The United Nations can arguably claim to have done more than any other institution to promote international commercial arbitration. The United Nations Convention on the Recognition and Enforcement of Arbitral Awards of 1958 (the New York Convention), the United Nations Commission on International Trade Law Arbitration Rules (the UNCITRAL Rules) and the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) are three of the most important legal frameworks to have assisted the worldwide development of international commercial arbitration.
The New York Convention is one of the corner-stones of international arbitration. Its purpose was to replace the Geneva Convention of 1927 and, by so doing, create a much simpler regime for the recognition of arbitration clauses and for the enforcement of foreign arbitration awards. In short, it has shifted the burden of proof for enforcing an award from the party seeking enforcement to the party resisting recognition of the award. The New York Convention was adopted in 1958 and currently has 135 signatory countries around the world.
The UNCITRAL Rules were approved by the General Assembly of the United Nations in December 1976 and are now one of the pre-eminent sets of arbitration rules in the world. They are not only used around the world by commercial parties in ad hoc arbitrations but they have also proved to be an important source for the rules of various other arbitral bodies (such as the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC)).
Finally, the Model Law was adopted by UNCITRAL in June 1985. As its name suggests, it provides the basis for countries’ procedural arbitration laws and is consistent with both the New York Convention and the UNCITRAL Rules.
The New York Convention and the UNCITRAL Rules are examined in detail below; a brief introduction to the Model Law follows.
It is the New York Convention that makes the arbitration process the most effective means of international dispute resolution. An award which conforms to the requirements of the Convention should be recognised and enforced virtually worldwide. There is no parallel global enforcement regime for court judgments.
Article I (1) sets out the scope of the New York Convention and makes clear that the place where the award is made is the main test for deciding whether the New York Convention applies. The Convention is intended to apply to arbitration awards ‘made in the territory of a State other than the State where the recognition and enforcement of such awards are sought’. Article I (1) also expressly states that the Convention applies to ‘awards not considered as domestic’. The word ‘domestic’ can be interpreted narrowly or widely. For example, it has been held in the US that the Convention applies to the enforcement of an award made in the US and involving two US companies because the subject matter of the dispute involved transactions occurring outside the US.
For the purposes of the New York Convention, ‘arbitral awards’ includes those made either by a tribunal established solely to decide a particular dispute or by a permanent arbitral body.
Article II provides for the recognition of arbitration agreements. Each country which has ratified the Convention (a contracting state) must recognise an ‘agreement in writing’ whereby the parties to such agreement submit their differences to arbitration. This does not necessarily mean that an arbitration clause has to be found in a signed contract as art II also provides that the arbitration agreement may be ‘contained in an exchange of letters or telegrams’. This has opened the door for some judges to interpret the ‘in writing’ requirement fairly widely.
Article III imposes the obligation upon each contracting state to recognise and enforce arbitration awards which conform to the Convention’s requirements and art IV sets out the steps necessary for a party to obtain the recognition and enforcement of an award, to be enforced ‘in accordance with the rules of procedure of the territory where the award is relied upon’. Further, contracting states should not impose fees on the enforcement of Convention awards that are any greater than ‘are imposed on the recognition or enforcement of domestic arbitral awards’.
The enforcing party must include, with its application, either a duly authenticated original award or a certified copy thereof and the original arbitration agreement or a copy thereof. If the award and the arbitration agreement are not in the official language of the contracting state in which recognition and enforcement is sought, certified translations must also be provided.
Article V of the Convention sets out the basic formal and procedural requirements, without which an award will not be recognised or enforced. This article lists a limited number of grounds upon which, if proven by the party against whom enforcement of the award is sought, recognition and enforcement of the award may be refused. These grounds are important as they equate to international standards for an enforceable arbitration award, such that it should not matter where an award was obtained. The party against whom enforcement is sought has five grounds which it may invoke (and prove) in order to resist the recognition and enforcement of the award.
