(1.26)

32. Subparagraph (b)(i). Place of arbitration. At its final session the Working Group
adopted the text of subparagraph (b)(i) in the form in which it appears in the Law. It did so
on the basis of a Secretariat draft which it amended in only one major respect. In that
draft, subparagraph (b)(i) read:

“the place of arbitration as determined in the arbitration agreement”. In the text adopted by
the Working Group the underscored words had been amended to read “if determined in,
or pursuant to”.(1.27)

33. The Analytical Commentary recognizes that where the place of arbitration is not
determined in the agreement, but subsequently pursuant to it, "13"there may be a long
period of uncertainty about the applicable law.(1.28) In view of the interest of parties in
knowing in advance whether the model law or a State's general arbitration law will apply,
the wisdom of the amendment appears dubious. The Analytical Commentary gives no
examples of determination of the place of arbitration “pursuant to” the arbitration
agreement. It does say, however, that “a stipulation authorizing the arbitral tribunal to
determine the place of arbitration”would not be a determination “pursuant to” the
arbitration agreement.(1.29) If that is so, would the same apply to determination of the
place of arbitration by the arbitral tribunal failing agreement of the parties, by virtue of Art.
20 of the Law or Art. 16 of the UNCITRAL Arbitration Rules, or by the Court of Arbitration
of the International Chamber of Commerce in a similar case by virtue of Art. 12 of the ICC
Rules? As to the last two, the answer would have to be negative because of Art. 2(d) of
the Law. Reliance on the “pursuant to” language will be clearly justified where the place of
arbitration is determined on the basis of objective factors stated in the arbitration
agreement or, of course, by agreement of the parties in the course of implementation of
the arbitration agreement.

34. In its written observations on (b)(i), the Federal Republic of Germany also questioned
an interpretation of “pursuant to” that would give the arbitral tribunal an option to make
international proceedings out of proceedings that have otherwise no international
connection solely by determining the place of arbitration. The Federal Republic of
Germany thought that this could not have been the intention, and suggested that the
proper meaning of “pursuant to” might rather be that even though the place of arbitration
is not expressly defined in the arbitration agreement it can nevertheless be derived from
the content of the agreement.(1.30) An arbitration clause providing that the place of
arbitration shall be outside the territory of the State where the parties have their places of
business, but that the precise place of business will be determined by the arbitral tribunal
would be an example.

35. At the plenary Commission sessions, some delegates felt that subparagraph (b)(i)
should be deleted in its entirety since in their view there was no justification for qualifying
a purely domestic relationship as international simply because a foreign place of
arbitration was chosen. In the language of the Commission Report:

“Party autonomy was unacceptable here since it would enable parties to evade mandatory
provisions of law, including those providing for exclusive court jurisdiction, except where
recognition or enforcement of the 'foreign' award was later sought in that State [i.e., the
State where the parties have their places of business].”(1.31)"14"

36. Another view, expressed in particular by the delegates of Italy and the Federal
Republic of Germany, and of Australia, was that subparagraph (b)(i) should be
maintained, but without the words “or pursuant to” which created uncertainty as to what
was the applicable law and as to the availability of court assistance before the place of
arbitration was determined. The delegate of the United Kingdom was also opposed to
those words because of the difficulties to which they could give rise.(1.32)

37. The prevailing view was on the contrary to retain the entire provision of subparagraph
(b)(i) on the basis of the principle of autonomy which should extend to the question of
internationality.(1.33)

38. When this discussion took place, the Commission had not yet decided the question of
the territorial application of the model law,(1.34) and it appears that only a few delegates
considered the possible outcome of that question in taking a position on subparagraph
(b)(i).

39. The point is that since the Law basically applies only when the place of arbitration is
in “this State”, it will not apply, subject to the exceptions stated in Art. 1(2), to arbitrations
between parties whose places of business are in State A, i.e., “this State”, but who have
chosen a place of arbitration in State B. If State B has adopted the model law, the
question arises whether the arbitration is “international” under its law and the answer is
that it is, since the place of arbitration is situated outside the State in whose territory the
parties have their places of business.

40. Does this enable parties to evade “mandatory provisions of law, including those
providing for exclusive court jurisdiction”of State A? The answer would seem to be that, if
State B has adopted the model law, violation of mandatory provisions of law of another
State would neither be a ground for a court of State B to set aside an award made in that
State nor to refuse recognition or enforcement, unless the parties had subjected their
arbitration agreement to the law of State A, which is hardly likely. The situation is different
in State A, where a court may refuse recognition and enforcement pursuant to Art.
36(1)(b)(i) or (ii), which applies to an award “irrespective of the country in which it was
made”, if it finds that the subject matter of the dispute is not capable of settlement by
arbitration under its law or that recognition or enforcement would be contrary to the public
policy of State A. To that extent the parties' intent to evade State A's mandatory law will
therefore be frustrated.

41. In addition to the provisions on recognition and enforcement, there is another

provision which applies in State A even though the place of arbitration is elsewhere. It is
Art. 8(1) which in relevant part requires a court before which an action is brought in a
matter which is the subject of an arbitration agreement to refer the parties to arbitration
“unless it finds that "15"the agreement is null and void.” This may enable a court of State
A to render the arbitration agreement ineffective in its territories when the agreement is
null and void under its law for violation of mandatory provisions.(1.35)

42. Subparagraph (b)(ii). Place of performance, connection of subject matter of dispute.

While the very factor that makes an arbitration “international” under subparagraph (b)(i), to
wit, a foreign place of arbitration, takes it out of the scope of the model law adopted by the
State in which the parties have their places of business, except for its Arts. 8(1), 9, 35 and
36, the model law of that State will apply when one of the two objective factors stated in
subparagraph (b)(ii) is present.

43. In commenting on the first of these ( “a substantial part of the obligations of the
commercial relationship is to be performed in a State other than the one in which the
parties have their places of business”) the Analytical Commentary states that it is not
necessary that the dispute itself relate to the international element.(1.36) The Federal
Republic of Germany suggested in its written observations that this was not an
appropriate criterion and should be deleted. In its opinion, international character should
solely depend on the second connecting factor, namely, that the place with which the
subject matter of the dispute is most closely connected is outside the State in which the
parties have their places of business.(1.37) This view was not pursued in the sessions of
the plenary Commission.

44. In the Commission the discussion of subparagraph (b)(ii) was linked with
subparagraph (c) in the “objective” form which that paragraph then had ( “the subject
matter of the arbitration agreement is otherwise related to more than one State”) and
there were suggestions that either one or the other might be deleted. It was common
ground that neither was very precise. In the end it was decided to let subparagraph (b)(ii)
stand and to change subparagraph (c) into an “opting-in” provision, as to which see nrs.
55 and following, infra.

45. Subparagraph (c). Stipulation. As already stated, those who favored a wide scope of
application of the model law suggested a number of additional criteria. At the last session
of the Working Group a proposal was made to use as a criterion “significant foreign
ownership or substantial control”. The proposal was not accepted in view of the practical
difficulties in devising a workable test but also because of the “controversial and sensitive
nature of the issue”.(1.38) The issue was whether a locally incorporated subsidiary of a
foreign parent should “automatically” have the benefit of the model law in "16"an
arbitration with a company having its place of business in the same State as the
subsidiary. Although the opponents did not use that term, they appear to have considered
the proposal as a manifestation of extra-territorial jurisdiction.

46. After other criteria had also been rejected, the Working Group agreed to add a new
subparagraph (c) to cover all cases, not already covered by subparagraphs (a) and (b), in
which “the subject matter of the arbitration agreement is otherwise related to more than
one State”.(1.39) This residual criterion of internationality was the broadest and the least
precise of the tests adopted by the Working Group.
47. The Analytical Commentary correctly notes that “the subject matter of the arbitration
agreement” is not to be construed as referring to the arbitration itself but to the
substantive matters that may be subject to arbitration.(1.40)

48. A number of governments submitted written observations on the width and certainty
of the test of internationality. Specifically, Canada(1.41) and Poland(1.42) found
subparagraph (c) too vague and Yugoslavia considered that it was too
broad.(1.43)Sweden, disagreeing with the decision of the Working Group on this point,
was of opinion that a dispute arising in an operation between parties having places of
business in the same State should be considered “international” if one party is a
subsidiary of a foreign company.(1.44)

49. The United States suggested that in order to meet the concern that parties should
know from the beginning whether the model law or domestic arbitration law would apply,
the Commission should reconsider the proposal which had been discussed (but not
accepted) by the Working Group(1.45) to couple the criteria with an agreement of the
parties defining the arbitration as “international”. In the opinion of the United States, when
a corporation which is doing business in another country opens an office there, the
transaction is international and, whether the office is a branch or a subsidiary incorporated
in that country, contracts made by that office would come within the definition of
subparagraph (c) because those contracts were related to more than one State. However,
to remove any doubt or later argument, a sentence should be added to the effect that if
the agreement of the parties states that it involves interests in more than one State they
could not subsequently deny that it does.(1.46) The United States also suggested an
"17"amendment of subparagraph (c) by the substitution of “subject-matter- ... related to
commercial interests in more than State” for “subject-matter ... related to more than one
State”.(1.47)

50. While the first United States suggestion carried elements of “opting in”, Norway felt
that neither should the model law preclude parties from agreeing that the domestic
arbitration law will be applicable even if their relationship is international and
commercial.(1.48) It did not, however, pursue this “opting out” proposal at the
Commission sessions.

51. The Soviet Union observed that since under paragraph (2) the model law may apply
to arbitrations between parties having their places of business in the same State, that
paragraph might be interpreted as enabling the parties to submit their dispute to
arbitration even if under the law of that State the dispute is within the exclusive
competence of a judicial or other authority, that is, is not arbitrable.(1.49) While an award
made in respect of such a dispute could be set aside under draft Art. 34, the Soviet Union
considered that it would be expedient to provide a clear answer by the addition to Art. 1 of
a provision to the general effect that the model law does not affect the legislation of the
model law State which may declare certain categories of disputes to be within the
exclusive competence of a judicial or other authority.(1.50)

52. At the Commission, subparagraph (c) gave rise to a lively discussion in which initially
sharply conflicting views were expressed. Delegates of Hungary, Yugoslavia, China, Italy,
Singapore, Argentina and the Federal Republic of Germany, speaking in that order, were
in favor of simply deleting the subparagraph.(1.51) Of those who gave reasons, Cuba and
Brazil considered subparagraphs (a) and (b) adequate, Hungary preferred deletion since it
referred by implication to matters with which the Commission was not competent to deal,
such as the rights of multinational corporations in host countries,(1.52) and Italy felt that it
was important for the model law to make it clear that an arbitration could not be
considered international merely because one of the parties was wholly or partly owned by
a foreign corporation.(1.53)

53. The delegates of India and France were not opposed to subparagraph (c) but felt that
it should be made more precise.(1.54) The United Kingdom delegate felt that there was a
need of clarification of the words “otherwise "18"related to more than one State” since
read in conjunction with subparagraph (b)(ii) they did not relate to the place where the
obligation was to be performed and their meaning was thus unclear.(1.55)

54. The United States delegate, restating the essentials of his Government's written
observations, said that subparagraph (c) was a necessary provision intended to cover the
case of a company which was performing a contract in a country other than its own while
the other party had its place of business in that country. He also restated the two
proposals for amending subparagraph (3) which were put forward by the United States in
its written observations.(1.56) The Cypriot delegate said that the United States delegate
had made it clear why subparagraph (c) was necessary.(1.57)

55. The discussion took a different turn when the observer for Finland suggested that a
sentence be added to subparagraph (b) to the effect that if the parties had agreed that the
subject matter was of an international nature, they should not be able to deny the fact at a
later stage. Subparagraph (c) would then be deleted.(1.58) The Australian delegate
thereupon proposed that subparagraph (c) should be replaced by an “opting-in” clause to
the effect that an arbitration was international if the parties specified that it was
international.(1.59)

56. The delegate of the Soviet Union, agreeing with others that subparagraph (c) was
vague, thought it desirable that the text should include an explicit statement and proposed
a new paragraph along the lines of its written observations to the effect that the model law
would not affect the law of a State which may declare certain categories of disputes to be
within the exclusive competence of a judicial or other authority, or in the alternative, a
provision to the effect that the model law will not affect the legislation of a State by virtue
of which the dispute was not capable of settlement by arbitration.(1.60)

57. The Australian delegate supported the Soviet Union proposal which would suitably
balance the “opting-in” provision which his delegation had proposed.(1.61) The United
Kingdom delegate supported replacement of subparagraph (c) by an “opting-in” provision
along the lines of the Australian proposals. He also supported the inclusion of a provision
of the kind suggested by the Soviet Union delegation which be termed an essential
safeguard if an “opting-in” provision was included.(1.62) The United States delegate said
that he could support either the Finnish or the Australian "19"proposal. In regard to the
Soviet Union proposals, he favored the second.(1.63)

58. The Australian proposal appeared to be generally acceptable, although the delegates
of France and Hungary regretted that it would allow two parties, which both had places of
business in a given country, to resort to the model law even if their transactions were
devoid of any international subject matter.(1.64) The Japanese delegate also had
reservations about the desirability of allowing the parties to decide what is
“international”.(1.65)

59. The Australian and Soviet proposals were referred to an ad hoc drafting committee
which produced the texts of what the Commission approved as paragraphs (3)(c) and (5)
of the Law.(1.66)

Summary and Conclusion

60. The foregoing detailed review of the drafting history of the definition of “international”
may be summarized as follows:

(i) The Law's basic criterion for the international character of the arbitration is that the
parties have, at the time of the conclusion of the arbitration agreement, their places of
business in different States (paragraph (3)(a)). Where each party has only one place of
business, the parties will know in advance whether this criterion has been met.

(ii) In case a party has more than one place of business, paragraph (4) determines which
one is the place of business for purposes of paragraph (3)(a). Where the parties find it
desirable to guard against the inevitable element of uncertainty which this imparts, they
may stipulate in the arbitration agreement that the place of business on which they rely for
the international character of the arbitration agreement is the one “which has the closest
relationship to the arbitration agreement” or even agree expressly that, whether or not the
criterion of subparagraph (a) is met, the subject matter of the arbitration agreement
“relates to more than one country” (subparagraph (c)). As long as such a stipulation or
agreement does not go beyond the resolution of reasonable doubts and does not
represent an egregious attempt to evade the Law, it will in my opinion be respected by a
court in a model law State.

(iii) Subparagraph (b) establishes additonal criteria for the international character of an
arbitration when the parties have their places of business in the same State (which I shall
call here for convenience “the common "20"State”). In commenting on the degree to which
they permit parties to know from the beginning that their arbitration is international, four
cases may be distinguished:

(a) Where the place of arbitration “determined in the arbitration agreement” is situated
outside the common State, the parties have complete certainty. I should add that the term
“arbitration agreement” must be understood as referring not only to the initial arbitration
agreement but equally to any subsequent agreement on arbitration by which a place of
arbitration outside the common State is designated.

(b) Where the place of aribtration determined “pursuant to the arbitration agreement” is
situated outside the common State, the parties will have such certainty only when the
arbitration agreement provided that the place of arbitration to be determined shall in any
event be outside the common State.

(c) In most instances the determination, at the time of the conclusion of the substantive
agreement, of the “place where a substantial part of the obligations of the commercial
relationship is to be performed” will pose no problems and will therefore enable the parties
to know from the beginning whether their arbitration is “international”. In my view this test
of subparagraph (b)(ii) is also satisfied if performance of these obligations in a number of
States each of which is situated outside the common State constitutes performance of a
substantial part thereof. For the avoidance of doubt, where that might be a problem, the
parties may stipulate that a stated place or stated places of performance collectively meet
the test.

(d) Certainty concerning the place, “with which the subject matter of the dispute is most
closely connected” can in the nature of things only be obtained when the dispute arises,
although the parties may be able to make an educated guess. In my opinion, the
uncertainty can in this case not be cured by a stipulation or an “opting-in” agreement.

Paragraph (5)

61. Reservation of domestic law on arbitrability. Although the Working Group had decided
not to deal generally with the subject of arbitrability in the model law,(1.67) paragraph (5)
defers to the provisions of the domestic law on arbitrability of a model law State in order to
make clear that the definitions of “international” and the explanation of “commercial” do
not have the effect of rendering disputes coming within those terms necessarily arbitrable.
The issue was raised by the Soviet Union as regards “international”(1.68)"21"and by
Mexico and the Soviet Union in regard to “commercial”.(1.69) The point was generally
accepted and the draft prepared by an ad hoc drafting committee was approved by the
Commission without discussion.(1.70)

Commercial (Footnote)

62. There was general agreement from the beginning that the term “commercial” should
be given a wide meaning in order to meet the concern that, in certain legal systems, the
term might be construed in an unduly restrictive manner. At the same time the Working
Group was aware of the difficulty of devising a clear-cut definition. Attempts at definition
were pursued at the first three sessions of the Working Group,(1.71) but in the end it was
decided to request the Secretariat to draft a footnote to the term “commercial” which
would take into account the proposed definitions and the need for clarifying that not only
transactions between merchants but also others were covered.(1.72)

In its “Possible features” paper the Secretariat had raised the question whether the model
law should contain a definition of “commercial” as an element delimiting the substantive
scope of the law's application. If suggested that the term “commercial”, although not
always and in all respects construed in an identical manner, had gained a sufficiently clear
meaning, at least as a modifier to “arbitration”, thus excluding arbitration of a different
nature, such as those in labor disputes or family law matters. The Secretariat also
suggested that the term “commercial” should not be qualified along the lines of Art. I(3) of
the New York Convention by language such as “relationships which are considered as
commercial under the national law of the respective State”.(1.73)

63. When a draft footnote was placed before the fourth session of the Working Group,
some proposed that the illustrative list set forth in the footnote should be incorporated into
the body of the text of paragraph (1), an approach that had earlier been opposed on the
ground, among others, that inclusion of a list of examples was contrary to the legislative
techniques in a number of legal systems, while others preferred not to retain any such
illustrative list at all. The prevailing view was to retain the footnote since it provided some
useful guidance for the interpretation of the term “commercial”."22"
64. In accordance with the instructions of the Working Group, the Secretariat draft of the
footnote read in part:

“The term 'commercial' should be given a wide interpretation so as to cover matters

arising from all relationships of a commercial [or economic] nature, irrespective of whether
the parties are 'commercial persons' (merchants) under any given law” (emphasis
added).(1.74) At the fourth session the quoted words were maintained over the opposition
of an articulate minority which succeeded at the final session of the Working Group in
obtaining the deletion of that language, which in their opinion might be interpreted as
dealing with the issue of State immunity. The Working Group noted that the quoted words
were not at all intended to touch on that issue but were incorporated for the sole purpose
of clarifying that the commercial nature was not dependent on the qualification of the
parties as merchants, since some national laws used that qualification for distinguishing
between commercial and civil relationships. The Working Group agreed to delate the
italicized words but understood that the deletion did not change the meaning of the first
sentence of the footnote.(1.75)

65. As regards the form of the footnote, the Working Group agreed that while the
technique was not ideal, it was maintained as an intermediate solution between an
attempt to incorporate a definition of “commercial” in the model law which proved to be
impracticable and the mere inclusion in the Commission's eventual report of the illustrative
list.(1.76)

66. The Analytical Commentary states that at the least the footnote could provide some
guidance to the legislator of a State even where it would not be reproduced in the national
enactment of the model law. It also notes that while the footnote does not give a clear-cut
definition, it supports an autonomous interpretation of the term “commercial” unlike the
New York Convention which permits a Contracting State to apply the Convention only to
legal relationships “which are considered as commercial under the national law” of the
State in question. It would, therefore, be wrong, according to the Commentary, to apply
national concepts which define as commercial, for example, only those types of
relationship dealt with in the commercial code.(1.77)

67. The Analytical Commentary concludes that while the model law does not touch on the
issue of State immunity and, for example, does not say whether the signing of an
arbitration agreement by a State constitutes a waiver of any such immunity, the fact
remains that the Working Group draft covers relationships of a commercial nature to
which a State organization or governmental entity is a party.(1.78)"23"

68. The divergent view points expressed in the Working Group on the relative merits of a
definition in the text, a footnote or a comment in the Commission's report were restated in
almost identical form at the plenary Commission session. A renewed suggestion that the
opening sentence of the footnote might state that the qualification of a relationship as
commercial did not depend on the nature or character of the parties, was once again met
by the concern about State immunity. Another concern, forcefully expressed by Mexico in
its written observations,(1.79) and supported by the delegate of the Soviet Union, was that
the illustrative list of commercial relationships might be construed as meaning in positive
terms that any dispute arising therefrom would be capable of settlement by arbitration.
That concern could be simply met by a non-controversial recognition in the model law that
a model law State could declare that certain disputes or certain subjects were not capable
of settlement by arbitration. This was done by the adoption of paragraph (5) supra which
had already been proposed by the Soviet Union in the context of the definition of
“international” and had been generally accepted.(1.80)

69. The footnote was revised in order to make clear that the term “commercial” was
intended to cover matters arising from all relationships of a commercial nature, whether
contractual or not.(1.81) The Commission summarized its conclusions as follows:

“The Commission was of the view that with the revision of the footnote it was sufficiently
clear that the qualification of a relationship as commercial did not depend on the nature of
the parties. Therefore, it was felt that it was not necessary to express it explicitly in the
text either of Article 1(1) or of the footnote. The Commission was also of the view that the
provision as drafted did not touch on any rule on sovereign immunity”.(1.82)

Postscript

70. In view of the doubts expressed as to the effect of a footnote and, generally, of the
travaux préparatoires, it is interesting to note that the Canadian federal and provincial
legislation enacting the model law and the legislative proposals of the Hong Kong Law
Reform Commission include specific reference to the travaux préaratoires as an aid in
interpreting the legislation and that the British Columbia International Arbitration Act has a
definition of “commercial” in Art. 1 which essentially incorporates the Working Group draft
footnote to “commercial”."24"

Article 2 - Definitions and Rules of Interpretation

(*)

1. This article did not give rise to extended discussions and most of its content was non-
controversial. My comments can therefore be brief.

2. Paragraph (a). This paragraph, which did not appear in the Working Group draft, was
added by the Commission without objection on the proposal of the delegate of the
German Democratic Republic.(2.1)

3. Paragraphs (b) and (c). The purpose of these definitions is to make a clear distinction
between judicial and arbitral dispute settlement institutions so as to avoid terminological
confusion. “Arbitral tribunal” is used throughout the Law, rather than the abbreviated form
“tribunal” which in a language like French may be taken to refer to a court. “Court” is
defined in order to avoid the misunderstanding that it might include any arbitration body or
arbitration institution which bears the name “court” (e.g., ICC Court of Arbitration).(2.2)

4. Paragraphs (d) and (e). The purpose of these paragraphs is “to prevent too literal an
interpretation of the references in the model law to the parties' freedom to determine an
issue or to their agreement”.(2.3) The number of arbitrators and the place of arbitration
are mentioned as practical examples "25"of issues which parties may under paragraph (d)
authorize an arbitration institution to determine.(2.4) The determination of these issues by
such an institution may also result under paragraph (e) from the reference in the
arbitration agreement to the rules of such an institution which provide for such
determination.
5. The Commission approved the two paragraphs in the form in which they had been
adopted by the Working Group, save for the insertion in paragraph (d) of the words
“except article 28”. In its written observation, the Hague Conference on Private
International Law had pointed out that the freedom given to the parties to choose the law
applicable to the dispute by Art. 28(1) of the Working Group draft (which appears without
change as Art. 28(1) of the Law) was a fundamental principle of private international law.
It was therefore not desirable to permit parties to entrust this choice to a third party, let
alone to an arbitration institution, which would not be competent in the matter. The model
law already provided in Art. 28(2) that when the parties had failed to choose the
applicable law it would be determined by the arbitral tribunal. The Working Group draft
should therefore be modified by a reservation concerning Art. 28.(2.5)

6. The observer for the Hague Conference restated his proposal in the context of the
Commission's discussion of Art. 28. It was recognized that paragraph (d) of Art. 2 should
not be interpreted as extending to matters of substantive law which the Working Group
had not intended to cover. After some drafting discussion the Commission approved the
exclusion of the choice of substantive law by the insertion in paragraph (d) of “except
article 28”.(2.6)

7. Paragraph (f). In their written observations Norway and the United States noted the
understanding of the Working Group at its final session that any provision of the model
law referring to a claim would apply, mutatis mutandis, to a counter-claim. In their view,
which was shared by Canada, the model law should contain explicit provisions on this
point, either in Art. 2 (subject to careful examination of exceptions as suggested by
Norway) or in provisions of the model law dealing with claims.(2.7)Mexico and
Czechoslovakia proposed language to cover specific aspects of counter-claims.(2.8)

8. The Commission adopted paragraph (f) without objection on the basis of a proposal
prepared by the delegates of Czechoslovakia and the United States. The exceptions are
self-explanatory.(2.9)"26"

9. “Award” not defined. The Working Group was agreed that it was desirable for the
model law to define the term arbitral “award”, in particular for purposes of determining
which kinds of decisions would be subject to recourse under Art. 34 (setting aside). At its
fifth and final session the Working Group considered the following proposal:

“'award' means a final award which disposes of all issues submitted to the arbitral tribunal
and any other decision of the arbitral tribunal which finally determines any question of its
competence or any other question of procedure but, in the latter case, only if the arbitral
tribunal terms its decision an award.”(2.10)

10. While there was wide support for the first part of the proposed definition, serious
concerns were expressed as regards the latter part, in particular the last portion referring
to decisions on questions of procedure. Since there was not sufficient time for
consideration in depth of the important implications of a definition for a number of
provisions of the model law, the Working Group decided not to include a definition of
“award” in the text to be adopted by it and to invite the Commission to consider the
matter.(2.11)

11. At the Commission session the Mexican delegate, supported by the delegate of
Argentina, stated that it was necessary to include in Art. 2 “some definition of the concept
of 'award', which was used in Art. 16(3) and Art. 34(1)”.(2.12)

12. The representative of the Secretariat recalled that the Working Group had not
succeeded in its attempts to arrive at a satisfactory definition of “award”. In his opinion the
only matter that should be regulated was that of what decisions could be set aside under
Art. 34, and they might be defined as “any decision which contained a decision of
substance”. Any decision which was strictly on a procedural matter, including the
competence of an arbitral tribunal, would not be covered by Art. 34. Following the
example of the New York Convention, which also did not define an arbitral award, no
attempt should be made to define it for the purpose of Arts. 35 and 36.(2.13) The Italian
delegate agreed with the approach of the Secretariat that there should be no initial
general definition of “award”. Where the need for a specific definition was identified in the
text, a decision could be taken at that time.(2.14)

13. After the delegates of the United Kingdom and the United States had drawn attention
to the need to go through the text to see where differences in language (“award”,
“decision”, “determination”) indicated differences in "27"concept, and the desirability of
clarifying the meaning of “final award” in draft Art. 32 and to consider the matter of partial,
interim and interlocutory awards, the Chairman suggested that the discussion of Art. 2 be
concluded for the time being but that if there were a need to define terminology in the
course of consideration of the text of the draft model law, it would be possible to make
additions to Art. 2.(2.15)

14. The Commission Report records the Commission's agreement to determine in the
context of Art. 34 and any other provision where such determination was needed (e.g.,
Arts. 31 and 33) which types of decisions were covered by these articles.(2.16) The
subject was, however, not discussed at any of the subsequent meetings of the
Commission.

Article 3 - Receipt of Written Communications

(*)

1. As adopted by the Working Group (as part of Art. 2), this provision was closely
modelled on Art. 2(1) of the UNCITRAL Arbitration Rules.(3.1)"28"

2. In its written observations, Norway suggested that a party against which an award had
been made although it had not been aware of the proceedings might be given a right of
recourse.(3.2)Canada expressed the view that the modalities of delivery will have to be
considered by each State, having regard to the rules of delivery it accepts in the case of
judicial procedures and to local circumstances.(3.3) A suggestion was also made that a
certain amount of time should elapse before the addressee could be taken to have
received a communication delivered to its last-known place of business, habitual
residence or mailing address.(3.4) According to another view, the matter of notification
need not be dealt with in the model at all but should be left to local procedural law.(3.5)

3. After discussion, the Commission agreed that the provision should not set forth
excessively detailed procedural requirements. It did, however, add as a safeguard for a
defendant that when a communication was sent to its “last-known” address, it should be
sent “by registered letter or any other means which provides a record of the attempt to
deliver it”.(3.6) As regards the meaning of “last-known”, the Commission agreed with the
submission by the delegate of the German Democratic Republic that that expression
referred to the knowledge of the sender.(3.7)

4. The Commission also decided to add paragraph (2) in order to express its
understanding that Art. 3 did not apply to court proceedings or measures, but only to the
arbitral proceedings proper.(3.8)

5. Art. 3 of the Law applies “[U]nless otherwise agreed by the parties”. That means that if
the parties have accepted the UNCITRAL Arbitration Rules (which impose a less strict
notice requirement), those rules will prevail by virtue of Art. 2(e) of the Law. In situations
such as this where the same subject is governed in different ways by arbitration rules
accepted by them and non-mandatory provisions of the Law, parties will have to decide
which provisions they prefer. If they wish the Law to apply, they should exclude from the
applicability of the arbitration rules provisions which are in conflict with the Law where the
latter is applicable."29"

Article 4 - Waiver of Right to Object

(*)

1. This provision, which was modelled on Art. 30 of the UNCITRAL Arbitration Rules, was
adopted after extensive discussion of divergent views.

2. In the form in which it was first considered by the Working Group, a party which failed
to make a timely objection to non-compliance with “any provision of, or requirement under,
this Law”was deemed to have waived his right to object. There was some support for
deleting the draft article as inappropriate in an arbitration law as distinguished from
arbitration rules. The prevailing view was, however, to retain a waiver rule but to exclude
from its operation failure to object to non-compliance with mandatory provisions of the
model law.(4.1) A party thus retained its right to invoke such non-compliance at any time
even if it had not objected to it earlier.

3. When the Working Group considered a new draft at its next and final session, a
minority continued to oppose a waiver provision both because waiver was considered too
rigorous a sanction and, more generally, because questions of waiver and estoppel were
better left to be decided by arbitrators and judges.(4.2)

4. Divergent views were also expressed as to the scope of the provision. Some
considered that the waiver should operate without limitation, that is, to mandatory and
non-mandatory provisions alike. Others would exclude only fundamental procedural
defects, such as violations of public policy or non-arbitrability. The prevailing view was,
however, to retain the limitation to non-mandatory provisions.(4.3)

5. The Working Group also considered the separate question whether the waiver
provision would have effect only in the arbitral proceedings or whether its effect would or
should extend to judicial proceedings when a party founds a request for setting aside on
non-compliance by its opponent "30"with provisions of the model law or requirements of
the arbitration agreement, or relies on them as a ground for contesting recognition and
enforcement of the award. The majority view was that it extended to judicial proceedings
as well.(4.4)

6. The written observations on the Working Group draft by governments and interested
organizations largely repeated arguments which were covered in the Working Group
discussions. The discussion in the Commission led to two changes in the Working Group
draft, both intended to soften its provisions. That draft had sanctioned a party's failure to
object to noncompliance which he knew or “ought to have known”. The Commission
decided to exclude imputed knowledge and deleted the quoted words.(4.5) The Working
Group draft also sanctioned failure to object “without delay” and the Commission softened
this to “without undue delay” when it was found that no time period would be appropriate
for all instances.(4.6)

7. The Commission did not accept a proposal to deal with the question of waiver only in
those provisions in regard to which a waiver rule was regarded as essential and confirmed
the view of the Working Group that a general waiver rule, which should however not affect
mandatory provisions, should be maintained in order to help the arbitration process
function efficiently and in good faith.(4.7)

8. The Commission also confirmed the Working Group's view that the effect of a waiver
under Art. 4 was not limited to the arbitral proceedings but extended to subsequent court
proceedings in the context of Arts. 34 and 36 and its Report so states.(4.8) It also records
the comment made in the discussion to the effect that where an arbitral tribunal has ruled
that a party was deemed to have waived its right to object, the Art. 6 court or the
“competent court”, as the case may be, could come to a different conclusion in its review
of the arbitral procedure pursuant to Art. 34, or provided the proceedings were conducted
under this Law, Art. 36.(4.9)

Article 5 - Scope of Court Intervention

(*)"31"

1. In submitting the draft provision on the role of courts with regard to arbitration, which
eventually passed unchanged into the Law as Art. 5, the Secretariat stated:

“This novel draft provision is intended to express a principle underlying the discussions in
the Working Group. While its acceptability may be assessed only after the contents of
(i.e., 'the matters governed by') the model law are clear, it would compel the drafters to
express in the Law any instance of possible court control.”(5.1) After its initial exploration
of the issue at its third session, the Working Group concluded that it was premature to
take a decision on the draft provision without a clearer view of the instances in which the
model law would provide for court intervention, whether in aid of arbitration or for
purposes of supervision.(5.2) After having postponed discussion of the subject at its fourth
session, the Working Group at its last session adopted the article which, in the view that
prevailed in the discussion, would be beneficial to international commercial arbitration by
providing certainty to the parties and the arbitrators about the instances in which court
supervision or assistance was to be expected. The Working Group stated that its decision
was, nevertheless, a tentative one to be reconsidered by the Commission in the light of
comments by Governments and international organizations.(5.3)
2. In an indirect reply to those who thought that the provision evidenced a distrust of
courts and constituted an undue limitation on court supervision and assistance, the
Working Group report noted that Art. 5 did not itself take a stand on the extent of court
supervision but merely required that any instance of court involvement be expressed in
the model law. The report also pointed out that it was understood that the introductory
words “In matters governed by this Law” limited the scope of application of Art. 5 to those
matters which were in fact governed by or regulated in the model law. It then went on to
say that Art. 5 would not exclude court control or assistance “in those matters which the
Working Group had decided not to deal with in the Law”.(5.4)

3. Only three governments submitted written observations. Norway was in favor of the
principle that instances of court intervention be exhaustively mentioned in the model law
itself. It also thought that the possibility of court intervention should be kept to a
minimum.(5.5)Korea suggested that courts might extend cooperation at the request of an
arbitral tribunal when "32"the latter is incapable of performing an act which it deems
essential to the arbitration.(5.6)

4. Basic questions were raised in the extensive written observations of the United
Kingdom.(5.7) Although many of them were reiterated at the Commission stage it will be
helpful to present them here in summary in the systematical way in which they were
advanced by the United Kingdom Government.(5.8) The general line of the observations
was that, recognizing the desirability of a clear statement which would enable the
draftsman of legislation enacting the model law, and a party in an arbitration conducted
under such legislation, to know whether or not in any given situation recourse to the
courts is possible, Art. 5 did not, and probably could not, provide such a clear statement.

5. The first question raised was: what matters are “governed by this Law”? When a party
seeks the intervention of a court of a model law State, the court must ask itself whether it
has jurisdiction to intervene. Where the situation which caused the party to seek court
intervention is covered by the express terms of “this Law,” the position is clear: the
remedies prescribed for that situation, and no others, may properly be applied. However,
if there is no express provision in the Law, the court must seek to determine which one of
three possible reasons explains the omission.(5.9)

6. The first reason might be that the framers of the Law considered the situation and
decided that it should not be dealt with by the model law. This is the case, mentioned in
nr. 2 supra. However, the list of subjects not intended to be governed by the model law,
mentioned in the report of the Working Group on its last session, was clearly given for
illustrative purposes only.(5.10)

7. The problem may be even more difficult if a court finds that the situation is generally of
the same type as situations which are expressly dealt with in the model law. Can one
conclude that the absence of any reference to that situation shows that the framers
intended that the court should have no power to intervene? The United Kingdom notes in
this connection that the Analytical Commentary differs from the Working Group report in
referring to issues which are in fact regulated “whether expressly or impliedly”(emphasis
added). Could that wider meaning be embodied in the text of the model law
itself?(5.11)"33"
8. Finally, quid if the situation in question is one which the framers of the model law had
never considered at all? This would be a case in which the Working Group had not
decided not to deal with the situation. Would that mean that court control and assistance
was excluded in such a case?(5.12)

9. The United Kingdom emphasized that these were not theoretical objections but that
they reflected genuine uncertainties expressed by users of the arbitral process consulted
by the Government.(5.13)

10. The Analytical Commentary states that the effect of Art. 5 is limited to those issues
which are in fact regulated, whether expressly or impliedly, by the model law and that the
article would, therefore, not exclude court intervention in any matter not regulated in the
model law. It goes on to say: “It is submitted that the distinction is reasonable, even
necessary, although it is not in all cases easily made”. The Commentary then gives an
example which tends to show that the concern of the United Kingdom may have been
overstated: Art. 17 of the Law (Art. 18 of the Working Group draft) governs the arbitral
tribunal's ordering of interim measures of protection, but it does not regulate the possible
enforcement of these orders. Art. 5 would leave a State free either to empower the arbitral
tribunal to take itself certain measures of compulsion or to provide for enforcement by
courts.(5.14)

11. The second question raised in the United Kingdom's written observations concerned
the stage at which judicial control would be permissible in case of “misconduct” by the
arbitral tribunal.(5.15) That question is linked to Arts. 34 and 36 of the Law and, more
generally, to the conduct of arbitral proceedings the guiding principles of which are laid
down in Arts. 18 and 19. I shall therefore deal with that aspect of the United Kingdom's
observations in my comments on those articles.

12. The third question raised in the United Kingdom's written observations concerned not
the interpretation and possible clarification of Art. 5, but whether the article was
mandatory. The United Kingdom suggested on the basis of its consultation with
businessmen who are using the arbitral process, some of whom favored the retention of a
possibility of recourse to the courts on questions of law, that it would be a logical
consequence of the principle of party autonomy that a court should be able to give effect
to their agreement to avail themselves of measures of judicial assistance which are
excluded by Art. 5.(5.16)

13. The Commission adopted Art. 5 in the form suggested by the Working Group after a
discussion in which 23 delegations (including observers) participated. Perusal of the
Summary Record shows that the principal issues "34"were the interpretation of the words
“in matters governed by this Law,” the possibility of “opting out” and the question whether
Art. 5 unduly limited court jurisdiction. As to the meaning of “intervene”, there was general
agreement that the term covered both supervision or control and assistance.

14. In response to the opening statement of the United Kingdom's delegate, who
summarized the United Kingdom's written observations, seeking enlightenment as to the
meaning of Art. 5 from the Secretariat at whose initiative the article had been introduced
in the Working Group draft, the following answers were supplied:

(i) the provision clearly excluded court

 intervention in situations expressly regulated
by the model law.
(ii) it also excluded such intervention in situations
impliedly so regulated, as, for example, the
freedom of the parties under the model law to
agree on the procedure for appointing
arbitrators, which clearly implied that they
could actually appoint them without
confirmation by a local court required by
domestic arbitration legislation.
(iii) judicial control was not excluded in situations
with which the Working Group had decided
that the model law should not deal, non-
exhaustive examples of which were supplied,
but it was obviously not the intention of the
Working Group to exclude judicial control in
situations not foreseen by it.
(iv) there would admittedly be cases in which it
would be very difficult to know in advance
whether or not judicial control or assistance
was permitted, but that problem was common
to any lex specialis and would exist even
without Art. 5.

(5.17)

15. There was little support for the proposal to permit parties to “opt out” of Art. 5, that is
to agree to a wider measure of court control than is provided for under that article. As
indicated in the United Kingdom's written observations and oral statement at the
Commission session, some businessmen would feel comfortable with a greater possibility
of access to courts as a protection against abuse of the arbitral process. In contrast to the
United Kingdom's position, the delegate of France said that neither restricting nor
expanding recourse to national jurisdiction was a matter for party autonomy.(5.18)

16. The answer to those who considered that Art. 5 unduly restricted court supervision
and control of the arbitration process was that the purpose of Art. 5 was not to deal with
the extent of judicial control but to oblige the draftsmen of the model law and
subsequently the legislator to decide in which situations court controls should be
provided.(5.19) In fact, no specific "35"suggestions were advanced for adding instances of
court control to the model law text.

17. Sir Michael Mustill, addressing the question of how to deal with abuse of the arbitral
process, noted that the Working Group draft contained no provision for judicial
intervention during the course of the arbitration. The Commission should consider whether
this meant that the subject was not covered by the model law, or that such intervention
was implied or that it was excluded.(5.20) The point was not responded to and no
proposal for an amendment was made. The great majority of delegations were either
affirmatively in favor of the current text of Art. 5 or were prepared to accept it.(5.21) In the
end, the delegate of the United Kingdom said that the problems which arose in connection
with Art. 5 could not be solved by mere drafting changes such as had been suggested by
some delegates. His delegation considered that the current version of the article, while not
perfect, was the best which could be hoped for.(5.22)

18. The Chairman concluded that Art. 5 had found general approval and that the
Commission would wish it to be maintained in its current form, and the Commission
agreed.

Article 6 - Court or Other Authority for Certain Functions of Arbitration Assistance

and Supervision

(*)

1. This article prescribes that certain functions of assistance and supervision shall be
performed by the court, courts or other authority specified by each State enacting the
model law. The functions listed in the article are related to the appointment of an arbitrator
(Art. 11(3) and (4)), the challenge of an arbitrator (Art. 13(3)), the termination of the
mandate of an arbitrator because of his failure or impossibility to act (Art. 14), the review
"36"of a decision of an arbitral tribunal as a preliminary question that it has jurisdiction
(Art. 16(3)), and the setting aside of an award (Art. 34(2)). The particulars, including the
time limits (if any) within which recourse to the court or other authority must be sought, are
specified in the respective articles cited. All but one of those articles (Art. 34(2)) provide
that the decision of the court or other authority (as the case may be) shall be without
appeal.

2. At its second meeting, the Working Group considered draft articles which provided for
decisions in certain cases by “the Authority” designated by the model law. It was agreed
that each State which adopted the model law would have the option of designating the
Authority it thought most appropriate,(6.1) and that in doing so the State should name a
judicial organ.

3. The question was also raised as to the Authority of which State would exercise the
functions of an Authority under the model law.(6.2) This was the question of the criteria for
the applicability of the model law which was answered when the Commission decided to
adopt the territorial criterion subject to only a few exceptions, none of which concern the
provisions which contemplate decisions by the “Authority” as it was first called or by the
“court or other authority”, as in the final text.

4. At the Working Group's third session it considered a draft which provided among other
things that the decisions of what in that draft was called the “special Court” would be final.
The Working Group did not accept that provision and decided that the procedural features
of the Court (including finality of decision) might be included in the provisions of the model
law entrusting it with certain functions.(6.3) This was done, with the result shown in nr. 1
above.

5. The Secretariat which had taken the initiative for Art. 6, accompanied the Working
Group draft with a commentary which goes beyond the necessarily condensed accounts
in the Group's reports.(6.4) The following extracts are of interest:
 2. “To concentrate these arbitration-related
functions in a specific Court is expected to
result in the following advantages. It would help
parties, in particular foreign ones, more easily
to locate the competent court and obtain
information on any relevant features of that
'Court', including its policies adopted in
previous decisions. Even more beneficial ...
would be the expected specialization of that
Court.
3. Although these two advantages would best be
achieved by a full centralization, the
designation of a Court does not necessarily
mean that it will in fact be only one individual
court in each State.(6.5)
4. The designated court need not necessarily be
a full court or a chamber thereof. It may well
be, for example, the president of a court or the
presiding judge of a chamber for those
functions which are of a more administrative
nature.”

6. In its written observations, the Soviet Union suggested that States adopting the model
law should be given a broader choice in assigning the functions mentioned in Art. 6, by
referring to “the court of another competent organ” rather than the court only. In support of
its suggestion the Soviet Union pointed out that such functions were not in all countries
reserved to judicial organs only, and that from a practical point of view a court is not
necessarily the most appropriate organ to appoint an arbitrator as compared, for example,
with a chamber of commerce. Even in the case of challenge or termination, the judiciary
would not necessarily be the most appropriate authority taking into account the
consensual nature of arbitration.(6.6)

7. When the Soviet delegate presented this suggestion to the Commission, with the
clarification that it related specifically to Arts. 11, 13 and 14 (and thus not to Art. 34(2) on
setting an award aside), it met with general approval.(6.7)

8. The Summary Records lead one to think that there may have been questions about
the effect on appealability of substituting another competent authority for a court. The
clear answer in my submission is that the question of appeal from decisions under Art. 6
is governed solely by the provisions of the model law assigning those decisions, and that
it does not matter whether the decision is assigned to a court or other authority.

Article 7 - Definition and Form of Arbitration Agreement

(*)

1. This article defines the substantive scope of “arbitration agreement” and the form the
agreement may take, stipulates that the agreement must be “in writing” and construes that
term.
Scope of Arbitration

2. The definition of “arbitration agreement” is of central importance since only an

agreement within that definition will be recognized as the basis for application to it of the
Law, including its provisions with respect to the recognition and enforcement of awards
made pursuant to the agreement. The first sentence of Art. 7(1) states that an arbitration
agreement is an agreement to submit disputes to “arbitration” but the Law does not define
that process as such. At its very first meeting the Working Group considered whether
“arbitration” should be defined for purposes of the modal law.(7.1) There was agreement
that arbitrations not based on a voluntary agreement of the parties should fall outside the
scope of the law. This poses no problem as it is implicit in the term “arbitration
agreement”. Nor is there any problem about the exclusion of mediation, conciliation and
other procedures which do not envisage a binding decision. As regards the various types
of procedures similar to arbitration which the Group thought should also not be covered,
such as the Italian arbitrato irrituale, the Netherlands bindend advies and the German
Schiedsgutachten, the question whether they are covered by the Law will, as in the case
of every other point left open by the Law and not inconsistent with it, fall to be answered
on the basis of the general law of the State concerned. Where it is clear under the
applicable law that the procedure is not to be equated to arbitration, as in the case of the
Netherlands and the Federal Republic of Germany, and probably in the case of “valuation”
in England, there is no room for autonomous interpretation of the term “arbitration” in the
Law.(7.2)"39"

3. Another issue which is not addressed by the Law and is thus left to be governed by the
general law of a model law State is whether the arbitral process extends, or may be
extended by agreement of the parties, to the adaptation of contracts to changed
circumstances or their supplementation by the filling of gaps intentionally left by the
parties. After extensive discussion of the issue by the Working Group, the view prevailed
that although some legal systems already granted such powers to arbitral tribunals, and
others provided mechanisms for third party assistance in adapting and supplementing
contracts outside the domain of arbitration which would benefit from the safeguards
provided by their being brought within the ambit of arbitration law, it was premature to
attempt unification of the law on this point, and that adaptation and supplementation of
contracts should therefore not be dealt with in the model law.(7.3) The Working Group
thought, however, that its discussions might prompt national legislators to adopt rules on
adaptation and supplementation of contracts and that once such rules and practice
thereunder were more developed, harmonization might be achieved more easily.(7.4)

4. The Commission did not reverse the Working Group's view that a definition of the
nature of arbitration was not necessary, but provided in Art. 2(a) in the guise of a definition
that “arbitration” means “any arbitration whether or not administered by a permanent
arbitral institution”.(7.5) This covers “pure” ad hoc arbitration as well as all forms of
administered arbitration, whether by private national or international institutions or by the
courts of arbitration attached to the chambers of commerce for foreign trade in socialist
countries.

5. The arbitration agreement may call for the submission to arbitration of both existing
and future disputes (“which have arisen or which may arise”) "40"in respect of a “defined
legal relationship, whether contractual or not”, thus including disputes arising out of
contract, quasi-contract and tort.(7.6) In countries that adopt this provision of the model
law without change it will supersede in international arbitration any provisions of their law
failing to give effect to compromissory clauses or imposing special requirements on a
compromis.

6. Art. 7(1) is modelled on Art. II(1) of the New York Convention on the recognition by
Contracting States of arbitration agreements, save that it omits the Convention's limitation
to disputes “concerning a subject matter capable of settlement by arbitration”. Although
the Working Group recognized the importance of the requirement of arbitrability, it had
repeatedly resisted proposals for an express provision. Among its reasons were, on the
one hand, that non-arbitrability was adequately addressed in the respective provisions on
setting aside and recognition and enforcement as a ground for setting aside and for
refusing recognition and enforcement and, on the other, that the Group had decided not to
deal with the material validity of the arbitration agreement and not to attempt either to list
non-arbitrable subject matter in the Model Law or to require each State to do so on
adopting the Law.(7.7) The issue was revived when the delegation of the Soviet Union to
the plenary Commission observed that Art. 1 of the Working Group draft might be read as
suggesting that all international commercial disputes could be subject to arbitration. It was
therefore necessary to provide clearly in the opening provisions of the Law that it did not
cover disputes which the model law State determined to be non-arbitrable.(7.8) The
proposal was accepted without discussion and a small drafting group produced paragraph
(5) of Art. 1:

“This Law shall not affect any other law of this State by virtue of which certain disputes
may not be submitted to arbitration or may be submitted to arbitration only according to
provisions other than those of this Law.”(7.9) which in effect qualifies the definition of
“arbitration agreement” in Art. 7(1) at least as strictly as the New York Convention's
restriction to disputes “concerning a subject matter capable of settlement by
arbitration”."41"

Form

7. Pursuant to the second sentence of Art. 7(1), an arbitration agreement may be in the
form of an arbitration clause in a contract or in the form of a separate agreement. Both
forms are comprised in the term “arbitration agreement” and a model law State which
accepts this provision without change is bound to recognize either.

In Writing

8. Like the New York Convention, Art. 7(2) of the Law requires that the arbitration
agreement be “in writing”. Art. II(1) of the New York Convention defines this requirement
as calling for an agreement “signed by the parties or contained in an exchange of letters
or telegrams”.(7.10) The drafters of the Law have improved on this language, adapting it
both to developments in communications technology such as the use of facsimile
transmission and to the requirements of international commercial practice.

9. They provided in the first place that an agreement is in writing if it is contained in an

exchange of any means of communication which provide a record of the agreement.

10. Secondly, they added (at the plenary Commission stage) the further provision that an
agreement is in writing if it is contained in an exchange of statements of claim and
defence in which the existence of an agreement is alleged by one party and not denied by
another. It was pointed out in the discussion that awards rendered pursuant to
agreements evidenced in that manner might be denied enforcement under the New York
Convention for failure to meet the literal requirements of its Art. II(2) - a possibility that
would be relevant if the enforcement State had not adopted the model law(7.11) - but that
conceivably the very adoption of the extended language would eventually lead to a
broader interpretation of that article. In my view, a strong argument can be made that to
interpret the prorogated jurisdiction described in the extended language as meeting the
requirement of Art. II(1) would be entirely in accordance with its object and purpose.

11. Thirdly, they clarified the effect of a reference in a contract to another document
which contains an arbitration agreement provided the contract is itself in writing and the
reference is such as to make that clause part of the contract. In adopting this language at
its final session, the Working Group "42"agreed that it should not be understood as
requiring an explicit reference to the arbitration clause in the other document.(7.12)

12. The fact remains that notwithstanding these improvements, Art. 7(2) does not cover
cases, encountered in practice and recognized by some national laws as constituting valid
arbitration agreements, in which one of the parties does not consent to arbitration in
writing. A wide-ranging proposal would have referred to agreements in international trade
or commerce “in a form which accords with practices in that trade or commerce of which
the parties are or ought to have been aware”. Another suggestion would have considered
an arbitration clause contained in, or included by reference in a bill of lading or other
document signed by only one of the parties to be an agreement in writing if that bill or
other document gave sufficient evidence of a contract. Neither proposal was in the end
accepted and the Commission settled for the much more modest solution mentioned in nr.
10 above.(7.13)

Article 8 - Arbitration Agreement and Substantive Claim Before Court

(*)

Paragraph (1)

1. Art. 8(1) deals with the effect of an arbitration agreement in a situation in which one of
the parties brings an action before a court in a matter which is the subject of that
agreement. It provides that if a party makes a timely "43"request to that end, the court
“shall refer the parties to arbitration”, unless it finds that the agreement is “null and void,
inoperative or incapable of being performed”. The party making the request must do so
not later than when submitting his first statement on the substance of the dispute. If it fails
to do so it has waived its right to arbitration. As lex specialis, Art. 8(1) supersedes
provisions of a model law State's domestic arbitration law permitting a similar request to
be made later.

2. Several elements of Art. 8(1), which is modelled on Art. II(3) of the New York
Convention,(8.1) call for comment.

3. “Shall refer the parties to arbitration”. Art. 8(1) is a mandatory provision: when the
conditions for its application are fulfilled the court has no discretion, but must refer the
parties to arbitration.(8.2) As we have seen, one of these conditions is a timely request of
a party. The court may therefore not refer the parties to arbitration on its own motion. The
reason is clear: an arbitration agreement derives its force from the will of the parties which
may also agree to terminate it or waive its provisions by not invoking it in opposition to an
action before a court in a matter which is the subject of the agreement.(8.3)

4. “Refer to arbitration”. The use of this term in the Law is somewhat unfortunate since it
has no clear legal meaning. The term goes back to the 1923 Geneva Protocol on
Arbitration Clauses(8.4) from which it was taken over in the New York Convention. It is
suitable for use in a treaty to make clear that the court should refrain from hearing and
determining the merits of the dispute, leaving it to the implementing legislation of the
treaty parties to translate this objective into procedural law. An examination of the laws of
13 Contracting States which have enacted legislation implementing the New York
Convention shows that not a single one has used “refer to arbitration” as an operative
term, which attests to its unsuitability for inclusion in a statute.(8.5)

5. As its first session, the Working Group considered whether the model law should
specify the type of decision the court should render when the arbitration agreement was
invoked and, in particular, whether the court action should be stayed or dismissed. The
Group agreed, however, that the "44"matter should be left to be determined by the court
according to its own procedural law.(8.6)

6. Notwithstanding this early decision, the question was re-opened when a suggestion
was made at the third session of the Working Group to substitute “shall decline
jurisdiction” for “shall refer to arbitration”, but it was decided to retain the latter text for the
sake of consistency with the New York Convention.(8.7) The same wish not to depart
from the New York Convention led the Working Group to reject at its next session a
redrafted provision prepared by the Secretariat which read in relevant part “shall ...
decline jurisdiction and refer the parties to arbitration”.(8.8)

7. The Analytical Commentary stated: “As under the 1958 New York Convention, the
court would refer the parties to arbitration, i.e., decline (the exercise of its) jurisdiction
etc.”(emphasis added), equating reference to arbitration with either denial of jurisdiction
or, if there is jurisdiction, refusal to exercise it.(8.9)

8. When the Working Group draft was circulated to governments for their comments in
preparation for the session of the plenary Commission, Yugoslavia, Sweden and Canada
submitted written comments on Art. 8(1). Yugoslavia observed that where the State court
finds that it has no competence to decide the dispute, it is not customary for the court to
instruct the parties to approach another institution.(8.10)Sweden observed that under its
law a court in a matter which is the subject of an arbitration agreement does not refer the
parties to arbitration but merely dismisses the case and that it was therefore considered
desirable to supplement Art. 8(1) so as to take the possibility into account as
well.(8.11)Canada expressed the view that Art. 8(1) was not clear. The question was
whether it was intended to provide for only a stay of the action or for its total removal from
a court, or whether it was, perhaps, intended to leave this question for determining by the
legislature adopting the model law.(8.12)

9. After a brief and unenlightening discussion in the Commission, the Chairman, noting
that there were proposals for more than one draft of Art. 8(1), suggested that the text
should be left unaltered but that the Commission's report should state that the article did
not describe the course of judicial proceedings, so that it was quite possible for a decision
to be taken "45"to refer the parties to arbitration, while the case remained open pending a
further possible application. The Commission agreed.(8.13)

10. Even if it had been recognized, as in the Canadian written comments, that the issue
was not one of consistency with the New York Convention, but of stating the procedural
consequences of a finding by the court that the matter brought before it was covered by
an arbitration agreement, it would not have been possible to produce a uniform text. It
might, however, have been possible to produce alternative texts, one for the countries that
would only stay the court action and one for those that would decline jurisdiction (dismiss
the action).

