The topic is inherently difficult for many entrepreneurs and executives because it requires them to address the possibility of failure at the outset of a relationship they necessarily believe will succeed. As a result, many joint venture associates and business partners simply gloss over the issue, refusing even to address it.

If their clients are willing to listen, many lawyers offer the standard list of dispute resolution mechanisms: arbitration, mediation and buy/sell arrangements, also referred to as Russian roulette or Texas shootout provisions.

Although the terms “arbitration” and “mediation” are typically met with disinterest, “Russian roulette” and “Texas shootout” almost always pique interest. Yet that interest generally fades when the parties delve into the mechanics of the buy/sell arrangement. Business partners need a better alternative. Fortunately, there is one known as the possession arrow.

I observed the following interaction among three children at their school bus stop. As the bus rounded the corner, John, age 8; Annie, 6; and Ben, also 6, scrambled in line. Ben was disappointed that John was first, particularly because John went first the previous day. Ben appealed to his father to intercede, which he declined to do, suggesting instead that the children work it out. John offered to play rock-paper-scissors to decide the order, but that didn’t appeal to Annie. Neither the children nor their parents thought it was a good idea to set the order based on who got to the bus stop first. As the bus pulled up, the children agreed out of desperation to take turns going first, something they have continued to do.

Although taking turns as a method for resolving significant commercial disputes seems at first blush unsophisticated and arbitrary, it can work well if structured thoughtfully. In its most basic form, the possession arrow method authorizes one party to make the final decision on the first deadlock and gives the other party the power to decide the next one.

The approach requires business partners to establish fundamental principles to guide their behavior when confronted with a particularly difficult issue that could lead to a deadlock. The parties must make a covenant agreeing to be bound by those fundamental principles with respect to their joint decision-making and individual conduct when they are empowered to break a particular deadlock. The fundamental principles should include an obligation to deal in good faith and commitment to advance positions that are in the venture’s best interests, not the individual’s. It is sometimes also appropriate to include a requirement that the parties take positions consistent – to the extent that it is commercially feasible – with their most recent past practices.

When using the possession arrow, the parties must also determine who will be empowered to break the first deadlock. In some cases, the parties might be able to agree immediately. In other cases, the parties might decide to give the arrow to the one who did not declare the deadlock.

An effective dispute resolution mechanism should encourage cooperation to avoid deadlocks, foster commercially reasonable conduct and lead to outcomes that allow the parties to move forward. The possession arrow meets each of these criteria. The children and parents at the bus stop recognized that arbitration, mediation and game-playing were inferior to taking turns. It is time for business partners to do the same.

By David Charles, Special to Washington Technology. Lessons from the bus stop in dispute resolution. David Charles is a partner in the Corporate and Securities-Technology practice at Pillsbury Winthrop Shaw Pittman LLP.

A Directive on certain aspects of mediation in civil and commercial matters was adopted today 23 April 2008. The purpose of the Directive is to facilitate access to cross-border dispute resolution and to promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a sound relationship between mediation and judicial proceedings. The Directive is one of the follow-up actions to the Green Paper on alternative dispute resolution presented by the Commission in 2002, the other being the European Code of Conduct for Mediators established by a group of stakeholders with the assistance of the Commission and launched in July 2004.

Welcoming the adoption of this Directive, Vice-President Jacques Barrot said: “This Directive fulfils the political objective established in October 1999 by the European Council of Tampere, which – in the context of encouraging better access to justice in Europe – called for the creation of alternative, extrajudicial procedures for dispute resolution in the Member States. Mediation can provide cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and help preserve an amicable and sustainable relationship between the parties.

The Commission proposed the Directive in October 2004 (IP/04/1288). The Directive facilitates recourse to mediation by strengthening the legal guarantees accompanying it, thus giving real added value to citizens and businesses in the European Union. The key components of the Directive are as follows:

The Directive obliges Member States to encourage the training of mediators and the development of, and adherence to, voluntary codes of conduct and other effective quality control mechanisms concerning the provision of mediation services.

The Directive gives every Judge in the Community, at any stage of the proceedings, the right to suggest that the parties attend an information meeting on mediation and, if the Judge deems it appropriate, to invite the parties to have recourse to mediation.

The Directive enables parties to give an agreement concluded following mediation a status similar to that of a Court judgment by rendering it enforceable. This can be achieved, for example, by way of judicial approval or notarial certification, thereby allowing such agreements to be enforceable in the Member States under existing Community rules.

