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UNCITRAL Arbitration Rules: Progress of the Working Group

Winter 2008
International Disputes Quarterly

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The revision of the UNCITRAL Arbitration Rules (the "Rules") is currently on the agenda of the United Nations Commission on International Trade Law ("UNCITRAL") Working Group on International Arbitration and Conciliation.  The Rules, dating back to 1976, are more than 30 years old.1  A revision of the Rules was long overdue to ensure that they continue to meet the needs of their users, reflecting best practices in the field of international arbitration.2 

The Working Group, which meets biannually (alternately in New York and Vienna), reconvened in Vienna from September 10-14, 2007 to continue its work on the Rules.3  UN member state delegates, observers from non-UN member states, and international and non-governmental organisations (including arbitral institutions and associations) reviewed and discussed proposed amendments to articles 21 to 37 of the Rules, essentially on the basis of a note prepared by the UNCITRAL Secretariat.4  

Main Points of Discussion

The main discussion points during the last session in September included: whether employees and officers of a party may appear as witnesses and experts (articles 25 and 27); whether the proposed rule for interim measures should allow for ex parte preliminary orders (article 26); whether in circumstances where a majority decision may not be achieved, the presiding arbitrator may make an award alone (article 31); the form and effect of an award (article 32); and the applicable law rule (article 33).  The thrust of these discussions is briefly summarised in the following paragraphs.

Witness and Expert Evidence

In relation to witness and expert evidence, the Working Group's discussions centred around the proposed rule providing that parties to the arbitration or officers, employees or shareholders thereof who testified to the arbitral tribunal should be treated as witnesses.5  The main concern expressed was that in most civil law countries parties, including officers and employees, cannot be witnesses.  The delegates were concerned that this inconsistency with the position under some existing national laws might impact negatively on the enforcement of an award in jurisdictions where a party was prohibited from being heard as a witness.  In response, it was observed that, where the Rules conflicted with a provision of mandatory applicable law, the provision of that mandatory law prevailed.6  The Working Group endorsed the principle that any person could be heard on any issue of fact or expertise and that the parties may present their own expert evidence irrespective of whether the arbitral tribunal appointed an expert.7

Interim Measures and Preliminary Orders

The discussions focused on whether the proposed rule on interim measures8 should allow for preliminary orders by an arbitral tribunal upon request by a party without notice of the request to the other party.  The circumstances allowing for such orders would be where it is considered that prior disclosure of the request for the interim measure to the party against whom it is made risks frustrating the purpose of the measure in question.9  Diverging views were expressed at the Working Group. Numerous delegations were of the view that, unless prohibited by the law governing the arbitral process, the arbitral tribunal was not prevented from issuing preliminary orders.10  The Secretariat was asked to prepare an alternative short draft sentence omitting the terminology "preliminary order" which stated that the arbitral tribunal was entitled to take appropriate measures to prevent the frustration of an interim measure.

Majority Decisions

The Working Group discussed whether the so-called "majority requirement" for awards made by a three member arbitral tribunal should be revised so as to enable the presiding arbitrator to make the decision alone in cases where no majority decision can be reached among the three arbitrators (as if the presiding arbitrator were a sole arbitrator).11  While it was argued that the "presiding arbitrator solution" would undermine the consensual process of arbitration and give excessive powers to the presiding arbitrator that could be open to abuse, it was suggested that the "majority requirement" allowed the co-arbitrators to defend unreasonable positions which would leave the presiding arbitrator with no alternative but to join one or the other of the co-arbitrators to form a majority, offering no effective solution in case of a deadlock.  The "presiding arbitrator solution" received considerable support from delegates and it was observed that modern arbitral practice and numerous institutional arbitration rules require the presiding arbitrator to take a decision in the case of a deadlock situation.12  No consensus on this issue has been reached yet and it will be considered upon the second reading of the proposed amendments at a future session.

Form and Effect of Awards

In relation to the form and effect of awards,13 the Working Group considered: (1) whether the Rules should clarify that the arbitral tribunal may render separate awards on different issues at different times during the course of the proceedings;14 and (2) whether qualifications such as "final," "interim" or "interlocutory" regarding the nature of awards, created confusion and should be avoided, given that not all types of awards are known in all legal systems.  Discussions followed in relation to the meaning of the terms "final and binding."  Once rendered, an award shall not be susceptible to revision by the arbitral tribunal, and shall be binding on the parties.  A waiver of any form of appeal, as expressed in the proposed language of the Rules, shall not be understood as also waiving the parties' rights to apply for setting aside of the award.15  While the parties' consent is required to make an award public, wide support was expressed for a proposed provision to also make an award public in situations where a party is under a legal duty of disclosure, where a party sought to protect or pursue a legal right, and where a party sought to produce an award in relation to legal proceedings.

