International arbitration

Features of the process

Dr. Michael Reynolds LLM, M.Sc.,F.C.I.Arb.,C.Arb.
BPP University College and Socio-Legal Centre, University of Oxford
A lecture on international arbitration

• Purpose.
– To tell you something about the process
– To make you think about it

• Outcomes
– To understand its benefits, its challenges and the future
of international trade which depends on a reliable
disputes process
Global Diversity
 LCIA

In 2013, a total of 290 arbitrations were referred

to the LCIA in addition to 11 requests for
mediation or some other form of ADR,

bringing the total to 301

 ICC
ICC Rules of Arbitration in effect on the date of
commencement of the arbitration, unless the parties have
agreed to submit to the Rules in effect on the date of their
arbitration agreement (Article 6 (1)).
• The current version in force from 1 January 2012.
• The ICC International Court of Arbitration monitors the entire
arbitral process, from the initial request for arbitration to
scrutiny of the draft final award.
 CIARB

Recent Oxford report suggests CIArb whilst the

leading training body not the foremost in
arbitration appointments.

International membership but not effectively an

international arbitration body.
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CENTRE FOR SOCIO-LEGAL STUDIES

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• AN OVERVIEW OF THE USE OF ARBITRATION IN ENGLAND

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• DECEMBER 2014
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• DR MICHAEL REYNOLDS
 What is arbitration?
The New York Convention Refers to an agreement
to arbitrate as an agreement in writing under which
the parties undertake to submit to arbitration all or
any differences which have arisen or which may
arise between them in respect of a defined legal
relationship whether contractual or not
 Reasons for international arbitration (Born,
2012)
1. Neutrality
2. Centralised dispute resolution

3. Enforceability of agreements and awards

4. Commercial competence and expertise

5. Finality of decisions

6. Party autonomy and procedural flexibility

7. Cost and speed
8. Confidentiality and privacy

9. Involvement of states and state entities

 Popularity
• According to Born the number of international
institutional arbitral appointments has risen
from 1104 in 1992 to 4339 in 2010.
• China has seen the highest rise from 267 in
1992 to 1352 in 2010. CIETAC is the leading
institution on this basis.
CIETAC
 The main business functions of CIETAC include:

1.Accepting international, foreign-related and domestic cases involving natural persons, legal persons,
and other organizations that are treated as equal subjects under the law;
2.Offering other dispute resolutions services in accordance with the agreement of the parties;
3.Accepting cases on the authorization of governments, international organizations and other
institutions at home and abroad;
4.Providing services on demand, such as appointing arbitrators for institutional or non-institutional
arbitration in accordance with the agreement and request of the parties;
5.Providing to the legislature for its reference legal opinions and advice on relevant legislation and
amendments to the law;
6.Making researches in and promoting commercial arbitration and other alternative dispute resolution;
7.Fostering domestic and international exchange and cooperation in arbitration and participating
arbitration activities at home and abroad;
 UNCITRAL MODEL LAW
Article 7 (1) United Nations Commission on
International Trade Law Model Law provides that an
arbitration agreement is an agreement by the
parties to submit to arbitration all or certain disputes
which may arise between them in respect of a
defined legal relationship whether contractual or
not.
 icsid

The International Convention on the Settlement of

Investment Disputes between States and Nationals
of Other States (known as the ICSID Convention)
offers eligible states and foreign investors the
opportunity to bring their investment disputes to
neutral ad hoc arbitration tribunals
 Icsid advantage
• ICSID tribunals are administered by the World Bank’s
International Centre for Settlement of Investment
Disputes.
• They are entirely self-contained and delocalised
• Function independently of local courts and local
procedural law.
• They are immune from any form of National Court review
 Geographic Distribution of All Cases Registered under the ICSID Convention and Additional Facility Rules, by State
Party Involved*:
The classification of the geographic regions above is based on EU Membership, available at
http://europa.eu/about‐eu/countries/index_en.htm, and the World Bank’s regional system, available at
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/0,,pagePK:180619~theSitePK:136917,00.html, and also
includes World Bank donor countries.

• South America 27%

• European Union 12%
• Central America & the Carribean 6%
• North America (Canada, Mexico & U.S.) 5%
• Eastern Europe (non‐EU) & Central Asia (non‐EU)14%
• Western Europe (non‐EU)1%
• Sub‐Saharan Africa 16%
• Middle East & North Africa 11%
• South & East Asia & the Pacific8%
• © 2014 by International Centre for Settlement of Investment Disputes. Content may be reproduced for educational use with
acknowledgement.
 Key advantages of international arbitration

1. Consensual means to resolve disputes

2. Non-governmental Decision-maker selected by or for the parties
3. Adopts judicial processes
4. Transnational character
5. International recognition
 Further advantages

1.Easier to enforce than foreign court rulings

2.Choice of law matter for parties

3.Choice of tribunal matter for parties

4.Choice of procedure matter for parties

 Theoretical Questions
• Professor Lew and Mistelis of Queen Mary
ask: what is the juridical nature of
arbitration?
• What do they mean by that?
 Juridical nature

• Is arbitration subject to legal regulation?

