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Part II Arbitral Procedures to Control the Selection and Conduct of Arbitrators, Ch.6 Failure to Act, other Disruptions, and the Replacement of an Arbitrator

From: The UNCITRAL Arbitration Rules: A Commentary (2nd Edition)

David D Caron, Lee M Caplan

Previous Edition (1 ed.)

Content type:: Book content

Product:: International Commercial Arbitration [ICMA]

Series:: Oxford Commentaries on International Law

Published in print:: 07 March 2013

ISBN:: 9780199696307

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Subject(s):: Settlement of disputes — Replacement of arbitrator — UNCITRAL Arbitration Rules

(p. 276) (p. 277) Chapter 6 Failure to Act, other Disruptions, and the Replacement of an Arbitrator

1. Introduction

Lack of impartiality or independence in an arbitrator is not the only contingency that a set of arbitral rules must anticipate. An arbitrator's failure to perform his or her functions, resignation, absence, or death also have the potential to disrupt the arbitral proceedings.

Article 12(3) addresses an arbitrator's failure to act or the impossibility of performing his or her functions. The problems of resignation, absence, and death have been dealt with extensively in the practice of the Iran–US Claims Tribunal. Article 14 establishes the procedures for replacement of an arbitrator or, in certain circumstances, the continuation of the proceedings without an arbitrator. Finally, Article 15 creates the rule for resumption of a hearing after replacement of an arbitrator. These provisions are the subject of this chapter.

2. Failure to Act and other Disruptions—Article 12(3)

A. Text of the 2010 UNCITRAL Rule¹

Article 12(3) of the 2010 UNCITRAL Rules provides:

1. … [This provision is addressed in Chapter 5]
2. … [This provision is addressed in Chapter 5]
3. In the event that an arbitrator fails to act or in the event of the de jure or de facto impossibility of his or her performing his or her functions, the procedure in respect of the challenge of an arbitrator as provided in article 13 shall apply.

B. Commentary

(1 ) Drafting history of the rule and general comments

Article 12(3) provides that if an arbitrator fails to act or if there is the de jure or de facto impossibility of further performance, the challenge procedures in Article 13 will apply. This provision essentially establishes a second ground for challenge in addition to “circumstances giving rise to justifiable doubts as to arbitrator's impartiality or independence” under Article 12(1).²

(p. 279) Article 12(3) is virtually identical to Article 13(2) of the 1976 UNCITRAL Rules. The Commentary on the revised draft of corresponding Article 13(2) of the 1976 UNCITRAL Rules provides the following summary of proceedings:

… the party who alleges that an arbitrator is incapacitated or has failed to act must notify the arbitrator concerned and the other party of this challenge. Upon receipt of this notification, the other party may agree to the removal of the challenged arbitrator or the arbitrator may decide to withdraw from his office; in all other cases, pursuant to the procedures laid down in article 11 [of the 1976 UNCITRAL Rules], the appropriate appointing authority will have to decide on the validity of the challenge made against the arbitrator. When an arbitrator loses his office on the ground of incapacity or of failure to act, regardless of whether such loss of office resulted from the agreement of the other party to the charge, the withdrawal of the arbitrator from his office, or the decision of an appointing authority, a sole arbitrator shall be replaced in accordance with the provisions of article [6] of these [1976 UNCITRAL] Rules, and a party-appointed or presiding arbitrator in accordance with the relevant provisions of Article [7 of the 1976 UNCITRAL Rules].³

Article 13(2) of the 1976 UNCITRAL Rules was added to the Rules to highlight the distinction between death and resignation and more ambiguous situations. Like Article 13(2) of the 1976 UNCITRAL Rules, Article 12(3) covers cases in which an arbitrator is incapacitated or has failed to act, such as when an arbitrator has simply failed to perform his duties without officially resigning.

The first issue addressed by the drafters in the debates on Article 13(2) of the 1976 UNCITRAL Rules was whether to fix a time limit to establish a case of failure to act.⁴ To give the rule maximum flexibility, the Committee chose not to impose a specific time limit but to leave that issue to the authority who would decide the challenge.⁵

The drafters also spent significant time discussing whether to include the term “incapacitated” in the provision. A summary of this discussion is provided in the Report of Committee II at the Ninth Session:

It was noted … that the word “incapacitated” was unduly ambiguous in that it was not clear whether both physical incapacity, such as a serious illness, and legal incapacity, such as minority or insanity on the part of an arbitrator, were covered. The Committee agreed that this word should be replaced by an objective statement establishing that article [13], paragraph 2 [of the 1976 UNCITRAL Rules], extended to all circumstances that made it legally or physically impossible for an arbitrator to perform his functions.⁶

The final language of Article 13(2) of the 1976 UNCITRAL Rules, like Article 12(3) of the 2010 UNCITRAL Rules, uses the terms “de jure or de facto impossibility of performing functions.”

