Origins
The LCIA justly claims to be one of the longest-established arbitral institutions in the world, having been inaugurated in London just three years after the Arbitration Act 1889 was passed, in response to a growing disenchantment in the business community with the long-winded and expensive procedures of the English courts of the day.
However, the modern LCIA has its genesis in the early 1980s, when it became fully independent of its founding and governing bodies (the City of London, the London Chamber of Commerce and the Chartered Institute of Arbitrators); it was incorporated as a not-for-profit company, and, perhaps most significantly, its Arbitration Court was established, of which see further below.
Geographical seat
The LCIA Secretariat is based in London, at the International Dispute Resolution Centre, in the establishment of which it was a prime mover. The Centre offers accommodation and support services for arbitrations and mediations and is available for all arbitration and ADR proceedings, whether administered or ad hoc and, if administered, irrespective of the administering institution. Its full address and contact details are:
LCIA
70 Fleet Street
London EC4Y 1EU
United Kingdom
Tel: +44 020 7936 7007
Fax: +44 020 7936 7008
Email: lcia@lcia.org
Website: www.lcia-arbitration.com
The preparation of this chapter would have been impossible without the generous assistance of Adrian Winstanley, Director-General and Registrar of the LCIA. The author also wishes to acknowledge the collaboration of Stephen L Drymer of Ogilvy Renault.
Regional scope
Though based in London, the LCIA’s reach extends to jurisdictions around the world by means of its six ‘Users’ Councils’, which cover Europe and the Middle East; North America; South-East Asia and the Pacific Rim; Africa; and Latin America.
The LCIA can, and does, administer arbitrations anywhere in the world, although many of the contracting parties electing for LCIA arbitration prefer to locate their hearings in London, recognising London’s status as one of the leading neutral venues for the resolution of international commercial disputes.
It is notable that more than 70% of cases referred to the LCIA involve no UK parties at all, firmly debunking the myth that the LCIA is somehow an English institution. It is, in reality, as internationally relevant as any of the other leading institutions.
The venue for any hearings, meetings and deliberations may be anywhere convenient to the parties and the tribunal, and does not, of course, affect the seat of the arbitration, which dictates the procedural law and at which the award will, in all circumstances, be made (art 16.2 of the LCIA Rules1).
The choice of seat is entirely up to the parties and, in the great majority of cases referred to the LCIA, the seat is expressly designated in the arbitration agreement. The LCIA Secretariat advises that, in that small proportion of cases in which the seat is not specified, the parties typically agree on the seat post hoc. If the seat remains an issue, art 16.1 provides the safety net of a London default seat ‘unless the LCIA Court determines, in view of all the circumstances, and after having given the parties an opportunity to make written comment’ that another seat is more appropriate.
1 References to articles in this chapter are to articles of the LCIA Rules
ORGANISATIONAL FRAMEWORK
Administrative elements
The LCIA comprises three principal administrative elements: the Company, the Court, and the Secretariat.
The Company
The statutory governance of the LCIA is by way of the Board of Directors of the not-for-profit company, which is limited by guarantee. The Board is primarily concerned with business development and compliance issues. It does not have a prescribed role in the conduct of arbitration proceedings.
The Court
It is, perhaps, the LCIA Court that best reflects the international credentials of the modern LCIA.
The Court comprises up to 35 members, appointed by the LCIA Board, on the recommendation of the Court and holding office for five years. A maximum of only six members may be from the UK. At the time of writing, 23 jurisdictions are represented on the Court, from Australia to the UAE; from Belgium to the USA; and including, to name a handful of others, Canada, Chile, China, Malaysia, Mexico, Nigeria and Russia.
The Court’s Officers are the President, up to seven Vice Presidents, and the Registrar.
The Court is the final authority for the application of the LCIA Rules and its key functions are prescribed by the Rules. These include, in particular, the selection and appointment of arbitrators, determining challenges to arbitrators and controlling costs. The Court’s Constitution also requires it to keep the rules under review and to promote the objectives of the LCIA and of international commercial arbitration generally.
The functions of the Court are performed in the name of the Court by the President or a Vice President, or by Divisions of three or five members of the Court appointed by the President and chaired by the President or a Vice President, or, in the case of administrative functions, by the Registrar.
