KluwerArbitration
Document information
Publication
The Powers and Duties of
an Arbitrator: Liber
Amicorum Pierre A. Karrer
Bibliographic
reference
Jane Willems, 'Chapter 38:
The Arbitrator's Jurisdiction
at Risk: The Case of Hybrid
and Asymmetrical
Arbitration Agreements', in
Patricia Louise
Shaughnessy and Sherlin
Tung (eds), The Powers and
Duties of an Arbitrator:
Liber Amicorum Pierre A.
Karrer, (© Kluwer Law
International; Kluwer Law
International 2017) pp. 403
- 416
P 404
P 405
© 2022 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
Chapter 38: The Arbitrator's Jurisdiction at Risk: The Case
of Hybrid and Asymmetrical Arbitration Agreements
Jane Willems
§38.01 INTRODUCTION
The cornerstone of international commercial arbitration is party autonomy, a principle
which embodies the parties’ freedom to select the arbitration mechanism that best suit
their needs (institutional or ad-hoc arbitration) at an elected seat, and empowers them
to determine the substantive and procedural rules applicable for the determination of
their dispute. This party autonomy principle, in its various formulations, is universally
accepted by international instruments, case law and existing statutes and ensures that
international commercial arbitration proceeds in accordance with the parties’ intentions
and desires.
However, it is practically a cliché to point out that dispute resolution clauses are often
referred to as the ‘midnight clause’, the clause that is pushed to the very end of the
agreement and considered, briefly, at the end of contract negotiations. This clause, to
which no one pays attention to, can be badly drafted and full of defect, a so-called
pathological clause. If not cured, this clause may be found unenforceable. At the other
end of the spectrum, some dispute resolution clauses are drafted so carefully – perhaps
too carefully – that their very enforceability raises some unexpected results. The
enforceability of types of complex arbitration clauses, namely hybrid and asymmetrical
arbitration agreements, when tested before arbitrators and in state court, shows the
limits and the risks of the parties’ possibilities in designing their dispute resolution
mechanism.
§38.02 THE ARBITRATOR”S JURISDICTION AND HYBRID ARBITRATION
AGREEMENTS
International arbitration is classically divided between ‘institutional’ and ‘ad-hoc’
arbitration. (1) Parties intending to settle their disputes by institutional arbitration may
choose among the various institutions providing international arbitration services
located around the world, and select the arbitration rules promulgated by these
arbitration institutions. (2) These institutional arbitration rules govern the appointment
of the arbitrator, conduct of the arbitral proceedings, and payment of the parties’
arbitration costs. These arbitration institutions, and good practice principles, (3) direct
and recommend arbitration users and drafters to refer to their model dispute resolution
clauses, so as to avoid any mistakes in the drafting of the arbitration agreement which
may render the clause ‘pathological’ and adversely affect its enforceability.
On the other hand, parties wishing to have recourse to ad-hoc arbitration need to agree
directly on the rules which will conduct their ad-hoc arbitration proceedings, or
alternatively, adopt existing sets of ad-hoc arbitration rules, such as the UNCITRAL
arbitration rules. (4)
The practice of hybrid clauses, built on the principle of party autonomy, and coupled
with the unlimited creativity of the parties when drafting their arbitration agreement,
consists in the parties selecting among the various arbitration institutions and the
available arbitration rules institutional or ad-hoc). The two types of alternative hybrid
arbitration clauses provide for the parties’ choice to have their chosen arbitration
institution administer proceedings under: (i) the rules promulgated by another
arbitration institution, or (ii) ad-hoc arbitration rules. When parties elect this route, they
should recognize that once a dispute arises, any disagreements as to the meaning and
the enforceability of these hybrid clauses often leads to lengthy proceedings concerning
the validity of the arbitration agreement and of the award, before the arbitral tribunal or
the courts.
[A] The Arbitrator’s Jurisdiction and the Parties’ Choice of an Institution to
Administer Proceedings under Arbitration Rules Promulgated by Another
Arbitration Institution
Particularly common hybrid clauses are when parties select an arbitral institution, ‘X’ to
conduct the arbitration in accordance with the rules of institution ‘Y’: ‘SIAC administered
under ICC rules’, ‘SCC administered under ICC rules’ or ‘CIETAC administered under ICC rules’.
Since 2012, the ICC has stated its reservation to other arbitration institutions
administering cases under its institutional arbitration rules. (5) Notwithstanding, others
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 international arbitration institutions, such as the SIAC and the Stockholm Chamber of