What conduct constitutes a failure to act or a de jure or de facto impossibility of further performance? The text of Article 12(3) does not expressly address this question. However, (p. 280) when an arbitrator intends only a brief absence, it seems inappropriate to require referral to the lengthy procedure of challenge.⁷ The Iran–US Claims Tribunal approached the problem by modifying corresponding Article 13(2) of the 1976 UNCITRAL Rules to provide that in the event of impossibility to perform because of temporary illness or other circumstances of a relatively short duration, the member shall not be replaced but a temporary substitute member shall be appointed.⁸ In the context of ad hoc arbitration under the Rules, without such a mechanism for temporary substitution, whether the absence of an arbitrator requires action under Article 12(3) will depend on the specific circumstances of the case, as they are understood by the party that is prejudiced by the absence.⁹

The practice of the Iran–US Claims Tribunal, discussed in the following sections, is instructive in terms of defining where the line falls between reasonable inconvenience by an arbitrator and failure to act or impossibility of further performance. Such practice may be drawn upon in interpreting and applying the virtually identical text of Article 12(3) of the 2010 UNCITRAL Rules. The question of remedies other than the challenge procedure reference in Article 12(3) is discussed in section 3 of this chapter on Article 14.

(2 ) Iran–US Claims Tribunal practice with respect to an arbitrator's failure to act

The Iran–US Claims Tribunal adopted corresponding Article 13(2) of the 1976 UNCITRAL Rules, without modification to the basic rule.¹⁰ The Tribunal confronted two incidents where arbitrators were challenged on the basis of a failure to act under Article 13(2). First, the 1984 challenge by the United States of Judges Kashani and Shafeiei was premised in part on a failure to act. Second, the Iranian government brought a challenge under Article 13(2) of the Tribunal Rules in August 1991 against a third-party arbitrator, Judge Gaetano Arangio-Ruiz.

In the first instance, the Agent for the United States argued that Judges Kashani and Shafeiei had “failed to act” when they attacked Judge Mangård. Specifically they “have repudiated basic principles of conduct governing international arbitration” and “they have refused to work with Mr. Mangård, a duly appointed member of the Tribunal entitled and obligated to perform the duties of an arbitrator.”¹¹ The Agent continued: “By their actions, they have served notice that they will not participate further in the Tribunal (p. 281) as presently, and lawfully, constituted.”¹² Concerned that Judges Kashani and Shafeiei might apologize for the attack and argue that they were able to continue to act, the US Agent argued that:

Even if Messrs. Kashani and Shafeiei were to apologize and agree to work … [t]he conduct of Messrs. Kashani and Shafeiei demonstrates their incapacity and unfitness to perform—and hence the de facto impossibility of performing—their functions as arbitrators. … Article 13(2) [of the 1983 Tribunal Rules] was drafted to cover all circumstances that make it impossible for an arbitrator to perform his functions.¹³

Judges Kashani and Shafeiei were withdrawn by the Iranian government prior to a decision on the challenge by the Appointing Authority.

The second instance involved an Iranian challenge to Judge Arangio-Ruiz for failure to act and rested on essentially four allegations. First, during the preceding twelve months, Judge Arangio-Ruiz had not spent more than 40 working days at the Tribunal, only 14 of which were spent physically participating in hearings. Second, based on this limited participation, Judge Arangio-Ruiz could not have had sufficient time to read and review carefully the parties’ pleadings and relevant evidence. He therefore must have relied exclusively on condensed and selected versions of pleadings and evidence prepared by a legal assistant. Third, Judge Arangio-Ruiz allegedly failed to study proposals concerning the cases brought before his Chamber and several times demonstrated he was insufficiently informed. Lastly, Judge Arangio-Ruiz's attendance at the Tribunal allegedly resulted in a sluggish adjudicating process in Chamber 3, which led to a large backlog of cases.¹⁴

The Agent for the United States argued in response that, in addition to the inaccuracy of Iran's allegations, the “plain meaning of ‘fails to act’ is inactivity, not activity of a type that one arbitrating party does not like.”¹⁵ The Agent went on to state that “the negotiating history of … the [1976] UNCITRAL Rules … confirms that the ‘fails to act’ provision was devised to address the case of an arbitrator who, while not formally resigning, had ceased all activity with respect to arbitral proceedings.”¹⁶ The Agent for Iran replied “that ‘failure to act’ is not meant to be absolute and that the level of an arbitrator's performance has to be taken into account in the light of the circumstances of every situation.”¹⁷