All members of the Court are eligible for appointment as arbitrators in LCIA cases, but the President is only eligible if all parties jointly nominate him or her as sole arbitrator or as the chair of a tribunal. Vice Presidents are only eligible if nominated by a party or by the parties. Needless to say, the President or a Vice President takes no part in any function of the Court relating to an arbitration in which he or she is to sit.
The Court meets as often as the President deems necessary and at least once a year. Most of the functions of the Court are not, however, carried out in plenary session.
The Secretariat
Under the active supervision of the Registrar, the London headquarters administers all of the arbitrations referred to the LCIA, both under the LCIA’s own Rules and under a variety of ad hoc procedures, liaising with overseas associates, as and when necessary.
Less heavily administered than, say, International Chamber of Commerce (ICC) arbitrations, LCIA cases are handled with a flexible approach, though with a common computer-monitored overview, which seeks to provide the level of administrative support that each individual case requires – an approach assisted by the LCIA’s relatively simple administrative structure.
The LCIA claims not to regard itself as being in competition with the ICC, or with the other major arbitral institutions, but rather as offering an alternative system, based upon its distinct and distinctive administrative culture.
Administration of ad hoc arbitrations and of ADR
The administrative role of the LCIA in international commercial disputes is not confined to arbitrations conducted under its own rules. The LCIA also provides a complete administrative service in arbitrations subject to the United Nations Commission on International Trade Law Arbitration Rules (the UNCITRAL Rules) and recommends a model clause for contracting parties preferring that option.
The LCIA also acts as appointing authority under the UNCITRAL Rules (whether by contractual agreement or when designated as such by the Permanent Court of Arbitration) and, with party agreement, under other ad hoc procedures. It will also provide appointing and administrative services under its own mediation rules and in cases subject to adjudication, to expert determination, or to dispute review boards. It will also act as neutral fundholder in otherwise entirely ad hoc proceedings.
Arbitral panels
The LCIA does not maintain or publish a list of arbitrators, as such. Rather, it operates a database of, currently, some 800 neutrals from 80-plus jurisdictions. The database is subdivided into key fields, including legal and other professional qualifications; languages; areas of practical expertise and experience; knowledge of legal, commercial and cultural systems other than the individual arbitrator’s own; and so on.
This database includes all of the most eminent international arbitrators, as well as many who might be described as the next generation. As to the selection of arbitrators from this database, see further below.
EDUCATIONAL PROGRAMMES
There is, of course, no requirement that contracting parties should be associated in any way with the LCIA in order to write in an LCIA clause or to refer a dispute to the LCIA. However, the LCIA does have a general membership, for which it provides a programme of conferences and symposia around the world.
The most famous of these is the twice-yearly ‘Tylney Hall’ symposium, named after the venue in rural Hampshire, whose consistent quality ensures that it is invariably over-subscribed.
The LCIA also produces one of the most highly regarded quarterly academic journals on international commercial arbitration, Arbitration International, published by Kluwer, and a lighter-weight, but none the less informative quarterly newsletter.
Senior members of the LCIA Secretariat are also available, on sufficient notice, to address student groups and practitioners, both at the LCIA offices and elsewhere.
COSTS
Administrative costs and arbitrators’ fees and expenses
The LCIA does not operate a tariff system, either for its own charges, or for the fees charged by the arbitrators it appoints in administered arbitrations, favouring time-based charges over those based, ad valorem, on sums in issue.
The LCIA’s schedule of arbitration fees and costs forms part of the Arbitration Rules and may be separately amended from time to time by the LCIA Court.
At the time of writing, the LCIA’s administrative charges comprise a nonrefundable registration fee of £1,500; plus the time-based charges of Secretariat staff of between £100 and £200 per hour; plus a sum equivalent to 5% of the tribunal’s fees in respect of its general overhead; plus disbursements. All time charges are logged to a computerised ledger, which is open to inspection at any time by the parties and by the tribunal.
Arbitrators’ fees must be within the prescribed range, currently £150 to £350 per hour. This range applies whether the arbitration is being administered under the LCIA’s Rules or under ad hoc procedures, which may be a significant factor in the decision by contracting parties to provide that the institution will administer arbitrations that are subject to the UNCITRAL Rules.
The LCIA’s argument in favour of time-based charges is that the sum in issue does not, of itself, dictate how legally or technically complex a case might be and that hourly rates are fairer to all concerned; parties, arbitrators and the institution, ensuring a cost-effective and high-quality service.