• To what? National or International law? Mixture?
• Is arbitration purely autonomous i.e. Under the governance suzerainty of the
parties or states who are parties.
• It begs the question as to the legal nature of the process.
 Juridical theories

1. Jurisdictional

2. Contractual
3. Mixed
4. Hybrid
 Reality

• Like many academic theories Lew opines

they have little relevance or application in
practice.
• The question amounts to this: who is
sovereign: the parties or the State?
 A hybrid?

Is the theory that more closely resembles the nature of

arbitration?
• Arbitration contains elements of private and public law
• It has procedural and contractual features
• It involves the parties who agree to arbitration and the
state which supports its enforcement
Professor Sauser-Hall Report to the Institut de
Droit International 1952

• Argued that the contractual and jurisdictional

elements of arbitration were ”Indissoluably
intertwined”
 Is an arbitrator like the judge

• Yes and no.

• Yes when he determines the case and
publishes his award.
• No because he has no state power: he cannot
enforce only the state court can enforce.
 The autonomous (sui juris) theory
• Developed by Rubellin-Devichi in 1965
• She determined that arbitration could in fact and in law be determined by looking
at its use and purpose
• In that context arbitration cannot be classified as purely contractual or
jurisdictional.
• What does arbitration to, how and why does it function in the way it does?. It can
operate outside the constraints of positive law or national legal system. It is not
hidebound by private international law.
• In reality, what relevance have national criteria to international trade or the
international commercial community? And what if anything has national public
policy and mandatory law to do with international arbitration?
 Why this lesson is so important

• Without international arbitration trade disputes

will not be resolved; without peaceful processes
for the settlement of disputes between states,
multi-nationals and others trade will decline,
economies will suffer and history tells us that
trade wars or worse become inevitable.
 Arbitration Act 1996
• Section 46

• Rules applicable to substance of dispute.

• (1)The arbitral tribunal shall decide the dispute—

• (a)in accordance with the law chosen by the parties as applicable to the substance of the
dispute, or
• (b)if the parties so agree, in accordance with such other considerations as are agreed by
them or determined by the tribunal.
• (2)For this purpose the choice of the laws of a country shall be understood to refer to the
substantive laws of that country and not its conflict of laws rules.
• (3)If or to the extent that there is no such choice or agreement, the tribunal shall apply the
law determined by the conflict of laws rules which it considers applicable.
 Arbitration Act 1996
• Section 47

• Awards on different issues, &c.

• (1) Unless otherwise agreed by the parties, the tribunal may make more than one
award at different times on different aspects of the matters to be determined.
• (2) The tribunal may, in particular, make an award relating—

• (a)to an issue affecting the whole claim, or

• (b)to a part only of the claims or cross-claims submitted to it for decision.

• (3) If the tribunal does so, it shall specify in its award the issue, or the claim or part
of a claim, which is the subject matter of the award.
 Arbitration Act 1996
• Section 48 Remedies.

• (1) The parties are free to agree on the powers exercisable by the arbitral tribunal as regards
remedies.
• (2)Unless otherwise agreed by the parties, the tribunal has the following powers.

• (3)The tribunal may make a declaration as to any matter to be determined in the

proceedings.
• (4)The tribunal may order the payment of a sum of money, in any currency.

• (5)The tribunal has the same powers as the court—

• (a) to order a party to do or refrain from doing anything;

• (b) to order specific performance of a contract (other than a contract relating to land);

• (c) to order the rectification, setting aside or cancellation of a deed or other document.
 Arbitration Act 1996
Section 49 Interest.
• (1) The parties are free to agree on the powers of the tribunal as regards the award of interest.
• (2) Unless otherwise agreed by the parties the following provisions apply.
• (3) The tribunal may award simple or compound interest from such dates, at such rates and with such rests as it
considers meets the justice of the case—
• (a) on the whole or part of any amount awarded by the tribunal, in respect of any period up to the date of the
award;
• (b) on the whole or part of any amount claimed in the arbitration and outstanding at the commencement of the
arbitral proceedings but paid before the award was made, in respect of any period up to the date of payment.
• (4) The tribunal may award simple or compound interest from the date of the award (or any later date) until
payment, at such rates and with such rests as it considers meets the justice of the case, on the outstanding
amount of any award (including any award of interest under subsection (3) and any award as to costs).
• (5) References in this section to an amount awarded by the tribunal include an amount payable in consequence
of a declaratory award by the tribunal.
• (6) The above provisions do not affect any other power of the tribunal to award interest.
 Section 50 Extension of time for making award.

