CHAPTER 8 THE ADMINISTRATION OF ARBITRAL CASES UNDER THE 1998 RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE

• Jurisdiction: United States

International Energy and Minerals Arbitration
(Feb 2002)
CHAPTER 8
THE ADMINISTRATION OF ARBITRAL CASES UNDER THE 1998 RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE
Horacio A. Grigera Naón ^*
White & Case
Washington, DC

Reprinted from ICSID Review, Foreign Investment Law Journal, Volume 13, Number 1, Spring 1998.

I. INTRODUCTION

ON 8 APRIL 1997, THE COUNCIL OF THE INTERNATIONAL CHAMBER OF COMMERCE meeting in Shanghai, China, adopted new ICC Arbitration Rules which will come into effect on January 1, 1998 (the 1998 Rules or the New Rules). The 1998 Rules-the final product of two years of work-were prepared by the ICC Commission on International Arbitration, in conjunction with the International Court of Arbitration of the ICC (the Court) and also with the input from National Committees of the International Chamber of Commerce from all over the world.

The 1998 Rules will apply to arbitrations commenced on or after January 1, 1998, unless the parties agree that the ICC arbitration rules in effect on the date of their arbitration agreement shall apply.¹

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The Court has issued guidelines giving further precisions as to the application of the New Rules. The underlying spirit is to privilege the application of the New Rules over the current ICC rules. Accordingly, the Court will consider with a flexible eye such guidelines and any agreement of the parties favoring the application of the New Rules. For all practical purposes, the New Rules will govern ICC arbitrations commenced on or after January 1, 1998. Before such date, the parties may also agree to have the 1998 Rules govern ICC arbitrations they intend to initiate prior to January 1, 1998. Even after such date, but normally not later than on the date of the respective terms of reference, the parties may agree that ICC arbitrations commenced before January 1, 1998 shall be governed by the New Rules. The parties may also agree to submit to the ICC rules of arbitration in effect on the date of their arbitration agreement.² However, even in such case the Secretariat of the Court will inform the parties at the initiation of the arbitral proceedings that they may agree to submit to the New Rules according to the Court's guidelines mentioned above.

The updated fee scales, set forth in Appendix III to the New Rules and the advance payment of US$2,500 corresponding to administrative fees to be made together with the filing of the arbitration request, shall be effective as of January 1, 1998 in respect of all arbitrations commenced on or after that date and irrespective of the version of the ICC arbitration rules applying to the arbitration.³ For example, arbitral and administrative fees concerning an arbitration commenced before January 1, 1998 under the New Rules (because the parties have so agreed according to the Court's guidelines) will be calculated according to the current fee scales and not the new ones presently incorporated into the Appendix III to the New Rules.

II. BASIC FEATURES OF THE ICC ARBITRATION SYSTEM

The 1998 Rules maintain the basic features that have characterized the ICC arbitration system since its inception in 1923: i.e., (i) the pivotal role played by the Court, throughout its 75 years of existence, in the administration of arbitrations under ICC arbitration rules, which includes confirming arbitrators and scrutinizing draft arbitral awards as to form and points of substance before being rendered; and (ii) the flexibility and

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universality of the ICC arbitration system permitting ICC arbitrations to take place in any corner of the world, in any language and against the back-drop of any legal system. In this sense, the New Rules constitute an evolution rather than a revolution in respect of the current text, that had not suffered any major modification since the last substantial overhauling of the ICC arbitration rules about 20 years ago. The New Rules are largely the outcome of the experience gathered by the Court and its Secretariat since then and a response to the needs of users. The New Rules incorporate existing practices, adapt the ICC arbitration rules to certain developments in the field, introduce greater flexibility and transparency and reduce or prevent delays in the administration and conduct of ICC arbitrations.

Before describing the main substantial innovations introduced through the New Rules, it is useful to look more closely at the basic features of the ICC arbitration system which have remained essentially the same under the new text.

