There are many forms of arbitration. Some are conducted with the support of specialist arbitral bodies such as the International Chamber of Commerce ("ICC"), the Singapore International Arbitration Centre ("SIAC") or the Hong Kong International Arbitration Centre ("HKIAC"). Other arbitrations will proceed without any such support and supervision: the rules and processes of the arbitration may instead be set by reference to a standard set of rules (such as the UNCITRAL Rules) or by the agreement of the parties and, when appointed, by direction of the arbitrators.
In this newsletter we consider the basic structure of ICC arbitration, which remains one of the most popular forms of arbitration for international dispute resolution. Since its establishment in 1923 the ICC International Court of Arbitration (the "ICC Court") has handled over 15,000 cases. The most recently published statistics reveal that nearly 600 new cases were filed in 2006 involving parties from 125 different nationalities, with arbitrations taking place in 52 different countries. Of these new arbitrations, 4 are taking place in Japan. Japan also accounts for 15 of the parties and 2 of the appointed arbitrators involved in cases filed in 20061.
The ICC Court and the ICC Secretariat
An ICC arbitration is supervised by the ICC Court and administered by the Court's Secretariat.
The ICC Court may play a role in identifying the arbitrator(s) (see our comments below under the Heading "Procedural Stages") and will in any event confirm the appointment of the arbitral tribunal (the "Tribunal"). The ICC Court will also review any draft awards before they are finalised and released to the parties. Although the ICC Court will not interfere with the Tribunal's final decision, they may at this stage enter into a dialogue with the Tribunal to ensure that the draft award deals with all matters with which it is required to deal and to ensure that it contains no technical errors. Members of the ICC Court are drawn from 88 different countries, including Japan. Japan's representative member is Professor Hiroshi Oda, a Herbert Smith consultant.
The Court Secretariat is based at the ICC's headquarters in Paris. The Secretariat has over 50 staff, is organised into six separate legal teams and provides a link between parties, arbitrators and the ICC Court. Since 2005 Jennifer Kirby has acted as the ICC Deputy Secretary General with responsibility for supervising the ICC's legal teams and managing the ICC's arbitration cases. In April on this year Jennifer will be joining the partnership of Herbert Smith, based in our Paris Office but available for consultation with our clients worldwide.
We set out below an overview of the basic procedural stages in an ICC arbitration. It should be stressed that the following is a guide only to the typical process and that there is certain flexibility to the ICC procedural rules (the "ICC Rules"). For example, the deadline for filing an Answer to the Request for Arbitration may be extended by the Secretariat where necessary2. Other aspects of the ICC Rules (for example the mechanism for appointment of arbitrators) can also be varied by agreement of the parties.
Day 1: Commencing the Arbitration
To commence an ICC Arbitration the claimant will submit to the Secretariat multiple copies of its written Request for Arbitration (the "Request"). The Request will set out such matters as the nature and circumstances of the dispute giving rise to the claim and the relief sought. The Secretariat then serves one copy of the Request on the respondent(s)3. The claimant will also submit with its Request an initial non refundable payment to the ICC for administrative expenses of US$2,5004.
Within 30 Days of the Receipt of the Request
Once the respondent has received its copy of the Request from the Secretariat, it has 30 days in which to file its response (the "Answer"). The respondent will include in its Answer its comments on the dispute and its response to the relief sought by the claimant. If the respondent wishes to bring a counterclaim, notice of this counterclaim must be included in its Answer. Once the Answer is filed with the ICC, a copy is served on the claimant by the Secretariat5.
After the ICC Secretary General has reviewed the Request he or she will normally write requiring the claimant to pay (usually within a period of 30 days) a further sum (the "provisional advance") which is intended to cover the costs of the arbitration until the Terms of Reference (see below) have been established6. The provisional advance is calculated by the Secretariat taking into account such matters as the value of the claimant's claim and the number of arbitrators to be appointed. The amount is ordinarily in the region of 25% to 35% of the total costs payable to the ICC for the entire arbitration.
As soon as practicable after service of the Answer
Article 8.2 of the ICC Rules provides that unless the parties have agreed otherwise or the ICC Court determines that circumstances mean that a 3 member Tribunal is appropriate, a sole arbitrator shall be appointed.
Unless the parties have agreed to the contrary:-
(i) In arbitrations requiring a sole arbitrator, the parties may by agreement nominate the arbitrator, failing which the arbitrator is appointed by the ICC Court within 30 days of the date the Request was received by the respondent; and
(ii) If a 3 member Tribunal is to be appointed, the claimant will nominate an arbitrator in its Request, the respondent will nominate an arbitrator in its Answer and the third arbitrator will be appointed as Chairman by the ICC Court7.
In practice the ICC Court will usually confirm the Tribunal shortly after the service of the Answer.
As soon as practicable after confirmation of the Tribunal
Once the arbitrator(s) have been confirmed the Secretariat will transfer the case file to the arbitral Tribunal8. The Tribunal will then usually write to the parties and / or convene a procedural hearing to consider how to progress the arbitration.
The ICC Court may also revisit the question of costs at this stage. With the Request and Answer both served, the total amounts in dispute in the claims and any counterclaims should have been established, allowing the ICC Court to fix the total advance on costs payable by the parties. The amount is calculated by reference to the total sums claimed and may be readjusted later in the Arbitration if necessary9.
The advance on costs is ordinarily payable in equal shares between the parties. In cases, however, where there is a substantial difference between the amounts sought by the two parties, it may be possible to obtain separate costs orders so that the party advancing the larger claims pays a greater proportion of the overall advance. We have obtained separate costs orders in several recent ICC arbitrations, thereby reducing the advance costs exposure of our clients.
Within 2 months of the Tribunal Receiving the File
Within 2 months of receiving the case file, the Tribunal is required to prepare and finalise the Terms of Reference identifying the issues to be determined in the arbitration10. After this point the parties can only raise new claims for consideration with the permission of the Tribunal11.
At the same time as preparing the Terms of Reference or as soon as possible thereafter the Tribunal should also issue a provisional timetable for the future conduct of the arbitration12. The precise procedural steps envisaged in the timetable may differ depending on the experience and practice of the arbitrators and the demands of the individual case, but will usually identify provisional dates for the final hearing and will often include directions for the following preparatory stages:-
(i) An opportunity for the parties to request disclosure of documents from the other party which have not yet been produced;
(ii) For the claimant to prepare and serve a detailed statement of case together with supporting documentation on which it relies;
(iii) For the respondent to prepare and serve a detailed response together with supporting documentation on which it relies;
(iv) To the extent not already undertaken at stages (ii) and (iii) above) the preparation and service by the parties of witness statements of fact and / or statements of expert evidence; and
(v) The exchange of written submissions prior to the final hearing.
The overall duration of the arbitration will depend on many factors, not least the availability of the Tribunal. The best arbitrators tend to be the busier ones. In the case of a 3 member Tribunal it can therefore be difficult to ensure an early scheduling of the final hearing, particularly if the arbitration requires that several weeks be set aside for the hearing of evidence. In our experience, an overall duration of up to 2 years is not uncommon for complex disputes.