Article V (1) (a) applies where (i) the parties to the arbitration agreement were under some incapacity under the law applicable to them, or (ii) the arbitration agreement was not valid either under the law applicable to it or under the law of the seat of the arbitration. In relation to a party’s capacity to enter into an arbitration agreement, it is perhaps less common for this to be an issue for an individual or a corporation. Individuals are normally free to enter into contractual relationships, though it is worth checking whether an individual has the capacity to enter into certain contracts both under his own law and the law governing the contract. A corporation’s capacity is normally determined by its constitutional documents and the laws of its seat of incorporation. It would be unusual for either of those to place a restriction on the ability to enter into an arbitration agreement. However, incapacity is more commonly an issue in relation to a state or state agency. In some countries, the state or its agencies are not permitted to resolve a dispute between themselves and a commercial party through arbitration. Further, in some countries, a state agency may require permission or an approval from another authority before it has the capacity to enter into an arbitration agreement. It is therefore always advisable before entering into an arbitration agreement with a state or state agency to confirm that it has the capacity to enter into the agreement.
The second ground for refusal to recognise or enforce an award is lack of due process, ie that the party against whom the award is made ‘was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case’. This provision ensures the integrity of the arbitral process. The arbitration resulting in the award should have been conducted fairly and properly such that justice was not only done but it was seen to be done. The most common argument under this ground is that the party concerned did not receive a ‘fair hearing’. Although the words of the article are narrow, this ground has rightly been relied upon to challenge awards where a party has believed it had not received a fair hearing. Different jurisdictions of course have different approaches to what is a fair hearing. At the recognition and enforcement stage, however, a national court should not be trying to decide whether the award is the correct result or to apply to the arbitral process its own requirements for a court hearing. Rather, it should simply seek to ensure that the hearing was conducted as the parties agreed and that each party has had an opportunity to present its case.
The third ground for refusal to recognise or enforce an award could come under a general heading of ‘jurisdiction’. Recognition and enforcement may be refused when the award ‘deals with a difference’ (meaning a controversy between the parties) that was not contemplated or fell within the terms of the submission to arbitration or the award contains decisions on matters outside the scope of the submission to arbitration. The first part of this ground allows a national court to decide that a tribunal exceeded its remit and therefore refuse enforcement. The consensus amongst commentators is that this argument is rarely successful in resisting recognition and enforcement. The reason is that most national courts view their role under the Convention narrowly and therefore do not seek to second-guess a tribunal’s decision-making process. In relation to the second part of this ground, the Convention also provides that an award may still be enforced to the extent that it is possible to separate those parts which are within the scope of the submission to arbitration and those which are not. In short, this allows partial enforcement of an award if a national court was to decide that a tribunal had decided some matters outside its jurisdiction to do so.
2.9 The fourth ground: composition of the tribunal/procedure not as agreed
The fourth ground for refusal to recognise or enforce an award is if the ‘composition of the arbitral authority or arbitral procedure’ was not in accordance with what the parties had agreed or, if the parties had not reached an agreement, was not in accordance with the requirements of the law of the country where the arbitration occurred. National courts have tended to interpret this ground restrictively such that it is rarely successfully invoked as a defence by a party resisting recognition and enforcement. For example, even in a case where the party resisting enforcement had been able to prove this ground the court exercised its discretion to enforce none the less.
The fifth ground is that the award has not yet ‘become binding’ on the parties. On this basis, some national courts have decided to examine the law applicable to the award to determine whether the award is yet ‘binding’. In addition, refusal may be granted if an award has been set aside or suspended.
This part of the fifth ground has given rise to more discussion and judicial consideration than any of the other grounds. The issue of whether an award has been set aside or not would seem to be a simple one. For example, it seems reasonable that if an English court sets aside a London seat award, that award is not enforceable in the UK. Logically, it would seem to follow that other national courts would then decide the London award is not enforceable. However, this is not always the case. Although controversial and relatively rare, it is possible for an award to be held to be unenforceable in its jurisdiction of origin, but then be enforced under the Convention in another country (the courts of the US, France, Belgium and Austria have each interpreted the Convention to permit this). The basis for such an approach is that the grounds in art V of the Convention are not mandatory for national courts; on the contrary, the introduction to art V states that a national court may refuse to recognise or enforce an award. Further, art VII of the Convention preserves the right of a party to avail itself of an award to the extent allowed by local law in the country where enforcement is sought. An additional reason for this anomaly is that the Convention is silent on the grounds for setting aside or suspending an award. This is a question solely for the courts or law of the country in which the award was made. Accordingly, the New York Convention recognises that some jurisdictions look upon recognition and enforcement more favourably than others and through this fifth ground and art VII, it expressly allows a party to pursue enforcement in such a jurisdiction if possible.