11. In four U.S. cases arising under the New York Convention, the party invoking the
arbitration agreement asked that the suit be dismissed. In three of them the court agreed
that the Convention required this result even though it would not have been reached by
the application of the Federal Arbitration Act,(8.14) while in the fourth it decided that a
stay of the action was the proper result (the Rhône Case).(8.15) In Siderius the court
characterized the referral procedure of Art. II(3) as being final and held that:

“the finality of the referral procedure, and the absence of any provision for the retention of
jurisdiction after referral by the court, indicates that dismissal of the complaint for lack of
subject matter jurisdiction is the appropriate remedy under the Convention”,

and in McDonnell Douglas the court stated:

“The ordinary practice once the court has referred the parties to arbitration pursuant to the
Act is for the court to stay proceedings pending the arbitration (9 U.S.C., Sec. 3).
Defendants make a persuasive case that the precise [sic] terms of Art. II(3) of the
Convention require the action to be dismissed for lack of subject matter jurisdiction in the
case of international commercial agreements.” but the defendants in Rhône argued
unsuccessfully that if a controversy must be referred to arbitration under the Convention
this means that a court is divested of its jurisdiction. The court disagreed, holding that
while no other judicial action should be taken until the arbitration had been completed in
the controversy referred to, the controversy need not be removed from a court's docket.

12. Professor Kazuo Iwasaki, commenting on a decision of the District "46"Court of

Yokohama in which the defendant had successfully invoked the arbitration agreement,
states:

“Under the Civil Procedure Code of Japan, Japanese courts do not have the power to
order a stay of court action and compel arbitration [as the defendant had requested]. It
therefore is an established understanding in Japan that the Court's obligation to refer the
parties to arbitration is discharged when the court rejects Ameroido's [plantiff's] claim
against the arbitration agreement”.(8.16)

13. “Inoperative or incapable of being performed”. These terms have been taken over
without comment or discussion from Art. II(3) of the New York Convention. Nor do they
appear to have been discussed at the 1958 New York Conference.(8.17) The Yearbook
Commercial Arbitration reports seven cases in which the plaintiff resisted reference to
arbitration under the New York Convention invoking these terms.
14. It was held in two English cases that neither the fact that the defendant did not have
the financial resources to satisfy an award,(8.18) nor the alleged inability of the plaintiff to
pay the deposit required by the administering arbitration institution (ICC),(8.19) rendered
the arbitration agreement incapable of performance. Nor, as held in a U.S. case, does the
fact that an award may be unenforceable make the arbitration clause 'useless'.(8.20)

15. In a curious Italian decision, the Supreme Court upheld the defendant's objection to
the jurisdiction of the judiciary on the basis of an arbitration clause in the contract between
the parties even though it was admitted that a time limit for the appointment of an
arbitrator stipulated in the clause had expired. The court held that this was not an intrinsic
element of non-effectiveness. The reason for its decision was probably that the clause in
question stated that if the time limit was not observed “the claim shall be deemed as
waived and absolutely barred”.(8.21)

16. In Lonrho and a subsidiary v. Shell, BP and 27 others,(8.22) the dispute was covered
by an arbitration clause applicable to Shell and BP only. In opposition to a motion by the
latter for a stay of all proceedings against them, plaintiff's counsel argued that the
arbitration clause was “inoperative” (which he construed as something less than “null or
void” and less than "47"“incapable of taking effect”) since the same issues of law and fact
would arise in the arbitration proceedings against two defendants and the court
proceedings against the others. Brightman J. regretfully decided that risk of inconsistent
results was not a factor “which can be said to render the arbitration proceedings sterile or
of no practcial operation, or as serving no useful purpose”and that he was therefore
obliged to stay the proceedings against Shell and BP.

17. In two reported cases, the defendant's plea in opposition to the court action on the
basis of an arbitration agreement was unsuccessful. A Belgian court held that a law
withdrawing a category of dispute from the domain of arbitration renders an arbitration
clause covering such a dispute inoperative.(8.23)

18. In England, the Commercial Court judge refused to grant a stay of an action brought
by a customer against Merrill Lynch and refer the parties to arbitration under an
agreement which provided for arbitration or, at the customer's election, for a proceeding
before the “Commodity Futures Trading Commission” in the United States when the
customer had elected the latter proceeding. Bingham J. held that the agreement on which
the defendant relied was either not an arbitration agreement at all, or one that was
inoperative or incapable of being performed since the arbitral tribunal will not arbitrate
while there are parallel proceedings on foot.(8.24)

Paragraph (2)

19. Art. 8(1) prescribes what a court should decide when the respondent resists an action
brought against him on the ground that it concerns a matter which is the subject of an
arbitration agreement, and the claimant counters "48"with the contention that the
arbitration agreement is “null and void, inoperative or incapable of being performed”.(8.25)
Depending on the general procedural law of the model law State which would apply in the
absence of a model law provision governing the point, the court's decision may be subject
to appeal to an appellate court and possibly to the State's highest court. This raises the
question whether and to what extent the arbitration agreement may be implemented while
the issue of its effectiveness is sub judice. Specifically, may arbitration proceedings be
commenced or continued and may an arbitral tribunal render an award? Art. 8(2) answers
both questions in the affirmative.

20. No attempt will be made to describe the lengthy discussion which ended in this
result.(8.26) Suffice it to say that the principal consideration was to safeguard the arbitral
process by protecting it against dilatory tactics. A party should therefore not be precluded
from initiating or continuing arbitral proceedings by the fact that the matter had been
brought before a court.

21. One could have further expressly provided, as was done in Art. 7(3) of the 1961
European Convention, that the court should normally postpone its ruling on the question
whether the arbitration agreement is “null and void, inoperative or incapable of being
performed”until the arbitral tribunal had rendered an award.(8.27) Art. 8 does not contain
such an express provision. It focuses in its paragraph (2) on the arbitral proceedings. This
priority is in accordance with the power of an arbitral tribunal to determine its own
jurisdiction (Kompetenz-Kompetenz), subject to court review, whether under Arts. 16, 34
or 36.

22. However, Art. 8(1) does not preclude the court from ruling at any time on the
contention of the claimant in the court action that the arbitration agreement is null and
void. Moreover, Art. 8(1) permits a court to keep jurisdiction not only when it finds that the
arbitration agreement is null and void, but also when it is “inoperative” or “incapable of
being performed”, even though the arbitration agreement may be valid as such.

23. At its penultimate session, the Working Group agreed that the arbitral tribunal may
continue the proceedings while the issue of the effect of the arbitration agreement was
pending with the court, “although it was understood that this provision should not preclude
a court from ordering a stay or "49"suspension of the arbitral proceedings” .(8.28)
Presumably in order to express this understanding the Secretariat draft prepared for the
final Working Group session(8.29) added to Art. 8(2) the words “unless the court orders a
stay or suspension of the arbitral proceedings”, but the Working Group had changed its
mind and deleted these words.

24. In my opinion, this decision confirms that an attempt to order a stay or suspension of
the arbitral proceedings would run afoul of Art. 5 of the Law which, as will be recalled,
provides that in matters governed by it, “no court shall intervene except where so provided
in this Law”.

25. It is thus clear that Art. 8 permits proceedings in the court and in the arbitral tribunal
to go forward concurrently. Paragraph (2) envisages two situations. In the first, the court
action is instituted after the arbitration proceedings have commenced. In the second, the
arbitration proceedings are instituted after the court action. The procedural roles of the
parties in the two proceedings will of course be reversed. The claimant in the arbitration
proceedings will be the defendant in the court action, while the respondent in the
arbitration proceedings will be the plaintiff in the court action. Art. 8(2) ensures that a court
action will not enable a recalcitrant party to the arbitration agreement to obstruct its
implementation, but it does not determine which of the two proceedings will in fact move
first to a decision. Nor will it prevent conflicting decisions. Its usefulness in practice is thus
inevitably limited.
26. Where the issue raised in the court proceedings is whether the arbitration agreement
is valid, and the arbitral tribunal has no doubts about its validity, it would presumably want
to proceed without delay and move to an award. If, on the other hand, the arbitral tribunal
is in doubt, it would probably exercise the discretion which Art. 8(2) leaves it and await the
decision of the court before proceeding with the arbitration, in order to save expense for
the parties if the court later ruled that the agreement was invalid. A court faced with a
defence under Art. 8(1) that an arbitral tribunal which is considering the issue which is
pending before the court is without jurisdiction might, but need not, suspend its
proceedings if the arbitral tribunal proceeds to determine the issue of its jurisdiction, but it
would not be bound by the tribunal's decision.

27. The foregoing discussion has, however, left out a complicating factor which will
always be present unless the plaintiff in the court action does not appear in the arbitration
proceedings, namely, that the recalcitrant party, respondent in the arbitration proceedings,
will raise in those proceedings a plea under Art. 16 of the Law that the arbitral tribunal has
no jurisdiction. If the arbitral tribunal rules on the plea as a preliminary question that it has
"50"jurisdiction,(8.30) any party may request the court specified in Art. 6 of the Law to
decide the matter, which decision shall be subject to no appeal.(8.31)

28. As will be recalled, all except four provisions of the Law apply only if the place of
arbitration is in the model law State.(8.32) Art. 8 is one of the exceptions, Art. 16 is not. A
possible conflict between the two provisions can therefore only arise if the place of
arbitration is in the model law State, and only if the arbitral tribunal decides in favour of its
jurisdiction as a preliminary question. If those conditions are fulfilled and the ruling of the
arbitral tribunal precedes a decision by the court and is confirmed by the court specified in
Art. 6, it would seem that the court of Art. 8 is bound by that decision.

29. But quid if the confirmation of the arbitral tribunal's ruling takes place after the court of
Art. 8 has decided that the arbitration agreement is null and void? The answer to that
question is neither simple nor clear, but it suggests that if arbitration proceedings are in
fact proceeding under Art. 8(2), the court should avoid the possibility of conflict by
suspending its proceedings until it knows whether the “recalcitrant” party has objected to
the jurisdiction of the arbitral tribunal and whether the latter has upheld its jurisdiction as a
preliminary issue. In saying this, I leave open the question whether the Art. 6 court could
or would dismiss a request for a decision on the ground of res judicata if by that time the
Art. 8 court had already ruled on the issue of the validity of the arbitration agreement.

30. As regards the two grounds, additional to invalidity of the arbitration agreement, on
which the court may refuse to refer the parties to arbitration, namely that the arbitration
agreement is inoperative or incapable of being performed, it would seem that the very
conduct of arbitral proceedings pursuant to Art. 8(2) may prove in some instances that the
objections are ill-founded, and that in general the court should use its discretion and
suspend its proceedings pending the arbitral proceedings unless it is satisfied that the
resistance of the defendant to the court action and its recourse to arbitration is no more
than a dilatory tactic.

Article 9 - Arbitration Agreement and Interim Measures by Court

(*)
1. By way of exception to the general rule that the Law applies only when the place of
arbitration is in the territory of the model law State, Art. 9, like the preceding article,
applies irrespective of the place of arbitration.(9.1) A court of model law State A may
therefore grant interim measures even when the place of arbitration has not yet been
determined, or is in State B (and whether or not it is a model law State).

2. The principle underlying Art. 9, which is not universally recognized, was adopted at the
earliest session of the Working Group and confirmed by the plenary Commission.
Provisions similar to Art. 9 are found in Art. 26(3) of the UNCITRAL Arbitration Rules, Art.
VI(4) of the 1961 Geneva Convention, Art. 4(2) of the 1966 Strasbourg Uniform Law and
in a more limited form in Art. 8(5) of the ICC Rules of Arbitration. These provisions have in
common that they only address a party's right to seek judicial provisions remedies, and in
the case of arbitration rules that is all they can address, while the Law explicitly provides
that the court to which a request for such remedies is submitted is not barred from
granting it by the mere existence of an arbitration agreement.

3. At its fourth session the Working Group agreed that the interim measures of protection
would include measures of conservation of the subject matter of the dispute and
measures in respect of evidence as well as pre-award attachments, but that it was not
necessary to list the various measures. A general formula such as adopted in the 1961
Geneva Convention would be more appropriate.(9.2) At its last session the Working
Group preferred the expression “interim measures of protection”, which was taken from
the UNCITRAL Arbitration Rules. It noted that the range of measures was much wider
than the interim measures of protection which an arbitral tribunal might grant under Art. 18
of the draft (now Art. 17 of the Law).(9.3) The latter are limited to measures “in respect of
the subject matter of the dispute”.(9.4)

4. In their written observations, the United States stated among other things that under
appropriate circumstances, the protection of trade secrets and proprietary information
would be proper subjects of interim relief from a court, and the Federal Republic of
Germany considered preservation of evidence a primary example.(9.5)

5. The Commission confirmed that the range of measures covered by the provision was a
wide one and included, in particular, pre-award attachments. "52"Its Report records the
Commission's understanding that Art. 9 did not itself regulate which interim measures of
protection were available to a party. It merely expressed the compatibility of any court
measure available under a given legal system with the fact that the parties had agreed to
settle their dispute by arbitration.(9.6)

6. At the plenary Commission stage, the observer for the Chartered Institute of Arbitrators
(London) said that Art. 9 raised the question whether it would invalidate an agreement
between the parties precluding an application to a court for interim measures and
suggested that if that was not the intention the text should make this clear.(9.7) The
French delegate objected to a substantive amendment to Art. 9 which would support an
interpretation that national courts were bound to respect a prior exclusion agreement. His
delegation was satisfied with the existing text which left that issue open.(9.8) There was
no further discussion. The Commission Report states:

“While the article should not be read as precluding such exclusion agreement, it should
also not be read as positively giving effect to any such exclusion agreement.”(9.9)

Article 10 - Number of Arbitrators

(*)

1. Art. 10 was adopted by the plenary Commission, without discussion, in the form in
which it had been approved by the Working Group. There had been general agreement
that the Law should not contain any mandatory "53"provision specifying the number of
arbitrators and that the freedom of the parties to determine the number of arbitrators
should be expressly stated.(10.1)

2. There is a great variety on this point among national laws. Some require that the
tribunal be composed of an odd number of arbitrators, while others either leave the parties
free to deviate by agreement from that requirement or contain no provisions on the
subject. In some but not all of these laws provision is made in various ways to prevent
frustration of the arbitration when an even number of arbitrators are deadlocked.

3. The unlimited freedom granted to parties by Art. 10 means that they may agree on an
even number of arbitrators in a model law State whose domestic arbitration law requires
an odd number. Parties should, however, be aware that the Law provides no solution for
the situation in which a tribunal is deadlocked, leaving this to the parties. They should
probably in any event provide for the appointment of an additional arbitrator. Even if they
make no further provision the appointment would result at least in a tribunal composed of
an odd number of arbitrators. The parties may also use the freedom left them by Art. 29 of
the Law (Decision-making by panel of arbitrators) to authorize the additional arbitrator to
decide as if he were a sole arbitrator.

4. It may be useful to recall in this connection that pursuant to Art. 2(d) of the Law, the
parties' freedom to determine the number of arbitrators includes their right to authorize a
third party, for example an arbitration institution, to make that determination. Of course, no
problem arises when the matter is covered in arbitration rules which the parties have
accepted.

5. If the parties fail to determine the number of arbitrators, the tribunal will be composed
of three arbitrators. A number of different proposals for this supplementary rule were
advanced, but the choice was essentially between one or three, for each of which there
was precedent in practice. The number of three was adopted following Art. 5 of the
UNCITRAL Arbitration Rules,(10.2) as appearing to be the most common number in
international commercial arbitration."54"

Article 11 - Appointment of arbitrators

(*)

1. Paragraph (1). Some national arbitration laws preclude foreigners from acting as
arbitrators. The purpose of paragraph (1) is to override such exclusions in the case of
international commercial arbitration. As indicated by the “unless” clause, the provision is
not intended to preclude parties from specifying directly, or through incorporating the rules
not, be appointed as arbitrators.(11.1) Nor should it be read in my view as ruling out
legislation which would provide, for example, that a sole arbitrator should have a
nationality other than those of the parties.(11.2)

2. The Commission adopted the Working Group draft of paragraph (1) without discussion.
It is worth recalling, nevertheless, that at the fourth session of the Working Group some
representatives suggested that the paragraph should be deleted “because it would be
difficult to implement” in States where nationals of certain States were precluded from
serving as arbitrators. The answer given to those representatives was that the model law,
not being a convention, would not exclude the possibility for a State to reflect its particular
policies in national legislation.(11.3)

3. Paragraph (2) provides that the parties are free to agree on a procedure for appointing
the arbitrator or arbitrators. Their freedom is, however, not unlimited. Their
agreement(11.4) may not run counter to paragraph (4), which provides for recourse to the
Art. 6 court in the circumstances defined in that paragraph, nor to paragraph (5) which
provides criteria to be observed by that court in the appointment of an arbitrator.

4. A proposal which notwithstanding initial strong support was not accepted by the
Working Group and thus did not reach the plenary Commission would have imposed a
further limitation on the parties to the effect that a procedure that accords one of the
parties a privileged position with regard to the appointment of arbitrators will invalidate the
entire arbitration agreement or, in another version, will render only the appointment
procedure inoperative.(11.5)"56"

5. Paragraph 3 deals with the case in which the parties have failed to agree on an
appointment procedure. It prescribes that if there are to be three arbitrators, either
because this number was determined by the parties or pursuant to Art. 10 in the absence
of such determination, each party shall appoint one arbitrator and the two arbitrators so
appointed shall appoint the third. In order to avoid frustration or unreasonable delay of the
constitution of the tribunal, the Art. 6 court will make the appointment at the request of a
party if the other party has failed to nominate an arbitrator within thirty days after a request
to that end, or the two appointed arbitrators have failed to agree on the third within thirty
days after their appointment (i.e., where applicable, after the date of the appointment of
the last appointed arbitrator).

6. If there is to be one arbitrator, the Art. 6 court will make the appointment at either
party's request if the parties are unable to agree on the sole arbitrator. The Law does not
prescribe a waiting period within which the parties must attempt to reach agreement
before recourse is had to the court.

7. Paragraph (4) deals with the case in which the parties have agreed on a procedure for
constituting the tribunal but those called on to act or perform a function under that
procedure, a party, the two parties, the two arbitrators, or a third party, as the case may
be, fail to do so. In that event any party may request the Art. 6 court “to take the
necessary measure”, i.e., to make the appointment, “unless the procedure agreed by the
parties provides other means for securing the appointment”, and, it would seem one
should add, such means do secure the appointment. As already noted under nr. 2 supra,
paragraph (4) is a mandatory provision from which the parties may not derogate, that is to
say that they may not exclude appointment by the Art. 6 court as a last resort.
8. Paragraph (5) provides that the decision of the Art. 6 court under paragraphs (3) or (4)
shall be subject to no appeal. It does, however, lay down guidelines for the court's
decision. It calls on the court to “have due regard” (a) to any qualifications required of the
arbitrator by the agreement of the parties, and (b) such considerations as are likely to
secure the appointment of an “independent and impartial arbitrator”. As noted in nr. 2
supra, the freedom of the parties to agree on an appointment procedure is subject to
paragraph (5). The Law does not explicitly prescribe the qualifications of arbitrators.
However, the fact that lack of independence or impartiality is a ground for challenge under
Art. 12 leads to the conclusion that the criteria of independence and impartiality are part of
the mandatory character of paragraph (5) and may not be waived or varied by the parties.

9. Paragraph (5) provides, further, that in the case of the appointment of a sole or third
arbitrator the court shall take into account as well “the advisability” of appointing an
arbitrator of a nationality other than those of the parties. The weaker language, which
follows that of Art. 6(4) of the "57"UNCITRAL Rules, suggests that the parties may free
the court from observance of this criterion.(11.6)

Article 12 - Grounds for Challenge

(*)

Paragraph (2)

1. Article 12 is most conveniently discussed by first commenting on the second

paragraph which defines the grounds on which parties may challenge an arbitrator.

2. At its first discussion of the subject the Working Group decided that the model law
should deal with the grounds for challenge only in the same general manner as it dealt
with the qualifications of an arbitrator,(12.1) that a "58"draft provision should be prepared
using the same formula (impartiality and independence) and that this should form the sole
basis for challenging an arbitrator.

3. As was subsequently suggested by the Secretariat in the Analytical Commentary, the

formula “if circumstances exist that give rise to justifiable doubts as to his impartiality or
independence”, approved by the Working Group, appeared broad enough to cover any
specific grounds for challenge of judges and arbitrators in national laws.(12.2) On the
other hand, it did not cover the notions of competence or other qualifications possibly
included in the agreement on the appointment of arbitrators and concern was expressed
in the Working Group that the formula was too restrictive. The prevailing view in the Group
was, however, that such qualifications were more closely related to the conduct of the
proceedings than to the initial appointment.(12.3)

4. When Art. 12 was taken up by the plenary Commission, the Commission had before it
a written proposal by the United States to add to the Working Group language, “and on
such additional grounds as the parties may agree”. The proposal was adopted in an
amended form ( “if he does not possess qualifications agreed to by the parties”,(12.4)
which recognized the autonomy of the parties but in a less open-ended manner than the
original proposal.(12.5)

5. While there was no objection to this specific extension of the scope of the article, the
Commission rejected after discussion proposals to delete the word “only”. In regard to the
argument that Art. 10 of the UNCITRAL Arbitration Rules after which Art. 12(2) was
patterned, does not contain the restrictive term “only”, it was pointed out that because of
their contractual nature the UNCITRAL Rules could not affect the application of any other
grounds for challenge provided in mandatory rules in the applicable law, while the model
law could effectively prevent such other grounds for challenge from being applied in
international commercial operation.(12.6)"59"

6. The second sentence of Art. 12(2) limits the right of a party to challenge an arbitrator in
two cases to grounds of which he only becomes aware after the appointment has been
made. Initially this restriction only applied, as in Art. 10 of the UNCITRAL Arbitration
Rules, where the arbitrator had been appointed by the party,(12.7) but at its last session
the Working Group adopted the final version of the article, adding “or in whose
appointment he has participated” to the earlier text on the ground that the policy
considerations which applied to the case of the party-appointed arbitrator were of equal
force in the case where the parties jointly appointed an arbitrator.(12.8) The Analytical
Commentary correctly submits that “participation in the appointment” also includes a less
direct involvement, such as the one under the list procedure envisaged in the UNCITRAL
Arbitration Rules.(12.9) A party should not be permitted to challenge an arbitrator on a
ground which he already knew at the time of his participation in the appointment if he was
able to veto the appointment but failed to do so.

Paragraph (1)

7. This paragraph is designed to avoid the appointment of an unacceptable candidate by

requiring a prospective arbitrator to disclose any circumstances likely to cast doubts on
his impartiality and independence. It is modelled on Art. 9 of the UNCITRAL Arbitration
Rules,(12.10) but the Working Group clarified and strengthened the obligation by
stipulating that the duty of disclosure is a continuing one and must be carried out
promptly. Since Art. 12(1) is a mandatory provision it would prevail over Art. 9 of the
UNCITRAL Arbitration Rules in an arbitration in a model law State pursuant to the
UNCITRAL Rules.

8. The Working Group text was approved without discussion by the

Commission.(12.11)"60"

Article 13 - Challenge Procedure

(*)

1. The subject matter of this article gave rise to widely divergent views and repeated
redrafts and rearrangements of provisions during the five Working Group sessions at
which it was discussed. I shall deal here only with the principal issues.

2. The only point on which there was general agreement from the beginning was that the
parties should have the right to agree on a challenge procedure,(13.1) but there was a
difference of opinion on the question whether such an agreement could exclude resort to
a court. After this question had been debated at the second and third sessions it was
agreed that if the challenge is unsuccessful, the challenging party may have recourse to a
court, but no agreement was reached on the alternatives presented to the Working Group,
namely, immediate recourse to a court on that issue, or such recourse only in an action
for setting aside the award under Art. 34.(13.2)"61"

3. At the Working Group's fourth session, a compromise solution was adopted which, on
the one hand, permitted immediate recourse to the Art. 6 court or other authority, with the
attendant risk that such recourse may be used as a delaying tactic and, on the other
hand, permitted (but did not oblige) the arbitral tribunal to continue the arbitral
proceedings. This enables the tribunal either to limit the adverse effects of an unjustified
challenge for dilatory purposes by continuing the proceedings, or to suspend the
proceedings where it considers that the interest of the parties is best served by getting the
challenge question out of the way rather than letting them run the risk of waste of time and
money on an award which may ultimately be set aside under Art. 34.(13.3)

4. This solution covered the case in which the parties had agreed on a challenge
procedure. The issue whether the model law should set forth supplementary rules for
those cases in which parties had not themselves regulated the challenge procedure was
resolved in the affirmative,(13.4) and at the final meeting of the Working Group it was
agreed that the challenge would be presented by the challenging party to the arbitral
tribunal and that unless the challenged arbitrator withdrew or the other party agreed to the
challenge the arbitral tribunal would decide on the challenge. The Working Group also
agreed that this decision was entrusted to all members of the arbitral tribunal, including
the challenged arbitrator.(13.5) As regards recourse to courts the same solution was
adopted as the one set out in nr. 3 supra for the case of a challenge procedure agreed by
the parties.

5. Written observations were submitted by Canada, the Federal Republic of Germany,

the International Chamber of Commerce, Japan, Norway, the Soviet Union, Sweden, the
United States and Yugoslavia.

6. The Soviet Union preferred deleting paragraph (3) dealing with recourse to courts
entirely or if that were not acceptable limiting such recourse to the rare case where the
sole arbitrator or a majority of the arbitral tribunal is challenged.(13.6) The United States
proposed that recourse to courts during the arbitration proceedings be allowed only if the
parties had not agreed on a procedure for challenges.(13.7) The Federal Republic of
Germany thought that the parties should have the right to exclude court recourse as was
the case in Art. 11(4)(13.8) and the ICC would accept court recourse in ad hoc
arbitrations, but parties should be free to exclude court intervention where the institutional
rules they have chosen contain provisions on challenge procedure.(13.9)"62"

7. On other issues, the Federal Republic of Germany,(13.10)ICC and Yugoslavia(13.11)

disagreed with the Working Group decision to permit the challenged arbitrator to function
as a member of the arbitral tribunal to decide on the challenge. Canada asked that the
characterization of the Art. 6 court's decision as “final” in the Working Group draft be
clarified since it might mean either that the decision was ready for appeal or that it was
non-appealable(13.12) while Norway considered that “final” should not exclude a
challenge of the judgment of the court on its procedural handling of the case, or the lower
court's interpretation or application of the law.(13.13) Finally, Sweden suggested a further
refinement of the compromise solution adopted by the Working Group by giving the
arbitral tribunal before which a challenge was pending an option to take itself a final
decision or to leave it to the court. The former might be appropriate, for example, in case
of a challenge presented at an advanced stage of the proceedings.(13.14)

8. The discussion in the plenary Commission was concentrated on the appropriateness of

court control during arbitral proceedings. The United States' and Soviet Union's positions
stated in their written observations were reiterated by their delegations, as was the
Swedish suggestion referred to above. The sense of the Swedish suggestion was to make
court recourse subject, as it were, to the veto power of the arbitral tribunal. The Egyptian
delegate made a suggestion, going in the opposite direction, to empower the court to
suspend the proceedings before the arbitral tribunal.(13.15) While this suggestion
gathered considerable support,(13.16) the prevailing view was to retain the system
adopted by the Working Group “since it struck an appropriate balance between the need
for preventing obstruction with dilatory tactics and the desire of avoiding unnecessary
waste of time and money”.(13.17)

9. The Commission confirmed the Working Group's decision not to exclude a challenged
arbitrator from the deliberations and decisions of the arbitral tribunal in the challenge. It
agreed that the word “final” was intended to mean that no appeal was available from the
decision so characterized and decided that that understanding should be made clear,
which was done by substituting “which decision shall be subject to no appeal” for the
Working Group's draft “which decision shall be final”."63"

10. I have two comments on other points. Some concern had been expressed during the
discussion about the application of Art. 13 to a challenge of a sole arbitrator which that
arbitrator did not accept. That case is, however, fully covered by Art. 13(3) which deals
with the situation in which a challenge “is not successful”. The challenging party may
therefore request a decision from the court or other authority designated by the model law
State in question in Art. 6.

11. In its written observations Norway expressed the view that if a party does not object
within the time limits provided for in Art. 13(2), that party should be precluded from raising
this objection not only during the arbitral proceedings but also under Art. 34(2)(a)(iv) and
36(1)(a)(iv) alleging improper composition of the arbitral tribunal, and that this should be
clearly expressed in the text of the model law.(13.18) The point was not discussed in the
Commission's session on Art. 13. The Norwegian view seems correct since the time for
raising a challenge has expired, but this does not necessarily mean that a party would be
barred in Art. 34 or Art. 36 proceedings from alleging and proving “procedural injustice”,
even though the injustice could arguably have been avoided by a timely challenge of one
or more members of the arbitral tribunal.

12. The reader is reminded that the Commission decided not to extend the applicability of
Art. 13 to the time before the place of arbitration was determined.(13.19)

Article 14 - Failure or Impossibility to Act

(*)"64"

Paragraph (1)

1. After the Working Group had considered and rejected various drafts, it finally came to
grips at its last session with all substantive aspects of this article and adopted a text which
was eventually approved by the Commission without substantial changes.(14.1)

2. The issues raised by the subject matter were the grounds which would give rise to
termination of an arbitrator's mandate, the manner in which the mandate would be
terminated and disagreement between the parties concerning the question whether
termination is justified.

3. As to the first issue, the grounds are an arbitrator's inability de jure or de facto to
perform his functions or, in the Working Group draft, failure to act for other reasons. The
terms de jure or de facto were retained because they were used in Art. 13(2) of the
UNCITRAL Arbitration Rules. As observed by the Secretariat, in substance “inability”
would of course cover both cases.(14.2)

4. The Working Group had recognized that the statement that the arbitrator “fails to act”
was not abundantly clear, but found it preferable to any amendment, relying in part on the
ability of the court to resolve cases of uncertainty or controversy.(14.3) At the Commission
sessions various clarifying or qualifying additions were suggested. The Italian delegate
urged acceptance of the addition of the words “with appropriate speed and
efficiency”.(14.4) The word “efficiency” evoked strong opposition since it opened the
possibility of a court review of the entire nature of the arbitration proceeding and seemed
to invite any party which was dissatisfied with the way the proceedings were going to
apply to a court on the ground that there had been inefficiency.(14.5) There was,
however, substantial sentiment in favour of clarifying that failure to act meant failure to do
so within a reasonable time or with reasonable speed or without undue delay, and in the
end the last set of words were inserted in the Working Group draft.

5. The Commission Report records that the additional words of this nature were viewed
as an elaboration, not a change, of “fails to act” in Art. 13(2) of the UNCITRAL Arbitration
Rules.(14.6) This is consistent with the Secretariat's understanding of the unadorned “fails
to act” in the Working Group draft, which includes, but is not limited to, the element of
delay. The Analytical Commentary mentions among the relevant considerations in judging
whether an arbitrator failed to act, the question whether, in the light of the arbitration
agreement and the specific procedural situation “his "65"conduct fell clearly below the
standard of what may reasonably be expected from an arbitrator” .(14.7)

6. The second issue concerned the manner in which the arbitrator's mandate would be
terminated. The Working Group rejected a draft in which termination was the automatic
legal consequence of inability or failure to act(14.8) and linked the termination to the
arbitrator's withdrawal from office or agreement of the parties to terminate the mandate.

7. The third issue addressed the question of a controversy between the parties as to
whether one of the grounds for terminating the arbitrator's mandate was present. The
provision giving exclusive jurisdiction to the Art. 6 court or other authority was objected to
in the written observations of Austria, Canada, the Federal Republic of Germany and the
International Chamber of Commerce. Austria proposed that the provision be made subject
to a contrary agreement by the parties,(14.9)Germany would have permitted court control
only where the parties had not agreed on another procedure that would lead to a
conclusive and binding decision,(14.10)Canada was of the view that in an arbitration with
three arbitrators a party should be able to request the other members of the arbitral
tribunal to terminate the mandate of the third arbitrator before being required to request
the court to do so,(14.11) while ICC pointed out that giving exclusive jurisdiction to the
state court was not compatible with those rules of arbitral institutions which provide that, in
such cases, the institution takes a final decision.(14.12)

8. In the Commission sessions the delegates of the Federal Republic of Germany and of
Austria reaffirmed their written proposals.(14.13) The United States delegate supported
the German position which he understood to mean that court review would not be
excluded if the procedure agreed upon by the parties did not lead to a conclusive
decision.(14.14)

9. The Chairman thought that this was an entirely new proposal the acceptance of which
would imply major drafting changes.(14.15) followed by an appeal the next morning by the
Secretary of the Commission asking delegates to bear in mind in their further discussion
of the Working Group draft, which was the product of detailed consideration by the Group,
that the Commission's schedule for finalizing the model law imposed severe constraints of
time. The delegates of Austria and the Federal Republic of Germany thereupon withdrew
their proposals.(14.16) I mention this sequence of events as an example of a situation in
which proposals were not "66"considered by the Commission on their merits but were not
dealt with for lack of time.

10. In the light of the foregoing, the second sentence of paragraph 136 of the
Commission Report is somewhat puzzling. The paragraph reads:

“It was noted that Article 14, unlike Articles 11 and 13, did not expressly give the parties
the freedom to agree on a procedure in case of an arbitrator's inability or failure to act. It
was understood, however, that the provision was not intended to preclude parties from
varying the grounds which would give rise to the termination of the mandate or from
entrusting a third person or institution with deciding on such termination”.

11. The Summary Records do not disclose any statement as to the Commission's
understanding. In fact, the only statement made on the subject was a comment made by
the United States delegate, after the proposal of the Federal Republic of Germany had
been withdrawn, to the effect that his delegation had supported that proposal because it
clarified the intent of the provision although it did not change the substance.(14.17) The
United States' comment appears to have been based on the argument that the words 'if
the parties agree on the termination” in conjunction with Art. 2(d), pursuant to which the
parties may delegate to a third party, including an institution, the determination of an issue
(other than that of applicable substantive law) which the parties are free to determine,
authorize the parties to agree on a procedure for the termination of an arbitrator's
mandate including third party determination. The comment was made at the end of the
discussion of this aspect of Art. 14 and elicited no reaction from other delegates or the
chair.

12. The comment was specifically addressed only to the issue whether the parties could
entrust the decision to terminate an arbitrator's mandate to a third party and not to the
different issue whether they could vary the grounds which would give rise to the
termination of the mandate.(14.18) In my opinion the Art. 14 grounds are definitively
determined by the article, and the agreement of the parties comes into play only in regard
to the process of termination.(14.19) However that may be, the issue was not discussed
or referred to by any one at all. Paragraph 136 therefore must be considered as the
expression of a Secretariat's view rather than reflecting a decision of the Commission.

13. As in Art. 13(2), the Working Group characterization of the court decision as “final”
was amended in the text approved by the Commission to read “shall be subject to no
appeal”.(14.20)"67"

Paragraph (2)

14. This provision applies to termination of an arbitrator's mandate both under this article
and under Art. 13(2) on challenge procedure. It appeared in the Working Group draft as a
separate article.(14.21) It was approved in substance by the Commission without
discussion and incorporated by the Drafting Group into Art. 14 as new paragraph
(2).(14.22)

Article 15 - Appointment of Substitute Arbitrator

(*)

1. The draft of Art. 15 considered by the Working Group at its second session called for
the appointment of a substitute arbitrator “in the event of the termination of the mandate of
an arbitrator or in the event of his death or resignation”. The Working Group accepted the
principle of the article and understood that the draft provision also covered the case of
termination or withdrawal as a result of a challenge.(15.1) At its third session the Working
Group considered an amendment to the provision, pursuant to which if the arbitrator to be
replaced was named in the arbitration agreement, that agreement would lapse ipso iure.
The amendment was considered unnecessary since according to the text then before the
Group it applied “unless the parties agree otherwise”. It was also pointed out that an
automatic lapsing of the agreement was not necessarily in the interest of the
parties.(15.2)"68"

2. At the fourth session of the Working Group two other issues were identified. First, it
was observed that the text (arbitrator's mandate terminates under challenging procedure
or failure or impossibility to act or in the event of his death or resignation) did not specify
in a systematic manner the cases in which the need for appointing a substitute arbitrator
arose. Secondly, a concern was expressed that in the case of a party-appointed arbitrator
the mechanism of resignation and replacement could be abused for the purpose of
obstructing or otherwise improperly influencing the proceedings. This problem had been
solved in the context of the 1965 Washington Convention on the Settlement of Investment
Disputes between States and Nationals of Other States by providing that if a party-
appointed arbitrator resigned without the consent of the arbitral tribunal on which he was
serving, a substitute arbitrator would be appointed by a neutral authority. The Working
Group decided, however, not to deal with the problem at that stage.(15.3)

3. At its final session the Working Group considered the problems that had been touched
on earlier in greater depth. It decided to make clear, either in Art. 14 or Art. 15, in what
cases other than the ones already mentioned in Art. 14 the mandate of an arbitrator would
terminate. The first question to be resolved in that context was whether the parties had
unrestricted freedom to agree on the termination of the mandate of an arbitrator. Because
of the consensual nature of arbitration that question was answered in the affirmative as a
matter of arbitration law, and without prejudice to possible legal responsibility to the
arbitrator whose mandate was terminated without sufficient cause. The same question
was raised as to the freedom of an arbitrator to resign for other than the reasons already
stated in Art. 14 and the answer was once again affirmative, in that case for the practical
reason that an unwilling arbitrator could not, in fact, be forced to perform his
functions.(15.4) Here, too, the question of legal responsibility of the arbitrator was
reserved, the Working Group having decided at the beginning that the model law would
not deal with legal responsibility issues in the party/arbitrator relationship.(15.5)

4. The Working Group decided that its conclusions on these issues should be reflected in
its draft of the model law and that this should be done in Art. 15.(15.6) This explains the
rather awkward structure of that article. The first category, termination of mandate under
Art. 13 or 14, includes both withdrawal and parties' agreement to terminate; the second,
withdrawal from office for any other reason, reflects resignation in the framework of the
arbitrator's unlimited freedom to do so; the third, revocation of mandate by agreement of
the parties, reflects the parties' unlimited freedom in this "69"regard; and the fourth is a
catch-all provision to make sure that Art. 15 covers all cases in which a mandate has
been terminated, even if they are not covered within the first three categories.

5. In its written observations Norway proposed to simplify the text of the Working Group
draft (which in relevant part was identical to the final text) by deleting the passage
commencing with the words “under Article 13 or 14” and ending with the words
“termination of his mandate”.(15.7) The result of the adoption of that proposal would have
been to reduce the content of the provision to its essentials, namely the appointment of a
substitute arbitrator to fill a vacancy, rather than having it serve as well the function of
indicating the cases in which the mandate of an arbitrator would terminate.

6. At the Commission stage the Working Group draft was approved subject only to the
deletion of the words “unless the parties agree otherwise” at the end of the provision. It
was believed that these words might create complications. In addition these words were
unnecessary since the Commission understood that the party autonomy recognized in Art.
11 for the original appointment of an arbitrator applied with equal force to the procedure of
appointing the substitute arbitrator which pursuant to Art. 15 will be in accordance with
“the rules that were applicable to the appointment of the arbitrator being replaced”. I recall
that Art. 11 does not apply in a model law State unless the place of arbitration is within the
territories of that State.

Article 16 - Competence of Arbitral Tribunal to Rule on its Jurisdiction

(*)

1. Art. 16 deals with the broad and important subject of the respective powers of arbitral
tribunals and courts in relation to proceedings which have been initiated before the arbitral
tribunal.(16.1) In paragraph (1) the article lays down the principle that an arbitral tribunal
may rule on its own jurisdiction to which it adds another and quite different principle to the
effect that if in so doing it finds that the contract between the parties is null and void this
“shall not entail ipso jure the invalidity of the arbitration clause” contained in the contract.
The first concept is frequently referred to as Kompetenz-Kompetenz or compétence de la
compétence, while the second establishes the “separability”, or “autonomy”, or
“independence” of the arbitration clause. I shall deal with each of them in greater detail
below.
2. The second paragraph of Art. 16 is concerned with the rules governing pleas to the
jurisdiction of the arbitral tribunal while paragraph (3) deals with court control of the rulings
of the arbitral tribunal on such pleas.

Paragraph (1)

3. Although this paragraph did not lead to particularly lengthy or difficult discussions, I
believe that some observations on the concepts of “competence-competence” and
“separability” and especially on the differences between them will be helpful.

4. The concept of “competence-competence” concerns the degree to which an arbitral

tribunal may rule on its own jurisdiction as defined by the arbitration agreement. It does
not imply the power of an arbitral tribunal to take a final and binding decision as to its
jurisdiction. It rather denotes a tribunal's power to adopt an initial ruling as to its own
jurisdiction. The issue is not the finality of the arbitrators' decision on their jurisdiction and
the consequent ouster of the jurisdiction of the courts, but rather the time at "71"which and
the conditions under which the courts may play their role as the final authority on the
question of arbitral jurisdiction. It is therefore an issue which is to be resolved on the basis
of practical rather than doctrinal considerations. The basic problem is how to reconcile the
realization of the objectives of commercial arbitration, which would be defeated if an
arbitral tribunal would have to suspend or terminate its proceedings each time a party
pleaded invalidity of the arbitration agreement, with an effective measure of court
supervision to ensure that the arbitral tribunal does not finally confer on itself a jurisdiction
which by reason of the consensual nature of arbitration can only derive from the
agreement of the parties.(16.2)

5. The power to investigate its own jurisdiction is inherent in the appointment of an

arbitral tribunal and is now generally accepted. Notwithstanding its essential role in the
discharge of an arbitral tribunal's task, it has in the past not been explicitly stated. The
tendency over the last few decades has, however, been to set this power of arbitral
tribunals forth in express terms. The explicit recognition of competence-competence in the
model law is in accordance with this tendency and lends it additional authority.(16.3)

6. The second principle enunciated in paragraph (1) is “separability”. It must be carefully

distinguished from “competence-competence”. While the latter, as we have just seen,
recognizes the power of an arbitrator to rule, at least initially, on his own jurisdiction,
separability of the arbitration clause is intended to have the effect that if an arbitrator who
has been validly appointed and who stays within the limits of the jurisdiction conferred
upon him by the arbitration clause concludes that the contract in which the arbitration
clause is contained is invalid, he does not thereby lose his jurisdiction. This concept which
is relatively new has been accepted by judicial decisions or by doctrine in a large number
of countries. It has, "72"however, not been universally accepted and with few
exceptions(16.4) it has not been enacted as statutory law anywhere, otherwise than
through adoption of the model law, of which the Canadian legislation is an example. There
is, moreover, no evidence that it has the same meaning and effect in the countries and
among the authors which have accepted it. Nor has its precise meaning been defined in
Art. 16 or in the discussions leading to its adoption.

7. The working paper for the Working Group at its first session was the Secretariat report
“Possible features of a model law on international commercial arbitration”,(16.5)
accompanied by a further document which, among other things, provided a list of
questions covering the issues which the Working Group might wish to consider.(16.6) The
order and classification of the issues used in the two papers was not intended to indicate
the eventual structure of the model law but simply adopted the classification scheme used
in the national reports as published in the Yearbook Commercial Arbitration. It thus
happened that of the two principles laid down in paragraph (1) the first one taken up by
the Working Group was separability rather then competence-competence which logically
precedes it.

8. The “Possible features” paper suggested, with little explanation, “that the model law
take a clear stand in favor of separability or autonomy of the arbitration clause, as
adopted in modern arbitration law and rules”,(16.7) referring to Art. 21(2) of the
UNCITRAL Arbitration Rules as an example. That provision is substantially identical to the
second and third sentences of paragraph (1). The report of the Working Group's first
session notes without elaboration that there was general agreement that the model law
should adopt the principle of separability or autonomy of the arbitration clause, as
embodied in Art. 21 of the UNCITRAL Arbitration Rules.(16.8) “Separability” had become
the hallmark of progressive arbitration law but was not always subjected to legal analysis.

9. In my submission, this observation finds its justification in the Working Group's answer
to the question whether the arbitral tribunal should be empowered “to decide on any pleas
as to its jurisdiction including those "73"based on non-existence or invalidity of an
arbitration agreement”. The Working Group answered the question in the affirmative “in
accordance with” [sic] its earlier decision that the model law should adopt the separability
principle.(16.9) Competence-competence was thus regarded as a consequence of
separability, whereas in reality separability is a principle of substantive law which enlarges
the effective range of the procedural law principle of competence-competence.(16.10)

10. At its second meeting, the Working Group approved, as Art. 4, a provision starting
with “For the purposes of determining whether the arbitral tribunal has jurisdiction ...”and
continuing to state the separability principle, and, as Art. 29(1), a provision embodying
competence-competence.(16.11) At its fourth meeting the Working Group considered and
adopted an Art. XIII(1) which combined the earlier two articles in reverse order.(16.12)
The resulting text was identical with Art. 16(1) of the Law except for the subsequent
substitution by decision of the Commission of “may” for “has the power to”.

11. At the Commission stage, it was agreed that the words “including any objections with
respect to the existence or validity of the arbitration agreement”were not intended to limit
the competence-competence of the arbitral tribunal to those cases in which a party had
raised an objection. Consequently, the arbitral tribunal may decide questions of
jurisdiction on its own motion,(16.13) which it is however unlikely to do except in rare
cases where public policy or arbitrability issues are involved. I have already mentioned the
decision to substitute “may” for “has the power to” in the opening sentence of paragraph
(1). The Commission Report notes that it was not thereby intended to deviate in
substance from the corresponding wording in Art. 21(1) of the UNCITRAL Arbitration
Rules.(16.14)

12. More significantly, the Commission discussed suggestions that paragraph (1) might
be qualified by the insertion before the first sentence of language along the lines of
“unless otherwise agreed by the parties” or that parties might be given the right to contract
out of the paragraph.(16.15) The discussion was summarized by the Commission in the
following terms:

“As regards the power given to the arbitral tribunal in paragraph (1), concern was
expressed that the provision was not acceptable to certain States which did not "74"grant
such powers to arbitrators or to those parties who did not want arbitrators to rule on their
own jurisdiction. It was stated in reply that the principle embedded in the paragraph was
an important one for the functioning of international commercial arbitration; none the less,
it was ultimately for each State, when accepting the model law, to decide whether it
wished to accept the principle and, if so, possibly express in the text that parties could
exclude or limit that power.”(16.16)

13. Neither the Summary Records nor the above passage from the Commission Report
indicate whether the concerns expressed related to all of the first paragraph, or principally
or exclusively to the separability principle. It is my recollection that the participants in the
discussion did not clearly distinguish between the two principles involved.(16.17)

14. There is no record of any discussion in the Commission of the precise meaning of
separability in the context of Art. 16(1). A particular question which the provision raises is
whether the last sentence ( “A decision by the arbitral tribunal that the contract is null and
void shall not entail ipso iure the invalidity of the arbitration clause”) has the effect of
maintaining the arbitration clause in force even though the agreement of which it forms
part never came into being or was null and void ab initio.

15. I believe that it is common ground that the first situation constitutes an exception to
the principle. In the words of Professor Pieter Sanders, a strong supporter of separability:

“If the question arises whether the parties have indeed concluded a contract containing an
arbitration clause, the jurisdiction of the arbitrator is put in question. If there is no contract
at all, the legal basis of the arbitrator's powers which reside in the arbitration clause found
in the contract, is also missing”.(16.18)"75"

16. According to Professor Sanders this is the only exception to the principle. A contrary,
and in my opinion preferable, view holds that an arbitration clause contained in a contract
that is null and void ab initio is another exception:

“As a matter of legal principle, if a purported contract is invalid ab initio it means that the
arbitration clause contained in it is also invalid ab initio; if the contract has not come into
existence, the collateral contract (the arbitration clause) cannot have come into existence
either”.(16.19) In this situation the defect which causes the nullity of the contract also
affects the arbitration clause itself.

17. The purpose of these observations is to alert the reader to the fact that there is a
question of interpretation rather than to argue the merits of the conflicting viewpoints in
detail.(16.20)

Paragraph (2)

18. Pleas to Jurisdiction; Time Limits

Paragraph (2) deals with two types of pleas to jurisdiction made to the arbitral tribunal. A
party may plead that the arbitral tribunal is entirely without jurisdiction or that it is
exceeding its jurisdiction (“authority” in the terminology of Art. 16(2)).

19. The first plea (denial of jurisdiction) must be made not later than the submission of
the statement of defence to the claim or counter-claim,(16.21) as the case may be. In
order to enable a respondent who has objections to the jurisdiction of the arbitral tribunal
to be formed, nevertheless to take part in the constitution of that tribunal, it was deemed
useful for the Law to provide explicitly that the respondent will not be precluded from
invoking lack of jurisdiction by the fact of such participation. This will avoid the need for a
reservation, as would be necessary under some national laws in order "76"to avoid that
participation in the constitution of the arbitral tribunal would be treated as a waiver.(16.22)

20. After considering numerous proposals during its meetings, the Working Group finally
decided on the following formulation with respect to the definition of the second type of
plea and the time limits for its submission:

“A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised
promptly after the arbitral tribunal has indicated its intention to decide on the matter
alleged to be beyond the scope of its authority”.(16.23)

21. In their written observations, both the Soviet Union(16.24) and Sweden(16.25)
expressed the view that the point of time for raising this plea should be defined with more
precision. They pointed out that normally the intention of the arbitral tribunal to exceed its
authority would only become clear after an award had been rendered and that it would be
only then that a party could know with certainty that the scope of the tribunal's authority
had in its opinion been exceeded.

22. For Sweden this meant that a party should be able to raise the plea during the period
of time for the application for setting aside the award. The Soviet Union, on the other
hand, suggested that the provision would be made more precise if the plea had to be
raised by a party promptly as soon as the matter which is allegedly beyond the power of
the arbitral tribunal is raised during the arbitral proceedings, as provided in the 1961
European Arbitration Convention (Geneva).

23. The Soviet Union's proposal was widely supported(16.26) and the Commission
approved the third sentence in the form in which it appears in the final text of the Law. As
compared with the Working Group draft, the formulation of the plea (“a plea that the
arbitral tribunal has exceeded” instead of “. .. is exceeding”) would have given a
respondent a clearer criterion, but on the other hand the final text covers not only those
instances where there is an indication of the intention of the arbitral tribunal itself, but also
the case where one party in its written or oral statements raises a matter outside the
tribunal's scope of authority. The substitution of “as soon as” for “promptly” was intended
to meet the concern that parties which are not sophisticated in international commercial
arbitration might not realize that a matter exceeding the arbitral tribunal's jurisdiction had
been raised and that they were compelled to object promptly.(16.27)

24. The arbitral tribunal may admit a plea beyond the prescribed time limit if it considers
the delay justified. This provision applies to both types of pleas to jurisdiction."77"
25. Effect of Failure to Raise Plea to Jurisdiction

At the fourth meeting of the Working Group the question was raised whether failure by a
party to invoke lack of jurisdiction would preclude that party from invoking it later in
litigation under the provisions for setting aside and recognition and enforcement. Lack of a
valid arbitration agreement may be relied upon in those proceedings, but it was
recognized that failure to plead lack of jurisdiction under paragraph (2) might come within
the waiver rule of Art. 4. The question was put aside to be dealt with later in an overall
review of the various provisions of the model law relating to jurisdiction and validity of
arbitration agreement.(16.28)

26. In a paper submitted to the Working Group at its fifth and final session, the
Secretariat advanced the suggestion that a party who fails to raise the plea in accordance
with Art. 16(2) should be precluded from raising objections with respect to the existence or
validity (or scope) of the arbitration agreement also in other contexts, and in particular in
the post-award stage (setting aside and recognition and enforcement). It was, however,
further suggested that this waiver should not extend to reliance on certain matters such as
public policy, including arbitrability.(16.29) The Working Group made this suggestion its
own but took no further action.(16.30)

27. In the Analytical Commentary, the Secretariat submitted that the suggestion might
appropriately be expressed in the model law, noting that it would be in line with the
understanding accepted by the Working Group under Art. 4 that the effect of a waiver
would not extend to non-compliance with mandatory provisions. Thus, grounds such as
violation of public policy, including non-arbitrability, could be raised in proceedings under
Arts. 34 and 36 even if no party had raised any objections in this respect during the
arbitral proceedings. Moreover, the court can determine those issues on its own
motion.(16.31)

28. In its written observations, Norway suggested that these consequences of a party's
failure to raise a plea regarding jurisdiction should be explicitly provided either in Art. 16 or
in Arts. 34 and 36.(16.32)

29. At the Commission only one speaker, the Italian delegate, addressed the subject
matter. He asked whether a party's failure to raise an objection under Art. 16 would later
preclude him from seeking to have the award set aside or from refusing to recognize it or
accept its enforcement, noting that the Analytical Commentary appeared to support that
interpretation. He also expressed the view that the model law should distinguish between
an "78"objection that the arbitral tribunal had exceeded its authority, which could not be
taken before the Art. 6 court and an objection [to jurisdiction] on other grounds which
could.(16.33) The Chairman proposed, without objection, that this matter be discussed in
connection with Arts. 34 and 36,(16.34) but that discussion never took place and the
matter was left dangling. A parallel question was asked and similarly left unanswered in
the discussion of paragraph (3). I shall return to the issue of waiver covering both of these
cases at the end of paragraph (3).

