20 January 1995, Geneva, Switzerland
Commentary: The Conduct of Arbitral Proceedings under the Rules of Arbitration Institutions; The WIPO Arbitration Rules in a Comparative Perspective
(Articles 48 to 58 and 73 to 76)
by Michael Schneider
Etude Lalive & Partners, Geneva
Gerald Aksen has spoken so eloquently about the general framework of these Rules, their objectives and the drafting philosophy that I do not dare compete with him. I would rather take a different approach and examine specifically some of the individual clauses and comment on the particularities which I have observed.
When one reads the WIPO Arbitration Rules, one notes that, in many aspects, these Rules correspond to standard practice. Marc Blessings paper has shown this well. For the other aspects, where the Rules go beyond standard practice, I would distinguish three categories of rules: Firstly, there are some rules which regulate matters which, in my view, need not really be regulated in the published rules. Then, there are a number of rules which appear as useful developments of the existing practice or which are even innovative. Finally, there are a few rules with respect to which I have some reservations.
I first turn to the first category, rules regulating matters which, in my view, need not really be regulated.
There is for instance a series of articles on evidence. Jan Paulsson has discussed this morning the Rules on Experiments (Article 49), on Site Visits (Article 50) and on Agreed Primers
(Article 51). With the exception of the provision on Site Visits, rules of this type normally are not found in arbitration rules and, as Jan has said, one probably could expect an arbitrator to regulate such matters himself or herself. If I understood Jan correctly, the intention of the drafters was to show that they were responsive to the particularities of this type of arbitration. But I would ask myself whether it is really necessary to show such responsiveness by regulating in the rules matters which the arbitrators may very well handle themselves on a case-by-case basis. And I have noted already a potential difficulty in interpretation.
The manner in which Jan presented the Rule on Experiments is not exactly that in which I would read Article 49: indeed, there may be a disagreement between Nick Carter and the Drafting Committee. I had understood Article 49 in the sense that the experiments, by the time they are announced to the arbitral tribunal, have already been conducted. They are not, as Jan Paulsson explained, experiments which a party intends to perform under the supervision of the arbitral tribunal and the other party. Had the rules addressed this latter situation, they might perhaps have been useful in providing a mechanism for conducting experiments as part of the arbitration procedure. But, as I said, this is not what Article 49 deals with. It concerns experiments which have been already performed. The reports on these experiments are evidence like any other document and no particular rule would have been required for them.
Another article which may be taken as an example of over-regulation and the risks which it carries concerns witness evidence. Here again, Article 54 for the most part sets out what is normal international arbitration practice. However, it regulates matters which normally are left to the arbitrator who deals with them according to the circumstances of each arbitration.
The risk of regulating these aspects in a general manner can be seen, for instance, in paragraph (e) of Article 54 which says that a party shall be responsible for the practical arrangements, costs and availability of the witnesses which it calls. This is indeed what normally happens in an arbitration; but when it is expressed as a rule, this statement is inadequate, since it fails to take account of the situations where the party cannot be responsible for the availability of the witness because he is not under that partys control. In such a situation, a party would wish to turn to the arbitral tribunal which, under other types of arbitration rules where the matter is not regulated, can provide the necessary assistance by calling the witness or, in some cases, by turning to the courts to subpoena the witness to appear.
It seems now that under the WIPO Rules, if they were interpreted strictly, the arbitral tribunal might feel prevented from making such arrangements because the rule says that this is the partys responsibility. I do not think that this was the intention of the drafters of the rules; but it shows that, by regulating matters in too much detail, rules can become more restrictive than really intended.
The second category of rules where the WIPO Arbitration Rules differ from others are those which I find to be useful developments of existing practice or innovative solutions. Here are a few examples:
It is useful for the Rules to require expressly that the relief sought be stated in the Request for Arbitration and in the Statement of Claim (Article 9 (v) and Article 41 (b)). It is indeed a matter which occasionally gives rise to difficulties for arbitrators and it is to be welcomed that parties are reminded of this requirement.
It is also helpful for the Defendant to be reminded that its Statement of Defense "shall reply to the particulars of the Statement of Claim" (Article 42 (b)). This might appear obvious but occasionally parties are negligent and need the reminder in the Rules.
Mention has been made earlier today of the provision concerning security: the arbitrators may order such security both with respect to the costs of the procedure and with respect to the payment of the claims or counter-claims which the Arbitral Tribunal might award (Article 46 (b)). It is good that this has been stated and one may expect that, with respect to security for costs of the procedure, the English courts would not be prompted to interfere in a WIPO arbitration as they did in an ICC arbitration. There is one point, however, in this respect where an omission seems to have occurred: Article 46 (d) provides that a party is not precluded from addressing itself to the courts with requests for a variety of provisional measures and for the purpose of implementing interim measures ordered by the arbitral tribunal. Among these measures, one finds the security for the claims but, surprisingly, not security for the costs for the proceedings. Presumably, the provision has to be construed as follows:
With respect to a request seeking security for the claims which may be awarded by the arbitral tribunal, a party may address itself both to the arbitral tribunal and to the courts; concerning the security for costs of the proceedings, a party may only turn to the arbitral tribunal. However, I am not sure that I understand the reason for this differentiation between the two types of measures.