The Appointing Authority agreed with Iran that “the phrase ‘fails to act’ also covers the situation in which an arbitrator, though not completely inactive, consciously neglects his arbitral duties in such a way that his overall conduct falls clearly below the standard of what may be reasonably expected from an arbitrator.”¹⁸ However, the appointing authority disagreed with Iran that Judge Arangio-Ruiz's conduct fell below this standard.¹⁹

(p. 282) (3 ) Iran—US Claims Tribunal practice with respect to other disruptions

In addition to the mechanism of resolving an alleged failure to act or impossibility of further performance through the challenge process, the Tribunal itself had to consider remedies in the event of an arbitrator's absence from proceedings. The Tribunal essentially came to rely on two mechanisms for dealing with absences: (1) the use of substitute arbitrators to replace members in the event of temporary, justified absences, and (2) the use of truncated tribunals in the face of unjustified absences.

(a ) A note on substitute arbitrators

The Iran–US Claims Tribunal anticipated that arbitrators might, for good reasons, be temporarily absent from arbitral proceedings. As a result, it modified Article 13(2) of the 1976 UNCITRAL Rules to provide that if the President of the Tribunal determined that an arbitrator's failure to act or his impossibility to perform his duties was due to a temporary illness or other circumstances of a relatively short duration, the member would not be replaced but rather a temporary substitute member would be appointed.

An example of the Tribunal's application of its modified Article 13(2) of the 1976 UNCITRAL Rules was the appointment of Mr Salans as a substitute for the American arbitrator, Charles N Brower, when he was appointed Deputy Special Counsel to President Ronald Reagan in early 1987.²⁰ The naming of a substitute in this case was facilitated by the fact that the Americans had taken steps under the Note to Article 13 of the 1983 Tribunal Rules to have pre-qualified substitutes available to step in if a permanent member was temporarily absent. The Iranian government had not appointed pre-qualified substitutes, a practice which guaranteed that the absence of an Iranian arbitrator would lead to disruption of Tribunal proceedings unless the Tribunal could continue to proceed on some other basis.

Article 13(3) of the 1983 Tribunal Rules provides for the replacement of the Tribunal President in the event of his temporary absence. Under this provision, the replacement shall be “the senior other member of the Tribunal not appointed by either of the two Governments.” The individual so appointed shall act as President of the Tribunal and Chairman of the Full Tribunal.

In 1989, during the Iranian challenge to Judge Briner in Case No 39 and as President of the Tribunal, the Iranians alleged that Briner was acting improperly by continuing to perform his duties as President in the midst of the challenge proceedings. In a Dissent to Orders dated August 11, 1989, Judge Khalilian tried to equate the Iranian challenge to Briner with a de jure or de facto impossibility of the President's performance of his functions and called for the President to step aside and allow a replacement to perform his duties under Article 13(3).²¹

In response to the Iranian interpretation of Article 13(3), the Agent for the United States focused on the fact that nothing explicitly stated in either the 1983 Tribunal Rules or the 1976 UNCITRAL Rules requires the President or any arbitrator to relinquish his official duties in the face of a challenge. The Agent further noted that forcing an arbitrator to (p. 283) relinquish those duties prior to the resolution of a contested challenge would disrupt Tribunal proceedings and encourage abuse of the challenge mechanism.²²

A challenge of the President affected the entire operations of the Tribunal in a way the challenge of an arbitrator in a particular case does not. There was significant evidence that the Iranian challenge to Judge Briner as President was made for the purpose of disrupting proceedings in significant cases. Thus if the Iranian government achieved its goal of having Judge Briner replaced, even temporarily, they would arguably have been rewarded for their attempt to disrupt the proceedings. Nevertheless, in the event of a serious challenge to the President of a multi-claim institution, and certainly the Iranian challenge was regarded by many Iranian representatives as serious, applying the replacement provision of Article 13(3) could be appropriate.

Article 13(4) of the 1983 Tribunal Rules requires that a substitute member appointed for a temporary period under Article 13(2) continue to serve as a member of the Tribunal for those cases in which he participated in a hearing on the merits. It operates like Article 13(5), discussed below, to ensure minimal disruption of the proceedings and avoid the necessity of a re-hearing upon the return of the permanent member.

This rule does not appear to have been applied specifically at the Tribunal, however. Substitute arbitrators have been assigned to cases at the Tribunal, eg, Mr Salans as substitute for Mr Brower from January to April 1987, and presumably, awards could have been rendered under the signature of a substitute who had participated in the hearing.