Commerce (SCC), have enforced the parties’ choice to administrate the proceedings
under other arbitration institutions’ rules.
In the seminal Alstom v. Insigma case, (6) the licence agreement granted by Alstom to
Insigma (China) contained an arbitration clause that required the parties to submit their
dispute to SIAC, but instructed SIAC and the arbitrators to apply ICC rules of arbitration.
The arbitration clause provided that the dispute would be: ‘… finally resolved by
arbitration before the Singapore International Arbitration Centre in accordance with the
Rules of Arbitration of the International Chamber of Commerce.’ This ‘SIAC administered
under ICC rules’ clause gave rise to a multi-tier dispute at each stage of the arbitration
proceedings. Alstom first filed its claim before the ICC Court and then withdrew it. After
an agreement was reached between the parties, the case was filed with SIAC, who
proceeded with the confirmation of the arbitrators appointed by the parties. Insigma
then challenged the validity of the arbitration clause before the arbitral tribunal. SIAC
then informed the arbitral tribunal that it was prepared to administer the arbitration in
accordance with the ICC Rules and the SIAC Secretariat, Registrar, and Board of Directors
of SIAC, respectively, would perform the functions assigned to the Secretary-General,
Secretariat, and the ICC Court under the ICC Rules. With that framework in mind, the
arbitral tribunal decided that it had jurisdiction to hear the dispute.
Insigma challenged the award before the Singapore courts. The Singapore High Court
qualified this ‘SIAC administered under ICC rules’ arbitration clause as an ad-hoc
arbitration clause, whereby SIAC merely ‘administered the case’ and confirmed its
validity. The court further held that the fact that SIAC had performed the role set out in
the ICC rules in confirming the party-appointed arbitrators was not significant in that no
policy reasons would bar SIAC from agreeing to do so.
A recent decision rendered by a Swedish court in Government of the Russian Federation v.
P 406 I.M. Badprim, S.r.l. (7) has confirmed this enforcement positive approach to hybrid
clauses. In that dispute, the parties’ agreement provided for a ‘SCC administered under
ICC Rules’ arbitration clause. The SCC accepted the arbitration filing and the arbitrators
proceeded to conduct the arbitration according to the ICC rules. The court subsequently
rejected the challenge against the award and confirmed the validity of the hybrid
arbitration clause.
More recently in Top Gains Minerals Macao Commercial Offshore Ltd v. TL Resource Pte Ltd
(HCMP 1622/2015), (8) the High Court of Hong Kong was asked to examine, in the context of
a request for interim measure, a ‘SIAC administered under ICC rules’ arbitration clause
providing ‘… If the dispute or matter cannot be settled by mutual accord between the
Parties, such dispute or claim shall be referred to Singapore International Arbitration Center
(SIAC) for arbitration in accordance with the Rules of Conciliation and Arbitration of the
International Chamber of Commerce … ’ The claimant had chosen to file its request for
arbitration before the auspices of the ICC and not the SIAC. The High Court of Hong Kong
decided not to intervene pending the determination by the ICC arbitral tribunal of its
jurisdiction, and estimated that, should the tribunal find it has jurisdiction, it was still
possible for the award to be recognized and enforced by the Hong Kong Court at the
enforcement and recognition stage. (9)
The pro-validity approach to hybrid clauses adopted by courts located in arbitration-
friendly jurisdictions is not accepted, however, in other jurisdictions where the
enforcement of the same award may be sought under the 1958 New York Convention. In
Insigma, when Alstom moved to enforce in the Mainland China the award it had obtained,
Insigma objected on the ground that the arbitral tribunal had not been constituted in
accordance with the parties’ agreement. The Hangzhou Court accepted Insigma’s
objection and denied the enforcement of the award by holding that the confirmation of
the arbitrators by the SIAC, and not by the ICC Court of International Arbitration, as
required under the ICC Rules chosen by the parties, failed to comply with the parties’
agreement. (10)
Since the institutional arbitration rules provide for the intervention of their own organs at
various stages of the arbitration proceedings (in particular when the arbitrators are
appointed arbitrators) that may not exist in the other institution selected by the parties
to administer the dispute, the choice of hybrid arbitration clauses may create a
deadlock, which absent an additional agreement of the parties, raise the risk that either
the court of the seat, or the enforcing court, will apply a stricter standard and find that
the enforcement of the arbitration clause did not comply with the parties’ agreement.
P 407