Paragraph (3)

30. At its first session, the Working Group was in general agreement that a ruling by the
arbitral tribunal should be subject to review by a court.(16.35) At its second session it
agreed that the arbitral tribunal may rule on a plea concerning its jurisdiction either as a
preliminary question or in the final award, with some support being expressed for a further
provision that a ruling as a preliminary question should always be made in the form of an
interlocutory award so as to allow an appeal to the courts.(16.36)

31. It proved difficult, on the other hand, to reach agreement on the timing and scope of
court review. Where a ruling by the arbitral tribunal that it has jurisdiction is included in an
award on the merits, court control of that ruling would be exercised upon an application of
the objecting party for the setting aside of the award or upon its resisting a proceeding for
the recognition and enforcement of the award. Where the affirmative ruling is made on a
plea as a preliminary question, it is a matter for decision whether to provide either for
immediate court control, with an attendant risk of the use of this device for delaying
maneuvers or for court control only after the award on the merits is rendered, with the risk
that at the end of the day the time and effort devoted to the merits will prove to have been
wasted.

32. At its fourth meeting, the Working Group adopted a third paragraph of what has
become Art. 16 which, as in the definitive article, permitted the arbitral tribunal to rule on a
plea to the jurisdiction either as a preliminary question or in the final award, but provided
that in either case an affirmative rule on jurisdiction might be contested only in an action
for setting aside the arbitral award.(16.37)

33. The Working Party, however, also considered and gave approval in principle to a
fourth paragraph of Art. 16 which gave a party objecting to the jurisdiction of an arbitral
tribunal the right, in addition to the plea "79"addressed to the tribunal, to request a ruling
on the competence of the arbitral tribunal directly from a court, with the understanding that
the arbitral tribunal might continue the proceedings while the issue is pending with the
court.(16.38)

34. The proposal was further considered by the Working Group at its final session where
it was presented as a separate Art. 17, entitled “Concurrent court control”:

(1) “[Nothwithstanding the provisions of Article 16] a

party may [at any time] request the Court
specified in Article 6 to decide whether a valid
arbitration agreement exists and [if arbitral
proceedings have commenced,] whether the
arbitral tribunal has jurisdiction [with regard to the
dispute referred to it].
(2) While such issue is pending with the Court, the
arbitral tribunal may continue the proceedings
[unless the Court orders a stay of the arbitral
proceedings]”.(16.39)

35. The proposal was not accepted for several reasons. It was noted in the first place that
short-circuiting the arbitral tribunal in this manner was to a large extent in conflict with
paragraph (3) of Art. 16 which at the Working Group stage precluded a party from
contesting an affirmative ruling by the arbitral tribunal on its jurisdiction until a final award
settlement of any controversy on the arbitral tribunal's jurisdiction, it also opened the door
to delaying tactics and obstruction. Finally, it was not in harmony with the principle
underlying Art. 16 that it was initially and primarily for the arbitral tribunal to decide on its
competence, subject to ultimate court control.(16.40) The proposed Art. 17 continued,
however, to play a role in the legislative process.

36. In written observations Austria, India, Norway, Poland and the International Bar
Association (IBA) objected to paragraph (3) and expressed the view that an affirmative
ruling by an arbitral tribunal should be open to immediate court review.(16.41)Austria
thought that to this end the arbitral tribunal should have the possibility to rule on its
jurisdiction as a preliminary question in the form of an award.(16.42)Poland envisaged an
obligatory preliminary award.(16.43) In a more elaborate proposal Norway would give the
arbitral tribunal which ruled on a plea to jurisdiction as a preliminary question the right to
do so in the form of a preliminary award which, unless otherwise agreed by the parties, a
party may request a court to set aside. It would further leave it to the arbitral tribunal to
decide, unless otherwise agreed by the parties, whether the arbitral tribunal shall continue
while the issue of its jurisdiction is before the court.(16.44)Canada was of the opinion
"80"that an arbitral tribunal should be able to refer the question of its jurisdiction to a
court.(16.45)IBA suggested that Art. 16(3) should be reconsidered and that Art. 17 might
be reviewed with a view to reinstating it. IBA observed in that connection that many
practicing lawyers felt that concurrent court control should also be available in a more
general sense, in addition to matters of the jurisdiction of the arbitral tribunal, in order to
prevent arbitral tribunals from exceeding their authority, or failing to comply with the
requirements of due process.(16.46)

37. Very much in line with the foregoing, the United Kingdom stated that it attached great
importance to the reintroduction into the text of the previous Art. 17. Instead of preventing
dilatory tactics by a respondent its deletion provided for them. Sufficient safeguard against
abuse was contained in Art. 17(2), which allowed the arbitration proceedings to continue
during the challenge before the court (except where the court rules otherwise - which it
would no doubt refrain from doing save in a clear case). The United Kingdom thought that
a discretionary power for the tribunal to make an interim award was not a sufficient
protection for the parties.(16.47)

38. Norway and IBA also pointed to an anomaly in the current text of paragraph (3) which
appeared to provide that questions of jurisdiction may only be raised in an action for
setting aside, whereas a party should be able to raise those questions also by way of
defence in an action for recognition and enforcement of an award.(16.48)Mexico
suggested that it be made clearer that the provisions of paragraph (3) apply not only to
the plea that the arbitral tribunal does not have jurisdiction but also to the plea that the
arbitral tribunal is exceeding the scope of its authority.(16.49)

39. In the Analytical Commentary, the Secretariat submitted that the weight of the two
conflicting concerns which dominated the discussions, i.e., fear of dilatory tactics and
obstruction versus waste of time and money were difficult to assess at a general level.
Thus, it might be worth considering giving the arbitral tribunal discretion, based on its
assessment of the actual potential of these concerns, to cast its ruling either in the form of
an award which would be subject to instant court control or of a procedural decision which
may be contested only in the post-award stage.(16.50)
40. The questions before the Commission were the following:

(i) should there be a general right for a party to

seek a court decision at any time on the
jurisdiction of the arbitral tribunal?"81"
(ii) should a party have the right to seek a
decision from the Art. 6 court on an affirmative
ruling on jurisdiction of the arbitral tribunal as
a preliminary question? Should it have that
right regardless of the form of the ruling, or
only if the ruling takes the form of an
interlocutory award?
(iii) if the answer to (i) or (ii) is “yes”, should the
arbitral tribunal have the authority to continue
the proceedings and render an award pending
the decision of the court?
(iv) should the decision of the court under (i) or (ii)
be subject to appeal?
(v) should the model law require an arbitral
tribunal to decide the question of its
jurisdiction as a preliminary question, or, if
not, should a party or the parties have the
right to require this?
(vi) what should be the legal effect of failure by a
party to raise a plea to jurisdiction before the
arbitral tribunal in accordance with paragraph
(2) or to seek a decision of the Art. 6 court on
an affirmative ruling by the tribunal on its
jurisdiction as a preliminary question?
(vii) should paragraphs (2) and (3) apply both to
cases where the arbitral tribunal has no
jurisdiction at all (invalid arbitration
agreement) and those where the trbunal has
exceeded its authority?

41. The basic issue behind the first five questions was whether there should be pre-
award court control of the jurisdiction of the arbitral tribunal, contrary to what was provided
in the current paragraph (3). A substantial majority answered that question in the
affirmative.(16.51) The unlimited freedom to seek court control at any time as
contemplated by Art. 17 was endorsed or found acceptable by a number of delegations
but in many cases subject to various qualifications.(16.52)

42. A consensus developed against reinstating Art. 17, but in favor of amending
paragraph (3) to permit court control of the arbitral tribunal's affirmative ruling as a
preliminary matter. There was, however, a divergence of views as to whether the tribunal
should have discretion either to rule on an objection to jurisdiction as a preliminary matter
or to join it to the merits,(16.53) or whether a party (or the parties) could require the
tribunal to "82"rule as a preliminary question,(16.54) or whether the model law should
oblige it to do so,(16.55) with the consequence in each case that the affirmative ruling
could be taken immediately for decision to the Art. 6 court. Under yet another view the
possibility of such appeal would be left in effect to the discretion of the arbitral
tribunal.(16.56) There was general agreement that pending the resort to Art. 6 court, the
arbitral tribunal would be free to continue the proceedings.(16.57)

43. The Commission finally reached an agreement on an amalgam of the Secretariat's

suggestion in the Analytical Commentary(16.58) and the Austrian proposal in its written
observations(16.59) to give discretionary power to the arbitral tribunal to rule on a plea to
jurisdiction as a preliminary question and to provide for court control on the same basis as
in Art. 13(3) on challenge procedure: the request to the court must be made within thirty
days after notice of the affirmative ruling and the court's decision is subject to no appeal.

44. I now return to the question of failure to raise the plea to jurisdiction before the arbitral
tribunal pursuant to paragraph (2). As noted in nrs. 25-29 supra, the Working Group
appeared to have accepted the Secretariat's suggestion, which was restated in the
Analytical Commentary, that a party which fails to raise a timely plea should be precluded
from raising objections “with respect to the existence or validity (or scope) of the
arbitration” in the post-award stage but that “such waiver by submission” should be
subject to certain limits such as public policy, including arbitrability. I further recall that the
Secretariat in the Analytical Commentary and Norway in its written observations had
expressed the view that this matter should be explicitly provided for in the model law.
Surprisingly only one delegate addressed the issue in the Commission, asking whether
the Secretariat's interpretation set forth in the Analytical Commentary was correct. The
Chairman did not answer the question but suggested that it should be discussed in
connection with setting aside and recognition and enforcement. That discussion never
took place and the question of interpretation on this point of paragraph (2) thus remains
open.

45. That question is in my opinion not answered by the fact that the Analytical
Commentary, which was one of the documents before the Commission, suggested a clear
answer and that none of the delegates expressed disagreement. The question is so
important that failure by the "83"delegates to express any views on it rather suggests that,
however strange that may be, they simply did not focus on it.

46. It seems to me that the language of Art. 16 is as compatible with the waiver
theory(16.60) advanced in the Analytical Commentary as with an interpretation according
to which a party has an option of either raising the issue of jurisdiction before the arbitral
tribunal or postponing it until the post-award phase. I recall in this connection the two
conflicting concerns in connection with preliminary exceptions to jurisdiction, namely, on
the one hand, concern about the use of such exceptions as a dilatory manoeuver and, on
the other, concern that the parties may spend a great deal of time and money on the
proceedings only to find out after an award has been rendered that it is being set aside or
refused recognition and enforcement on the basis of a jurisdictional plea. It is relevant that
the latter, that is, the waste of time and money may result from the option of the arbitral
tribunal under paragraph (3) to rule on a plea to jurisdiction in an award on the merits.
One may therefore argue that it would not be fair to deny a party a corresponding option
to postpone the decision on the plea to jurisdiction to the post-award stage, especially
since a decision of the Art. 6 court under paragraph (3), unlike court decisions under Arts.
34 and 36, is not subject to appeal.
47. It is unfortunate that the Law does not resolve this question of interpretation by an
explicit provision one way or the other. Such a provision could also have settled the
question whether the words in paragraph (3) “a plea referred to in paragraph (2) of this
article” cover both a denial of any jurisdiction and a claim of excess of jurisdiction. When
the Italian delegate asked whether the Secretariat's interpretation of the consequences of
failure to make a timely plea to jurisdiction was correct, without expressing a view as to its
validity in general, he did say that the model law should distinguish between an objection
that the arbitral tribunal had exceeded its authority which in his opinion could not be taken
before the Art. 6 court and objections on other grounds which could.(16.61)Mexico had
suggested in its written observations that it should be made clearer that the provisions on
paragraph (3) apply not only to the plea that the arbitral tribunal does not have jurisdiction
but also to the plea that the arbitral tribunal is exceeding the scope of its authority.(16.62)
At the Commission session the Mexican delegate reverted to the matter and stated that it
needed to be made clear whether Art. 16(3) applied to both pleas.(16.63)"84"There was
no reaction to either the Italian or Mexican remarks. I am inclined to the view that Art.
16(3) applies to both pleas.

48. While the previous questions were addressed to the waiver effect vel non of failure of
a party to raise a timely plea to jurisdiction before the arbitral tribunal, the observer for
ICCA asked at the Commission session whether failure of a party to exercise its right
under paragraph (3) to seek a decision from the Art. 6 court would be treated as a waiver
of that party's rights to raise the question of jurisdiction in setting aside proceedings or as
a defence in proceedings for recognition and enforcement.(16.64) The Chairman's reply
as recorded in the Summary Record was that it would be a question of national
procedural law on the authority of judicial decisions (res judicata).(16.65) This must have
been based on a misunderstanding of the observer's question, since it envisaged a case
in which there would not have been a judicial decision. The arguments in favour of a
negative reply are even stronger than in the case of failure to raise the plea with the
arbitral tribunal. I submit that after having raised the plea before the arbitral tribunal the
party in question has a choice between either seeking a decision from the Art. 6 court
under paragraph (3) or raising the issue in proceedings under Arts. 34 and 36.

49. Arbitral Tribunal's Negative Ruling on Jurisdiction

Art. 16 does not deal with the case where the arbitral tribunal rules that it has no
jurisdiction. In a working paper prepared for the fourth session of the Working Group the
Secretariat tentatively suggested the following addition to paragraph (3):
“A ruling by the arbitral tribunal that it has no jurisdiction may be contested by any party
within 30 days before the Court specified in [Art. 6]”.(16.66)

50. In support of the additional sentence it was suggested that the aim of such recourse
could be limited to the recognition of the existence of a valid arbitration agreement rather
than to have the same arbitrators continue the proceedings.

51. The prevailing view was that the ruling of an arbitral tribunal that it has no jurisdiction
was final as regards those proceedings but did not finally settle the question whether the
substantive claim was to be decided by a court or by an arbitral tribunal. That question
could be settled if the substantive claim were submitted to a court which would then be
able to rule on the question.(16.67) The Working Group therefore did not accept the
"85"additional sentence.(16.68) The Secretariat commented that it thus depended on the
general law on arbitration or civil procedure of a model law country whether court control
of a negative ruling could be sought other than by way of request in any substantive
proceeding as referred to in Art. 8(1).(16.69)

52. At the Commission session, the delegate of the United Kingdom, reverting to this
issue, noted that although Art. 16(3) said that a ruling by the arbitral tribunal that it had
jurisdiction could be contested in the court, none of the proposals so far had addressed a
situation in which the arbitral tribunal decided that it had no jurisdiction. Could the parties
then claim that it did? The speaker referred to Art. 13, which he believed dealt with both
situations and there seemed to be no logical reason why Art. 16 should not do the same.
The Chairman thought that there was a substantive reason, namely, that the arbitrators
could not be forced to continue their arbitration if they believed they had no jurisdiction.
When the speaker said that the party making the plea could then take the matter before a
court which would then have to decide whether the arbitration agreement was operative
and whether the court proceedings should then be stayed under Art. 8, the Chairman
disagreed, saying that in his opinion the arbitration agreement could no longer be invoked
before a court.(16.70) In my submission, the Chairman was in error and the true position
is as stated in the Analytical Commentary and in the remarks of the delegate of the United
Kingdom.

Article 17 - Power of Arbitral Tribunal to Order Interim Measures

(*)

1. It is necessary at the outset to clarify the relation between Art. 17 (which, except for the
word “appropriate” in the second sentence, is identical with the Working Group draft) and
Art. 9 (“Arbitration agreement "86"and interim measure by court”). Art. 17 confers on the
arbitral tribunal a limited power to order interim measures of protection.(17.1) Art. 9 does
not purport to confer any such power on a court. It merely provides that if a court has such
power under its national procedural law, it will not be precluded from exercising it because
the parties to the dispute have concluded an arbitration agreement.(17.2)

2. At the Commission session, the Indian delegate asked which order would prevail if
contradictory orders were issued by the court and the arbitral tribunal and suggested that
the court order would prevail on penalty of contempt of court.(17.3) The Secretariat
pointed out that properly analyzed, the articles in themselves did not create a conflict, but
there was always the possibility, given the fact that Art. 9 applied regardless of the place
of arbitration, that a conflict might arise when a party had requested an order from the
arbitral tribunal and the opposing party obtained a conflicting order from a court in another
State.(17.4) The Commission decided that the model law should not embody a solution
for such conflicts. This was a matter for each State to decide.(17.5)

3. There was general agreement in principle at the first session of the Working Group that
an arbitral tribunal should have the power to order certain interim measures of
protection,(17.6) but divergent views were held on a number of issues which were left
open.

4. The first issue was whether the grant of power to order interim measures was
conditional on the agreement of the parties, or whether the arbitral tribunal should be
stated to have that power unless the parties excluded it. The latter alternative
prevailed(17.7) and the text is clear on this point.

5. The second issue concerned the scope of the interim measures. In an early draft which
was inspired by Art. 26 of the UNCITRAL Arbitration Rules, the emphasis was on one
type of transaction, namely sale of goods, in "87"giving as an example of interim
measures “measures for the conservation of the goods forming the subject matter in
dispute”.(17.8) It was subsequently decided to adopt a more general formula, such as
“interim measures of protection”,(17.9) which is used in the final text. The Analytical
Commentary mentions as additional practical examples measures designed provisionally
to “stabilize” a long term relationship and related to such matters as the use or
maintenance of machines or works or the continuation of a certain phase of a construction
if necessary to prevent irreparable harm. It mentions, finally, an order to secure evidence
which would otherwise be unavailable at a later stage of the proceedings.(17.10)

6. At the Commission session, the United States delegate recalled that as previously
agreed with regard to interim measures from a court, the record should also reflect that,
under appropriate circumstances, the arbitral tribunal would be entitled to order the
protection of trade secret and proprietary information.(17.11)

7. When the Working Group decided to broaden the range of interim measures it
disposed at the same time of a possible third issue by suggesting a restriction to those
measures which the parties themselves could have achieved by agreement.(17.12) This
restriction is reflected in the clear text of Art. 17 which states that the measures must not
only relate to the subject matter of the dispute, but that the order of the arbitral tribunal
may be addressed only to a party (or both parties), thus excluding any measures affecting
the right of third parties.

8. The fourth issue concerned the question whether, as suggested in the draft provision
considered by the Working Group at its fourth session, the arbitral tribunal should have
authority to request a court to render executory assistance.(17.13) Under one view, such
assistance was desirable and should be available not only to the arbitral tribunal but also
to a party. The prevailing view was opposed to the proposal since it dealt in an incomplete
manner with a question of national procedural law and court competence and was unlikely
to be adopted by many States and the power of the arbitral tribunal to order interim
measures of protection was of practical value even without the executory assistance of a
court.(17.14) The Working Group's report on its fourth session notes its understanding
that this decision should not be read as foreclosing such executory assistance in those
cases in which a State was prepared to render it under its procedural law.(17.15) The
issue was not reopened in the Commission."88"

9. The fifth issue concerned the provision in the Working Group draft authorizing the
arbitral tribunal to require security for the costs of an interim measure ordered by it. In the
Analytical Commentary the Secretariat expressed the view that such costs might also
cover any possible damages.(17.16) At the Commission session the Mexican delegate
reiterated the suggestion which had been advanced in the Mexican written observations
for an amendment of the article to provide that the security should cover possible damage
suffered by the other party as well as the costs of the interim measure itself.(17.17) His
proposal was supported by the delegate of Spain(17.18) and the observer for the
Chartered Institute of Arbitrators.(17.19) The latter referred to the Secretariat comment in
the Analytical Commentary, but felt that it was desirable to make clear that the article
covered the contingency of damages. The Chairman suggested that this could be dealt
with by a general expression such as “reasonable security”.(17.20)

10. At this point, the United States delegate intervened to point out that Art. 26(2) of the
UNCITRAL Arbitration Rules contained language nearly identical to the current draft
(“security for the costs of such measures”) and that in the absence of any strong reason
for thinking that those Rules were inadequate, they should be retained in order to
minimize confusion.(17.21) I mention this as an illustration of an issue that arose on many
occasions during the legislative history. The French delegate could go along with the
Mexican proposal but felt that there should be a reference to damages in the text. He did
not agree that the Commission must use the UNCITRAL Arbitration Rules as the ultimate
authority in drafting the model law. The Commission was not bound by them if it could
arrive at a better formulation more relevant to the specific purpose which the model law
was intended to serve.(17.22) The compromise solution was to adopt “appropriate
security” which would negate any implied limitation on security for the costs of an interim
measure, and to record in the Commission Report that “it had been pointed out” that the
insertion of “appropriate” should not lead to an interpretation of the UNCITRAL Arbitration
Rules language as excluding the possibility of including in the amount of security any
forseeable damage of a party.(17.23)

11. I finally note that Austria(17.24) and Mexico(17.25) thought that there was no need for
the article and that it might therefore be deleted."89"

Article 18 - Equal Treatment of Parties

(*)

1. This brief opening provision of Chapter V (Conduct of Arbitral Proceedings) states the
fundamental principle of fairness applicable at all stages of the arbitral proceedings, in
requiring that the parties be treated with equality and that each party shall be given a full
opportunity of presenting his case.

2. The principle was accepted at the first session of the Working Group which agreed that
the model law should contain a mandatory provision modelled after Art. 15(1) of the
UNCITRAL Arbitration Rules,(18.1) reading in relevant part:

“. . . the arbitral tribunal may conduct the arbitration in such manner as it considers
appropriate, provided that the parties are treated with equality and that at any stage of the
proceedings each party is given a full opportunity of presenting his case”.

3. This form, in which the requirement of fairness is stated as a restriction on the freedom
of the arbitral tribunal rather than in terms of an affirmative obligation, was followed by the
Working Group at its second session except that it was decided to delete the words “at
any stage” in order to avoid that a party might rely on them to justify dilatory procedural
steps.(18.2)

4. A subsequent draft provided that the parties were free, subject to the provisions of the
Law, to agree on the procedure to be followed by the arbitral tribunal, and thus made clear
that the freedom of the arbitral tribunal to conduct the arbitral proceedings in such manner
as it considered appropriate was subject to any agreement of the parties on
procedure.(18.3)

5. At its last session, the Working Group decided that the requirements of equal
treatment and opportunity of presenting one's case should be observed not only by the
arbitral tribunal but also by the parties when laying down any rules of procedure.(18.4)
The text was further revised for purposes of submission to the plenary Commission as
part of a draft Art. 19 consisting of hree paragraphs, the first dealing with parties'
agreements on procedure "90"and the second with the powers of the arbitral tribunal,
followed by a third paragraph stating:

“In either case, the parties shall be treated with equality and each party shall be given a
full opportunity of presenting his case”.(18.5)

6. The Secretariat draft came close to stating the principle of fairness as an independent
obligation rather than linking it to other provisions as a restriction or proviso. The final step
was taken by the Commission which decided that the above-quoted provision

“constituted a fundamental principle which was applicable to the entire arbitral

proceedings and that, therefore, the provision shall form a separate article [18 bis] to be
placed at the beginning of Chapter V of the model law”.(18.6)

7. Failure to comply with the overriding standards of Art. 18 will constitute procedural
injustice(18.7) which may be a ground for refusal to recognize and enforce an award or for
setting it aside.(18.8)

Article 19 - Determination of Rules of Procedure

(*)

1. In its Analytical Commentary, the Secretariat called this provision (which in the
Working Group draft included a third paragraph which is now Art. 18 of the Law) “the
Magna Carta of Arbitral Procedure”:

“It goes a long way towards establishing procedural autonomy by recognizing the parties'
freedom to lay down the rules of procedure (paragraph (1)) and by granting the arbitral
tribunal, failing agreement of the parties, wide discretion as to how to conduct the
proceedings (paragraph (2)), both subject to fundamental principles of fairness (paragraph
(3))”.(19.1)

Paragraph (1)

2. The discussion of this paragraph whose principle was never in doubt was essentially
focused on the form in which the restrictions on the parties' freedom should be expressed,
that is, whether with reference to specific provisions of the model law,(19.2) or by more
general language such as “subject to the mandatory provisions” of the Law.(19.3)

3. Since the parties' freedom would by definition only be restricted by “mandatory”

provisions, express mention of that qualification was tautological.(19.4)
4. The rejection of both alternatives left open the question which provisions of the model
law should be mandatory. This question arose not only in relation to Art. 19(1) but more
generally. It will suffice here to state that at its fifth (final) session the Working Group
decided against listing in a separate article all mandatory provisions of the model
law,(19.5) but was of the view that it was desirable to express the non-mandatory
character in all provisions which were intended to be non-mandatory, and decided to
insert language such as “unless otherwise agreed by the parties” in several articles. It was
nevertheless understood that this did not mean that all provisions which did not express
their non-mandatory character were necessarily of a mandatory nature.(19.6)

5. Based on the foregoing, I submit that the only mandatory provisions "92"concerning
the conduct of proceedings, other than Art. 18, are Art. 24(2) and (3) and Art. 27
(q.v.).(19.7)

6. In its Analytical Commentary, the Secretariat gives examples of various ways in which
parties can determine the rules applicable to the conduct of the arbitration proceedings
between them. Thus, they may prepare their own individual set of rules or, as is likely to
occur more frequently, they may refer to standard rules for institutional or ad hoc
arbitration.(19.8) The propriety of the second method is expressly recognized by Art. 2 (e)
which states that where a provision of the Law refers to an agreement of the parties,
“such agreement includes any arbitration rules referred to in that agreement”.

7. The parties are free to “pick and choose” and may thus agree on a set of rules, subject
to stated exceptions, deletions or additions. The Analytical Commentary expresses the
view that the parties may even opt for a national procedural law, noting that in that event
“such law would be applicable by virtue of their choice and not by virtue of being the
national law”.(19.9)

8. At its final session, the Working Group considered a Secretariat suggestion that the
model law should require that any agreement between the parties as to procedure be
concluded before the first or sole arbitrator is appointed. The reason for such requirement
would be that arbitrators should know from the beginning under what rules of procedure
they are expected to function.(19.10) This suggestion was not accepted by the Working
Group which noted that the freedom of the parties to agree on the procedure was a
continuing one throughout the arbitral proceedings.(19.11)

9. The Secretariat, recording this decision of the Working Group, submitted that the
parties themselves may in their original agreement limit their freedom if they wish their
arbitrators to know from the start under what procedural rules they are expected to act.

10. The question whether the parties' freedom to agree on rules of procedure should be a
continuing one or be subject to the time limit suggested by the Secretariat, was the only
issue discussed by the plenary Commission which adopted paragraph (1) without change.

11. In line with the written observations of the United States government on Art.
19(1)(19.12) its delegate proposed that the continuing freedom be made explicit in the text
of the model law.(19.13) The Italian delegate, recalling "93"the Italian written
observations,(19.14) suggested that the model law should on the contrary specify that
changes agreed between the parties after the start of proceedings would require the
arbitrator's consent.(19.15) While several delegates supported the Italian proposal, the
Commission decided to adopt neither proposal, and recorded its decision in the following
terms:

“Although the provision as it now stood implied that the parties had a continuing right to
change the procedure, the arbitrators could not in fact be forced to accept changes in the
procedure because they could resign if they did not wish to carry out new procedures
agreed to by the parties. It was noted that the time-frame allowed for changing the
procedures to be followed could be settled between the parties and the
arbitrators”.(19.16)

Paragraph (2)

12. This paragraph, which grants the arbitral tribunal wide procedural discretion in the
absence of agreement by the parties on the procedure generally, or on the particular
matter at issue before the tribunal,(19.17) ranks in importance with the first paragraph.
Together they establish in the words of the Analytical Commentary “a liberal framework ...
to suit the great variety of needs and circumstances of international cases, unimpeded by
local peculiarities and traditional standards which may be found in the existing domestic
law of the place”.(19.18)

13. The exemplification of the powers conferred on the arbitral tribunal in the second
sentence of paragraph (2) as including the power to determine the admissibility,
relevance, materiality and weight of the evidence tracks the language of Art. 26(6) of the
UNCITRAL Arbitration Rules except that the provision that the arbitral tribunal “shall
determine” these matters is, like any other provision of those Rules, subject to the
mandatory provisions of the national law applicable to the arbitration.(19.19) The
discretion conferred on the arbitral tribunal by Art. 19(2), on the other hand, supersedes
conflicting national law.

14. The statement that the arbitral tribunal's power to conduct the arbitration in such
manner as it considers appropriate is “subject to the provisions "94"of this Law” does not
entirely have the same meaning as in paragraph (1) as to which see nr. 5 supra. When a
provision of the Law tells the arbitral tribunal to take, or refrain from taking, certain actions
unless the parties otherwise agree, the tribunal will have to respect that provision, thus
being bound by mandatory and non-mandatory provisions.

15. In the Working Group, paragraph (2) gave rise to discussion on only one point,
namely, the possible insertion in the text of additional language to the effect that the
arbitral tribunal's powers include “the power to adopt its own rules of evidence”. The
suggestion was discussed at the second session of the Working Group at which it was
received without enthusiasm.(19.20) The report on the Working Group's fourth session
which considered a text from which that language had been deleted shows, however, that
the differences of opinion concerned drafting only. It notes that the Working Group
“reaffirmed its view” that the power conferred on the arbitral tribunal included the power to
adopt rules of evidence, but that the prevailing view was that the existing wording “already
covered this point in sufficient clarity”.(19.21) The Analytical Commentary states correctly
that the powers conferred on the arbitral tribunal with respect to evidence include, in turn,
“the power of the arbitral tribunal to adopt its own rules of evidence, although that is no
longer expressed in the text”.(19.22)
16. Three governments presented written observations on issues within the general
scope of Art. 19(2) which had not been discussed by the Working Group.

17. The Soviet Union and the United States suggested that, following the example of Art.
24 of the UNCITRAL Arbitration Rules, the Law should provide that each party shall have
the burden of proving the facts on which it relies and, in the Soviet observations, that
arbitrators are entitled to demand from the parties the presentation of additional
evidence.(19.23) The Commission decided not to include a provision in the model law on
this point, noting at the same time that “it was understood that it was a generally
recognized principle that reliance of a party on a fact in support of his claim or defence
required that party to prove the fact”. Two reasons for the decision are stated: on the one
hand, such a provision could unnecessarily interfere with the general principle of Art. 19
which leaves the rules of procedure to be determined by the parties or failing such
determination by the arbitral tribunal; on the other hand, certain aspects of burden of proof
might be regarded to be issues of substantive, rather than procedural law, and therefore
subject to provisions of Art. 28 on the determination of the law applicable to
substance.(19.24)"95"

18. The second reason appears to be inconsistent with the Commission's rejection of the
proposal by the Italian delegation to delete the second sentence of paragraph (2)(19.25)
as well as of the solution suggested by the Chairman to maintain the second sentence but
to add “subject to Art. 28”.(19.26) In the language of the Commission Report, in
considering the question of the relationship between the second sentence of paragraph
(2) and Art. 28,

“[I]t was understood that the objective of paragraph (2) was to recognize a discretion of
the arbitral tribunal which would not be affected by the choice of law applicable to the
substance of the dispute.”(19.27) In other words, the lex specialis of Art. 19(2) will prevail
over the lex generalis of Art. 28 in case of conflict between the two.

19. The United States' written observations included two further points, suggesting first
that although that power is already implicit in Art. 19(2), the model law might state
specifically that the arbitral tribunal is free to determine the manner in which witnesses are
examined, unless the parties have agreed otherwise, in a provision modelled on Art. 25(4)
of the UNCITRAL Arbitration Rules and, second, that evidence of witnesses may be
presented in the form of written statements signed by them in a provision modelled after
Art. 25(5) of those Rules.(19.28) A proposal for the adoption of the latter suggestion was
rejected by the Commission “since it was considered better to leave a point of detail like
the one proposed under the aegis of the general principle of Art. 19”.(19.29)

20. While respecting the primacy of the parties' right to bind the arbitral tribunal to their
agreements on procedure, paragraph (2) gives the tribunal the wide discretion which it
needs in order to conduct international proceedings flexibly in a manner that meets the
requirements of the case without fear of running afoul of peculiarities of national
procedural laws.

Article 20 - Place of Arbitration

(*)
1. Art. 20 is an important provision because of its link with Arts. 1(2) and (3)(b)(i), 31(3),
34 and 36(1)(a). Unless the place of arbitration is in a model law State, the Law will not
under any circumstances apply to the arbitration, except for Arts. 8(1), 9, 35 and 36 (Art.
1(2)). If the parties have their places of business in the same state the criterion of
“international” is met when the place of arbitration, if determined in, or pursuant to, the
arbitration agreement is situated outside that State (Art. 1(3)(b)(i)).(20.1) Art. 31(3)
provides that the award shall be deemed to have been made at the place of arbitration as
determined in accordance with Art. 20(1) and Art. 34 on setting aside of the award applies
when the place of arbitration is situated in the model law State to whose Art. 6 court the
application for setting aside is made. Finally, under Art. 36(1)(a) the law of the country
where the award was made (sub para. (i)), the law of the country where the arbitration
took place (sub para. (iv)) and the country in which an award was made (sub para. (v))
may be relevant in determining whether recognition and enforcement will be refused.

Paragraph (1)

2. There was general agreement at the first meeting of the Working Group that the model
law should recognize the parties' freedom to determine the place of arbitration and that it
should contain a supplementary rule empowering the arbitral tribunal to make that
determination where the parties had not agreed on the place of arbitration. It was
suggested that such a provision might be modelled on Art. 16(1) of the UNCITRAL
Arbitration Rules with a possible modification of the last part of that provision.(20.2)"97"

3. At its second meeting, the Working Group adopted a text providing that the parties “are
free to determine, or to authorize a third person or institution to determine”the place of
arbitration and that failing such stipulation the arbitral tribunal shall determine the place of
arbitration, “having regard to the circumstances of the arbitration”. The Working Group did
not accept the addition suggested by the Secretariat after the quoted words of “including
the convenience of the parties”. There were many other circumstances to be taken into
account and it was not appropriate to mention only one of them.(20.3)

4. At its fourth session the Working Group adopted a simplified version, omitting the
statement of the parties' freedom to authorize a third person or institution to determine the
place of arbitration which had become superfluous in view of the adoption of what has
become Art. 2(d).(20.4) In addition, it decided to delete the words “having regard to the
circumstances of the arbitration”, thus removing any guideline for the determination by the
arbitral tribunal of the place of arbitration. This decision was confirmed without dissent at
the fifth and final session of the Working Group. The resulting text read:

“(1) The parties are free to agree on the place of arbitration. Failing such agreement, the
place of arbitration shall be determined by the arbitral tribunal.”(20.5)

5. The written observations of India and AALCC reflected the fear that the freedom of
parties to agree on the place of arbitration might operate against a weaker party (read: a
developing country). India suggested that a possible approach would be to hold the
arbitration in the respondent's country. It was, however, not opposed to the inclusion of
what it considered to be a test of objectivity envisaged by the phrase “the place of
arbitration shall be determined by the arbitral tribunal”.(20.6)
6. AALCC was of the view that the best practical solution for the concern of its member
States that Art. 20 would work to their disadvantage, would be to append a footnote to
paragraph (1) of Art. 20, as follows:

“The Asian-African countries are recommended to include in their agreements the use of
Cairo and Kuala Lumpur Arbitration Centre and any other Centre established by the
Asian-African Legal Consultative Committee, as a venue of arbitration.”(20.7)"98"

7. At the Commission session, the delegate of India, going beyond the Indian written
observations, proposed the addition to the Working Group draft of the phrase “having
regard to the circumstances of the arbitration, including the convenience of the parties”,
language that had been considered and rejected in the process of the Working Group's
work.(20.8) The proposed language, which in the end was adopted by the Commission,
save for the change of “circumstances of the arbitration” to “circumstances of the case”,
evoked varied reactions.

8. A number of delegates gave unqualified support to the Indian proposal,(20.9) being of

the view that it would give sound guidance to the arbitral tribunal and that the convenience
of the parties was very important. Although most of these delegates probably had in mind
that the arbitral tribunal should pay particular attention to the convenience of the weaker
party, the language requires that the convenience of both parties be taken into
account.(20.10) Another aspect that lent a slightly unrealistic air to the debate on
convenience was that paragraph (2) of the Working Group draft (which was adopted
without change by the Commission) made it possible for arbitration proceedings to take
place in their entirety outside the “place of arbitration”.

9. Two delegations were opposed to the Indian proposal.(20.11) Two others could accept
the language proposed to be added by India if it were expressed in a comment separate
from the article itself.(20.12) Others again could go along with the comment only if it
omitted the reference to the convenience of the parties, mention of which would appear to
give it more prominence than other relevant factors, such as enforceability of the award or
whether a State had adopted the model law.(20.13)

10. The Mexican delegate approved the proposal to add a reference to the circumstances
of the arbitration to the text but he was opposed to a "99"reference in Art. 20 to the
convenience of the parties.(20.14)Austria offered a compromise solution under which the
text of the provision would be aligned on the UNCITRAL Arbitration Rules while it would
be mentioned in a comment that the circumstances of the arbitration included the question
of the convenience of the parties.(20.15) This was acceptable to the delegate of the
United States, with whom the Italian delegate agreed, provided the comment made it clear
that not only physical convenience but other relevant factors such as suitability of the law
of the place of arbitration and the effect of the choice of the place of arbitration on
enforceability of the award should be taken into account.(20.16)

11. The Chairman said that there seemed to be considerable support for the Indian
proposal and that unless he heard any objections he would take it that the Commission
approved paragraph (1) of the Working Group draft as amended by that proposal.(20.17)

12. The relevant language of the Commission Report must be read against the
background of the discussions described in the foregoing:
“... the prevailing view was that the model law should refer to the convenience of the
parties as a circumstance of great importance in the determination of the place of
arbitration in international commercial arbitration. It was understood at the same time that
the convenience of the parties should be interpreted as including the above-mentioned
considerations regarding the applicable procedural law and the recognition and
enforcement of awards.”(20.18)

Paragraph (2)

13. At its second session the Working Group considered a Secretariat draft, modelled on
Arts. 16(2) and 16(3) of the UNCITRAL Arbitration Rules, which would have permitted the
arbitral tribunal to hear witnesses and hold meetings for consultation among its members
at any place it deems appropriate and to meet at any such place for the inspection of
goods, other property or documents. The draft provided that the parties should be given
sufficient notice to enable them to be present at such inspection. The Working Group
agreed that the text should make it clear that the same notice should be given to enable
parties to be present at the hearing of witnesses.(20.19)

14. The next draft, considered by the Working Group at its fourth session, "100"departed
from the model of the UNCITRAL Arbitration Rules. It provided simply that the arbitral
tribunal may meet at any place it deems appropriate for hearing witnesses, consultations
among its members and the inspection of goods, other property or documents but it gave
the parties the right to exclude this facility.(20.20) The requirement of notice of hearings
and inspections was moved to a provision dealing with these matters and is found in Art.
24(2) of the Law.

15. The Working Group adopted the policy underlying that draft and considered that the
need for meetings outside the place of arbitration might arise in respect of other types of
meetings as well, such as hearings of experts or “normal hearings with the
parties”.(20.21) Although it was not fully admitted at the time, this envisaged a system in
which the place of arbitration could be reduced to nothing but a legal fiction. Concern was
understandably expressed that such wide powers of the arbitral tribunal might be in
conflict with the expectations of the parties when agreeing to the place of arbitration,
taking into account considerations of convenience and costs. The Secretariat was,
nevertheless, requested to adopt a more general formula than the one of the current draft
in response to which it produced the text which after approval by the Working Group at its
fifth and final session was approved without debate by the plenary Commission.(20.22)

16. The Analytical Commentary notes that the factual significance of the place of
arbitration is that, in principle, the arbitral proceedings would be expected to be held at
that place. However, there may be good reasons for meeting elsewhere, either where a
change of locale is necessary, e.g., for inspection of premises, or where another place
may be more convenient for the persons involved and for keeping down costs. The
Commentary states, finally, that another possible consideration would be to balance the
parties' own expenses by scheduling some of the meetings at the place of one party and
some of the meetings at the place of the other party.(20.23)

17. The freedom given to an arbitral tribunal by paragraph (2) to meet elsewhere than at
the place of arbitration determined pursuant to paragraph (1), unless the parties otherwise
agree, facilitates the task of the arbitral tribunal when it is called upon to determine the
place of arbitration. In weighing “the circumstances of the case” it may determine a place
of arbitration, for example because it is situated in a model law State, even though that
location is inconvenient to one or both of the parties, since it can take account of the
convenience of the parties by scheduling its sessions elsewhere."101"

Article 21 - Commencement of Arbitral Proceedings

(*)

1. The origin of this article was a request by the Working Group at its first session for a
draft provision on the issue of notice of arbitration and its effects on the running of periods
of limitation (prescription periods).(21.1) In a note submitted by the Secretariat in
response to that request for discussion at the Working Group's third session, the
Secretariat suggested that it might be desirable that the commencement of arbitral
proceedings should affect the running of periods of limitation in the same manner as the
commencement of judicial proceedings.(21.2) Since national laws often leave the manner
of commencing arbitral proceedings to the agreement of the parties, including arbitration
rules adopted by them, the model law should deal with this matter and respect the
freedom of the parties but also provide supplementary rules for cases where the parties
failed to agree.

2. The Secretariat pointed out that the recent Convention on the Limitation Period in the
International Sale of Goods (New York, 1974) contained a provision (Art. 14(1)) which
suggested an approach. It read:

“Where the parties have agreed to submit to arbitration, the limitation period shall cease to
run when either party commences arbitral proceedings in the manner provided for in the
arbitration agreement, or by the law applicable to such proceeding.” Art. 14(2) gave a
supplementary rule for the date on which arbitral proceedings were deemed to commence
in the absence of such contractual or statutory provision.

3. The Secretariat therefore suggested similar provisions as a basis for discussion by the
Working Group. The principal rule was expressed as follows:

“The limitation period in respect of a claim submitted to arbitration shall cease to run when
any party commences arbitral proceedings in the manner provided for in the arbitration
agreement,” "102"and, as in the case of the Limitation Convention, was followed by a
supplementary provision covering the situation in the absence of such an agreement.

4. The Working Group considered whether and to what extent the model law should deal
with issues relating to the cessation of the running of limitation periods by the institution of
arbitration proceedings. There was wide support in the Group that the model law should
contain a rule which would define the moment of the commencement of arbitration
proceedings, but it was felt that that rule was sufficient for the model law. Any
consequences of the commencement of arbitration proceedings, such as the cessation of
the running of periods of limitation, were outside the field of arbitral procedure. It was also
felt that a rule on the cessation itself would have to be much more elaborate and settle
many details which, in turn, could easily be in conflict with existing laws on
prescription.(21.3)
5. At its fourth meeting the Working Group considered a draft provision which in
accordance with its decision at the previous meeting was limited to a definition of the time
of commencement of arbitration proceedings. The draft was substantially identical to the
definitive text of Art. 21 save for the addition of a proviso requiring that the request for
arbitration identify the claim.(21.4) The proviso was criticized on the ground that a request
for arbitration necessarily had to identify the claim, and was omitted from the final Working
Group draft(21.5) which was approved without change, although not without discussion,
by the Commission.

6. The Working Group also asked that a general rule on the date when a notice or other
communication is received be included in the model law.(21.6) A provision on this point
was included in the final Working Group draft and subsequently adopted as Art. 3(1) of
the Law.

7. At the Commission session, the Czechoslovak delegate drew attention to his country's
written proposal concerning prescription of claims.(21.7) It contemplated an addition to
Art. 21 that would, first, give a request which referred a dispute to arbitration the same
legal effect as if the request had been filed with a court and, second, would permit a
claimant who had instituted arbitration proceedings prior to the expiration of the period of
limitation of the claim to bring an action in court within a very short period after receipt of a
ruling by an arbitral tribunal rejecting jurisdiction or following receipt of a judgment setting
an award aside, without being met by a plea that the period of limitation had in the
meantime expired.

8. The delegate of the Soviet Union welcomed the idea underlying the Czechoslovak
proposal. If arbitral proceedings began shortly before the "103"expiration of the claimant's
time limit for bringing the claim, and it was only after a long delay that the arbitrators were
found not to have jurisdiction, the claimant might be debarred from taking his claim to a
court because the time limit for doing so had expired. The matter had been regulated in
the 1972 Moscow Convention on Arbitration because of the paucity of national legislations
dealing with it.(21.8)

9. While the proposal was supported by numerous other delegations(21.9) a majority,

while appreciating the merits of the Czechoslovak proposal, was opposed to its adoption.
Among the reasons given were that the Working Group had considered the matter of
prescription and had decided that the model law should not deal with it,(21.10) and there
was no need for the debate on the subject to be repeated in the Commission;(21.11) that
it would involve changes in national statutory limitations which went beyond the functions
of the model law;(21.12) that the issue was too closely connected with substantive
law(21.13) and had better be left to substantive law;(21.14) that the Commission would be
exceeding its mandate and venturing in an area of big differences among legal
systems;(21.15) that it could cause problems with domestic laws of some countries(21.16)
and that it would be very difficult to establish uniform international practice in such a
complex matter as prescription.(21.17) Several speakers acknowledged the importance of
the subject matter and suggested that it be mentioned in the Commission's report and that
States adopting the model law might want to take the ideas underlying the Czechoslovak
proposal under consideration,(21.18) and this was done.(21.19) The Czechoslovak
delegate withdrew his delegation's proposal for Art. 21. He hoped that UNCITRAL might
find time to resume discussion of the matter at a later stage.(21.20)
10. The Commission also heard another proposal, which was advanced by Japan in its
written observations. Based upon its law and what it presumed to be the law of other
countries, it proposed an addition to Art. 21 to the effect that in the case of arbitration
administered by an arbitration institution, arbitration proceedings commence on the date
on which a request for "104"arbitration is received by the institution.(21.21) The proposal
ran into strong opposition and was withdrawn.(21.22) It was unacceptable as a mandatory
provision, but where it is desired that receipt by the institution rather than the respondent
be the element which determines the time of commencement of the proceedings this can
be achieved by a provision to that effect in arbitration rules. Art. 21 applies by its own
terms unless otherwise agreed by the parties and the parties are thus entirely free to
determine their own regime for determining the time when a proceeding is deemed to
commence.

Article 22 - Language

(*)

1. There is an evident need for a provision on language in a law on international

commercial arbitration. It is also evident that the place of arbitration is irrelevant as such
for the choice of language, and that the determination of the procedural language or
languages must meet the overriding equal treatment standard of Art. 18, giving each party
a full opportunity to present its case, while paying due regard to the practical issues of
efficiency (including considerations of cost) and in particular of communication, not only
between the parties but between them and the arbitrators. It may well be that the
members of a three-member arbitral tribunal have three different native languages which
added to a possible two different party languages (and assuming that the parties' counsel
speak their clients' languages) makes for five different languages. The problem may,
"105"however, be greatly reduced in practice when the dramatis personae are competent
in more than one language.

2. The Working Group quickly agreed on the principle that the parties and, in the absence
of the parties, the arbitrators should be free to determine the language or languages of the
proceedings. It also agreed that there was no need for two possible further provisions
both of which were in a way self-evident, namely a suggestion to the parties to agree on a
single procedural language, and an express statement that the arbitrators must have
regard to the circumstances of the case. It was, on the other hand, deemed desirable to
make clear in the Law that the determination of a language may relate to all or only
certain specified documents or communications.(22.1) This was done in the first draft
considered by the Working Group at its fourth session which provided in its first paragraph
that the choice of language would apply to the entire proceeding (including the award),
with the sole exception (stated in the second paragraph) of documentary evidence which
need be presented in translation only when the arbitral tribunal so orders.(22.2)

3. After having made minor changes, the Working Group at its fifth and final session
adopted Art. 22 in the form in which it appears in the Law. At both sessions of the Working
Group concern was expressed that the provisions in the last sentence of paragraph (1)
and in paragraph (2) were too detailed for the model law but the prevailing view, as
recorded in the report of the Working Group on its final session, was “that those
provisions were useful in view of the great practical importance of the question of
language and in that they drew the attention of the parties to different instances in which
the agreed or the determined language could affect their position in the
proceedings”.(22.3) As will be seen from the written observations and the discussions in
the Commission, a number of participants wanted Art. 22 to be even more specific.

4. In its written observations and through its delegate at the Commission session, the
Federal Republic of Germany proposed that Art. 22 should provide that when called upon
to determine the procedural language or languages the arbitral tribunal should be required
to respect what was then Art. 19(3), which provided that the parties must have a full
opportunity to present their case.(22.4) The argument that the reference to Art. 19(3) was
unnecessary was strengthened when the Commission decided to make a "106"separate
Art. 18 of the third paragraph and placed it at the head of Chapter V, Conduct of
Proceedings. The Commission Report leaves no doubt that the reason why the proposal
was not accepted was that it was unnecessary, since the arbitral tribunal will be required
to observe the standard of Art. 18.(22.5)

5. In the Analytical Commentary, the Secretariat submitted that Art. 18 (Art. 19(3) at the
time) did not compel, on the one hand, that the language of each party must be adopted
as a procedural language, nor permit, on the other hand, that a party would be denied the
right to use his own language when required to give him a full opportunity to present his
case. However, if his language was not agreed or determined to be a procedural
language, for example, because the parties had used only one language in their business
dealings, he would have to pay for the translation or interpretation into the language of the
proceedings.(22.6)

6. ICC(22.7) and ICCA(22.8) thought that the principle acknowledged in the Analytical
Commentary should be expressed in Art. 22 but the Commission thought that this was
unnecessary, thus confirming the Secretariat's interpretation.

7. Among other suggestions which were regarded as too rigid and were therefore not
accepted, the Iraqi delegate,(22.9) supported by the delegate of Algeria,(22.10) thought
that if the arbitral tribunal had chosen a language of one party as the language of the
proceedings, the costs of translation into the other party's language should be included in
overall costs; AALCC proposed that where a party's language is not one of those chosen
by the arbitral tribunal he should have the right to have translations into his own language
at his own expense;(22.11) and the Egyptian delegate wanted paragraph (2) to be
amended so as to make clear that the arbitral tribunal might order documents to be
translated into only one of two procedural languages(22.12) which was acceptable to the
United States delegate provided the arbitrators were left the discretion to require
translation into more than one language.(22.13)

8. Both the Australian and United Kingdom delegates strongly opposed any change in
Art. 22, feeling that parties should put their trust in the arbitrators who were bound by the
essential requirement that parties should be given a full opportunity to present their cases.
It was not possible to "107"foresee every circumstance and to cater for every possible
difficulty.(22.14) They were strongly supported by the observer for the Chartered Institute
of Arbitrators. If the arbitrators were not trusted, the procedure itself was not trusted and
would become an exercise in futility. It was impossible to legislate for all situations, nor
could there be any universal solution.(22.15)

9. The discussions in the Commission tended to prove those members of the Working
Group who had thought that Art. 22 was too detailed right. In retrospect, the most practical
proposal for an amended article was the Austrian suggestion in its written observations,
but not repeated at the Commission session, to delete the third sentence of Art.
22.(22.16) Experienced arbitrators will have no difficulty in resolving language questions
with full respect for Art. 18 while paying proper attention to the practical requirements of
an efficient proceeding. They may have a continuing task since developments in the
course of proceedings may raise new language issues. In my submission this is not
inconsistent with Art. 22 of the Law.

Article 23 - Statements of Claim and Defence

(*)

Article as a Whole

1. The party autonomy in procedural matters recognized by Art. 19(1) of the Law and the
broad powers conferred on the arbitral tribunal by Art. 19(2) in respect of the conduct of
the proceedings in the absence of "108"agreement of the parties, and subject in particular
to the equal treatment requirement of Art. 18, tend to reduce the relative importance of a
provision on statements of claim and defence, and raise a legitimate question as to
whether such a provision should be mandatory. As will be seen, that question was
discussed at length in the Commission and recourse to the Summary Records and the
Report of the Commission is necessary for an understanding of the divergent views which
were sought to be accommodated in the final text of the first sentence of Art. 23(1), and
as an aid in interpreting its meaning.

Paragraph (1)

2. The Working Group considered the subject for the first time at its third session on the
basis of a Secretariat note.(23.1) The majority view was that the model law should contain
a rule on the initial pleadings of the parties and that such a rule should only deal with
those elements of the initial pleadings which were essential for defining the dispute,
without adding procedural rules along the lines of Arts. 16-20 of the UNCITRAL Arbitration
Rules. The Working Group deferred a decision on whether the rule should be mandatory
or non-mandatory.(23.2)

3. That issue was neither resolved nor discussed when the Working Group approved
successive drafts resulting in the adoption of a first sentence of a paragraph identical to
the final text save for the words “unless the parties have otherwise agreed as to the
required elements of such statements”and of a second sentence, of which the opening
words read “The parties may annex. . .” rather than “The parties may submit. . .”.

4. Recognizing that there was a question whether, and if so to what extent, the provision
should be mandatory, the Secretariat commented as follows on the Working Group draft:

“The required contents of the initial statement of claim and of the respondent's reply may
be regarded as so basic and necessary as to conform with all established arbitration
systems and rules.(23.3)

Nevertheless, it is submitted that the provision should be non-mandatory, at least as

regards its details. For example, arbitration rules may describe these essential elements
in slightly different form or may require their inclusion already in the initial request for
arbitration.”(23.4) The Commentary did not suggest how the partially mandatory character
might be expressed."109"

5. Two governments presented written observations. Italy thought that the periods of time
for the submission of the claim and defence should be stated in Art. 23 rather than leaving
their determination to the parties or the arbitrators,(23.5) but the matter was not raised at
the session of the Commission.

6. The United States addressed the issue of the mandatory or non-mandatory character
of the provision and proposed that it be made clear that paragraph (1) was not mandatory,
in order to avoid difficulties for parties who utilize arbitration rules that were not entirely
consistent with the Working Group draft.(23.6)

7. At the Commission session, the delegate of the United Kingdom, agreeing with the
written observations of the United States, took the position that the form of claim and
defence should be subject to agreement of the parties. There were cases in which written
pleadings were inappropriate.(23.7) He was followed by the observer for the Chartered
Institute of Arbitrators who stated that while the first part of Art. 23 was cast in mandatory
form, the mechanics of arbitration should be left to the parties concerned who could adopt
suitable institutional rules to fit the case(23.8) and by the observer of the International Bar
Association (IBA), who agreed with the previous speakers and felt that where the parties
so agreed there was no necessity for formal statements of claim and defence.(23.9)

8. The delegate of France, disagreeing with the previous speakers, stated that Art. 23
embodied the basic principle of providing the parties with the opportunity of stating their
respective cases. There could be flexibility in the manner of their presentation but the
principle of the right of the defence required that the arbitrators should be seized of all the
facts involved in the dispute before them. He could therefore not agree to making the first
sentence of paragraph (1) subject to the agreement of the parties.(23.10)

9. After a number of other delegates had expressed support for either the United
Kingdom or the French position, the delegate of the Soviet Union stated that he agreed
with the French position that it would be illogical to place words like “unless otherwise
agreed by the parties” at the beginning of the first sentence of paragraph (1). He believed,
on the other hand, that the concerns expressed by many delegations, including those of
the United States and the United Kingdom, should be taken into account. He therefore
"110"proposed, as a compromise formula, that the words “unless the parties have
otherwise agreed on the contents and the form of such statements” be added at the end
of the first sentence.(23.11) After representatives of Canada, the United Kingdom, France,
Kenya, the Philippines, and the International Bar Association(23.12) had expressed their
acceptance of the proposal and in the absence of objection, the Commission decided to
approve paragraph (1) as amended by the representative of the Soviet Union,(23.13)
subject to review of the text by the Drafting Group.

