6/2/2010

ADR – INTERNATIONAL ARBITRATION

Report on Legal and Regulatory Environment of Business

Submitted By: Faryal Naeem Warind

Javeria Yousuf
Kanwal Malik
 Table of Contents

Introduction ................................................................................................. 2

Advantages of Arbitration ................................................................................. 2

The New York Convention ................................................................................. 3

Features of the ICC International Court of Arbitration ............................................... 3

Drafting the Arbitration Document ...................................................................... 3

Arbitration Process ......................................................................................... 4

I – Request for Arbitration and Respondent’s Answer ................................................. 4

II – Setting the Arbitration in Motion .................................................................... 4

III – Terms of Reference ................................................................................... 5

IV – Proceedings ............................................................................................ 5

V – Scrutiny and Final Award.............................................................................. 5

Other Dispute Resolution Services ....................................................................... 5

ADR ........................................................................................................... 6

Pre-arbitral “Referee” Procedure........................................................................ 6

Appointing Authority for Ad Hoc Arbitrations .......................................................... 6

Statement of Contribution ................................................................................ 7

1|Page
Introduction
The International Court of Arbitration was established as the arbitration body of the
International Chamber of Commerce in 1923. With this development, the court was able to
promote arbitration as an acceptable and effective alternate way of resolving commercial
disputes on an international scale. Such has been the success of the International Court of
Arbitration that up to date it has overseen over 17000 international cases which is largely
attributable to the growing popularity of resorting to arbitration as an alternate dispute
resolution technique because of its advantages of being less costly and less time consuming.
Apart from these two advantages it is also a very attractive and “safe” option because of the
confidentiality it offers and the freedom the parties, involved in suits, get to choose their
own arbitrators.

Advantages of Arbitration
The following are some of the reasons of resorting to arbitration for resolution of conflicts:

1) Final binding decisions: Arbitral awards can not, in nearly all cases, be subjected
to an appeal and are and are final, unchallengeable decisions.
2) International recognition of arbitral awards: Arbitral awards have greater
recognition and enforceability on an international level due to a number of
multilateral and bilateral arbitration conventions, the New York Convention being
the most prominent.
3) Neutrality: The process of arbitration provides neutrality between both parties
making them equals. The arbitration process is not country, language or
nationality-specific making it completely fair and free from bias.
4) Specialized competence of arbitrators: Parties can have their disputes resolved by
arbitrators of their own choice and preference.
5) Speed and economy
6) Confidentiality

2|Page
The New York Convention
This convention was adopted on June 10th, 1958 by the ICC International Court of Arbitration
and is a multilateral treaty that mainly involves international enforceability of arbitration
awards.

Features of the ICC International Court of Arbitration

• The ICC International Court of Arbitration applies the Rules of Arbitration of the
International Chamber of Commerce and also oversees the whole arbitral process and
all matters associated with it.
• The Secretariat provides assistance to the Court in terms of facilitating the arbitration
process and also providing educational and documentary support services.
• Designation of arbitrators, according to the ICC Rules, is a decision made by the Court
if only one arbitrator is to be appointed, with the agreement of both the parties, and
if three arbitrators are to be appointed this same decision is taken by the two parties,
the third arbitrator being appointed on mutual agreement of both parties.
• The Court is in charge of monitoring and reviewing the whole process of arbitration to
make sure that the Rules set by the Court are being followed.
• Arbitrator fees are decided by the Court according to fees already set in the ICC Rules
having taken into account expense-determining factors like the efficiency of the
arbitrators, the time spent by them and the speed with which the case was handled.
• Scrutiny of arbitral awards is the Court’s responsibility and involves the Court approving
certain arbitral awards, which highlight some important issues and provide solutions to
them, which can be useful for future reference.

Drafting the Arbitration Document

What factor decides whether a dispute is to be resolved by ICC arbitration? The answer is
provided by the New York Convention – Article II.1 which states:

Each Contracting State shall recognize an agreement in writing under which the parties
undertake to submit to arbitration all or any differences which ... may arise between them
... concerning a subject matter capable of settlement by arbitration.”
And thus, the contract should have “in writing” the following standard clause:
3|Page
 “All disputes arising out of or in the connection with the present contract shall be finally
settled under the Rules of Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with the said Rules.”

The clauses defining the existence, validity and scope of arbitration agreement should be
clearly and carefully drafted; vague and ambiguous clauses may give rise to pleas concerning
the scope of the agreement and eventually, delays or even impedes the arbitration process.
Moreover, if the parties in contract wish and agree upon, then the arbitration document may
also contain the law governing the contract, the number of arbitrators, the place of
arbitration and the language of the arbitration.

Arbitration Process

I – Request for Arbitration and Respondent’s Answer

The claimant sends a request for arbitration to the Secretary of the International Court of
Arbitration in Paris. This request is then sent to the respondent. The respondent has to send
an answer to the request within 30 days, including any counterclaims. The claimant is
requested by the Secretary to make a prepayment to cover the costs of arbitration before the
Terms of Reference are drafted.