[B] The Arbitrator’s Jurisdiction and the Parties’ Choice of an Institution to

Administer the Arbitration under Ad-hoc Arbitration Rules
As set out above, ad-hoc arbitration clauses in international commercial arbitration, and
in investor-State arbitration, often adopt published sets of ad-hoc arbitration rules. The
parties may choose any arbitral institution to act as the ‘appointing authority’. Absent a
choice by the parties, published ad-hoc arbitration rules, such as the UNCITRAL
arbitration rules, require institutions to fulfil the duties of the ‘appointing authority’ in
the designation of the arbitral tribunal.

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 In addition to administrating proceedings under their own institutional rules, quite a few
international arbitration institutions offer to administer ad-hoc cases by acting as the
appointing authority and providing full or partial administrative assistance. (11) These
administered services are regularly used in ad-hoc arbitration, in particular in investor-
state arbitration. The parties may, therefore, request arbitral institutions to provide
administrative services in support of their arbitration proceedings.
The difficulty with the use of an ad-hoc arbitration clause has arisen particularly in the
international commercial arbitration practice in the Mainland China where ad-hoc
arbitration agreements are de facto forbidden. In Mainland China, parties must choose
an arbitration institution, failing which, the arbitration agreement is invalid. (12)
Chinese arbitration institutions have published and regularly update their institutional
international arbitration rules and publish their model arbitration clauses. (13) Some of
these Chinese institutional arbitration rules, however, allow the institution to administer
P 408 cases under ‘other arbitration rules’. (14) This is a pragmatic attempt to attract more
Sino-foreign cases to be arbitrated in Mainland China by offering the foreign parties a
Chinese seated arbitration forum but administered under international arbitration rules,
such as the ICC rules.
Furthermore, some Chinese institutional rules expressly state that the institution will
provide administered services for arbitration under the UNCITRAL arbitration rules. (15)
In the context of the current arbitration legal framework, the offer of administered
services for ad-hoc arbitration under the UNCITRAL rules, notably in the new Shanghai
Free Trade Zone, constitutes a welcome initiative and the first real attempt to open the
Great Wall of excluding ad-hoc arbitration. (16)
Two instances confirm that while Chinese local courts have rejected the validity of ad-hoc
clauses, they have affirmed the validity of ‘administered’ ad-hoc clauses. In the first case,
Invista Technologies S.à.r.l. (Invista), a European technology licensor and Zhejiang Yisheng
(Yisheng), a Chinese petrochemical company, had agreed in two technology licensing
agreements to refer disputes to arbitration under a ‘CIETAC administered UNCITRAL rules’
clause: ‘The arbitration shall take place at China International Economic Trade Arbitration
Centre (CIETAC), Beijing, P.R. China and shall be settled according to the UNCITRAL
Arbitration Rules as at present in force’.
When a dispute arose, Invista commenced arbitration by submitting its claim to CIETAC in
July 2012. Yisheng subsequently applied to Chinese state courts for a declaration that the
arbitration clause was invalid. Following the instructions from the Chinese People’s
Supreme Court, the Ningbo court held the arbitration agreement was valid. (17) In its
judgment dated 17 March 2014, (18) the court found that the terms ‘shall take place at
CIETAC’ meant that the parties had agreed CIETAC would administer the case under
UNCITRAL Rules and therefore the arbitration agreement was valid under Chinese law.
Similarly, in a second instance, also involving a ‘CIETAC administered UNCITRAL Rules’
clause, which had been inserted in a construction contract entered into in 2009. (19) The
P 409 arbitration clause provided:

The parties agree to resolve all differences arising out of or relating to this
AGREEMENT through binding arbitration before three arbitrators pursuant to
the UNCITRAL Arbitration Rules. The place of arbitration shall be Shanghai,
People’s Republic of China and the language of the arbitration shall be
English. The China International Economic and Trade Arbitration Commission,
Shanghai Commission shall administer the arbitration, and also act as the
appointing authority when the UNCITRAL Arbitration Rules call for an
appointing authority to act… .
The terms of this clause are very similar to the draft model clause provided by UNCITRAL
for parties who wish for an institution to ‘fully administer’ the arbitration under the
UNCITRAL arbitration rules. (20) In this case, one party filed a request for arbitration
before the Shanghai sub-commission of CIETAC, who accepted the case. The respondent
to the arbitration proceedings challenged the validity of this clause before the Shanghai
Court seeking a declaration that the clause is invalid under then 1994 Chinese arbitration
law because it constituted an ad-hoc arbitration agreement. The Shanghai court rejected
the challenge and held the clause was valid. The state court considered the phrases
‘administer the arbitration’ and ‘appointing authority’ taken together meant that the
parties had empowered the Shanghai sub-commission of CIETAC with more than the
function of administering services generally offered by other arbitration institutions in
ad-hoc arbitrations. It further found that the Shanghai sub-commission of CIETAC was an
arbitration institution able to thoroughly administer the present arbitration proceedings,
and that neither the Chinese arbitration law nor the arbitration rules of the Shanghai sub-
commission of CIETAC prevented parties from choosing the UNCITRAL arbitration rules.
The Shanghai Court interpreted the consent of the parties in light of the object and
purpose of the clause, concluded that the parties had indeed chosen an ‘arbitration
institution’ as required by Article 16 of the 1994 Chinese arbitration law, and therefore the
contemplated arbitration was not an ad-hoc arbitration.
These two decisions are a welcome boost to party autonomy in the Mainland China and
contribute a way to limit the prohibition of ad-hoc arbitration clauses to ‘non-

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 administered’ ad-hoc clauses. (21) Indeed, clearly neither of the two above cited clauses
provide for an institutional arbitration. Instead, in these clauses, the parties had only
selected an arbitral institution to administer an ad-hoc proceeding. Even if the
P 410 institutional arbitration rules themselves, as it is the case for the SHIAC rules, contains
provisions for the administration of ad-hoc proceedings, the role of the arbitration
institution is limited to the administration of the case and to the appointment of the
arbitrators under ad-hoc arbitration rules chosen by the parties, and therefore the
consent of the parties remains that for an ad-hoc arbitration.

§38.03 THE ARBITRATOR”S JURISDICTION AND ASYMMETRICAL ARBITRATION

AGREEMENTS
Another aspect of the parties’ freedom to design their dispute resolution clause is found
in asymmetrical arbitration agreements. Indeed, arbitration agreements may be
negotiated with the intent to bind the parties to a dispute resolution mechanism where
they accept to postpone the identification of the forum before which the dispute will be
heard until after the dispute has arisen. The dispute resolution clause contains an option
whereby both parties (bilateral option clauses) or sometimes one party only
(asymmetrical/unilateral option clauses), holds the option to bring the dispute between
two or more jurisdictions. The option is most often between several arbitration
alternatives or between litigation and arbitration.

