New rules of the International Commercial Arbitration Court
In the international arbitration community, 2007 is marked as the year of significant changes and amendments to the Rules of some of the main arbitration centers. Thus, the new Rules of the Arbitration Institute of the Stockholm Chamber of Commerce came into effect on 1 January 2007 and Singapore International Arbitration Center has been using its new Rules since 1 July 2007. This trend has emerged due to the tremendous and far-reaching development of new concepts and approaches in the field of international commercial arbitration worldwide. Ukraine is not an exception and has also joined this popular trend. On 17 April 2007 the Presidium of the Ukrainian Chamber of Commerce and Industry approved the new Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (“New ICAC Rules”), which came into effect on 1 June 2007 and apply to all cases registered with the ICAC after that date.
First of all, it is necessary to emphasize that the New ICAC Rules differ significantly from the old 1994 Rules. On examination of the New ICAC Rules, the influence of the Rules of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation is obvious. The Russian Federation revised its Rules in 2006. The content and approach of Russian and Ukrainian Rules are very similar, but still there are some differences. The adoption of the New ICAC Rules is a very positive step in the development of international commercial arbitration in Ukraine.
The New ICAC Rules are set out in an easy-to-read structure and in far better English than the old Rules. The new Rules are comprised of sections, paragraphs and articles rather than sections and articles in the old Rules. The core sections of the Rules are: General Provisions; Organization of the ICAC; Arbitration Procedure; Execution of the Arbitral Award; and Final Clauses.
There are substantial differences between the old Rules and the new one.
Jurisdiction of the Tribunal
The New ICAC Rules introduced significant changes with regard to the fundamental principle of competence/competence (kompetenz/kompetenz). The old Rules did not formerly recognize the principle stating that “[t]he question as to the competence of the Arbitration Court in every concrete case shall be decided by the President of the Arbitration Court.” The new Rules still allow the President of the ICAC to decide on the jurisdiction of the ICAC/or the tribunal or both, but only on the prima facie basis. In other situations, the Arbitral Tribunal will decide on its jurisdiction.
Revised Structure of the Presidium
The next feature of the New ICAC Rules is an updated organizational structure of the ICAC. Now, the main body of the ICAC is the Presidium, which comprises of the President and two Vice Presidents, and four members appointed by the Presidium of the Ukrainian Chamber of Commerce and Industry, who have been on the Recommendatory List of Arbitrators for over five years. This is some way different from the old Rules, where the Presidium comprised only of the President and 2 Vice-Presidents.
The Arbitral Procedure
Turning to the arbitration procedure, the New ICAC Rules provide that proceedings in the case shall be initiated by the Order of the ICAC President upon the filing of a Statement of Claim with the ICAC; the old Rules say that arbitral proceeding commence “by the filing a duly Statement of Claim” to the ICAC. Someone can think that is a step backwards because now commencement is in the hands of a third party, however, considering that at the commencement stage the Presidium decides only on the prima facie jurisdiction it seems quite reasonable.
Under the new Rules, when the Claimant insists on the initiation of arbitral proceedings and forwarding claim materials to the Respondent, and refers to the existence of an agreement of the parties on the jurisdiction of the ICAC, the ICAC President may, without prejudging the issue of existence, validity or scope of the arbitration agreement, accept the case into consideration by the ICAC, which amounts to commencement of the arbitration procedure. In that case, the issue of the ICAC jurisdiction shall be decided on by the Arbitral Tribunal.
In the article relating to the rectification of the Statement of Claim the following new approach has been introduced: “[w]here a Statement of Claim contains demands arising out of several contracts, it shall be accepted for arbitration, provided that there is an arbitration agreement covering all such demands as well as the fulfillment of obligations under these contracts cannot be separated under several claims. Otherwise the ICAC shall propose to the Claimant to separate his demands and to bring independent Statements of Claim under each contract.”
Article 24 of the new Rules, which governs the rights of the parties on counter-claim and set-off, says that “[w]here the arbitral proceedings are extended because of unjustified delay on the part of the Respondent in submitting his counter-claim or a set-off statement, the Respondent may be required to cover the extra costs and expenses incurred by the ICAC and the other party as a result of the delay.” The old Rules were silent in this respect.
In the course of the arbitral proceeding the Secretary General of the ICAC may request from the parties additional documents or information concerning any written statements submitted by them. If a party fails to submit requested information (in particular, regarding the Respondent's correct postal address) or documents, the ICAC President may terminate the arbitral proceedings.
Art. 9(3) of the New ICAC Rules introduced the following entirely new provision: “The parties and their representatives shall make fair use of their procedural rights, refrain from abusing such rights, and observe the time limits designated for the exercise thereof.” This very important provision for time and cost efficient arbitration reflects a much more international approach to arbitration.
Composition of the Arbitral Tribunal
The new ICAC Rules introduces various new provisions regarding the composition of the Arbitral Tribunal. Article 27(3) states that “[w]here the Arbitral Tribunal is to be composed of three arbitrators to arbitrate between multiple claimants and multiple respondents, the multiple claimants and the multiple respondents shall each choose one arbitrator.” The old Rules did not specify this issue and this innovation reflects many similar provisions in major arbitral rules.
