Lesson 5 - Arbitration
Tuesday, 3 October 2023
International Commercial Arbitration:
an introduction
Benjamin Gottlieb
Schellenberg Wittmer Ltd
Content of the presentation
I. Introduction to arbitration
i. Definition of arbitration
ii. Regulatory framework of arbitration
iii. Different types and fields of arbitration
iv. Other forms of dispute resolution
v. Arbitrability
vi. Facts on international commercial arbitration
vii. Why arbitrate?
II. Arbitration agreement
i. Arbitration agreement
ii. Pathological arbitration clauses
III. Challenge of jurisdiction
IV. Procedure of an arbitration
V. Recognition and enforcement of an arbitral award
VI. Legal research
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Definition of arbitration
Definition:
“A private method of settling disputes by chosen individuals,
based on the agreement between the parties.”
“In international arbitration there are no national flags or other
symbols of state authority but simply a group of people seated
around a row of table, in a room hired for the occasion. To an
outsider, it would look as if a conference or business meeting
was in progress.”
Key elements of arbitration:
▪ Contractual form of dispute resolution (arbitration agreement)
▪ Before a (private) panel (arbitral tribunal)
▪ The arbitrator/s is/are usually appointed by the parties
▪ Final and binding award
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Regulatory framework of arbitration
Regulatory framework in international commercial arbitration:
▪ International Conventions
- New York Convention for recognition and enforcement of the arbitral
award (the “NYC”)
- European Convention on International Commercial Arbitration
▪ National Arbitration Legislation (lex arbitri)
the law of the seat of an arbitral tribunal ≠ the law governing the merits
▪ Arbitral Rules (Institutional Rules / UNCITRAL Arbitration Rules)
▪ Existence of delocalized or a-national arbitration?
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Different types and fields of arbitration
• National and international arbitration
• Ad hoc and institutional arbitration
• Various fields of arbitration:
▪ International commercial arbitration (sales, construction, agency
etc.)
▪ Arbitration in sports
▪ Bilateral Investment Treaties (BIT)
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Other forms of dispute resolution
• State court proceedings (litigation)
• Alternative dispute resolution (ADR)
▪ Mediation
▪ Conciliation
▪ Expert determination
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Arbitrability
Arbitrability ratione materiae:
What disputes may be settled by arbitration?
Subjective ratione personae:
Who may settle disputes by arbitration?
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Facts on international commercial
arbitration
International commercial arbitration is “the ordinary and normal
method of settling disputes of international trade”.
International Chamber of Commerce (ICC)
1986: 344 requests for arbitration
2003: 580 requests for arbitration
2009: 817 requests for arbitration (2095 parties from 128 countries were involved)
Worldwide, 2,282 parties were involved in ICC Arbitration cases from 135 countries in 2018.
Newly registered cases in 2018 represented an aggregate value of US$ 36 billion, with an
average amount of US$ 45 million in dispute. The aggregate value of all pending disputes
before the Court at the end of the year was US$ 203 billion, with an average value of $131
million and a median value of US$ 10 million. With the exception of 2016, which included 135
related small-claim cases arising from a single collective dispute, these statistics represent a
new record for ICC Arbitration cases.
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First exercise
Find as many arguments as possible in favor and
against arbitration.
(Time: 10 minutes)
Why arbitrate?
Pros Cons
• Opportunity to choose the place • Limited powers of the arbitrators
of arbitration • Conflicting awards
• Opportunity to choose the • Costs
members of the arbitral tribunal • Less published court decisions /
• Enforceable award Less legal certainty
• Flexibility of arbitral proceedings
• Confidentiality
• Less time-consuming
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Arbitration agreement (1)
Definition according to art. II (1) NYC:
“Each Contracting State shall recognize 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,
concerning a subject matter capable of settlement by arbitration.”
Foundation stone of every arbitration
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Arbitration agreement (2)
Core elements of an arbitration agreement:
▪ Agreement of the parties to arbitrate
▪ Definition of the dispute/legal relationship to be resolved by
arbitration
Additional elements:
▪ Seat/place of arbitration
▪ Ad hoc or institutional arbitration
▪ Composition of the arbitral tribunal
▪ Applicable law on the merits
▪ Language of the arbitration
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Arbitration agreement (3)
Validity of the arbitration agreement:
▪ Compliance with the form provided by the lex arbitri
▪ The parties have agreed on the essential elements of an arbitration
agreement
▪ The arbitration agreement does not violate any mandatory law of the lex
arbitri
▪ The subject-matter of the dispute is arbitrable
▪ The parties were able to enter into an arbitration agreement
Different kinds of arbitration agreements
▪ Arbitration clause
▪ Agreement to submission to arbitration
▪ Multi-party arbitration clauses
Termination of the arbitration agreement
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Pathological arbitration clauses
Pathological arbitration clauses
Typical errors made in arbitration clauses:
▪ The reference to an arbitration institution is incorrect
▪ There is a problem with the appointment of the arbitrator
▪ The parties have chosen several sets of arbitration rules
▪ The agreement to arbitrate appears to be optional
Case law on pathological arbitration clauses:
▪ “Arbitration: Hamburg, West Germany”
▪ “Eventual arbitration: Arbitration Chamber of London”
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Second exercise (1)
1. Where could be the problems in the following
two arbitration clauses?