Particularly useful are, in my opinion, the mechanisms for assuring expeditious proceedings. Gerold Herrmann will mention these mechanisms. I should perhaps qualify the general approval here by pointing out that the periods stipulated in the rules appear as somewhat short. In particular the 30 days allowed for the Respondents Statement of Defense may not be enough, if it is counted from the date when the Statement of Claim is submitted. The Claimant may have taken many months in preparing this statement and the Defendant may have difficulties in preparing his reply in 30 days. But the matter is not very serious since the arbitral tribunal may prolong the period and, in the circumstances, should not hesitate to do so.
The really interesting mechanism concerning acceleration of the procedure is the Status Report which the arbitrators have to provide at regular intervals if the proceedings are delayed (Article 63 (b)). The effect of this rule is reinforced by Article 23 (a) which states that the arbitrator, by accepting his appointment, is deemed to have undertaken to "make available sufficient time" to the case. I believe that this is all that can and should be done by the rules to assure expeditious proceedings by the arbitrators. With respect, the Drafting Committee should be commended for an innovative solution without over-regulating.
And now to the third category of clauses, those which might call for some reservations. I would like to mention two such clauses:
One of them concerns the confidentiality advisor, as provided for in Article 52 (d). Jan Paulsson explained the background of this clause and I share his sympathy for the difficult situation in which an arbitrator might find himself. The invention of a confidentiality advisor probably is a useful innovation in the particular circumstances of intellectual property disputes: practice will show.
According to the Rules, such an advisor has two functions: one is set out in paragraph (e) of Article 52 which stipulates that the advisor is to report to the arbitral tribunal. This could, indeed, be a useful service to be provided to an arbitral tribunal.
But there is also another function set out in the preceding paragraph where it is said that the arbitral tribunal may appoint the advisor to "determine" whether information is to be classified as confidential and "to decide" on the conditions of disclosure. Here, I must raise objections. Determinations and decisions are prerogatives and duties of the arbitral tribunal; occasionally, they may be delegated to the chairman alone, but they should not be delegated to some advisor. In any event, if one were prepared to admit that the advisor may make such determinations and decisions, he or she should be subject to the same requirements of independence and impartiality; the same procedures with respect to challenge should be applicable to him as are to the arbitral tribunal itself.
With respect to the hierarchy of rules of which Marc Blessing spoke this morning, I understand now from his explanations that the WIPO Center may decide that certain agreements by the parties, derogating from the rules, are not acceptable to the Center. In such a case, the arbitration would no longer be a WIPO Arbitration. It is understandable that the Center reserves for itself such a possibility. I would only suggest that the Center give some consideration to the question how the derogating agreement will be brought to its attention and how the Center then will notify the arbitral tribunal and the parties of its decision. The matter should be clarified since the parties and the tribunal would find themselves in an embarrassing situation if, at the end of the arbitration, for instance, when a request is made for the notification of the award, the Center declares: "No, we have decided that you have stepped out off the limits of our Rules. Therefore, this is not a WIPO arbitration and we are not concerned with it."
Finally, a brief remark on another aspect of confidentiality which relates to the "existence of the arbitration" (Article 73). It was certainly useful that the matter was considered by the drafters of the Rules. But I believe that they have gone somewhat too far in restricting the conditions under which the existence of an arbitration may be disclosed to third parties.
The example given by Jan Paulsson serves well to illustrate the risks of this over-restrictive provision: in negotiations for the sale of an enterprise or a merger, the seller is engaged in an arbitration and informs the buyer of the existence of an arbitration. The seller assures the buyer that the claims made in the arbitration are wholly without merit and that he is confident that these claims will be rejected. The prospective buyer may not be prepared to take the sellers word for it and might wish to see the pleadings and the evidence produced in the arbitration. Under the Rules, as they are now framed, the seller would be precluded from giving such access to the files. Moreover, the rules say that the party in the arbitration which makes such a disclosure about the existence of the arbitration must inform the arbitral tribunal and the other party of the circumstances under which the disclosure was made. In other words, the rule requires one of the parties to inform its opponent in the arbitration that it entered into merger negotiations and that, in these negotiations, it provided information about the arbitration. I do not think that a party in merger negotiations would like to inform his opponent in an arbitration of such negotiations and I do not think that it should be required to do so.
Here again, a little bit less regulation might have been better.
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