The Directive ensures that mediation takes place in an atmosphere of confidentiality and that information given or submissions made by any party during mediation cannot be used against that party in subsequent judicial proceedings if the mediation fails. This provision is essential to give parties confidence in, and to encourage them to make use of, mediation.

To this end, the Directive provides that the mediator cannot be compelled to give evidence about what took place during mediation in subsequent judicial proceedings between the parties.

The provision of the Directive on periods of limitation and prescription will ensure that parties that have recourse to mediation will not be prevented from going to court as a result of the time spent on mediation. The Directive thus preserves the parties’ access to justice should mediation not succeed.

Source: A boost for mediation in civil and commercial matters: European Parliament endorses new rules

¿How, exactly, PayPal resolves disputes between ecommerce merchants and their customers? Colin Rule, PayPal‘s Director of Online Dispute Resolution was intervied by Practical eCommerce magazine:

Practical eCommerce (PeC): If an ecommerce customer pays for a legitimate product using PayPal and then decides he doesn’t like it and complains to PayPal, what will PayPal do?

Colin Rule: In cases where the buyer is simply disappointed in the item, we would encourage the buyer to work directly with the seller. PayPal does offer buyer protection, but this protection covers buyers for items that they didn’t receive and for items that are significantly not as described. It does not cover cases where the buyer is merely disappointed with the item or where the item did not meet the buyer’s expectations.

Practical eCommerce (PeC): What are a merchant’s options if a customer asks PayPal to hold payment?

Colin Rule: If a merchant does get a chargeback, a couple pieces of information can be extremely helpful to dispute it. Proof of delivery, such as online tracking offered by both USPS and UPS, can be critical evidence in reversing the chargeback. A copy of the buyer’s signature confirming receipt can also be extremely effective. Finally, if a merchant did refund the buyer at any point in time, proof of the refund (and/or the shipment of a replacement item) is important.

Practical eCommerce (PeC): What other options are available to merchants to address disputes?

Colin Rule: Again, we always encourage buyers and sellers to first try to work through disputes together. To help with that, we’ve launched the dispute resolution center – a step-by-step system designed to facilitate communication between the buyer and the seller in order to get resolution of the issue. Since launching PayPal Dispute Resolution, buyer claims against sellers decreased by 50 percent, and seller losses on PayPal due to chargebacks decreased 20 percent.

If the dialogue with the seller fails to produce a satisfactory result, the buyer can then escalate the dispute into a claim, where our claims specialists gather information from both parties, examine the case and work with both parties to try to fairly and efficiently resolve the claim. In this process, PayPal will ask sellers for documentation that helps us determine that they shipped the item to the buyer and that the item was as described.

Practical eCommerce (PeC): Why should an ecommerce merchant accept payments from PayPal?

Colin Rule: It helps them increase sales and lower costs. PayPal has 141 million accounts worldwide and merchants therefore have access to a large, global base of buyers. At any given time, there is $3 billion stored in PayPal accounts, which turn over every two weeks. Many buyers view the money in their PayPal accounts as discretionary, so they are more willing to spend it, perhaps with an ecommerce merchant.

Source: Quick Query: PayPal’s Director of Online Dispute Resolution

World of Arbitration In a civilised society, citizens look to the courts to settle their disputes. The courts put judges at the disposal of the parties, the courts determine the substantive and procedural law which is to be applied and the courts enforce their own orders through court officers, when necessary. It is a one-stop shop.

For those engaged in alternative dispute resolution – ADR, the courts are available not merely to enforce decisions and awards but also to supervise and control the chosen ADR procedures, should matters go awry.

Where disputes arise in the international arena, the picture is a little different because national courts are rarely acceptable to both sides. Disputes between states or between an individual and a foreign state or between an individual and an international organisation may be regarded as being in a special category, where the aggrieved party may have recourse to treaty arbitration. Examples are arbitration before the PCA1 and arbitration under the auspices of ICSID2. Beyond that special category, the parties must make express provision for dispute resolution in their agreement, failing which the aggrieved party will be left to seek his remedy from the domestic courts of one country or another, depending upon which will assume jurisdiction.

