UNCITRAL Arbitration Rules 2010 & 1976: A Comparison- Part IV

This post is the fourth part in the series of posts on the analysis of the new features in the UNCITRAL Arbitration Rules, 2010. This post deals with provisions pertaining to the constitution of the arbitral tribunal and the independence and impartiality of arbitrators. Previous posts of this series can be accessed from here, here and here.

Appointment of Arbitrators by List Procedure:
In the previous post, we had mentioned that the UNCITRAL Arbitration Rules provides for the constitution of the arbitral tribunal by an appointing authority.  In this part of the post, we describe how the appointing authority appoints the arbitrator as per the New Rules. Appointment of the sole arbitrator by the appointing authority is by "list procedure". A typical list procedure system consists of one party to the arbitration circulating a list of arbitrators to the other. However, under the Rules, it is the appointing authority which would communicate a list of arbitrators to each of the parties. Once the list is given, the parties are to delete names from the list which they consider inappropriate and also allot priority to the arbitrators they approve of. The appointing authority would appoint such the sole arbitrator whom both parties have agreed to, in accordance with the priority allocated by them. The selection in the list is to be done within the time limits specified in the Rules.

It is not that the list procedure is compulsory. The parties may agree that list procedure should not be followed. In fact, the appointing authority has the discretion not to employ the list procedure in case it deems it inappropriate to do so. Also, if the appointment cannot be made even after following the list procedure, the appointing authority is given the discretion to appoint a sole arbitrator.

Commentators suggest that although the list procedure is slower as compared to direct appointment, it offers an element of choice to the parties as compared to direct appointment by the appointing authority [ALAN REDFERN ET AL, LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 224 (2004)] Institutions such as the ICDR and the Netherlands Arbitration Institute employ the list procedure.

The list procedure was in vogue even under the 1976 Rules for the constitution of a sole arbitrator tribunal. Provisions under the 2010 Rules on the appointment of arbitrators are not drastically different from the 1976 Rules.

On the appointment procedure in the UNCITRAL Arbitration Rules, some commentators have opined:

“[T]he Rules present neither a costly nor a lengthy process… From the date of the notice of arbitration this process would require an absolute minimum, 90 days and more likely 150 to 180 days, and may require the payment of the costs of appointing authority. Such periods of time do not see burdensome compared to, for example, the time a party might have to wait on the docket of many municipal courts.”

[D. CARON, L CAPLAN & M PELLONPAA, THE UNCITRAL ARBITRATION RULES: A COMMENTARY 331 (2006)]

Some commentators disagree to this view. According to Gary Born, appointment of arbitrators could become complicated under the UNCITRAL Arbitration Rules if parties did not agree on the appointing authority. Born’s chief complaint is that in such a case, there are numerous opportunities for the parties to comment or protest the appointment of an arbitrator. Born also concedes that the Permanent Court of Arbitration, which is the authority appointing the appointing authority, has been discharging is functions well. He also states that the appointing authorities have also discharged their functions through the list procedure reasonably well, “although the delays that are inherent in the system can sometimes cause frustrations or injustice to the claimants.” [GARY B BORN, INTERNATIONAL COMMERCIAL ARBITRAITON VOL. II 1412-1413]

Constitution of a Three Member Tribunal:
Article 9 provides for the constitution of a three member tribunal. Article 9(1) provides for the typical procedure in such cases: each party has to appoint one arbitrator and the two arbitrators so appointed would appoint the third arbitrator. In cases where a party fails to appoint an arbitrator within thirty days from receipt of notification of appointment of the arbitrator, Article 9(2) provides that the other party could approach the tribunal for appointment of the arbitrator. Article 9(3) provides that in case both parties appoint arbitrators in time but the two arbitrators fail to agree on the third arbitrator, the appointing authority would appoint the presiding arbitrator in the same way as it appoints the sole arbitrator. It must be noted that Article 9(2) does not provide how the second arbitrator is to be appointed by the appointing authority. Whether the appointing authority should arbitrarily appoint an arbitrator or it should follow the list procedure is not clear.