To counter any danger that this system may reward inefficiency, the LCIA has in place a tight system of monitoring, controlling and bearing down on costs. First, by setting competitive hourly rates. Secondly, by the transparency and accessibility of its own ledgers. Thirdly, by requiring its arbitrators to keep detailed records of time spent. Fourthly, and perhaps most significantly, by providing in its Rules that the costs of the arbitration shall be determined by the LCIA Court. This means, in practice, that the Court reviews a dossier of accounts in each case, before the costs are approved for inclusion in any award.
Funds lodged by the parties on account of the costs are held to the Order of the LCIA Court and interest on the sums deposited is credited to the account of the party making the deposit ‘at the rate applicable to an amount equal to the amount so credited’ (para 6 of the LCIA Schedule of Costs). If funds deposited exceed the cost of the arbitration at the conclusion of the proceedings, surplus funds are returned, as appropriate (para 5(a) of the LCIA Schedule of Costs).
Parties’ obligations
It is not LCIA practice to call for an initial advance estimated to cover the full cost of the arbitration.
Once the registration fee has been paid and the arbitration commenced, the LCIA does not call for any further payment from the parties until the tribunal has been established. If the matter settles before a tribunal has been appointed, the parties will be invoiced for any accrued administrative charges, for which they will be jointly and severally liable.
When a tribunal has been appointed, the LCIA will call for an initial advance to take the proceedings through the early stages of pleadings and, perhaps, through a preliminary hearing. Thereafter, it will monitor the costs, call for interim accounts from the tribunal and order further advances to take the proceedings from stage to stage, thus spreading the burden over the duration of the arbitration. These directions are made in accordance with art
24.1 of the Rules. By art 24.2, a tribunal may not proceed with the arbitration without ascertaining from the Registrar that the LCIA is in requisite funds, thus safeguarding both tribunal and institution.
Default
Article 24.3 provides that, in the event a party will not pay its share of the deposit, another party may be directed to make a substitute payment to allow the arbitration to move forward and provides, further, that that substitute payment is a ‘debt immediately due from the defaulting party’.
A party which has a claim or a counterclaim in the arbitration and which fails to lodge its share of the deposit risks the sanction contemplated by art 24.4, by which a tribunal and the LCIA Court may treat the claim or counterclaim as withdrawn. Where a defaulting party is advancing no claim, merely defending itself, the party required to file a substitute advance must seek other enforceable remedies, perhaps under the provisions of art 25.
Awards as to costs
Article 28 provides the guidelines for awards of costs.
The tribunal’s costs and those of the LCIA Secretariat are determined by the LCIA Court (art 28.1). The tribunal must specify these costs in their final award (art 28.2) and must also specify the proportions in which they are to be borne by the parties. These costs will be met from sums lodged by way of advances. Insofar as the prevailing party is awarded arbitration costs that it has covered by its own advances, that party must look to the losing party to recover those advances.
If an arbitration is concluded before a final award, the costs will still be determined by the Court and the parties will remain jointly and severally liable for those costs until they are settled in full.
Article 26.8 provides that the conclusion of an arbitration in which a settlement is reached is dependant upon the payment by the parties of any outstanding costs.
By arts 28.3 and 28.4, the tribunal also has the power to order that one party’s legal costs shall be paid by another party, ‘on such reasonable basis as it thinks fit’ and ‘on the general principle that costs should reflect the parties’ relative success or failure in the award or in the arbitration’.
AGREEMENTS TO ARBITRATE
Indispensable elements
The agreement to arbitrate is the indispensable element upon which the consensual process of arbitration is constructed. In the absence of such agreement, whether in the form of an arbitration clause contained in a contract, by which future disputes are referred to arbitration, or of a submission agreement, by which parties agree to refer an existing dispute to arbitration, no court will compel arbitration and no arbitral institution will accept jurisdiction.
The preamble to the LCIA Rules states:
‘Where any agreement, submission or reference provides in writing and in whatsoever manner for arbitration under the Rules of the LCIA or by the Court of the LCIA (the LCIA Court), the parties shall be taken to have agreed in writing that the arbitration shall be conducted in accordance with [the LCIA Rules].’
Similarly, art 1.1(b) of the LCIA Rules requires that the Request for Arbitration (discussed further below) must be accompanied by a copy of the ‘written arbitration clause or separate written arbitration agreement’ between the parties.
