Conference on Rules for Institutional Arbitration and Mediation

20 January 1995, Geneva, Switzerland

The Commencement of Arbitral Proceedings
by Francis Gurry, Director
WIPO Arbitration Center

The commencement of the arbitration is the expression widely used to denote that an arbitration has been set in motion, with the legal consequence of initiating the various steps in the arbitral procedure that are provided for in the Rules governing the arbitration. It also usually marks that point in time from which, in those jurisdictions that recognize arbitration as having a legal effect in relation to any applicable statute of limitations, the running of the limitation period is suspended for the pendency of the arbitration.

There are four main issues that may conveniently be considered in respect of the commencement of an arbitration:

THE ROLE OF THE ADMINISTERING AUTHORITY IN RELATION TO THE LEGAL INSTRUMENT THAT PROVIDES THE FOUNDATION OF THE ARBITRATION

The legal foundation of an arbitration is, of course, provided by the agreement to arbitrate, which serves to evidence the consent of the parties to the submission of a dispute to arbitration and provides the basis of the jurisdiction of the arbitral tribunal to hear and determine the dispute.

Given its central importance, the arbitration agreement is invariably one of the items which arbitration rules require to be produced with the initial documentation by which the arbitration is commenced (1). As such, it raises perhaps the first issue indicative of the nature and type of administration that is provided by an administering authority in relation to the arbitration, namely, the question of the role, if any, played by the administering authority in assessing the validity or satisfying itself of the existence of the arbitration agreement. All systems involve a degree of restraint on the part of the administering authority in addressing this question. Three main approaches, representing different degrees of restraint, are apparent in the rules of various institutions.

The first approach, the most activist of the three, is exemplified in the International Chamber of Commerce Rules of Arbitration ("the ICC Rules"). Two Articles in those Rules (Articles 7 and 8(3)) envisage that the International Court of Arbitration of the ICC will take a decision on the prima facie existence of the arbitration agreement. Those Articles require such a decision if the Defendant does not file an Answer within the required period or refuses ICC arbitration (Article 7), or if one of the parties raises a plea concerning the existence or validity of the arbitration agreement (Article 8(3)). While the provisions do not seem to require a systematic decision on prima facie existence in every case, they do require the administering authority to take a position on prima facie existence whenever the issue is raised directly or indirectly.

An intermediate approach to the question is to be found in the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce ("the SCC Rules") and in the Chamber of Commerce and Industry of Geneva Arbitration Rules ("the CCIG Rules"). Article 10 of the SCC Rules provides for the claimant’s request for arbitration to be dismissed "if it is obvious that the Institute lacks competence over the dispute."(2) Article 9 of the CCIG Rules requires the administering authority to proceed with the establishment of the arbitral tribunal "unless it is apparent from the outset that there is manifestly no agreement to arbitrate referring to the CCIG." The approach in these provisions differs from that adopted in the ICC Rules primarily in respect of the standard applied to activate an intervention by the administering authority. Whereas the ICC Rules envisage assessment of prima facie existence and non-action on a request for arbitration in the absence of a finding of prima facie existence, the SCC and CCIG Rules seem to envisage intervention by the administering authority only in more extreme cases, namely where it is obvious or manifest that there is no arbitration agreement.

The third approach, adopted in the American Arbitration Association International Arbitration Rules ("the AAA IA Rules"), the London Court of International Arbitration Rules ("the LCIA Rules") and the WIPO Arbitration Rules is silence. In so far as the WIPO Arbitration Rules are concerned, this approach reflects the position that the administering authority should, in so far as possible, not become involved in questions that may be left to the arbitral tribunal or the courts for decision. In conformity with this position, Article 36(a) of the WIPO Arbitration Rules sets out the well-known kompetenz-kompetenz rule that the tribunal shall have power to hear and determine objections to its own jurisdiction, "including any objections with respect to form, existence, validity or scope of the Arbitration Agreement..." Similarly, Article 36(e) provides that a plea that the tribunal lacks jurisdiction "shall not preclude the Center from administering the arbitration."

Silence in the Rules on any role on the part of the administering authority in connection with the arbitration agreement should not be equated with lack of any effective power. Ultimately, the role of the administering authority to administer the arbitration depends on the contractually expressed consent of the parties and the authority would clearly be justified in not proceeding in the complete and manifest absence of any such consent. Silence does mean, however, that a systematic decision will not be taken by the administering authority on prima facie or other existence in each case, and that objections to the validity of the arbitration agreement will, in the overwhelming majority of cases, be left to the tribunal (or ultimately the courts) to decide.

A further question concerning preliminary jurisdictional screening, which is specific to a specialized arbitration institution like the WIPO Arbitration Center, is whether there must be any demonstration that the subject matter of the dispute falls within the institution’s area of specialization. In other words, since the WIPO Arbitration Center provides specialized services in relation to international intellectual property disputes, is it necessary to show that a dispute referred to arbitration under the WIPO Arbitration Rules concerns, either in whole or in part, intellectual property?