Article VI permits the enforcing court to adjourn the decision on enforcement where an application has been made elsewhere to set aside or suspend the award. In these circumstances, the enforcing court may order security from the party against whom the award is made while the application to set aside or suspend the award is determined.
Two further grounds for refusal to recognise or enforce an award – arbitrability and public policy – are set out in art V. Both these grounds relate to issues of law rather than fact. As such, they are the subject of legal submissions and therefore do not have to be proved as fact by the party against whom the award is invoked before the enforcing court can exercise its discretion to refuse to enforce.
Arbitrability
The recognition and enforcement of an award may be refused if the competent authority where recognition and enforcement is sought finds that ‘the subject matter of the difference is not capable of settlement by arbitration under the law of that country’. Those matters which are solely preserved for the courts to decide and which therefore cannot be the subject of an arbitration tend, with some common exceptions, to differ between jurisdictions. However, the question of whether a dispute is arbitrable arises at two points in the arbitration process: the first is when the arbitration commences; and the second is at its conclusion. When an award is obtained, the party resisting enforcement in a certain jurisdiction may argue that the subject matter of the dispute leading to the award is not arbitrable in that jurisdiction. An example of a dispute which is not arbitrable in many jurisdictions is one involving the subsoil, as is common in oil or mineral exploration or development contracts. Some jurisdictions require that such disputes may only be resolved by the state courts.
Public policy
Finally, recognition and enforcement may be refused if the award is contrary to the public policy of the state in which recognition and enforcement is sought. Of course, states do not wish to enforce awards which violate their own standards of public policy. In some jurisdictions the public policy defence has succeeded in circumstances which are generally regarded to be unacceptable, eg to protect local interests. However, the prevailing view is in favour of enforcement and arguments based on public policy rarely succeed.
The Convention consists of 16 articles of which the first seven are the most important for legal practitioners. Articles VIII to XV deal exclusively with matters that take effect when a state accedes to the Convention. It is worth noting that art XVI declares the Chinese, English, French, Russian and Spanish texts to be ‘equally authentic’.
The combination of the backing of the United Nations, the reputation of the representatives who drafted the UNCITRAL Rules and the high calibre content of the UNCITRAL Rules themselves have ensured their place as one of the leading and most commonly used sets of arbitration rules in international commerce. The decision in 1981 by the Iran-United States Claim Tribunal to apply the UNCITRAL Rules to its procedure gave the Rules significant exposure which led to an increase in their use around the world, a trend which has continued.
One of the key features of the UNCITRAL Rules is that there is no institution acting as secretariat or reviewer of an award. Save for the possible involvement of an outside authority in the appointment of the tribunal, if the parties cannot reach agreement, the process is in the hands of the parties and their chosen tribunal.
Administrative costs and arbitrators’ fees and expenses
The UNCITRAL Rules are not prescriptive on cost or fee amounts. For example, they do not provide a schedule of fees or provide a range of fees for arbitrators.
Article 38 provides that a tribunal should fix the costs in its award. ‘Costs’ includes the tribunal’s fees, the tribunal’s expenses such as travel costs, the costs of experts and any other assistance given to the tribunal, witness expenses (to the extent approved by the tribunal), the parties’ reasonable legal costs and the fees and expenses of any appointing authority.
Article 39 gives general guidance on the tribunal’s fees. They should be reasonable and they should take into account the amount in dispute, the complexity of the subject matter, the time spent by the arbitrators and ‘any other relevant circumstances’. The article also provides that if an appointing authority is used and that appointing authority has a schedule of fees, then that schedule should be taken into consideration. For example, when the LCIA is used as an appointing authority in an UNCITRAL Rules arbitration, its schedule of arbitration fees and costs is used as the basis for the tribunal’s fees.