Recommended clauses
The model arbitration clause recommended by the LCIA reads as follows:
‘Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be [one/three].
The seat, or legal place, of arbitration shall be [City and or Country].
The language to be used in the arbitration shall be [ ].
The governing law of the contract shall be the substantive law of [ ].’
The LCIA also publishes recommended clauses for mediation on its own; for mediation followed (if unsuccessful) by arbitration; and for arbitration under the UNCITRAL Rules. These clauses can be found on the LCIA website, www.lcia-arbitration.com.
Recommended additional elements
If the clause is to provide for three arbitrators, the manner of their selection should also be specified. The usual choices are (a) that the institution selects all three; (b) that each side nominates one arbitrator and the two so nominated select the third; or (c) that each side nominates one arbitrator and the institution selects the third. If the selection of the chair is left to the party-nominated arbitrators, it is important to include the time frame for their doing so and a default provision that the LCIA make the selection, if the two arbitrators cannot agree within the time prescribed.
INITIATING PROCEEDINGS
Required documents and preconditions
Arbitration is commenced by way of a written Request for Arbitration (art 1), containing, or accompanied by, the names and contact co-ordinates of the parties and (if known) of their attorneys; the arbitration agreement invoked by the claimant; a ‘brief statement’ describing the nature and circumstances of the dispute and specifying the claims advanced; a statement of such practical matters as the seat and language, where these have been agreed; and the name and contact co-ordinates of the arbitrator nominated by the claimant, if the clause calls for party-nomination.
Notwithstanding the requirements of art 1.1, art 5.4 provides that the LCIA may proceed with the constitution of a tribunal even if the Request is incomplete, thus guarding against any obstructions arising from some innocent or inconsequential omission.
Service requirements
The claimant must serve the Request simultaneously on the Respondent(s) (art 1.1(g)) and will be asked, in due course, to provide proof of service. The Request must also be accompanied by the registration fee (art 1.1(f)), without which, crucially, the arbitration will be deemed not to have commenced.
Article 4 gives details of requirements as to means of service and of communication, which include mail, courier, fax, telex and email. Article 4 also spells out the basis upon which periods of time for submissions are to be calculated.
SELECTION, APPOINTMENT AND CHALLENGE OF ARBITRATORS
Make-up of tribunal
In most cases, the parties will have specified, in their arbitration agreement, the number of arbitrators and, if there are to be three, the method of their selection.
If the arbitration agreement is silent as to the number of arbitrators, and if the parties do not agree on the matter once the arbitration has commenced, then the LCIA Court will decide on the number and will make the selection. By art 5.4, the presumption is in favour of a sole arbitrator ‘unless the parties have agreed in writing otherwise, or unless the LCIA Court determines that, in view of all the circumstances of the case, a three member tribunal is appropriate’.
Requirements of independence
In common with all arbitral institutions, the LCIA requires its arbitrators, prior to their appointment, to complete a statement of independence and to assume a continuing obligation to remain impartial and independent of the parties (art 5.3).
The LCIA requires its arbitrators, therefore, to confirm one of the two following statements and to resolve any doubt in favour of full disclosure.
Statement A ‘I am impartial, and independent of each of the parties, and I intend to remain so, and there are no circumstances known to me likely to give rise to any justified doubts as to my impartiality or independence.’
Statement B: ‘I am impartial, and independent of each of the parties, and I intend to remain so, but I wish to disclose certain circumstances for the consideration of the LCIA Court prior to my appointment, whether or not any such circumstance is likely to give rise to any justified doubts as to my impartiality or independence. Other than such circumstances here disclosed by me, there are no circumstances known to me likely to give rise to any justified doubts as to my impartiality or independence.’
Where a candidate arbitrator opts for the statement B, it will be for the LCIA Court to decide whether the matter disclosed automatically disqualifies the arbitrator from appointment, or does not automatically disqualify, but should be placed before the parties before the appointment (to afford them the opportunity to state any objections to the appointment) or amounts, prima facie, to a matter of such marginal consequence that the appointment will be confirmed by the LCIA Court and the disclosure provided to the parties at the time of notification of the appointment.
As an additional bolster to the neutrality of the tribunal, art 6.1 provides that, where the parties are of different nationalities, a sole arbitrator or a chair of the tribunal cannot be of the same nationality as any party, unless the parties who are not of the same nationality as the proposed appointee agree otherwise.