The result is a contrast. Whereas national courts often represent a convenient and acceptable means of dispute resolution for parties to a dispute which has no international element, there is no international equivalent. In consequence, most international disputes fall to be resolved through a process or by a tribunal which is essentially consensual in origin.

This paper is concerned with the resolution of disputes arising under international construction contracts. The purpose is to survey the available alternatives and to identify some of the considerations to be borne in mind by those concerned. In this last context, the emphasis is on two key considerations, being enforcement and applicable law.

Enforcement

It is convenient to note at this stage that there is more than one aspect to enforcement. Thus, we may distinguish between enforcement in the sense of ensuring implementation of the chosen disputes resolution procedure, on the one hand, and enforcement in the sense of giving effect to the resulting award or decision, on the other.

There are various conventions which bear upon enforcement. However, on the international stage, it is the New York Convention which is of most significance. Replacing the Geneva Convention of 1927, the New York Convention provides a simple and effective method of obtaining recognition and enforcement of foreign arbitral awards. By Article II, Contracting States agree to recognise arbitration agreements in writing and undertake that their courts, if seized of an action in respect of which the parties have made an arbitration agreement in writing, will, in principle, refer the parties to arbitration. Further, By Article III, awards made in the territory of a Contracting State, provided that they are made pursuant to an arbitration agreement in writing, are to be recognised and enforced by another Contracting State. Limited grounds for refusal of recognition and enforcement are set out in Article V. These are as follows:

Article V(1) (Conflict with the law of the State where the award was made or where the arbitration proceedings took place)

1. Incapacity of parties and invalidity of arbitration agreement.

5. Award not yet binding or already set aside or suspended.

Article V(2) (Conflict with the law of the State where recognition or enforcement is sought)

1. Dispute not capable of settlement by arbitration.

2. Recognition or enforcement contrary to public policy.

In applying such grounds for refusal of enforcement, it is customary for the courts of contracting states to allow a margin of appreciation in recognition of the fact that the award was made in another jurisdiction. For example, although ad hoc arbitration agreements are void under the PRC Arbitration Act 1995, the courts of the PRC have nevertheless chosen to enforce arbitration awards rendered by ad hoc tribunals in foreign jurisdictions, rather than invoking the public policy ground set out in Article V(ii)(b)5.

Applicable Law

The second key consideration concerns the applicable law. It is in the context of arbitration that the need to ascertain the applicable law is most acute. It has been said that, without undue sophistication, there are at least five different systems of law which may have a bearing on an international commercial arbitration6. Allowing for the fact that this paper is concerned not only with arbitration but also with other forms of ADR, the five may be expressed as follows:

1. The law governing the parties’ capacity to enter into an dispute resolution agreement;

2. The law which governs the dispute resolution agreement and its performance;

3. The law which governs the existence and proceedings of the mediator, conciliator or tribunal – sometimes known in the context of arbitration as the lex arbitri;

4. The law governing the substantive issues in dispute, generally described as the applicable law, the governing law, the substantive law or the proper law of the contract;

5. The law governing recognition and enforcement of the award or decision (which may in practice be more than one, if the attempt to enforce has to be made in more than one jurisdiction).

Having noted above a distinction between enforcement in different senses, it is to be observed that enforcement in the sense of ensuring implementation of the chosen disputes resolution procedure is governed by the law at (2) above, whilst enforcement in the sense of giving effect to the resulting award or decision is governed by the law at (5).

Mediation and Conciliation

The parties to an international dispute may embark on mediation or conciliation. If they do it will either be because the contract calls for it or because they have agreed to do so on an ad hoc basis. Various institutions involved in international dispute resolution have published protocols providing for mediation or conciliation, such as the ICE7, the ICC8, the LCIA9 and the HKIAC10.

Since such procedures depend largely for their success upon the parties reaching consensus, the fact that the dispute has an international element tends to have relatively little bearing on the proceedings, save that, for one party or the other (and perhaps both) the applicable substantive law may be foreign. However, the international element cannot wholly be overlooked. Those involved will wish to bear in mind the effect of anything said and done in the context of a mediation upon any subsequent means of dispute resolution to be undertaken if the mediation fails. For example:

1. The privilege against disclosure and production of documents which common lawyers associate with the epithet without prejudice is unknown in Greek law. Accordingly, if the ultimate arbitration is to be conducted according to Greek procedural law, the parties to any mediation process should be aware that any documents disclosed may ultimately come to the attention of the arbitral tribunal even if the parties purport to conduct the mediation on a without prejudice basis.