Article 41 provides that the tribunal may require each party to deposit equal amounts as a deposit for the tribunal’s costs. The tribunal may request supplementary deposits as the arbitration proceeds. If a party defaults on its share of the deposits within 30 days of a request for it to do so, the tribunal will inform the parties in order that one of them may make the required payment. If the deposit is not paid, the tribunal can order that the arbitration be either suspended or terminated. After an award is made, the tribunal should provide an accounting of how the deposits were expended and return any unused portion of the deposits.
Article 40 makes clear that the general principle should be that costs are borne by the unsuccessful party in the arbitration. However, art 40 does allow a tribunal to apportion costs if it is ‘reasonable, taking into account the circumstances of the case’. These principles include the parties’ legal costs. In the event a tribunal is asked to correct or interpret its award, no additional fees can be charged by the tribunal.
Article 1 provides that the UNCITRAL Rules will apply when parties to a contract have agreed in writing that they should do so. Parties are free to amend or alter the Rules as long as they also do this in writing. Article 1 also makes clear that the Rules will govern the arbitration only to the extent that they do not conflict ‘with a provision of the law applicable to the arbitration from which the parties cannot derogate’. In such circumstances, such a provision will prevail over the UNCITRAL Rules.
The model arbitration clause recommended by UNCITRAL reads as follows:
‘(a) 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 as at present in force.’
The UNCITRAL Rules also indicate that parties may wish to consider adding the following to the clause:
'(a) The appointing authority shall be … (name of institution or person);
It is sensible to include such provisions in the arbitration clause. It is common for the parties to agree an institution, such as the LCIA or the ICC, to act as the appointing authority in default of the parties reaching agreement on the composition of the tribunal. Alternatively, reference is sometimes made to the president or head of an arbitral institution to act as an appointing authority. Such institutions generally have a large database of respected and experienced arbitrators from which a tribunal can be appointed.
It is also important to decide at the time of contracting whether the parties will require a tribunal of three or whether a sole arbitrator will suffice in the event of a dispute. Likewise, the language to be used in the proceedings should be agreed; this is often overlooked by drafters of arbitration clauses and, if omitted, can lead to considerable argument and expense when the dispute arises. However, probably the most important issue to decide is where will be the place or ‘seat’ of the arbitration. This decision will greatly affect how the arbitration proceeds, as the seat or place of arbitration will determine the procedural law which applies to the arbitration. The substance of that procedural law can vary greatly between different jurisdictions with eg different views towards interim measures or disclosure of documents. Such considerations need to be taken account of at the time of drafting.
Required documents and preconditions
An arbitration under the UNCITRAL Rules is commenced by way of a Notice of Arbitration (art 3) served by the claimant on the respondent. The Notice is deemed received on the day it is either physically delivered to the respondent or delivered ‘at his habitual residence, place of business or mailing address’ (art 2(1)). The Notice should contain a demand that the dispute be referred to arbitration; the contact details of the parties; a specific reference to the arbitration clause being invoked; a reference to the contract from which the dispute arises; an indication of the nature of the claim and the quantum sought (if any); the relief or remedy sought; and proposals about the number of arbitrators if the parties have not previously agreed this in the arbitration clause. In addition, the Notice may contain a proposal for the appointment of a sole arbitrator or a reference to an appointing authority; the notification of the claimant’s party appointed arbitrator (as per art 7 if appropriate); and the entire statement of claim if the claimant wishes to do so.
Article 4 states that parties may be ‘represented or assisted by persons of their choice’. The contact details of any such representatives should be sent to the other side as well as information on whether the appointment is made for the purpose of representation or assistance.
The usual position is that parties have agreed in their arbitration clause on the number of arbitrators and how they should be appointed. However, this is not always the case. Sometimes the parties must agree these issues after the dispute has arisen. This is not always an easy thing to do as the relationship between the parties may have completely broken down. If the parties are unable to reach agreement on the number of arbitrators or how they should be appointed, the UNCITRAL Rules set out the procedure for the parties to follow.