[A] Optional Arbitration Agreements

The option is defined at common law as the right of election to exercise a privilege. (22)
In the context of dispute resolution clauses, an option given to a party – the ‘optionee’ –
empowers it to exercise a right to either litigate, or to arbitrate a dispute. (23) The
optionee is granted the privilege to accept or reject the offer made by the other party.
The optionee is not bound to the contract if it rejects the offer. Hence, until the optionee
elects the arbitration or the litigation option, no contract is formed. (24) In The Messiniaki
Berger where a bilateral option clause was inserted in the contract, Bingham J. held: ‘The
P 411 clause confers an option, which may be not exercised. … [U]ntil an election is made there
is no agreement to arbitrate, but once the election is made (and the option exercised) a
binding arbitration agreement comes into existence.’ (25)
Bilateral option clauses are routinely enforced by courts and allow either party to trigger
the option upon crystallization of the dispute. (26) However, the exercise of asymmetrical
dispute resolution clauses and arbitration clauses has given rise to abundant case law.
Under English arbitration law, the validity of unilateral arbitration clauses is well settled
and courts have held that the fact that one only party holds the option does not affect
the validity of the arbitration agreement in itself, as there is no requirement for an
arbitration agreement to be ‘mutual’. (27)
Contemporary international investment agreements (International investment
agreements (IIA), multilateral or bilateral investment treaties (BITs) grant the foreign
investor a right of action against the host state. The dispute resolution clauses contained
in these treaties offer the investor a unilateral option to choose before which forum to
bring its investment dispute against the host state. The option includes the host states’
domestic courts or international arbitration under the auspices of different arbitration
institutions (ICSID, SCC, etc.) (28) The validity of these asymmetrical arbitration clauses is
not disputed. Their practicability resides in the fact that the investor alone may initiate
P 412 the dispute and act as claimant under the IIA, whereas the host state acts as the
respondent. In addition, in order to prevent the introduction by the investor/claimant of
the same dispute under several fora, IIAs also often contain a so-called fork-in-the-road
provision, which aims at making the investor’s choice of forum final and exclusive. (29)
The exercise of asymmetrical arbitration clauses in international commercial arbitration
is therefore connected with a ‘risk’ of parallel proceedings, both where the clauses
provide for a general option of forum or where they act as an exception to the general
forum.

[B] The Enforceability of Asymmetrical Clauses Providing for a General Option of

Forum
In international commercial arbitration, the option may be granted to the benefit of the
party who will act as claimant if a dispute arises. In this situation, when drafting the
contract, the parties cannot foresee which of them will be the claimant in a future
dispute and so both parties may act as claimant and exercise the option. (30) The case
China Nat. Metal Product v. Apex Digital (31) illustrates the risk of parallel arbitration
proceedings, and of multiple awards, when enforcing unilateral option clauses. In this
case, the purchase orders under a series of written sales agreements, contained a CIETAC
arbitration clause with three alternative fora ‘at the claimant’s option’, namely (1) CIETAC
in Beijing; (2) CIETAC sub-commission in Shenzhen; or (3) CIETAC sub-commission in
Shanghai, the clause read:
All dispute[s] arising from or in connection with this Contract shall be
submitted to [CIETAC] for arbitration which shall be conducted by [CIETAC] in

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 Beijing or by its Shenzhen Sub-Commission in Shenzhen or by its Shanghai
Sub-Commission in Shanghai at the Claimant’s option in accordance with
[CIETAC’s] arbitration rules in effect at the time of applying for arbitration… .
The obvious difficulty arises when each party, intending to be the claimant, moved to
initiate arbitration proceedings before different fora. In China Nat. Metal v. Apex Digital,
Apex filed a request for arbitration against China Nat Metal before the CIETAC Sub-
commission in Shanghai. China Nat Metal subsequently filed a request for arbitration
with CIETAC Beijing. The two CIETAC ran parallel and resulted in two different arbitral
awards, with the Beijing arbitration panel ruling for China Nat Metal last.
P 413
Having prevailed in its arbitration proceedings in Beijing against Apex, China Nat. Metal
sought to enforce the CIETAC award in the United States under the 1958 New York
Convention. In the US court, Apex objected to the enforcement, arguing that it had agreed
to arbitrate in one of three fora, and not in multiple fora. Apex contended that since it
was the claimant (in that it had filed first), its option was final. The clause therefore
required China Nat. Metal to counterclaim before the forum selected by Apex, as
claimant, and not to exercise the option subsequently as a claimant. The Court of
Appeals of the 9th Circuit did not agree with Apex, and held that, since CIETAC had
permitted the two separate, but related, arbitrations to proceed along parallel paths,
the award should be enforced and Apex and China Nat. Metal were both claimants in
their respective arbitrations.
This case raises the classic issue of parallel proceedings in international commercial
arbitration where absent a clear wording stating that the first claimant’s filing will
determine the final forum, or the power of the arbitration institution to consolidate the
pending arbitration proceedings, the parties run the risk of conflicting arbitral awards.