Applicable Law

In relation to the applicable law provisions,16 the Working Group agreed that the wording of the parties' choice of law shall refer to "rules of law" rather than merely "law," so as to enable the inclusion of other legal sources, such as the UNIDROIT Principles of International Commercial Contracts.  Further, it was proposed to replace the existing conflict of laws rule which guides the arbitral tribunal to determine the applicable law of the dispute where the parties have failed to do so.  The existing conflict of laws rule provides for an indirect choice by referring to the application of the law determined by the conflict of laws rules which the arbitral tribunal considers applicable.17  The proposed new conflict of laws rule replaces that indirect choice with a direct choice of the rules of law most closely connected to the dispute.18 

Investor-state Arbitrations

Lastly, issues arising out of arbitrations involving a state as one or more of the parties to a dispute, in particular investor-state arbitrations, are yet to be addressed.  Two of the observer organisations, the International Institute for Sustainable Development and the Center for International Environmental Law, suggest revisions to the Rules to take into account public interest aspects of investor-state arbitrations.19  In essence, the proposal aims to enhance the transparency of these proceedings, including the disclosure of pleadings, public hearings, the submission of amicus curiae briefs and the publication of awards. 

Next Working Group Meeting

The next Working Group session is scheduled to take place from February 4-8, 2008 in New York.  The process for revision will continue past this and the new revisions to the Rules are not likely to take effect for several years.


1 The 1976 UNCITRAL Arbitration Rules are available here.
 
2 A summary of the main areas of the Working Group's Proposed revisions is available in a previous issue of this publication, see Judith Levine, "UNCITRAL Working Group on Arbitration Proposes Revisions to Arbitration Rules," International Dispute Resolution, Vol. 19, No. 4 (December 2006) at p. 4., available here.

3 Two White & Case attorneys are members of the UNCITRAL Working Group on International Arbitration and Conciliation.  The author serves as observer delegate on behalf of a non-governmental organisation; Judith Levine (New York) is part of the Australian delegation.

4 References to proposed amendments of articles of the UNCITRAL Arbitration Rules relate to the Secretariat's note.  The Secretariat's note A/CN/9/WG.II/WP.145/Add.1 is available here.

5 See proposed article 25(2bis).

6 Article 1(2).

7 Discussions relating to articles 15(2), 25 and 27 and proposed amendments.

8 The proposed article 26 is closely modelled on the provisions on interim measures contained in chapter IV A, article 17 of the UNCITRAL Model Law on International Commercial Arbitration, which was adopted by the Commission in 2006.  A report on the recent amendments to the UNCITRAL Model Law is available in a previous issue of this publication, see Judith Levine, "UNCITRAL Working Group Proposes Reforms to Model Law," International Dispute Resolution, Vol. 19, No. 1 (March 2006) at p. 12.  The text of the UNCITRAL Model Law is available here.

9 See Section 2 of chapter IV A of the UNCITRAL Model Law on International Commercial Arbitration.

10 Article 15(1) gives a broad discretion to the arbitral tribunal, provided that the parties are treated with equality and full opportunity to present their cases.

11 See article 31, as proposed in the Secretariat's note.

12 For example, article 25(1) ICC Rules, article 61 WIPO Rules, article 26.3 LCIA Rules, article 26(2) Vienna Rules, article 31 Swiss Rules, article 30 SCC Rules and article 43 CIETAC Rules; cf. article 26 ICDR Rules (AAA).

13 See article 32, as proposed in the Secretariat's note.

14 As is provided by article 26.7 of the LCIA Rules.

15 For example, on the grounds for challenging an award as set out in article 34 of the UNCITRAL Model Law on International Commercial Arbitration.

16 See proposed amendment to article 33.

17 See existing article 33(1).

18 Article 17(1) of the ICC Rules was considered as a model.

19 A revised joint paper on "Revising the UNCITRAL Arbitration Rules To Address Investor-State Arbitrations" was circulated in September 2007. It is available here.


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