10. The Commission Report contains the following account and interpretation of the
Commission's decision:

“The Commission was agreed that paragraph (1) expressed a basic principle of arbitral
procedure from which the parties should not be able to derogate but that the specific rules
of procedure in respect of the statements of claim and defence should be subject to the
agreement of the parties. It was pointed out that the procedure provided in paragraph (1)
was not entirely consistent with the procedure in some institutional arbitration rules. The
Commission decided to express the distinction between the mandatory nature of the
principle expressed in paragraph (1) and the non-mandatory nature of the procedural
rules by adding to the end of the first sentence words along the lines of 'unless the parties
have otherwise agreed on the contents and form of such statements.'”(23.14)

11. The additional language was thus intended to convey that the parties are required to
submit statements of claim and defence, but that the content and form of these
statements may differ from what the first sentence prescribes if the parties so agree. The
Commission noted that the use in the Working Group draft of the words “The parties may
annex ...” in the second sentence of paragraph (1) might be interpreted to require a
statement of claim or defence always to be in writing, but that the Commission was in
agreement “that that was not the intended interpretation”.(23.15) The Drafting Group
substituted “submit” for “annex”.

12. It is a fair comment that if the Commission had accepted the Secretariat's suggestion
to insert in the opening phrase of paragraph (1) the words “and in the manner” after the
words “period of time”, after which it would have read “within the period of time and in the
manner agreed by the parties, etc”,(23.16) much of the discussion and its interpretation in
the Commission Report could have been avoided and a much clearer text would have
resulted."111"

Paragraph (2)

13. In the form in which this paragraph, which by its own terms is non-mandatory, was
adopted by the Working Group, the basis on which the arbitral tribunal might consider it
inappropriate to allow a party to amend its claim or defence was not limited, as in the final
text, to the delay in making the request, but included “prejudice to the other party or any
other circumstances”.(23.17) The Analytical Commentary states that the paragraph leaves
it to the discretion of the arbitral tribunal to determine, on the basis of certain criteria,
whether a party may be denied permission to amend or supplement its statement of claim
or defence. The Secretariat added that in respect of one important point, which is not
expressly mentioned in the text but is self-evident, the arbitral tribunal has no discretion at
all: the amendment must not exceed the scope of the arbitration agreement.(23.18) This
does not mean that amendments exceeding the scope of the initial arbitration agreement
are prohibited, but that they may be allowed only if the other party agrees, that is to say, in
effect agrees to broadening the scope of that agreement.

14. The parties may derogate from the non-mandatory paragraph (2) and provide, for
example, that amendments are subject to certain other specified limits, or are prohibited,
or on the contrary are allowed as a matter of right.(23.19)

15. At the Commission session, sharply divergent views were expressed as to the power
of the arbitral tribunal to refuse to allow(23.20) an amendment of a statement of claim or
defence.

16. At one extreme, five delegations were in favour of deleting all limitations on the
parties' right to submit amendments.(23.21) In the opinion of the observer for Bulgaria the
discretion granted to arbitrators was not compatible with Art. 19(3) (Art. 18 of the Law).
The delegate of the Soviet Union thought that paragraph (2) gave the arbitrators too much
freedom. The words “or any other circumstances” should in any event be deleted. Since
any amendment submitted by a party would be presumably to its advantage and therefore
to the prejudice of the other party, that restriction should be also deleted. It would be more
just to grant the parties the right to submit amendments or supplements at any time until
the arbitrators announced the "112"termination of proceedings. The representatives of
Bulgaria and the German Democratic Republic stated that the award of additional costs
was a proper remedy against dilatory tactics.

17. At the other extreme, five delegations were strongly in favour of maintaining the
UNCITRAL Arbitration Rules language adopted by the Working Group.(23.22) In the
opinion of the United States delegate, deletion of the limitations would leave the arbitral
tribunal powerless to prevent abuses of an unlimited right. The delegate of the United
Kingdom said that while the Working Group had in the opinion of his delegation gone into
excessive detail in order to maintain a balance between the rights of claimants and
defendants, its text was a fair compromise and should be maintained.

18. Five other delegations were either in favour of, or willing to accept, deletion of the
words “or any other circumstances” but approved of the remainder of the Working Group
draft.(23.23)

19. An intermediate solution was proposed by the delegate of France. Arbitration was
above all a matter for the parties and they should be able to submit amendments or
supplements when this helped to clarify the subject matter of the dispute. He was
therefore opposed to limiting that right. He proposed the deletion of the reference to
prejudice to the other party, which was already covered by Art. 19(3) (Art. 18 of the Law)
and dropping the formula “or any other circumstances” which was far too broad.(23.24)
Delay in submitting an amendment or supplement would then, along with non-observance
of the equality of the parties, be the sole bases for disallowing the amendment or
supplement.

20. The French proposal attracted wide support(23.25) and the Commission agreed to
the suggestion of the Chairman to accept that proposal, which would be a balanced
solution.(23.26)

21. Allowance as well as disallowance of amendments or supplements may give rise to

both direct and indirect attacks on an eventual award. If the arbitral tribunal allows a party
(whether it be the claimant or the respondent) to present an amendment or supplement
over the objections of the other party, that party's recourse would be to attack the eventual
award on "113"the ground of violation of Art. 18 or 23(2). The same recourse would be
available to a party whose amendment or supplement was refused. If the award was
made in a model law State, the complaining party may apply to the Art. 6 court to have it
set aside on those grounds under Art. 34. It may also resist recognition or enforcement of
the award irrespective of the country where it was made, under Art. 36(1)(a)(iii), alleging
that the amendment or supplement involved a subject outside the scope of the arbitration
agreement. This ground could also be raised in setting aside proceedings in a model law
State, as provided in Art. 34(2)(a)(iii).
Article 24 - Hearings and Written Proceedings

(*)

1. Art. 24 deals with three different aspects of arbitral proceedings. Paragraph (1) is
concerned with the mode of the proceedings, written, oral or both. Paragraph (2)
prescribes advance notice to the parties of any hearing and of certain meetings of the
arbitral tribunal, while paragraph (3) deals with the communication by the parties and the
tribunal of documents and information.

Paragraph (1)

2. It was common ground that an oral hearing is an important element of arbitral

proceedings, whether for the purpose of presenting evidence or for "114"advancing the
legal and factual arguments in support of a party's case. This had been recognized in Art.
15(2) of the UNCITRAL Arbitration Rules in the following terms:

“If either party so requests at any stage of the proceedings, the arbitral tribunal shall hold
hearings for the presentation of evidence by witnesses, including expert witnesses, or for
oral argument. In the absence of such a request, the arbitral tribunal shall decide whether
to hold such hearings or whether the proceedings shall be conducted on the basis of
documents and other materials.”

3. The Working Group agreed at its first session that the model law should contain
procedural rules along the lines of that Arbitration Rule and requested the Secretariat to
prepare a draft provision for its consideration.(24.1) When the Working Group discussed
the Secretariat draft, which was identical with the Arbitration Rule, it agreed that the
parties should have the right to modify the provision calling for a hearing at the request of
a party. It also expressed the view that the provision allowing a request to be made at any
time was too broad and that this right should be limited “in the interest of expeditious
proceedings” (i.e., in order to avoid delay or obstruction) so as to be available at the
appropriate stage of the proceedings.(24.2)

4. The draft presented by the Secretariat at the Working Group's fourth meeting,
reversing the order of the earlier draft based on UNCITRAL Arbitration Rule 15(2), started
out with the general rule that “Failing agreement by the parties”, (changed by the meeting
to “Subject to any contrary agreement by the parties”), the arbitral tribunal was to decide
the mode of the proceedings. This was followed by the first sentence of the earlier draft
introduced by “However” and amended, in accordance with the decision of the Working
Group, to provide that the arbitral tribunal shall hold hearings “at the appropriate stage of
the proceedings” and to delete the statement that a party may make the request “at any
stage of the proceedings”. The Working Group was also asked to consider, but did not
accept, language limiting oral argument to argument on the substance of the dispute, thus
excluding procedural issues.(24.3)

5. When the resulting text, which was close in substance to the final text of Art. 24(1),
was considered by the Working Group at its last session, the question of policy was raised
whether a party had the right to request a hearing even if the parties had agreed on
written proceedings exclusively, or only in the absence of such agreement, when it was
for the arbitral tribunal to decide on the mode of proceedings. The prevailing view was that
the right of a party to request a hearing was of such importance that the parties should not
be allowed to exclude it by agreement. This led to a second "115"question, on which the
proponents of the prevailing view were divided, namely, whether the arbitral tribunal
should be required to comply with the party's request, or whether it should have discretion
in that regard. After discussion, the Working Group decided that a certain control by the
arbitral tribunal was desirable and the proper wording for the provision should therefore be
that the arbitral tribunal “may”, rather than “shall”, hold hearings.(24.4)

6. The text approved by the Working Group was as follows:

(1) “Subject to any contrary agreement by the

parties, the arbitral tribunal shall decide whether
to hold oral hearings or whether the
proceedings shall be conducted on the basis of
documents and other materials.
(2) Notwithstanding the provisions of paragraph (1)
of this article, if a party so requests, the arbitral
tribunal may, at any appropriate stage of the
proceedings, hold hearings for the presentation
of evidence or for oral argument.”

7. The Analytical Commentary pointed out that while the discussions in the Working
Group had focused on the case in which the parties had agreed to exclude oral hearings,
the language of paragraph (2) of the Working Group draft applied as well to the more
frequent case in which the parties have not made any stipulation on the mode of the
proceedings. This meant that a party would have an unrestricted right to a hearing only if
the parties had agreed that there shall be an opportunity for oral argument or a hearing for
the presentation of evidence. The Secretariat submitted that this decision, which
appeared to be the result of a legislative oversight, should be reconsidered since it might
be regarded as not being consistent with mandatory Art. 19(3) (Art. 18 of the Law) which
requires that each party shall be given a full opportunity of presenting its case.(24.5)

8. The Secretariat view was endorsed by the United Kingdom in its written observations:
“In the absence of agreement between the parties, one party should have the right to
require that oral hearings be held”.(24.6)Canada wanted to go even further. Even if the
parties had agreed not to have oral hearings, a party should still be able subsequently to
require a hearing in the interest of giving him a full and fair opportunity to present his
case. Moreover, the arbitral tribunal should always have the power to order a hearing on
its own initiative if it feels such a hearing is necessary to get out all the evidence to reach
a proper decision in the dispute.(24.7)Poland and the "116"United States proposed that
the Working Group language be replaced by a single paragraph based largely on Art.
15(2) of the UNCITRAL Arbitration Rules,(24.8) but giving the arbitral tribunal control of
the stage of the proceedings at which oral hearings would be ordered.

9. The German Democratic Republic,nd IBA proposed that the wording of the Working
Group draft be reconsidered(24.9) and Sweden suggested that the word “may” should be
replaced by “shall”.(24.10) The Soviet Union also considered that at least in the case
where parties have not agreed after the dispute has arisen on proceedings on the basis of
documents only, the arbitral tribunal must at the request of either party order
hearings.(24.11)

10. At the Commission session, general support was expressed for the United States
proposal as well as for amendment of the Working Group text by substituting “shall” for
“may”.(24.12)

11. At the close of the discussion, the Chairman said that in the absence of objection he
would take it that the Commission wished to transmit the Working Group text to the
Drafting Group with a request that it incorporate the following ideas:

(i) that the parties should be free to decide

whether an oral hearing should take place
(ii) that if not expressly prohibited by the parties,
either party had a right to an oral hearing upon
request
(iii) that if the parties took no decision on the
matter and neither applied for an oral hearing,
the arbitral tribunal could decide how the
proceedings were to be conducted.

(24.13)

12. Point (ii) is explicitly dealt with in the text of Art. 24, paragraph (1). Point (iii) is not
reflected in the text of Art. 24, but its Report notes the agreement of the Commission that
the arbitral tribunal has that power.(24.14) This follows from Art. 19(2) which gives the
arbitral tribunal wide powers to “conduct the arbitration in such manner as it considers
appropriate”, subject to the agreement of the parties and the provisions of the Law,
particularly Art. 18. The arbitral tribunal is therefore free to take all procedural decisions
which are not dealt with either by the Law or the agreement of the parties. It is also free to
decide that the proceedings will be "117"conducted partly on the basis of oral hearings
and partly on the basis of documents(24.15)

13. Point (i) is reflected generally in the opening clause of the first sentence of paragraph
(1) “Subject to any contrary agreement by the parties” and specifically in its second
sentence which entitles a party to an oral hearing at its request “unless the parties have
agreed that no hearings shall be held”. It must be noted, however, and was so noted by
the Commission, taat Art. 18 of the Law may in exceptional circumstances provide a
compelling reason for holding an oral hearing. The Report then goes on to say:

“It was understood that parties who had earlier agreed that no hearings should be held
were not precluded from later modifying their agreement, and thus to allow a party to
request oral hearings.”(24.16)

14. I submit that this formulation is the result of an oversight. The right of the parties to
determine the mode of the proceedings is a continuing one(24.17) and it thus goes
without saying that they can change their agreement. The real issue to be addressed was
whether in the exceptional circumstances referred to the arbitral tribunal may order an oral
hearing at the request of one of the parties. In my submission, the arbitral tribunal does
under Arts. 34(2)(a)(ii) and 36(1)(a)(ii) for failure to respect Art. 18. One would expect, or
course, that the arbitral tribunal would give the other party an opportunity to express its
views, just as it would consult the parties before exercising its rights under the first
sentence of paragraph (1).

Paragraph (2)

15. The second half of this provision does not strictly relate to the subject of hearings and
written proceedings, but rather to Art. 20(2) which deals with meetings of the arbitral
tribunal “for inspection of goods, other property or documents”. It assures that the parties
will have sufficient advance notice of any such meeting."118"

Paragraph (3)

16. The Commission decided that while all material supplied to the arbitral tribunal by one
party, regardless of its nature, had to be communicated to the other party, it should be
made clear in the second sentence that documents such as research material prepared or
collected by the arbitral tribunal did not have to be communicated to the parties. To that
end the reference in the Working Group draft to “any expert report or other document”
was changed to “any expert report or evidentiary document” (emphasis added).(24.18)

Article 25 - Default of a Party

(*)

Article as a Whole

1. Except for the words “in itself” which were inserted by the Commission in
subparagraph (b) and the change from the passive to the active mode in subparagraph
(a), the text of this non-mandatory provision is identical with the Working Group draft.

Art. 25 defines the consequences of default, that is, failure to communicate a statement of
claim or defence, to appear at a hearing or to produce documentary evidence, “without
showing sufficient cause”. At the Commission "119"session it was agreed that these
words implied “to the arbitrators” and that the Commission's report should make this
clear.(25.1)

2. The Australian delegate said that the arbitral tribunal should have a clear power to
order an extension in appropriate circumstances. He proposed the deletion of the words
“without showing sufficient cause” and the insertion before “if” in the opening clause of “or
otherwise ordered by the arbitral tribunal”.(25.2) The French delegate said that the phrase
“without showing sufficient cause” already gave the arbitral tribunal sufficient discretionary
power(25.3) and the observer for ICCA understood the provision to mean that the arbitral
tribunal had the discretion, for example, to grant the respondent a period of grace if his
failure to serve its papers on time was not a wilful act and caused no undue delay in the
proceedings.(25.4) The Chairman suggested that the Commission's report should make it
clear that the intention was to give the arbitrators a degree of discretion and
flexibility.(25.5)

Subparagraph (a)
3. This subparagraph did not give rise to discussion at the Commission session. A draft
examined by the Working Group at its second session, but not accepted by it, would have
imposed on the defaulting claimant the sanction of having to bear the cost of the
arbitration.(25.6)

Subparagraph (b)

4. While the consequence of the claimant's default is termination of the arbitration, the
respondent's default does not frustrate the arbitration proceedings. The arbitral tribunal is
obliged to continue the proceedings “without treating such failure in itself as an admission
of the claimant's "120"allegations”.(25.7) The Analytical Commentary states that this rule
“seems useful in view of the fact that under many national laws on civil procedure, default
of the defendant in court proceedings is treated as an admission of the claimant's
allegations”.(25.8) It adds that that rule “does not mean that the arbitral tribunal would
have no discretion as to how to assess the failure and would be bound to treat it as a full
denial of the claim”.(25.9)

5. It was on that very point that the Federal Republic of Germany sought to be reassured.
It had expressed concern in its written observations on the Working Group draft that
subparagraph (b) would be interpreted to mean that the respondent's silence would not
result in any disadvantage to it. It should be left to the arbitral tribunal to draw its own
conclusions.(25.10) This concern was restated by its delegate(25.11) at the Commission
session and supported by the French delegate,(25.12) whereupon the Commission
agreed that subparagraph (b) should not be interpreted as meaning that the arbitral
tribunal would have not discretion as to how to assess the cause of the respondent's
failure to communicate the statement of defence as required and that it would be
precluded from drawing inferences from such failure. The Commission agreed that the
correct interpretation should be made clear in the text by using an expression such as
“without treating such failure in itself...”.(25.13)

Subparagraph (c)

6. The effect of this provision in practical terms is that the arbitral tribunal has the power
not to admit, or to disregard, documentary evidence presented after the time limit. The
Analytical Commentary states that the arbitral tribunal is not precluded from drawing
inferences from a party's failure to produce any evidence as requested.(25.14) The written
observations of the Soviet Union,(25.15) restated by its delegate at the Commission
session, expressed the view that it would not be justified to give the arbitral tribunal full
discretion in these cases, and that subparagraph (c) should be amended to provide that
the arbitral tribunal would be obliged to continue the arbitral "121"proceedings if the party
not in default so requested.(25.16) A number of delegates were opposed to limiting the
discretionary powers of the arbitral tribunal.(25.17) It was also said that the amendment
proposed by the Soviet Union was in contradiction with the proviso “without showing
sufficient cause”.(25.18) The Chairman did not agree that there was a contradiction since
the proviso applied to all three subparagraphs. The arbitral tribunal would therefore be
bound to comply with a request for continuation of the proceedings under subparagraph
(c) only if the defaulting party had not shown sufficient cause.(25.19) However, since the
delegate of the Soviet Union had said that he would not press its proposal(25.20) the
Commission decided to retain the existing text of subparagraph (c).(25.21)
7. Unlike subparagraphs (a) and (b), this subparagraph does not state time limits either
directly or by reference to another provision. The Analytical Commentary states that
“failure to appear at a hearing” presupposes that the party was given sufficient advance
notice as required by Art. 24(3) and that “failure to produce documentary evidence”
presupposes that the party was requested to do so within a specified period of time which
was reasonable in accordance with the fundamental principles of Art. 19(3) (Art. 18 of the
Law).(25.22)

8. At the Commission session, the delegate from Tanzania said that it would be helpful to
insert the words “within reasonable time” after “documentary evidence”.(25.23) The
Hungarian delegate commented that the text implied that the time limit for the production
of documents would be set by the arbitral tribunal; it could be assumed that it would be a
reasonable one.(25.24) The Chairman suggested that the report should make it clear that
documentary evidence was to be produced within the period set by the arbitral tribunal or,
if no period had been set, within a reasonable time.(25.25)"122"

Article 26 - Expert Appointed by Arbitral Tribunal

(*)

Article as a Whole

1. Except for the substitution in paragraph (2) of the words “put questions to him” for
“interrogate him”, the text of this non-mandatory provision is identical with the
corresponding provision of the Working Group draft. The article is described in the
Commission Report as a compromise between the common law system of adjudication in
which appointment of experts by the court or tribunal is not usual and the civil law system
in which such appointments are common.(26.1)

Paragraph (1)

2. At the first session of the Working Group, there was general agreement that the arbitral
tribunal should have the power to appoint experts even if the parties had not expressly
authorized it to do so. It then moved to the question whether that power could be excluded
by stipulation of the parties. Opinion was divided, as it remained throughout the model law
exercise, but the prevailing view was that parties could exclude the power of the arbitral
tribunal to appoint experts and that they could do so at any stage. The Secretariat was
requested to prepare a draft provision.(26.2)"123"

3. A draft provision on conduct of the arbitration presented to the Working Group at its
second session contained a tentative suggestion to the effect that “[T]he parties may not
preclude the arbitral tribunal from calling an expert if it deems that necessary for deciding
the dispute”.(26.3) The suggestion was not well received. It was felt that such a provision
unduly restricted the principle of freedom of the parties.(26.4)

4. At the Working Group's fourth session it considered a draft which tentatively suggested
that the power of the arbitral tribunal to appoint experts should be qualified by the words
“Unless otherwise agreed by the parties”.(26.5) The Working Group adopted that
language but suggested that any contrary agreement had to be concluded before the
appointment of the arbitrators so that any arbitrator when accepting his mandate would be
award of the restriction of his power to appoint experts.(26.6)

5. Carrying out the apparent wishes of the Working Group, the Secretariat proposed a
text in which the power of the arbitral tribunal to appoint experts was qualified by the
clause “Unless otherwise agreed by the parties before the appointment of the first
arbitrator...” (emphasis added).(26.7) But this time, while there was some support for
retaining the italicized words, the prevailing view was that the freedom of the parties to
restrict that power of the arbitral tribunal was paramount and should not be subject to
such a time limit.(26.8)

6. In its comment on the Working Group draft, the Secretariat recognizes that the arbitral
tribunal may have to decide the dispute without obtaining the necessary expertise which it
itself lacks and that “not everyone would like to act as arbitrator under such conditions”.
Among the “practical considerations” underlying the decision giving the parties the right to
exclude the arbitral tribunal's power to appoint experts, and to do so at any time during the
proceedings, the Analytical Commentary mentions significantly the consideration “that the
parties are wise enough not to put their arbitrators in a dilemma of the type described
above”.(26.9) This confirms that the debate was essentially concerned with principle.
Additional confirmation is found in the discussion at the Commission session.

7. The delegate from the Soviet Union said that the parties should decide before the
setting up of the arbitral tribunal whether they wished to allow the appointment of experts
and he proposed an amendment to that effect.(26.10) An arbitrator might not consider
himself competent in a certain area and might wish to rely on the advice of an expert. If
the parties did not "124"wish the arbitrator to appoint an expert, he could resign but the
resulting delay would not be in the parties' best interest. He was supported by the
observer for ICCA, who agreed that arbitrators should know in advance whether they
would have the right to obtain the assistance of an expert.(26.11) The delegate from the
Philippines went further and proposed to delete the words “Unless otherwise agreed by
the parties” entirely.(26.12)

8. A clear majority was in favour of leaving the provision unchanged.(26.13) The United
Kingdom delegate, who preferred the existing text of paragraph (1), said that he himself
felt that in most cases the parties would avoid a decision which might force the resignation
of an arbitrator(26.14) and the observer of the Chartered Institute of Arbitrators stated that
in practice parties rarely agreed that experts should not be appointed.(26.15)

9. The Commission Report states the arguments supporting the proposal of the Soviet
Union and the prevailing view that the parties should always have the right to decide that
the arbitral tribunal was not free to appoint experts. Among the reasons in support of the
latter it mentions that although the parties may be expected to have confidence in the
arbitrators they have named, they might not have confidence in the expert or experts
whom the arbitral tribunal proposed to appoint. If the joint refusal of the parties to permit
the arbitral tribunal to appoint an expert was unacceptable to the arbitrators, they were
free to resign. If such resignation was a likely result, it could be assumed that the parties
would carefully consider (or reconsider) their decision.(26.16) I submit that the practical
effect of the provision is likely to be very small.

Paragraph (2)
10. In its written observations Cyprus felt that the arbitral tribunal should have the right to
put questions to the expert it appointed regardless of any agreement to the contrary of the
parties.(26.17) The proposal was not discussed at the Commission session, but it seems
to me that the arbitral tribunal has that right under the existing text. The observer of Iran
said that this provision which stated that the parties have the opportunity to put questions
to the expert should make clear that such examination could not be done directly by the
parties but only through the arbitral tribunal.(26.18) The matter "125"was not discussed by
the Commission. Paragraph (2) does not go into procedural detail, leaving this to be
determined by the arbitral tribunal pursuant to Art. 19. It is my view that “opportunity to put
questions” to the expert is compatible both with direct examination by the parties and
examination through the arbitral tribunal.

Article 27 - Court Assistance in Taking Evidence

(*)

1. The principal questions raised by the subject matter of this provision were whether the
model law should deal with court assistance in taking evidence at all, and if it did whether
it could appropriately include court assistance in foreign arbitrations and requests in
domestic arbitrations addressed to foreign courts. These questions as well as a number of
questions related to implementation were debated at length by the Working Group on the
basis of a Secretariat Note(27.1) and successive drafts.(27.2) While there is no need to
trace the history of those debates in any detail, it will be useful for an understanding of the
considerations that ultimately led to the adoption of the short text of Art. 27 to pass the
principal points of the Secretariat's analysis in review.

2. Under the Law and most national laws, the arbitral tribunal lacks the power to compel
the appearance of a witness, the production of a document or access to goods or a
property for inspection. This may block the arbitral proceedings. Some national laws
expressly provide that the arbitral tribunal may request assistance from the court in taking
evidence. There was general agreement in the Working Group that such court assistance
could contribute to the efficient functioning of international commercial
arbitration.(27.3)"126"

3. One difficulty indicated in the Working Group was that the procedures for such court
assistance formed an integral part of the procedural laws of the legal system concerned,
which varied considerably from one system to another. This difficulty might be lessened if
the model law minimized its impact on the existing national rules of procedure. The model
law could, among other things, provide that court assistance in taking evidence would be
given in accordance with the rules which were applicable for similar assistance among the
courts.(27.4)

4. A special difficulty arises where the court assistance is required in a country other than
the one where the arbitration takes place, because the model law, being a national law,
cannot secure court assistance abroad.(27.5) Conversely, the model law can provide for
court assistance to foreign arbitral tribunals, by requiring a court to treat a request for
assistance from a foreign arbitral tribunal in the same way as a similar request from
foreign courts. However, this would provide a solution only where the court in question
would be bound to execute such requests pursuant to a bilateral or multilateral
treaty.(27.6)
5. One could go further and provide that courts would execute requests for assistance
from foreign arbitral tribunals regardless of their obligation to give such assistance to
foreign courts. States were unlikely to accept such an obligation in the absence of a
reciprocity, but that principle had its own difficulties in application.(27.7)

6. Other points concerned the question whether assistance should be provided only upon
request by the arbitral tribunal, rather than directly by a party, in order to minimize the
possibility of abuse of the arbitral process;(27.8) the question whether the model law
should provide that the court may refuse to give assistance for stated reasons, including
that the interests of the State would be prejudiced thereby;(27.9) and the method by which
court assistance is provided, whether by actually taking the evidence itself, by merely
providing the element of compulsion, or by following the one or the other method as
chosen by the arbitral tribunal.(27.10)

7. By the end of the discussions of the Working Group, it had been agreed that the model
law should provide for court assistance in taking evidence, but that it should be limited to
requests for such assistance in arbitration proceedings held in the model law State and
addressed to a court of that State; it would neither provide for assistance by that court to
foreign arbitral tribunals nor for requests to foreign courts for assistance in domestic
arbitral "127"proceedings.(27.11) It had also been agreed that requests for assistance had
to be made either by the arbitral tribunal or by a party with the approval of the arbitral
tribunal. As regards the method for executing the requests for assistance, a combined
approach had been agreed which would allow the court to give the assistance according
to its own rules. The suggested provision stating reasons for refusing a request for
assistance had not be retained.

8. The Working Group draft considered by the Commission reads as follows:

(1) “[In arbitral proceedings held in this State or

under this Law,](27.12) the arbitral tribunal or a
party with the approval of the arbitral tribunal may
request from a competent court of this State
assistance in taking evidence. The request shall
specify:
(a) the names and addresses of
the parties and the
arbitrators;
(b) the general nature of the
claim and the relief sought;
(c) the evidence to be obtained,
in particular,
(i) the name and
address of any
person to be
heard as
witness or
expert witness
and a statement
of the subject-
 matter of the
testimony
required;
(c) (ii) the description
any document to
be produced or
property to be
inspected.
(2) The court may, within its competence and
according to its rules on taking evidence, execute
the request whether by taking the evidence itself
or by ordering that the evidence be provided
directly to the arbitral tribunal.
”

9. In the Commission session the observer of the Hague Conference on Private

International Law, which in its written observations had welcomed the decision of the
Working Group not to include in the model law a provision on international court
assistance in taking evidence, mentioned that a special Commission of the Hague
Conference had studied the possibility of preparing a protocol to the 1970 Hague
Convention on Taking of Evidence Abroad in Civil or Commercial Matters to extend its
application to arbitral proceedings and had confirmed the technical feasibility of the
scheme. A second session of the special commission, which would then include
arbitration experts, was planned to consider the substance of the problem. The Hague
Conference would welcome comments on the matter.(27.13) The Working Group's
decision that the question of international "128"assistance in the taking of evidence in
arbitral proceedings should not be governed by the model law was confirmed by the
Commission.(27.14)

10. The delegates expressed general agreement with an Austrian proposal(27.15) to

delete the statement in the second sentence of paragraph (1) of the Working Group draft
of the contents of a request for assistance on the ground that it entered into excessive
detail that did not need to be expressed in the model law.(27.16) This reduced paragraph
(1) of the Working Group draft to a single sentence.

11. On the proposal of the Philippine delegate, the Commission decided to delete the
concluding portion of paragraph (2) “either by taking the evidence itself or by ordering that
the evidence be provided directly to the arbitral tribunal”.(27.17) It was felt that there was
no need to indicate the manner in which the court should execute the request.(27.18) The
Drafting Group thereupon combined what was left of paragraphs (1) and (2) of the
Working Group draft into the single paragraph Art. 27.

12. Sweden had proposed an addition to Art. 27 to the effect that where evidence was
possessed by a party and the party refused to comply with an order to produce it, the
arbitral tribunal should be expressly empowered to interpret the refusal to that party's
disadvantage.(27.19) At the Commission session the Swedish delegate said that if that
notion were generally accepted, he would be satisfied if it was simply mentioned in the
report.(27.20) The Commission Report states that “[I]t was suggested, and not
contradicted in the Commission, that such a provision was unnecessary since the arbitral
tribunal already had that power, particularly under Art. 25(c)”.(27.21)

Article 28 - Rules Applicable to Substance of Dispute

(*)

Article as a Whole

1. The first two paragraphs of Art. 28 gave rise to a lengthy debate in the plenary
Commission. The Working Group draft of paragraph (1) which in conformity with modern
trends in international arbitration practice recognized the parties' right to choose the “rules
of law” applicable to the substance of the dispute (rather than “law” as used, e.g., in the
UNCITRAL Arbitration Rules) was attacked by some for departing from traditional
concepts, while its draft of paragraph (2) which provided that failing designation of the
applicable law by the parties the arbitral tribunal should apply the law determined by the
conflict of laws rule which it considers applicable, was unacceptable to others who felt that
it unduly restricted the arbitrators' discretion in disregard of modern trends. At one stage
of the debate, the Commission decided to replace the innovative “rules of law” in
paragraph (1) by the traditional “law”, but subsequently reversed itself. In the end the
Commission approved the Working Group drafts of paragraph (1) and paragraph (2)
without change. Paragraph (3) of the Working Group draft dealing with decisions of the
arbitral tribunal ex aequo et bono or as amiable compositeur was approved without
change and without debate. Paragraph (4) which enjoins the arbitral tribunal to decide the
dispute in accordance with the terms of the contract and to take account of relevant trade
usages was added by the Commission. The subject matter had been considered by the
Working Group, which initially decided not to deal with it in the model law, subsequently
reversed that decision, but finally reverted to its original negative decision.

Paragraph (1)

2. At the first session of the Working Group there was general agreement that an
affirmative answer should be given to the question formulated by the Secretariat in the
following terms:"130"

“Should the model law require as binding on the arbitral tribunal an agreement by the
parties that a certain law be applicable to the substance of the dispute?”(28.1)

In addition, some support was expressed for the farther reaching proposition, suggested
by the Secretariat in its “Possible features” paper,(28.2) that parties might also choose as
law applicable to the substance of the dispute an international convention or uniform law
even if it was not yet in force, or not in force in their countries.(28.3)

3. Based on the deliberations of the Working Group at its first session, the Secretariat
prepared a draft provision of which the first sentence was modelled on Art. 33(1) of the
UNCITRAL Arbitration Rules:

“The arbitral tribunal shall apply the law designated by the parties as applicable to the
substance of the dispute”,

followed by a tentative second sentence:

“Parties may so designate any national law or, even if not yet in force, a pertinent
international convention or uniform law.”(28.4)

4. At its second session the Working Group gave general support to the broadest
measure of party autonomy. The first sentence of the Secretariat draft was approved but
there was general agreement to delete the second sentence because of concern that the
designation of an instrument not yet in force would cause difficulties in determining the
relationship between the text and the other provisions of national law applicable to the
substance of the dispute.(28.5) A suggestion was thereupon made that the autonomy of
the parties could be broadened implicitly by replacing the UNCITRAL Arbitration Rules
language by a provision according to which “the tribunal shall decide a dispute in
accordance with such rules of law as may be agreed by the parties”(emphasis
added).(28.6) This would enable the parties, for example, to designate parts of different
systems of law as applicable to the substance of their dispute. It would also enable them
to “incorporate” a national law as in existence on a certain date or to exclude the
application of certain provisions of such a law. The suggestion received some support but
no decision was taken.

5. On another point, the Working Group decided that the text should "131"indicate clearly
that, unless otherwise expressed, the designation by the parties of the law of a given
State referred to the substantive law of that State and not to its conflict of laws rules.(28.7)

6. The Secretariat draft considered by the Working Group at its fourth session presented
alternative versions according to which the arbitral tribunal would “decide the dispute in
accordance with such rules of law as may be agreed by the parties”or “apply the law
designated by the parties as applicable to the substance of the dispute”.(28.8)

7. While there was some support for the second alternative, the prevailing view was that
the reference to “the rules of law” (instead of “the law” which was understood as referring
to the law of one State) was preferable since it provided the parties with a wider range of
options and would, for example, allow them to designate as applicable to their case rules
of more than one legal system, including rules of law which had been elaborated at the
international level.(28.9) The Working Group's report notes that some representatives
“would have preferred an even wider interpretation or an even broader formula, to include,
for example, general legal principles or case law developed in arbitration awards”but that
the Working Group decided that “this was too far-reaching to be acceptable to many
States, at least for the time being”.(28.10)

8. After some minor wording changes at the fourth and fifth sessions of the Working
Group, paragraph (1) appeared in the Working Group draft in the form in which it was
ultimately approved by the Commission.

9. Four governments submitted written observations on Art. 28(1). The United States
supported the wider range of options on the grounds stated in the Working Group's report
on its fourth session.(28.11) The Federal Republic of Germany also approved the use of
the term “rules of law” which in its view “must be interpreted in a broad sense so as to
allow deviating from the provisions of law in accordance with the declared or presumed
will of the parties”.(28.12)
10. Two other governments were of a contrary view. The Soviet Union observed that the
term “rules of law” introduced a new and ambiguous notion that might cause considerable
difficulties in practice. The model law should in its opinion follow the traditional approach
of instruments like the 1961 European Convention on International Commercial Arbitration
and the UNCITRAL Arbitration Rules.(28.13)Cyprus stated that, perhaps, the word “law”
(not “rules of law”) was the appropriate word.(28.14)"132"

11. As stated in nr. 1 supra, paragraph (1) gave rise to an extended discussion during the
Commission session and sharp differences of opinion.

12. A majority of the speakers welcomed the use of “rules of law”,(28.15) or were willing
to accept it,(28.16) and some of the proponents indicated their understanding in more
specific terms of what the “wider options” were which that term should make possible.

13. The Italian delegate, who opened the discussion, considered that rather than binding
the arbitral tribunal to the law of a given State, parties should be allowed to “denationalize”
the dispute by indicating as a basis for settlement rules and principles of a different
nature, taken, for example, from international instruments, whether in force or not, widely
observed trade usages and rules and principles common to the national legal systems of
both parties. Substantially the same view was expressed by the French delegate who
stressed that the principle of party autonomy required that the parties should be free to
choose the rules, of whatever origin, that they considered appropriate for purposes of
settling their dispute. The German and Japanese delegates felt that the terms “rules of
law” covered the intermediate position between “law” and ex aequo et bono.

14. The observer for the Chartered Institute of Arbitrators stated that the use of “rules of
law” instead of “law” would remove the risk that an arbitral tribunal might consider
inappropriate a provision in a contract accepting a national law as the applicable law save
for certain provisions of that law, and the observer for ICCA pointed out that the formula
“rules of law” would cover the case in which parties agreed on a given national law as of a
certain date as the applicable law, excluding subsequent amendment.

15. The Hungarian delegate said that international commercial arbitration had evolved in
such a way that parties were able to choose the law of any State for application to their
dispute and to choose separate national laws to apply to certain obligations (dépeçage).
The traditional approach of using the term “law” would permit this particular measure of
freedom, but it would not suffice to allow the parties to use, as the applicable law, the
provisions of conventions which had not yet entered into force. In his statement endorsing
the use of “rules of law” on the understanding that the parties would thus be able to
subject their dispute to international rules and practices on international conventions, the
delegate of Argentina noted that it was appropriate to give parties the greatest possible
autonomy “within the limits set by the model law in respect of public policy”. The reminder
that autonomy can still be subject to the limits of public policy was a valid point that had
not been explicitly made in the discussion."133"

16. The opposition to the use of “rules of law” was led by the delegate of the Soviet Union
who expanded on the country's written observations in support of the traditional approach
embodied in Art. 33(1) of the UNCITRAL Arbitration Rules. The expression “rules of law”
was an innovation the use of which had not really been justified or well-defined by its
proponents. He agreed that parties should have the opportunity to select the law of more
than one country. The concept of dépeçage was recognized. If parties wanted to allow
arbitrators to decide on the basis of rules designated by the parties (other than rules
contained in an enacted law), that would be a term of the contract which could refer to
model rules or model contracts. As regards trade usages, it would be better to adopt a
provision modelled on UNCITRAL Arbitration Rule 33(3). In that way the desiderata he
had mentioned would be accommodated directly and not indirectly by the use of the
nebulous expression “rules of law”.(28.17) Support for the traditional approach favoured
by the Soviet Union along the lines of paragraphs 1 and 3 of Art. 33 of the UNCITRAL
Arbitration Rules was expressed by a number of other delegates in general terms.(28.18)

17. In summing up the discussion the Chairman, who had presumably overlooked the
fact that a clear majority had supported the Working Group text, stated that “considerable
support” had been expressed for the idea that the reference to “rules of law” should be
replaced by a reference to “law” and that the latter notion should be interpreted in a
broader sense than previously in the light of developments in international commercial
arbitration.(28.19) The latter part of that statement was mistaken in that the support for the
broader interpretation was not expressed by those opposed to the Working Group text.
Nor was it accurate to say that it seemed to be a widely held view that Art. 28(1) should
“at least contemplate allowing the parties to engage in the process known as dépeçage”.
In fact, a proposal by the Swiss delegate to include a reference to what he said had been
widely acknowledged to be an acceptable practice, was regarded as inadequate by the
Hungarian delegate and rejected by the delegate from Italy.(28.20) The Chairman's
conclusion was that if he heard no objection “rules of law” would be replaced by “law” in
the first sentence of paragraph (1); the paragraph would be referred to the Drafting Group
with a view to the incorporation in it of wording which reflected the notion of dépeçage;
and "134"the report would explain that the term “law” should be understood in a broader
sense than previously.(28.21)

18. The Commission thereupon proceeded to an examination of paragraph (2) in the

course of which it was decided to reverse the earlier decision and to retain the Working
Group text of paragraph (1). As a result, paragraph 234 of the Commission Report which
purports to set out the Commission's initial decision may be disregarded.

Paragraph (2)

19. At its first session, the Working Group considered the question formulated by the
Secretariat in the following terms:

“Failing an agreement envisaged under question 5-10 [agreement by parties as to law

applicable to the substance of their dispute], should the arbitral tribunal apply the law it
deems appropriate (as e.g., under art. 1496 of the French New Code of Civil Procedure)
or the law determined by the conflict of laws rules which it consideres applicable (as e.g.,
under art. 33(1) of the UNCITRAL Arbitration Rules)?”(28.22) Views were expressed in
favour of both possibilities and of variants thereof. The Secretariat was asked to prepare
alternative drafts as a basis for further consideration of the issue.(28.23)

20. The report of the Working Group's second session records that there was general
agreement that the preferable solution was to provide that failing designation by the
parties of the law applicable to the substance of the dispute, the arbitral tribunal should
apply
“the law determined by the conflict of laws rules which it considers applicable.”(28.24)

21. After the Working Group had decided at its fourth session to substitute “rules of law”
for “law” in paragraph (1), there was considerable support for aligning paragraph (2) with
paragraph (1) and providing that the arbitral tribunal “shall apply the rules of law it
considers appropriate”. It was agreed in support of this solution that it would avoid the
difficulties of applying rules of private international law and would better accord with
current practices in international commercial arbitration.(28.25)

22. The majority view was, however, to retain the earlier language. It was "135"felt, in the
language of the Working Group's report “that a more cautious approach in paragraph (2)
was advisable in view of the fact that paragraph (1) already presented a rather
progressive step”.(28.26) The disparity between paragraphs (1) and (2) was regarded as
acceptable since paragraph (1) was addressed to the parties who could take advantage of
the wider scope and paragraph (2) applied only if they had not done so.

23. Both Sweden and ICC regretted this decision in their written observations. For
Sweden, the “rather traditional view” reflected in the Working Group draft might adversely
affect the current trend towards a free judgment of the question of choice of
law.(28.27)ICC stated that Art. 28(2) was not consistent with modern practice in
international arbitration. In finding the law applicable to the merits of the case, arbitrators
did not necessarily first decide on an existing conflict of laws rule but determined the
appropriate law on substance by more direct means.(28.28)

24. The discussion of paragraph (2) at the Commission session took place against the
background of the Commission's decision to change the Working Group text of paragraph
(1) by substituting “law” for “rules of law” coupled with the notion that the as yet undrafted
provision would indicate that “law” should be given a broader meaning than previously.

25. The Japanese delegate was in favour of removing from paragraph (2) the
requirement to go through the conflict of laws process. If that was done, a country
adopting the model law would be able to attribute either a wide or a narrow meaning to
the term “law” as it chose.(28.29) The Italian delegate, supporting the Japanese proposal,
said that the term “law” as used in paragraph (1) was to be explained in the report. As far
as its use in paragraph (2) was concerned, national legislatures should adopt a consistent
approach to the two paragraphs when transferring the model law to their own
legislation.(28.30)

26. Support for the deletion of the reference to conflict of laws rules was also expressed
by delegates from the United States, Argentina, France, Sweden, Australia and Canada
as being in accordance with the modern trend in international commercial arbitration
practice.(28.31) Two delegates were concerned that deletion of the reference would make
the relationship between paragraphs (1) and (2) awkward. The Hungarian delegate said
that if the term “law” in paragraph (1) was going to be taken as encompassing things that
were not actually law, it would be difficult to be sure of the meaning of paragraph
(2).(28.32) The Austrian delegate noted that under the "136"decision taken by the
Commission the word “law” used in paragraph (1) could be interpreted as including
conventions not yet in force, while in paragraph (2) “law” would mean existing national
law. It might therefore be advisable to reconsider the decision to replace “rules of law” in
paragraph (1) by “law”.(28.33)
27. The delegate from the Soviet Union, on the other hand, felt that paragraph (2) should
be left as it stood. It represented a well-known compromise that had been achieved in
1961 during the preparation of the European Convention on International Commercial
Arbitration. Deletion of the reference to conflict of laws rules would grant the arbitrators
absolute freedom in the choice of the applicable law and would constitute a precedent that
would be unacceptable to many countries.(28.34) Deletion of the reference was also
opposed by the delegates from the German Democratic Republic, Egypt, China, Kenya,
India, Czechoslovakia, Algeria, Portugal and the Philippines.(28.35)

28. The discussion took a different turn when the Italian delegate stated that the
Commission, despite divided opinion, had accepted a change in paragraph (1). In order to
be consistent it should now accept the deletion of “conflict of laws” on which opinion was
also divided. Since that would be unsatisfactory, he proposed, as a compromise, that the
decision on paragraph (1) be reversed and that both paragraphs (1) and (2) be retained
as drafted by the Working Group.(28.36) The Philippine delegate who favoured retaining
paragraph (2) as it stood said that for the sake of consistency between paragraphs (1)
and (2), it would be better to retain the words “rules of law.” He added that as a matter of
procedure, where there was equally divided opinion, the draft as prepared by the Working
Group should be retained.(28.37) The latter view was supported by the French, Australian
and United States delegates,(28.38) who were willing to accept both paragraphs (1) and
(2) as drafted by the Working Group.

29. The Soviet Union delegate noted that Art. 28 was in effect no more than a guideline,
as there were no sanctions in the model law for failure to observe its provisions. Since the
Commission could not agree on the contents of the guideline, it might be better to take a
more radical approach and delete both paragraphs altogether.(28.39) The French
delegate, disagreeing, said that a law on international commercial arbitration could not
remain silent on the choice of law.(28.40)

30. Concluding the discussion, the Chairman said that the feeling of the
"137"Commission seemed to be that paragraph (1), contrary to the earlier ruling, should
be retained as drafted by the Working Group and that paragraph (2) should remain as
drafted by the Working Group.(28.41)

Paragraph (3)

31. At its first session the Working Group considered the question formulated by the
Secretariat in the following terms:

“Should the model law recognize as binding on the arbitral tribunal an agreement by the
parties that the case be decided ex aequo et bono? If so, should an attempt be made to
define such mandate in the model law (e.g. 'amiables compositeurs' must observe those
mandatory provisions of law regarded in the respective country as ensuring its ordre
public international)?”(28.42)

The first half of the question was answered in the affirmative. As to the second half, the
Working Group was agreed that it was extremely difficult to define in a practicable manner
the mandate, and its limits, of arbitrators authorized to decide ex aequo et bono or as
amiables compositeurs. These terms were not clearly demarcated and sometimes given
varying interpretations in different legal systems. The Working Group decided therefore to
limit itself to the approach adopted in Art. 33(2) of the UNCITRAL Arbitration Rules which
used the terms but did not attempt to define them. That provision read as follows:

“The arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only if the
parties had expressly authorized the arbitral tribunal to do so and if the law applicable to
the law applicable to the arbitral procedure permits such arbitration.”(28.43)

32. At its second session the Working Group adopted as a separate article (which later
became a paragraph of the draft article on the law applicable to the substance of the
dispute) a text in the form of what became paragraph (3) of Art. 28. The only substantive
difference between paragraph (3) and the UNCITRAL Arbitration Rule was the deletion of
the proviso “if the law applicable to the arbitral procedure permits such arbitration”since
the model law would be that law. The Working Group decided to adopt the article even
though many States do not provide for such arbitrations.(28.44)

33. There was no further discussion of the provision at subsequent sessions of the
Working Group or at the Commission session. The Analytical "138"Commentary offers
two useful observations. It states, first, that the inclusion in the model law of a type of
arbitration that is not known in all legal systems is justified because it would be contrary to
the purpose of the model law to disregard or even prevent established practices.
Recognition of a type of arbitration which is not normally used presents no risk for a party
unfamiliar with this type of arbitration since an express authorization of the parties is
required.(28.45)

34. Secondly, as regards the absence of a definition in the model law of the type of
arbitration, the Commentary observes that the parties may in their authorization provide
some certainty either by referring to the kind of amiable composition or decision ex aequo
et bono developed in a particular legal system, or by laying down the rules or guidelines
for the arbitrators' mandate and, for example, request a fair and equitable solution within
the limits of the international public policy of their national States.(28.46)

Paragraph (4)

35. At its first session the Working Group considered the question formulated by the
Secretariat in the following terms:

“Should the arbitral tribunal be required to decide in accordance with the terms of the
contract and to take into account the usages of the relevant trade? If so, should this also
apply to decisions ex aequo et bono?”(28.47) The second half of the question was
answered in the negative for the reasons mentioned in the comments on paragraph (3)
supra. Consideration of the first half of the question at the Working Group's first session
started a process of analysis of the merits of the requirement as well as of its suitability for
inclusion in the model law. The conclusion finally reached by the Working Group on the
basis of the analysis was rather summarily reversed by the plenary Commission.

36. The Working Group was agreed from the start that an arbitral tribunal should have
regard to the terms of the contract and relevant trade usages. There was no consensus,
however, as to whether, and if so in what manner, this should be expressed in the model
law.
37. As regards contract terms, some members of the Working Group thought it advisable
that the model law should require the arbitral tribunal to decide in accordance with the
terms of the contract (or, at least, to take those terms into account). The prevailing view
was, however, that no provision should be included in the model law: on the one hand, the
"139"requirement was self-evident, on the other it would be possibly misleading or
incorrect in relation to a contract term which was invalid under the applicable substantive
law.(28.48)

38. Concerning regard to trade usages, the argument against including a provision in the
model law was that this was a matter of substantive law and a provision on the subject
might conflict with the applicable substantive law. The prevailing view was, however, that
an attempt should be made to draft an appropriate provision. Such a provision might be
modelled on the 1961 European Convention on International Commercial Arbitration
whose Art. VII requires the arbitral tribunal to “take account of. .. trade usages” or on Art.
33(3) of the UNCITRAL Arbitration Rules which requires it to “take into account the
usages of the trade applicable to the transaction”. A suggestion was also made to
consider inclusion of a provision along the lines of the elaborate Art. 9 of the 1980 Vienna
Convention on Contracts for the International Sale of Goods, which was adopted for the
purpose of substituting a uniform rule for differing national laws.(28.49)

39. At its second session, the Working Group reversed its earlier decision concerning
contract terms and approved a provision which required the arbitral tribunal to “decide in
accordance with the terms of the contract”. Rejecting an argument against including a
provision concerning trade usages, based this time on the view that the obligation to apply
trade usages was impliedly incorporated in paragraph (1), the Working Group decided
that the model law should contain an express provision on the subject. It adopted the
formulation of Art. 33(3) of the UNCITRAL Arbitration Rules. The suggested addition of a
sentence modelled on the Vienna Sales Convention was not accepted on the grounds
that it was applicable to contracts of sale but not to all the different types of contracts
which might give rise to disputes subject to the model law.(28.50) The resulting text read:

“The arbitral tribunal shall decide in accordance with the terms of the contract and shall
take into account the usages of trade applicable to the transaction.” It was identical to the
final text, except for the opening words “In all cases” of the latter.

40. Renewed consideration at the Working Group's fourth session of the arguments for
and against the inclusion in the model law of a provision dealing with contract terms and
trade usages led to a reversal of the decision reached one year earlier. It was now the
majority view that the questions and concerns the provision raised (and which had been
identified at earlier sessions of the Working Group) were such as to warrant its deletion.
Examples mentioned were that the reference to contract terms could be "140"misleading
where such terms were in conflict with mandatory provisions of law; that this reference did
not belong in an article dealing with the law applicable to the substance of the dispute,
though appropriate in arbitration rules;(28.51) that the legal effect and qualification of the
reference to trade usages was not uniform in all systems; and that where they derived
from national law they were already covered by paragraph (1) or (2).(28.52)

41. The Analytical Commentary on the Working Group draft offered the justified
observation that the fact that Art. 28 did not expressly call upon the arbitral tribunal to
decide in accordance with the terms of the contract and to take into account the trade
usages applicable to the transaction did not mean that the model law would disregard or
reduce the relevance of the contract and the trade usages and that this was clear from the
reasons advanced against retaining an express provision.(28.53)

42. At the Commission session, “trade usages” were mentioned briefly in the context of
the discussion of Art. 28(1). The French delegate mentioned a reference to trade usages
as one of the examples of the wider choice which use of the words “rules of law” would
afford parties.(28.54) The Soviet Union delegate said that it would be preferable to
address this directly, by a provision along the lines of Art. 33(1) of the UNCITRAL
Arbitration Rules,(28.55) and the Japanese delegate thought that “trade usage” might
possibly be added to “rules of law” (the use of which he favoured) to cover the position
fully.(28.56)

43. In the context of the discussion of Art. 28(2), the United States delegate, who
expressed himself in favour of the deletion of the conflict of laws provision, recommended
that some part of Art. 28 should contain a reference to the terms of the contract and to
trade usages. He noted that that language had been deleted from the draft text by the
Working Group, but that it was to be found in Art. 33(3) of the UNCITRAL Arbitration
Rules, had been adopted and recommended by the General Assembly as being
acceptable to countries with different legal systems, and was also to be found in Art. VII(1)
of the European Convention.(28.57) He subsequently "141"made a formal proposal to
insert a new paragraph in Art. 28 in line with Art. 33(3) to which he had referred
earlier.(28.58)

44. The Yugoslav delegate supported the United States proposal, although with
reservations regarding the reference to terms of contract and the use of the wording “take
into account”.(28.59) The United Kingdom delegate said that it was essential to introduce
the rule proposed by the United States “since the pre-eminent obligation of the arbitral
tribunal was to apply the terms of the contract”.(28.60) No other delegate spoke either in
support or in opposition. The Chairman concluded that the feeling of the Commission
appeared to be that a new paragraph corresponding to Art. 33(3) of the UNCITRAL
Arbitration Rules should be inserted,(28.61) and this was done.

45. After three extensive rounds of discussion in the Working Group, delegates were
obviously reluctant to have another lengthy debate on an issue that was not likely to be of
much practical importance. One may expect that, regardless of the language of paragraph
(4), arbitrators will not give effect to terms of a contract that are in conflict with mandatory
provisions of law. For the remainder, it is self-evident that arbitrators will first look at and
apply the terms of the contract and that they will give such effect to trade usages as they
consider justified in the circumstances, being guided, where relevant by the applicable
substantive law. Here, too, one may expect that arbitrators will not let trade usages prevail
over unambiguous contractual terms, but rely on them only to supplement those terms or
to interpret them when that is called for.

Article 29 - Decision-making by Panel of Arbitrators

(*)

1. This article deals with awards as well as with any other decisions of the arbitral
one arbitrator, a majority of all members of the arbitral tribunal is required.(29.1) However,
on the conditions stated in the second sentence questions of procedure may be decided
by a presiding arbitrator. By its terms, the provision is non-mandatory.