[C] The Enforceability of Asymmetrical Clauses Providing for an Exception to the

General Forum
The option may also be granted to a designated party (Party A), chosen at the time the
contract is entered into, to hold the privilege to opt out of the general choice of
jurisdiction otherwise agreed upon by both parties. Under the first scenario, an identified
party, Party A, holding the option, may refer the dispute to arbitration as an exception to
the agreement to resolve the dispute through the courts. Under the second scenario,
Party A may refer the dispute to the court as an exception to the arbitration agreement.
Under the first scenario, the choice of court agreement is subject to a unilateral option to
arbitrate, therefore Party A may unilaterally opt to refer the dispute to arbitration. In NB
Three Shipping, (32) the dispute resolution clause inserted in the charter-party (under the
amended Barecon 89 Form) granted only the owner, Harebell Shipping Ltd. (as Party A),
the privilege over the charterers, NB Three Shipping (as Party B), to derogate from the
choice of English courts and opt for ad-hoc arbitration in London. Clause 47 of the
charter-party provided:
‘47.02The courts of England shall have jurisdiction to settle any disputes which
may arise out of or in connection with this Charterparty but [Party A] shall
have the option of bringing any dispute hereunder to arbitration…
‘47.10Any dispute arising from the provisions of this Charterparty or its
performance which cannot be resolved by mutual agreement which
[Party A] determines to resolve by arbitration shall be referred to
arbitration in London or, at [Party A’s] option, in another city selected by
[Party A] by two arbitrators, one appointed by [Party A] and one by the
Charterers [Party B] who shall reach their decision by applying English
P 414 law. If the arbitrators so appointed shall not agree they shall appoint
an umpire to make such decision.’ (Emphasis added)
NB Three Shipping (Party B) brought the dispute against the owners, Harebell Shipping
Ltd. (as Party A), before the High Court of England under clause 47.02. Party A,
respondents to the court action, then decided to exercise their right to arbitrate the
matter, appointed their arbitrator and requested the court to stay the court proceedings
on the grounds that the parties were bound to arbitrate the dispute. To the objection of
Party B who alleged the option to arbitrate was only available to Party A, when it acted as
claimant, the court held that the very purpose of the option granted to one only party
was to give that party an advantage and that party may exercise its right to choose
between litigation or arbitration and exercise such option even as respondent, after the
dispute had arose, by asking the matter be removed from courts and heard in arbitration:
It seems to me that clause 47.02 gives [Party A] a right to stop or stay a court
action brought against them, at their option. This gives the clause some
practical effect and was designed to apply in circumstances such as these. If
[Party B] seek to bypass the [Party A’s] determination to have disputes
resolved by arbitration as contemplated by Clause 47.10, then [Party A’s]
option of bringing the disputes to arbitration remains, continuing [Party A’s]
control over the issue of arbitration or court. [Party B] can obtain no

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 advantage from ‘jumping the starting gun’.
Morison J. found that clause 47.10, which permits only Party A to arbitrate, ‘satisfies the
requirements of an arbitration agreement since a one sided choice of arbitration is
sufficient.’ Morison J. went on to comment that one of the fundamental objectives being
exercised in allowing the stay of litigation proceedings (under section 9(1) of the
Arbitration Act), is to give the parties autonomy of over their choice of forum and ‘… once
[Party A] exercise their option the parties have agreed that the disputes should be
arbitrated. By refusing a stay the court would not be according to them their autonomy.’
Under the second scenario, the arbitration agreement is subject to a unilateral option to
litigate, and Party A may refer the dispute to the court as an exception to the arbitration
agreement. In the case of Law Debenture Trust Corp Plc v. Elektrim Finance BV, (33) the
dispute resolution clause granted Party A the unilateral right to choose litigation over
arbitration:
‘29.2 Any dispute arising out of or in connection with these presents may be
submitted by any party to arbitration for final settlement […].
29.4 The place of such arbitration shall be in London […].
29.6 The agreement by all the parties to refer all disputes … to arbitration …
is exclusive such that neither shall be permitted to bring proceedings in
any other court or tribunal …
29.7 Notwithstanding cl 29.2, for the exclusive benefit of the [Party A] and
each of the Bondholders, [Party B] hereby agree that [Party A] and each
of the Bondholders shall have the exclusive right, at their option, to
P 415 apply to the courts of England, who shall have non-exclusive
jurisdiction to settle any disputes …’ (Emphasis added)
Elektrim (Party B) commenced an arbitration and Law Debenture (Party A) applied to stay
arbitration proceedings commenced by Elektrim (Party B). When Party B applied to stay
the litigation proceedings, the Mann J refused and restrained the continuation of the
arbitral proceedings. It was held that the contract allowed Party A to exercise the option
to force Party B to litigate both as a respondent to an arbitration case and in court
proceedings after a dispute has arisen. Party B did not have this option. Party A could
litigate, but Party B could be forced to arbitrate (unless litigation is started, in which case
Party B could counterclaim). Party A, meanwhile, could not be forced to arbitrate if it
wished to commence its own proceedings covering the same subject matter.
The enforceability of such clauses is however not shared in all jurisdictions. In the Russian
case CJSC Russian Telephone Company v. Sony Ericsson Mobil Communications Rus LLC. (34)
The disputed resolution clause, inserted in a general distribution contract entered into
between two Russian entities, also provided for a unilateral option to litigate the dispute
as an exception to an ICC arbitration clause. Under the dispute resolution clause, the
buyer, Russian Telephone Company (Party B) was bound to arbitration, while the seller,
Sony Ericsson Mobil Communications Rus LLC (‘Sony Ericsson’, Party A) held the privilege
to opt out of the arbitration and apply to court. The arbitration clause provided as
follows:
‘Any dispute arising under this Agreement which cannot be resolved by way of
negotiation shall be definitively resolved in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce … The
venue of the arbitration shall be London, and English shall be the language of
the proceedings… This arbitration clause does not limit Sony Ericsson [Party A]
the right to apply to a court of competent jurisdiction for recovery of amounts
owed for delivered products.’ (Emphasis added)
When a dispute arose, Party B brought the case before a Moscow Court of First Instance,
Party A objected to jurisdiction and asked the court to dismiss the case to arbitration
based on the option contained in the above stated clause. The Court of First Instance, the
review court and the appeal court held, based on party autonomy held the parties were
‘free to contract’ as they saw fit in, that the arbitration clause was enforceable and
refused to consider Party B’s claim.
The Supreme Arbitration Court, however, disagreed with the lower courts’ decision and
sent the case back to the Court of First Instance for review based on the parties’ inherent
right to be treated equally. The court decided that the unilateral option to litigate was
P 416 invalid and unenforceable and ruled that the lower courts had not taken into account
the fact that the clause a forum shopping right to only one party to the contract, Party A.
Hence, the contract created an imbalance between the parties’ rights. The Court stressed
that equality before the law is one of the basic principles of civil law and the parties
should equally be given an opportunity to present to the court all relevant aspects of
their case. This would ensure judicial protection and guarantee a fair trial and declared
the clause invalid and unenforceable.
P 416