2. Parties who succeed in settling their dispute in mediation do well to include in the settlement agreement not only a term which identifies the law which governs the settlement agreement itself but also a term (if it can be agreed) to the effect that in the event of dispute both parties agree to submit to the jurisdiction of a particular national court.

It may also be necessary to have the law applicable to enforcement in mind when considering the possibility of dispensing with mediation even though it is expressly provided for. Thus, if the disputes resolution procedure laid down by the contract makes mediation a condition precedent to arbitration, the party who fails to cooperate in mediation may do so at its peril. The court from whom enforcement is sought might decline to do so under Article V of the New York Convention, either upon the basis that the arbitral procedure was not in accordance with the agreement of the parties (Article V(1)(d)) or on the basis that enforcement would be contrary to public policy (Article V(2)(b)).

A similar problem might arise in with the process sometimes known as “Med-Arb”. In, for example, the PRC an arbitral tribunal may well find itself acting as mediator and conciliator. In that jurisdiction, there is no objection to the tribunal subsequently resumed its arbitral function, provided that the award is rendered promptly. But, whereas such a procedure would be regarded as quite normal in the PRC, it might not be seen in the same light elsewhere. Accordingly, there is a risk that if enforcement were sought in some other jurisdiction, it might well be resisted under the New York Convention on public policy grounds.

Disputes Boards

For a project of any size involving contracting parties of different national origins, the contract which provides for the interim resolution of disputes on referral by a Disputes Board11 is now the rule rather than the exception. The rules under which such a body operates tend to vary from project to project. However, a degree of standardisation has been introduced as a result of the publication of standard rules both by the ICC12 and by FIDIC13.

Typically, the Disputes Board is appointed at the commencement of the project; its members are required to visit the site periodically and to familiarise themselves with the works; disputes come before the Disputes Board only upon referral by one or other of the parties; and the Disputes Board’s decision (or “recommendation”) binds the parties, subject to review by an Arbitral Tribunal (or, more rarely, by the courts).

Once again, the international element of the dispute tends to have little bearing on the proceedings conducted before the Disputes Board. However, practitioners still need to take into account the effect of different systems of law. Thus:

1. The enforceability of the Disputes Board procedure will be governed by the law which governs the disputes resolution provisions generally.

2. The enforceability of the Disputes Board’s decision will be governed by the law of the state in which enforcement is sought.

Let it be supposed that a substantial infrastructure is part complete when a dispute over valuation arises, leading the contractor to issue a threat to suspend all work on the relevant part of the project unless its demands for payment are met. Let it be supposed further that the employer then seeks injunctive relief to restrain the contractor from carrying out its threat. The contractor maintains that the court ought to decline jurisdiction in favour of the Disputes Board constituted in accordance with the Disputes Resolution provisions. The issue for the court is whether or not to enforce the contractual procedure. Many will recognise these as the outline facts of the Channel Tunnel case14. As is well known, the House of Lords preferred to enforce the contractual disputes resolution procedure. In doing so, it may be regarded as having applied the law governing the dispute resolution agreement and its performance.15

The moral of the tale is that the practitioner should keep well in mind the likely attitude of the courts in the state in which enforcement action might be taken.

Treaty Arbitration

The PCA situated at The Hague was established by the Convention for the Pacific Settlement of International Disputes included at The Hague in 1899 and revised in 1907. Where the relevant state is a party to one or other of the two Hague Conventions, a dispute may be referred to the PCA where at least one party is a state, state entity or an intergovernmental organisation.

ICSID was established by the Washington Convention of 1965,16 better known as the ICSID Convention. It gives both private individuals and corporations who are “investors” in a foreign state the right to bring legal proceedings against that state before an international arbitral tribunal. “Investors” in this context include a foreign contractor implementing a construction project in the territory of the state in question. Here, the source of authority to arbitrate is a bilateral investment treaty. For the contractor who qualifies as an “investor”, this offers the opportunity to institute proceedings before an international Arbitral Tribunal administered by ICSID in Washington. The advantages to the “investor” are that there is no fear of the outcome being influenced by the Respondent state as there might be if the dispute could only be litigated or arbitrated within the borders of that state. Furthermore, state immunity is much restricted.