First Sentence

2. This sentence is identical with the corresponding sentence in the Working Group draft.
The Analytical Commentary states that the majority principle does not mean that not all
arbitrators need to take part in the deliberations or at least have the opportunity to do
so.(29.2)

3. At its fourth session, the Working Group considered the case in which there was no
majority for an award or other decision. A suggestion that a presiding arbitrator should
have the decisive vote in that case was not accepted.(29.3)

4. Failure of the arbitral tribunal to reach a majority decision on an award was the subject
of written observations by Finland, Sweden and IBA. They expressed the view that in that
case the presiding arbitrator should decide as if he were a sole arbitrator. In support of
that view Sweden pointed to the risk that in the event of three different opinions the
presiding arbitrator may be tempted to agree to a juridically dubious solution in order to
attain the necessary majority. IBA recognized that it was seeking to re-open a question of
policy that had already been settled by the Working Group. The issue was, however,
important since parties can suffer a total waste of time and expense if the arbitration ends
without any award being issued.(29.4)

5. At the Commission session the delegates of Finland and Sweden pressed their
proposal to give the presiding arbitrator a decisive vote.(29.5) On the other hand, the
United States delegate favoured the requirement of a majority decision, since it made it
more likely that all issues would be fully considered as a result of the need to reach
agreement. He also thought that the parties would more readily accept the decision, thus
reducing the likelihood of subsequent litigation or appeals.(29.6) The delegates of
Austria,"143"France and the United Kingdom also opposed the proposal and wished the
first sentence of Art. 29 to be retained as drafted.(29.7)

6. The Austrian delegate foresaw little difficulty in the matter. In the entire history of the
ICC the rules of which provide that the presiding arbitrator will decide as if he were a sole
arbitrator when there is no majority, he knew of only two cases where that had in fact
occurred. Moreover, the non-mandatory character of Art. 29 would permit the parties,
where the arbitral tribunal was unable to reach a decision, to authorize a presiding
arbitrator to decide alone.(29.8) I add to this that pursuant to Art. 2(e) this result will be
achieved automatically if the parties agree to arbitration under the ICC rules, or under any
other rules which have the same provision.

Second Sentence

7. The Working Group draft provided, that “the parties or the arbitral tribunal”might
authorize a presiding arbitrator to decide questions of procedure.(29.9) Some doubt had
been expressed as to the wisdom of that provision because of the risk of controversies in
cases where it was not certain whether a question was one of procedure or of substance,
but the Working Group had retained it because it might be used to make an arbitration
more efficient.(29.10)

8. At the Commission session, the Australian delegate stated that in common law
countries the distinction between procedural and substantive matters was not always
clear. That was not important where the parties authorized a presiding arbitrator to take
decisions, but where the arbitral tribunal did so, there might be a conflict among the
arbitrators on such questions. He also noted that the presiding arbitrator might be an
arbitrator appointed by one of the parties. For these reasons he would prefer that the
words “or the arbitral tribunal” be deleted.(29.11)

9. The Austrian delegate agreed that a problem could arise where two arbitrators
authorized a presiding arbitrator to take decisions but that arbitrator refused to act alone.
That problem could be avoided by requiring a unanimous decision by the arbitral
tribunal.(29.12)

10. The Commission adopted that solution.(29.13) It also noted that, as "144"suggested
by the Australian delegate,(29.14) it was implicit in the model law that, in the absence of
any express requirement to the contrary, arbitrators might take decisions without being
physically present by telephone, telex or similar means of communication.

11. I note finally that, as was observed by the Indian delegate, the model law contained
no definition of the presiding arbitrator, nor did it indicate the manner of his appointment.
This might create a problem in the application of Art. 29. The representative of the
Secretariat explained that the form of “a presiding arbitrator” rather than “the presiding
arbitrator” had been adopted in view of the fact that there need not necessarily be such an
appointment.

12. Obviously, if no presiding arbitrator has been appointed the second sentence can find
no application.(29.15)

Article 30 - Settlement

(*)

1. The importance of this provision is manifest. It permits the effective enforcement of a

settlement agreement by providing for its being recorded in the form of an arbitral award.

2. There was a consensus throughout the preparatory work that the arbitral tribunal
should be authorized, if so requested, to record a settlement in an award(30.1) and that
such a settlement should state that it was an award and should be treated like any other
award.(30.2) Divergent opinions "145"were expressed, on the other hand, on whether the
request should be made by both parties or might be made by either party, and whether
the arbitral tribunal should be obliged to accept a request to record a settlement in the
form of an award on agreed terms or should have the right to decide whether it will so
record the settlement and, if so, how much discretion the arbitral tribunal should have.

Paragraph (1)

3. At its second session the Working Group adopted language identical in substance with
right to decide whether it would record the settlement in the form of an award on agreed
terms.(30.3) The reason for this view was that the arbitral tribunal should not be
compelled so to record the settlement in all circumstances. The Analytical Commentary
mentions as examples cases of suspected fraud, illicit or utterly unfair settlement.(30.4)

4. According to one view, the arbitral tribunal should be empowered to act on the request
of either party, that is to say in practice the winning party, who would have an interest in
converting the settlement into an award which could then be enforced. The majority view
was, however, that a request by both parties should be required in order to avoid the risk
of injustice where the settlement was ambiguous or subject to conditions that might not be
apparent to the arbitral tribunal.(30.5)

5. At its fifth session the Working Group adopted paragraph (1) in the form in which it was
subsequently approved by the Commission.(30.6) However, the two issues on which
there had not been a consensus in the Working Group, were raised again in the written
observations of governments and at the Commission session.

6. Austria and Mexico proposed the deletion of the words “and not objected to by the
arbitral tribunal” which unduly restricted party autonomy. Austria pointed out that if the
subject matter of the dispute was capable of being submitted to arbitration, the parties
should be free to settle their dispute without restriction by the arbitral tribunal.(30.7) The
proposal was taken up at the Commission session by the Australian delegate and
supported by several other delegations,(30.8) but was strongly opposed by speakers who
felt that the arbitral tribunal should have discretion."146"

7. The observer for Canada, referring with approval to the Analytical Commentary, said
that there were antitrust and other considerations which the arbitral tribunal should be
able to take into account regardless of the will of the parties.(30.9) The United States
delegate felt that arbitrators should not be forced to concur in a settlement that might
violate antitrust or income tax laws or be in furtherance of a conspiracy between the
parties. If the wording was deleted, the arbitrators might be forced to resign in such a
case.(30.10) After this view had been supported by other delegates, the Australian
delegate withdrew his amendment.(30.11)

8. The position is therefore that while the parties have the right to have the arbitral
proceedings terminated as a result of their settlement, arbitrators are not obligated to
attach their signatures to whatever settlement the parties have reached since, in the
words of the Commission Report, “the terms of such settlement might, in exceptional
cases, be in conflict with binding laws or public policy, including fundamental notions of
fairness and justice”.(30.12) It is, on the other hand, also clear that the arbitral tribunal
should refuse the parties' request only if the stipulated settlement is incompatible with the
ordre public of the legal system applicable to the arbitration.(30.13)

9. The other issue which was raised again at the Commission session was whether the
request for an award on agreed terms must be made by both parties or whether a request
by one of the parties would suffice. The observer for Canada was in favour of the latter
since it would avoid the risk that one of the parties might block the arbitral tribunal from
recording the settlement in an award.(30.14) The Commission Report states that after
deliberation it was agreed “that there must be the dual will of the two parties that the
settlement be recorded as an award, but that the formal request needed to be made by
only one of them”.(30.15) It seems to me that since the arbitral tribunal must be satisfied
as to the “dual will” a joint request is likely to save time.

Paragraph (2)

10. The text of the Working Group draft was adopted by the Commission without change
and without discussion. The report of the penultimate "147"session of the Working Group
records that the Group had noted that the last sentence, which equates an award on
agreed terms with any other award on the merits, “might later have to be modified in order
to qualify this statement as regards reasons for recourse against such an award or its
enforcement”.(30.16) There was no further discussion and no comment in the
Secretariat's Analytical Commentary.

11. It would seem to me that the answer as to recourse against an award on agreed
terms or its enforcement must be that a party to such an award is estopped from invoking
the grounds for setting aside under Art. 34(2)(a) or for refusing recognition or enforcement
under Art. 36(1)(a), but that a court is not barred from setting an award aside or refusing
its recognition or enforcement under Art. 34(2)(b) or Art. 36(1)(b) when it finds that the
subject matter of the dispute is not capable of settlement by arbitration under the law of
the forum State or the award is, or its recognition or enforcement would be, in conflict with
the public policy of the forum State. The result, which in my view is compatible with the
text of paragraph (2), is that the court gets a second chance to deny arbitral enforcement
to a settlement agreement that the arbitral tribunal would have been justified in refusing to
record in an award on agreed terms.

Article 31 - Form and Contents of Award

(*)

Paragraph (1)

1. This paragraph, which is identical with the corresponding provision of the Working
Group draft, reflects the consensus that the award should for the sake of certainty be
made in writing and that it should be signed by all members of the arbitral tribunal.
Nevertheless, the signatures of a majority of the members will suffice, provided that the
reason for any omitted signature is stated.

2. The Analytical Commentary noted that there were two different possible causes for a
missing signature. The first was that after the award was finalized an arbitrator died,
became physically unable to sign or could not be reached. The second possible reason
was that an arbitrator dissented from the award and refused to sign. The Secretariat
pointed out that in the latter case the proviso would not be acceptable to those who were
opposed to revealing whether an award was made unanimously or whether an arbitrator
dissented. The Secretariat suggested therefore that the Commission might want to
consider whether the proviso should be maintained as well as whether the model law
should contain provisions on the separate issue of allowing or prohibiting dissenting
opinions. If the model law did not deal explictly with that issue, it would be governed by
Art. 19 as a matter of the conduct of proceedings.(31.1)

3. Two countries submitted written observations. Norway would have had the model law
provide that the award should state whether it was rendered unanimously. If it was not, it
should identify the dissenter and the issue of dissent and the dissenter would have the
right to state the reasons for his dissent in the award.(31.2)Sudan, on the other hand,
while apparently not objecting to disclosure of the dissent, proposed to add to paragraph
(1) that the award may not include “any dissenting judgment”.(31.3) Neither proposal was
followed up at the Commission session.

4. At that session the Philippine delegate suggested that the requirement of a statement
of the reason for an omitted signature should be deleted. In his view, the signatures of the
majority of the members of the arbitral tribunal should be sufficient to validate the award.
The Chairman replied that paragraph (1) represented a compromise between two extreme
positions: on the one hand, that the majority of the arbitrators could take any decision they
wished; on the other, that all the arbitrators must sign an "149"award.(31.4) The question
of dissenting opinions was not addressed. The position is therefore that this is a matter to
be determined pursuant to Art. 19 by the parties or, failing determination by them, by the
arbitral tribunal.

5. The Secretariat had also suggested that the Commission might wish to consider
aligning the signature requirement with any agreed decisional system other than decision
by majority, as permitted by Art. 29.(31.5) The Commission did not act on the suggestion.
Since Art. 29 governs all decisions of an arbitral tribunal, including awards, Arts. 31(1) and
29 will be in conflict when the parties require unanimity, in which case signatures of the
majority are not sufficient, or authorize a presiding arbitrator to decide as if he were a sole
arbitrator, in which case obviously only his signature is required. In order to resolve the
conflict, countries enacting the model law might amend the beginning of the second
sentence of paragraph (1) to read: “In arbitral proceedings with more than one arbitrator,
where the award of the arbitral tribunal is to be made by a majority of all its member, the
signatures ... etc.”

Paragraph (2)

6. This paragraph, which is identical with the corresponding provision of the Working
Group draft, was adopted by the Commission without discussion. It adopted a solution
which accommodates a variety of national legal requirements and practices by requiring
that reasons be stated but allowing parties to agree that no reasons are to be given. This
solution had received very wide support at the first session of the Working Group, where it
was also noted that it was in accordance with Art. 32(3) of the UNCITRAL Arbitration
Rules.(31.6) In the Analytical Commentary the Secretariat suggests that an agreement
that no reasons are to be given may be implied, for example, in submitting a dispute to an
established arbitration system which is known not to contemplate the giving of reasons,
and that the same would apply to an intermediate solution, practiced in certain systems,
such as to state the reasons in a separate and confidential document.(31.7)

Paragraph (3)

7. For a better understanding of the difference between the seemingly parallel

requirements with respect to the mention in the award of its date "150"and the place of
arbitration, the paragraph might be rearranged as follows:

“The award shall state its date. It shall be deemed to have been made at the place of
arbitration as determined in accordance with Article 20(1) which shall be stated in the
award.”

8. At the Commission session, it was proposed to extend the second sentence of

paragraph (3) to the date of the award, and to have it read: “The award shall be deemed
to have been made at that place and on that date”.(31.8) It was stated in support that the
date of the award might have legal implications with regard, for example, to the payment
of interest “from the date of the award”,(31.9) and that since the award might be circulated
among the arbitrators by mail for their signature, it would be difficult to determine its date.
The prevailing view was, however, that the date fixed in the award by the arbitral tribunal
should be open to rebuttal.(31.10)

Paragraph (4)

9. The text of this paragraph, which is identical with the corresponding Working Group
draft provision, did not give rise to discussion. A lengthy discussion arose, however, about
the desirability of adding a definition of the time when an award becomes binding and the
criteria to be employed in such a definition. A number of delegates saw no need for such
a provision, although some of them would not object if a suitable definition were
found.(31.11)

10. The only provision of the Law for which the time when an award becomes binding is
directly relevant is Art. 36(1)(a)(v), which states that recognition and enforcement may be
refused “if the award has not yet become binding on the parties”. That provision applies to
awards wherever made. The identical Art. V(i)(e) of the 1958 New York Convention, if
applicable in the model law State, applies only to foreign awards, while the model law
provision defining the date when an award becomes binding can only apply to awards
made in the model law State.

11. The proponents of a definition could not agree on the criteria to be employed. The
two principal variants advanced were the date of the award, which had already proved in
the discussion of paragraph (3) to be a difficult "151"criterion to rely on, and the date on
which the award is delivered to the parties, which among other inconveniences would
require proof of delivery.

12. At the end of the discussion the Chairman concluded that since it appeared to be
impossible to satisfy all points of view, the Commission would have to keep the text of
paragraph (4) as it stood and not add to it.

Article 32 - Termination of Proceedings

(*)

1. The text of this article was developed in stages during the deliberations of the Working
Group and the plenary Commission. It would have benefited from a review prior to being
put into final form, but the timetable did not make this possible.

Paragraph (1)
either as a result of the issuance of a final award or by an order of the arbitral tribunal.

3. The point of time of the termination of the arbitral proceeding may be relevant, for
example, for the determination of the running of periods of "152"limitation which, if tolled
by the institution of arbitral proceedings, would resume upon their termination, or the
possibility to institute legal proceedings before another forum on the same dispute.(32.1)
An order of the arbitral tribunal will fix that time with certainty. This is not quite the case of
an award, whose date is open to rebuttal.(32.2)

4. The use of the term “final award”, which does not appear anywhere else in the Law,
has a curious history. When the Working Group considered at its first session whether the
model law should deal with the different possible types of award, such as final, interim,
interlocutory, or partial, it did not reach a clear conclusion.(32.3) It acknowledged,
however, that the main point in need of clarification was that the making of an interim
award would not terminate the mandate of the arbitral tribunal, since there were national
legal systems under which the contrary result would ensue.(32.4) Accordingly, the draft
provision considered by the Working Group at its second session stated that the making
of an award which “is apparently” (or in an alternative version “indicates that it is”) not
intended to settle the dispute in full, does not terminate the mandate of the arbitral
tribunal.(32.5)

5. At its fourth session, the Working Group considered two sets of provisions drafted by
the Secretariat.(32.6) The first set was addressed to termination of the mandate of the
arbitral tribunal which under one version would not be terminated as a result of an award
which was not intended to (or did not) “constitute a final disposition of the substance of the
dispute”, and under an alternative version would be terminated by the making of “the final
award which constitutes or completes the disposition of all claims submitted to arbitration”.
This language was also used in the second set, which covered the termination both of the
arbitral proceedings and of the mandate of the arbitral tribunal. However, in the text
adopted by the Working Group at its fifth and final session only the words “final award”
were retained.(32.7)

6. In providing for termination of the arbitral proceedings by an order of the arbitral

tribunal, the text appears to limit this to orders “in accordance with paragraph (2)”. This
overlooks, however, termination by the arbitral tribunal under Art. 25(1) in case of default
by claimant and Art. 30(1) in case of settlement of the dispute by the parties.

7. A final comment on paragraph (1) concerns the fact that it does not provide, as does
paragraph (3), that it is subject to the provisions of Arts. 33 "153"and 34(4). I shall,
however, defer its discussion until my comments on paragraph (3).

Paragraph (2)

8. In adopting this paragraph, which defines the instances in which the arbitral tribunal is
called upon to order the termination of the arbitral proceedings, the Commission departed
from form and substance of the Working Group draft which in turn differed in many ways
from earlier drafts. Some elements of the legislative history provide a helpful background
to the final text and will be briefly mentioned.

9. In a Working Paper prepared by the Secretariat at the request of the Working Group
two possible approaches to termination of arbitral proceedings were outlined. The first,
which was eventually followed in the Law, was to enumerate various circumstances which
would cause either automatic termination or empower the arbitral tribunal (or a court) to
terminate the proceedings. The second approach was to limit the termination of arbitral
proceedings to those cases only when the continuation of proceedings would be either
unnecessary or impossible. Examples mentioned in the Working Paper included, in
addition to the rendering of an award on the merits, withdrawal of the claim. If this
approach were followed, a special rule on termination might be superfluous since
termination would be a self-evident consequence. On the other hand, the Working Paper
pointed out, such a rule might be useful for cases in which the arbitral tribunal considers
continuation to be unnecessary and a party has an objection to the termination.(32.8)

10. The draft article submitted for discussion provided that termination would take place
when the parties so agreed and “in all other cases where the continuation of the arbitral
proceedings becomes unnecessary or impossible”, coupled with an obligation for the
arbitral tribunal, when the arbitration proceedings are to be terminated without an award
on the merits of the claim, to inform the parties of its intention to issue an order for the
termination of the proceedings. Unless a party raised justifiable grounds for objection, the
arbitral tribunal would have the power to issue such an order.(32.9)

11. The draft article considered by the Working Group at its fourth session, which
provided for termination of the arbitral proceedings either by the final award, by
agreement of the parties or by an order of the arbitral tribunal pursuant to paragraph (2),
contained the following version of that paragraph:"154"

“After having given suitable notice to the parties, the arbitral tribunal shall issue an order
for the termination of the arbitral procedings when the claimant withdraws his claim or if
for any other reason the continuation of the proceedings becomes unnecessary or
inappropriate.”(32.10) The report of that session notes that the Working Group was of the
view that the withdrawal of a claim should not necessarily lead to termination of the
arbitral proceedings since the respondent might have a legitimate interest in a final
settlement of the dispute.(32.11)

12. At the final meeting of the Working Group, the provision for notice of intention to issue
an order for termination of the arbitral proceedings was dropped; in the event of
withdrawal of a claim the arbitral tribunal would issue an order for the termination of the
arbitral proceedings “unless the respondent objects thereto and the arbitral tribunal
recognizes a legitimate interest on his part in obtaining a final settlement of the
dispute”(para. 2(a)); and the arbitral tribunal might issue such an order “when the
continuation of the proceedings had for any other reason become unnecessary or
inappropriate”(para. 2(b)).(32.12)

13. At the Commission session the delegate of the Soviet Union referred to his country's
written observations(32.13) and made two suggestions which, without objection, were
both referred to the Drafting Group. He pointed out that as a matter of legal principle and
in order to be consistent with Art. 30, only the arbitral tribunal should have power to
terminate arbitral proceedings. He suggested therefore that agreement by the parties to
terminate the arbitral proceedings should become one of the bases for an order to that
effect of the arbitral tribunal.(32.14) His second suggestion was to replace in paragraph
2(b) the word “inappropriate” which gave too much discretion to the arbitral tribunal by
“impossible”.(32.15) Both suggestions were incorporated in the final text.

14. A further change in the Working Group draft was made on the proposal of the
Egyptian delegate who said that if the arbitral tribunal found that continuation of the
arbitral proceedings had become unnecessary or inappropriate (subsequently changed to
“impossible”), an order for termination of the proceedings should be mandatory.(32.16) It
was not clear why the arbitral tribunal, having made that finding, should nevertheless have
the right to permit a continuation of the proceedings which could only be a "155"waste of
time and money. Accordingly “may order” in paragraph 2(b) of the Working Group draft
was replaced by “shall order” in the final text of what had become paragraph 2(c).

15. The Tanzanian delegate expressed concern that the proviso of paragraph 2(a) was
open to abuse by the respondent who might force the claimant to continue participation in
arbitral proceedings although he had good reasons to withdraw his claim. The
representative of the Secretariat explained that the Working Group had realized that a
respondent might have a legitimate interest in continuation of the proceedings in order to
reduce the risk of harassment by a claimant repeatedly bringing a claim and then
withdrawing it. Paragraph (2)(a) described instances in which, in the objective judgment of
the arbitral tribunal, and not only in the view of the respondent, the latter had a legitimate
interest in obtaining a final settlement of the dispute.(32.17)

Paragraph (3)

16. The Commission approved this paragraph without discussion.(32.18) Both Arts. 33
and 34(4) contemplate action by the arbitral tribunal after the rendering of the award:
corrections, interpretations and additional awards in the case of the former and action to
eliminate grounds for annulment in the case of the latter. Since this means the
continuation or resumption of the arbitral proceedings, paragraph (1) will have to be read
as if it provided that the arbitral proceedings “are terminated by the final award, subject to
the provisions of Arts. 33 and 34(4) or by an order ... etc”. In fact, if paragraph (1) had
been so drafted, paragraph (3) could simply have read: “The mandate of the arbitral
tribunal terminates with the termination of the arbitral proceedings”.

17. The drafting history of the term “final award” militates against its interpretation as
including the decisions of the arbitral tribunal pursuant to Arts. 33 and 34(4). Moreover, if
that were the correct interpretation, the reference to those articles in paragraph (3) would
have been unnecessary.

18. It is accordingly my view that the time of termination of the arbitral proceedings in a
case in which Art. 33 or 34(4) has found application, will not be the time of what was
intended to be the “final award” but the time of the decision or award under those
articles."156"

Article 33 - Correction and Interpretation of the Award; Additional Award

(*)

Article as a Whole
governed by mandatory paragraphs (1)(a) and (2); (ii) interpretation of the award,
governed by paragraph (1)(b) which requires the agreement of both parties and (iii)
rendering an additional award on "157"claims presented in the arbitral proceedings but
omitted from the award, governed by paragraph (3) which applies unless otherwise
agreed by the parties.

2. Paragraphs (4) and (5) apply to all three procedures. The former authorizes the arbitral
tribunal to extend, if necessary, the time limit within which it is to act under paragraphs (1)
or (3) and the latter provides that the provisions of Art. 31 (Form and contents of award)
shall apply to a correction or interpretation of the award or an additional award.

Paragraph (1)

3. There was general agreement at the first session of the Working Group that the model
law should contain provisions on correction of errors and interpretation which might be
modelled on Arts. 35 and 36 of the UNCITRAL Arbitration Rules. It was, however, also
agreed that unlike the provisions of Art. 36 of those Rules, requests for interpretation
“should be limited to specific points in order to avoid possible abuses and delay.”(33.1)

4. In the event, the Working Group did not adopt such a limitation and at its second
session even decided that the right of a party to request an interpretation was not subject
to a contrary agreement of the parties.(33.2)

5. The Working Group also approved at its second session a non-mandatory provision
authorizing a party to request an additional award where a claim had been presented in
the arbitral proceedings but had been omitted from the award. The provision was
modelled on Art. 37 of the UNCITRAL Arbitration Rules and like that provision required
that the arbitral tribunal found that “the omission can be rectified without any further
hearings or evidence”.(33.3)

6. At its fifth and final session the Working Group, reversing the earlier decision, deleted
the language quoted above as unduly restrictive since it excluded an considerable
number of cases where at least a hearing, if not further evidence, was necessary before
an additional award could be made.(33.4) The Working Group also addressed a number
of other issues of practical implementation.

7. Discussion of time limits for action to be taken by the arbitral tribunal on requests for
correction of errors, interpretation or an additional award elicited strongly diverging views
as to the need for fixed limits. As a compromise it was agreed that Art. 33 would set fixed
periods of time but "158"would empower the arbitral tribunal to extend them if necessary
under the circumstances.(33.5)

8. The Working Group noted that the purpose of the notice which the party making a
request was to give to the other party was to give that party an opportunity to express its
views. Its report states that while it was not felt necessary to lay down an elaborate time
schedule, “it was understood” that the arbitral tribunal should allow sufficient time for a
reply. This in turn led to the suggestion that a reasonable period of time for reply “should
be taken into account for the calculation of the period of time during which the arbitral
tribunal should dispose of the request”.(33.6) I find this statement, which appears to be
inconsistent with the decision that the fixed time periods run from the date of receipt of the
request by the arbitral tribunal, puzzling unless it reflected a view of the Working Group on
a guideline for extension by the arbitral tribunal of the fixed time period. In view of the
arbitral tribunal's explicit power to extend periods of time, the point has no practical
importance.

9. Four countries submitted written observations on the Working Group draft.

Czechoslovakia proposed that the provision on interpretation be restricted to interpretation
“of the reasons on which the award is based” rather than of the dispositive part of the
award.(33.7) The German Democratic Republic proposed not to deal in the model law
with the possibility of interpretation at all.(33.8)Sweden and the United States proposed
reconsideration of the article with a view to establishing an obligation of the arbitral
tribunal which has received a request to give the other party an opportunity to
respond.(33.9) This proposal was not repeated at the Commission session where the
Australian delegate said that the obligation to give the other party an opportunity to
respond was already implicit in Art. 19(3) (Art. 18 of the Law) and a provision to that effect
need not be incorporated in Art. 33, but that he wished to make it clear that that was how
the article was to be interpreted.(33.10)

10. At the Commission session, the observer for IBA supported the proposal of the
German Democratic Republic to delete paragraph (1)(b) of the Working Group draft which
authorized a party, with notice to the other party, to request the arbitral tribunal to give an
interpretation of a specific point or part of the award. If the Commission wished to retain it,
he hoped that the provision would be made non-mandatory by the addition of “unless the
parties otherwise agree”.(33.11) The Australian delegate agreed that the "159"parties
should be able to exclude the application of paragraph (1)(b)(33.12) and the delegate of
the United States - who was concerned, like the IBA observer, that that paragraph invited
attempts on the part of both the winner and the loser to change the award, for the one to
seek to protect the award against annulment and for the other to lay a basis for recourse
against the award - felt that the arbitral tribunal's power of interpretation should not be
exercised at the unilateral request of one of the parties. He also was not aware of any
arbitration statute containing a provision for interpretation of an award by the arbitral
tribunal which had rendered it.(33.13)

11. The Cuban delegate pointed out that various arbitration rules provided for clarification
of a specific point or part of an award,(33.14) and the French delegate pointed out that
interpretation of an award was possible under Art. 35(1) of the UNCITRAL Arbitration
Rules, and “that the principle was admitted in the judicial system”. He would, however,
have no objection to making the provision non-mandatory.(33.15)

12. The delegate of Sierra Leone also favoured the retention of the paragraph(33.16) as
did the delegate of Czechoslovakia who recalled his Government's written observations to
the effect that interpretation should be limited to the reasons upon which the award was
based.(33.17)

13. A number of delegates preferred the deletion of paragraph (1)(b),(33.18) including the
Finnish delegate who mentioned, however, that a possible compromise would be to make
interpretation subject to the agreement of both parties.(33.19) After the delegates of the
Federal Republic of Germany and India had stated that they could accept the compromise
solution,(33.20) the Commission, on the Chairman's proposal, agreed to the reformulation
of paragraph (1)(b) to provide for the agreement of both parties as a condition for the
arbitral tribunal's power to act on a request for interpretation of the award.(33.21)

14. In his statement the Chairman indicated that this meant that both parties should either
have agreed before the award was made to allow an interpretation of it by the arbitral
tribunal, or should by common agreement ask for an interpretation after the award had
been made.

15. The Australian delegate noted that the proviso in paragraph (3) that the arbitral
tribunal would make an additional award “if it considered the "160"request to be justified”
should apply equally to requests for correction or interpretation and the proviso was
added in paragraph (1).(33.22)

16. Subject to these two amendments, the Commission approved the Working Group
draft of paragraph (1).

Paragraphs (2) through (5)

17. The Working Group drafts of these paragraphs were approved. An exchange of
comments on paragraph (2) concerned a point that could only arise under paragraph (1).
The United States delegate stated that there should be one period during which the other
side could object to a request for correction and another during which the arbitrators could
act after a party had filed its objection or after the date of filing had expired.(33.23) This
overlooked that paragraph (2) authorizes the arbitral tribunal to correct errors on its own
motion, i.e., without having received a request, and establishes a time limit running from
the date of the award.(33.24) The same is true of the reaction of the French delegate who
thought that paragraph (2) when read in conjunction with paragraph (1) and Art. 19(3)
(Art. 18 of the Law) could have the effect of facilitating the reopening of the case under
the pretext of a request for a correction.(33.25)

18. The point that both speakers discussed, and which could only arise when the arbitral
tribunal was acting on a request, had been discussed without a definite conclusion by the
Working Group, as described in nr. 8 supra, and clearly did not lend itself at the stage of
the Commission discussion to a solution through necessarily complex drafting changes.
Moreover, in view of the explicit power of the arbitral tribunal to extend time periods, it
would be possible to handle the situation in a manner that would respect the equality of
the parties and their right to a full presentation of their cases. That the purpose of the
provision for notice of a request to the other party was to enable that party to express its
views on the request was fully recognized by the Working Group and is not open to
doubt."161"

Introduction to Articles 34, 35 and 36 - Recourse Against Award; Recognition and

Enforcement of Award

1. I shall deal with these articles in two stages. At this first stage I shall treat a number of
policy issues, interrelated in part, which their subject matter raised, including the
overriding issue whether the model law should deal with the subject matter at all. This
justifies dealing first with those issues that have a certain commonality, before
commenting at the second stage on the specifics of the separate articles.

2. The starting point for the Working Group's deliberations on the subject matter of Arts.
34 to 36 was the “Possible features” paper prepared by the Secretariat(1) and a
Secretariat note suggesting questions derived from that paper for discussion.(2) The
stated purpose of the “Possible features” paper was “merely to identify the issues and to
state reasons relevant to the decision about their inclusion in the draft model law”rather
than “to discuss the issues in detail and to present elaborate proposals”.(3) However, with
respect to recognition and enforcement of the award and recourse against the award, the
Secretariat had gone further and advanced a number of suggestions which represented
what the paper itself characterized as the “internationalist” approach.

3. Executory force and enforcement. The paper noted that national laws commonly
provide that the award(4) obtains its executory force by an exequatur (leave to enforce)
issued under procedures and by authorities which may vary from one State to another. It
also noted that when an award was made in State A and the 1958 New York Convention
on the Recognition and Enforcement of Foreign Arbitral Awards applied to its enforcement
in State B, the latter State would have to recognize it as binding and enforce it pursuant to
Arts. III and IV of the New York Convention which "162"do not require that an exequatur
has been obtained in the country where, or under whose law, the award has been
rendered.(5)

4. Taking account of the fact that the proposed model law would be limited to
international arbitration, the paper suggested that the model law should follow the
provisions of the New York Convention dealing with executory force and enforcement of
foreign arbitral awards and should apply these provisions to all international awards,
whether foreign or domestic. This approach would enhance unification and thus facilitate
matters in a field of great practical importance.(6)

5. Means of recourse. The paper noted the great variety in national laws both as to the
types and procedural forms of attacks on awards, and as to the grounds on which such
attacks could be based. The paper suggested that every attempt should be made as
regards procedure to provide for only one type of attack on the award, viz. setting aside
(annulment) procedures and, as regards the reasons for setting aside, to limit them as
much as possible and, ideally, to accept only those grounds on which recognition and
enforcement may be refused under the New York Convention. This would result in full
alignment of the reasons for setting aside and for refusing recognition and
enforcement.(7) The paper added that this alignment would, nevertheless, not render the
setting aside procedure superfluous since it would allow a party to raise objections against
an international award in the country which had jurisdiction to set it aside,(8) irrespective
of whether enforcement was sought there(9) by the other party.

6. Initial Working Group deliberations. At its first two sessions, the Working Group
developed tentative answers to some of the questions derived from the “Possible
features” paper.

7. The Group's initial deliberations showed wide support for the proposition "163"that the
model law should adopt a uniform system of enforcement for all awards in international
arbitration, irrespective of where they are rendered, and that like the New York
Convention it should not require in the case of a foreign award that it be deposited or
registered in the country where it was rendered.(10) Divergent views were expressed on
the question whether the model law should contain procedural rules to govern recognition
and enforcement.(11) There was wide support, however, for the view that the model law
should not deal with remedies against court decisions granting or refusing enforcement:
procedures for appeal or recourse were an integral part of the law of civil procedure of
each State.(12)

8. Tentative general agreement was expressed in favour of “streamlining” the types of

recourse against an arbitral award and providing for only one type of action of “attacking”
an award, namely, setting aside. There was also general agreement that a restrictive
approach should be adopted in listing the grounds for the setting aside of awards.(13) In
that regard the prevailing view was that the grounds for setting aside should be limited to
those listed in Art. V of the New York Convention.(14) There was an inconclusive
discussion of the question whether the “public policy” ground of Art. V(2)(b) should be
further restricted and qualified as “international public policy”.(15) I shall deal with that
question in my comments on Article 34.

9. Discussion of draft provisions at third session. Based on the deliberations of the

Working Group at its first two sessions the Secretariat produced separate draft provisions
on recognition and enforcement of awards “made in the territory of this State” and awards
“made outside the territory of this State”, respectively,(16) separate draft provisions on
grounds for refusing recognition and enforcement of awards “made in the territory of this
State” and awards “made outside the territory of this State”, respectively,(17) a draft
provision, intended to be applicable to awards whether made in or outside the territory of
the model law State, providing for possible adjournment of the decision in enforcement
proceedings in the event of a pending application for the setting aside or suspension of an
award,(18) and two provisions on setting aside of an arbitral award “made under this
Law”.(19)"164"

10. a. Recognition and enforcement

The Working Group's report on its third session records that as to the demarcation line
between domestic and foreign international awards, it supported the territorial principle as
opposed to the principle of wider recognition of the autonomy of the parties. Under the
territorial principle, “domestic” awards are only those made in the State where recognition
and enforcement was sought, excluding awards made in a foreign State but submitted by
agreement of the parties to the procedural law of the former. The report also notes that
“this preference for the territorial approach” was limited to the article under discussion and
would not preclude the possibility of drawing the line differently in respect of other
provisions.(20) The uncertainty about the territorial or mixed territorial/autonomy criteria
for the application of the model law, which was not finally settled until the last stages of
the Commission session,(21) greatly complicated the drafting process in respect of a
number of provisions, including in particular what became Arts. 34, 35 and 36 of the Law,
and renders the reports, and especially the Commission Report, difficult to read.

11. The Working Group noted that there was no essential difference between the
provisions of the draft article which dealt with domestic awards and that which dealt with
foreign awards;(22) but concluded that for the sake of clarity and possible different
treatment of domestic and foreign awards in other respects, it was advisable to have
separate articles on those two types of awards.(23)

12. A basic issue of policy was raised in respect of the draft article on recognition and
enforcement of foreign awards.(24) The question was whether the model law should
contain such an article, since for those States that had ratified or acceded to the New
York Convention or other relevant conventions there was no need for adopting provisions
on recognition and enforcement, and other States would be unlikely to accept such
“liberal” provisions. The majority view was, however, that the inclusion of such provisions
in the model law would constitute an important step towards creating, in addition to the
bilateral and multilateral network, a unilateral system of recognition and enforcement of
foreign arbitral awards. In response to the concern that, unlike the New York Convention,
the draft model law did not provide the means to require reciprocity, it was stated that the
draft article "165"on grounds for refusing recognition and enforcement could provide such
a safeguard.(25)

13. b. Grounds for refusing recognition and enforcement

The separate draft articles relating to “domestic” and “foreign” awards (as determined by
the territorial criterion), respectively, raised a number of questions of policy which were
identified and analyzed by the Secretariat in extensive footnotes.(26) As in the case of the
draft provisions on recognition and enforcement, unsuccessful proposals were made to
delete both articles.(27) The most troublesome issue, on which divergent views were
expressed, concerned the desirability of harmony of the two provisions with Art. V of the
New York Convention to whose provisions the Working Group was to pay “due regard”. In
the discussion of the draft article on “domestic” awards, the view prevailed that with
respect to those awards there was less need for harmony than in respect of the draft
article on “foreign” awards. The New York Convention should be taken as the basis for the
work of the Working Group which might, however, deviate therefrom where there were
good reasons for doing so.(28)

14. This tentative decision raised further questions in the discussion of the draft provision
relating to “foreign” awards. The Working Group decided that the latter should be closely
modelled on Art. V of the New York Convention “without precluding the possibility of a
substantive modification in exceptional cases for cogent reasons”. The decisions of the
Working Group relating to the “domestic” awards were not binding in respect of the draft
article relating to “foreign” awards, but that approach “did not necessarily exclude the
option of later striving for greater harmony between the treatment of 'domestic' and
'foreign' awards.”(29) In the light of the subsequent decision by the Working Group to
combine the two provisions most other policy issues became irrelevant and need not be
mentioned here. I merely note that the Working Group adopted the draft provision
modelled after Art. VI of the New York Convention (cf. text at n. 18 supra), which after
minor changes became Art. 36(2) of the Law.(30)

15. c. Recourse against award

The draft provisions on this subject expressed the Working Group's initial decision that an
action for setting aside should be the only recourse against an award and that the
grounds for setting aside should be limited to those on which recognition or enforcement
may be refused under Art. V of the New York Convention.

16. The remedy of setting aside was stated to be the exclusive remedy against an award
“made under this Law”, but the grounds on which the "166"award could be set aside were
those on which recognition or enforcement might be refused under the draft provision on
territorial one while the remedy of setting aside appeared to apply to awards either made
in the country where the action to set aside was brought, or made elsewhere but where
the parties had agreed on the applicability of the law of that country.(31) The potential for
conflict or confusion eventually disappeared when the Commission adopted the purely
territorial criterion for the application of Art. 34 of the Law.

17. Under one suggestion made during the Working Group's discussion of the draft
provisions on setting aside, but not followed up subsequently, these provisions should be
combined with the provisions on recognition and enforcement of “domestic” awards,
thereby streamlining the model law system.(32)

18. Discussion of general aspects of draft provisions at fourth and fifth sessions. Before
examining the specifics of the revised draft provisions submitted for discussion at the
Working Group's fourth session, the Group embarked on a discussion of general matters
of policy. The main questions of policy, which were interrelated and had been touched
upon at least incidentally in earlier discussions, were whether the model law should
contain provisions on recognition and enforcement of “foreign” and “domestic” awards; if
so whether and what to extent separate treatment of these two categories was necessary
and justified; and how closely any provisions on recognition and enforcement should
follow the corresponding articles of the New York Convention.(33)

19. The arguments against the inclusion in the model law of provisions concerning
recognition and enforcement of “foreign” awards were essentially the same as those that
had been advanced, and rejected by the majority, at the Working Group's third
session.(34)

20. The arguments against the retention of provisions concerning “domestic” awards
were that their recognition and enforcement was satisfactorily dealt with in national laws,
some of which, moreover, set less onerous conditions than those contemplated by the
model law. In addition retention of the provisions concerning “domestic” awards would
create an unacceptable “double control”, since an award could be attacked in an action to
set it aside on the same grounds as could be invoked against its recognition and
enforcement.(35)"167"

21. These arguments did not convince the majority of the Working Group of the necessity
or, indeed, the justification of the deletion of the draft provisions dealing with recognition
and enforcement. The majority took on the contrary an affirmative stand in favour of the
inclusion of such provisions covering both “domestic” and “foreign” awards, based on the
consideration that a model law on international commercial arbitration would be
incomplete if it did not deal with recognition and enforcement of awards and recourse
against awards, and on the further consideration that one should strive for uniform
treatment of all international awards irrespective of their place of origin.(36) During its fifth
and final session, the Working Group once again considered whether the model law
should deal with recognition and enforcement of both “domestic” and “foreign” awards in
international commercial arbitration, and while divergent views continued to be expressed
the Working Group confirmed its earlier conclusion.(37)

22. The majority suggested that in order to avoid conflict with the New York Convention
the provisions of the model law should be closely modelled on the corresponding
provisions of that Convention, and that the model law should not adversely affect the
reciprocity reservation permitted by the Convention.(38)

23. In relation to the draft provision concerning recognition and enforcement of “domestic”
awards, the majority recognized that it envisaged more onerous conditions than existed in
a number of legal systems and that it should therefore be seen as setting maximum
standards which would allow States to require less than provided therein. The majority
also recognized that the double control under the respective draft provisions concerning
grounds for refusing recognition and development of “domestic” awards and the setting
aside of those awards was undesirable and should be avoided by an appropriate
technique. Finally, it was proposed to reconsider the draft provisions on recognition and
enforcement with a view to providing for recognition standing alone, i.e., where it is not
merely relevant as a pre-condition of enforcement”.(39)

24. Consideration of specific policy issues at fourth and fifth session. The Working Group
agreed to consolidate in one article the separate draft provisions on recognition and
enforcement of “domestic” and “foreign” arbitral awards. It was understood that the
conditions in the consolidated article were maximum conditions. The Working Group also
agreed to consider a text on recognition standing alone.(40)

25. After deliberation the Working Group decided to consolidate the draft provisions on
grounds for refusal of recognition and enforcement of "168"“domestic” and “foreign”
arbitral awards, respectively. If further decided to do so on the basis of the draft provision
relating to “foreign” awards. Nevertheless, in view of what was recognized to be the
tentative nature of the basic policy decision, observations were made on the former draft
provision in case it were retained as a special regime, and conclusions were reached
regarding amendment of the draft provision in that event.(41)

26. The Working Group reaffirmed its view that the model law should not cast any doubt
on the legal effect of a reciprocity reservation made with regard to the application of
provisions of the New York Convention for the Recognition and Enforcement of Arbitral
Awards. On the other hand, it did not adopt a suggestion made at its fourth session to
include in the article requiring recognition and enforcement of an arbitral award a
provision that would, on a unilateral basis, allow a similar reciprocity reservation.(42) The
issue was considered again at the fifth and final session of the Working Group which
agreed that a State which wanted to apply the obligation to recognize and enforce an
arbitral award only on the basis of reciprocity should express this restriction in its
legislation, specifying the basis or connecting factor and the technique used by it.(43)

27. At both its penultimate and final sessions the Working Group tried to implement its
decision mentioned in nr. 23 supra to avoid the “double control” of the “domestic” arbitral
award through objections to recognition and enforcement based on the very reasons that
support setting aside. To maintain this double procedure could lead to conflicting
decisions by courts of the same country, since actions for recognition and enforcement
would be brought in the court designated by the code of civil procedure whereas
application for setting aside would be heard by the special court designated pursuant to
Art. 6 of the Law. A radical solution, which would have eliminated the procedure for
refusal of recognition and enforcement and would have left an application for setting aside
as the only control of “domestic” awards, was rejected since it would deprive a party of the
possibility to raise objections if “domestic” enforcement was sought after the expiration of
the short period for setting aside, while the same objections could still be raised against
enforcement in any other State.(44) The Working Group was, however, agreed that the
double procedure should be avoided during the time period for setting aside and
requested the Secretariat to prepare a draft provision to that effect.(45)

28. Under the draft provision submitted to the Working Group at its final session, a party
against whom “domestic” enforcement of an award was sought could have raised an
objection only by an application for setting "169"aside to the special court. While there
was considerable support for the policy underlying that provision, the Working Group
decided after deliberations that the system envisaged under the provision was not an
appropriate one, leaving it to the Commission to consider a more acceptable system.(46)

29. Commission consideration of inclusion of provisions on recognition and enforcement.

Before engaging in a detailed discussion of the Working Group draft of Arts. 35 and 36,
the Commission first considered the general question of whether these articles should be
retained at all. In fairly short order, some twenty delegates stated their views. Thirteen
expressed themselves in favour of inclusion of provisions covering both “domestic” and
“foreign” awards.(47) The United Kingdom delegate could envisage excluding “foreign”
awards but would retain the provisions in respect of “domestic” awards which in the
United Kingdom, for example, were not selfenforcing.(48) Five delegations felt that the
model law should not deal with recognition and enforcement of arbitral awards at all.(49)
The Commission accordingly decided that both articles should be retained, subject to
such changes as the Commission might make in the course of its detailed examination of
their text.

30. In their written observations several countries had suggested that provision be made
in the model law for reciprocity as a condition for recognition and enforcement of “foreign”
awards.(50) The United States stated its understanding, based on the report of the final
session of the Working Group, that the freedom of any State to apply Art. 35 only on the
basis of reciprocity as expressed in its national legislation was fully preserved.(51)

31. At the Commission session, the Soviet Union delegate thought that provision should
be made in Art. 35 for the possibility for States to require reciprocity. Their adoption of the
model law might turn on whether they would want to avail themselves of that
possibility.(52) However, in the ensuing "170"discussion it appeared that the weight of
opinion was in favour of clarification of the matter in the report, rather than an expression
in the text of Art. 35.(53)

32. As stated in nr. 28 supra, the Working Group had been unable to devise a
satisfactory solution for the problem of double control and had invited the Commission to
consider an appropriate solution. The question was not raised at the Commission session.
However, in its written observations the United States, while supporting the view that
defences against recognition and enforcement may be asserted in setting aside
proceedings as well as in opposition to an application for recognition and enforcement,
stated that Art. 36(2), which authorizes the court to adjourn its proceedings if an
application has been made for setting aside, provided a practical solution.(54)

33. The arguments advanced at the Commission session in favour and against the
inclusion in the model law of provisions dealing with recognition and enforcement were
basically the same as those made in the course of the sessions of the Working Group.
They are briefly summarized in paragraphs 308-310 of the Commission Report. Referring
to the concerns expressed about conflicts with the New York Convention or adverse effect
on its operation the Report states:

“It was pointed out, in that respect, that the model law, as expressed in its article 1(1), was
subject to any such treaty, that any State adopting the model law could consider
incorporating certain restrictions, for instance, based on the idea of reciprocity, and that
articles 35 and 36 were closely modelled on the provisions of that Convention”.(55)

34. “Award” not defined. As explained in Article 2, nrs. 9-14 supra, the term “award” was
not defined in the Law.

Article 34 - Application for Setting Aside as Exclusive Recourse Against Arbitral

Award

(*)

Paragraph (1)

1. The Working Group agreed at its second session that the model law should provide for
one type of action of “attacking” an award and considered "172"successive draft
provisions for setting aside.(34.1) Until the Commission took the final decision to adopt
territoriality as the basic criterion for the applicability of the Law, these drafts had
expressed their applicability by qualifying the awards as “made under this Law” (at the
fourth session)(34.2) and, in the alternative, “made in the territory of this State” or “made
under this Law” (at the fifth and final session).(34.3) With the adoption of the territorial
criterion, both alternatives stated the correct position: an award “made in this State” met
the requirement of Art. 1(2) that the place of arbitration was in “this State”, and likewise an
award could only be made “under this Law” if the place of arbitration was in “this State”.
The qualifications had, however, become redundant after the adoption of Art. 1(2) and
were deleted.

2. While an application for setting aside is the only recourse by way of an active attack on
the award, Art. 36 gives a party the right to raise objections against recognition or
enforcement of an award. At its final session the Working Group agreed that for the sake
of clarity reference should be made to that other recourse.(34.4) However, when it
appeared that the term “recourse” had, in a number of languages, the connotation of an
initiative or action of a party such as an “appeal”, the Working Group reversed its decision
since the meaning of the term “recourse” did not fully correspond to the raising of
objections envisaged under Art. 36.(34.5) The Commission Report confirmed the
understanding that the application for setting aside was exclusive in the sense that it
constituted the only means for actively attacking the award. A party was, however, not
precluded from defending itself by requesting refusal of recognition and enforcement in
proceedings initiated by the other party.(34.6)

3. An application for setting aside must be made in accordance with paragraphs (2) and
(3) of this article. Paragraph (2) provides that the application will be considered by the Art.
6 court and lists the exclusive grounds on which an award may be set aside, while
paragraph (3) states the time limits within which the application must be made.

Paragraph (2)
4. The six grounds on which an award may be set aside are divided in two groups. A
party basing its application on one or more of the grounds listed in subparagraph (a) must
prove their existence, while the Art. 6 court, in "173"acting on the party's application, may
set an award aside on its own motion on one or both of the grounds listed in
subparagraph (b). The distinction is important not only because the applicant is not
required as a legal matter to allege these grounds, but because the court may set an
award aside notwithstanding waiver or estoppel by the applicant under Arts. 4 or 16.

5. Paragraph (2) tracks, and to a large extent reproduces verbatim, the language of Art. V
of the New York Convention which lists the grounds on which recognition and
enforcement of an award may be refused. Like that article (and Art. 36 of the Law) it uses
the permissive “may” which applies to both subparagraphs (a) and (b) and this gives the
court a certain measure of discretion. I shall not comment on this or other issues on which
there is no substantial difference between the model law and the New York Convention.

6. Until the fifth and final session of the Working Group, there had been separate draft
provisions on recognition and enforcement of “domestic” and “foreign” international
awards respectively. These draft provisions preceded the draft provision on setting aside.
The latter stipulated the same grounds for setting aside as for refusing recognition and
enforcement of “domestic” awards, and did so by reference back to the draft provisions on
recognition and enforcement rather than spelling them out.

7. However, at its fourth session the Working Group agreed to consolidate the draft
provisions on recognition and enforcement, which were not in every respect identical, and
to do so on the basis of the draft provisions governing “foreign” awards. The Working
Group also decided to reverse the earlier order and to place the provision on setting aside
before the provisions on recognition and enforcement. The provision on setting aside then
spelled out the grounds in specific terms rather than by reference and those terms were
(except in subparagraph (2)(a)(iv)) the ones used in the consolidated provision on
grounds for refusal to recognize and enforce an arbitral award.

8. Subparagraph (2)(a)(i). As submitted to the Working Group at its final session, this
provision was as far as applicable identical with Art. V, paragraph (1)(a) of the New York
Convention in stating as ground for setting aside that:

“the parties to the arbitration agreement referred to in Art. 7 were under the law applicable
to them, under some incapacity, or the said agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon, under the law of this State.”

9. There was considerable support for substituting “a party to the arbitration agreement
referred to in Art. 7 lacked the capacity to conclude the agreement”for the first part of the
text quoted above, starting with the “parties” and ending with “under some incapacity”,
since that text was regarded as containing an incomplete and inappropriate conflict of
laws rule. "174"The prevailing view was, however, to retain the current wording because
of its identity with that of Art. V(1)(a) of the New York Convention.(34.7)

10. There was also some support for limiting the second part of the above-quoted text to
the statement that “the arbitration agreement is not valid” and deleting the balance. Here,
too, identity with New York Convention language was an argument in favour of retaining
the current language.(34.8)
11. At the Commission session, the observer for ICCA, reverting to the discussion in the
Working Group, argued that the incapacity of only one of the parties should be sufficient
for setting aside the award. Moreover, the words “under the law applicable to them” were
in any event unclear. The Working Group draft was aligned with the New York Convention
language but where wording was unclear, the Commission might want to depart from that
language.(34.9) The suggestion received wide support.(34.10) The Chairman, stating that
some speakers had in mind that only the incapacity of the applicant should be provided
for, asked the observer for ICCA whether it was his recommendation that the applicant
should be able to furnish proof of incapacity of either party. The answer was
affirmative.(34.11)

12. The delegate of the Soviet Union asked and obtained confirmation by the Chairman
that the acceptance of the ICCA recommendation was a drafting matter and did not imply
a substantive difference between the model law and the New York Convention.(34.12)
The delegate of Hungary, supported by the delegates of China and Tanzania and the
observer for Bulgaria stressed the importance of consistency between the various
instruments covering the subject. Changes should therefore not be made for purely
cosmetic reasons.(34.13) The Chairman said that it should be borne in mind that the New
York Convention does not deal with the setting aside of awards(34.14) and the United
Kingdom delegate, while agreeing with the Hungarian delegate, said that it would be
wrong to incorporate wording from the New York Convention blindly.(34.15)

13. The observer for the Hague Conference referred to his organization's written
observations on Art. 36(1)(a)(i), which applied to the second part of Art. 34(2)(a)(i) as
well.(34.16) It did not seem right that the validity of an arbitration agreement should be
governed by the law of the country of "175"arbitration, since the place of arbitration was
not necessarily connected with the main contract or the parties to it. He therefore
proposed that the second part of subparagraph (2)(a)(i) be amended to read “or the said
agreement is not valid”, deleting the words “under the law to which the parties have
subjected it or, failing any indication thereon, under the law of this State”.(34.17)

14. The proposal was endorsed by the delegates of Australia and France.(34.18) The
observer for Finland, on the other hand, thought that the point was adequately covered by
the fact that the parties have complete freedom to choose the law applicable to their
arbitration agreement.(34.19) His view was shared by the Swedish delegate.(34.20) The
United States delegate was opposed to the proposals,(34.21) while the Italian delegate
and the observers for ICC and the Cairo Centre felt that the proposals required further
discussion.(34.22)

15. The Commission decided to amend the first part of subparagraph (2)(a)(i) along the
lines of the ICCA recommendation and to retain the wording of the second part contained
in the Working Group draft.(34.23) With respect to the latter decision, the Commission
Report noted, apart from the identity with the wording of the New York Convention, the
fact that the provision recognized party autonomy and that to use the place of arbitration
as a secondary criterion provided the parties with a degree of certainty which was lacking
under the formula proposed by the Hague Conference.(34.24)

16. Subparagraph (2)(a)(ii). This subparagraph became the focus of a major debate on
the question whether paragraph (2) should give an exhaustive list of grounds for setting
aside and, if the answer was that it should, whether it did so. After a lengthy and difficult
discussion, extending over parts of three meetings, which also involved the interpretation
of subparagraph (2)(a)(iv) and, in particular, of subpa,agraph (2)(b)(ii) the Commission
adopted the Working Group version, subject only to the non-controversial replacement of
the words “appointment of the arbitrator(s)” in that version by the words “appointment of
an arbitrator” which made clear that in arbitral proceedings with more than one arbitrator
failure to give proper notice of the appointment of any one of them constituted a ground
for setting aside an award.(34.25)"176"

17. In its written observations the United Kingdom had expressed concern that the
exclusive test of grounds for setting aside an award contained in the Working Group draft
might not cover all cases of procedural injustice. Quoting relevant portions of
subparagraphs (2)(a)(ii), (2)(a)(iv) and (2)(b)(ii) of Art. 34, and of Art. 19(3) of the Working
Group draft (Art. 18 of the Law), it gave examples of awards tainted by fraud, corruption or
perjured evidence which might not be covered by the quoted provisions.(34.26) Referring
to these observations, the delegate of the United Kingdom stated that the concept of
“public policy”, mentioned in paragraph (2)(b)(ii), did not exist in his country. His
delegation would therefore welcome the addition to Art. 34 of a more general formula to
ensure the possibility of recourse in all cases of serious procedural injustice.(34.27)

18. When the Commission started its consideration of subparagraph (2)(a)(ii), the United
Kingdom delegate said that the textual distinction, between that provision and Art. 19(3)
(Art. 18 of the Law)(34.28) was unnecessary and that the two texts should be assimilated
to each other.(34.29) The delegate of the United States was inclined to agree, noting that
this would bring the model law closer to UNCITRAL Arbitration Rules; it would, on the
other hand, distance it from the New York Convention.(34.30) The observer for Canada
suggested that subparagraph (2)(a)(ii) was the place to take account of the comments of
the United Kingdom about the need for Art. 34(2) to cover all cases of serious procedural
injustice. He also agreed that subparagraph (2)(a)(ii) should be assimilated with Art. 19(3)
(Art. 18 of the Law) since procedural misconduct by arbitrators interfered with the right of
parties to present their case.(34.31)

19. The discussion of the problem raised by the United Kingdom was resumed after the
Commission had dealt with and reached a provisional conclusion on subparagraph
(2)(b)(ii). I have covered the discussions on this subparagraph in nrs. 46-53, infra. In
opening the resumed discussion the Chairman said that sub-paragraph (2)(a)(ii) could
perhaps be widened a little so as to cover procedural irregularities and suggested that the
United Kingdom might prepare a draft amendment for consideration.(34.32) The delegate
of the United States cautioned that the amendment should not be so broad as to include
mistakes by arbitrators but should be restricted to situations where the award was
procured by fraud, corruption or other undue means.(34.33) Along the same lines, the
French delegate felt that the suggested addition should concentrate on the violation of
fundamental "177"principles of procedure or failure to respect the legitimate expectations
of parties with regard to the proper conduct of arbitration proceedings and not on the non-
observance of ordinary procedural rules.