No such requirement is contained in the WIPO Arbitration Rules. It was considered that any such a requirement would merely constitute an invitation to reluctant parties to challenge the competence of the tribunal or to argue that part of the subject matter of a dispute should be referred elsewhere for decision. It is thus entirely for the parties to decide what sort of disputes should be referred to the Center.

THE WRITTEN SUBMISSIONS REQUIRED AT THE COMMENCEMENT OF AN ARBITRATION

The Scheme Envisaged for the Exchange of Written Submissions

The nature of the documentation required to commence an arbitration depends on the scheme envisaged by the relevant Rules for the exchange of the main written submissions between the parties. In general, there are two models provided for in this regard in the various Rules.

The first model provides for a one-stage exchange of the main pleadings or written submissions, meaning that the opening exchange of written submissions contains or is accompanied by the statement of claim, on the part of the claimant, and the statement of defense (together with any counter-claim or set-off), on the part of the respondent. This is the scheme followed in the AAA IA Rules (3), the CCIG Rules (4), and the Rules of Arbitration of the International Arbitral Center of the Federal Economic Chamber in Vienna ("the Vienna Rules") (5). The description of this scheme as a "one-stage" exchange should not be taken to imply, however, that further written submissions after the opening exchange are not allowed or envisaged under the relevant Rules.

The ICC Rules (6) provide formally for a one-stage exchange of main pleadings, but the practice of initiating an arbitration with a short-form request followed later by a full memorial containing the statement of claim is widely admitted.

The second model divides the exchange of the main written statements into two stages. At the first, opening stage, a Request for Arbitration is submitted by the claimant, in response to which the respondent is required to submit an Answer or Response. Thereafter, at a second and later stage, the claimant must submit the statement of claim (unless there is an option for the claimant to submit the statement of claim earlier, with the Request for Arbitration, and the claimant has exercised the right to do so). The respondent’s statement of defense follows within a designated time period after the submission of the statement of claim. This two-stage scheme is provided for in the LCIA Rules (7), the Arbitration Rules of the Netherlands Arbitration Institute ("the NAI Rules") (8) and the SCC Rules (9).

The WIPO Arbitration Rules (10) follow the model of the two-stage scheme of exchange, providing for an opening Request for Arbitration and Answer to the Request, followed by the Statement of Claim and the Statement of Defense at a later stage (11). They allow, however, a claimant the option of shortening the process by submitting the statement of claim with the Request for Arbitration, if it so wishes (Article 10).

The reasoning behind the adoption of the two-stage model in the WIPO Arbitration Rules is essentially to facilitate an expeditious commencement of an arbitration. In order for such a commencement to be effected, it is necessary that the written submissions contain sufficient information to define the issues that have to be determined in the arbitration and to enable the arbitral tribunal to be established. For this purpose, it is unnecessary that the detailed factual situation be described or that the full evidence in support of the main contentions of the parties be joined to the opening submissions. The most didactic statement of this rationale of the two-stage exchange is contained in Article 8 of the NAI Rules:

The two-stage exchange also reflects the type of administration to be provided by the administering authority. Under the scheme of the WIPO Arbitration Rules, written submissions and other documents are channelled through the WIPO Arbitration Center up until the stage of the appointment of the arbitral tribunal. Thereafter, written submissions and other documents are submitted directly to the arbitral tribunal (12). Since the principal functions of the WIPO Arbitration Center at the commencement of an arbitration are associated with the appointment of the arbitral tribunal, the determination of the arbitrator’s fees and the administration of the costs of the arbitration, the receipt of the opening written submissions, without the full evidentiary support for those submissions contained in the statement of claim and the statement of defense, is sufficient.

The Contents of the Opening Written Submissions

The contents that are required in the Request for Arbitration with which an arbitration is initiated under the WIPO Arbitration Rules are set out in Article 9 and need not be repeated here. One difference in Article 9, however, compared to the corresponding provisions in other Rules is the requirement in item (iv) that the brief description of the nature and circumstances of the dispute include "an indication of the rights and property involved and the nature of any technology involved." The purpose of this requirement is to accommodate the specific characteristics of intellectual property disputes and to ensure that sufficient information is provided concerning the technical nature of a dispute to enable appropriate choices to be made in the appointment of the arbitral tribunal.

The Answer to the Request must be submitted by the Respondent within 30 days from the date on which it receives the Request for Arbitration. It must contain comments on any of the elements in the Request for Arbitration and may include indications of any counter-claim or set-off. If the respondent does intend to make a counter-claim or set-off raising substantially different issues from those set out in the Request for Arbitration, it would be desirable that an indication to this effect be included in the Answer to the Request, since the different nature of the issues involved may have a bearing on the desired qualifications or expertise of the members of the arbitral tribunal.

