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

This post is the fifth part in the series of posts on the analysis of the new features in the UNCITRAL Arbitration Rules, 2010.  Previous posts of this series can be accessed from here, here, here and here.

Challenge and Replacement of Arbitrator:
The provisions pertaining of challenge of an arbitrator are virtually similar to the Old Rules. However, there is one addition in the New Rules. Where a challenge of an arbitrator is made by a party and the challenge is notified to the tribunal and to other parties, fifteen days time has been given under the New Rules for:

1. the parties to agree to the challenge, or
2. the challenged arbitrator to withdraw

If neither of these happens, the challenging party is free to pursue the challenge and seek a decision from the tribunal on the challenge within thirty days from the date of the notice of challenge [Article 13(4)].

The provisions pertaining to replacement of arbitrator have been streamlined. The procedure for appointment of the substitute arbitrator would be the same as that for appointment of an arbitrator. However, on application by a party, if the appointing authority is of the opinion that it ought to deprive a party of its right to appoint a substitute arbitrator, it may do so. In that case, the appointing authority might, after giving opportunity of being heard to the parties and after obtaining the views of the arbitrators, either appoint a substitute arbitrator or if the need for replacement occurs after the hearings are over, authorize the existing tribunal to continue with the arbitral proceedings without appointing another arbitrator.

Repetition of hearings on replacement of an arbitrator:
The previous position as regards repetition of hearings was that the hearings would have to commence afresh if the presiding arbitrator had to be replaced (Article 14). But in case of replacement of other arbitrators, it was up to the discretion of the arbitral tribunal to decide to commence fresh proceedings or to continue with the proceedings. During the deliberations of the Working Group, it was suggested that the new provisions pertaining to repetition of hearings due to replacement of arbitrators be based on Article 14 of the Swiss Rules of International Arbitration, which provided:

“If an arbitrator is replaced, the proceedings shall as a rule resume at the stage where the arbitrator who was replaced ceased to perform his functions, unless the arbitral tribunal decides otherwise.”

The Swiss Rules of International Arbitration, also known in the industry as the Swiss Rules, is based on the UNCITRAL Arbitration Rules, 1976, with certain modifications. Prior to the introduction of Swiss Rules, different Chambers of Commerce and Industry in Switzerland had their own arbitration rules. In 2004, these Chambers of Commerce and Industry, with a view to promote institutional arbitration in Switzerland, joined together and uniformly adopted the Swiss Rules of International Arbitration, thereby replacing their own arbitration rules (See, Introduction to the Swiss Rules of International Arbitration).

The suggestion to use the Swiss Rules was accepted and the relevant provision in the new Rules is based on the said provision of the Swiss Rules. Thus, under the new Rules, the distinction between the presiding arbitrator and the other arbitrators has been abolished. The procedure under the New Rules is that the proceedings would continue from the stage when the replaced arbitrator ceased to perform his functions, unless the arbitral tribunal decides otherwise.

Immunity to Arbitrators and Others:
Considerable discussions took place on the scope of immunity to arbitrators and their appointees. During the initial stages of the revision of the UNCITRAL Rules, it was proposed to either limit or exclude the liability of the arbitrators through specific provisions (Para 136, Report of the Working Group on Arbitration and Conciliation on the work of its forty-fifth session A/CN.9/614). Apart from the arbitrators, the UNCITRAL felt that such immunity should be granted to even the appointing authority under the Rules (Para 39-40, Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules A/CN.9/WGII/WP.143/Add.1).

On the scope of the immunity, the UNCITRAL contemplated two approaches. The first was to have an unequivocal waiver by the parties similar to the ICC Rules or the Vienna Rules. Article 34 of the ICC Rules of Arbitration provides:

“Neither the arbitrators, nor the Court and its members, nor the ICC and its employees, nor the ICC National Committees shall be liable to any person for any act or omission in connection with the arbitration.”

Article 8 of the Rules of Arbitration and Conciliation of the International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna (Vienna Rules) states:

“Liability of the arbitrators, the Secretary General, the Board and its members and the Austrian Federal Economic Chamber and its employees for any act or omission in relation to arbitration proceedings, insofar as such liability may be admissible by law, shall be excluded.”