20. The delegate of the United Kingdom said that for the purposes of drafting an
amendment it was essential to know the decision of the Commission on the general point
raised in the written observations of Sweden,(34.34) namely, whether the right to set
aside existed upon proof of the specified grounds or only if those facts had affected the
results of the arbitration.(34.35) The French delegate preferred an objective criterion
only,(34.36) with which the delegate of Hungary agreed, stating that the permissive “may”
in the opening clause of Art. 34(2) covered all the necessary elements for the court's
decision.(34.37) Although there is no reference in the Summary Records to a decision
taken on this issue, the Commission Report states:

“It was understood that an award might be set aside on any of the grounds listed in
paragraph (2) irrespective of whether such ground had materially affected the
award.”(34.38)

21. The United Kingdom delegate presented two alternative proposals. The first, which
he thought was an acceptable rendering of ordre public, would have added to (a)(ii) “or if
the proceedings were otherwise in breach of natural justice”. The second which was
inspired by Art. 52 of the 1965 Washington Convention would have added “or if there had
been a serious departure from a fundamental rule (or: principle) of procedure”.(34.39)
These proposals were offered in order to solve the problem that had arisen because the
words “public policy” were an inaccurate rendering of the term ordre public which
conveyed a wider notion of procedural injustice.(34.40) He added in the ensuing
discussion that he had understood his mandate to be to draft a form of words which would
complement subparagraph (2)(b)(ii) and would be placed in paragraph (2)(a). One of the
main reasons for uncertainty on the part of the United Kingdom as to whether (2)(b)(ii)
was sufficient lay in the conjunction of “public policy” with “award”, which had been taken
to mean that the conflict with public policy might relate solely to the award and not to the
procedure leading up to it.(34.41)"178"

22. A number of delegates found the United Kindom's second alternative draft (with
“principle” substituted for “rule”) acceptable.(34.42) Most speakers, however, were in
favour of leaving paragraph (2) as it was.(34.43) Their preference was based on their view
that amendment was not needed since subparagraph (2)(b)(ii) met the concerns of the
United Kingdom.

23. Doubts on this point could be dispelled by suitable comment in the report of the
Commission. As pointed out by the Spanish delegate, this was particularly desirable with
regard to the question whether conflict with public policy covered all the steps in the
arbitral proceedings during which irregularities might have occurred.(34.44) The
Secretariat observed in that connection that all the known cases under the New York
Convention in which violation of public policy had been invoked concerned violation of
procedure. There was a clear understanding that the reference to the award in
subparagraph (b)(ii) covered impropriety, such as corruption and fraud, in the manner in
which the award had been reached.(34.45) Some speakers thougth that reference might
be made in paragraph 2(a) in some way to Art. 19(3) (Art. 18 of the Law) which expressed
the principles of procedure governing arbitration under the model law.

24. Summing up the discussion, the Chairman said that there was a general desire that
paragraph (2)(a) should be an exclusive list of grounds for setting aside an award. Most
speakers had stated that their first preference was to leave Art. 34 as it was but many
others had favoured alternative two of the United Kingdom's proposal or considered it the
second best option. There had also been a willingness to take some action to meet the
concerns of those holding the same views as the United Kingdom delegation. He
therefore proposed to add to paragraph (2)(a) the full text of Art. 19(3) (Art. 18 of the Law)
and to have the Commission's report state that most speakers had expressed the view
that the term “public policy” covered cases of fraud, corruption and other serious violations
of procedure.(34.46)

25. The issue was reopened at the penultimate meeting of the Commission in the context
of a discussion of the disparity which the Commission had created between Arts. 34 and
36. The grounds for refusing recognition or enforcement followed the text of the New York
Convention and contained no reference to Art. 18. The Chairman thought that since the
New York Convention was not concerned with setting aside, the Commission might
accept differing formulations of the two articles.(34.47) However, the French,
"179"Hungarian and Soviet Union delegates felt that Arts. 34 and 36 should be
identical.(34.48)

26. The Austrian delegate then referred to the broad interpretation of Art. 34(2)(b)(ii) as
not referring exclusively to the award but also covering the procedures that led to an
award. As long as that broad interpretation was clearly reflected in the Commission's
report, he would favour the Working Group text of subparagraph (2)(a)(ii).(34.49) In what
seemed to be a partial abandonment of the initial position of his delegation, the delegate
of the United Kingdom said that while his delegation could not agree to any action by the
Commission to align Arts. 34 and 36 that implied a reversal of its decision to expand the
scope of Art. 34, the Commission might perhaps take the view that the purpose of that
decision could equally well be achieved by the incorporation in the report of wording
conveying the broad interpretation of paragraph (2)(b)(ii). If so, his delegation could
accept that as a substitute for the Commission's earlier decision.(34.50) The Australian
delegate added that the report should in that case make it clear that any breach of the
obligations imposed by Art. 18 was intended to be covered by the wording of paragraph
(2).(34.51)

27. The Commission thereupon decided to reverse its decision to expand the
enumeration of the grounds for setting aside in paragraph (2)(a) and, instead, to include in
its report the wording referred to by the United Kingdom and Australian delegates.(34.52)

28. The relevant portion of the Commission Report reads as follows:

“It was understood that the term 'public policy', which was used in the 1958 New York
Convention and many other treaties, covered fundamental principles of law and justice in
substantive as well as procedural respects. Thus, instances such as corruption, bribery
and fraud and similar serious cases would constitute a ground for setting aside. It was
noted, in that connection, that the wording 'the award is in conflict with the public policy of
the State' was not to be interpreted as excluding instances or events relating to the
manner in which an award was arrived at”.(34.53)

29. While it is to be regretted that the Commission's report does not include the
Australian wording, it is not open to doubt that any breach of the obligations imposed by
Art. 18 is covered by subparagraph (2)(a)(ii) as well as subparagraph (2)(a)(iv) to which
the delegate of the Soviet Union had drawn attention.(34.54)"180"

30. Subparagraph (2)(a)(iii). The final Working Group version, which was identical with
the corresponding provision of the New York Convention, was approved by the
Commission without debate.(34.55)
31. Subparagraph (2)(a)(iv). The Commission approved the final Working Group version
of this provision.

32. The draft of the subparagraph submitted by the Secretariat to the Working Group
differed in two respects from the draft of corresponding subparagraph (1)(a)(iv) of Art. 36
which reproduced the text of Art. V(1)(d) of the New York Convention.(34.56) In the first
place, since setting aside only applies to “domestic” awards the words “not in accordance
with the Law” were substituted, as a necessary drafting matter, for the Art. 36 formula “not
in accordance with the law of the country where the arbitration took place”, which reflected
the fact that Art. 36 applied to awards irrespective of the country in which they were made.

33. Secondly, the Secretariat suggested broadening the grounds for setting aside by
permitting setting aside if the composition of the arbitral tribunal or the arbitral procedure
was not in accordance with the mandatory provisions of this Law and the agreement of
the parties. The italicized words were added to the language of Art. 36. The Working
Group adopted the policy underlying the Secretariat's suggestion on the ground that a
mandatory provision of the model law would necessarily prevail over any procedural
agreement of the parties which was in conflict with such a provision. The Secretariat was
asked to prepare a new draft so as to avoid the expression “mandatory” which was not
understood in all legal systems as meaning “from which the parties cannot
derogate”.(34.57) The Working Group did not examine the redrafted text which was
submitted directly to the Commission.

34. In its Analytical Commentary on the Working Group draft, the Secretariat stated that
since the subparagraph expresses the priority of the mandatory provisions of the model
law over any agreement of the parties, it covers to a large extent also the grounds of
subparagraph (a)(ii) “which comprise cases of violations of Art. 19(3) (Art. 18 of the Law)
and Art. 24”.(34.58) This is true, but I submit that even in the absence of an express
reference to mandatory provisions of law an agreement on the composition of the arbitral
tribunal or the arbitral procedure which would violate mandatory law would almost
inevitably be covered either by subparagraph "181"(a)(ii) or by subparagraph (b)(ii), and
that that express reference was therefore not necessary.(34.59)

35. My own comment on the text is that it does not clearly reflect the Working Group's
decision that an award should be subject to setting aside not only if the composition of the
arbitral tribunal or the procedure is not in accordance with any agreement of the parties,
but also if composition or procedure, while in accordance with such an agreement,
violates mandatory provisions of “this Law”. The text says that if the agreement conflicts
with mandatory law, non-observance of the agreement is not a ground for setting aside,
but does not say that observance of such a conflicting agreement is a ground for setting
aside.(34.60) The same criticism was directed at the text in the written observations of
Canada which suggested that the provision should be redrafted to read “... not in
accordance with the agreement of the parties or with a provision of this Law from which
the parties may not derogate”(34.61) I returned to the point at the Commission session
speaking as the observer for ICCA, but it was not further discussed.(34.62)

36. At the Commission the observer for Canada requested a clarification of the last part
of subparagraph (a)(iv), beginning with the words “failing such agreement” to which the
Chairman replied that it was his view that in the absence of an agreement of the parties
on the composition of the tribunal or procedure, these matters had to conform even to the
non-mandatory rules of the forum and that the award might be set aside if those rules had
not been observed.(34.63) I agree with this interpretation.

37. Subparagraph (2)(b)(i). After a lengthy discussion the Commission adopted the final
Working Group version of this provision.

38. In the separate draft provisions on refusal of recognition and enforcement of

“domestic” and “foreign” awards prepared for the third session of the Working Group, the
issue of arbitrability was handled in different ways. While the draft provision relating to
“foreign” awards was modelled on the New York Convention, non-arbitrability in the draft
provision relating to “domestic” awards was not treated as a separate ground for refusal of
recognition and enforcement, but rather as included in conflict with public policy. The
Secretariat tentatively suggested adding to the statement of that ground the words
“including any public policy rule on the arbitrability of the subject matter of the dispute”,
stating that the quoted words were based “on the common view that Art. V(2)(a) of the
1958 New York Convention "182"presents, in substance, a sub-category of the general
reason set forth in subparagraph (b) of that paragraph”.(34.64) Since the draft provision
on setting aside stated the grounds for setting aside by reference to the grounds for
refusing recognition and enforcement of “domestic” awards, the foregoing applied also to
setting aside.(34.65)

39. The majority view in the Working Group was that the suggested addition should not
be retained since rules on non-arbitrability normally formed part of the public policy of a
State.(34.66) However, at the next session of the Working Group this decision was
reversed and it was decided that the provision should specifically mention the ground of
non-arbitrability, like the provision relating to “foreign” awards (and Art. V of the New York
Convention).(34.67) Because of the drafting technique followed, each decision had
applied automatically also to setting aside. The last decision was reflected as
subparagraph (2)(b)(i) of draft Art. 34 on setting aside which was prepared for
consideration at the fifth (and final) session of the Working Group. Departing from the
earlier technique it spelled out the grounds for setting aside.(34.68)

40. The Working Group had considerable difficulty dealing with the provision. Questions
were raised regarding the justification for setting an award aside, with global effect, on the
ground of non-arbitrability under the law of the forum State.(34.69) According to some,
such effect should result only from a finding that the subject matter of the dispute was not
arbitrable under the law applicable to that issue which was not necessarily the law of the
place of arbitration. Others felt that a different view was justified if the non-arbitrability was
part of the public policy of the forum State. Various suggestions were made which only
served to disclose additional problems. Acting under severe pressure of time, the Working
Group agreed that the matter required further study and decided to retain subparagraph
(2)(b)(i) in its current form and to invite the Commission to reconsider the matter in the
light of comments by Governments and organizations.(34.70)

41. Without expressing a Secretariat opinion on the subject, the Analytical Commentary
stresses the global effect of setting aside by virtue either of Art. V(1)(e) of the New York
Convention or Art. 36 (1)(a)(v) of the Law, where they or one of them are applicable, since
setting aside of an arbitral award by a court of the country in which, or under the law of
which, that award was made is a ground for refusal of recognition and
enforcement.(34.71)"183"
42. The issue elicited only two relevant written observations. Poland agreed with the
Working Group arguments against the subparagraph and proposed the replacement of
the words “under the Law of this State” by the words “under the rules of law applicable to
the substance of the dispute”.(34.72) The Hague Conference proposed the deletion of the
subparagraph.(34.73)

43. At the Commission session three points of view were expressed: retention of the
subparagraph; deletion of the subparagraph; and, as a compromise suggested by the
Chairman, retention of the subparagraph but deletion of the words “under the law of this
State”.

44. Most of the speakers favoured retention of the subparagraph which would enable a
party to have an arbitral award set aside by a court of the country where the arbitration
had taken place if the law of that country did not allow the subject matter of the dispute to
be settled by arbitration.(34.74) Of those who were opposed,(34.75) the French delegate
said that while questions of arbitrability and public policy were extremely important they
would be dealt with under Art. 36. He therefore believed that all of Art. 34(2)(b) should be
deleted.(34.76)

45. In offering the compromise solution the Chairman said that it left open the question of
applicable law but that it must be understood that in most cases the state court would
apply its own law.(34.77) The compromise was declared acceptable by some speakers,
including as a second best solution by proponents as well as opponents of the
subparagraph,(34.78) but strongly opposed by others who were of the opinion that it
would create confusion and uncertainty, obscure the meaning of the subparagraph, and
create more problems than it solved.(34.79) The Chairman concluded that as most
delegations seemed to favour the retention of subparagraph (b)(i) the text should be left
unaltered.(34.80)"184"

46. Subparagraph (2)(b)(ii). The Commission adopted the final Working Group version of
this subparagraph ( “The award or any decision contained therein is in conflict with the
public policy of this State”) subject to the deletion of the italicized words.

47. At the Working Group's second session the question was considered whether, on the
assumption that it would be acceptable to restrict the grounds for setting aside to those
mentioned in the New York Convention as grounds for refusal of recognition and
enforcement, the public policy ground should be further restricted and qualified as
“international public policy”. It was argued in favour of an affirmative answer that the case
law and doctrine of many countries showed a clearly discernible trend to apply a standard
of public policy in cases of international commercial arbitration different from that applied
in cases of domestic commercial arbitration.(34.81) Under the opposing view, adoption of
a different standard might lead to a conflict between the ground for setting aside for
violation of “international public policy” under the model law and the grounds for refusing
execution of a foreign award for violation of “public policy” under the New York
Convention.(34.82) The Secretariat was asked to prepare alternative drafts.

48. At the third session of the Working Group, the question was discussed in the context
of the provisions on refusal of recognition and enforcement, since the draft provision on
setting aside did not spell out the grounds for setting aside. While some support was
expressed in favour of the word “international” the prevailing view was that it should not
be used “because its underlying idea was not generally accepted and, above all, the term
'international public policy' lacked precision”.(34.83)

49. There was no specific discussion in the Working Group of the meaning of the term
“public policy”, but when at its fourth session a suggestion was made to widen the
grounds for setting aside by adding “manifest injustice” to the list of grounds, the
suggestion was rejected as being too vague and too broad and because most cases of
such injustice would fall under the grounds stated in what have become subparagraphs
(2)(a)(ii) and (2)(b)(ii) of the Law.(34.84)

50. In its written observations, Yugoslavia commented that the formulation “the award or
any decision contained therein” might lead to the interpretation, incompatible with
contemporary trends towards restrictive interpretation of public policy, that an award could
be set aside on a ground which did not influence the decision on the merits of the
case.(34.85) Its views were restated at the Commission session and supported by the
delegates of "185"India and Tanzania, whereupon it was agreed to delete the words “or
any decision contained therein”.(34.86)

51. The Commission took up the discussion of subparagraph (2)(b)(ii) immediately after
its decision to retain subparagraph (2)(b)(i). Somewhat surprisingly, several delegations
preferred to see it deleted, principally because the term “public policy” was too
vague.(34.87) The observer for ICC thought, on the other hand, that the idea of public
policy should be further developed in the model law and a distinction made between
national and international public policy.(34.88)

52. For the delegate of the United Kingdom, the question was whether a case of serious
procedural injustice would be regarded as contrary to public policy.(34.89) The Chairman
said that during the drafting of the 1972 European Convention on State Immunity there
had been a long discussion on ordre public. Ultimately the French text of the Convention
had simply used that term while the English text had to specify a violation of a
fundamental rule of procedure in the form of “no adequate opportunity fairly to present his
case”, in order to make clear that the notion was not limited to substantive law.(34.90) The
delegate of Cyprus noted that the term ordre public had been used in the English text of
the Fourth Protocol to the European Convention on the Protection of Human
Rights.(34.91) Several speakers expressed themselves strongly in favour of retaining the
subparagraph.(34.92) Some of them expressed the hope that a formula could be found
that would meet the anxiety of the common law States, while others felt that the term
“public policy” was adequate because it clearly included respect for procedural regularity.

53. Summing up the discussion at this point the Chairman who had noted that there was
a public policy clause in all 38 conventions of the Hague Conference, said that the
Commission seemed disposed to retain subparagraph (2)(b)(ii) without amplification in the
text but with a reference in the report to what the term meant in other conventions in
which it was used - namely fundamental principles of law, substantive and
procedural.(34.93) A definitive decision was taken in the context of the later discussion of
a possible addition to subparagraph (a) which I have convered in nrs. 19 and following
supra. That discussion ended with the agreement on the interpretation of the term “public
policy” quoted in nr. 28 supra."186"

Paragraph (3)
54. The Commission approved the final Working Group version of this paragraph. It did
not adopt a proposal to make the period of time set forth in the paragraph subject to
contrary agreement of the parties.(34.94)

Article 35 - Recognition and Enforcement

(*)

1. The Commission approved paragraphs (1) and (2) of the Working Group draft of this
article without change. It decided to delete a third paragraph of the Working Group draft
as to which see nr. 12 infra.

Paragraph (1)

2. Art. 1(2) of the Law makes clear that Art. 35 applies regardless whether the place of
arbitration is in the model law State. In order to emphasize this, "187"it is repeated in the
text of this article in the equivalent expression “irrespective of the country in which [the
award] was made”.(35.1)

3. “Recognized as binding”. Paragraph (1) makes a distinction between recognition of an

award standing alone, and recognition as a step in the enforcement process. The former
will occur when, in judicial proceedings between the same parties, the successful party in
the arbitration invokes the res judicata effect of the award. The drafters of the New York
Convention did not focus on recognition as a process distinct from enforcement. Art. IV,
for example, speaks throughout of recognition and enforcement and, in particular, of “a
party applying for recognition and enforcement”.(35.2) It is, however, certainly not
inconsistent with that Convention to recognize that recognition and enforcement may be
separate processes, and not to require a party wishing to rely on an award to make an
application to have it enforced.

4. “Application in writing to the competent court”. In order to obtain enforcement of the

award, the successful party must make an “application in writing to the competent court”.
Two comments are in order. The model law does not prescribe the procedure to be
followed in order to enforce an award, leaving this to be determined by the procedural law
of the country where the enforcement is sought.(35.3) Secondly, while applications for
annulment are addressed to the Art. 6 court, the Working Group agreed that the
enforcement procedure should be conducted before the court designated by the law of the
country where the award is sought to be enforced “since the function envisaged here was
one of enforcement for which States had well established systems of competence”.(35.4)

5. “Subject to the provisions of this article and of article 36”. This clause applies both to
recognition and enforcement, as do the conditions laid down in paragraph (2).(35.5) As
just noted, the model law does not prescribe the procedure to be followed in order to
enforce an award, so that enforcement is governed in part by the model law and in part by
the procedural law of the forum. In case of conflict between the two, the model law will
prevail. As the Secretariat stated in the Analytical Commentary:

“Once the model law is enacted in State X, 'the Law applies' as lex specialis, i.e. to the
exclusion of all other pertinent provisions of non-treaty law, whether contained, for
example, in a code of civil procedure or in a separate law on arbitration. This priority,
while not expressly stated in the model law, follows from "188"the legislative intent to
establish a special regime for international commercial arbitration”.(35.6)

6. In its written observations, the United States suggested that the principle of lex
specialis be expressed in the text of the model law, stating that this would also help to
make clear that the model law was not to establish a self-contained and self-sufficient
system and that there were aspects of arbitration that were not regulated in the model
law.(35.7) When the United States delegate reverted to that proposal at the Commission
session, it was referred to an ad hoc working party which produced the following text for
inclusion in Art. 1: “This Law prevails over other provisions of law of this State as to
matters governed by this Law”. The basic objection raised against the proposal seemed to
be that States should be free to decide which provisions of the model law they would
adopt,(35.8) to which one might have answered that while this freedom to pick and
choose necessarily applied also to the lex specialis provision, that was no reason not to
include such a provision in the model law.

7. Summing up the discussion, the Chairman suggested that a note should be included in
the report “to the effect that the purpose of the model law was to cover the field of
application otherwise covered by national law, but that it had been left to the legislators in
States accepting the model law to deal with the situation as they understood it”.(35.9) The
Commission Report, which was approved by the Commission, substituted a much
improved rendering of reasons for the rejection of the proposals for an explicit statement
on the lex specialis aspect of the model law and of the conclusions to be drawn therefrom:

“The Commission decided not to include the suggested formulation in Art. 1 because of a
concern that the proposed provision linked a somewhat imprecise delimitation of 'matters
governed by this Law' with a categorical rule. However, it was understood that, since the
model law was designed to establish a special legal "189"régime, in case of conflict its
provisions, rather than those applicable to arbitrations in general, would apply to
international commercial arbitrations”.(35.10)

8. Time when an award becomes binding. Referring to the written observations of the
Soviet Union, its delegation pointed out that the Working Group draft did not determine
the time when an award becomes binding, although subparagraph (a)(v) of Art. 36(1) said
that recognition of enforcement of an arbitral award could be refused if the award “has not
yet become binding on the parties”. The question when an award became binding was to
be determined by the law applied by the State in which the award had been made. In the
case of an award made in a model law State, that could be appropriately achieved by
inserting a provision in Art. 32(1) which would give an indication of the time at which an
award became binding.(35.11) However, in the subsequent discussion of this question in
the context of Art. 31, the Commission failed to agree on a definition of the moment when
the arbitral award becomes binding.(35.12)

9. Scope of application. The explicit language of paragraph (1) leaves no doubt that it
applies to both “domestic” and “foreign” awards. The question was, however, raised at the
Commission session by the Italian delegate whether it would not be advisable to make
clear in the text that Art. 35 (and Art. 36) applied only to awards rendered in respect of
disputes that fall within the scope of Art. 1 of the Law, i.e., awards in international
commercial arbitration. As far as awards rendered within the territory of the model law
State were concerned, that could go without saying, but the situation was not so clear in
respect of awards made abroad.(35.13) The Chairman did not think that there was a need
for clarification: Art. 35 could not exceed the scope of application of the other provisions of
the model law.(35.14) The observer for ICCA thought that Art. 35 was quite unambiguous.
The award in question must be an award to which the model law was directed. If the
award made abroad whose enforcement was being sought was not an international award
within the meaning of the model law, it would be covered by the New York Convention if
that was otherwise applicable but not by the model law.(35.15) The United States and
French delegates thought that the insertion in Art. 35 of a reference to international
commercial arbitration would nevertheless be useful in resolving any ambiguity "190"and
would show clearly that the model law did not apply to just any arbitral award although it
did cover any country.(35.16)

10. The Commission agreed to insert language to that effect in Art. 35(1), but the Drafting
Group left the text unchanged. The Commission Report states that Arts. 35 and 36
covered only awards arising out of an international commercial arbitration in the terms of
Art. 1 of the Law, even as regards awards made in a foreign State, adding that this did not
mean that “the State in which the award was made must have itself adopted the model
law for those provisions to apply to the enforcement of the award”.(35.17)

Paragraph (2)

11. The Commission retained the Working Group draft without change, including the
footnote which indicates that the conditions set forth are intended to be maximum
standards. A state may therefore retain less onerous conditions.

Paragraph (3) of Working Group Draft

12. At the suggestion of the Secretariat the Working Group had approved a third
paragraph of draft Art. 35 reading as follows:

“Filing, registration or deposit of an award with a court of the country where the award was
made is not a precondition for its recognition or enforcement in this State”.(35.18)

13. The Secretariat had stated by way of explanation that such a provision might be
advisable in view of the fact that a foreign procedural law may require such registration or
deposit and that it might even be advisable in respect of awards made in the model law
State (“this State”) since registration or deposit is not regulated or even mentioned in the
model law. “An express statement would help to clarify that this fact should not be
regarded as an intentional gap to be filled by another municipal law but as a positive
regulation to the effect that registration or deposit is not a precondition for recognition or
enforcement”.(35.19)

14. This explanation appears to have been overlooked, and paragraph (3) to have been
misunderstood, by the Indian delegate and the Chairman. The "191"former stated, without
explanation, that the question whether an award must be filed, registered or deposited
should be left to each State.(35.20) The latter said that the paragraph would be
inappropriate in a model law State under whose general arbitration law registration or
deposit was required and suggested that paragraph (3) be deleted.(35.21) This statement
which was rendered in paragraph 316 of the Commission Report as suggesting that “it
would be inconsistent for a State to require awards to be registered but to enforce those
awards even though they were not registered”missed the point that paragraph (3) would
establish a special rule governing both “domestic” and “foreign” international arbitral
awards, just as the model law did on many other points. The suggestion to delete
paragraph (3) was made at the end of the day's proceedings and was agreed to without
opportunity for further discussion. It would not be inconsistent with the Commission's
decision for governments that enact the model law to restore paragraph (3) and thus to
realize the objective of uniform treatment of international awards wherever made.

Article 36 - Grounds for Refusing Recognition or Enforcement

(*)

Article as a Whole

1. Art. 1(2) of the Law makes clear that Art. 36 applies regardless whether the place of
arbitration is in the model law State. In order to emphasize this, it is repeated in the text of
this article in the equivalent expression “irrespective of the country in which [the award]
was made”.

2. As mentioned under the heading Introduction to Articles 34, 35 and 36, supra, nr. 9,
the Working Group initially considered separate provisions regarding grounds for refusal
of recognition or enforcement of “domestic” and “foreign” arbitral awards, respectively.
The introduction to the first set of drafts prepared by the Secretariat for consideration by
the Working Group at its third session states that while the draft articles treat separately
awards rendered in the State where the model law is in force and awards rendered
outside that State, an attempt was made “to suggest similar solutions in substance in
order to come closer to the ideal of uniform treatment of 'international' awards irrespective
of their place of origin”.(36.1)

3. The draft provision on “foreign” awards was stated to be modelled on Art. V of the New
York Convention and the one on “domestic” awards on that article of the Convention “with
some suggested modifications for the "193"sake of clarification or to adjust it to non-
foreign awards”.(36.2) In fact, the identical subparagraphs (a), (b) and (c) of those drafts
of what became subparagraphs (a)(i), (a)(ii) and (a)(iii) of Art. 36(1) differed from the
corresponding provisions of the New York Convention, while the draft subparagraphs (d)
and (e) of what became subparagraphs (a)(iv) and (a)(v) of Art. 36(1) differed from each
other in the two drafts as well as from the corresponding New York Convention provisions.
The two drafts of what became Art. 36(2) differed from each other, with the draft
respecting the “foreign” award modelled on the New York Convention. Finally, a draft
provision modelled on Art. VI of the New York Convention, which was stated to apply to
both “domestic” and “foreign” arbitral awards, became paragraph (2) of Art. 36.

4. Consideration of these drafts by the Working Group at its third session led to the
decision to bring the drafts relating to foreign awards in conformity with the New York
Convention language of the corresponding provisions and to limit the draft provision
modelled on Art. VI of that Convention to “foreign” awards.(36.3) At its fourth session the
Working "194"Group considered revised drafts and decided to consolidate the separate
provisions dealing with “domestic” and “foreign” arbitral awards on the basis of the
latter.(36.4)
Paragraph (1)

5. This paragraph states the exclusive grounds on which recognition or enforcement may
be refused and divides them into two classes. Subparagraph (1)(a) requires that the party
against whom the award is invoked furnishes proof of the existence of the grounds listed
therein to the court before which recognition or enforcement is sought. Subparagraph
(1)(b) provides, on the other hand, that recognition and enforcement may be refused by
the Court ex officio if it finds that the grounds listed in that subparagraph are present. An
implied waiver or submission by the losing party under Arts. 4 and 16(2) will not affect the
application of that subparagraph.(36.5)

6. As noted, Art. 35 leaves the details of the procedure for enforcement of an arbitral
award to the procedural law of the forum. Unlike applications for setting aside, which must
be addressed to the Art. 6 court, applications for enforcement will be initiated before the
court designated by the applicable national procedural law (“the competent court”) which
may well be different from the Art. 6 court. The fact is that, save for the obvious exception
of Art. 36(1)(a)(v), the grounds for refusal of recognition and enforcement and for setting
aside are identical and therefore create a risk of duplication of proceedings and conflicting
decisions. This risk was sought to be avoided by Art. 36(2), infra.

7. Application to both “domestic” and “foreign” awards. In consolidating the separate

provisions on recognition and enforcement of “domestic” and “foreign” awards,
respectively, on the basis of the latter, the Working Group had failed to satisfy itself that all
of the consolidated language could or should apply to “domestic” awards. I drew attention
to this in my 1984 report on “Recourse against the Award: Recognition and Enforcement
of the Award” in which I dealt with the issue in some detail.(36.6) The Analytical
Commentary pointed out that the fact that the grounds listed in paragraph (1) are
applicable to foreign as well as domestic awards must be taken into account when
interpreting the text, which was in large part copied from Art. "195"V of the New York
Convention applicable only to foreign awards.(36.7) In its written observations, the United
States said that its review of Art. 36(1) had shown that not all of the grounds for
recognition and enforcement might be equally applicable to both domestic and foreign
awards and suggested that the Commission should undertake a review in the light of its
decision on territorial application of the model law.(36.8)

8. When the Commission reached paragraph (1) shortly before the end of the
Commission session, the observer for ICCA said that, having decided to deal with both
“domestic” and “foreign” awards in the model law, the Commission must remember that
the same provisions should not always apply to both; the grounds for refusal that had to
be proved by the parties should not be the same in both cases and the grounds for refusal
set out in Art. 36(1)(b) should be compulsory for domestic awards. That distinction should
be made clear in the text.(36.9) The matter was not pursued when the observer for
Switzerland suggested as a solution that Art. 36 be limited to foreign awards,(36.10) a
suggestion opposed by the delegates of Sweden, France, Hungary and Italy and
thereupon withdrawn.(36.11)

9. Subparagraph (1)(a)(i). This provision went through a rather curious development. At

its third session, the Working Group considered identical drafts of subparagraph (1)(a) of
the separate articles on recognition and enforcement of “domestic” and “foreign” awards,
respectively.
They read as follows:

“A party to the arbitration agreement referred to in article II was, under the law applicable
to him, under some incapacity, or the said agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon, under the law of the
State”.(36.12)

10. The discussion of the “domestic” provision ended in a decision to request the
Secretariat to revise the provision so as to exclude any conflict "196"rules.(36.13) In the
discussion of the “foreign” provision, the Working Group weighed the relative merits of
aligning it on the corresponding “domestic” provision or aligning it, despite its
shortcomings, on Art. V of the New York Convention which dealt with the same subject
matter, i.e., refusal of recognition and enforcement of a foreign award. The prevailing view
was that the provision should accord with the text of subparagraph (1)(a) of the New York
convention without, however, excluding the possibility of a substantive
improvement.(36.14)

11. Carrying out its instructions, the Secretariat submitted to the Working Group at its
fourth session the following revised draft of the domestic provision from which the conflict
rules had been removed:

“A party to the arbitration agreement referred to in article II [was under some incapacity]
[lacked the capacity to conclude such an agreement], or the said agreement is not
valid”.(36.15) The prevailing view in the Working Group favoured the wording between the
second set of square brackets.(36.16) However, at that same session, the Working Group
confirmed its earlier tentative decision to consolidate the “domestic” and “foreign”
provisions on the basis of the latter,(36.17) and after deliberation the Working Group
decided that subparagraph (1)(a)(i) should accord textually with the corresponding
provision of the New York Convention.(36.18)

12. At the Commission session, the subject of the subparagraph (1)(a)(i) was discussed
in the context of the Working Group draft of Art. 34.(36.19) I refer the reader to nrs. 9-15
of Article 34, supra, for the discussion, and the decision to remove the conflicts provision
from the first half of the provision but to leave it in the second. When the Commission
reached Art. 36 in its deliberations, it considered that textual conformity at this point
between Arts. 34 and 36 was even more important than conformity between the latter and
the New York Convention and decided to modify subparagraph (1)(a)(i) to conform to the
change previously made in Art. 34(2)(a)(i). The Commission Report records that this
modification was adopted for the purpose of maintaining textual harmony at this point
between Arts. 34 and 36 but that its adoption did not in the Commission's view entail any
"197"substantive discrepancy between Art. 36(1)(a) and the corresponding provision of
the New York Convention.(36.20)

13. Subparagraph (1)(a)(ii). The Commission approved the final Working Group version
of this provision subject to the replacement, in line with its decision on Art. 34(2)(a)(ii), of
the words “appointment of the arbitrator(s)” by the words “appointment of an
arbitrator”.(36.21)

14. Subparagraph (1)(a)(iii). The Commission approved without discussion the Working
Group version of this provision, which was a literal reproduction of the corresponding
provision of the New York Convention.

15. Subparagraph (1)(a)(iv). The Commission approved without discussion the Working
Group version of this provision. This subparagraph is properly drafted as applied to
“foreign” awards. On the other hand, recognition or enforcement of a “domestic” award,
which is also covered by Art. 36, should be refused, in addition, if the composition of the
arbitral tribunal or the procedure, even though in accordance with the agreement of the
parties, conflicts with a provision of the law of the model law State (including, of course,
the model law itself) from which the parties may not derogate. This was the Working
Group's decision with respect to setting aside,(36.22) and that ground for setting aside
should equally justify refusal of recognition and enforcement. In relation to “domestic”
awards, the reference to “the law of the country where the arbitration took place”, of
course, includes “this Law”.

16. Subparagraph (1)(a)(v). The Commission approved without discussion the Working
Group version of this subparagraph, which reproduced Art. V(e) of the New York
Convention. As I had pointed out in my report referred to in nr. 7 supra, the language of
that subparagraph does not fit a “domestic” award. If the award is not yet binding or has
been suspended by the Art. 6 court of the same country whose “competent court” is asked
to enforce it, the latter court will necessarily refuse enforcement. The discretionary “may”
which governs all of Art. 36(1) is inappropriate with respect to an award made in the same
country where it is sought to be enforced.

17. Subparagraph (1)(b)(i). This subparagraph did not raise the problems raised by its
counterpart in Art. 34 because of its global effect(36.23) and was adopted by the
Commission without discussion.

18. Subparagraph (1)(b)(ii). As a result of an apparent misunderstanding of the scope of

the interpretation of the term “public policy” in the discussion of the counterpart on this
provision in Art. 34, the Indian"198"delegate proposed its deletion since in civil law
countries the concept of “public policy” referred essentially to the law of contracts and this
would not cover procedural injustice.(36.24) The representative of the Secretariat said
that the Commission had decided to retain the term “public policy” and had agreed to
include in its report the interpretation of the term at which it had arrived.(36.25) The
observer from Canada and the Australian delegate stated that their delegations had
understood the term “public policy” in the sense of the French ordre public rather than in
the restricted common law sense(36.26) whereupon subparagraph (1)(b)(ii) of the
Working Group draft was approved without change. In order to avoid any doubt on this
point which had caused such lengthy and difficult discussions during the Commission's
consideration of Art. 34 the Commission Report usefully records its decision “that
subparagraph (1)(b)(ii) should be retained under the same understanding which the
Commission expressed in connection with Article 34(2)(b)(ii)”.(36.27)

Paragraph (2)

19. At its third session, the Working Group considered a Secretariat draft of an article
dealing with the effect of an application for setting aside on a proceeding for enforcement
of an award. The draft which authorized the “competent court” to adjourn the decision on
the enforcement of the award was modelled on Art. VI of the New York Convention and
was approved with a minor wording change by the Working Group and thereafter, without
discussion, by the Commission.

20. The Secretariat draft was expressed to be applicable to both the separate provisions
for the recognition and enforcement of “domestic” and “foreign” awards,
respectively.(36.28) The Working Group decided to limit its scope to recognition and
enforcement of “foreign” awards only,(36.29) but the effect of that decision was undone
when the separate provisions on grounds for refusing recognition and enforcement were
consolidated and the provision authorizing adjournment became a paragraph of the
consolidated provision.

21. Paragraph (2) gives the “competent court” discretionary authority to adjourn the
decision on recognition and enforcement (“if it considers it proper”) and to order the party
which requests adjournment to provide suitable security. The authority to require security
may discourage vexatious "199"setting aside proceedings instituted for the sole purpose
of delaying enforcement.

22. In the case of a foreign award, i.e., an award made in a country other than the model
law country where the award is sought to be enforced, the two proceedings take place in
different jurisdictions: setting aside in the country of origin, enforcement in the model law
country (“this State”). Moreover, unless the country of origin has also adopted the model
law, the grounds for setting aside and the period within which setting aside proceedings
must be initiated may differ substantially from those under the model law. There is
therefore every reason for the discretion which paragraph (2) gives the “competent court”
in dealing with a request for adjournment of enforcement proceedings based on setting
aside proceedings in another jurisdiction and governed by another law.

23. The Analytical Commentary notes that paragraph (2) covers both “domestic” and
“foreign” arbitral awards in international commercial arbitration and comments with
apparent approval on its application to “domestic” awards:

“Thus, it can be used to avoid concurrent review of the same grounds and possibly
conflicting decisions where this is not already excluded by the fact that the same court is
seized with the application for setting aside and the other party's application for
enforcement”.(36.30)

24. My criticism of Art. 36(2) as applied to “domestic” awards is that adjournment should
be mandatory rather than discretionary. This is yet another instance of the drafters' failure
to reflect on the difference between “domestic” and “foreign” awards. Having said this, I
expect that the “competent courts” will in fact always adjourn the enforcement
proceedings in respect of a “domestic” award when setting aside proceedings have been
or are being initiated, as they could do in the absence of a specific provision on this
point.(36.31)

25. Paragraph (2) applies whether the application for setting aside has been made prior
to or subsequent to the institution of enforcement proceedings. The paragraph thus
resolves for all practical purposes the danger of "200"“double control” of the validity of an
arbitral award,(36.32) while granting the losing party the choice between seeking to set
aside the award with effect erga omnes during the short period when that remedy is
available, and waiting until the winning party seeks to enforce the award and then to
advance the grounds for refusal of enforcement. "201""202"
* Doctor of Laws, Amsterdam; J.D., Fordham; former Secretary-General of ICSID;
International Legal Consultant; of Counsel, Holtzmann, Wise & Shepard, New York;
Member of ICCA.
1 A Guide to the UNCITRAL Model Law on International Commercial Arbitration -
Legislative History and Commentary (1989); 1307 pp.
2 330 UNTS 38. The text of the Convention is also set out, inter alia, in Yearbook
Commercial Arbitration (YB Comm. Arb'n) IV (1979) pp. 226-229.
3 Adopted by UNCITRAL in 1976. On 15 December 1976 the UN General Assembly
adopted Resolution 31/98 recommending the use of the Rules “in the settlement of
disputes arising in the context of international commercial relations”. The text of the Rules
is set out, inter alia, in YB Comm. Arb'n II (1977) pp. 161-171.
4 Doc. A/CN.9/169, 10 UNCITRAL Yearbook (1979), pp. 108-109.
5 As a matter of form such requests are usually addressed to the Secretary-General of
the United Nations and reports are rendered pursuant thereto in the name of the
Secretary-General. I shall use the term Secretariat, i.e., the secretariat of UNCITRAL,
throughout.
6 10 UNCITRAL Yearbook (1979), pp. 20-21.
7 Doc. A/CN.9/207.
8 Report of the United Nations Commission on International Trade Law on the work of its
fourteenth session (1981), GAOR, Thirty-Sixth Session, Supplement No. 17 (A/36/17),
para. 70.
9 See J.P. Dietz, “International Commercial Arbitration/Development of the UNCITRAL
Arbitration Rules”, 27 AJCL (1979) p. 450.
10 ICCA also convened a meeting at Lausanne from 9-12 May 1984, devoted to a
discussion of the Working Group draft on the basis of a series of reports dealing with
different parts of the draft. They were subsequently published along with the text of this
draft in UNCITRAL's Project for a Model Law on International Commercial Arbitration (P.
Sanders, ed.), ICCA Congress Series No. 2 (1984).
11 The present writer. Since the ICCA consists of individuals of different nationalities and
from different legal and socio-economic backgrounds, there was no ICCA standpoint on
the content of the Law. Several ICCA members represented their governments in the
Working Group and the Commission. The ICCA observer acted as a neutral expert.
1 Article headings are for reference purposes only and are not to be used for purposes
of interpretation.
* Article 1
Scope of application [1. Article headings are for reference purposes only and are not to be
used for purposes of interpretation.]

(1) This Law applies to international commercial. [2. The term “commercial” should be
given a wide interpretation so as to cover matters arising from all relationships of a
commercial nature, whether contractual or not. Relationships of a commercial nature
include, but are not limited to, the following transactions: any trade transaction for the
supply or exchange of goods or services; distribution agreement; commercial
representation or agency; factoring; leasing; construction of works; consulting;
engineering; licensing; investment; financing; banking; insurance; exploitation agreement
agreement in force between this State and any other State or States.

(2) The provisions of this Law, except articles 8, 9, 35 and 36, apply only if the place of
arbitration is in the territory of this State."5"

(3) An arbitration is international if:

(a) the parties to an arbitration agreement have, at

the time of the conclusion of that agreement,
their places of business in different States; or
(b) one of the following places is situated outside
the State in which the parties have their places
of business:
(i) the place of arbitration if
determined in, or
pursuant to, the
arbitration agreement;
(ii) any place where a
substantial part of the
obligations of the
commercial relationship is
to be performed or the
place with which the
subject-matter of the
dispute is most closely
connected; or
(c) the parties have expressly agreed that the
subject-matter of the arbitration agreement
relates to more than one country.

(4) For the purposes of paragraph (3) of this article:

(a) if a party has more than one place of

business, the place of business is that which
has the closest relationship to the arbitration
agreement;
(b) if a party does not have a place of business,
reference is to be made to his habitual
residence.

(5) This Law shall not affect any other law of this State by virtue of which certain disputes
may not be submitted to arbitration or may be submitted to arbitration only according to
provisions other than those of this Law.

1.1 Doc. A/34/17, para. 81.

1.2 Ibid.
1.3 Canada, the first State to adopt the Law, extended its scope to domestic arbitration
and the Hong Kong Law Reform Commission recommended in addition the elimination of
the restriction to “commercial” arbitration.
1.4 Norway and Sweden were among the minority which on this ground among others
questioned the approach to confine application of the law to international commercial
arbitration. See their written observations on p. 9 of Doc. A/CN.9/263 and as regards
Sweden, Doc. A/CN.9/SR.306, para. 16.
1.5 This would not have been true in the absence of such an express provision in States
under whose law international agreements rank equally with domestic enactments and
thus have to yield to lex posterior.
1.6 A/CN.9/233, paras. 128 and 163.
1.7 The Analytical Commentary mentions as an example Art. 22(3) of the 1978 Hamburg
Convention on the Carriage of Goods by Sea which would prevail over Art. 20 of the Law
which grants the parties freedom to agree on the place of arbitration (Doc. A/CN.9/264, p.
8).
1.8 Doc. A/CN.9/245, para. 191.
1.9 Ibid., para. 148.
1.10 Ibid., paras. 149 and 191. The Secretariat study (“Territorial scope of application
and related issues”) is contained in Doc. A/CN.9/WG.II/WP.49.
1.11 Doc. A/CN.9/246, paras. 165-171. The Working Group did consider the issue in
relation to the article on setting aside but did not reach a clear decision. It also considered
whether any general conflict of laws rules should be prepared as part of the model law,
another subject examined in the Secretariat study, but reached a negative conclusion,
noting among other things the work being done by the Hague Conference on Private
International Law (Ibid., p. 47, nr. 6).
1.12 See Docs. A/CN.9/SR.310, paras. 1-45, and A/CN.9/SR.330, paras. 14-39 and
Commission Report, paras. 72-81.
1.13 Commission Report, para. 80.
1.14 The mention in the Law of “Article 8” is a lapsus. The Commission Report (para. 75)
correctly refers to Art. 8(1) and the text should be so understood. Art. 8(2) clearly applies
only when the place of arbitration is within the territory of the State in question.
1.15 Commission Report, para. 75.
1.16 Doc. A/CN.9/SR.330, para. 22."10"
1.17 Ibid., para. 19.
1.18 Ibid., para. 20 and Commission Report, para. 81.
1.19 Ibid., para. 15.
1.20 Docs. A/CN.9/233, para. 59 and A/CN.9/246, para. 164.
1.21 Cf. Doc. A/CN.9/233, para. 59 in fine.
1.22 Although in its written observations, Sweden had suggested that “places of
business” be replaced by “principal places of business” and the subparagraph (4)
(numbered subparagraph (3) in the Working Group draft) be deleted (Doc. A/CN.9/263,
para. 21).
1.23 Doc. A/CN.9/233, paras. 58-60.
1.24 Ibid., para. 60.
1.25 Doc. A/CN.9/245, para. 160.
1.26 Ibid., paras. 166-168.
1.27 Doc. A/CN.9/246, p. 13, paras. 156-157.
1.28 Doc. A/CN.9/264, p. 13, para. 28.
1.29 Ibid.
1.30 Doc. A/CN.9/263, para. 23.
1.31 Commission Report, para. 28.
1.32 Doc. A/CN.9/SR.306, paras. 46 and 48 and Doc. A/CN.9/SR.307, paras. 6 and 9.
1.33 Ibid., para. 29.
1.34 Nr. 9 et seq, supra.
1.35 Since the law of State A does not apply generally to the arbitration, paragraph (2) of
Art. 8 would be inapplicable.
1.36 Doc. A/CN.9/264, p. 13, para. 29.
1.37 Doc. A/CN.9/263, p. 13, para. 24. This criterion has, however, the major
disadvantage that the international character cannot be determined before the dispute
arises. Accord, the Analytical Commentary (Doc. A/CN.9/264, p. 13, para. 30).
1.38 Doc. A/CN.9/246, para. 161.
1.39 Ibid., para. 163, and Annex, Art. 1(2)(c).
1.40 Doc. A/CN.9/264, p. 13, para. 31.
1.41 Doc. A/CN.9/263/Add. 1, p. 4, para. 7.
1.42 Doc. A/CN.9/263, p. 14, para. 26.
1.43 Doc. A/CN.9/263/Add. 1, p. 4, para. 9.
1.44 Doc. A/CN.9/263, p. 12, para. 21.
1.45 At its third, fourth and fifth sessions (Docs. A/CN. 9/233, para. 60; A/CN.9/245,
para. 166; A/CN.9/246, para. 126).
1.46 Doc. A/CN.9/263, p. 12, para. 18.
1.47 Ibid.
1.48 Ibid., p. 12, para. 21.
1.49 In the Working Group the issue of arbitrability which the Group did not find it
necessary to address directly in the text of the model law, was discussed in relation to Art.
7. See my comments on Article 7, nr. 6.
1.50 Doc. A/CN.9/263, p. 9, para. 9.
1.51 Doc. A/CN.9/SR.307, paras. 16, 20, 21, 22, 25, 26 and 30.
1.52 Ibid., para. 16.
1.53 Ibid., para. 22.
1.54 Ibid., paras. 12 and 17.
1.55 Ibid., para. 14.
1.56 Ibid., para. 18, and see nr. 48 supra.
1.57 Ibid., para. 28.
1.58 Ibid., para. 27. This was a variant of one of the U.S. proposals.
1.59 Ibid., para. 31.
1.60 Ibid., para. 32.
1.61 Ibid., para. 33.
1.62 Ibid., para. 38.
1.63 Ibid., para. 41.
1.64 Ibid., paras. 42 and 43. It is, however, by no means clear that a court would give
effect to the “opting-in” in such extreme cases.
1.65 Ibid., para. 44.
1.66 Ibid., para. 51. The committee was composed of delegates of the U.S.S.R., Finland,
Australia, India and the U.S.
1.67 Analytical Commentary, Doc. A/CN.9/264, p. 22, para. 5 and the Reports of the
Working Group referred to there, as well as this Commentary under Article 7, nr. 6.
1.68 See nrs. 51, 56, 57 and 59 supra.
1.69 See nr. 68 supra.
1.70 Commission Report, para. 34.
1.71 Doc. A.CN.9/207, para. 31.
1.72 Doc. A/CN.9/216, para. 19; Doc. A/CN.9/232, paras. 30-33; Doc. A/CN.9/233,
paras. 52-56.
1.73 Doc. A/CN.9/233, para. 56.
1.74 Doc. A/CN.9/245, para. 160.
1.75 Doc. A/CN.9/246, paras. 157 and 158.
1.76 Ibid., para. 159.
1.77 Doc. A/CN.9/264, p. 10, para. 17; p. 11., para. 19.
1.78 Ibid., p. 11, para. 21.
1.79 Doc. A/CN.9/163, p. 10, para. 12.
1.80 Doc. A/CN.9/SR.306, para. 35.
1.81 Commission Report, paras. 22 and 29.
1.82 Ibid., para. 26.
* Article 2
Definitions and Rules of Interpretation
For the purposes of this Law:
(a)
(b)
(c)
(d)
(e)
(f)
“arbitration” means any arbitration whether or
not administered by a permanent arbitral
institution
“arbitral tribunal” means a sole arbitrator or a
panel of arbitrators
“court” means a body or organ of the judicial
system of a State
where a provision of this Law, except article
28, leaves the parties free to determine a
certain issue, such freedom includes the right
of the parties to authorize a third party,
including an institution, to make that
determination
where a provision of this Law refers to the fact
that the parties have agreed or that they may
agree or in any other way refers to an
agreement of the parties, such agreement
includes any arbitration rules referred to in that
agreement
where a provision of this Law, other than in
articles 25(a) and 32(2)(a), refers to a claim, it
also applies to a counter-claim, and where it
refers to a defence, it also applies to a defence
to such counter-claim.

2.1 Doc. A/CN.9/SR.307; Commission Report, para. 46.

2.2 Analytical Commentary, Doc. A/CN.9/264, p. 15, para. 1.
2.3 Ibid., para. 3.
2.4 See, for the question whether the determination of the place of arbitration by an
institution so authorized is a determination “pursuant to” the parties' arbitration agreement,
Article 1 (3) (b) (i), nrs. 32 et seq. supra.
2.5 Doc. A/CN.9/263/Add.1, p. 5, para. 2.
2.6 Docs. A/CN.9/SR.327, paras. 30-37 and A/CN.9/SR.333, paras. 1-4; Commission
Report, para. 40.
2.7 Docs. A/CN.9/263, p. 55, para. 1 and A/CN.9/263, Add. 1, p. 22, para. 1.
2.8 Doc. A/CN.9/263, p. 55, paras. 2 and 3.
2.9 Commission Report, para. 327.
2.10 Doc. A/CN.9/246, para. 192.
2.11 Ibid., paras. 193 and 194.
2.12 Doc. A/CN.9/SR.308, paras. 10 and 11.
2.13 Ibid., para. 17.
2.14 Ibid., para. 20. He was supported by the Indian delegate and the observer for ICCA
(ibid., paras. 23 and 24).
2.15 Ibid., paras. 19, 21 and 25.
2.16 Para. 49.
* Article 3
Receipt of written communications

(1) Unless otherwise agreed by the parties:

(a) any written communication is deemed to have

been received if it is delivered to the addressee
personally or if it is delivered at his place of
business, habitual residence or mailing
address; if none of these can be found after
making a reasonable inquiry, a written
communication is deemed to have been
received if it is sent to the addressee's last-
known place of business, habitual residence or
mailing address by registered letter or any
other means which provides a record of the
attempt to deliver it
(b) the communication is deemed to have been
received on the day it is so delivered.

(2) The provisions of this article do not apply to communications in court proceedings.

3.1 Doc. A/CN.9/246, Annex, Art. 3. The UNCITRAL Rule reads:

“For the purposes of these Rules, any notice, including a notification, communication or
proposal, is deemed to have been received if it is physically delivered to the addressee or
if it is delivered at his habitual residence, place of business or mailing address, or, if none
of these can be found after making reasonable inquiry, then at the addressee's last-known
residence or place of business. Notice shall be deemed to have been received on the day
it is so delivered.”