If the Claimant has exercised its option to submit a Statement of Claim with the Request for Arbitration, Article 12 of the WIPO Arbitration Rules gives the respondent the choice of including the Statement of Defense with the Answer to the Request. Should the respondent not include the Statement of Defense with the Answer to the Request in such circumstances, it will be required, under Article 42(a), to communicate its Statement of Defense within 30 days after receipt of notification from the Center of the establishment of the arbitral tribunal.

The Communication of Written Submissions

The WIPO Arbitration Rules provide, like the AAA IA Rules and the LCIA Rules, for the direct communication of the opening written submissions (the Request for Arbitration and the Answer to the Request) between the parties, with a copy being submitted at the same time to the WIPO Arbitration Center. The alternative model, to be found in the CCIG Rules, the ICC Rules, the NAI Rules and the Vienna Rules, is for the opening written submissions to be communicated to the administering authority which, in turn, addresses a copy to the other party.

Means of Communication

The means of communicating written submissions is dealt with in Article 4(a) and (b) of the WIPO Arbitration Rules.

Article 4(a) is intended to require that the means of communication is expeditious. It requires notices and other communications to be delivered by expedited postal or courier service, or transmitted by telex, telefax or other means of telecommunication that provide a record of the notice or communication. Two expressions perhaps require some explanation. The term "expedited postal service" is intended to make it clear that first-class postal service, and not surface mail, is required. The term "other means of telecommunication that provide a record" is intended to be ambulatory in nature and to allow for future improvements in technical possibilities in the field of telecommunications which may supplement or replace the telefax.

Article 4(b) addresses the question of the place to which communications must be sent to a party. It commences with the well-tried formula of a party’s "last-known residence or place of business," which is deemed to be a valid address for communications in the absence of any notification of change. The second sentence of the provision is novel in that it permits communications to be addressed to the party "in the manner stipulated or, failing such a stipulation, according to the practice followed in the course of dealings between the parties." It is an attempt to provide a means of overcoming recourse to delaying tactics by a party which refuses to receive communications relating to the arbitration, even if those communications are addressed in the manner that has been used in the course of dealings between the parties before the dispute arose.

DATE OF COMMENCEMENT OF ARBITRATION

The principal significance of determining the date for the commencement of an arbitration is the suspension, in those jurisdictions recognizing arbitration as having an effect on the statute of limitations, of the running period under the statute of limitations.

The solution adopted in the WIPO Arbitration Rules to the determination of the date of commencement corresponds to that adopted almost universally in Arbitration Rules. By Article 7, the date of commencement of the arbitration is the date on which the Request for Arbitration is received by the WIPO Arbitration Center. Under Article 8, the Center must inform the claimant and the respondent of the receipt of the Request for Arbitration and of the date of the commencement of the arbitration.

ROLE OF ADMINISTERING AUTHORITY

The commencement of arbitral proceedings provides the first opportunity to characterize the role that Arbitration Rules envisage for the administering authority in an institutional arbitration. It will be apparent from the foregoing description of the provisions of the WIPO Arbitration Rules in this respect that those Rules envisage only that degree of supervision on the part of WIPO Arbitration Center as is necessary to ensure that the essential elements of the arbitral procedure are set on foot.

Certain other services, not mentioned above, are also provided by the Center at the stage at the commencement of arbitral proceedings. Two of those deserve particular mention.

The first is the provision of material support for the conduct of the arbitration. In this respect, the Center makes available hearing and party rooms which, where the arbitration is conducted in Geneva on the premises of the WIPO, are supplied free-of-charge. In addition, it will provide assistance in engaging secretarial, interpretation or translation services, where these are needed or desired by the parties.

A second service precedes the commencement of arbitral proceedings. It is designed for those intellectual property disputes that take place between parties that do not stand in an existing contractual relationship. In these cases, typically infringement cases, the Center is prepared to offer good offices in bringing the parties together, at the request of one and with the consent of the other, to discuss the submission of a dispute to arbitration (or mediation) as an alternative to the resolution of the dispute through litigation.

Notes

1. See AAA IA Rules, Article 2(3)(c); CCIG Rules, Article 7.1(b); ICC Rules, Article 3(2)(c); LCIA Rules, Article 1(b); NAI Rules, Article 6(3)(e); SCC Rules, Article 9(d); UNCITRAL Rules, Article 3(3)(c); Vienna Rules, Article 6(3); WIPO Arbitration Rules, Article 9(iii).

2. See also SCC Rules, Articles 11 and 14.

3. Articles 2 and 3.

4. Articles 7 and 8.

5. Articles 6 and 7.

6. Articles 3 and 4.

7. Articles 1, 2 and 6.

8. Articles 6, 7, 8 and 24.

9. Articles 9, 11 and 18. The UNCITRAL Rules provide a hybrid model, envisaging a Notice of Arbitration (Article 3), without an Answer or Response, and a Statement of Claim (Article 18) and Statement of Defense (Article 19).

10. Articles 6, 11, 41 and 42.

11. Subject to the option that the claimant has of submitting the statement of claim with the Request for Arbitration (Article 10).

12. See Article 5.

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