II – Setting the Arbitration in Motion

The procedure may be set in motion through the Secretary General in the case where a Court
decision is not required concerning the existence of the prima facie, scope and validity of the
arbitration agreement, place of arbitration or the constitution of the Arbitral Tribunal. The
Secretary General may confirm arbitrators chosen by the parties as long as they have filed a
statement of independence excluding qualification or a qualified statement has not raised any
objections. The file is then sent to Arbitral Tribunal. Otherwise the Court makes the required
decisions and sets the procedure in motion. The Court establishes the advance costs to cover
the fees of the arbitrators and administrative expenses of the ICC. The Secretariat sends the
file to the Arbitral Tribunal if the advance on costs has been paid.

4|Page
III – Terms of Reference
Upon receiving the file, the Arbitral Tribunal creates a document defining its terms of
reference based on the documents or in the presence of the parties and according to their
latest submissions. These include information such as the names and descriptions of the
parties and the arbitrators, the location where arbitration took place, a summary of the
claims of the parties, and other applicable procedural rules. If the Arbitral Tribunal considers
appropriate, it may include a list of issues to be determined. The Arbitral Tribunal informs
the Court of an established procedural schedule for the arbitration. The Parties and the
Arbitral Tribunal sign the terms of reference. These are sent to the Court for approval and
the arbitration may proceed if one of the parties does not agree to sign the term of reference
or does not participate in drawing them up.

IV – Proceedings
The Arbitral Tribunal proceeds as soon as possible to build the facts of the case. When both
the parties have presented their cases, the proceedings are declared as closed and a draft
Award is prepared by the Arbitral Tribunal.

V – Scrutiny and Final Award

The Court scrutinizes the draft Award. If necessary, the Court may make modifications to the
Award or bring certain substances to the attention of the Arbitral Tribunal. When approved,
the arbitrator(s) sign the Award and the parties are notified by the Secretariat.

Other Dispute Resolution Services

There are various other services been provided by the ICC for business dispute resolution such
as,
• ADR
• Pre-arbitral Referee Procedure
• Appointing authority for ad hoc arbitrations Expertise
• DOCDEX
• Dispute Boards

Of all these, the ones related to arbitration are discussed below.

5|Page
ADR
Business disputes are settled according to ICC ADR Rules with the help of a third party known
as a Neutral. The settlement may be by mediation (where the Neutral’s role is of a facilitator
only); neutral-evaluation (where the Neutral gives an opinion about a possible settlement of
the dispute); mini-trial (where Neutral along with the representatives of both the parties give
an opinion or an acceptable solution to the dispute). ICC provides four alternative ADR clauses
in the form of suggestions in an increasing obligation order. They consist of a two-tiered
clause that suggests ICC ADR proceedings followed by ICC arbitration if the dispute is not
settled.

Pre-arbitral “Referee” Procedure

A “Referee” is selected by the concerned parties or by the Chairman of ICC International
Court of Arbitration, for urgent provisional measures (that are binding) towards solving the
dispute. Like arbitration itself the Pre-arbitral Referee Procedure is applicable only if the
contract contains, followed by the standard arbitration document clause, this standard ICC
clause regarding the said procedure:

“Any party to this contract shall have the right to have recourse to and shall be bound by the
pre-arbitral referee procedure of the International Chamber of Commerce in accordance
with its Rules for a Pre-Arbitral Referee Procedure.”

Appointing Authority for Ad Hoc Arbitrations

This type of dispute settlement takes place by the consultancy of ICC to the arbitral tribunal.
ICC follows the framework of set rules for ‘Uncitral’ arbitration as well as ‘non-Uncitral’ ad
hoc proceedings. The appointment of arbitrators is done by ICC International Court of
Arbitration. Under the ICC Rules, the Court may also be approached for decision, when
arbitrators are challenged on anything by the concerned parties.

6|Page
Statement of Contribution

Research
By all the three group members. Half by Faryal, and the remaining by Javeria and Kanwal.

Formatting
By Javeria Yousuf.

Making of the Report

According to the Table of Contents of the Report
• Introduction, Advantages of Arbitration, The New York Convention, Features of the ICC
International Court of Arbitration (By Kanwal Malik)
• Drafting the Arbitration Document (By Javeria Yousuf)
• Arbitration Process (By Faryal Naeem Warind)
o Request for Arbitration and Respondent’s Answer
o Selecting the Arbitration in Motion
o Terms of Reference
o Proceedings
o Scrutiny and Final Award
• Other Dispute Resolution Services (By Javeria Yousuf)
o ADR
o Pre-arbitral “Referee” Procedure
o Appointing Authority for Ad Hoc Arbitrations

7|Page