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Conference on Rules for Institutional Arbitration and Mediation

20 January 1995, Geneva, Switzerland

 

Commentary: Commencement of Arbitration Proceedings and the Arbitral Tribunal
by François Knoepfler
Knoepfler Gabus Gehrig, Neuchâtel,
Chairman, Swiss Association of International Law


Following these two very detailed presentations, I would like simply to add a word to what has been said by Mr. van den Berg and a further word on what was said by Mr. Gurry.

The report given by Mr. van den Berg of course approached the problem raised by the well-known Article 18 of the WIPO Rules dealing with multiple party arbitration. This is an important provision since the arbitration tribunals, contrary to ordinary courts, except possibly in certain countries such as the Netherlands or certain American States, do not have competence to link proceedings without the agreement of the parties and the parties do not have the right to summons third parties by invoking provisions of local procedural law. That is why the matter of regulation by the parties of an arbitration involving several respondents is particularly important.

The solution given in Article 18(c) of the WIPO Rules, which results in the cancelling of the appointment of an arbitrator as decided by the claimants, is difficult for me to accept. Indeed, the right of the parties to appoint their arbitrator remains one of the items on which arbitration differs from ordinary proceedings. It is altogether regrettable that a party who has properly respondent its arbitrator may be caused, by a simple manoeuvre on the part of the defendant, to renounce an arbitrator who was assumedly competent, impartial and unanimously appreciated.

Obviously, I realize that account had to be taken of the decision given by the French Court of Cassation in the DUTCO case. However, it has to be acknowledged that that decision is a surprising one. I fail to understand how, in 1992, in view of the developments in international arbitration, it could be held that the parties could not agree on the method for appointing their arbitrators prior to the arising of a dispute. Admittedly, the decision only concerns arbitration involving several respondents. However, there again, developments are such that a situation that was rather the exception is now becoming extremely frequent. The reservation expressed by the Court of Cassation therefore has weighty implications. Happily, French case law is not shared by everyone (not even in France, in fact) and several countries, including Switzerland, admit multiple party arbitration clauses. Although I understand that the drafters of the WIPO Rules had to take the DUTCO case into consideration, I nevertheless regret that such modern rules should consolidate a highly debatable solution.

However, it should not be forgotten that the DUTCO solution is not universally accepted. Where parties include a multiple party arbitration clause in a contract or group of contracts involving several parties, they should be most attentive to the drafting of such a clause. To begin with, it should be drawn up in a better manner than the clause on which the DUTCO case centered. The arbitration agreement must be clear, precise and allow for the various hypotheses which may arise when the respondents or some of the respondents are unable to agree on the name of an arbitrator. If the clause is well drafted, it can be covered by Article 18(c) that permits the parties to stipulate that they intend to exclude that very Article 18. What could then happen? If the arbitration is taking place in France and the award is given by an arbitration tribunal constituted in the manner agreed by the parties, an appeal based on the DUTCO case law would indeed be possible. However, I am not certain that the case law will be maintained for a long time. If the arbitration takes place elsewhere, for example in Switzerland, the clause will most probably be acknowledged as valid. Of course, the risk cannot be avoided, where an arbitration award given elsewhere, in Switzerland for example is executed in France that the respondents will invoke a remedy based on the DUTCO case. But it is also clear that public policy operates in a different manner where it is wished to oppose "foreign" awards already given where it is the process for appointing the arbitration tribunal that is taken into consideration. The DUTCO decision only concerns that latter hypothesis in my view.

Mr. Francis Gurry gave us a comparative presentation of the various systems for organizing international arbitration. He highlighted the differences between the WIPO Rules and others, such as those of the ICC. What he said was altogether correct. However, as is often the case, there is a big step between the texts and practice.

Thus, Mr. Gurry pointed to the various ways of setting up the arbitration and presenting the memorandums. He showed that there are two differing approaches, one in two steps (the WIPO system) and the other which, by requiring a request and a response, places the parties immediately at the center of their dispute. It is correct that the ICC Rules require in Article 3 that the request should contain a presentation of the claimant’s wishes and the information such as to clearly establish the circumstances of the matter and that Article 4 gives the respondent a period of thirty days to file his memorandum in reply. However, in practice, memorandums exchanged during this first stage are relatively incomplete and frequently of very varying value. This is due to the fact that, in international arbitration, those involved are from different countries and, above all, from very differing legal systems where memorandums that institute proceedings are conceived in extremely varying manners. In ICC practice, the first exchange of memorandums enables above all the instrument of mission to be established (a system that has frequently been criticized, but which is most useful). The arbitration tribunal will then arrange for the exchange of subsequent memorandums by giving instructions to the parties and thereby obtaining a degree of unity in the presentation of the memorandums. This system has an advantage for the arbitration tribunal initially, but also for the parties. That is why I appreciate the system planned by the WIPO Rules, although I note that the ICC practice is frequently comparable.

I will come to a stop here, not because there are no other subjects to be approached, but to enable the participants in this seminar to ask those questions of concern to them.

 

Commentary - Eric Schwartz
Discussion

 

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