2. What would you decide?
(Time: 10 minutes)
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Second exercise (2)
1. “The parties agree that any dispute or difference which may arise out
of this Agreement or the execution or interpretation of any of the
clauses hereof shall be settled amicably. If such dispute or difference
cannot be settled in the aforementioned manner they shall be finally
settled under the Rules of Conciliation and Arbitration of the Zurich
Chamber of Commerce, Zurich/Switzerland, in accordance with the
UNCITRAL Arbitration Rules. The number of arbitrators shall be
three (3). ICC shall be the appointing authority acting in accordance
with the rules adopted by ICC for that purpose.” [BGE 130 III 66]
2. “Disputes may be dealt with as provided under paragraph 1.8 of the
RIBA Conditions [arbitration rules] but shall otherwise be referred to
the English Courts.” [Commercial Court, Queen’s Bench Division, 22
November 1999]
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Challenge of the jurisdiction
Partial or total challenge of jurisdiction
Reasons:
- The contract in which the arbitration agreement is found is null and void
- The dispute is outside the scope of the arbitration agreement
- The dispute is not arbitrable
Concept of “competence-competence”
Doctrine of “separability”
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Procedure of an arbitration
ICC Arbitration No. 15XX/JHN
B. PLC vs S AG
Provisional Time-Table
Date Activities Parties/Tribunal
29 October 2022 Request for Arbitration Claimant
5 January 2023 Reply to Request for Arbitration Respondent
16 December 2022 / Confirmation of the Arbitrators ICC
21 January 2023 by the ICC
24 March 2023 Organizational Hearing as to the Terms Parties/Tribunal
of Reference and Time-Table
24 March 2023 Terms of Reference Parties/Tribunal
25 May 2023 Detailed Statement of Claim Claimant
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Procedure of an arbitration
20 July 2023 Detailed Statement of Defense Respondent
29 September Detailed Reply Claimant
2023
11 January Detailed Rejoinder Respondent
2024
15 February Simultaneous submission of written witness Parties
2024 statements
22 February Pre-hearing conference call (preparation of Parties/Tribunal
2024 witness hearing)
9 / 10 March Hearing for the purpose of examination of Parties/Tribunal
2024 witnesses
20 March 2024 Transcript of the hearing Tribunal
30 April 2024 Post-hearing briefs Parties
30 June 2024 Draft Award to the ICC Tribunal
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Recognition and enforcement of an arbitral
award
New York Convention for recognition and enforcement of the
arbitral award (the “NYC”)
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Legal Research – choice of books and web-
pages on international arbitration
• BERGER, BERNHARD/KELLERHALS, FRANZ, International and domestic arbitration in
Switzerland, 4th., Berne 2021.
• BORN, GARY B., International Commercial Arbitration, 3rd ed., vol. I,II and III,
Austin/Boston/Chicago/New York/The Netherlands 2021.
• FOUCHARD PHILIPPE/GAILLARD EMMANUELLE/GOLDMANN BERTHOLD,
Fouchard/Gaillard/Goldmann on International Commercial Arbitration, The
Hague/Boston/London 1999.
• POUDRET JEAN-FRANÇOIS/BESSON SÉBASTIEN, Comparative Law of International
Arbitration, 2nd ed., London/Zurich 2007.
• REDFERN ALAN/HUNTER MARTIN/BLACKABY NIGEL/PARTASIDES CONSTANTINE, Redfern
and Hunter on International Arbitration, 7th ed., Oxford 2022.
• LEW , JULIAN D.M./MISTELIS, LOUKAS A./KRÖLL, STEFAN M., Comparative international
commercial arbitration, The Hague 2003.
• www.kluwerarbitration.com
• www.westlaw.com
• www.iccwbo.org (information on the ICC incl. ICC-rules) and
www.iccwbo.org/court/arbitration/id4096/index.html (for cases of the ICC)
• www.uncitral.org; Homepage of the United Nations Commission on International Trade
Law, contains CLOUT = Case Law on UNCITRAL Texts
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