Article 5 makes clear that in the event that the parties have not agreed on whether to have one or three arbitrators, there is a default position of three arbitrators. The parties have 15 days after the respondent receives the Notice of Arbitration to decide whether or not to have a sole arbitrator. If they have not reached agreement by then, three arbitrators are to be appointed.
Articles 6 to 8 provide for the appointment of arbitrators. Two methods of appointment exist: with or without an appointing authority.
If the parties have not agreed on an appointing authority and a sole arbitrator is to be appointed, either party may suggest to the other the names of possible candidates. If after a party has made such a suggestion, they can not agree on who to appoint and if no appointing authority has been agreed upon (or the appointing authority agreed upon has failed to act within 60 days of a party’s request), then either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority. The procedure for appointment when using an appointing authority is then followed, of which see further below.
If the parties are to have a tribunal of three, the usual course is that each party appoints an arbitrator and the two party-appointed arbitrators then decide on the third presiding arbitrator. Complications arise when one party refuses or fails to appoint their party-appointed arbitrator within 30 days of the other party’s request. In that situation, art 7(b) provides that the party which has appointed its arbitrator may apply to the Secretary-General of the Permanent Court of Arbitration at The Hague to designate an appointing authority which will then appoint the second arbitrator at its discretion. If the two appointed arbitrators then cannot agree on the third presiding arbitrator within 30 days, the presiding arbitrator is appointed by the appointing authority in the same manner as a sole arbitrator is appointed under the rules when there is an appointing authority, of which see further below.
The use of an appointing authority is a key feature of the UNCITRAL Rules. If the parties have agreed to have a sole arbitrator and have agreed on an appointing authority, that authority will use a list procedure to make the appointment, unless the parties agree otherwise or the authority in its discretion determines that the list procedure is not appropriate in the circumstances (art 6(3)).
The list procedure works as follows. The appointing authority will communicate an identical list of three possible arbitrators to each party. Within 15 days of receipt of this list, each party returns the list to the appointing authority, having deleted the names to which that party objects and ranking the other names in order of preference. The appointing authority will then make the appointment from the names left on the lists returned to it and in accordance with the parties’ ranked preferences. If for any reason the appointment cannot be made using this procedure, the appointing authority has a discretion to appoint the sole arbitrator. At all times when making such an appointment, the appointing authority should consider all of the circumstances to ensure an independent and impartial arbitrator is appointed, as well as considering whether the arbitrator should be of a nationality other than the nationality of the parties. As discussed above, this procedure is also used if, with a tribunal of three, the two arbitrators cannot decide on a third presiding arbitrator.
Article 8 sets out the information the parties should send to the appointing authority: the Notice of Arbitration; a copy of the contract from which the dispute has arisen; a copy of the arbitration agreement (if it is not contained within the contract); and any further information requested by the appointing authority which ‘it deems necessary to fulfil its function’. Likewise, art 8 makes clear that the appointing authority should provide contact details, the nationality and a description of qualifications for any arbitrators it proposes to the parties.
Article 9 provides that any prospective arbitrator should disclose ‘any circumstances likely to give rise to justifiable doubts as to his impartiality or independence’. This duty is an ongoing one such that once appointed, an arbitrator must disclose any such circumstances that develop after having been appointed as well as before the appointment.
If circumstances do develop that give rise to ‘justifiable doubts’ as to an arbitrator’s impartiality or independence, that arbitrator can be challenged (art 10). The decision to challenge an arbitrator should certainly not be taken lightly, not least as it can be difficult to prove ‘justifiable doubts’. In so far as a party wishes to challenge its own party-appointed arbitrator, it can only do so for reasons it becomes aware of after the appointment was made.
The procedure to challenge, subject to any requirements of the law of the seat of the arbitration, is as follows (art 11). A party which intends to challenge shall send notice of its challenge within 15 days of that arbitrator’s appointment or within 15 days of becoming aware of the circumstances giving rise to justifiable doubts as to his impartiality or independence. The notice should be in writing, state the reasons for the challenge and be sent to the other party, to the arbitrator being challenged and to the other members of the tribunal (if any).