(b ) A note on truncated proceedings

What the Iran–US Claims Tribunal perhaps did not foresee when it adopted the 1983 Tribunal Rules was that arbitrators would use unjustified absences to disrupt Tribunal proceedings, such as where arbitrators were absent for some deliberations and for the signing of awards. In these cases the proceedings had reached an advanced stage and the cases in question had already been heard and, more or less, deliberated. Because the use of the replacement procedures in Article 13 of the 1983 Tribunal Rules would have further frustrated ongoing proceedings, the Tribunal followed a practice of allowing the remaining members to proceed with the arbitration as a truncated tribunal.

Following is a description of that practice that inspired the inclusion in the 2010 UNCITRAL Rules of Article 14(2), a provision empowering the appointing authority in exceptional circumstances to appoint a substitute arbitrator or to authorize the remaining arbitrators to proceed as a truncated tribunal and make an award.²³

The Absence of Mr Shafeiei, Summer 1983. Judge Bellet submitted his resignation in a letter to President Lagergren dated December 1, 1982. The Tribunal accepted this resignation to be effective August 1, 1983 or upon any earlier date when Judge Bellet's replacement would be available.²⁴ In view of the August 1, 1983 departure date, “from February to late June the three arbitrators had been in agreement that July would be fully dedicated to final deliberations in … pending cases.”²⁵ On June 23, 1983, Judge Shafeiei in a letter to (p. 284) Chairman Bellet informed the Chamber that he would be on vacation until the end of July.²⁶ Despite the absence of Judge Shafeiei, Chamber Two dealt with the pending cases as planned, rendering Awards on Agreed Terms in Case Nos 449 and 83 and Awards in Case Nos 188 and 220. Tribunal Award No 61 in Case No 188, rendered July 27, 1983, is particularly significant because the Iranian arbitrator apparently did not participate in any deliberations concerning the case.²⁷ Despite this total absence following the Hearing, the Chamber nonetheless rendered its Award. Judge Aldrich later wrote: “Judge Bellet and I decided that the Chamber was justified, and in fact obligated, by international law and precedent to proceed with the awards on which we could agree … any other conclusion, in a continuing tribunal of this type with many cases on its docket, would permit the Tribunal's work to be sabotaged.”²⁸

(1 ) The absence of Mr Sani, Fall 1983

On August 10, 1983, the Agent for Iran informed the Tribunal that Judge Sani had submitted his resignation to the Government of Iran and that such resignation was effective August 10, 1983. President Lagergren declared at the 83rd Meeting of the Full Tribunal “that the Tribunal had, as yet, received no valid reasons for Mr. Sani's absence, and had not authorized that absence [and] that for the time being it would be for Chamber 3 and the Full Tribunal to determine the legal consequences of that absence in the individual cases pending before them.” Chairman Mangård informed Judge Sani in a letter dated August 18 that the Chamber still regarded him as a Member, and that six cases would be finalized with Awards signed on September 2, 1983 and an additional seven cases would be finalized with Awards signed the following week. On September 2, 1983, awards were rendered by Chamber Three despite the absence of Judge Sani in Case Nos 185, 346, 124, 67 and 62. In statements attached to each award, Judges Mangård and Mosk indicated that some deliberations in each case had been held in the presence of Judge Sani “after the Hearing … and before the Tribunal's summer recess.”²⁹

(2 ) The absence of Judge Mostafavi, Spring 1988

The hearing in Uiterwyk Corp and The Islamic Republic of Iran was held on November 12 and 13, 1986 before Chamber One, with all three arbitrators of that Chamber present. These arbitrators then held three sessions of oral deliberations on various procedural issues. During the last of these sessions, however, Judge Mostafavi announced that “in view of his dissent from decisions reached by a majority of the Chamber on procedural issues, he did not wish to take part in further deliberations.”³⁰ Judges Böckstiegel and Holtzmann informed Judge Mostafavi that the “Chamber could and would nevertheless continue the (p. 285) deliberations and prepare an award notwithstanding his absence.”³¹ The truncated Chamber rendered a partial award in the case on July 6, 1988. The majority noted:

The practice of the Tribunal in this respect is necessary to prevent disruption and frustration by one Member of the Tribunal's performance of its functions and is fully in accordance with recognized principles of international law. As Judge Stephen Schwebel has observed, “the weight of international authority, to which the International Court of Justice has given its support, clearly favors the authority of an international tribunal from which an arbitrator has withdrawn to render a valid award.”³²

Judge Mostafavi refused to sign. In a letter appended to the Partial Award, he explained his refusal to sign and criticized the Chamber's decision to proceed in truncated fashion. On the latter point, Judge Mostafavi wrote:

[I]t is also clear that even if [my] refusal were found to be unjustified, the provisions of Article 13, para 2 of the [1983] Tribunal Rules will still apply to this issue. That paragraph deals with the matter directly, and provides that:

In the event that an arbitrator fails to act or in the event of the de jure or de facto impossibility of his performing his functions, the procedure in respect of the challenge and replacement of an arbitrator as provided in the preceding articles shall apply.