The other approach, consistent with the Introductory Note to the IBA Rules of Ethics for International Arbitrators (1987), the London Court of International Arbitration Rules and the American Arbitration Association Rules was to grant a similar immunity but to exclude intentional wrongdoing. The UNCITRAL felt that the current practice in several countries of introduction of stricter standards of liability for acts and omissions of judges should be taken into consideration in deciding on the scope of arbitrator immunity (See the “manifest bad faith” standard proposed by Paulsson & Petrochilos (p. 53, Jan Paulsson & Georgios Petrochilos, Revision of the UNCITRAL Arbitration Rules). It was also felt that the interests of the parties should not be compromised by adopting an overly protective arbitral immunity clause. At the same time, arbitrators would also have to be protected against claims of negligence or fault by parties against arbitrators. The UNCITRAL held:

“It was generally agreed that any provision that might be introduced in the Rules to exonerate arbitrators from liability should be aimed at reinforcing the independence of arbitrators and their ability to concentrate with a free spirit on the merits and procedures of the case. However, such a provision should not result or appear to result in total impunity for the consequences of any personal wrongdoing on the part of arbitrators or otherwise interfering with public policy.”

(Para 39, A/CN.9/646 - Report of the Working Group on Arbitration and Conciliation on the work of its forty-eighth session)

In the end, the UNCITRAL decided to take the more common approach of granting limited immunity to the arbitrators. (Para 39-40, Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules A/CN.9/WGII/WP.143/Add.1).

Thus, as per Article 16 of the 2010 Rules, parties are deemed to have waived of all claims against the arbitrator, the appointing authority or any person appointed by the arbitral tribunal, to the extent permitted by the applicable law. The only exception to this waiver rule is intentional wrongdoing.

Tribunal to Act Fairly and Efficiently:
One of the most fundamental provisions under the Old Rules was the directive to the tribunal to act fairly and give the parties full opportunity to present its case. The Working Group considered whether that the term “full” had to be dropped from the said provision. (Para 76-77, Report of the Working Group on Arbitration and Conciliation on the work of its forty-fifth session A/CN.9/614) Secondly, it was also suggested that the phrase “at any stage of the proceedings” implied that the tribunal should grant an opportunity to a party to present its case at every stage, even if such request by that party was inappropriate. The phrase “at any stage of proceedings” was not used in the Model Law (See Article 18). Finally, it was decided to use the term “reasonable” instead of “full” and the phrase “at an appropriate stage of proceedings” instead of “at any stage of the proceedings”. Further, the Rules obligate the tribunal to avoid unnecessary delay and expenses and provide for a fair and efficient arbitral process [Article 17(1)].

Preliminary Hearing:
A preliminary hearing is also called preparatory meeting or preparatory consultations. It is standard procedure to have a preliminary hearing in which several fundamental aspects pertaining to arbitration such as language of arbitration, the governing law of arbitration, the governing law of contract, the procedure for arbitration, time-limits for submissions of pleadings, fee of arbitrators etc are decided. The New Rules provides for such a hearing to be conducted by the tribunal to decide the provisional timetable of the arbitration, after hearing the views of the parties. This provisional timetable is not meant to be sacrosanct and the tribunal may, after hearing the parties, extend or shorten time periods specified in the provisional timetable.

Joinder of Third parties:
Right from the beginning of the revision of the Rules, the Working Group, inspired by Article 22.1(h) of the LCIA Arbitration Rules, felt that the New Rules should contain a provision on joinder of third parties (para 6, A/CN.9/WG.II/WP.145/Add.1 - Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules). Article 22.1(h) of the LCIA Rules provides:

“Unless the parties at any time agree otherwise in writing, the Arbitral Tribunal shall have the power, on the application of any party or of its own motion, but in either case only after giving the parties a reasonable opportunity to state their views:
...
(h) to allow, only upon the application of a party, one or more third persons to be joined in the arbitration as a party provided any such third person and the applicant party have consented thereto in writing, and thereafter to make a single final award, or separate awards, in respect of all parties so implicated in the arbitration.”