There are a number of possible responses to a challenge. The other party may agree to the challenge, the arbitrator may withdraw or, in the absence of either of these, the challenge may proceed. In either of the first two cases, the arbitrator’s reputation is not impugned as either result does not imply that the reasons for the challenge were valid: no decision is taken on those reasons. Rather, the arbitrator is simply then replaced in accordance with the appointment procedures set out above (art 6 or 7).
If the other party does not agree to the challenge, and the arbitrator does not withdraw, a decision on the challenge has to be made. If an appointing authority appointed him, the decision on the challenge is taken by that appointing authority. If his appointment was not made by an appointing authority but one has subsequently been designated, then again the decision is taken by that appointing authority. Otherwise, if there is no appointing authority and the parties cannot agree on one, either party must request that the Secretary-General of the Permanent Court of Arbitration at The Hague designate one (ie the procedure in art 6). If the appointing authority then sustains the challenge, a new arbitrator must be appointed in accordance with the appointment procedure discussed above, except that the rules on designating an appointing authority should be ignored.
The procedure by which the challenge is conducted is set by the appointing authority. The challenge may be capable of determination on the basis of the correspondence of the parties; alternatively, it may call for submissions and evidence from the parties and from the arbitrator challenged. Where a challenge is upheld, the appointing authority will appoint the new arbitrator. One further result is possible. The appointing authority can decide to reject the challenge. The challenging party then must decide whether to carry on with the arbitration with the existing arbitrator or if possible under the local law of the seat of the arbitration, it may be able to apply to the local courts to have the arbitrator removed, under the provisions of the arbitral laws of the seat of the arbitration.
Article 13 provides that in the event of the death or resignation of an arbitrator during the proceedings, that arbitrator must be replaced by a substitute arbitrator. The appointment procedure discussed above should be used. If an arbitrator simply fails to act or it becomes impossible for him to perform his functions, the challenge procedure should be used.
Article 14 provides that in the event the sole or presiding arbitrator (in a tribunal of three) is replaced, any hearings already held should be repeated. However, if one of three arbitrators, who is not the presiding arbitrator, is replaced, then the repetition of any previous hearings is at the discretion of the tribunal.
Like many other sets of arbitration rules, the UNCITRAL Rules expressly state that a tribunal has the power to rule on its own jurisdiction. Article 21 provides that the tribunal has the power to rule on objections to its own jurisdiction. The tribunal also has the power to decide both whether the arbitration agreement and the underlying contract in which that arbitration agreement may be found are valid. However, art 21 also makes clear that under the UNCITRAL Rules, the arbitration agreement is to be treated as independent of the other terms of the contract. Accordingly, any decision by the tribunal that the underlying contract is invalid will not affect the validity of the separate arbitration agreement.
Procedurally, any party wishing to raise an argument that the tribunal does not have jurisdiction must do so by its Statement of Defence or if in relation to a counterclaim, in the Reply to the Counterclaim. The UNCITRAL Rules sensibly suggest that a plea on jurisdiction should be decided as a preliminary issue. This will therefore save the time and costs of undergoing an entire arbitration if, in the end, the tribunal decides that it did not have jurisdiction to hear the dispute anyway. However, the UNCITRAL Rules also allow the tribunal the discretion to proceed with the arbitration and include the decision on jurisdiction as part of its final award.
Article 15(1) expressly states what should be a central tenet in any arbitration. The tribunal can conduct the proceedings ‘in such manner as it considers appropriate’ provided that ‘the parties are treated with equality and that at any stage of the proceedings each party is given a full opportunity of presenting his case’.
As stated above, the parties are free to agree on the place or seat of the arbitration as well as on what language should be used. Article 16 sets out the procedure when the parties have not reached such an agreement on the place. In such circumstances, the place shall be determined by the tribunal, ‘having regard to the circumstances of the arbitration’. The tribunal may also determine the locale of the arbitration within the country agreed upon by the parties.