Multi-Party Arbitration:
Article 10 deals with multi-party arbitration. Multi-party arbitrations are arbitrations involving more than two parties. Between 2002 and 2005, about one-third of the cases that ICC’s International Court of Arbitration dealt with were multi-party arbitrations (p. 7, Jan Paulsson & Georgios Petrochilos, Revision of the UNCITRAL Arbitration Rules). In such cases, constitution of the arbitral tribunal through consensus becomes a challenge in view of the number of parties involved. In case of tri-partite contracts, the typically used procedure is for each of the three parties to appoint one arbitrator and the three arbitrators so appointed to appoint two more arbitrators. Parties might consider it expensive to have an arbitral tribunal with more than five members. 

The 2010 Rules incorporate the most common solution to deal with constitution of arbitral tribunal in multi-party arbitrations. Article 10(1) provides for appointment in cases were three arbitrators are to be appointed. It provides:

“For the purposes of article 9, paragraph 1, where three arbitrators are to be appointed and there are multiple parties as claimant or as respondent, unless the parties have agreed to another method of appointment of arbitrators, the multiple parties jointly, whether as claimant or as respondent, shall appoint an arbitrator.”

In cases where parties have specifically provided that the number of arbitrators in the multi-party arbitrations shall be other than one or three Article 10(2) of the Rules provide that parties have to necessarily specify the procedure for appointment in their arbitration agreements. 

If no procedure is agreed upon in the arbitration agreement for constitution of the tribunal, whether in a multi-party arbitration or otherwise, the appointing authority has been given the authority under the Rules to constitute the entire arbitral tribunal by itself and designate one arbitrator so appointed as the presiding arbitrator.

Impartiality and Independence of the Arbitral Tribunal:
Under Article 9 of the Old Rules the prospective arbitrator was only bound to disclose circumstances that were likely to give justifiable doubts as to his or her independence or impartiality to the parties. In addition to incorporating the above obligation, the New Rules obligate the prospective arbitrator to disclose such circumstances to all the members of the arbitral tribunal. This obligation of the prospective arbitrator subsists, as per the New Rules, from the time when a party approaches the prospective arbitrator till the end of arbitral proceedings (Article 11). Further, unlike the Model Law (Article 12), the Old Rules was not specific on whether such obligation was a “continuing” obligation. The New Rules clarifies that the obligation is “ongoing”. 

The Working Group thought it fit to consider if the obligation to disclose should be in writing [para 48, A/CN.9/WGII/WP.143 - Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules]. A suggestion was mooted to have a model statement of declaration of disclosure of circumstances likely to give justifiable doubts as to the independence or impartiality of the arbitrator [Para 49, A/CN.9/WG.II/WP.145 - Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules]. The Working Group adopted two statements, one containing a declaration that there is no such circumstance to disclose, and the other providing that notwithstanding any past circumstances, the arbitrator would act in an independent and impartial manner. The purpose of the second statement was that even if there were circumstances that were likely to give justifiable suspicions of independence or impartiality of the arbitrator, the parties could assess whether to continue with the arbitrator or not. The Model Statements read:

“Model statements of independence pursuant to Article 11 of the Rules

No circumstances to disclose: I am impartial and independent of each of the parties and intend to remain so. To the best of my knowledge, there are no circumstances, past or present, likely to give rise to justifiable doubts as to my impartiality or independence. I shall promptly notify the parties and the other arbitrators of any such circumstances that may subsequently come to my attention during this arbitration.

Circumstances to disclose: I am impartial and independent of each of the parties and intend to remain so. Attached is a statement made pursuant to article 11 of the UNCITRAL Arbitration Rules of (a) my past and present professional, business and other relationships with the parties and (b) any other relevant circumstances. [Include statement] I confirm that those circumstances do not affect my independence and impartiality. I shall promptly notify the parties and the other arbitrators of any such further relationships or circumstances that may subsequently come to my attention during this arbitration.”

In the Fifty Second session of the II Working Group, a proposal was mooted to have a statement by the arbitrator of readiness to conduct the arbitration diligently, efficiently and in accordance with the UNCITRAL Rules [Para 33, A/CN.9/WG.II/WP.157/Add.2 - Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules]. The proposal was accepted and the statement was incorporated in the Annex to the Rules as a part of the statement on independence.

“Note — Any party may consider requesting from the arbitrator the following addition to the statement of independence:

I confirm, on the basis of the information presently available to me, that I can devote the time necessary to conduct this arbitration diligently, efficiently and in accordance with the time limits in the Rules .”

More on the Rules in the another post.