Role of the parties in selection
The role of the parties in selecting the members of the tribunal has been discussed above. However, it is worth emphasising that the LCIA Court alone is empowered to appoint arbitrators (art 5.5) and that if an arbitration agreement purports to provide that the parties will actually appoint arbitrators, that provision will be interpreted by art 7.1 to be an agreement to nominate only. Similarly, and also by art 7.1, the LCIA Court retains a right of veto on the appointment of any nominee who it considers to be unsuitable or to lack independence or impartiality.
Role of the Institution in selection
Where an arbitration agreement provides for party-nomination of arbitrators, the claimant should advise its nominee at the time of the Request (art 1.1(e)) and the respondent must advise its nominee at the time of the Response or, if no Response is filed, within the 30 days prescribed for service of a Response (art 2.3). If either party fails to nominate within the time prescribed, the LCIA Court has the discretion, under art 7.2, to make the selection itself, and without regard to any late nomination.
In multiple-party cases, in which the arbitration agreement provides for party-nomination, art 8 requires that all parties agree that they represent two separate sides for the purpose of the nomination of the arbitrators. If they cannot so agree, the LCIA Court will treat the nomination provisions as though they were an agreement for the LCIA itself to select all three arbitrators.
Although there is no provision in the LCIA Rules to this effect, the LCIA will, if it considers the circumstances appropriate, accommodate a request made jointly by the parties for a list of arbitrators which the LCIA Court would consider appropriate for appointment, from which list the parties may seek to agree on the identity of an arbitrator. In such cases, the LCIA Court reserves the right to appoint one of the arbitrators whose name it has put forward in the event the parties are unable to reach agreement.
In most cases where there is no provision for party-nomination, however, the LCIA will select the arbitrator(s) from its database (see above). The Secretariat will prepare a profile of the case for the LCIA Court and will search the database according to all relevant criteria (language, location, nationality, law(s) etc). Having reviewed the CVs of candidates whose names emerge from the search, the Secretariat will forward the Request, any Response, the case profile and relevant CVs to the Court, which will confirm the candidate(s) who the Secretariat should approach for appointment. Subject to availability, conflicts checks and statements of independence, the Court will formally constitute the tribunal.
Article 9 of the LCIA Rules is worth a special mention, being an innovative provision for the expedited constitution a tribunal in cases of ‘exceptional urgency’. This provision will typically be invoked by a party wishing to seek urgent interim or conservatory measures from the tribunal, in preference to having to apply for such measures to the state courts.
Timing and handling of challenges
A party may challenge the appointment of an arbitrator, including an arbitrator that it has nominated, where it becomes aware of circumstances giving rise to justifiable doubts as to the arbitrator’s impartiality or independence (art 10.3). Challenges must be made in writing to the LCIA Court, within 15 days of the formation of the tribunal, or after becoming aware of the circumstances referred to above; and the LCIA Court will decide on the challenge unless the arbitrator in question withdraws or all other parties agree to the challenge within 15 days of the date on which the challenge is made (art 10.4).
In practice, challenges are usually determined by a three-member Division of the LCIA Court, chaired either by the President or by a Vice President. The decision of the Division, like all decisions of the LCIA Court, is conclusive and binding and is treated as administrative in nature, with no requirement for reasons (art 29.1). However, the LCIA Court has, in recent years, adopted the practice of giving reasons for its decisions on challenges, so that the parties are not left with a blunt and unqualified ‘Yes’ or ‘No’.
RESOLUTION OF JURISDICTIONAL ISSUES
In the great majority of cases referred to the LCIA, the parties’ agreement is unequivocal. There are, however, cases referred from time to time by reference to clauses which are less than clear. The LCIA will accept such cases where, prima facie, its jurisdiction is arguable, on the understanding that the tribunal may, in due course, resolve any outstanding issues as to jurisdiction by the authority conveyed by art 23.1.
TYPICAL AND/OR REQUIRED PROCEDURES
Article 14.1 of the LCIA Rules encourages the parties to agree on the conduct of the proceedings, always provided that such agreement is consistent with the tribunal’s and the parties’ general duty to provide each side with a reasonable opportunity of putting its case and of dealing with its opponent’s case and to avoid unnecessary delay or expense.