… It will be noted that the above paragraph covers both justified and unjustified cases of refusal to perform an arbitrator's functions. …³³

In a Supplemental Opinion,³⁴ Judges Böckstiegel and Holtzmann responded:

Finally, it is appropriate to comment briefly on Mr. Mostafavi's view that when he failed to act he should have been replaced pursuant to Article 13, paragraph 2 of the [1983] Tribunal Rules. That provision permits the challenge and replacement of an arbitrator “who fails to act or in the event of the de jure or de facto impossibility of his performing his functions.” Article 13, paragraph 2 is not, however, the exclusive procedure for dealing with failure of an arbitrator to act. As explained in paragraph 30 of the Partial Award, the established practice of the Tribunal which is in accord with recognized international procedures, is for the majority of the arbitrators to continue their work and issue an award despite the voluntary choice of an arbitrator not to participate. In such circumstances, Article 13, paragraph 2 cannot be invoked to disrupt the orderly process of the Tribunal or to obstruct its functions. Moreover, the Tribunal is aware of no reason why it has been de jure or de facto impossible for Mr. Mostafavi to perform his functions in this Case either during the months he was still present at the Tribunal in The Hague or after his return to Iran. As noted in paragraph 30 of the Partial Award and confirmed in his letter, he acted in two other cases after his return to Iran.

Thus, the practice of all three Chambers of the Tribunal (and the President who has signed the notifications to the Escrow Agent)³⁵ constitutes precedent to the effect that at least after the hearing, the majority of a Chamber can continue working without the participation of a member who abstains without what the majority is ready to regard as a valid reason.

(3 ) The practice of the Tribunal regarding absence from the hearing

The Tribunal has not clearly decided whether proceedings at the stage of the hearing may continue despite the absence of an arbitrator. Generally, hearings have been postponed (p. 286) when “truncation” was the only option for the Tribunal or one of its Chambers,³⁶ but no ruling that such a postponement is legally required has been given. Chamber Three conducted two oral proceedings in May 1985 without one party-appointed arbitrator. This cannot serve as a precedent for hearings in general, since one was limited to the taking of witness testimony and the other concerned a pre-hearing conference.

(4 ) The practice of the Tribunal regarding the rendering of awards despite a refusal to sign

Although a lesser included category of truncated proceedings given the precedent of the Tribunal rendering awards despite both a refusal to sign and absence from deliberations, it should be noted that numerous awards were rendered where an arbitrator refused to sign.³⁷

(5 ) The practice of the Tribunal regarding the rendering of awards on agreed terms despite no participation by an arbitrator

Despite the absence and total non-participation of Judge Shafeiei in the summer of 1983, Chamber Two rendered two awards on agreed terms in Case Nos 449 and 83. Apparently, no hearing had been held in either case and neither Joint Request for an Award on Agreed Terms was filed with the Tribunal until after Judge Shafeiei had absented himself from the Tribunal. The second Award on Agreed Terms was rendered despite a strong protest by the Agent of Iran to the first.³⁸

(6 ) The practice of the Tribunal regarding the holding of pre-hearing conference despite the absence of an arbitrator

During an absence of Judge Ansari, Chamber Three nonetheless proceeded to hold a pre-hearing conference in Case No 261 on May 17, 1985.³⁹ Furthermore, it appears that Chamber One had held at least one pre-hearing conference in the past where an arbitrator, without objection from the panel, absented himself.

Finally, the unjustified absence of an arbitrator in a public international arbitration between nations does not prevent the tribunal from conducting at least certain of its proceedings with a truncated panel. However, in a private international arbitration, the law of the forum may be particularly significant in determining whether the remedy of suing the resigning or absent arbitrator is exclusive or whether additional remedies such as truncated proceedings are available.

(c ) A note on resignation of an arbitrator

The UNCITRAL Rules are silent as to the duties of the resigning arbitrator vis-à-vis the arbitral tribunal. The hidden issues surfaced, however, with the Iran–US Claims Tribunal. The several occasions the Tribunal has had to interpret Article 13(1) of the 1983 Tribunal Rules provide guidance as to the mechanics of resignation and the duties of resigning arbitrators vis-à-vis the tribunal.