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 References
1) 2010 IBA Guidelines for Drafting International Arbitration Clauses (IBA Guidelines),
Guideline 1: ‘The parties should decide between institutional and ad hoc arbitration.’
2) Such international arbitration institutions include the International Chamber of
Commerce (ICC), the London Court of International Arbitration (LCIA), the Stockholm
Chamber of Commerce (SCC), the China International Economic and Trade Arbitration
Commission (CIETAC), the Hong Kong International Arbitration Centre (HKIAC), the
Singapore International Arbitration Centre (SIAC), the International Centre for the
Settlement of Investment Disputes (ICSID), etc. On institutional and ad-hoc
arbitration, see, N. Blackaby, C. Partasides QC, A. Redfern and M. Hunter, Redfern &
Hunter on International Arbitration 6th ed., paras 1.141–1.156; G. Born, International
Commercial Arbitration (Second Edition), Kluwer Law International 2014, p. 205.
3) IBA Guidelines, Guideline 2: ‘The parties should select a set of arbitration rules and
use the model clause recommended for these arbitration rules as a starting point.’
4) For recommended ad-hoc arbitration clauses, see IBA Guidelines, para. 12; The
Freshfields Guide to Arbitration Clauses in International Contracts (Third Edition),
Paulsson, Rawding, et al. (ed) (2010), pp. 151–153.
5) 2012 ICC Arbitration Rules, Art. 1(2): ‘… The Court is the only body authorized to
administer arbitrations under the Rules, including the scrutiny and approval of awards
rendered in accordance with the Rules.’
6) Insigma Technology Co Ltd v. Alstom Technology Ltd [2009] 1 SLR(R) 23.
7) Svea Court of Appeals, 23 Jan. 2015, T 2454-14, available at
(http://www.arbitration.sccinstitute.com). In 2014 CIETAC reported a case involving a
‘CIETAC administered ICC rules’ clause, See 2014 Annual Report of International
Commercial Arbitration, China Academy of Arbitration Law, p. 33.
8) Top Gains Minerals Macao Commercial Offshore Tfd v. TL Resource Pte Ltd, [2015] HKCFI
2101; HCMP 1622/2015 (18 Nov. 2015), para. 5, 12.
9) Idem, para. 44.
10) Alstom Technology Ltd v. Insigma Technology Co Ltd, Hangzhou Intermediate People’s
Court, Zhejiang, 6 Feb. 2013, [2011] She Hang Zhong Que Zi No. 7, translated in Albert
Jan van den Berg and (eds), Yearbook Commercial Arbitration 2014, Vol. XXXIX, pp.
380–383, Kluwer Law International 2014.
11) The 2010 UNCITRAL arbitration rules have entrusted the Secretary-General of the
Permanent Court of Arbitration (PCA) as the default appointing authority. The PCA
indicates on its website it also ‘provides full administrative support in arbitrations
under the UNCITRAL Arbitration Rules’. The LCIA indicates it acts as appointing
authority as administrator in arbitrations conducted under the UNCITRAL arbitration
rules. Some arbitration institutions such as the HKIAC and the Japan Commercial
Arbitration Association have promulgated special procedures for the administration
of UNCITRAL Rules. For a review on these ad-hoc arbitration administration services,
See, 69/90 Recommendations to assist arbitral institutions and other interested bodies
with regards to arbitration under the UNCITRAL Arbitration Rules (as revised in 2010),
paras 18–26, United Nations UNCITRAL 2013.
12) Article 16 of the 1994 Chinese arbitration law provides that an arbitration agreement
shall include the Arbitration Commission selected by the parties. Article 18 of the
1994 Chinese arbitration law provides that, absent such a choice, the arbitration
agreement shall be invalid.
13) 2015 CIETAC Arbitration Rules, 2015 Beijing Arbitration Commission Arbitration Rules,
2015 Shanghai International Arbitration (SHIAC) Arbitration Rules.
14) 2015 CIETAC Arbitration Rules, Art. 4(3): ‘Where the parties agree to refer their dispute
to CIETAC for arbitration but … have agreed on the application of other arbitration
rules, the parties’ agreement shall prevail unless such agreement is inoperative or in
conflict with a mandatory provision of the law applicable to the arbitral proceedings.
Where the parties have agreed on the application of other arbitration rules, CIETAC shall
perform the relevant administrative duties.’ See also, 2014 China (Shanghai) Pilot Free
Trade Zone arbitration rules promulgated by the Shanghai International Arbitration
Centre (SHIAC), Art. 2(4): ‘SHIAC shall perform the functions that should be performed
by an arbitration institution referred to in other arbitration rules which are applicable
upon parties’ agreement.’ See also, the 2015 SHIAC arbitration rules, Art. 2(6).
15) The 2015 SHIAC Arbitration Rules, Art. 2(7) and the 2014 China (Shanghai) Pilot Free
Trade Zone arbitration rules promulgated by the Shanghai International Arbitration
Centre (SHIAC), Art. 2(5) provides that if the parties agree to adopt the UNCITRAL
Rules, SHIAC will become the appointing authority ‘and perform other administrative
functions’ in accordance with the UNCITRAL Rules or the agreement of the parties.
16) See, Tao J. & C. von Wunschheim, ‘Art. 16 and 18 of the PRC Arbitration Law: The Great
Wall of China for Foreign Arbitration Institutions’, 23 Arb. Int. 309, 311 (2007).