3.2 Doc. A/CN.9/263, p. 15, para. 6.

3.3 Doc. A/CN.9/263/Add.1, p. 4, para. 7.
3.4 Doc. A/CN.9/SR.308, para. 8 (Iraq).
3.5 Ibid., para. 11 (Argentina).
3.6 Commission Report, paras. 41 and 44.
3.7 Ibid., para. 41.
3.8 Ibid., para. 45.
* Article 4
Waiver of right to object
A party who knows that any provision of this Law from which the parties may derogate or
any requirement under the arbitration agreement has not been complied with and yet
proceeds with the arbitration without stating his objection to such non-compliance without
undue delay or, if a time-limit is provided therefor, within such period of time, shall be
deemed to have waived his right to object.

4.1 Doc. A/CN.9/245, paras. 176-178.

4.2 Doc. A/CN.9/246, para. 180.
4.3 Ibid., para. 182.
4.4 Ibid., para. 181.
4.5 Commission Report, para. 54.
4.6 Ibid., para. 56.
4.7 Ibid., para. 53.
4.8 Ibid., para. 57.
4.9 Ibid.
* Article 5
Scope of court intervention
In matters governed by this Law, no court shall intervene except where so provided in this
Law.

5.1 Doc. A/CN.9/WG.II/WP.40, p. 6, n.8.

5.2 Doc. A/CN.9/233, para. 72.
5.3 Doc. A/CN.9/246, paras. 185 and 186.
5.4 Ibid., paras. 187 and 188. Among the examples given were: impact of State
immunity, time limit for enforcement of award, competence of arbitral tribunal to adapt
contracts and enforcement by courts of interim measures of protection ordered by an
arbitral tribunal.
5.5 Doc. A/CN.9/263, p. 16, para. 1.
5.6 Ibid., para. 2.
5.7 Doc. A/CN.9/263/Add.2, paras. 19-38.
5.8 It is a safe assumption that they were the work of Lord Justice Mustill who was the
principal United Kingdom delegate at the Commission session.
5.9 Doc. A/CN.9/263/Add.2, para. 21.
5.10 Ibid., para. 22. They included impact of State immunity, capacity of parties to
conclude arbitration agreements and competence of an arbitral tribunal to adapt contracts.
The Analytical Commentary (Doc. A/CN.9/264, p. 19, paras. 5 and 6) adds the contractual
relations between the parties and the arbitrators or the arbitral institution, fees and other
costs, consolidation and period of time for enforcement of award.
5.11 Ibid., paras. 23 and 24; and Doc. A/CN.9/264, p. 19, para. 4.
5.12 Ibid., para. 25.
5.13 Ibid., para. 26.
5.14 Doc. A/CN.9/264, p. 19, paras. 4-6. It is not clear why the Commentary
characterizes Art. 17, entitled “Power of arbitral tribunal to order interim measures” as
“implying an otherwise doubtful power” (emphasis added).
5.15 Doc. A/CN.9/263/Add.2, paras. 27-35.
5.16 Ibid., paras. 36-38.
5.17 Doc. A/CN.9/SR.309, paras. 1-3, 6-9; Commission Report, paras. 59-61.
5.18 Doc. A/CN.9/SR.309, para. 25.
5.19 Ibid., para. 6.
5.20 Ibid., para. 4.
5.21 It was recognized that in the unusual case in which Art. 5 might be said to violate
constitutional principles of the State considering its adoption, that State might be unable to
adopt the model law without change.
5.22 Ibid., para. 38.
* Article 6
Court or other authority for certain functions of Arbitration assistance and supervision
The functions referred to in articles 11(3), 11(4), 13(3), 14, 16(3) and 34(2) shall be
performed by ... [Each State enacting this model law specifies the court, courts or, where
referred to therein, other authority competent to perform these functions].

6.1 Doc. A/CN.9/232, para. 90.

6.2 Ibid., para. 93.
6.3 Doc. A/CN.9/233, para. 85.
6.4 Doc. A/CN.9/264, p. 20.
6.5 A State might designate one type or category of courts, as in the Canadian federal
and provincial enactments of the model law."37"
6.6 Doc. A/CN.9/263, p. 18, para. 9.
6.7 Doc. A/CN.9/SR.310, passim.
* Article 7
Definition and form of arbitration agreement

(1) “Arbitration agreement” is an agreement by the parties to submit to arbitration all or

certain disputes which have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not. An arbitration agreement may be in
the form of an arbitration clause in a contract or in the form of a separate agreement.

(2) The arbitration agreement shall be in writing. An agreement is in writing if it is

contained in a document signed by the parties or in an exchange of letters, telex,
telegrams or others means of telecommunication which provide a record of the
agreement, or in an exchange of statements of claim and defence in which the existence
of an agreement is alleged by one party and "38"not denied by another. The reference in
a contract to a document containing an arbitration clause constitutes an arbitration
agreement provided that the contract is in writing and the reference is such as to make
that clause part of the contract.

7.1 Doc. A/CN.9/216, paras. 15-17.

7.2 As illustrated by the Italian arbitrato irrituale (contractual arbitration), the fact that a
process is not governed by arbitration law does not exclude the possibility of a
controversy as to whether an agreement for arbitrato irrituale or an award rendered
pursuant thereto is an “arbitration agreement” or an “arbitral award” within the meaning of
the New York Convention. The question was answered in the affirmative by the Corte di
Cassazione when a party invoked an agreement for “arbitration” in England according to a
procedure which the Court considered to be in the nature of arbitrato irrituale (YB Comm.
Arb'n IV (1979) p. 296 at p. 298) and in the negative by the Bundesgerichtshof in a case in
which a decision obtained in Italy in arbitrato irrituale was sought to be enforced in the
German Federal Republic (YB Comm. Arb'n VIII (1983) pp. 366-370).
7.3 Report of the Working Group on its Sixth Session, Doc. A/CN.9/245, paras. 19-20.
See for the draft provisions prepared by the Secretariat as a basis for discussion, and a
summary of the arguments for and against the inclusion of their subject matter, Doc.
A/CN.9/WG.II/WP.44, paras. 4-32 and for criticism of the Working Group's decision
Szurski in ICCA Congress Series No. 2 at pp. 66-70.
7.4 The new Netherlands arbitration legislation (Code of Civil Procedure, Arts. 1020-
1076, Intl. Handbook on Comm. Arb., National Report Netherlands, Annex) which has not
adopted the model law, has dealt by explicit provisions with adaptation and
supplementation as well as with some other issues, including quality arbitration, as to
which clarification was deemed desirable. After having defined the substantive scope of
arbitration in terms identical to those of the first sentence of Art. 7(1) of the Law, Art.
1020(4) provides:
“Parties may also agree to submit the following matters to arbitration:
(a) the determination only of the quality or
condition of goods
(b) the determination only of the quantum of
damages or a monetary debt
(c) the filling of gaps in, or modification of the legal
relationship between the parties referred to in
paragraph (1).”
Sanders in Het nieuwe arbitragerecht, p. 25, notes that this extension of the domain of
arbitration offers parties henceforth a choice between bindend advies and arbitration.
7.5 Cf., New York Convention, Art. I(2): “The term 'arbitral awards' shall include not only
awards made by arbitrators appointed for each case but also those made by permanent
arbitral bodies to which the parties have submitted”.
7.6 See the Analytical Commentary, Doc. A/CN.9/264, p. 21:
“It is submitted that the expression 'defined legal relationship' should be given a wide
interpretation so as to cover all non-contractual commercial cases occurring in practice
(e.g., third party interfering with contractual relations; infringement of trademark or other
unfair competition)”.

7.7 Ibid., p. 22.

7.8 Doc. A/CN.9/SR.306, p. 6, para. 35, id. 307, p. 3, para. 11 and p. 5, para. 32.
7.9 This formulation is patterned after Art. I(3) of the 1966 European Convention
providing a Uniform Law on Arbitration. The Convention has not entered into force, but the
arbitration law in Belgium conforms to the text of the Convention with the exception of the
recently amended Art. 17(4).
7.10 For an index to the numerous decisons of courts of Contracting States applying this
language reference is made to the Yearbook Key which since 1987 accompanies the
Yearbook Commercial Arbitration. See also Van den Berg, The New York Arbitration
Convention of 1958, pp. 170-232 and the case comments of the Editors in successive
volumes of the Yearbook and the Key.
7.11 And its national law did not recognize arbitration agreements so evidenced (New
York Convention, Art. VII (1)).
7.12 Doc. A/CN.9/246, para. 19. See also Analytical Commentary, p. 23, para. 8.
7.13 For details of the proposals, the reader is referred to the comments on the Working
Group draft by the United Kingdom (Doc. A/CN.9/263/Add. 2, para. 16) and Norway (Doc.
A/CN.9/263, pp. 19-20, para. 5) and for the discussions in the Commission to Doc.
A/CN.9/SR.311, paras. 6-48 and the Commission Report, paras. 84-88.
* Article 8
Arbitration agreement and substantive claim before court

(1) A court before which an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party so requests not later than when submitting his first
statement on the substance of the dispute, refer the parties to arbitration unless it finds
that the agreement is null and void, inoperative or incapable of being performed.
(2) Where an action referred to in paragraph (1) of this article has been brought, arbitral
proceedings may nevertheless be commenced or continued, and an award may be made,
while the issue is pending before the court.

8.1 The Convention provision does not, however, prescribe when the request must be
made.
8.2 For a case in which the court, if it had had discretion, would probably have refused to
refer the parties to arbitration, see n. 8.22 infra.
8.3 During the discussion in the Working Group of what became Art. 8(1), some support
was expressed for a proposal to delete the requirement of the request of a party. The
proposal was rejected and the requirement maintained in order to be consistent with the
New York Convention text, an argument frequently indiscriminately used, rather than for
the compelling reason that a court should not be permitted to enforce an arbitration
agreement against the will of the parties.
8.4 League of Nations Treaty Series, Vol. XXVII, p. 158, No. 678, Art. 4.
8.5 See, for details, Broches, “The 1985 UNCITRAL Model Law on International
Commercial Arbitration”, XII N.Y.I.L. pp. 19-22 (1987).
8.6 Doc. A/CN.9/207, para. 59.
8.7 Doc. A/CN.9/233, paras. 74, 76 and 77.
8.8 Doc. A/CN.9/245, para. 186. The Secretariat had proposed the modifications in an
attempt “to emphasize the issue dealt with in this provision, i.e., the competence - or lack
of competence - of a court before which a substantive claim is brought”(Doc.
A/CN.9/WP.45, n. 16). Such emphasis does not fit too well into the approach of the
common law which rather emphasizes a court's stay of proceedings without relinquishing
its jurisdiction.
8.9 Doc. A/CN.9/264, Art. 8, para. 3.
8.10 Doc. A/CN.9/263/Add.1, Art. 8, para. 2.
8.11 Doc. A/CN.9/263, Art. 8, para. 5.
8.12 Doc. A/CN.9/263/Add.1, Art. 8, para. 1.
8.13 Doc. A/CN.9/SR.312, para. 12. The Commission's Report is, however, silent on Art.
8(1).
8.14 Ledee v. Ragno, 528 F. Supp. 243, aff'd 684 F. 2d 184 (CA1), YB Comm. Arb'n VIII
(1983), p. 416; Siderius v. Acero del Pacifico, 453 F. Supp. 22, YB Comm. Arb'n V (1981),
p. 271; McDonnell Douglas v. Kingdom of Denmark, 607 F. Supp. 1016, YB Comm. Arb'n
XI (1986), p. 581.
8.15 Rhône Méditerranée v. Achille Lauro, 555 F. Supp. 481, aff'd 712 F. 2d 50, YB
Comm. Arb'n IX (1984), p. 474.
8.16 Ameroido v. Drew, YB Comm. Arb'n VIII (1983), pp. 394-397. The italicized
“discharged” has been substituted for the word “triggered” which appears in the Yearbook
text and is an obvious error.
8.17 Van den Berg, The New York Arbitration Convention of 1958 (Deventer 1981), p.
154. The 1923 Geneva Protocol on Arbitration Clauses, Art. 4, uses “the agreement or the
arbitration cannot proceed or becomes inoperative”.
8.18 The “Rena K”, High Court, Q.B. Div. (Admiralty Court), Dec. 1977/Jan. 1978, YB
Comm. Arb'n IV (1979), p. 323.
8.19 Haendler v. Paczy, Court of Appeal, 3-4 Dec. 1980, YB Comm. Arb'n IX (1984), p.
445.
8.20 Rhône Méditerranée, n. 8.16 supra.
8.21 Rocco v. Tomasos, Corte di Cassazione, 20 Dec. 1982, YB Comm. Arb'n X (1985),
p. 466.
8.22 High Court, Chancery Division, 3 January 1978, YB Comm. Arb'n IV (1979), p. 320.
8.23 Aguna v. Smith Industries, Tribunal de Commerce, Brussels, 19 September 1979,
YB Comm. Arb'n VIII (1983), p. 360. See, however, Company M. v. M.S.A. Cour d'appel,
Brussels, 4 Oct. 1985, YB Comm. Arb'n XIV (1989), pp. 618-620. In that case, which
involved the same Belgian law, the court held that whether the requirement of Art. II(1) of
the New York Convention that the subject matter of the arbitration be “capable of
settlement by arbitration” had been met, must be determined by the law applicable to the
arbitration agreement, rather than the lex fori. The latter would apply under Art. V of the
Convention which provides that recognition and enforcement may be refused when the
subject matter of the dispute is not capable of arbitration under the law of the country
where the recognition and enforcement is sought. Since the arbitration agreement was
governed by Swiss law, under which the dispute between the parties was capable of
settlement of arbitration, the lower court had been wrong in holding that it could not
recognise the arbitration agreement in accordance with Art. II(1) of the New York
Convention. Regardless whether one agrees with the Court of Appeal's conclusion, which
is criticized by Van den Berg (YB Comm. Arb'n XIV (1989), p. 565) its analysis of the
issue as one of arbitrability is correct and to be preferred to the one in the Aguna case.
8.24 Fowler v. Merrill Lynch, High Court, Queen's Bench Division (Commercial Court),
10 June 1982, YB Comm. Arb'n X (1985), p. 499. The court granted, however, the
defendant's second request for a stay on the ground of lis alibi pendens leaving the
plaintiff to pursue his remedy before the contractually agreed United States Commission.
8.25 The plaintiff may be already able to advance this contention, and thus to attack the
arbitration agreement, when instituting the court proceedings and to ask the court to deal
with it as a preliminary issue.
8.26 For the discussions at the Working Group stage, the reader is referred to Docs.
A/CN.9/232, paras. 146, 151; A/CN.9/233, paras. 74, 79, 80; A/CN.9/245, paras. 66-69;
A/CN.9/246, paras. 20-21 and for those in the plenary Commission to Doc.
A/CN.9/SR.312, paras. 14-41 and paras. 89-94 of the Commission's report to the General
Assembly.
8.27 But the European Convention qualifies and weakens the obligations of the courts of
Contracting States by adding the proviso: “unless they have good substantial reasons to
the contrary”.
8.28 Doc. A/CN.9/245, para. 67.
8.29 Doc. A/CN.9/WG.II/WP.48, Art. 8(2).
8.30 Pursuant to Art. 16(3), the arbitral tribunal may rule on the plea either as a
preliminary question or in an award on the merits.
8.31 Art. 16(3).
8.32 Art. 1(2).
* Article 9
Arbitration agreement and interim measures by court
It is not incompatible with an arbitration agreement for a party to request, before or during
arbitral proceedings, from a court an interim measure of protection and for a court to grant
such measure."51"

9.1 Art. 1(2).

9.2 Doc. A/CN.9/245, para. 188. The Geneva Convention uses the expression “interim
measures or measures of conservation”.
9.3 Doc. A/CN.9/246, para. 26.
9.4 The Analytical Commentary notes the possibility of conflict between a court decision
and an order by an arbitral tribunal relating to the same object or measure but submits
that the potential for such a conflict, with which the model law does not deal, is rather
small in view of the disparity of the respective ranges of measures (Doc. A/CN.9/264, p.
26, para. 5).
9.5 Doc. A/CN.9/263, p. 22, paras. 1 and 2.
9.6 Para. 96.
9.7 Doc. A/CN.9/SR.312, para. 42. Pursuant to Art. 13.2 of the 1985 Rules of London
Court of International Arbitration the parties accepting the Rules shall be taken to have
agreed not to seek an order from a judicial authority for the measures set out in paras. (g),
(h) and (i) of Art. 13.1 but to apply for such orders only to the arbitral tribunal (YB Comm.
Arb'n Vol. X (1985), p. 162). According to the speaker that provision had been found
valuable and acceptable.
9.8 Doc. A/CN.9/SR.312, para. 46.
9.9 Para. 97.
* Article 10
Number of arbitrators

(1) The parties are free to determine the number of arbitrators.

(2) Failing such determination, the number of arbitrators shall be three.

10.1 Unlike Art. 5 of the 1966 Strasbourg Uniform Law which requires a sole arbitrator or
an uneven number of arbitrators and provides that if the arbitration agreement provides
for an even number of arbitrators an additional arbitrator shall be appointed, and Art. 5 of
the UNCITRAL Arbitration Rules which envisages only a choice between a sole arbitrator
and a tribunal composed of three arbitrators, the Convention on the 1966 Uniform Law
permits a Contracting Party to declare that it reserves the right to provide in its law that
the additional arbitrator shall be appointed only in case of a tie in voting, while the
UNCITRAL Rules are by their own terms “subject to such modification as the parties may
agree in writing” (Art. 1(1)).
10.2 “If the parties have not previously agreed on the number of arbitrators (i.e., one or
three) ... three arbitrators shall be appointed”.
* Article 11
Appointment of arbitrators

(1) No person shall be precluded by reason of his nationality from acting as an arbitrator,
unless otherwise agreed by the parties.

(2) The parties are free to agree on a procedure of appointing the arbitrator or arbitrators,
subject to the provisions of paragraphs (4) and (5) of this article.

(3) Failing such agreement,

(a) in an arbitration with three arbitrators, each

party shall appoint one arbitrator, and the two
arbitrators thus appointed shall appoint the
third arbitrator; if a party fails to appoint the
arbitrator within thirty days of receipt of a
request to do so from the other party, or if the
two arbitrators fail to agree on the third
 arbitrator within thirty days of their
appointment, the appointment shall be made,
upon request of a party, by the court or other
authority specified in article 6;
(b) in an arbitration with a sole arbitrator, if the
parties are unable to agree on the arbitrator,
he shall be appointed, upon request of a party,
by the court or other authority specified in
article 6.

(4) Where, under an appointment procedure agreed upon by the parties,

(a) a party fails to act as required under such

procedure, or
(b) the parties, or two arbitrators, are unable to
reach an agreement expected of them under
such procedure, or
(c) a third party, including an institution, fails to
perform any function entrusted to it under
such procedure,

any party may request the court or other authority specified in article 6 to take the
necessary measure, unless the agreement on the appointment procedure provides other
means for securing the appointment.

(5) A decision on a matter entrusted by paragraph (3) or (4) of this article to the court or
other authority specified in article 6 shall be subject to no appeal. The court or other
authority, in appointing an arbitrator, shall have due regard to any qualifications required
of the arbitrator by the agreement of the parties and to such considerations as are likely to
secure the appointment of an independent and impartial arbitrator and, in the case of a
sole or third arbitrator, shall take into account as well the advisability of appointing an
arbitrator of a nationality other than those of the parties."55"

11.1 Doc. A/CN.9/264, p. 28, para. 1.

11.2 A proposal for an explicit provision to this effect was made in the written
observations of Sudan on the Working Group draft (Doc. A/CN.9/263/Add. 1, p. 9).
11.3 Doc. A/CN.9/245, para. 193.
11.4 And this would include arbitration rules accepted by them (Art. 2(e)).
11.5 The stronger sanction is found in Art. 1025(2) of the German Code of Civil
Procedure and in Art. 3 of the 1966 Strasbourg Uniform Law. It is the law in Belgium, the
only country that has adopted the Uniform Law (Art. 1678(1) of the Judicial Code). The
weaker sanction is found in the new Netherlands arbitration legislation (Code of Civil
procedure, Art. 1028) and in Art. 19 of the Swiss Concordat. The report of the Working
Group recording the decision not to accept the proposal stated: “That decision, however,
should not be understood as condoning practices where one party had a clearly greater
influence on the appointment without good reasons”(Doc. A/CN.9/233, para. 91).
11.6 British Columbia, which has enacted the model law, recenty amended Sect. 11 of
the B.C. International Commercial Arbitration Act to ensure that where the Chief Justice of
the Supreme Court of B.C. (the “Art. 6 Court”) was asked to appoint the arbitrator, he shall
not appoint a sole or third arbitrator of the same nationality as that of one of the parties
unless the parties have previously agreed to it (Miscellaneous Statutes Amendment Act
(No. 2), 1988, S.B.C. 1988, c.46).
* Article 12
Grounds for challenge

(1) When a person is approached in connection with his possible appointment as an

arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to
his impartiality or independence. An arbitrator, from the time of his appointment and
through the arbitral proceedings, shall without delay disclose any such circumstances to
the parties unless they have already been informed of them by him.

(2) An arbitrator may be challenged only if circumstances exist that give rise to justifiable
doubts as to his impartiality or independence, or if he does not possess qualifications
agreed to by the parties. A party may challenge an arbitrator appointed by him, or in
whose appointment he has participated, only for reasons of which he becomes aware
after the appointment has been made.

12.1 Doc. A/CN.9/216, para. 43. Eventually the model law did not explicitly prescribe the
qualifications at all, but Art. 11(5) tells a court or other authority, when called upon to
appoint an arbitrator, to “have due regard ... to such considerations as are likely to secure
the appointment of an independent and impartial arbitrator”. See also my commentary on
Article 11, nr. 6 supra.
12.2 Doc. A/CN.9/264, Art. 12, nr. 5, and id. nr. 4 where it is said that a general formula
for the grounds on which an arbitrator may be challenged seems preferable to listing all
possible connections and relevant situations. It would have been most difficult in any
event to reach agreement on detailed grounds.
12.3 Doc. A/CN.9/233, para. 105. And see Article 14, nr. 5.
12.4 Cf. Art. 11(5) which provides that a court or other authority appointing an arbitrator
“shall have due regard to any qualifications required of the arbitrator by the agreement of
the parties”.
12.5 Doc. A/40/17, para. 115.
12.6 Id., para. 119. The Report (para. 116) also mentions an entirely inappropriate
example of the alleged inadequacy of the impartiality or independence test. It was urged
by one delegate that without calling into question the integrity or impartiality of an
arbitrator, his nationality might be a sound ground for challenge in view of the policies
followed by his Government. I submit that, as stated by the delegate, it is not a sound
ground. If a party wishes to exclude certain nationals from acting as arbitrator, it should do
so in its agreement with the other party, as permitted by Art. 11(1). Where the nationality
of an arbitrator does raise justifiable doubts concerning his impartiality, Art. 12(2) permits
him to be challenged.
12.7 Doc. A/CN.9/232, para. 59.
12.8 Doc. A/CN.9/246, para. 34.
12.9 Doc. A/CN.9/264, Art. 12, nr. 6.
12.10 Art. 9 of the UNCITRAL Arbitration Rules reads:
“A prospective arbitrator shall disclose to those who approach him in connection with his
possible appointment any circumstances likely to give rise to justifiable doubts as to his
impartiality or independence. An arbitrator, once appointed or chosen, shall disclose such
circumstances to the parties, unless they have already been informed by him of these
circumstances.”

12.11 Commission Report, para. 113.

* Article 13
Challenge procedure

(1) The parties are free to agree on a procedure for challenging an arbitrator, subject to
the provisions of paragraph (3) of this article.

(2) Failing such agreement, a party who intends to challenge an arbitrator shall, within
fifteen (15) days after becoming aware of the constitution of the arbitral tribunal or after
becoming aware of any circumstances referred to in article 12(2), send a written
statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged
arbitrator withdraws from his office or the other party agrees to the challenge, the arbitral
tribunal shall decide on the challenge.

(3) If a challenge under any procedure agreed upon by the parties or under the procedure
of paragraph (2) of this article is not successful, the challenging party may request, within
thirty (30) days after having received notice of the decision rejecting the challenge, the
court or other authority specified in article 6 to decide on the challenge, which decision
shall be subject to no appeal; while such a request is pending, the arbitral tribunal,
including the challenged arbitrator, may continue the arbitral proceedings and make an
award.

13.1 Doc. A/CN.9/216, para 44.

13.2 Docs. A/CN.9/232, para. 64 and A/CN.9/233, paras. 107-111.
13.3 Doc. A/CN.9/245, paras. 207-212.
13.4 Doc. A/CN.9/232, para. 61.
13.5 Doc. A/CN.9/246, paras. 36 and 38.
13.6 Doc. A/CN.9/263, Art. 13, p. 26, para. 10.
13.7 Ibid., p. 25, para. 8.
13.8 Ibid., p. 25, para. 7.
13.9 Doc. A/CN.9/263/Add.1, p. 10, para. 1.
13.10 Doc. A/CN.9/263, Art. 13, p. 24, para. 2.
13.11 Doc. A/CN.9/263/Add.1, p. 10, para. 2.
13.12 Ibid., pp. 10-11, para 3.
13.13 Doc. A/CN.9/263, Art. 13, pp. 25-26, para. 9.
13.14 Ibid., p. 25, para. 5.
13.15 Doc. A/CN.9/SR.314, para. 2.
13.16 Including that of the delegates of the United Kingdom, India and Australia who did
not share the majority's concern to avoid court intervention as much as possible and saw
no problem in the common law system with granting of interim relief (Doc.
A/CN.9/SR.314, paras. 9, 11, 17 and 19).
13.17 Commission Report, para. 124.
13.18 Doc. A/CN.9/263, Art. 13, p. 24, para. 4.
13.19 See Article 1, nr. 17 supra.
* Article 14
Failure or impossibility to act
(1) If an arbitrator becomes de jure or de facto unable to perform his functions or for other
reasons fails to act without undue delay, his mandate terminates if he withdraws from his
office or if the parties agree on the termination. Otherwise, if a controversy remains
concerning any of these grounds, any party may request the court or other authority
specified in article 6 to decide on the termination of the mandate, which decision shall be
subject to no appeal.

(2) If, under this article or article 13(2), an arbitrator withdraws from his office or a party
agrees to the termination of the mandate of an arbitrator, this does not imply acceptance
of the validity of any ground referred to in this article or article 12(2).

14.1 Doc. A/CN.9/246, Annex Art. 14 and 14 bis.

14.2 Doc. A/CN.9/SR.315, para. 8.
14.3 Report of third session, Doc. A/CN.9/233, para. 114.
14.4 Doc. A/CN.9/SR.315, para. 49.
14.5 Ibid., paras. 56 and 58.
14.6 Para. 139.
14.7 Doc. A/CN.9/264, Art. 14, p. 34, para. 4.
14.8 Doc. A/CN.9/233, para. 113.
14.9 Doc. A/CN.9/263, p. 26, para. 1.
14.10 Ibid., para. 2.
14.11 Doc. A/CN.9/263/Add.1, Art. 14, p. 11, para. 3.
14.12 Ibid., para. 2.
14.13 Doc. A/CN.9/SR.314, paras. 75 and 76.
14.14 Ibid., para. 77.
14.15 Ibid., para. 78.
14.16 Doc. A/CN.9/SR.315, paras. 1-3.
14.17 Ibid., para. 9.
14.18 See nr. 2 supra.
14.19 See, however, Article 15 infra.
14.20 See Article 13, nr. 9 supra.
14.21 Doc. A/CN.9/246, Annex, Art. 14 bis. Substantially the same provision is included
in Art. 11.3 of the UNCITRAL Arbitration Rules on challenge procedure.
14.22 Commission Report, para. 145.
* Article 15
Appointment of substitute arbitrator
When the mandate of an arbitrator terminates under article 13 or 14 or because of his
withdrawal from office for any other reason or because of the revocation of his mandate
by agreement of the parties or in any other case of termination of his mandate, a
substitute arbitrator shall be appointed according to the rules that were applicable to the
appointment of the arbitrator being replaced.

15.1 Doc. A/CN.9/232, paras. 70-71.

15.2 Doc. A/CN.9/233, paras. 118-119.
15.3 Doc. A/CN.9/245, paras. 218-219, and eventually did not deal with it at all.
15.4 Doc. A/CN.9/246, paras. 42-44.
15.5 See e.g. Doc. A/CN.9/216, para. 51.
15.6 Doc. A/CN.9/246, para. 45.
15.7 Doc. A/CN.9/263, Art. 15, p. 27, para. 2.
* Article 16
Competence of arbitral tribunal to rule on its jurisdiction

(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with
respect to the existence or validity of the arbitration agreement. For that purpose, an
arbitration clause which forms part of a contract shall be treated as an agreement
independent of the other terms of the contract. A decision by the arbitral tribunal that the
contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than
the submission of the statement of defence. A party is not precluded from raising such a
plea by the fact that he has appointed, or participated in the appointment of, an arbitrator.
A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as
soon as the"70"matter alleged to be beyond the scope of its authority is raised during the
arbitral proceedings.

(3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either
as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a
preliminary question that it has jurisdiction, any party may request, within thirty days after
having received notice of that ruling, the court specified in article 6 to decide the matter,
which decision shall be subject to no appeal; while such a request is pending, the arbitral
tribunal may continue the arbitral proceedings and make an award.

16.1 As distinguished from the situation, treated in Art. 8, in which proceedings have
been initiated in a court.
16.2 “It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are
bound immediately to refuse to act until their jurisdiction has been determined by some
court which has power to determine it finally.” (Per Devlin, J., Christopher Brown Ltd. v.
Genossenschaft Oesterreichischer Waldbesitzer Holzwirtschaftsbetriebe Registrierte
G.m.b.H. [1954] 1 Q.B.8 at 12 and 13), cited in Redfern and Hunter, Law and Practice of
International Commercial Arbitration (1986). Traditionally, the law of England and Wales
has been reluctant to see the role of the courts in regard to arbitration diminished.
16.3 In addition to the 1961 European Convention on International Arbitration (U.N.
Treaty Series, Vol. 484, p. 364), the 1966 European Convention providing a Uniform Law
on Arbitration (not entered into force) and institutional rules such as the UNCITRAL
Arbitration Rules and the ICC Arbitration Rules among others, the competence-
competence of arbitral tribunals has been recognized in express terms in three recent
statutory enactments. Art. 1692 of the Belgian Judicial Code provides: “The arbitral
tribunal may rule in respect of its own jurisdiction and, for this purpose, may examine the
validity of the arbitration agreement”. Art. 1466 of the French Nouveau Code de
Procédure Civile provides: “If one of the parties contests, before the arbitrator, the latter's
jurisdiction, whether in principle or in scope, it is for the arbitrator to decide on the validity
or scope of his mission”, and Art. 1052(1) of the Netherlands Code of Civil Procedure,
introduced in 1986, states: “The arbitral tribunal shall have the power to decide on its own
jurisdiction”.
16.4 Art. 1692(2) of the Belgian Judicial Code contains the separability provision of the
Uniform Law established by the 1966 Strasbourg European Convention which Belgium
ratified. Art. 1053 of the Netherlands Code of Civil Procedure provides: “An arbitration
agreement shall be considered and decided upon as a separate agreement. The arbitral
tribunal shall have the power to decide on the validity of the contract of which the
arbitration agreement forms part or to which the arbitration agreement is related”. The
new Swiss Private International Law Act in Art. 178(3) also provides for the separability of
the arbitral clause although in slightly different language: “The validity of the arbitration
agreement cannot be contested on the ground that the main contract is not valid or that
the arbitration agreement concerns a dispute which has not yet arisen”.
16.5 Doc. A/CN.9/207 (May 1981).
16.6 Doc. A/CN.9/WG.II/WP.35 (December 1981).
16.7 Doc. A/CN.9/207, para. 58.
16.8 Doc. A/CN.9/216, para. 34.
16.9 Ibid., para. 81.
16.10 Art. 21 of the UNCITRAL Arbitration Rules, a contractual instrument, reflects the
statement in the text even more clearly than the final version of Art. 16(1). Art. 21(1)
states the power of the tribunal to rule on objections to its jurisdiction. Art. 21(2) states the
tribunal's further power to determine the existence or validity of the contract containing an
arbitration clause and adopts the separability principle in that context.
16.11 Doc. A/CN.9/232, paras. 47-48 and 152-153.
16.12 Doc. A/CN.9/245, para. 58. The Analytical Commentary states that the doctrine of
separability complements the power of the arbitral tribunal to determine its own
jurisdiction.
16.13 Committee Report, para. 150.
16.14 Ibid., para. 152.
16.15 Doc. A/CN.9/SR.315, paras. 24-36.
16.16 Commission Report, para. 151.
16.17 It is of interest to note in this connection the history of the 1966 European
Convention Providing a Uniform Law on Arbitration (Council of Europe, European Treaty
Series, No. 56). Art. 18 of the final text of the Law read as follows:

1. “The arbitral tribunal may rule in respect of its own jurisdiction and, for this purpose,
may examine the validity of the arbitration agreement.

2. A ruling that the contract is invalid shall not entail ipso jure the nullity of the arbitration
agreement contained in it.”

The Explanatory Report on the Convention contains the following comment in its
paragraph 84:
“The question has arisen whether the arbitrators must declare that they have no
jurisdiction if they consider that the contract of which the arbitration agreement forms part
is void or whether, on the other hand, they should settle the question of their jurisdiction
according to whether the arbitration agreement is affected by the same defect as that
which would invalidate the contract of which it forms part.
Rather than make no express ruling on this question and leave its solution to the
legislation or jurisprudence of each Contracting Party, it was considered preferable to
adopt the theory of the autonomy of arbitration agreements. The controversy to which this
theory gives rise may induce certain Governments to object to the wording of paragraph
2, Article 18, and it was therefore necessary to provide for a reservation on this subject....”
It is clear that in 1966 competence-competence was generally accepted and that only the
separability concept gave rise to controversy.
16.18 Hommage à Frédéric Eisemann Liber Amicorum (1979), p. 34.
16.19 Redfern and Hunter, Law and Practice of International Commercial Arbitration
(1986), p. 134.
16.20 I do want to mention, nevertheless, that I am not aware of any statute or judicial
decision which extends the separability principle to the situation in which the main
contract was null and void ab initio. French case law which is sometimes cited as a
particularly strong authority for “unlimited” separability proves on examination to have in
fact applied the principle only to situations in which the contract was initially valid but
became invalid as a result of, for example, supervening illegality. In the absence of a
record of discussion of the issue in the Working Group one wonders what the explanation
might be for the flat statement by the Secretariat in the Analytical Commentary “that the
principle of separability as adopted in Art. 16(1), in contrast to some national laws which
distinguish in this respect between initial defects and later grounds of nullity, applies
whatever be the nature of the defect”(Doc. A/CN.9/264, p. 38, para. 2).
16.21 By virtue of Art. 2(f).
16.22 Analytical Commentary, Doc. A/CN.9/264, pp. 38-39, para. 6.
16.23 Doc. A/CN.9/246, para. 50.
16.24 Doc. A/CN.9/263, p. 28, para. 3.
16.25 Ibid., para. 4.
16.26 Doc. A/CN.9/SR.315, paras. 37-50.
16.27 Commission Report, para. 155.
16.28 Doc. A/CN.9/245, para. 61.
16.29 Doc. A/CN.9/WG.II/WP.50, para. 16.
16.30 Doc. A/CN.9/246, para. 51.
16.31 Doc. A/CN.9/264, pp. 39-40, paras. 8-10. The Secretariat added that a party would
not be precluded from invoking invalidity of the arbitration agreement in Art. 34 or 36
proceedings if the plea was raised in time but rejected by the arbitral tribunal or if the party
had not taken any steps in the arbitration.
16.32 Doc. A/CN.9/263, p. 28, para. 5.
16.33 Doc. A/CN.9/SR.315, para. 51.
16.34 Ibid., para. 52.
16.35 Doc. A/CN.9/216, para. 82.
16.36 Doc. A/CN.9/232. paras. 152-153.
16.37 Doc. A/CN.9/245, para. 58. A proposal to permit court review of a negative ruling
on jurisdiction was not accepted.
16.38 Ibid., paras. 66-67.
16.39 Doc. A/CN.9/246, para. 53.
16.40 Ibid., para. 55.
16.41 Doc. A/CN.9/263, Art. 16, para. (3), para. 7.
16.42 Ibid., para. 7(a).
16.43 Ibid., para. 7(c).
16.44 Ibid., para. 7(b).
16.45 Doc. A/CN.9/263/Add.1, p. 12, para. 2.
16.46 Ibid., para 7(d). This suggestion reflected the traditional English confidence in the
courts as protection against “procedural injustice”.
16.47 Doc. A/CN.9/263/Add.2, para. 17.
16.48 Doc. A/CN.9/263, Art. 16(3), para. 8. This justified criticism was repeated by
several speakers in the Commission sessions (see Committee Report, para. 158).
However, it became moot in the final text of Art. 16(3).
16.49 Ibid., para. 9.
16.50 Doc. A/CN.9/264, p. 41, para. 14.
16.51 The current text was preferred or regarded as acceptable by Bulgaria (Doc.
A/CN.9/SR.315, para. 61), Egypt (ibid., SR.316, para. 21), France (ibid., para. 10), Soviet
Union (ibid., para. 21), Sweden (ibid., para. 27) and the United States (ibid., para. 8).
16.52 Apparent unqualified support by Australia (Doc. A/CN.9/SR.316, para. 1),
Tanzania (ibid., para. 3), Hungary (ibid., para. 4), Finland (ibid., para. 5), Singapore (ibid.,
para. 20); conditional support by Japan, Canada, the U.K. among others (ibid., paras. 13,
6 and Doc. A/CN.9/SR.315, para. 57).
16.53 Austria (Doc. A/CN.9/263, Art. 16, para. 7(a)), Soviet Union (Doc. A/CN.9/SR.316,
para. 28), ICCA (ibid., para. 62). The observer for the Chartered Institute of Arbitrators
said that retention of the existing Art. 16(3) without Art. 17 would be totally unacceptable
to the profession. There was no justification for forcing arbitrators who had ruled on a
difficult jurisdictional issue to go on with the proceedings only to have the final award
challenged under Arts. 34 and 36. In his experience - the speaker must have had English
arbitrators in mind - arbitrators, far from resisting applications to the court, were in favour
of a court ruling. His organization could therefore support an optional solution.
16.54 Japan (Doc. A/CN.9/SR.316, para 13). Contra: the United States (ibid., para. 12)
which was of the view that this would infringe the tribunal's right to deal with issues as it
sees fit.
16.55 Poland (Doc. A/CN.9/SR.316, para. 15).
16.56 Analytical Commentary (Doc. A/CN.9/264, p. 41, para. 14), ICCA (Doc.
A/CN.9/315, para. 62).
16.57 The final text has clarified that this includes making an award.
16.58 N. 16.50 supra.
16.59 Doc. A/CN.9/263, Art. 16, para. 7(a).
16.60 Contrary to what the Working Group appears to have thought at its fourth session
(see Nr. 25 supra) the theory could not be based on Art. 4: a plea to the jurisdiction is not
an objection to non-compliance with a non-mandatory provision of the Law or with a
requirement of the arbitration agreement.
16.61 Doc. A/CN.9/SR.315, para. 51.
16.62 Doc. A/CN.9/263, p. 31, para. 9.
16.63 Doc. A/CN.9/SR.316, para. 14.
16.64 Doc. A/CN.9/SR.320, para. 16.
16.65 Ibid., para. 17.
16.66 Doc. A/CN.9/WG.II/WP.40, Art. XIII (3).
16.67 Under Art. 8(1) of the Law.
16.68 Doc. A/CN.9/245, paras. 62-64.
16.69 Analytical Commentary, Doc. A/CN.9/264, p. 42, para. 15.
16.70 Doc. A/CN.9/SR.316, paras. 16-19.
* Article 17
Power of arbitral tribunal to order interim measures
Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party,
order any party to take such interim measure of protection as the arbitral tribunal may
consider necessary in respect of the subject matter of the dispute. The arbitral tribunal
may require any party to provide appropriate security in connection with such measure.

17.1 This power is mistakenly called an “implied” power throughout the legislative history
documentation. The reason for conferring it explicitly was the uncertainty whether an
arbitral tribunal would be recognized under their national laws to have implied powers to
order interim measures.
17.2 Art. 26 of the UNCITRAL Arbitration Rules deals with interim measures taken by an
arbitral tribunal at the request of a party in its first two paragraphs and with a request for
interim measures addressed to a judicial authority in the third paragraph. In their
respective written observations on the Working Group draft, Canada suggested that this
article, then numbered Art. 17, should be combined with Art. 9 “in the interest of clarity”
(Doc. A/CN.9/263/Add.1, p. 13, para. 3) while Norway proposed a di,ferent expression for
the measures dealt with in this article “in order to avoid confusion with the measures
ordered by a court as dealt with in Art. 9”(Doc. A/CN.9/263, p. 31, para. 6).
17.3 Doc. A/CN.9/SR.316, para. 36.
17.4 Ibid., para. 38.
17.5 Commission Report, para. 169.
17.6 Doc. A/CN.9/216, para. 65.
17.7 Doc. A/CN.9/232, paras. 119-120; Doc. A/CN.9/245, paras. 70-71. The expression
“take” interim measures which is used in Art. 26 of the UNCITRAL Arbitration Rules was
changed to “order”.
17.8 Doc. A/CN.9/232, para. 119.
17.9 Doc. A/CN.9/245, para. 71.
17.10 Doc. A/CN.9/264, p. 43, para. 2.
17.11 Doc. A/CN.9/SR.316, para. 40 and Commission Report, para. 167.
17.12 Doc. A/CN.9/245, para. 71.
17.13 Ibid., para. 70.
17.14 Ibid., para. 72.
17.15 Ibid.
17.16 Doc. A/CN.9/264, p. 43, para. 5.
17.17 Doc. A/CN.9/SR.316, para. 39.
17.18 Ibid., para. 42.
17.19 Ibid., para. 41.
17.20 Ibid., para. 43.
17.21 Ibid., para. 44
17.22 Ibid., para. 47. I consider this the sounder view.
17.23 Para. 166.
17.24 Doc. A/CN.9/263, p. 31, para. 1.
17.25 Doc. A/CN.9/SR.316, para. 39.
* Article 18
Equal treatment of parties
The parties shall be treated with equality and each party shall be given a full opportunity
of presenting his case.

18.1 Doc. A/CN.9/216, para. 56.

18.2 Doc. A/CN.9/232, paras. 101 and 104.
18.3 Doc. A/CN.9/245, paras. 73 and 74.
18.4 Doc. A/CN.9/246, paras. 60-62.
18.5 Ibid., p. 53.
18.6 Doc. A/40/17, para. 176.
18.7 In the case of an arbitrator, “misconduct” in terms of English arbitration law.
18.8 See Articles 34 and 36 infra, where this will be further examined. It may be useful to
state already at this point that the Commission recorded its view that where the Law
speaks of an award being in conflict with public policy (Art. 34, 2(b)(ii) and Art. 36, 1(b)(ii))
that wording “was not to be interpreted as excluding instances or events relating to the
manner in which an award was arrived at”. (Doc. A/40/17, para. 297).
* Article 19
Determination of rules of procedure
(1) Subject to the provisions of this Law, the parties are free to agree on the procedure to
be followed by the arbitral tribunal in conducting the proceedings.

(2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Law,
conduct the arbitration in such manner as it considers appropriate. The power conferred
upon the arbitral tribunal includes the power to determine the admissibility, relevance,
materiality and weight of any evidence."91"

19.1 Doc. A/CN.9/264, p. 44. The substance of the third paragraph was placed by the
plenary Commission in a separate Art. 18 (q.v.) to emphasize its overriding importance.
19.2 Considered but not accepted by the Working Group at its fourth session, Doc.
A/CN.9/245, paras. 73-74.
19.3 Considered but not adopted by the Working Group at its fourth session, Doc.
A/CN.9/246, para. 61.
19.4 This was recognized in the Analytical Commentary, Doc. A/CN.9/264, p. 45.
19.5 Doc. A/CN.9/246, paras. 174-176. The provision had been suggested in Secretariat
Note Doc. A/CN.9/WG.II/WP.45 as new Art. I ter.
19.6 Ibid., paras. 176-177.
19.7 Amendments made by the Commission to some of the provisions listed in the
Analytical Commentary, Doc. A/CN.9/264, at p. 45 as being mandatory have rendered
that listing obsolete.
19.8 Doc. A/CN.9/264, pp. 44-45.
19.9 Ibid.
19.10 Doc. A/CN.9/WG.II/WP.50, para. 14.
19.11 Doc. A/CN.9/246, p. 63.
19.12 Doc. A/CN.9/263, p. 32.
19.13 Doc. A/CN.9/SR.316, para. 51.
19.14 Ibid.
19.15 Ibid., para. 52.
19.16 Doc. A/40/17, para. 172.
19.17 A suggestion to make the first sentence read: 'Failing such agreement on the
respective point at issue. . .'etc. was not accepted by the Working Group (Fourth Session,
Doc. A/CN.9/245, paras. 73 and 75). While no reason for this decision is stated, we may
assume that the italicized words were regarded as unnecessary. The Analytical
Commentary is in accord with the statement in the text (A/CN.9/264, p. 45).
19.18 Doc. A/CN.9/264, p. 44.
19.19 Art. 1(2).
19.20 Doc. A/CN.9/232, para. 106.
19.21 Doc. A/CN.9/245, para. 75
19.22 Doc. A/CN.9/264, p. 45.
19.23 Doc. A/CN.9/263, pp. 56-57.
19.24 Doc. A/40/17, para. 328.
19.25 Doc. A/CN.9/SR. 330, para. 55.
19.26 Ibid., para. 56.
19.27 Doc. A/40/17, paras. 173-175.
19.28 Doc. A/CN.9/263, p. 57.
19.29 Doc. A/40/17, para. 329.
* Article 20
Place of arbitration

(1) The parties are free to agree on the place of arbitration. Failing such agreement, the
place of arbitration shall be determined by the arbitral"96"tribunal having regard to the
circumstances of the case, including the convenience of the parties.

(2) Notwithstanding the provisions of paragraph (1) of this article, the arbitral tribunal
may, unless otherwise agreed by the parties, meet at any place it considers appropriate
for consultation among its members, for hearing witnesses, experts or the parties, or for
inspection of goods, other property or documents.

20.1 As regards the words “pursuant to” see Article 1, nr. 33 supra. However illogical this
may be, it would seem that the place of arbitration determined by the arbitral tribunal
solely by virtue of Art. 20 would not meet the criterion of “international” whereas its
determination pursuant to Art. 16 of the UNCITRAL Arbitration Rules or Art. 12 of the ICC
Arbitration Rules would (Art. 1(3)(b)(i)).
20.2 Doc. A/CN.9/216. Art. 16(1) reads:
“Unless the parties have agreed upon the place where the arbitration is to be held, such
place shall be determined by the arbitral tribunal, having regard to the circumstances of
the arbitration.”

20.3 Doc. A/CN.9/232, paras. 99-100.

20.4
“Where a provision of this Law, except article 28, leaves the parties free to determine a
certain issue, such freedom includes the right of the parties to authorize a third party,
including an institution, to make that determination.”

20.5 Doc. A/CN.9/245, para. 64.

20.6 Doc. A/CN.9/263, p. 33, para. 1.
20.7 Doc. A/CN.9/263/Add.1, p. 13, Art. 20.
20.8 Doc. A/CN.9/SR.321, para. 1.
20.9 Ibid., paras. 3 (Canada), 6 (France), 7 (Algeria), (Philippines), 8 (China), 10 (Cuba),
13 (Nigeria), 14 (Cairo Regional Centre), 15 (Cyprus), 21 (Tanzania), 24 (Iraq).
20.10 The Iraqi delegate stated that at a recent AALCC meeting delegates had pointed
out the undesirability of choosing a place which would involve heavy costs for the parties;
they had stressed that it should be in or near to where one of the parties resided, and in
the developing country in the case of an arbitration between a party in a developing
country and one in a developed country (ibid., para. 24).
20.11 Ibid., paras. 9 (Sierra Leone) and 19 (ICC). The observer for ICC said that if a
criterion for determining the place of arbitration had to be mentioned it should be
enforceability of the award.
20.12 Ibid., paras. 4 (Chartered Institute of Arbitrators) and 20 (Federal Republic of
Germany).
20.13 Ibid., paras. 5 (U.S.), 11 (Korea), 12 (Sweden). The United States and Korean
delegates also were reluctant to have the model law deviate from the UNCITRAL
Arbitration Rules. In my opinion too much importance was attached to conformity with
those Rules: where the model law provision is not of a mandatory character, parties have
a choice between that provision or the corresponding provision of the UNCITRAL
Arbitration Rules, while where the model law provision is mandatory, the Arbitration Rule
on the point will simply not apply by the express provision of Art. 1 of the Rules
themselves.
20.14 Ibid., para. 16.
20.15 Ibid., para. 17.
20.16 Ibid., paras. 22 and 23.
20.17 Ibid., para. 25.
20.18 Para. 180.
20.19 Doc. A/CN.9/232, paras. 112-113.
20.20 Doc. A/CN.9/245, para. 76.
20.21 Ibid., para. 78.
20.22 Doc. A/CN.9/246, para. 64; Doc. A/CN.9/SR.321, para. 28.
20.23 Doc. A/CN.9/264, p. 48, para. 3.
* Article 21
Commencement of arbitral proceedings
Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular
dispute commence on the date on which a request for that dispute to be referred to
arbitration is received by the respondent.

21.1 Doc. A/CN.9/216, para. 72.

21.2 Doc. A/CN.9/WG.II/WP.41, paras. 12-17.
21.3 Doc. A/CN.9/233, para. 22.
21.4 Doc. A/CN.9/245, paras. 24-28.
21.5 Doc. A/CN.9/246, Annex, Art. 21.
21.6 Doc. A/CN.9/245, para. 28.
21.7 Doc. A/CN.9/263, p. 34, Art. 21, para. 2; Doc. A/CN.9/SR.321, para. 29.
21.8 Doc. A/CN.9/SR.321, para. 31.
21.9 German Democratic Republic (ibid., para. 35), Poland (ibid., para. 41), Cuba (ibid.,
para. 43), Bulgaria (ibid., para. 48), Argentina (ibid., para. 36), Switzerland (ibid., para.
42), Iran (ibid., para. 47), Sweden (ibid., para. 49) and Tanzania (ibid., para. 55).
21.10 Austria (ibid., para. 32), United Kingdom (ibid., para. 40).
21.11 Mexico (ibid., para. 46).
21.12 Australia (ibid., para. 30), Greece (ibid., para. 44).
21.13 Austria (ibid., para. 32).
21.14 Egypt (ibid., para. 38).
21.15 Finland (ibid., para. 33).
21.16 Japan (ibid., para. 45).
21.17 Spain (ibid., para. 50).
21.18 France (ibid., para. 34), Soviet Union and the United States (ibid., para. 57).
21.19 Commission Report, para. 186.
21.20 Doc. A/CN.9/SR.321, para. 56.
21.21 Doc. A/CN.9/263, p. 34, para. 3.
21.22 Doc. A/CN.9/SR.321, para. 65.
* Article 22
Language

(1) The parties are free to agree on the language or languages to be used in the arbitral
proceedings. Failing such agreement, the arbitral tribunal shall determine the language or
languages to be used in the proceedings. This agreement or determination, unless
otherwise specified therein, shall apply to any written statement by a party, any hearing
and any award, decision or other communication by the arbitral tribunal.
(2) The arbitral tribunal may order that any documentary evidence shall be accompanied
by a translation into the language or languages agreed upon by the parties or determined
by the arbitral tribunal.

22.1 Report of Third Session, Doc. A/CN.9/233, paras. 28-30.

22.2 Doc. A/CN.9/245, para. 34.
22.3 Doc. A/CN.9/246, para. 70.
22.4 Doc. A/CN.9/263, p. 34, Art. 22, para. 2 and Doc. A/CN.9/SR.322, para. 9. The
German position was supported by the Korean delegate who was of the opinion that if it
was made clear that the second sentence of Art. 22(1) included the guideline of Art. 19
(3), the last sentence of the first paragraph could be deleted (Doc. A/CN.9/SR.321, para.
70 and SR.322, para. 4).
22.5 Para. 190. The Indian delegate had expressed concern that Art. 22 overrode the
requirement of Art. 18 (Doc. A/CN.9/SR.322, para. 8).
22.6 Doc. A/CN.9/264, p. 50, para. 4.
22.7 Doc. A/CN.9/263/Add. 1, p. 14, Art. 22, para. 2; Doc. A/CN.9/SR.321, para. 69.
22.8 Doc. A/CN.9/SR.321, para. 72.
22.9 Ibid., para. 76.
22.10 Doc. A/CN.9/SR.322, para. 6.
22.11 Doc. A/CN.9/263/Add.1, p. 14, Art. 22, para. 1.
22.12 Doc. A/CN.9/SR.321, para. 68.
22.13 Doc. A/CN.9/SR.322, para. 20.
22.14 Ibid., para. 2 (Australia), para. 5 (U.K.).
22.15 Ibid., para. 10.
22.16 Doc. A/CN.9/263, Art. 22, para. 1.
* Article 23
Statements of claim and defence

(1) Within the period of time agreed by the parties or determined by the arbitral tribunal,
the claimant shall state the facts supporting his claim, the points at issue and the relief or
remedy sought, and the respondent shall state his defence in respect of these particulars,
unless the parties have otherwise agreed as to the required elements of such statements.
The parties may submit with their statements all documents they consider to be relevant
or may add a reference to the documents or other evidence they will submit.

(2) Unless otherwise agreed by the parties, either party may amend or supplement his
claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal
considers it inappropriate to allow such amendment having regard to the delay in making
it.