But the main focus of discussions during the revision was the issue of consent of the party who is to be joined as a party. The Working Group was of the opinion that the consent of the party proposed to be joined as a party (hereinafter, “Proposed Party”) must necessarily be taken in view of the fact that arbitration is based on consent of the parties (Para 121-126 A/CN.9/619 - Report of the Working Group on Arbitration and Conciliation on the work of its forty-sixth session). Hence, the Working Group noted that the Proposed Party must necessarily be a party to the arbitration agreement. The Working Group also noted that there need not be any express consent from the Proposed Party independent of the arbitration agreement. By the mere fact of acceding to the UNCITRAL Arbitration Rules, the party is deemed to have consented to the joinder provisions as well (Para 128-135 A/CN.9/665 - Report of Working Group II (Arbitration and Conciliation) on the work of its forty-ninth session). Apprehensions were raised that absence of express consent from the Proposed Party might pose problems at the stage of enforcement of the arbitral award. Hence, the Working Group decided to incorporate a safety valve for the Proposed Party- before the tribunal decides on the joinder, the Proposed Party (and even the parties to the proceedings) could submit to the tribunal that the joinder would prejudice it (Para 134 A/CN.9/665 - Report of Working Group II (Arbitration and Conciliation) on the work of its forty-ninth session).

Thus, as per Article 17(5) of the New Rules, three conditions must be satisfied for the tribunal to join one or more third parties to the arbitration proceedings:  

1. there must be a request from one of the parties. Here, the Rules is not clear whether the request may be made by a person who is not a party to the arbitration proceedings could apply to the tribunal for being joined as a party to the proceedings. In view of the fact that the Proposed Party had already consented to the joinder by acceding to the Rules, there is nothing that suggests that it might be the party proposing the joinder. But arbitrations are essentially private affairs and that party might not even know of the existence of the arbitration, or the means to communicate to the arbitral tribunal,
2. the person proposed to be joined as a party is a party to the arbitration agreement, and 
3. (iii) after giving an opportunity of being heard to all parties (including the person proposed to be joined as a party) the tribunal is of the opinion that the joinder would not prejudice any party.

Seat of Arbitration:
There is a difference between the seat of arbitration and the location of the arbitration proceedings. Seat or the Juridical Seat of Arbitration refers to the jurisdiction to which the arbitration is intrinsically connected. An arbitration cannot be delocalised, that is, it cannot be one which is unconnected to a legal jurisdiction. It has to belong to a jurisdiction, which is either agreed to by the parties or in the absence of such agreement, determined by the arbitral tribunal. However, the arbitral tribunal, may assemble for hearing in one or more locations during the course of arbitration for the sake of convenience. The latter affords certain amount of flexibility to the arbitral process. These two independent aspects have often been confused with each other. Hence, the Working Group initially felt that this distinction must be clearly spelt out in the revised Rules (Para 75-76, A/CN.9/WGII/WP.143 - Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules). Also see, p. 80-81, Jan Paulsson & Georgios Petrochilos, Revision of the UNCITRAL Arbitration Rules. Subsequently, however, the Working Group expressed doubts as to whether the revised Rules should contain terminology inconsistent with that of the Model Law (Para 89, Report of the Working Group on Arbitration and Conciliation on the work of its forty-fifth session A/CN.9/614). Another concern raised against clarification of the difference between seat and location of arbitration proceedings was that it might have “unintended consequences to existing contractual drafting practices”. (Para 141, Report of the Working Group on Arbitration and Conciliation on the work of its forty-fifth session A/CN.9/614).

Under the 1976 Rules, there was a requirement that the award be made in the place of arbitration [Article 16(4)]. This requirement has been done away with in the New Rules. Article 18(1) creates a legal fiction whereby the arbitral award is deemed to have been made in the place of arbitration.

Pleadings:
Under the 2010 Rules, the statement of claim should also contain particulars of legal grounds or arguments supporting the claim. This requirement was not there under the Old Rules. During the deliberations of the Working Group, it was initially suggested that the statement of claim should be accompanied by legal principles supporting the claim. However, it was felt that the term “legal principles” was too vague. Therefore, the Working Group decided to add the requirement of furnishing the legal grounds in the statement of claim.

The Notice of Arbitration could be treated as the Statement of Claim provided it complied with the requirements specified in Article 20(2). The requirements in Article 20(2) were that the Statement of Claim had to include the following:

1. The names and contact details of the parties;
2. A statement of the facts supporting the claim;
3. The points at issue;
4. The relief or remedy sought;
5. The legal grounds or arguments supporting the claim.