A full review of ICSID arbitration is beyond the scope of this paper. However, a particular problem to be noted is that which can arise where the underlying construction contract itself provides for the arbitration of disputes. In such a case, what sometimes appears to be a contest between two tribunals can arise in the event that one party purports to refer to a dispute to the contract tribunal, whilst the other purports to refer the same dispute to a tribunal constituted by ICSID.17

Arbitration pursuant to Agreement

Turning to arbitration pursuant to agreement, there is a distinction between an arbitration agreement incorporated into the contract at the outset and an arbitration agreement which is concluded ad hoc. But, either way, the threshold questions concern what is agreed or provided for as to the constitution of the Tribunal and what procedural law is be applied.

Parties commonly agree that the dispute is to be arbitrated in accordance with specified institutional rules such as those of UNCITRAL,18 the ICC,19 the Stockholm Chamber of Commerce,20 the HKIAC,21 CIETAC,22 SIAC23 and the Swiss Chambers of Commerce.24 In such a case, these threshold questions are likely to be provided for, if not agreed.

Where the parties do not adopt institutional rules, matters such as the constitution of the tribunal and the choice of procedural law fall to be settled in the event of dispute by the courts of the state in which the arbitration takes place. In English law, the approach would be to resolve such disputes by reference to the law which governs the arbitration agreement.

Thus, in the Star International case,25 the contractual arbitration clause was silent as to the procedural rules to be followed. After the award had been published, the unsuccessful party sought to challenge it on the basis that no oral hearing had been held. The court, applying English law, held that the absence of a hearing did not amount to unfairness and declined to interfere with the award.

Once the tribunal has been constituted and the procedural rules identified, practitioners are likely to find it necessary to refer to any one or more of a number of different systems of law.

Let it be supposed, for example, that the claimant seeks interim conservatory relief, perhaps an order that an area of allegedly defective flooring be preserved so that forensic tests can be conducted. In the first instance, there is a question whether the tribunal has jurisdiction to make such an order. The answer to that question will depend on the lex arbitri. In many cases, institutional rules expressly confer jurisdiction upon the tribunal to make such an order. Beyond that, if the tribunal does make an order, there is a question whether the local court should enforce it. The answer to that question will depend in part on the lex arbitri, in that the court would be unlikely to enforce an order made without jurisdiction. But it may depend also on the law of the state in which enforcement is sought. In the PRC, for example, it is unlikely that such an order would be enforced, since it seems that it is only the court which is regarded as having power to order interim relief.

Then again, let it be supposed that, following publication of the award, the losing party seeks to challenge it. The question whether or not the award can be challenged may depend in part on the lex arbitri. Thus, for example, the ICC Rules are regarded at least in England and Wales as excluding appeals26. But if the institutional rules are silent on the point, the question of challenge may depend on the law of the place of the arbitration. So, if such a situation were to arise in a case where the arbitration took place in, say, South Korea, the court would be likely to assume jurisdiction to set aside the award on grounds similar to those given in Article V of the New York Convention for refusing enforcement, provided that an order for enforcement has not already been made.27

In the same way, there are a number of circumstances in which the practitioner will wish to have in mind not only the lex arbitri but also the law of the state in which the arbitration takes place. These include where a party seeks to restrain the tribunal from proceeding at all, where a party seeks security for costs,28 where a party seeks to sub-poena witnesses; where a party seeks an order for disclosure of documents from a non-party; where a party seeks to challenge an award for lack of due process,29 and so on.

Discusion about this paper in Keating Chambers – United Kingdom – International Dispute Resolution website:
Article by John Marrin QC
United Kingdom: International Dispute Resolution.

http://www.mondaq.com/article.asp?articleid=44022&searchresults=1

I. Conciliation
Either party may demand conciliation. The demand for conciliation is made by letter, fax or Internet. Within 10 workdays, and once the administrative costs have been covered, the other party (parties) is (are) advised of this demand for conciliation. The applicant is notified of any response or reaction by the other party. If the case reveals a serious difficulty the parties may, in that event, call for an expert or a mediator to be appointed, so as to avoid litigation. After one month or when the conciliation fails, either party may initiate arbitration proceedings.

II. Expertise and Mediation
All the parties may demand, together, in writing, for an expert or mediator. Within 15 workdays, and once the administrative costs have been covered, an expert or a mediator will be appointed. Each party bears the costs thereof for equal parts. Within 30 days after the appointment, the expert or mediator shall meet the parties and, within 3 months, he shall make a compromise or give a report with a clear opinion.