By art 14.2, a tribunal is given the ‘widest discretion’ to discharge its duties as to the conduct of the proceedings.
Pleadings
If the parties have not agreed otherwise under art 14, then the written stages of the proceedings will follow the steps set out at art 15, which contemplates
(a) a Statement of Case; (b) a Statement of Defence and, if applicable, a Counterclaim; (c) a Statement of Reply to the Defence; and (d) if the Statement of Reply contains a Defence to the Counterclaim, a Reply by the Respondent to the Defence to Counterclaim. If art 15 is followed, the Statement of Case will be filed within 30 days of the appointment of the tribunal and the other pleadings within 30-day intervals thereafter.
Article 15.3 provides that a claimant may elect to treat its Request for Arbitration as its Statement of Case. Such an election is deemed effective no earlier than the date of notification of the appointment of the tribunal.
Article 22.1(a) gives the tribunal the power, on the application of a party or of its own motion and having given the parties an opportunity to state their views, to allow a party to amend a Claim, Counterclaim, Defence or Reply.
Default
Article 15.8 provides that if any party fails to avail itself of the opportunity to present its case, by means of the written submissions contemplated by art 15, or as otherwise directed by the tribunal, the tribunal may, none the less, proceed with the arbitration and make an award.
Documents and discovery
Article 22 gives the tribunal wide powers over disclosure and discovery. By art 22.1(d) the tribunal may order a party to make ‘any property, site or thing under its control’, which relates to the subject of the arbitration, available for inspection by the tribunal, the other parties and any expert. Article 22.1(e) allows the tribunal to order any party to produce ‘any documents or classes of documents in their possession, custody or power’, which the tribunal considers relevant.
Evidence
The evidence of the parties’ factual and expert witnesses is covered by the provisions of art 20.
Article 20.2 gives the tribunal wide discretion to determine the time, manner and form in which witness evidence will be presented and includes the discretion to allow, refuse or limit the appearance of a witness.
Witness testimony may be in written form (art 20.3) and any party may request a tribunal to direct that a witness on whose written testimony another party relies shall attend for oral questioning (art 20.4).
Article 20.6 allows a party or its attorneys to interview a witness ‘for the purpose of presenting his testimony in written form or producing him as an oral witness’.
Article 21 deals with a tribunal’s own experts, providing that the tribunal may appoint one or more independent and impartial experts to whom the parties must provide access to documents and other materials and who may be required to participate at a hearing, at which the parties will have the opportunity to question him or her and to present their own expert evidence on the points raised.
Time limits and calculation
As discussed, the parties and the tribunal have a wide discretion, under art 14, to decide on the conduct, and therefore the timing, of the proceedings. In the absence of such an agreement, art 15 provides the time frame for the written submissions, art 20.2 entitles the tribunal to fix the timing of the submission of witness evidence, and arts 4.7 and 22.1(b) give the tribunal discretion to extend or abridge any time limits.
HEARINGS
Need for oral hearing
By art 19.1, any party asking for a hearing has the right to be heard orally on the merits of the dispute. The effect of this provision is to ensure not only that a party has the right to be heard, but that a non-participating party will have no cause for complaint if it does not expressly require a hearing and if, as a consequence, no hearing is held.
Rights of audience
Article 18.1 provides the broadest of rights of audience, stating that ‘any party may be represented by legal practitioners or any other representatives’. Though parties’ representatives are legally qualified in the great majority of cases, a party wishing to proceed without instructing counsel may do so. In all cases, however, a tribunal may require a party’s representative to produce proof of its authority (art 18.2).
Timing and duration
It is up to the tribunal itself to fix the date, time and place of any hearing and to give the parties ‘reasonable notice’ thereof. Similarly, the tribunal has the ‘fullest authority’ to fix the duration of any meeting or hearing (art 19.5).
As a cautionary note, arbitrators with increasingly frequency exercise their right, under para 4(c) of the LCIA Schedule of Fees and Costs, to charge for time reserved but not used, as a result of the late postponement or cancellation of hearings. The parties should be wary, therefore, of asking their tribunal to block out time for hearings on a speculative basis.