• (1) Where the time for making an award is limited by or in pursuance of the arbitration agreement, then, unless
otherwise agreed by the parties, the court may in accordance with the following provisions by order extend that
time.
• (2) An application for an order under this section may be made—
• (a)by the tribunal (upon notice to the parties), or
• (b)by any party to the proceedings (upon notice to the tribunal and the other parties),
• but only after exhausting any available arbitral process for obtaining an extension of time.
• (3) The court shall only make an order if satisfied that a substantial injustice would otherwise be done.
• (4) The court may extend the time for such period and on such terms as it thinks fit, and may do so whether or not
the time previously fixed (by or under the agreement or by a previous order) has expired.
• (5) The leave of the court is required for any appeal from a decision of the court under this section.
 Arbitration Clauses ICC
• Arbitration
• “All disputes arising out of or in 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.”
• If the parties do not want the Emergency Arbitrator Provisions of the 2012 Rules (
see the page explaining the Emergency Arbitrators Provisions) to apply, they
must expressly opt out by using the following arbitration clause:
• Arbitration without emergency arbitrator
• “All disputes arising out of or in 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 Emergency
Arbitrator Provisions shall not apply.”
 ICC Arbitration Clauses
• The parties may also wish to stipulate in the
arbitration clause:
• the law governing the contract;
• the number of arbitrators;

• the place of arbitration; and/or

• the language of the arbitration.
 ICC Arbitration Clauses
• Ensure that the arbitration agreement is in writing and carefully and clearly drafted.

• Adaptation of the clauses to particular circumstances

• The standard clause can be modified in order to:

• Take account of the requirements of national laws and any other special requirements
• parties should always check for any mandatory requirements at the place of arbitration and
potential place(s) of enforcement.

Parties wishing to have an ICC arbitration in Mainland China may include in their arbitration clause
an explicit reference to the ICC International Court of Arbitration.

"All disputes arising out of or in connection with the present contract shall be submitted
to the International Court of Arbitration of the International Chamber of Commerce and
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.”
 ICC ARBITRATION CLAUSES
• Make special arrangements where the contract
or transaction involves more than two parties
• Combine several ICC dispute resolution services
• Combined and multi-tiered dispute resolution
clauses may help to facilitate dispute
management and reduce time and costs.
 ICC Arbitration clauses
• Arbitration can be combined with:

• Pre-arbitral referee procedure

• Mediation

• Expertise

• Dispute Boards,

• and virtually any other form of ADR.

 US Arbitration clause
• Any claim or dispute arising from or relating to this Agreement
or to this arbitration clause must be resolved by binding
arbitration [under the rules of the AHLA, AAA, CPR, JAMS, or
other agency—or no mention of rules] [and state whether the
arbitration is to be administered by that agency]. The purpose
of this clause is to streamline and simplify the process. These
provisions supersede any contrary arbitral rules that might
otherwise apply.
 LCIA Arbitration clause
• Future disputes
• For contracting parties who wish to have future disputes referred to arbitration under the LCIA
Rules, the following clause is recommended. Words/spaces in square brackets should be
deleted/completed as appropriate.

"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 LCIA Rules, 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 arbitral proceedings shall be [    ].

The governing law of the contract shall be the substantive law of [    ]."
 LCIA Existing disputes
• If a dispute has arisen, but there is no agreement between the parties to arbitrate, or if the parties wish to vary a
dispute resolution clause to provide for LCIA arbitration, the following clause is recommended. Words/spaces in
square brackets should be deleted/completed as appropriate.

• "A dispute having arisen between the parties concerning [    ], the parties hereby agree that the dispute shall be
referred to and finally resolved by arbitration under the LCIA Rules.

• 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 arbitral proceedings shall be [    ].

• The governing law of the contract [is/shall be] the substantive law of [    ]. "
 LCIA clauses
• Modifications to Recommended Clauses

• The LCIA Secretariat will be pleased to discuss any modifications to these

standard clauses. For example, to provide for party nomination of
arbitrators or for expedited procedures.

• Mediation and other forms of ADR

• Recommended clauses and procedures for Mediation, for Expert

Determination, for Adjudication, and for other forms of ADR, to be
administered by the LCIA, or in which the LCIA is to act as appointing
authority, are available on request from the LCIA Secretariat.
• Model Arbitration Clause
• For an arbitration to take place, the disputing parties must reach an agreement in writing to
submit their dispute to arbitration. This agreement may be made by incorporating an
arbitration clause into the commercial contract or may be concluded after a dispute arises.
The CIETAC recommends the following model arbitration clause to both Chinese and
foreign clients:
• "Model Arbitration Clause(1)

• Any dispute arising from or in connection with this Contract shall be submitted to China
International Economic and Trade Arbitration Commission (CIETAC) for arbitration which
shall be conducted in accordance with the CIETAC's arbitration rules in effect at the time
of applying for arbitration. The arbitral award is final and binding upon both parties.
• Model Arbitration Clause(2)
• Any dispute arising from or in connection with this Contract
shall be submitted to China International Economic and
Trade Arbitration Commission (CIETAC)___________Sub-
Commission (Arbitration Center) for arbitration which shall
be conducted in accordance with the CIETAC’s arbitration
rules in effect at the time of applying for arbitration. The
arbitral award is final and binding upon both parties."
• The parties may also stipulate the following matters in the
arbitration clause:
• the place of arbitration and/or hearing;
 the language of arbitration;
 • the number of arbitrators;
• the nationality of arbitrators;
 • the method of selection of arbitrators;
 • the applicable law of the contra