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 17) Under the pre-reporting system in China, where a lower court considers a foreign-
related arbitration agreement is not enforceable, it must first report its findings to
the higher court and if the higher court confirms the finding the Supreme People’s
court ultimately decides. See, Notice of the Supreme People’s Court on Several
Issues Regarding the Handling by the People’s Courts of Certain Issues Pertaining to
International Arbitration and Foreign Arbitration, issued by the Supreme People’s
Court on and effective from 28 Aug. 1995. For an analysis of the pre-reporting system,
See, Kun Fan, ‘Arbitration in China: Practice, Legal Obstacles and Reforms’, 19(2) ICC
Int’l Court of Arb. Bull. 1–16, at 9 (2008).
18) Zhejiang Yisheng Petrochemical Co Ltd v. Invista Technologies Sarl, Ningbo
Intermediate People’s court, 17 Mar. 2014, [2012] Zhe Yong Zhong Que Zi No. 4.
19) Shanghai 2nd Intermediate People’s Court, 23 Jan. 2015, [2013] Hu Er Zhong Min Ren
(zhongcai) No. 1, not published.
20) The model clause proposed by UNCITRAL, where the parties choose the institution to
fully administer the arbitration under the UNCITRAL arbitration rules, reads: ‘Any
dispute, controversy or claim arising out of or relating to this contract, or the breach,
termination or invalidity thereof, shall be settled by arbitration in accordance with
the UNCITRAL Arbitration Rules administered by [name of the institution]. [Name of the
institution] shall act as appointing authority.’ (Emphasis added) See, 69/90
Recommendations to assist arbitral institutions and other interested bodies with
regards to arbitration under the UNCITRAL Arbitration Rules (as revised in 2010), para.
26, United Nations UNCITRAL 2013.
21) Chinese courts have repeatedly held that ad-hoc clauses – providing for instance
‘arbitration in Beijing’ – are invalid. For reported cases, See, Peng X., ‘Validity of the
Beijing Arbitration Clause’, 28(1) J. Int’l Arb., 15–20. For an analysis of the Chinese court
practice of ‘institutionalizing’ these type of pure ad-hoc arbitration clauses in order
to hold the parties had designated an ‘arbitration commission’, See J. Willems, Les
contrats de joint venture sino-étrangères devant l’arbitre international, Larcier Ed.
2015, para. 111.
22) Black’s Law Dictionary, Sixth Edition, p. 1094.
23) On asymmetrical arbitration agreements, see, D. Draguiev, ‘Unilateral Jurisdiction
Clauses: The Case for Invalidity, Severability or Enforceability’, 31 J. of Int. Arb. 1, 19–25
(2014); S. Nesbitt, H. Quinlan, ‘The Status and Operation of Unilateral or Optional
Arbitration Clauses’, 22(1) Arb. Int’l. 133–149; M. Scherer, ‘A Cross-Channel Divide over
Unilateral Dispute Resolution Clauses’, Jurisdictional Choices in Time of Trouble,
Dossiers ICC Institute of World Business Law, 2014, pp. 10–20; A. Scott Rau,
‘Asymmetrical Arbitration Clauses’, Ibid. pp. 21–55; C. Drahozal, ‘Nonmutual
Agreements to Arbitrate’, 27 J. Corp L. 537 (2002); C. Nardinocchi, ‘Asymmetrical
Arbitration Clauses: A Risk for Pathology?’, Versailles Int’ Arb. & Bus. L. Rev. 109–131
(2014); D. Foster, ‘Asymmetrical Arbitration Agreements: Are They Worth the Risk?’, The
European, Middle East and African Review 2014, Global Arbitration Review 2014; J.
Barbet, P. Rosher, ‘La validité des clauses optionnelles’, 2010 Rev. Arb. 45–83.
24) HG Beale, ed, Chitty on Contracts: General Principles, vol. 1, 32nd ed (London, UK:
Thomson Reuters, 2015) at 2–134. However, it is worth noting that in the context of
landed property transactions, agreements containing an option become contracts at
the time they are signed and not when the option is exercised, See Chitty, at 2-020.
25) Westfal-Larsen & Co A/S v. Ikerigi Compania Naviers SA (The Messiniaki Bergen) [1983] 1
All ER 382. Here, clause 40(b) of the contract in question provided that any dispute
arising under the contract was to be decided by the English courts, provided that
‘either party may elect to have the dispute referred to [arbitration]’ Bingham J. found
that clause 40(b) was not merely an agreement to make an agreement to arbitrate
and once a valid election to arbitrate was made no further agreement was necessary
or contemplated for the arbitration to take place.
26) See Thermodyn v. M-Real Alizay, French Supreme Court, Cass Civ. 1ère, 12 Jun. 2013, the
cause provided: ‘If the dispute is not settled …, each party may choose to have
recourse to arbitration or to a court action before the court of where the buyer has its
seat. The dispute shall be submitted and finally by the arbitration rules of the London
Court of International Arbitration (LCIA) which is integrated by reference into this Article
… [… Si le différend n’est pas réglé …, chaque partie pourra choisir de recourir à
l’arbitrage ou à une action devant la cour du lieu du siège de l’acheteur. Le différend
devra être soumis et réglé de façon définitive par le règlement d’arbitrage de la London
Court of International Arbitration (LCIA), qui est intégré dans cet Article par
référence…].’ In this case, the Court held that the court had jurisdiction over the
dispute since the litigation/arbitration option offered a faculty to both parties and
the reference to the LCIA did not allow to reconsider the ‘purely optional nature of the
recourse to arbitration [… n’était pas de nature à remettre en cause le caractère
purement optionnel du recours à l’arbitrage].’
27) Pittalis v. Sherefettin [1986] QB 686, Fox L.J.: ‘I can see no reason why, if an agreement
between two persons confers to one of them alone the right to refer the matter to
arbitration, the reference should not constitute an arbitration. There is a fully bilateral
agreement which constitutes a contract to refer. The fact that the option is exercisable
by one of the parties only seems to me to be irrelevant.’ See also, The Stena Pacifica
[1990] 2 Lloyd’s Law Reports p. 234; Lobb Partnership Limited v. Aintree Racecourse
Company Limited [2000] 1 Building Law Reports 65.