Article 16 also deals with other geographical issues. The tribunal may hear witnesses; hold meetings between the members of the tribunal; or meet to inspect ‘goods, other property or documents’ (with due notice to the parties), where it deems appropriate. Finally, the award will be made at the place of the arbitration.
Article 17 sets out the procedure for when the parties have not agreed on what language is to be used in the arbitration. The tribunal should make a decision on this ‘promptly’ in order that the pleadings can be in the designated language and so that the parties will be aware that any hearings will also be in that language. The tribunal also has the discretion to order that any evidential documents submitted be accompanied by a translation into the language either agreed by the parties or determined by the tribunal.
Unless the parties have agreed otherwise (art 1), the UNCITRAL Rules expressly provide for one round of pleadings after the Notice of Arbitration: a Statement of Claim (provided this was not included with the Notice) and a Statement of Defence (arts 18 and 19). The tribunal may also decide that further pleadings are necessary (art 22). The periods of time for serving them are at the discretion of the tribunal.
Article 18 sets out specific information that should be contained in the Statement of Claim: ‘the names and addresses of the parties; a statement of the facts supporting this claim; the points at issue; and the relief or remedy sought.’ Further, the contract in dispute and the arbitration agreement (if not within the contract) should be attached. The claimant may also attach documents ‘he deems relevant’ or add a reference to them. Article 19 sets out similar requirements for the Statement of Defence. Further, in the Statement of Defence (or later if allowed by the tribunal) a party may also make a counterclaim arising out of the same contract or rely on such a claim for the purposes of set-off.
Provided it falls within the scope of the arbitration clause or separate arbitration agreement, the parties may amend or supplement their pleadings unless the tribunal deems it ‘inappropriate’ (art 20). In addition, the tribunal can decide that further pleadings in addition to the Statement of Claim and Statement of Defence are required and fix times for these to be submitted (art 22).
Article 28 provides for default. If the claimant does not serve its claim within the time limit set by the tribunal without ‘showing sufficient cause for such failure’, the tribunal can issue an order for the termination of the proceedings. However, if the respondent does not serve its Statement of Defence in accordance with the tribunal’s time limit, ‘the tribunal may proceed with the arbitration’ (ie the tribunal will continue and then make a ruling on the merits). If a party does not attend a hearing, but has been notified of the hearing in accordance with the UNCITRAL Rules, the tribunal can proceed with the arbitration. Finally, if a party fails to produce documentary evidence after having been invited to do so, the tribunal may make an award on the basis of the evidence that has been produced.
Most international arbitrations require parties to prove the facts on which they rely, but art 24 expressly states who has the burden of proof. Each party has the burden ‘of proving the facts relied on to support his claim or defence’. In addition, it empowers the tribunal to require a party to deliver documents or other evidence to the tribunal or the other party. It is common practice for the parties to attach to their pleadings the documents on which they rely. A party may request further disclosure which the tribunal then has the power to order. In addition, the tribunal may order witness statements to be submitted. When the parties are from different legal traditions, they may agree to apply the International Bar Association’s Rules on the Taking of Evidence in International Commercial Arbitration.
In some cases, in order for the tribunal to be able to make an evaluative decision on the facts, it is necessary for it to have the assistance of expert evidence. Article 27 expressly allows a tribunal to appoint its own expert or experts and it provides some detail on the parties’ rights in relation to those experts.
The tribunal can appoint one or more experts to report to it in writing on specific issues. The parties must give whatever documents or evidence the expert requires and, if there is a dispute between an expert and a party on the extent of the disclosure to be given, it is for the tribunal to decide what disclosure should be made. Once the tribunal receives the expert’s report, it should communicate the report to the parties for them to comment on it. The expert may be heard at a hearing at which the parties may question him and provide their own experts to give evidence on the points in issue.
An important provision is art 26. It concerns the tribunal’s ability to order interim measures in respect of the subject matter of the dispute. These include measures to conserve the goods the subject of the dispute. The interim measures may be in the form of an interim award and the tribunal is entitled to require security for the costs of the interim measures. Finally, art 26 does not limit a party’s ability to seek an interim measure from a national court, where necessary. Rather, it expressly states that a party will not have violated or waived the arbitration agreement by seeking such interim measures from a court.