Challenge of an Arbitrator
In respect to the challenge of an arbitrator the decision is reserved to the ICAC Presidium with a right of appeal to the President, the new Rules provide as follows “A party may send a written notice of challenge stating the reasons thereof to the ICAC within 15 days after being notified of the composition of the arbitral tribunal, or having become aware of circumstances that can serve as a reason for challenge. Unless a party makes a challenge within the period of time referred to above he shall be deemed to have waived his right to challenge. The ICAC Secretariat must give to the other party an opportunity to comment on the challenge. If the challenged arbitrator does not withdraw voluntarily or if the other party does not agree to the challenge, the decision on the release of the arbitrator from his appointment shall be made by the ICAC Presidium. The ICAC Presidium may, in its discretion, make the decision on the release of the arbitrator from his appointment if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. When the ICAC Presidium makes a decision to release from the appointment, it shall not be required to state reasons for its decision. If a challenge is not successful, the challenging party may request, within 30 days after having received a notice of the decision rejecting the challenge, the President of the Ukrainian Chamber of Commerce and Industry to decide on the challenge, which decision shall be subject to no appeal. While such a request is pending, the Arbitral Tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award. If an arbitrator withdraws from his office or a party agrees to the termination of the mandate of an arbitrator, this does not imply acceptance of the validity of any grounds based…”
In addition, regarding the composition of the Tribunal the following progressive provision is important: “Where the need for replacements in the Arbitral Tribunal arises after the closure of the hearings of the case, the ICAC Presidium may, taking into account the opinions of the remaining members of the Arbitral Tribunal and of the parties, and also the circumstances of the case, make the decision to continue the arbitration with the remaining Arbitral Tribunal.” The old Rules did not provide such option and the only solution was to appoint a new arbitrator, which would be likely to have a significant impact on the time and cost of the arbitration.
As to removal of an arbitrator other than by way of a challenge, new Rules provide “Where an arbitrator is legally or actually incapable of fulfilling his duties, or does not, for any other reasons, fulfill such duties without unjustified delay, his power may be terminated in response to his application for voluntary withdrawal or by agreement between parties. The ICAC Presidium also may, in its discretion, make a decision to terminate the powers of an arbitrator for above reasons.” The old Rules provided that the ICAC President might terminate the powers of an arbitrator, although the grounds for termination were the same.
Waiver of the Right to Object and Confidentiality Issues
The next interesting provision of the New ICAC Rules concerns waiver of the right to object: “Unless a party raises within the specified period of time or, where none is set, without unjustified delay, during the proceedings conducted at the ICAC, an objection to the non-compliance with any provision of these Rules, the arbitration agreement, or any applicable rules of the law on international commercial arbitration, which may not have been complied with by the parties, such party shall be deemed to have waived his right to object.”
It is also useful to mention here that the new Rules, clearly state that hearings shall be held in camera. Regarding confidentiality issue, the new Rules state that the President and Vice Presidents of the ICAC, arbitrators and the ICAC Secretariat shall refrain from disclosing information about disputes settled by the ICAC, which they become aware. Consequently, Parties are not obliged to follow the confidentiality.
Evidences and Participation of Third Parties
Regarding evidence for the arbitration procedure, the new Rules say that “[t]he Arbitral Tribunal may disregard the documents submitted by the parties if it finds that these documents do not have any evidential force and any relation to the case. Failure by either party to submit appropriate evidence shall not prevent the Arbitral Tribunal from continuing the proceedings and making an award on the basis of available evidence.”
As to the participation of third parties, the new Rules state that a third party may join in the arbitral proceedings only under the consent of the parties in dispute, as well as the consent of the third party. The invitation to join the third party must be in writing and may only be requested before the Statement of Defense is submitted.
Adjournment of Hearings and Suspension of Proceedings
The new ICAC Rules introduce two options for suspending arbitration procedure, in particular; adjournment of the hearing and suspension of the proceeding. This is contrary to the old Rules, which provided only for adjournment of the hearing as a mechanism to suspend the procedure. In accordance with the new Rules, the Arbitral Tribunal may adjourn the hearing: “a) in a case of the necessity to require any party to produce a new evidence; b) in connection with non-appearance of the Respondent's representative at the hearing, if there is no notification in the case materials that the notice of a date of the hearing was delivered to him; c) in a case of the rejection by the ICAC Presidium of the request of a party for the challenge of an arbitrator and request of the challenging party to the President of the UCCI according to item 4 of Article 30 of these Rules. Moreover, the hearing of the case may be adjourned in view of another circumstances determined by the Arbitral Tribunal as such that prevent to settle dispute at this hearing.”
With respect to suspension of the proceeding the Rules say: “[a]t the request of either party or on its own motion, the Arbitral Tribunal may suspend the arbitral proceedings for uncertain period of time. In that case the Arbitral Tribunal shall issue a reasoned ruling.”
Rendering of the Award and Setting Aside Procedure
Finally, when we reached the point of rendering an award, the new Rules allow, “any arbitrator disagreeing with the award made may express in writing his dissenting opinion, which shall be attached to the award.”
The new Rules are silent on the topic of setting aside arbitral awards, which, for arbitration with their seat in Ukraine, is governed by Article 34 of the Law of Ukraine “On International Commercial Arbitration,” mirroring the UNCITRAL Model Law.
To summarize, the New ICAC Rules have brought many useful approaches into the practice of international commercial arbitration in Ukraine despite not touching upon important issues such as consolidation of arbitration cases. It is clear that the changes have been chosen to adhere to internationally accepted approaches.