AWARDS
Prior approval/scrutiny
In common with most of the major arbitral institutions, the LCIA does not formally scrutinise the awards issued by the tribunals it appoints prior to their release to the parties. This is in part because the LCIA’s highly centralised system for the selection of arbitrators leads it to the view that it may rely upon the experience and expertise of the tribunals it appoints to render properly drafted and reasoned awards, and upon art 27 for any corrections (see below). It may also be because, without formal ‘Terms of Reference’, there is no matrix against which an award can sensibly be scrutinised.
However, in the author’s experience, the LCIA Secretariat is always willing to review a draft award for obvious typographical errors, should the tribunal so request.
It is for the LCIA Court, and not the tribunal, to transmit the award to the parties (art 26.5).
Essential requirements
An award rendered by an LCIA tribunal must be in writing and, unless there is contrary written agreement by the parties, it must state the reasons on which it is based. It must also state the date on which the award is made and identify the seat of the arbitration. It must be signed by the tribunal or, if there is a dissenting opinion, by those members of the tribunal who assent (art 26.1).
If an arbitration settles and the parties require a Consent Award, the award need not contain reasons, but it must expressly state that it is an award made by the parties’ consent (art 26.8).
As previously discussed, costs of the arbitration must be specified in a Final Award (art 28.2).
Dissenting opinions
Articles 26.3 and 26.4 provide for the eventuality of a dissenting opinion, allowing that any issue may be decided by a majority and providing, further, that the reason for an omitted signature must be stated in the award.
As a matter of practice, dissenting opinions are not themselves annexed to an award, but will be provided separately to the parties.
Correction of errors
Within 30 days of receiving an award, a party may apply for the correction of clerical or computation errors (art 27.1) and the tribunal may similarly correct that kind of error on its own initiative (art 27.2).
More significantly, perhaps, a party may apply, again within 30 days of receiving a Final Award, for the tribunal to make an additional award on any claims or counterclaims presented in the arbitration, which that party considers not to have been determined in the award (art 27.3).
Clerical and computation errors, if acknowledged by the tribunal, must be made within 30 days of the application, in the form of a memorandum which becomes part of the award itself.
Additional awards, rendered pursuant to art 27.3, must be made within 60 days of the application.
Review and appeals
The simplest and clearest way to express the LCIA rule with regard to the review of awards and appeals is to cite, in full, the applicable art 26.9, which provides:
‘All Awards shall be final and binding on the parties. By agreeing to arbitration under these rules, the parties undertake to carry out any Award immediately and without any delay (subject only to Article 27); and the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other judicial authority, insofar as such waiver may be validly made.’
INSTITUTIONAL PROS AND CONS
As this chapter specifically examines the LCIA and its procedures, it seems appropriate to paraphrase the case that the LCIA makes, in its own publications, for the administered arbitration option, a case which has considerable merit.
Incorporating established rules into a contract is the simplest way to provide a comprehensive and proven set of terms and conditions, irrespective of the seat of the arbitration; minimising the scope for uncertainty and the opportunity for delaying or wrecking the process.
The LCIA Rules, as we have seen, take care of all of the fundamentals, including the mechanism and time frame for the appointment of the tribunal; determining challenges to arbitrators; default provisions for the seat and language of the arbitration; interim and conservatory measures; and the control of costs.
Though the applicable procedural law may also assist the parties in these matters, many parties would prefer not to have to scurry off to the courts at every procedural impasse, incurring costs, wasting time and prejudicing confidentiality.
Administering institutions self-evidently offer a professional administrative service, which an ad hoc tribunal, with or without the co-operation of the parties, frequently cannot match. Ad hoc arbitrations do not run themselves and, on a proper cost-benefit analysis, professional administrative charges may be money well spent.
Institutions also have in place a framework of charges, both for their own administrative services and for their arbitrators and will be in a position to bring financial discipline to the proceedings, as well as acting as independent fundholders, disbursing funds as required and accounting for them to the parties.
Institutions have detailed knowledge of, and ready access to, the most eminent and most appropriately qualified arbitrators. They also monitor the progress of the next generation of arbitrators in whom the parties will be able to place their confidence and have well-tried procedures for dealing with conflicts.
While unnecessary interference in the proceedings is to be avoided, institutions do have an important role in monitoring the process, in supporting parties, counsel and arbitrators, and in breaking any procedural impasse. Parties may be reluctant to pursue the tribunals, but the institution will do so on the parties’ behalf.
Institutions can also assist in establishing and maintaining a level playing field for parties which may well not have equality of arms, thus helping to safeguard the process and the outcome.