Under the 1976 Rules, it was not obligatory on the part of the Claimant to annex the essential documents which they rely upon in its pleadings, the rationale being that the Claimant would be interested in concluding the dispute resolution as early as possible and would therefore annex such documents to its pleadings. Article 20(4) of the 2010 Rules provide that the pleadings should be accompanied by the documents relied upon by the respective party.

The Secretariat of the UNCITRAL requested the Working Group in July 2006 to consider if there should be an obligation on the parties to annex all documents alongwith their respective pleadings (Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules A/CN.9/WGII/WP.143/Add.1). The Secretariat referred to the rules of World Intellectual Property Organisation and of the London Court of International Arbitration. Article 41(c) of the Rules of the World Intellectual Property Organisation provides:

“The Statement of Claim shall, to as large an extent as possible, be accompanied by the documentary evidence upon which the Claimant relies, together with a schedule of such documents. Where the documentary evidence is especially voluminous, the Claimant may add a reference to further documents it is prepared to submit.”

Article 15.6 of the LCIA Rules states:

“All Statements referred to in this Article shall be accompanied by copies (or, if they are especially voluminous, lists) of all essential documents on which the party concerned relies and which have not previously been submitted by any party, and (where appropriate) by any relevant samples and exhibits.”

The Working Group did not want a stringent provision for the following reason:

“Concern was expressed that the use of the word “shall” suggested that the claimant would be obliged to communicate a comprehensive statement of claimant and would be precluded from providing subsequent materials. To address that concern, it was suggested that the word “shall” be replaced by “should” in order to establish a standard for the contents of the statement of claim without imposing rigid consequences for departures from that standard.”

(Para 121-126 A/CN.9/619 - Report of the Working Group on Arbitration and Conciliation on the work of its forty-sixth session).

Ultimately it was agreed that the Rules should provide that the pleadings “should, as far as possible, be accompanies by all documents and other evidence”. It may be noted that this provision is not quite stringent. Practically, it may so happen that a party might find some relevant document after submission of its pleading. In such cases, Article 20(4) does not prevent a party from producing such additional documents.

In the Old Rules, Article 19(3) imposed a condition that a counter-claim or a claim for set-off should be based on the same contract. See, [Para 191, Polis Fondi Immobiliari Di Banche Popolare Sgr.P.A v. International Fund For Agricultural Development, an arbitration conducted under the aegis of the Permanent Court of Arbitration. Also see, Alson Dundes Renteln, Encountering Counterclaims 15 Denv. J. Int’l L. & Pol’y 379, 389-390 (1986-1987)]. The Secretariat to the UNCITRAL, citing Article 21(5) of the Swiss Rules of International Arbitration, suggested that the tribunal should have the power, especially in investment disputes, to consider counter-claims and claims for set-off even beyond the contract in respect of which the dispute has been referred to the tribunal (Settlement of commercial disputes: Revision of the UNCITRAL Arbitration Rules A/CN.9/WGII/WP.143/Add.1). Ultimately the requirement that to the counter-claim or set off should be from the same contract was deleted.

More on the Rules in the next post.

Call for Papers: The National Law School of India Review

The National Law School of India Review has asked us to publish this call for papers for their journal. Their call is reproduced below:

"The National Law School of India Review is now accepting submissions for its upcoming issue - Volume 24(1).The National Law School of India Review (NLSIR) is the flagship law journal of the National Law School of India University, Bangalore, India. The NLSIR is a bi-annual, student edited, peer-reviewed law journal providing incisive legal scholarship on issues that are at the forefront of contemporary legal discourse. Over the last 20 years, the NLSIR has regularly featured articles authored by judges of the Indian Supreme Court, Senior Counsel practicing at the Indian bar, and several renowned academics.