The ICC arbitration system is one of the services rendered to the world's business community by the International Chamber of Commerce (the ICC) created in 1919. The ICC is the mouthpiece of world business interests and initiatives before national and international fora, including more recently the World Trade Organization. It enjoys consultative status at the highest level with the United Nations and its specialized agencies. It has National Committees in about 60 different countries representing the respective local business communities. It also has direct members from countries not having an ICC National Committee.

A. The Court

The Court is an autonomous arbitration body attached to the ICC.⁴ Each National Committee of the ICC may propose a member of the Court to be appointed by the ICC Council, the supreme governing body within the ICC.⁵ Thus, the Court has about 60 members representing developed and developing countries alike and all cultures and major legal systems. Its multinational and multicultural composition ensures that all viewpoints and approaches are represented in the Court's debates and in the making of the Court's determinations and decisions. Also, being an autonomous

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body, it carries its functions in complete independence from the ICC and its organs.⁶ The Court members are independent from the National Committees of the ICC, including the one having proposed them for appointment as Court member.⁷ These characteristics ensure the cultural neutrality and openness and the impartiality and independence of the Court in the carrying out of its functions and discharging its duties.

The Court does not itself settle disputes.⁸ It does not hear the parties to an arbitral dispute nor establishes the facts of the case. Its central function is to administer and supervise arbitrations conducted under the ICC rules of arbitration, as a result of an agreement of the parties to that effect, by arbitrators chosen by the parties themselves or appointed, if they would fail to do so, according to the ICC arbitration rules. The Court is entrusted with ensuring the application of the ICC arbitration rules,⁹ so as to exercise appropriate quality controls on the conduct of the arbitral proceedings and the award or awards rendered by the arbitral tribunal. The controls exercised by the Court with the assistance of its Secretariat aim at making the arbitral process and its outcome neutral, impartial and reliable so as to prompt the parties to spontaneously abide by the determinations and decisions of the arbitral panel and, if need be, to ensure that the arbitral award shall be enforceable at law before national courts.¹⁰ The Court administers arbitrations concerning international business disputes but will also take care of domestic business disputes if so agreed by the parties.¹¹

An ICC arbitrator must be independent from all parties to the dispute, including the one having nominated him¹² and must also be able and available to conduct the reference.¹³ Should any party fail to nominate his arbitrator or should the parties not agree on the sole arbitrator or the chairman of an arbitral panel, he will be appointed by the Court normally at the proposal of a National Committee of the ICC selected by the Court at the initiative of the Court's Secretariat.¹⁴ There are no lists of ICC arbitrators and each proposal, nomination and appointment of an arbitrator is done

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on a case by case basis without the help of pre-established lists or rosters. To ensure that every arbitrator is independent from all parties to the dispute, an arbitrator will only get appointed upon having been confirmed by, as the case may be, the Court or its Secretary General.¹⁵ Though the parties may contract out of the mechanisms for selecting and appointing arbitrators under the ICC arbitration rules,¹⁶ they cannot derogate from the cardinal principle that prospective arbitrators must be independent from all the parties and once appointed must remain independent throughout the arbitral proceedings. The Court will also determine the number of arbitrators failing a stipulation or agreement between the parties in this respect.¹⁷

Another basic principle of the ICC arbitration system is that the fixation of advances to cover arbitration costs and expenses, i.e., administrative fees to pay for the Court's and its Secretariat's services, arbitral fees and expenses reimbursable to the arbitrators, as well as of such fees or expenses that will be ultimately paid to the arbitrators or to the ICC for the Court's and its Secretariat's services, correspond exclusively to the Court, which will make the respective calculations by applying the fee tables set forth in Appendix III of the ICC arbitration rules to the amount of the dispute. Separate fee arrangements between the parties and the arbitrators are contrary to the ICC arbitration rules.¹⁸ This is one of the important advantages of agreeing on ICC arbitration since the parties and the arbitrators shall not be exposed to potential animosities or painful bargaining that may be associated with discussions or negotiations related to the financial and economic aspects of an arbitration. Direct dealings of the parties in this respect may conspire against the cooperative atmosphere necessary for the proper conduct of an arbitration and frequently lead to delays in the commencement and the continuation of...