As mentioned above, the tribunal has a discretion to fix periods of time in the arbitral proceedings. However, art 23 limits the amount of time between written statements to a period no greater than 45 days, unless the tribunal believes it is justified in extending the time limits.
Article 2(2) explains how periods of time should be calculated. A period of time is deemed to begin to run from the day on which a notice, notification or communication is received. If the last day of a time period is a holiday or nonbusiness day, then the period of time is extended until the next business day; otherwise, holidays and non-business days are counted as part of the period of time.
Article 15(2) provides that either party can request hearings at any stage of the proceedings. If neither party requests a hearing, the tribunal will decide whether to hold a hearing or whether a decision may be reached ‘on the basis of documents and other materials’.
If hearings are held, the tribunal may ask the parties whether there is any further proof, witnesses or submissions and if not, declare the hearings closed. The tribunal has a discretion to decide, if it thinks it is necessary ‘owing to exceptional circumstances’, to re-open the hearings at any time before the award is made (art 29).
Article 31 requires that when there are three arbitrators, the award should be made by a majority. Article 31(2) allows the presiding arbitrator to decide procedural issues only if there is no majority or the tribunal has authorised him to do so, though these decisions can later be revised by the tribunal.
An award made by a tribunal under the UNCITRAL Rules does not undergo an approval or scrutinising process before it is given to the parties. The parties therefore must, to the extent possible, ensure that the tribunal consists of reputable and knowledgeable arbitrators in order to make certain they obtain a high standard of award.
Article 32 sets out the requirements of an award. Besides expressly stating that the tribunal may make interim or partial awards, an award should include the following: it shall be in writing and shall be ‘final and binding on the parties’; the tribunal shall state the reasons on which the award is based (unless the parties have agreed otherwise); it shall be signed by the arbitrators and state the date and place where it is made; the award may only be made public with the consent of both parties; the tribunal shall send copies signed by the tribunal to the parties; and, if required by the local law of the place of arbitration, the tribunal will register the award.
Article 33 expressly states that the tribunal must make its award by applying the law designated by the parties as applicable to the dispute. If the parties have not so designated a law, the tribunal will make its award after applying the law which it determines is applicable to the dispute. The tribunal will only apply principles of equity or what it believes to be just (and possibly disregarding legal technicalities or requirements) if the parties have instructed it to do so. In all cases, the tribunal should decide its award in accordance with the underlying contract in dispute and take into account any trade usages applicable to the dispute.
Article 36 provides that within 30 days of receiving an award, either party may request that the tribunal correct ‘errors in computation, any clerical or typographical errors, or any errors of similar nature’. In addition, within 30 days of making the award, the tribunal may make any such corrections on its own initiative.
Within 30 days of the award, art 35 states a party may request an interpretation of the award from the tribunal. Such an interpretation should be given in writing within 45 days of the request and thereafter form part of the award.
Also within 30 days of the award, art 37 states a party may request that the tribunal make an additional award in respect of claims made in the arbitration but omitted from the award. If the tribunal considers the request justified and feels it can make the additional award without further hearings or evidence, it shall do so within 60 days.
If the parties settle the dispute, art 34 gives the tribunal two options. It may either issue an order for the termination of the proceedings or if the parties wish, it may record the terms of settlement in an agreed award. If at any point, the continuation of the proceedings becomes unnecessary, the tribunal has the power to terminate the arbitration upon notice to the parties.
As mentioned above, the third United Nations framework in support of arbitration is the Model Law. It is the result of a long process of negotiation involving legal and industrial experts from around the world. The Model Law was created to encourage the harmonisation of arbitration laws around the world. It has been successful in that aim since legislation based on the Model Law has been adopted in over forty countries around the world, including countries such as Canada, Germany and Australia. The Model Law is widely accepted to contain the best principles of international arbitration and therefore it is sometimes used as a tool for assisting the interpretation of national laws on arbitration.