The most recent issue of the NLSIR, Vol. 23(1), featured contributions by Mr. Justice Altamas Kabir (Judge, Supreme Court of India), Professor Christopher Forsyth (Cambridge University), Professor Julian Roberts (Oxford University), Professor Lea Shaver (Yale Law School), Professor Ariel Ezrachi (Director, University of Oxford Centre for Competition Law and policy) and Mr. K. Swaminathan (Head of the Direct Tax Practice at Lakshmikumaran & Sridharan) among several others. Moreover, in August 2009, NLSIR attained the unique distinction of being the only Indian student-run law journal to be cited by the Supreme Court of India, inAction Committee, Un-Aided Private Schools v. Director of Education. NLSIR has also recently been cited in Justice R. S. Bachawat's Law of Arbitration and Conciliation, a leading treatise on arbitration law in India. 

Papers may be submitted as Long Articles (approximately 8000 words), Essays (approximately 5000 words) or Notes (approximately 2500 words). Submissions may be made to mail.nlsir@gmail.com. Queries regarding submission may be sent to the same email address. The last date for submissions is November 1, 2011. Formore information, please visit - www.nlsir.in."

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.

Roundup of Prominent Developments in India and Abroad on Arbitration

Union of India v. Krafters Engineers (Supreme Court of India)

In Union of India v M/s Krafters Engineers, the Supreme Court of India clarified the law on the power of the arbitrator to award interest when the contract prohibits it. See the comments in the Indian Corporate Law Blog and the Lex Arbitri Blog.

Jivraj v Hashwani (UK Supreme Court) Nurdin Jivraj v Sadruddin Hashwani is an important case decided (pdf) by the UK Supreme Court. The issue was whether an arbitration clause requiring that the arbitrators should be from a particular religious community was valid. The English Court of Appeal had previously held that such a requirement violated the English Employment Equality (Religion or Belief) Regulations 2003 and was therefore void. The Court of Appeal had also held since the arbitration clause became substantially different if the void portion of the arbitration was severed, the entire arbitration clause was void. The UK Supreme Court overturned the decision of the Court of Appeal and held that the Employment Equality (Religion or Belief) Regulations 2003 was not applicable as arbitrators were not employees under the Regulations but were independent providers of service. Comments on the judgement can be found in UKSC Blog, Kluwer Arbitration Blog, Indian Corporate Law Blog and Lex Arbitri Blog.

Barclays Bank v Nylon Capital (English Court of Appeal on Expert Determination)

 
In this case, the English Court of Appeal had to decide on the question as to whether the court should stay proceedings brought for a declaration as to the interpretation of an agreement for the reason that the issue falls within the domain of the expert appointed as per the expert determination clause in that agreement. The said clause provided that the expert shall determine the matters in dispute between the parties and such determination may include dispute as to the interpretation of any provision of the agreement or even his jurisdiction. Such determination was to be final and binding on the parties. The court decided as follows:

• Even if the agreement confers jurisdiction on the expert to decide a question pertaining to the jurisdiction of an expert, the court is the “final decision maker” on the question.
• In construction of arbitration clauses, there is a presumption that sensible businessmen intended that any dispute arising out of an agreement should be decided by the arbitral tribunal. However, there is no such presumption as regards expert determination clauses. Therefore, the question as to whether a matter was to be referred to an expert or not is a matter of construction of the expert determination clause with “no presumption either way”.
• It is an established principle that courts would not interfere with the determination of experts except in narrow circumstances. Courts would interfere where the expert determines the issue referred to him in a manner contrary to the mandate conferred upon him by the parties. Whether the expert had acted contrary to his mandate is a question of law.
• Unlike an arbitrator who is bound to proceed with fairness, an expert can determine how he can proceed, subject, of course, to any stipulation in the agreement.
• Where the court is asked to determine whether a dispute is within the expert’s jurisdiction and if the agreement provides that such a question should be decided by the expert, the court should decide, first, if there is a dispute; second, the court should decide if it is in the interests of justice and convenience that it should decide the dispute.
• When an expert determines questions pertaining to his jurisdiction, such determinations are not final even if the parties agree. Such determinations can always be challenged.
• Where a party challenges the jurisdiction of the expert to determine a dispute, the said party could approach the court and the court would determine the issue of jurisdiction of the expert.

Use of And/ Or in Legal Documents:

Indian Corporate Law Blog had a small post a few days back providing the link to an article on the use “And/ Or” in legal writing.

Kishanganga Arbitration:

Lex Arbitri has a post on the latest developments in the Kishanganga arbitration between India and Pakistan.