The issue of abrupt resignations arose very early in the life of the Tribunal. On February 1, 1982, Judge Seyyed Hossein Enayat submitted his resignation from the Tribunal to his government, the Islamic Republic of Iran, without providing any notice to the Tribunal. (p. 287) This resignation was ostensibly in protest of certain remarks allegedly made by Nils Mangård, a third-party arbitrator, the previous December.⁴⁰ According to the Iranians, the resignation was to be effective immediately. At the time of Enayat's resignation, a hearing was scheduled for March 8, 1982 by the Tribunal in Case A/1, which encompassed four issues relating to the operation of the Security Account.

Article 13(1) of the 1983 Tribunal Rules provides that in the event of resignation, a substitute arbitrator shall be appointed pursuant to the procedure applicable to the original appointment of the resigning arbitrator. In this case, Enayat was a party-appointed arbitrator. Thus, under Article 7 of the 1983 Tribunal Rules, Iran had thirty days to appoint a substitute. Only after this initial thirty days had passed could the United States request the appointing authority to appoint a substitute. Given the opportunities for delay, Enayat's resignation jeopardized the Tribunal's scheduled adjudication of a very important matter. Ultimately, but not until much discussion had ensued, the issue became moot due to the appointment by Iran of Mostafa Jahangir Sani and his timely arrival for the hearing in Case A/1. Once it became clear that a successor would arrive in timely fashion, the Tribunal accepted Enayat's resignation effective February 1, 1982, even though the resignation had not per se been submitted to the Tribunal.

It was thus not until the resignation of Judge Sani in August 1983, that the Tribunal ultimately developed a position with regard to resignations. On August 10, 1983, the Government of Iran informed the Tribunal that Judge Sani had submitted his resignation, effective immediately. Chamber Three, of which Judge Sani was a member at that time, however, had a number of completed cases awaiting only the signature of the arbitrator and a full schedule of hearings set for September. When the Iranians failed to appoint a substitute to undertake Sani's responsibilities, the Tribunal recognized that the issue of sudden and potentially disruptive resignations had to be addressed in a systematic way. Therefore, in the interests of minimizing disruption to Tribunal proceedings and yet maintaining respect for an arbitrator's right to resign, the Tribunal established the following procedures for resignations. First, the resignation must be submitted to the Tribunal, not to the party that initially appointed the arbitrator. Second, the resignation would not be effective until accepted by the Tribunal. Third, the effective date of the resignation would not necessarily be the date suggested by the resigning arbitrator, but rather one determined by the Tribunal taking into account, among other things, the date suggested by the resigning arbitrator.

In addition, the Tribunal has usually made an arbitrator's resignation effective only when a successor has been appointed and is available to take up his or her duties. In short, it is the right of an arbitrator to resign. The freedom to resign, however, is not license to do so. As with all rights, the freedom to resign finds its limits in the rights of others. Accordingly, John Crook, the Agent of the United States, wrote to President Lagergren following Sani's resignation: “we trust that proper consideration will be given to the disruption, cost and potential prejudice to Claimant's rights that will inevitably follow from a precipitous departure from the Tribunal.”⁴¹

In essence, the Tribunal accepted Judge Sani's resignation but at a date significantly later than that given in the original resignation notice. The significance of this action was that for the period between Judge Sani's unilateral attempt to resign and the Tribunal's acceptance of that resignation, his absence from Tribunal proceedings was unjustified in the view of the (p. 288) Tribunal. As discussed below, Article 14(2) of the 2010 UNCITRAL Rules empowers the appointing authority to appoint a substitute arbitrator or allow a truncated tribunal to proceed with the arbitration to conclusion. Thus, the conclusion that an arbitrator is unjustifiably absent potentially allows for one of these extraordinary remedies to be imposed.

Moreover, the law of the forum may be particularly significant as to whether the often available remedy of suing the resigning arbitrator for costs is exclusive. Municipal legal systems widely recognize limits on the right of resignation and indeed may make the arbitrator personally liable for exceeding such limits.⁴² Responding more generally to the disruption involved in resignations such as Judge Sani's, the Tribunal also amended Article 13 of the 1983 Tribunal Rules by adding paragraph 5, which made resignations applicable only to future cases and not current ones.⁴³ The “Mosk Rule,” named after Judge Mosk, the first arbitrator to which the rule applied, “was adopted to facilitate efficient proceedings by permitting an arbitrator to continue to participate in deliberations in a case he or she had heard even if he or she resigned prior to the conclusion of deliberations and to prevent arbitrators from frustrating the issuance of an award by resigning during or after deliberations.”⁴⁴ As a result, arbitrators at the Tribunal are expected to (p. 289) continue to serve as members of the Tribunal for all cases on which they have participated in a hearing in the merits.⁴⁵

The Article 13(5) practice of the Tribunal concerning resignations has been consistently followed by the American and third-country arbitrators, if not always by their Iranian counterparts.⁴⁶ The resignations of the American and third-country arbitrators were all submitted to the Tribunal and all recognized that a resigning arbitrator has a duty where possible to ensure an orderly transition of the work.