III. Arbitration
Before initiating arbitration in the first instance parties are obliged to make an attempt at conciliation every time the law imposes it.

Art. 1: General
Arbitration has, since 1958, been an internationally recognized procedure (convention of New York). Unless otherwise agreed between the parties, only the laws of the country of the clerk’s office of the Court shall apply. The law applies to all that is not expressly stipulated in these rules.

Art. 2: Jurisdiction
Parties who had not foreseen an arbitration clause, may, after a dispute has arisen, conclude a contract thereto. An arbitration agreement must be incorporated in a document signed by both parties or in other legally binding documents. Disputes which cannot be legally submitted for arbitration shall be inadmissible. If one party refuses to take part in the proceedings or does not present its arguments within the stipulated time limit, the dispute will be heard anyway and an award shall be pronounced.

Either party may petition the judge to seek conservatory or provisional measures. This does not imply that this party waives the arbitration agreement. Also if suddenly a dispute or a protest arises after the obtaining of an enforcement ordinance, the claim shall be settled by arbitration only.

Art. 3:
In order to begin arbitration proceedings, the requesting party is required to send a registered ‘notification of arbitration’ (a) to the opposing party, as well as a ‘request’ (b) by registered letter to the secretariat referring to the arbitration clause.
In principle, the procedure shall take place in writing. Either party is entitled to ask for an audience with debates and to be assisted by or represented by an attorney or mandatory.

a) The notification of arbitration on a formal way invites the opposite party to give its point of view within 15 workdays and contains the same dossier as sent to the secretariat.

b) The request of arbitration is sent to the secretariat together with the notification of arbitration. It contains the complete identity of the parties, an accurate description of the claim (principal, interest, damage …) and a copy of the notification of arbitration with proof of sending to the opposite party.

c) The registration of the dossier by the secretariat is sent by ordinary mail to the parties, within 15 workdays after receipt.
The claimant is invited to pay a deposit estimated by the secretariat for initial costs. If it is not paid within the time limit, the request shall be, ex officio, considered withdrawn. In cases of serious financial difficulties, the secretariat shall ask for a bank security or guarantee or shall reduce or postpone the payment of this deposit.

d) Terms
- Within 15 workdays after receipt of the notification of arbitration, the defendant has to send his point of view (counter claim) and pieces to the claimant, and two copies to the secretariat with proof of sending to the claimant.
- Unless otherwise agreed by the parties, the clerk’s office who’s indicated after expiration of the previous deadline, shall appoint the Arbitral Court and inform the parties within 20 workdays.
- Within 15 workdays after receipt of the defendant’s statement, the claimant must send his final statement and supplementary proofs to the defendant and two copies to the clerk’s office with proof of sending to the opposite party.
- Within 15 workdays after receipt of the claimant’s final statement, the defendant must send his final statement to the claimant and two copies to the clerk’s office with proof of sending to the claimant.
The claimant has no right to reply, unless the defendant submits completely new elements. Only the Arbitral Court can decide about this. Conclusions and documents presented out of the terms fixed, can be kept out of the debates.
The receipts mentioned above are considered to be done, for national sending 3 workdays after the deposit to the post office and for international sending 6 workdays after the deposit to the post office. The contrary shall be proven by the requesting party. The proof of sending is the receipt of the Post Office. The day of sending does not count to calculate the terms.
Parties may foresee or decide to replace the exchange in writing mentioned above by an immediate hearing with debates. In this case it shall take place within one month after the appointment of the Arbitral Court.
The clerk’s office can postpone the proceedings at any time if the amount to cover the proceedings costs has not been paid. One party can request, by means of a well-motivated letter, the shortening or extension of terms. The clerk’s office decides sovereign about this request. The clerk’s office can also extend a term if useful for a good dispatch of the lawsuit. The Arbitral Court can also request the parties to formulate supplementary conclusions concerning one or more points, unclear to it.

e) The award
Within 10 workdays after receipt of the defendant’s final statements or before the hearing, the whole dossier shall be remitted by the clerk’s office to the Arbitral Court.
Within 20 workdays after receipt the dossier, the Arbitral Court shall give a verdict. This term can only be lengthened on motivated request by the Arbitral Court, and the clerk’s office’s approval. Without a verdict within the term and without approved longer term the proceedings are postponed, the clerk’s office will nominate, ex officio, a new Arbitral Court. In this case only Art.3e shall be applicable.