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© 2022 Kluwer Law International, a Wolters Kluwer Company. All rights reserved.
 28) North American Free Trade Agreement, U.S.-Can.-Mex., 17 Dec. 1992, Art. 1120: ‘… a
disputing investor may submit the claim to arbitration under: (a) the ICSID Convention,
provided that both the disputing Party and the Party of the investor are parties to the
Convention; (b) the Additional Facility Rules of ICSID, provided that either the disputing
Party or the Party of the investor, but not both, is a party to the ICSID Convention; or (c)
the UNCITRAL Arbitration Rules.’ 32 I.L.M. 289 (1993). Agreement among Japan, Korea
and the People’s Republic of China for the Promotion, Facilitation and Protection of
Investment, 11 May 2012, Art. 15(3): ‘The investment dispute shall at the request of the
disputing investor be submitted to either: (a) a competent court of the disputing
Contracting Party; (b) arbitration in accordance with the ICSID Convention, if the ICSID
Convention is available; (c) arbitration under the ICSID Additional Facility Rules, if the
ICSID Additional Facility Rules are available; (d) arbitration under the UNCITRAL
Arbitration Rules; or (e) if agreed with the disputing Contracting Party, any arbitration in
accordance with other arbitration rules…’
29) For an example of a fork-in-the-road provision, See 2009 China-Belgium BIT, art. 8(2):
‘… the choice of the proceedings will be final [le choix de la procédure sera définitif].’See
also, ICSID Convention, Art. 26. For an application, See, Pantechniki S.A. Contractors &
Engineers v. Republic of Albania, ICSID Case No. ARB/07/21.
30) C. Nardinocchi, ‘Asymmetrical Arbitration Clauses: A Risk for Pathology?’, Versailles
Int’l Arb. & Bus. L. Rev. 109–131 (2014).
31) China Nat. Metal v. Apex Digital, Inc., 379 F. 3d 796.
32) NB Three Shipping LTD v. Harebell Shipping Ltd (NB Three Shipping) 2004 All ER (D) 152.
33) [2005] APP.L.R. 07/01.
34) Judgment of 19 Jun. 2012, No. A40-49223/11-112-401 (Supreme Arbitrazh Court, Russian
Federation).

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