The history of the Tribunal has seen the death of two great scholars and arbitrators, Professor Michel Virally and Krzysztof Skubiszewski. Given that arbitrators in major international arbitrations are often senior in age due to their pre-eminence in the field, death is a possibility which the Rules must take into account. In the event of the death of an arbitrator, Article 14(1) of the UNCITRAL Rules stipulates that “a substitute arbitrator shall be appointed or chosen pursuant to the procedure provided for in articles 8 to 11 that was applicable to the appointment or choice of the arbitrator being replaced.”⁴⁷

(4 ) Comparison to the 1976 UNCITRAL Rules

Article 12(3) is nearly identical to Article 13(2) of the 1976 UNCITRAL Rules, save for the inclusion of feminine adjectives to reflect modern times and the omission of a reference to the general replacement procedures that in any event apply under the Rules if a claim of failure to act or impossibility of further performance is upheld. The repositioning of the rule from under the heading “Replacement of an Arbitrator” to under the heading “Disclosures by and Challenge of Arbitrators” reflects the close procedural relationship between challenges and determinations of an arbitrator's failure to act of impossibility of further performance.

C. Extracts from the Practice of Investment Tribunals

Himpurna California Energy Ltd and Republic of Indonesia, Final Award (October 16, 1999) (Ad Hoc Proceeding, 1976 UNCITRAL Rules, Concession Agreement), reprinted in (2000) XXV Ybk Commercial Arb 186, 194, 198:

[43] Although the Republic of Indonesia's readiness to sabotage these proceedings gave rise to an extraordinary event, the Arbitral Tribunal has not found it necessary to innovate in order to (p. 290) ensure the fulfilment of its mandate under the Terms of Appointment. The weight of well-established international authority makes clear that an arbitral tribunal has not only the right, but the obligation, to proceed when, without valid excuse, one of its members fails to act, withdraws or—although not the case here—even purports to resign.

…

[58] [The Tribunal noted the Supplemental Opinion by Judges Böckstiegel and Holtzmann in Uiterwyk Corp. v. The Islamic Republic of Iran, 26 Iran-U.S. C.T.R. 5 (1991–I), which concluded that Article 13(2) of the [1976] UNCITRAL Rules “is not the exclusive procedure for dealing with failure to act,” and “cannot be invoked to disrupt the orderly process of the Tribunal or to obstruct its functions.”]

[59] The Arbitral Tribunal concurs with that conclusion. A possible course may be to remove and replace an arbitrator who has withdrawn, if the withdrawal takes place at a sufficiently early stage that his replacement would cause only limited disruption. Such a solution is, however, manifestly inappropriate when an arbitrator withdraws at an advanced stage in the proceedings and that withdrawal is found by the Arbitral Tribunal to be without valid excuse. …

…

[63] … [Where the withdrawal of the arbitrator appointed by Indonesia] is the result of improper behaviour of agents of the Republic of Indonesia … the Republic of Indonesia should not benefit from its own wrong. …

Vito G Gallo and Government of Canada, Procedural Order No 1 (June 4, 2008) (ICSID administered, 1976 UNCITRAL Rules, NAFTA Chapter Eleven), at 4:

18 : … In the event of the death or incapacity of a member of the Arbitral Tribunal, the truncated tribunal may proceed to decide procedural matters.

D. Extracts from the Practice of the Iran–US Claims Tribunal

(1 ) Tribunal Rules (1983), Article 13(1)—Resignation

Whittaker Corp and Islamic Republic of Iran, Award No 301–286–1 (April 22, 1987), Dissenting Opinion of Judge Holtzmann (April 27, 1987), reprinted in 14 Iran-US CTR 271 n 2 (1987–I):

The majority in this case [was] the Chairman and Judge Mostafavi. [Judge] Mostafavi was the proper arbitrator to sign the Award notwithstanding the letter of resignation that he wrote to the President of the Tribunal …

Article 13 of the [1983] Tribunal Rules contemplates the possibility of the resignation of an arbitrator and establishes the procedures for appointing a successor. With respect to the resignation of J. Mostafavi, the Full Tribunal, following its previous practice, determined that (i) the resignation must be submitted to and considered by the Tribunal, (ii) the resignation is not effective until it is accepted by the Tribunal, (iii) the effective date of the resignation is not the date suggested by the resigning arbitrator, but rather a date determined by the Tribunal, and (iv) Judge Mostafavi's resignation would be effective when his successor had been appointed and was available to take up his duties. No successor had been appointed by the date on which the Award was to be signed, and, therefore, J. Mostafavi's resignation had not become effective on that date.