The clerk’s office informs the parties about this award. The award specifies also which party shall pay the procedure bill or in which proportion this charges are divided amongst parties and to whom they shall be paid or reimbursed.
If the defendant neither reacts in the first instance on the notification of arbitration nor responds to the notification of composition of the Arbitral Court, sent by registered letter, a verdict by default shall be pronounced. The Arbitral Court is authorized to declare, ex officio, an award provisionally enforceable and to exclude consignations. The parties undertake to execute the award. The clerk’s office lodges the original award at clerk’s office of the public Court. One party shall obtain the enforcement (exequatur) after homologation.

f) Procedural requirements
- All mailed items between parties shall be sent by registered mail, unless otherwise permitted by the parties and by law. – The documents shall be sent to the secretariat or the clerk’s office by registered mail, duly numbered and in DUPLICATE (QUADRUPLICATE in appeal).
- The clerk’s office is entitled to ask the parties for missing and/or additional copies or to impose an extra administrative charge for the inconvenience thus caused.
- The parties are exempted from the obligation to send their mailed items to the secretariat or the clerk’s office by registered mail provided they send them by e-mail and between the parties provided a mutual agreement after the dispute has arisen.
- The pleadings may, provided all parties agree thereto, be conducted via web- or videoconferencing.

g) International arbitration
The regulation-law of the United Nations (UNCITRAL, 21/06/1985), is applicable, as far as it is supplementary, and not contrary to the legislation of the country of the clerk’s office or to the present rules. If at least one of the disputing parties has its location outside of the European Union, all periods mentioned in Art. 3d) shall be doubled.

h) In case of bankruptcy or death of a party the procedure shall be postponed. On request of one party the procedure shall continue after payment of the costs and giving of the new identity of the parties.

Art. 4: Place and language
The place of the award shall be considered the place of arbitration.
Unless other agreement it shall be the place of the clerk’s office. This may be different from the place of debates which is sovereign chosen by the clerk’s office.
The parties shall choose the language of the proceedings. The proceedings may take place in two languages. In the absence of an agreement, the language(s) of the proceedings is/are that/those of the country of the clerk’s office. All charges for translations shall be paid by the party remitting documents in another language. The verdict is written in the language of the procedure, in accordance with the place of enforcement.

Art. 5: Multipartite arbitration
- Linking of controversies: If between the same parties, there are controversies that are connected or indivisible, the clerk’s office can order to link these controversies, if the parties are bound by the same arbitration clause on binding documents. The linking is not possible if already an award has been taken “before justice has been done” on its merits. – Third party intervention: The parties give to any third party the right to intervene in the proceedings. The third party shall accept by agreement the rules. It is conditional on the assent of the Arbitral Court.

Art. 6: The Arbitral Court
a) The mission: The Arbitral Court decides autonomously, even in cases where one party raises objections, on the competence and existence or validity of the arbitration agreement. The clerk’s office should be informed, at once, of any other decisions of other judicial authorities regarding the unresolved dispute.
The challenging of an arbitrator must be effected in a reasoned request (and by registered mail) to the clerk’s office within 10 days of receiving notification of the composition of the Arbitral Court. The challenged ar¬bitrator is duly advised thereof by the clerk’s office. The challenged arbitrator shall duly resign within 10 workdays or notify the objecting party that (s)he will not be withdrawing. The replacement shall be effected according to the rules governing new appointments. The Arbitral Court may decide autonomously whether to hear the parties (or their mandatory), to summon witnesses and/or to order an on-site inspection and, if appropriate, to appoint external experts whose brief shall be specified in writing. A board member, personally, a secretary, a clerk of the Court or an arbitrator cannot be held liable for their actions within the scope of, or in connection with, the rules. All disputes must be settled only by arbitration.

b) The appointment: Unless the parties have agreed otherwise, the clerk’s office in the first instance shall appoint one arbitrator and three for the appeals court. The parties are prohibited from contacting an arbitrator appointed by the clerk’s office, this under pain of absolute nullity and an order to pay damages to the other party.
If the parties, by mutual agreement, have themselves appointed an Arbitral Court, this Court may, in such a case, assign the duties of the clerk’s office and the appeals level to the Institute of Arbitration.
If an arbitrator dies or is legally impeded, the clerk’s office is in charge of the replacement.