23.1 Doc. A/CN.9/WG.II/WP.41, paras. 19-21.

23.2 Doc. A/CN.9/233, paras. 24-26.
23.3 Analytical Commentary, Doc. A/CN.9/264, p. 51, para. 1.
23.4 Ibid., para. 2.
23.5 Doc. A/CN.9/263, Art. 23, p. 34, para. 1.
23.6 Ibid., p. 35, para. 2.
23.7 Doc. A/CN.9/SR.322, para. 31.
23.8 Ibid., para. 32.
23.9 Ibid., para. 33. These statements led the Secretariat to observe that it was difficult
to envisage a decision on a dispute without statements from the parties concerned,
coupled with the suggestion that Art. 23 might be amended so that not only the timing but
also the manner of presentation of claim and defence would be left to be determined by
the parties (ibid., para. 38). However, this approach was not followed up in the discussion.
23.10 Ibid., para. 34.
23.11 Ibid., para. 50.
23.12 Ibid., paras. 52, 54 and 57-59.
23.13 Ibid., paras. 62-63.
23.14 Para. 196. The proposed language was reformulated by the Drafting Group.
23.15 Para. 197.
23.16 Doc. A/CN.9/SR.322, para. 38.
23.17 Doc. A/CN.9/246, Annex, p. 54. This language was modelled on Art. 20 of the
UNCITRAL Arbitration Rules.
23.18 Doc. A/CN.9/264, p. 52, paras. 4-5. This restriction is spelled out in Art. 20 of the
UNCITRAL Arbitration Rules.
23.19 Ibid., para. 6.
23.20 The Commission Report (para. 198) incorrectly speaks of the power to allow
amendments. The text is clear: amendments are allowed unless the arbitral tribunal
considers it inappropriate to allow them.
23.21 Doc. A/CN.9/SR.323, paras. 2 (Bulgaria), 4 (Soviet Union), 5 (German Democratic
Republic), 6 (Iraq) and 13 (Poland). The Philippines (ibid., para. 15) would have been
willing to go along with a majority opinion in favour of dropping all limitations.
23.22 Ibid., paras. 8 (U.S.), 10 (Sweden), 11 (Australia), 17 (U.K.) and 21 (Canada).
23.23 Ibid., paras. 12 (Finland), 14 (Japan), 24 (Sierra Leone), 26 (India) and 28
(Switzerland).
23.24 Ibid., para. 9.
23.25 Ibid., paras. 15 (Philippines), 16 (Cuba), 18 (Yugoslavia), 19 (Greece), 20 (Egypt),
22 (Iran), 23 (Federal Republic of Germany and Mexico), 25 (Algeria) and 27 (China).
23.26 ibid., paras. 29-30. Mention may be made here of interventions of the observer for
the Cairo Regional Centre for Commercial Arbitration (ibid., para. 3) and the delegate of
India (ibid., para. 26). The first speaker suggested different treatment of claims and
defences and proposed that the arbitral tribunal should not have the power to prevent a
party from changing his defence during the proceedings. The second spoke in favour of
retaining the reference to prejudice. There would be prejudice to the other party if, for
example, a party sought an amendment which involved a subject outside the scope of the
arbitration agreement. In my opinion, this would raise the issue of excess of jurisdiction
rather than that of prejudice. And see text at n. 23.18 supra.
* Article 24
Hearings and written proceedings

(1) Subject to any contrary agreement by the parties, the arbitral tribunal shall decide
whether to hold oral hearings for the presentation of evidence or for oral argument, or
whether the proceedings shall be conducted on the basis of documents and other
materials. However, unless the parties have agreed that no hearings shall be held, the
arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so
requested by a party.

(2) The parties shall be given sufficient advance notice of any hearing and of any meeting
of the arbitral tribunal for the purposes of inspection of goods, other property or
documents.

(3) All statements, documents or other information supplied to the arbitral tribunal by one
party shall be communicated to the other party. Also any expert report or evidentiary
document on which the arbitral tribunal may rely in making its decision shall be
communicated to the parties.

24.1 Doc. A/CN.9/216, para. 57.

24.2 Doc. A/CN.9/232, paras. 107-111.
24.3 Doc. A/CN.9/245, paras. 80-81.
24.4 Doc. A/CN.9/246, paras. 74-78. The Working Group also noted that the reference to
“hearings for the presentation of evidence by witnesses, including expert witnesses”, the
language used in Art. 15(1) of the UNCITRAL Arbitration Rules, might not cover other
types of evidence, for example, cross-examination or testimony of a party and decided
that rather than enumerating all possible types of evidence recognized in various legal
systems, the reference should merely read: “hearings for the presentation of evidence”
(ibid., para. 79).
24.5 Doc. A/CN.9/246, para. 54.
24.6 Doc. A/CN.9/263/Add. 2, para. 18.
24.7 Doc. A/CN.9/263/Add. 1, Art. 24, para. 1.
24.8 Doc. A/CN.9/263, Art. 24, para. 1.
24.9 Ibid., paras. 2 and 4.
24.10 Ibid., para. 3.
24.11 Ibid., para. 5.
24.12 Doc. A/CN.9/SR.323, passim.
24.13 Doc. A/CN.9/SR.324, para. 1.
24.14 Commission Report, para. 207.
24.15 Ibid., para. 203. In its written observations Norway had suggested an amendment
to this effect (Doc. A/CN.9/263, Art. 24, p. 37, para. 6). At the Commission session the
observer for Norway declared himself satisfied if the point were made clear in the
Commission Report (Doc. A/CN.9/SR.323, para. 40).
24.16 Ibid., para. 205. The Tanzanian delegate, supported by a few other delegations,
had expressed the view that a party which had originally agreed that no hearing should be
held might subsequently decide that one was necessary after all (Doc. A/CN.9/233, paras.
55 and 57).
24.17 Cf. Commission Report, para. 219 in relation to the power of an arbitral tribunal to
appoint experts.
24.18 Commission Report, para. 211.
* Article 25
Default of a party
Unless otherwise agreed by the parties, if without showing sufficient cause,
(a) the claimant fails to communicate his
statement of claim in accordance with article
23(1), the arbitral tribunal shall terminate the
proceedings
(b) he respondent fails to communicate his
statement of defence in accordance with
article 23(1), the arbitral tribunal shall continue
the proceedings without treating such failure in
 itself as an admission of the claimant's
allegations
(c) any party fails to appear at a hearing or to
produce documentary evidence, the arbitral
tribunal may continue the proceedings and
make the award on the evidence before it.

25.1 Doc. A/CN.9/SR.325, paras. 11 and 12. The Commission Report, para. 213 states
in error that it had been agreed that the text should show that sufficient cause should be
shown to the arbitral tribunal. The text was not changed.
25.2 Ibid., para. 4.
25.3 Ibid., para. 6.
25.4 Ibid., para. 10.
25.5 Ibid., para. 11 and Commission Report, para. 213 which states the Commission's
comment on the issue raised by the delegate from Sierra Leone (Doc. A/CN.9/SR.325,
para. 1) of the time at which the sufficient cause for the delay was to be shown to the
arbitral tribunal: “... [as to that point] it was thought that, although it was clear from the
article that the question whether there was sufficient cause for the failure had to be settled
before the arbitral tribunal decided on a consequence of default, a definition of a point of
time in the text would be difficult and would unnecessarily interfere with the discretion of
the arbitral tribunal to assess the cause for delay and to extend the period of time when
the party must communicate a statement or produce evidence”.
25.6 Doc. A/CN.9/232, para. 86.
25.7 The draft considered by the Working Group at its final session included two
variants, namely, to provide that the arbitration proceedings would continue, leaving it
entirely to the arbitral tribunal's discretion how to treat the default, or to provide that the
arbitral tribunal would treat the default as a denial of the claim (Doc. A/CN.9/246, para.
81).
25.8 Doc. A/CN.9/264, p. 56, Art. 25, para. 4.
25.9 Ibid.
25.10 Doc. A/CN.9/263, p. 37, Art. 25, para. 1.
25.11 Doc. A/CN.9/SR.325, para. 18.
25.12 Ibid., para. 19.
25.13 Commission Report, para. 214. The addition of the italicized words was
subsequently approved by the Drafting Group.
25.14 Doc. A/CN.9/264, p. 56, Art. 25, para. 4.
25.15 Doc. A/CN.9/263, p. 38, Art. 25, para. 3.
25.16 Doc. A/CN.9/SR.325, para. 22.
25.17 Ibid., para. 30 (Iraq), 34 (Cairo Regional Centre), 35 (Iran), 36 (Philippines).
25.18 Ibid., para. 30.
25.19 Ibid., para. 32.
25.20 Ibid., para. 33.
25.21 Ibid., paras. 37 and 38; also Commission Report, para. 215.
25.22 Doc. A/CN.9/264, p. 57, Art. 25, para. 5.
25.23 Doc. A/CN.9/SR.325, para. 24.
25.24 Ibid., para. 26.
25.25 Ibid., para. 27. The Commission Report does not in fact mention this point, but the
omission is undoubtedly due only to the pressure of time under which the report had to be
prepared.
* Article 26
Expert appointed by arbitral tribunal

(1) Unless otherwise agreed by the parties, the arbitral tribunal

(a) may appoint one or more experts to report to

it on specific issues to be determined by the
arbitral tribunal;
(b) may require a party to give the expert any
relevant information or to produce, or to
provide access to, any relevant documents,
goods or other property for his inspection.

(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal
considers it necessary, the expert shall, after delivery of his oral or written report,
participate in a hearing where the parties have the opportunity to put questions to him and
to present expert witnesses in order to testify on the points at issue.

26.1 Para. 219.

26.2 Doc. A/CN.9/216, para. 63.
26.3 Doc. A/CN.9/232, para. 101.
26.4 Ibid., para. 105.
26.5 Doc. A/CN.9/245, para. 80.
26.6 Ibid., para. 84.
26.7 Doc. A/CN.9/246, para. 85.
26.8 Ibid., para. 87.
26.9 Analytical Commentary, Doc. A/CN.9/264, p. 57, Art. 26, para. 2.
26.10 Doc. A/CN.9/SR.325, para. 39.
26.11 Ibid., para. 42.
26.12 Ibid., para. 47.
26.13 Ibid., paras. 41 (Tanzania), 43 (United Kingdom), 44 (France), 45 (Chartered
Institute of Arbitrators), 46 (Nigeria), 48 (Sierra Leone) and 49 (Cairo Regional Centre and
Algeria).
26.14 Ibid., para. 43.
26.15 Ibid., para. 45.
26.16 Para. 219.
26.17 Doc. A/CN.9/263, p. 38, Art. 26, para. 3.
26.18 Doc. A/CN.9/SR.325, para. 54.
* Article 27
Court assistance in taking evidence
The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a
competent court of this State assistance in taking evidence. The court may execute the
request within its competence and according to its rules on taking evidence.

27.1 Doc. A/CN.9/WG.II/WP.41, paras. 27-37.

27.2 Doc. A/CN.9/233, para. 36; Doc. A/CN.9/245, paras. 37, 42-46; Doc. A/CN.9/246,
paras. 90-91, 95-96.
27.3 Doc. A/CN.9/WG.II/WP.41. para. 27.
27.4 Ibid., para. 28.
27.5 Ibid., para. 29.
27.6 Ibid., para. 30.
27.7 Ibid., para. 31.
27.8 Ibid., para. 32.
27.9 Ibid., para. 33.
27.10 Ibid., para. 35.
27.11 The report on the Working Group's final session notes that this solution was
adopted as a compromise between not providing for court assistance at all and extending
court assistance to foreign arbitral tribunals (Doc. A/CN.9/246, paras. 95-96).
27.12 The words within the brackets were included in the draft because no decision had
been taken at the time on the territorial character of the model law. When the Commission
decided that the place of arbitration should be the exclusive determining factor for the
application of the model law, these words were no longer necessary since that criterion
applies with very few exceptions, which do not include Art. 27 (Art. 1(2)).
27.13 Doc. A/CN.9/263/Add.1, pp. 15-16, Art. 27, para. 1 and Doc. A/CN.9/SR.325,
para. 57.
27.14 Commission Report, para. 225.
27.15 Made in its written observations (Doc A/CN.9/263, p. 39, Art. 27(1), para. 4).
27.16 Doc. A/CN.9/SR.325, passim and Commission Report, para. 228.
27.17 Doc. A/CN.9/SR. 325, para. 89.
27.18 Commission Report, para. 230.
27.19 Written observations, Doc. A/CN.9/263, p. 39, Art. 27, para. 6.
27.20 Doc. A/CN.9/SR.325, para. 84.
27.21 Commission Report, para. 229. And see Article 25(c), nr. 6, supra.
* Article 28
Rules applicable to substance of dispute

(1) The arbitral tribunal shall decide the dispute in accordance with such rules of law as
are chosen by the parties as applicable to the substance of the dispute. Any designation
of the law or legal system of a given State shall be construed, unless otherwise
expressed, as directly referring to the substantive law of that State and not to its conflict of
laws rules."129"

(2) Failing any designation by the parties, the arbitral tribunal shall apply the law
determined by the conflict of laws rules which it considers applicable.

(3) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if
the parties have expressly authorized it to do so.

(4) 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.

28.1 Doc. A/CN.9/WG.II/WP.35, p. 13, Question 5-10.

28.2 Doc. A/CN.9/207, para. 91.
28.3 Doc. A/CN.9/216, para. 87.
28.4 Doc. A/CN.9/232, para. 158, Art. 31(1).
28.5 Doc. A/CN.9/232, para. 162.
28.6 Ibid. The suggestion was made by the observer for ICCA who derived this formula
from the innovative Art. 42(1) of the Convention on the Settlement of Investment Disputes
between States and Nationals of Other States (the so-called Washington Convention of
1965).
28.7 Ibid., para. 161.
28.8 Doc. A/CN.9/245, para. 93, Art. XIX(1).
28.9 Ibid., para. 94.
28.10 Ibid.
28.11 Doc. A/CN.9/263, p. 40, Art. 28(1), para. 3; and see nr. 7 supra.
28.12 Ibid.
28.13 Doc. A/CN/9/263, p. 41, Art. 28(1), para. 5.
28.14 Ibid., para. 6.
28.15 Doc. A/CN.9/SR.326, paras. 1 and 28 (Italy), 5 (United States), 7 (Argentina), 8
(Federal Republic of Germany), 9 and 27 (France), 10 (Canada), 18 (Singapore), 20
(Japan), 23 (Hague Conference), 24 (Chartered Institute of Arbitrators), 25 (Portugal), 26
(ICCA), 30 (Hungary).
28.16 Ibid., 16 (Austria), 19 (Finland).
28.17 Ibid., paras. 11 and 12.
28.18 Ibid., paras. 6 (India), 13 (Algeria), 14 (Switzerland), 15 (Nigeria), 17 (German
Democratic Republic), 31 (Iran). They were joined by the observer for Greece who
expressed the extreme view that the Working Group text “left the door wide open to
extravagant choices by the parties, including the application of a combination of rules
drawn from various legal systems and possibly also from an international legal instrument
which might or might not have come into force”(ibid., para. 22).
28.19 Ibid., para. 33.
28.20 Ibid., paras. 30-32.
28.21 Ibid., para. 34.
28.22 Doc. A/CN.9/WG.II/WP.35, p. 13, Question 5-11.
28.23 Doc. A/CN.9/216, paras. 88-90.
28.24 Doc. A/CN.9/232, para. 163.
28.25 Doc. A/CN.9/245, para. 96.
28.26 Ibid., para. 97.
28.27 Doc. A/CN.9/263, p. 40, Art. 28, para. 1.
28.28 Doc. A/CN.9/263/Add.1, p. 36, Art. 28, para. 1.
28.29 Doc. A/CN.9/SR.326, para. 38.
28.30 Ibid., para. 49. The delegate of Iraq argued that the deletion of the reference to the
rules of law would make paragraph (2) consistent with paragraph (1).
28.31 Ibid., paras. 40, 43, 46, 48, 54.
28.32 Ibid., para. 47.
28.33 Ibid., para. 56.
28.34 Ibid., para. 53.
28.35 Ibid., paras. 42, 45, 51, 52 and Doc. A/CN.9/SR.327, paras. 5, 7, 14, 15.
28.36 Doc. A/CN.9/SR.327, para. 8.
28.37 Ibid., para. 15.
28.38 Ibid., paras. 17, 19, 21.
28.39 Ibid., para. 16.
28.40 Ibid., para. 17.
28.41 Ibid., para. 38.
28.42 Doc. A/CN.9/WG.II/WP.35, p. 13, Question 5-9.
28.43 Doc. A/CN.9/216, paras. 84-86.
28.44 Doc. A/CN.9/232, paras. 168-170.
28.45 Doc. A/CN.9/264, p. 63, para. 8.
28.46 Ibid., para. 9.
28.47 Doc. A/CN.9/WG.II/WP.35, p. 13, Question 5-12.
28.48 Doc. A/CN.9/216, para. 91.
28.49 Ibid., para. 244.
28.50 Doc. A/CN.9/232, paras. 164-166.
28.51 Those rules, as stated explicitly in Art. 1(2) of the UNCITRAL Arbitration Rules, will
not apply where they are in conflict with mandatory provisions of the applicable law.
28.52 Doc. A/CN.9/245, para. 99.
28.53 Doc. A/CN.9/164, p. 63, paras. 10 and 11.
28.54 Doc. A/CN.9/SR.326, para. 9.
28.55 Ibid., para. 12.
28.56 Ibid., para. 20.
28.57 Ibid., para. 41. This was an overstatement. The General Assembly did not adopt
the Arbitration Rules but on the basis of their adoption by UNCITRAL recommended their
use in the context of international commercial relations, particularly by reference to them
in commercial contracts. The Arbitration Rules apply only when the parties accept them
and as noted earlier only to the extent that they are not in conflict with mandatory
provisions of law. Secondly, the 1961 European Convention, which does establish legal
rules, significantly only requires that the arbitral tribunal “shall take account of” contract
terms, in contrast to the stronger language of the model law which requires the arbitral
tribunal to “decide in accordance with the terms of the contract”.
28.58 Doc. A/CN.9/SR.327, para. 23.
28.59 Ibid., para. 24.
28.60 Ibid., para. 29.
28.61 Ibid., para. 38.
* Article 29
Decision-making by panel of arbitrators
In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal
shall be made, unless otherwise agreed by the parties, by a majority of all its members.
However, questions of procedure may be decided by a presiding arbitrator, if so
authorized by the parties or all members of the arbitral tribunal.

29.1 In the unusual case of an arbitral tribunal with two arbitrators, as permitted pursuant
to Art. 10(1), this means that a unanimous decision is required.
29.2 Doc. A/CN.9/264, p. 64, para. 2. A majority view at the second session of the
Working Group favoured an express statement that all arbitrators must have had an
opportunity to participate in the deliberations, although under another view this condition
was self-evident. (Doc. A/CN.9/232, para. 138). Language in accordance with the majority
view was included in a draft provision considered by the Working Group at its fourth
session, which adopted a simplified version omitting that language (Doc. A/CN.9/245,
paras. 101-102).
29.3 Doc. A/CN.9/232, para. 103.
29.4 Doc. A/CN.9/263, p. 43, Art. 29, para. 1. Korea suggested that in cases where no
majority can be obtained, the arbitration agreement shall come to an end.
29.5 Doc. A/CN.9/SR.327, paras. 47 and 49.
29.6 Ibid., para. 48.
29.7 Ibid., paras. 50-52.
29.8 Ibid., para. 50. The Analytical Commentary had mentioned as examples of this
flexibility that parties might authorize a presiding arbitrator, if no majority can be reached,
to cast the decisive vote, or to decide as if he were the sole arbitrator. They might also, for
quantum decisions, agree on a formula for the calculation of the decisive amount (Doc.
A/CN.9/264, p. 64, para. 3).
29.9 Doc. A/CN.9/246, Annex.
29.10 Ibid., para. 108.
29.11 Doc. A/CN.9/SR.327, paras. 41 and 45.
29.12 Ibid., para. 46.
29.13 Ibid., para. 59 and Commission Report, para. 246.
29.14 Ibid., para. 40.
29.15 Ibid., paras. 43 and 44.
* Article 30
Settlement

(1) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall
terminate the proceedings and, if requested by the parties and not objected to by the
arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

(2) An award on agreed terms shall be made in accordance with the provisions of article
31 and shall state that it is an award. Such an award has the same status and effect as
any other award on the merits of the case.

30.1 Doc. A/CN.9/216, para. 95.

30.2 Ibid., para. 97.
30.3 Doc. A/CN.9/232, para. 176.
30.4 Doc. A/CN.9/264, p. 65, Art. 30, para. 2.
30.5 Doc. A/CN.9/232, paras. 174-175.
30.6 Doc. A/CN.9/246, para. 110.
30.7 Doc. A/CN.9/263, p. 44, Art. 30.
30.8 Doc. A/CN.9/SR.328, paras. 4 (Australia), 8 (Iraq), 10 (Cuba), 11 (France) and 12
(Mexico). The French delegate thought that the Australian proposal was reasonable since
“[A]rbitration was only a manifestation of private justice”and that an arbitral tribunal should
not therefore have powers that conflicted with the will of the parties (loc. cit.).
30.9 Ibid., para. 9.
30.10 Ibid., para. 13. In reply to a question from the Chairman, the del,gate said that
instances had been rare in which an arbitrator had not signed an award on agreed terms
and the parties had been forced to rely on a private settlement agreement instead (ibid.,
para. 14).
30.11 Ibid., paras. 17 (Australia), 15 (Hungary), 16 (German Democratic Republic), 19
(Italy).
30.12 Para. 249.
30.13 As was suggested by Yugoslavia in its written observations (Doc.
A/CN.9/263/Add.1, p. 27, Art. 30, para. 2).
30.14 Doc. A/CN.9/SR.328, para. 3 and Doc. A/CN.9/263/Add.1, p. 27, Art. 30, para. 1.
30.15 Para. 250.
30.16 Doc. A/CN.9/245, para. 107.
* Article 31
Form and contents of award

(1) The award shall be made in writing and shall be signed by the arbitrator or arbitrators.
In arbitral proceedings with more than one arbitrator, the signatures of the majority of all
members of the arbitral tribunal shall suffice, provided that the reason for any omitted
signature is stated.
(2) The award shall state the reasons upon which it is based, unless the parties have
agreed that no reasons are to be given or the award is an award on agreed terms under
article 30.

(3) The award shall state its date and the place of arbitration as determined in
accordance with article 20(1). The award shall be deemed to have been made at that
place.

(4) After the award is made, a copy signed by the arbitrators in accordance with
paragraph (1) of this article shall be delivered to each party."148"

31.1 Doc. A/CN.9/264, p. 66, Art. 31, para. 2.

31.2 Doc. A/CN.9/263, p. 44, Art. 31, para. 3.
31.3 Doc. A/CN.9/263/Add.1, Art. 31, para. 1. Sudan also proposed the addition of a
paragraph (5), providing as does Art. 32(5) of the UNCITRAL Arbitration Rules: “The
award shall not be published except with the written consent of both parties”(ibid., para.
3). There had been general agreement at the first session of the Working Group that the
model law should not deal with the question whether an award may be published (Doc.
A/CN.9/216, para. 105).
31.4 Doc. A/CN.9/SR.328, paras. 25-26.
31.5 Doc. A/CN.9/264, p. 66, Art. 31, para. 2.
31.6 Doc. A/CN.9/216, para. 80.
31.7 Doc. A/CN.9/264, p. 67, Art. 31, para. 3. The Analytical Commentary and the report
of the first session of the Working Group (n. 31.6 supra) speak in terms of a “waiver” of
the requirement that reasons are to be given. In my submission that is too limited a
characterization: if an agreement states that no reasons are to be given, it precludes the
giving of reasons.
31.8 Doc. A/CN.9/SR.328, paras. 29 and 33.
31.9 The date of the award has, on the other hand, no significance for the application of
the Law. Time limits, including the limit for an application under Art. 34 for setting an
award aside, run, not from the date of the award, but from the date on which the party
received it.
31.10 Commission Report, para. 255.
31.11 See for details of the discussion Docs. A/CN.9/SR.328, paras. 45-58 and SR.329,
paras. 1-25. The Commission Report deals with the subject in para. 257.
* Article 32
Termination of proceedings

(1) The arbitral proceedings are terminated by the final award or by an order of the
arbitral tribunal in accordance with paragraph (2) of this article.

(2) The arbitral tribunal shall issue an order for the termination of the arbitral proceedings
when:

(a) the claimant withdraws his claim, unless the

respondent objects thereto and the arbitral
tribunal recognizes a legitimate interest on his
part in obtaining a final settlement of the
dispute;
 (b) the parties agree on the termination of the
proceedings;
(c) the arbitral tribunal finds that the continuation
of the proceedings has for any other reason
become unnecessary or impossible.

(3) The mandate of the arbitral tribunal terminates with the termination of the arbitral
proceedings, subject to the provisions of articles 33 and 34(4).

32.1 This was, in fact, the reason why the Working Group decided to adopt a provision
on termination of proceedings, the need for which had been questioned. (Doc.
A/CN.9/245, para. 48).
32.2 See Article 31 supra at n. 31.10.
32.3 Doc. A/CN.9/216, para. 73. In the event it was decided not to define the different
types of award in the model law (see under Article 2, supra, nr. 13).
32.4 Ibid.
32.5 Doc. A/CN.9/232, para. 132.
32.6 Doc. A/CN.9/245, paras. 47 and 117.
32.7 Doc. A/CN.9/246, para. 114.
32.8 Doc. A/CN.9/WG.II/WP.41, paras. 38-40.
32.9 Ibid., para. 41.
32.10 Doc. A/CN.9/245. para. 47. An agreement of the parties that the arbitral
proceedings were to be terminated had the effect of terminating them.
32.11 Ibid., para. 52.
32.12 Doc. A/CN.9/246, para. 114.
32.13 Doc. A/CN.9/263, p. 44, Art. 32, para. 1 and p. 45, Art. 32, para. 3.
32.14 Doc. A/CN.9/SR.329, para. 26. It became subparagraph (b) of paragraph (2).
32.15 Ibid., para. 33. Canada and Yugoslavia had also criticized the Working Group draft
on this point (Doc. A/CN.9/263/Add.1, p. 18, paras. 1 and 2).
32.16 Doc. A/CN.9/SR. 329, para. 32.
32.17 Ibid., paras. 29 and 30.
32.18 Ibid., para. 37.
* Article 33
Correction and interpretation of the award; additional award

(1) Within thirty days of receipt of the award, unless another period of time has been
agreed upon by the parties:

(a) a party, with notice to the other party, may

request the arbitral tribunal to correct in the
award any errors in computation, any clerical
or typographical errors or any errors of similar
nature;
(b) if so agreed by the parties, a party, with notice
to the other party, may request the arbitral
tribunal to give an interpretation of a specific
point or part of the award.
If the arbitral tribunal considers the request to be justified, it shall make the correction or
give the interpretation within thirty days of the receipt of the request. The interpretation
shall form part of the award.

(2) The arbitral tribunal may correct any error of the type referred to in paragraph (1)(a) of
this article on its own initiative within thirty days of the date of the award.

(3) Unless otherwise agreed by the parties, a party, with notice to the other party, may
request, within thirty days of receipt of the award, the arbitral tribunal to make an
additional award as to claims presented in the arbitral proceedings but omitted from the
award. If the arbitral tribunal considers the request to be justified, it shall make the
additional award within sixty days.

(4) The arbitral tribunal may extend, if necessary, the period of time within which it shall
make a correction, interpretation or an additional award under paragraph (1) or (3) of this
article.

(5) The provisions of article 31 shall apply to a correction or interpretation of the award or
to an additional award.

33.1 Doc. A/CN.9/216, para. 98.

33.2 Doc. A/CN.9/232, para. 179. The Group also decided that the parties should not be
able to stipulate that the arbitral tribunal would not have the right to correct errors in
computation or clerical, typographical or similar errors (ibid., para. 178).
33.3 Ibid., para. 180.
33.4 Doc. A/CN.9/246, para. 125.
33.5 Ibid., para. 122.
33.6 Ibid., para. 124.
33.7 Doc. A/CN.9/263, p. 45, Art. 33, para. 1. Cf. the text at n. 33.01 supra.
33.8 Ibid., para. 2.
33.9 Ibid., para. 3.
33.10 Doc. A/CN.9/SR.329, para. 54.
33.11 Ibid., para. 38. His comments were endorsed by the Austrian delegate (ibid., para.
46).
33.12 Ibid., para. 39.
33.13 Ibid., para. 40.
33.14 Ibid., para. 42.
33.15 Ibid., para. 43.
33.16 Ibid., para. 48, although he would prefer “clarification” or “explanation” to
“interpretation” which was perhaps too strong.
33.17 Ibid., para. 47.
33.18 Ibid., paras. 41 (Tanzania), 44 (German Democratic Republic), 45 (Finland), 49
(Sweden), 50 (Federal Republic of Germany) and 51 (India).
33.19 Ibid., para. 45.
33.20 Ibid., paras. 50 (Federal Republic of Germany) and 51 (India).
33.21 Ibid., paras. 52 and 53.
33.22 Ibid., para. 54.
33.23 Ibid., para. 56.
33.24 In its written observations AALCC had expressed the view that where an arbitral
tribunal contemplates correcting an award on its own initiative it should be obliged to
notify the parties concerned. The point was not considered at the Commission session.
33.25 Doc. A/CN.9/SR.329, para. 57.
1 Doc. A/CN.9/207.
2 Doc. A/CN.9/WG.II/WP.35.
3 Doc. A/CN.9/207, para. 7.
4 That is to say, the domestic award. In the absence of a treaty on the subject, the
statement in the text may not be true in respect of a foreign award.
5 Those provisions read as follows:
Article III
“Each Contracting State shall recognize arbitral awards as binding and enforce them in
accordance with the rules of procedure of the territory where the award is relied upon,
under the conditions laid down in the following articles. There shall not be imposed
substantially more onerous conditions or higher fees or charges on the recognition or
enforcement of arbitral awards to which this Convention applies than are imposed on the
recognition and enforcement of domestic arbitral awards”.
Article IV

1. “To obtain the recognition and enforcement mentioned in the preceding article, the
party applying for recognition and enforcement shall, at the time of application, supply:

(a) the duly authenticated original award or a duly

certified copy thereof
(b) the original [arbitration] agreement referred to
in Article II or a duly certified copy thereof.

2. If the said award or agreement is not made in an official language of the country in
which the award is relied upon, the party applying for recognition and enforcement of the
award shall produce a translation of these documents into such language. The translation
shall be certified by a official or sworn translator or by a diplomatic or consular agent.”

6 Doc. A/CN.9/207, para. 99.

7 Ibid., paras. 108-111.
8 And, if successful, to have it set aside erga omnes.
9 Or for that matter anywhere else.
10 Doc. A/CN.9/216, paras. 101 and 103.
11 Ibid., para. 104. The New York Convention does not establish procedural rules to be
observed by Contracting States. Its Art. III (n. 5 supra) leaves recognition and
enforcement to “the rules of procedure of the territory where the award is relied upon”.
12 Ibid., para. 109.
13 Doc. A/CN.9/232, para. 15.
14 Ibid. Except for the grounds stated in Art. V(1)(e), which by its terms is inapplicable to
setting aside and Art. V(2)(a) (subject matter of difference not capable of settlement by
arbitration).
15 Ibid., paras. 16-18.
16 Doc. A/CN.9/233, paras. 121 and 127.
17 Ibid., paras. 133 and 157.
18 Ibid., para. 176.
19 Ibid., paras. 178 and 181.
20 Ibid., para. 124.
21 See text at nr. 29 infra.
22 The only substantive difference was that the provisions of the draft article dealing with
foreign awards were “subject to any multilateral or bilateral agreement entered into by this
State”. This was subsequently expressed as a general rule in Art. 1(1) of the Law.
23 Doc. A/CN.9/233, para. 122.
24 Although the record is not entirely clear, a suggestion appears to have been made,
but not accepted, to delete the draft article dealing with domestic awards on the ground
that there was no need to unify national rules for recognition and enforcement of
“domestic” awards.
25 Doc. A/CN.9/233, para. 129.
26 Doc. A/CN.9/WG.II/WP.42, pp. 3-6.
27 Doc. A/CN.9/233, paras. 135 and 158.
28 Ibid., paras. 138 and 139.
29 Ibid., para. 161.
30 Ibid., para. 176.
31 Ibid., paras. 178 and 181. The adoption of the mixed territorial/autonomy criterion was
said to be more in line with Art. V(1)(e) of the New York Convention than the purely
territorial one (Doc. A/CN.9/WG.II/WP.42, nr. 24). That provision states as a ground for
refusing recognition and enforcement that the award has been set aside by a competent
authority “of the country in which, or under the law of which” it was made.
32 Ibid., para. 182.
33 Doc. A/CN.9/245, para. 125.
34 Ibid., para. 127, and the text at n. 25 supra.
35 Ibid., para. 128.
36 Ibid., para. 129.
37 Doc. A/CN.9/246, paras. 142 and 143.
38 Doc. A/CN.9/245, para. 130.
39 Ibid., para. 132.
40 Ibid., para. 135.
41 Ibid., paras. 139-141.
42 Ibid., para. 143.
43 Doc. A/CN.9/246, para. 144.
44 Doc. A/CN.9/245. para. 157.
45 Ibid., para. 158.
46 Doc. A/CN.9/246, paras. 149 and 152. Since if enforcement were sought just before
the expiration of the time period for setting aside the party would in effect be without
remedy in the country of origin, that party would, in practice, be forced to start setting
aside proceedings without knowing whether and if so when the other party will seek to
enforce the award in that country, a situation the Working Group thought unacceptable.
47 Doc. A/CN.9/SR.320, paras. 37 (Canada), 41 (Iraq), 42 (Sweden), 43 (United States),
44 (France), 45 (Sierra Leone), 46 (Singapore), 47 (Soviet Union), 49 (Czechoslovakia),
50 (Italy), 51 (Cyprus), 53 (Philippines), 54 (Switzerland). This group included
representatives of countries which had become parties to the New York Convention as
well as those which had not yet done so.
48 Ibid., para. 38.
49 Ibid., paras. 32 (Egypt), 35 (Finland), 36 (Australia), 39 (Cuba), 40 (India). In their
written observations both IBA and ICC had suggested that Arts. 35 and 36 be limited to
“domestic” awards and that the grounds for refusing recognition and enforcement be
reviewed (Doc. A/CN.9/263, p. 50, para. 6 and Doc. A/CN.9/263/Add.1, p. 21).
50 Doc. A/CN.9/263, paras. 9 (Czechoslovakia), 10 (Norway), 11 (Poland), 12 (Soviet
Union).
51 Ibid., para. 13.
52 Doc. A/CN.9/SR.331, para. 39.
53 Ibid., paras. 40-48.
54 Doc. A/CN.9/263, p. 51, para. 14. This was also the view of the Secretariat in its
Analytical Commentary (Doc. A/CN.9/264, p. 79, para. 3).
55 Para. 309.
* Article 34
Application for setting aside as exclusive recourse against arbitral award

(1) Recourse to a court against an arbitral award may be made only by an application for
setting aside in accordance with paragraphs (2) and (3) of this article."171"

(2) An arbitral award may be set aside by the court specified in article 6 only if:

(a) the party making the application furnishes proof

that:
(i) a party to the arbitration
agreement referred to in
article 7 was under some
incapacity; or the said
agreement is not valid
under the law to which the
parties have subjected it
or, failing any indication
thereon, under the law of
this State; or
(ii) the party making the
application was not given
proper notice of the
appointment of an
arbitrator or of the arbitral
proceedings or was
otherwise unable to
present his case; or
(iii) the award deals with a
dispute not contemplated
by or not falling within the
terms of the submission to
arbitration, or contains
decisions on matters
beyond the scope of the
submission to arbitration,
provided that, if the
decisions on matters
submitted to arbitration can
be separated from those
not so submitted, only that
 part of the award which
contains decisions on
matters not submitted to
arbitration may be set
aside; or
(iv) the composition of the
arbitral tribunal or the
arbitral procedure was not
in accordance with the
agreement of the parties,
unless such agreement
was in conflict with a
provision of this Law from
which the parties cannot
derogate, or, failing such
agreement, was not in
accordance with this Law;
or
(b) the courts finds that:
(i) the subject matter of the
dispute is not capable of
settlement by arbitration
under the law of this
State; or
(ii) the award is in conflict
with the public policy of
this State.

(3) An application for setting aside may not be made after three months have elapsed
from the date on which the party making that application had received the award or, if a
request had been made under article 33, from the date on which that request had been
disposed of by the arbitral tribunal.

(4) The court, when asked to set aside an award, may, where appropriate and so
requested by a party, suspend the setting aside proceedings for a period of time
determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the arbitral tribunal's opinion will eliminate
the grounds for setting aside.

34.1 Doc. A/CN.9/232, para. 14.

34.2 Doc. A/CN.9/245, para. 150.
34.3 Doc. A/CN.9/246, para. 126.
34.4 Ibid., para. 140.
34.5 Ibid., para. 197.
34.6 Para. 274.
34.7 Doc. A/CN.9/246. para. 132.
34.8 Ibid., para. 133.
34.9 Doc. A/CN.9/SR/317, para. 6.
34.10 Ibid., paras. 8 (Iraq), 9 (Hague Conference), 10 (Finland), 12 (Poland), 13
(Australia), 15 (France), 16 (Cuba), 18 (Tanzania), 22 (Mexico), 24 (U.S.), 25 (Italy), 26
(ICC), 28 (Cairo Centre), 29 (Argentina).
34.11 Ibid., paras. 20 and 21.
34.12 Ibid., paras. 30 and 31.
34.13 Ibid., paras. 32, 33, 34.
34.14 Ibid., para. 35.
34.15 Ibid., para. 36.
34.16 Doc. A/CN.9/263/Add.1, p. 22, para. 3.
34.17 Doc. A/CN.9/SR.317, para. 9. A similar proposal had been made, but not
accepted, at the final session of the Working Group (see text at n. 34.08 supra).
34.18 Ibid., paras. 13 and 15.
34.19 Ibid., para. 10.
34.20 Ibid., para. 11.
34.21 Ibid., para. 24.
34.22 Ibid., paras. 25, 26 and 28.
34.23 Commission Report, para. 285.
34.24 Ibid., para. 284.
34.25 Ibid., para. 286.
34.26 Doc. A/CN.9/263/Add.2, paras. 29-35.
34.27 Doc. A/CN.9/SR.317, para. 4.
34.28 Art. 34 was discussed by the Commission before its final decision on Art. 19.
34.29 Doc. A/CN.9/SR.317, para. 37.
34.30 Ibid., para. 38.
34.31 Ibid., para. 42.
34.32 Doc. A/CN.9/SR.318, para. 58.
34.33 Ibid., para. 61.
34.34 Doc. A/CN.9/263, p. 47, para. 8.
34.35 Doc. A/CN.9/SR.318, para. 63.
34.36 Ibid., para. 64.
34.37 Ibid., para. 65.
34.38 Para. 303. This does not mean that the court is required to set aside an award
when any of these grounds is proved to be present. And see the comment of Yugoslavia
in written obseraations on subparagraph (2)(b)(ii) at nr. 50, infra.
34.39 Doc. A/CN.9/XVIII/CRP.10.
34.40 Doc. A/CN.9/SR.324, para. 21.
34.41 Ibid., para. 56.
34.42 Ibid., paras. 24 (Sweden), 25 (Finland), 28 (France), 29 (Austria), 34 (Canada), 35
(Japan), 36 (Australia), 42 (India), 46 (Greece).
34.43 Ibid., paras. 30 (Soviet Union), 32 (United States), 40 (Philippines), 41 (Hungary),
43 (Switzerland), 44 (Tanzania), 47 (Egypt), 49 (China), 50 (Mexico), 52 (German
Democratic Republic), 53 (Cuba), 54 (Cyprus).
34.44 Ibid., para. 38.
34.45 Ibid., para. 39.
34.46 Ibid., para. 57.
34.47 Doc. A/CN.9/SR.331, para. 1.
34.48 Ibid., paras. 2-4.
34.49 Ibid., para. 5.
34.50 Ibid., para. 6.
34.51 Ibid., para. 7.
34.52 Ibid., paras. 8 and 9.
34.53 Para. 297.
34.54 Doc. A/CN.9/SR.331, para. 4.
34.55 At the Commission session the Greek delegate found the provision “unclear and
perhaps redundant” (Doc. A/CN.9/SR.317, para. 43) but there was no further discussion.
See Article 36, infra, n. 36.13 for the initial Secretariat draft of the provision.
34.56 Doc. A/CN.9/246, para. 216.
34.57 Ibid., para. 135. For the discussion of which provisions are to be regarded as
“mandatory” see ibid., paras. 176-177.
34.58 Analytical Commentary, Doc. A/CN.9/264, p. 73, para. 11.
34.59 The reason for proposing an express reference to mandatory provisions of law in
subpara. (a)(iv) appears to have been that Art. V(1)(d) of the New York Convention which
does not contain that reference, and which has been reproduced in Art. 36(1)(a)(iv), has
been interpreted as according absolute priority to the agreement of the parties.
34.60 A. Broches in UNCITRAL's Project for a Model Law on International Commercial
Arbitration (ICCA Congress series no. 2), Pieter Sanders, Gen. Ed., (1984) p. 212.
34.61 Doc. A/CN.9/263/Add.1, p. 20, Art. 34, para. 4.
34.62 Doc. A/CN.9/SR.317, para. 52.
34.63 Ibid., paras. 49 and 50.
34.64 Doc. A/CN.9/WG.II/WP.42, p. 4, nr. 11.
34.65 Ibid., p. 8, Art. 41(2).
34.66 Doc. A/CN.9/233, para. 155.
34.67 Doc. A/CN.9/245, para. 141.
34.68 Doc. A/CN.9/246, para. 126.
34.69 No such question was raised concerning the identical provision in Art. 36 on
refusal of recognition and enforcement since such refusal by the courts of the forum State
would not affect the possibility of enforcement elsewhere.
34.70 Doc. A/CN.9/246, paras. 136 and 137.
34.71 Doc. A/CN.9/264, p. 73, para. 12.
34.72 Doc. A/CN.9/263, p. 48, Art. 34(2)(b), para. 13.
34.73 Doc. A/CN.9/263/Add.1, p. 20, para. 6. Repeating its written observations the
observer for the Hague Conference stated that the subparagraph contradicted the
principle that, in the absence of a choice by the parties, the law governing the substance
of the dispute was the one which was applied to the question of arbitrability (Doc.
A/CN.9/SR.318, para. 1). In warning against the danger of retaining the subparagraph he
also said, incorrectly, that it would enable a party to have an award set aside “in any
State” (ibid). The observer for ICCA answered that the only country whose court could be
asked to set aside an award was the country whose law governed the arbitration (ibid.,
para. 2).
34.74 Doc. A/CN.9/SR.318, paras. 2 (ICCA), 6 (German Democratic Republic), 9
(Hungary), 13 (Australia), 14 (India), 16 (U.S.), 19 (Philipppines), 21 (Tanzania), 22 (U.K.),
23 (Japan), 24 (Italy), 26 (Federal Republic of Germany).
34.75 Ibid., paras. 1 (Hague Conference), 3 (Sweden), 4 (Egypt), 5 (Finland), 10
(France), 17 (Cairo Centre), 25 (Switzerland).
34.76 Ibid., para. 10. Disagreeing, the Australian delegate did not think that the matter
should be covered exclusively under Art. 36.
34.77 Ibid., para. 11.
34.78 Ibid., paras. 12 (Hague Conference), 15 (Hungary), 18 (Cuba), 20 (Argentina), 24
(Italy), 25 (Switzerland), 27 (China), 28 (ICCA), 29 (France), 30 (Canada).
34.79 Ibid., paras. 16 (U.S.), 22 (U.K.), 26 (Federal Republic of Germany).
34.80 Ibid., para. 32.
34.81 Doc. A/CN.9/232, para. 16.
34.82 Ibid., para. 17.
34.83 Doc. A/CN.9/233, para. 154.
34.84 Doc. A/CN.9/245, para. 151.
34.85 Doc. A/CN.9/263/Add.1, p. 20, para. 7.
34.86 Doc. A/CN.9/SR.318, paras. 34, 36, 50, 56.
34.87 Ibid., paras. 34 (India), 35 (Sweden), 37 (Iraq), 39 (Nigeria), 44 (Singapore).
34.88 Ibid., para. 40.
34.89 Ibid., para. 41.
34.90 Ibid., para. 42.
34.91 Ibid., para. 49.
34.92 Ibid., paras. 43 (France), 46 (Italy), 47 (Argentina), 48 (U.S.), 49 (Cyprus), 50
(Tanzania), 51 (Canada), 52 (Cuba), 53 (Kenya), 54 (Greece).
34.93 Ibid., para. 56.
34.94 Commission Report, para. 307.
* Article 35
Recognition and enforcement

(1) An arbitral award, irrespective of the country in which it was made, shall be
recognized as binding and, upon application in writing to the competent court, shall be
enforced subject to the provisions of this article and of article 36.

(2) The party relying on an award or applying for its enforcement shall supply the duly
authenticated original award or a duly certified copy thereof, and the original arbitration
agreement referred to in article 7 or a duly certified copy thereof. If the award or
agreement is not made in an official language of this State, the party shall supply a duly
certified translation thereof into such language. [* The conditions set forth in this
paragraph are intended to set maximum standards. It would, thus, not be contrary to the
harmonization to be achieved by the model law if a State retained even less onerous
conditions.]

35.1 Art. 30(3) provides that the award shall be deemed to have been made at the place
of arbitration. As to possible reciprocity restrictions see Introduction to Articles 34, 35 and
36, supra, nrs. 30 and 31.
35.2 See Introduction to Articles 34, 35 and 36, supra, n. 5.
35.3 Cf. Art. III of the New York Convention which provides for enforcement “in
accordance with the rules of procedure of the territory where the award is relied upon”.
35.4 Report of fourth session of Working Group, Doc. A/CN.9/245, para. 136.
35.5 Accord: Analytical Commentary, Doc. A/CN.9/264, p. 76, para. 4.
35.6 Ibid., p. 7, para. 7. In my report on Arts. 34, 35 and 36 of the Working Group draft
prepared for the Interim Meeting of ICCA in May 1984 I had suggested that in order to
clarify how enforcement fits into the general procedural framework of the model law State
and to express the lex specialis character of the model law, the “subject” clause at the end
of paragraph (1) might be amended to read: “in accordance with the provisions and
subject to the conditions of this Law and the rules of civil procedure of this State not
inconsistent with this Law”(ICCA, Congress series no. 2, UNCITRAL's Project for a Model
Law on International Commercial Arbitration, p. 218).
35.7 Doc. A/CN.9/263, p. 8, para. 3. A suggestion to this effect had been made by the
Secretariat in a note to the Working Group at its final session, which the Group under
pressure of time had failed to consider (Doc. A/CN.9/WG.II/WP.50, paras. 3-7).
35.8 Doc. A/CN.9/SR.319, paras. 43, 48, 52, 53, 54.
35.9 Ibid., para. 59.
35.10 Commission Report, para. 35.
35.11 Doc. A/CN.9/SR.320, para. 61.
35.12 See Article 31, nr. 12 supra. The Commission Report expressed the view (at para.
313) that in respect of arbitral awards outside the model law State the question would be
answered “in conformity with the rule laid down in Art. 36(1)(a)(v.) by the law of the State
in which, or under the law of which, the award was made”, extending that provision, which
refers to setting aside and suspension, by analogy.
35.13 Doc. A/CN.9/SR.320, para. 65.
35.14 Ibid., para. 67.
35.15 Ibid., para. 69.
35.16 Ibid., paras. 68 and 73.
35.17 Commission Report, para. 312. This will not be true if the model law State where
the award is sought to be enforced requires reciprocity.
35.18 Doc. A/CN.9/246, para. 148.
35.19 Doc. A/CN.9/WG.II/WP.50, para. 29.
35.20 Doc. A/CN.9/SR.320, para. 81.
35.21 Ibid., para. 83.
* Article 36
Grounds for refusing recognition or enforcement

(1) Recognition or enforcement of an arbitral award, irrespective of the country in which it

was made, may be refused only:

(a) at the request of the party against whom it is

invoked, if that party furnishes to the competent
court where recognition or enforcement is sought
proof that:
(i) a party to the arbitration
agreement referred to in
Article 7 was under some
incapacity; or the said
agreement is not valid under
the law to which the parties
have subjected it or, failing
any indication thereon, under
the law of the country where
the award was made; or
(ii) the party against whom the
award is invoked was not
given proper notice of the
appointment of an arbitrator
or of the arbitral proceedings
or was otherwise unable to
present his case; or
(iii) the award deals with a
dispute not contemplated by
or not falling within the terms
 of the submission to
arbitration, or it contains
decisions on matters beyond
the scope of the submission
to arbitration, provided that, if
the decision on matters
submitted to arbitration can
be separated from those not
so submitted, that part of the
award"192"which contains
decision on matters submitted
to arbitration may be
recognized and enforced; or
(iv) the composition of the arbitral
tribunal or the arbitral
procedure was not in
accordance with the
agreement of the parties or,
failing such agreement, was
not in accordance with the
law of the country where the
arbitration took place; or
(v) the award has not yet
become binding on the
parties or has been set aside
or suspended by a court of
the country in which, or under
the law of which, that award
was made: or
(b) if the court finds that:
(i) the subject matter of the
dispute is not capable of
settlement by arbitration
under the law of this State;
or
(ii) the recognition or
enforcement of the award
would be contrary to the
public policy of this State.

(2) If an application for setting aside or suspension of an award has been made to a court
referred to in paragraph (1)(a)(v) of this article, the court where recognition or
enforcement is sought may, if it considers it proper, adjourn its decision and may also, on
the application of the party claiming recognition or enforcement of the award, order the
other party to provide appropriate security.

36.1 Doc. A/CN.9/WG.II/WP.42, para. 3.

36.2 Ibid., p. 5, n. 12 and p. 3, n. 3, respectively. Art. V reads as follows:

1. “Recognition and enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that party furnishes to the competent authority where
the recognition and enforcement is sought, proof that:

(a) The parties to the agreement referred to in

article II were, under the law applicable to
them, under some incapacity, or the said
agreement is not valid under the law to which
the parties have subjected it or, failing any
indication thereon, under the law of the country
where the award was made; or
(b) The party against whom the award is invoked
was not given proper notice of the appointment
of the arbitrator or of the arbitration
proceedings or was otherwise unable to
present his case; or
(c) The award deals with a difference not
contemplated by or not falling within the terms
of the submission to arbitration, or it contains
decisions on matters beyond the scope of the
submission to arbitration, provided that, if the
decisions on matters submitted to arbitration
can be separated from those not so submitted,
that part of the award which contains decisions
on matters submitted to arbitration may be
recognized and enforced; or
(d) The composition of the arbitral authority or the
arbitral procedure was not in accordance with
the agreement of the parties, or, failing such
agreement, was not in accordance with the law
of the country where the arbitration took place;
or
(e) The award has not yet become binding on the
parties, or has been set aside or suspended by
a competent authority of the country in which,
or under the law of which, that award was
made.

2. Recognition and enforcement of an arbitral award may also be refused if the

competent authority in the country where the recognition and enforcement is sought finds
that:

(a) The subject matter of the difference is not

capable of settlement by arbitration under the
law of that country; or
(b) The recognition or enforcement of that award
 would be contrary to the public policy of that
country.”

36.3 Doc. A/CN.9/233, paras. 167, 169, 172, 173. Art. VI reads as follows:
“If an application for the setting aside or suspension of the award has been made to a
competent authority referred to in article V(1)(e), the authority before which the award is
sought to be relied upon may, if it considers it proper, adjourn the decision on the
enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.”

36.4 It nevertheless considered the revised draft of the “domestic” provision in case it
should ultimately be decided to retain a special regime for “domestic” awards (Introduction
to Articles 34, 35, and 36, supra, nr. 25 and Doc. A/CN.9/233, paras. 137-141).
36.5 Cf. Article 34, supra, nr. 4.
36.6 In op. cit., n. 34.60, supra, pp. 221-223.
36.7 For example, where references in that paragraph to the law of the country in which,
or under whose law, the award had been made led to the “law of this State”, i.e., in the
case of a “domestic” award, account should be taken of the effect of an implied waiver or
submission on the grounds set forth in subparagraphs (1)(a)(i), (a)(iii) and (a)(iv). In its
Analytical Commentary on Art. 4 the Secretariat states that the effect of that article, viz.,
that the party involved may not invoke non-compliance as a ground for setting aside or
refusal of recognition or enforcement, is of course limited to cases where the article is
applicable, i.e., with regard to those awards which are made “under this Law”. It submits,
however, that a court from which recognition or enforcement is sought of an award not
made “under this Law”, might disregard late objections of a party by applying any similar
rule of the procedural law applicable to such an award or by relying on the general notion
of estoppel (Doc. A/CN.9/264, p. 17, para. 6 and ibid., p. 79, para. 4).
36.8 Doc. A/CN.9/263, p. 52, para. 2.
36.9 Doc. A/CN.9/SR.329, para. 65. The words “not compulsory” should read
“compulsory”.
36.10 Ibid., para. 66.
36.11 Ibid., paras., 67-71.
36.12 Doc. A/CN.9/233, paras. 133 and 157.
36.13 Ibid., paras. 143 and 144.
36.14 Ibid., paras. 160 and 163-167.
36.15 Doc. A/CN.9/245, para. 137.
36.16 Ibid., para. 141.
36.17 Ibid., para. 143.
36.18 Ibid., para. 144.
36.19 The grounds for setting aside under Art. 34 and for refusing recognition and
enforcement under Art. 36 were substantially identical, and the Commission took up Art.
34 before Art. 36.
36.20 Para. 321.
36.21 Commission Report, para. 322. For the discussion on possible additions to this
subparagraph to assure that it would cover all instances of procedural injustice see Article
34, supra, nrs. 16-27.
36.22 See Article 34, supra, nr. 35 for my view that that decision is not clearly reflected
in the text.
36.23 See Article 34, supra, paras. 37-45.
36.24 Doc. A/CN.9/SR.330, para. 7.
36.25 Ibid., para. 8.
36.26 Ibid., para. 9.
36.27 Para. 323.
36.28 Doc. A/CN.9/233, para. 176.
36.29 Ibid., para. 177.
36.30 Doc. A/CN.9/264, p. 279, para. 5. It is of course possible that the Art. 6 court
happens to be the “competent court” of Art. 36.
36.31 At the Commission session, the Swedish delegate, speaking on subparagraph
(1)(a)(v) (“award has been set aside”), asked what would happen if enforcement of a
foreign arbitral award were sought before the expiration of the three month period for
instituting setting aside proceedings, and the enforcement court (the “competent court”)
found errors which would be grounds for setting the award aside. He thought that the
point should be raised in the Commission's Report so that States could introduce
appropriate national legislation if necessary (Doc. A/CN.9/SR.330, para. 5). It seems to
me that every court should and would suspend enforcement proceedings, if the period for
instituting setting aside proceedings was as short as three months.
36.32 “Double control” would be possible in the almost unthinkable case where an
enforcement proceeding was instituted and a request for refusal of enforcement had been
rejected within the three months' period for setting aside. The losing party would then
have another chance to attack the award by starting proceedings in the Art. 6 court before
the expiration of the three month period.
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