Art. 7: Hoger beroep
Either party has the right to appeal against an award within the time limit of 30 calendar days after the postmarked date of the registered notification of the award of first instance, except if the parties, after the dispute arises, have expressly excluded the appeal level and in this case the award in first instance is not by default.
If the appeal period begins or ends during the legal vacations of the clerk’s office country, said appeal shall be extended until the 15th day of the new calendar year. Once this deadline has expired, it will no longer be possible to make an appeal.

The request for appeal should be sent, by registered mail, to the clerk’s office. On registered request of the clerks’ office the appellant does pay within 15 workdays the registration and the asked advance. The clerk’s office fixes sovereign this advance. If the registration fees and costs are not total paid within 15 workdays, these appeal proceedings shall be deemed to be not existed.
The appeals procedure and terms are the same as the proceedings in first instance (III.Art.3), with the difference that the notification of arbitration is given by the clerk’s office after the registration fees and costs have been paid and that this notification does duty for registration of the arbitration. The Arbitral Appeals Court is composed of three arbitrators.

IV. Costs
The administrative cost for each dossier is maximum 50 EUR (15 EUR if the request is introduced by Internet).

a) Conciliation: For a financial claim the cost is max. 100 EUR. For other disputes see IV b.

b) Expertise or mediation: The cost is limited to half of the arbitration (see IV.c.).

c) Arbitration:

For the registration of the request and the appointment of the Arbitral Court the costs per party for the first instance is 75 EUR and 200 EUR for the appeal level.
The cost for arbitration (clerk’s office & fees) is 100 EUR per hour (min. 1 hour) with a maximum fixed according to the amount of the value of the litigation (main issue and counterclaim, if any): On the:
1st range up to 6.000 EUR: 10%
2nd range from 6.000 EUR up to 12.000 EUR: 8 %
3rd range from 12.000 EUR up to 25.000 EUR: 6 %
4th range from 25.000 EUR up to 125.000 EUR: 3 %
5th range from 125.000 EUR up to 250.000 EUR: 1,5 %
6th range from 250.000 EUR up to 625.000 EUR: 1 %
7th range from 625.000 EUR up to 1.250.000 EUR: 0,5 %
8th range from 1.250.000 EUR and more: 0,25 %
The costs of an award by default about a not contested money claim in the first instance are not due but doubled in appeal or when the Arbitral Court is composed by three arbitrators.

Exceptional expenses.
The Arbitral Court will be condemned, ex officio, to pay an indemnification for the lawyer’s intervention in the procedure, of 400 EUR for the first instance and 800 EUR for the appeal. The expenses provided for audiences, hearing of witnesses, appearing, visits to the scene of the occurrence, translations, supplementary copies, research, corrections and rejection are not included and are estimated separately by the Arbitral Court, and shall be paid by one or more parties. If the value of the controversy cannot be determinate, the clerk’s office will fix the amount needed to cover the retainers and the operating expenses.
Only in cases where the arbitration was stopped before the notification to the parties of the Arbitral Court the costs shall be reduced to the administrative charge.

All travelling expenses and costs resulting from a deviation from these rules are exceptional expenses. All amounts are exclusive of taxes, duties or charges.

V. Standard Dispute Rules
Unless otherwise agreed between the parties, the Institute of Arbitration non-profit organization of Brussels, shall designate the arbitration committee or chamber and the clerk’s office of the Court, which shall be tasked with organizing the arbitration proceedings and monitoring the progress thereof, according to the rules. The clerk’s office means the secretariat of an Arbitration Committee or Chamber.

These Rules are subject to modification at any time. The modifications do not apply to an arbitration which is already pending (‘lis pendens’). The interpretation of the Standard Dispute Rules and of the correct application thereof falls within the competence of the Institute of Arbitration non-profit organisation, Drève Sainte Anne 68b, in 1020 Brussels, +32-(0)70-233.620.

In application from 1 January 2006
Institute of Arbitration Legal registration 1998, 2001, 2004 & D/2004/6878/1

More Information:

Institute of Arbitration
Drève Sainte Anne 68 b
1020 Brussels
E-Mail: info(at)euro-arbitration.org
Tel: +32-(0)70-233.620 (9h-12h)
Fax: +32-(0)70-233.620