Finally, it is to be noted that even if J. Mostafavi's resignation had become effective by the date of the signature of the Award, he would still be the proper arbitrator to sign the award in this Case in view of Article 13, paragraph 5, of the Tribunal Rules which states that “[a]fter the effective date of a member's resignation he shall continue to serve as a member of the Tribunal with respect to all cases in which he had participated in a hearing on the merits … ” This provision is not contained in the [1976] UNCITRAL Arbitration Rules on which the Tribunal Rules are based, but was added by the Tribunal in the exercise of its powers under Article II, paragraph 2 of the Claims Settlement Declaration.

(p. 291) (2 ) Tribunal Rules (1983), Article 13(2)—Failure to act

Memorandum of the Agent of the United States to the Appointing Authority supporting the Initiation of the Challenge of Judges Kashani and Shafeiei, September 17, 1984, at 13–17 (footnote numbers added):

D. Mr. Kashani's and Mr. Shafeiei's Resort to Violence and Threats Constitutes a Failure to Act Pursuant to the Tribunal Rules and Renders it De Facto Impossible for Them to Perform Their Functions as Arbitrators under those Rules.

Article 13(2) of the [1983] Tribunal Rules provides that an arbitrator may be challenged and replaced first if he “fails to act” or, second, “in the event of de facto or de jure impossibility of his performing his functions.” The arbitrators’ conduct at issue here justifies a challenge on both grounds.

Messrs. Kashani and Shafeiei have “fail[ed] to act” in two significant respects. First, by their attack and continued threats, Messrs. Kashani and Shafeiei have repudiated basic principles of conduct governing international arbitration. “To act” as an arbitrator entails action in accordance with applicable rules and basic principles of decent conduct. Messrs. Kashani and Shafeiei have renounced those principles and violated those rules. They have thus failed to act as the Rules require.

Second, they have refused to work with Mr. Mangård, a duly appointed member of the Tribunal entitled and obligated to perform the duties of an arbitrator. Each member of the Tribunal has a duty to join with every other member as necessary in deliberations, hearings and other business of the Tribunal. Nevertheless, Messrs. Kashani and Shafeiei have refused to meet with Mr. Mangård in the performance of these required duties. Instead, they have sought to drive Mr. Mangård from the Tribunal by force. Their attack and continued threats violate and abandon their responsibilities as arbitrators. They have thus both failed to act under the first portion of Article 13(2).

…

Where an arbitrator's refusal to sit paralyzes a tribunal, international law requires the removal of that arbitrator. In the Franco-Tunisian Arbitration, the Tunisian Arbitrators refused to participate in Tribunal proceedings because they believed that the convention establishing the tribunal was invalid. Because the convention required the presence of at least two Tunisians on the tribunal, the refusal of the Tunisian arbitrators to sit threatened to paralyze the tribunal. Accordingly, the tribunal removed the two Tunisians, holding that the refusal of a member of a permanent arbitral tribunal to comply with a request to sit cannot, whatever the reasons given and even if his refusal to sit paralyzes the tribunal, result in dissolving the tribunal or putting an end to its mission.¹

The principle established by these authorities, that an arbitrator who paralyzes the tribunal by refusal to perform arbitral functions shall be removed, is embodied in [1983] Tribunal Rule 13(2). As is now indisputably clear, Messrs. Kashani and Shafeiei adamantly refuse to perform their functions as arbitrators. By their actions, they have served notice that they will not participate further in the Tribunal as presently, and lawfully, constituted. So long as they remain members, the Tribunal will remain paralyzed and its arbitral mission frustrated. Under these circumstances, international law requires, and Article 13(2) permits, their removal and replacement.

Even if Messrs. Kashani and Shafeiei were to apologize and agree to work with Mr. Mangård in some fashion, a second, independent ground for challenge under Article 13(2) is applicable. The conduct of Messrs. Kashani and Shafeiei demonstrates their incapacity and unfitness to perform—and hence de facto impossibility of performing—their functions as arbitrators. Arbitrators who physically attack their colleagues and make violent threats against them show a fundamental, irremediable incapacity and unfitness to function as arbitrators.² As the Committee Report on the [1976] UNCITRAL Arbitration Rules makes clear, Article 13(2) was drafted to cover all circumstances that make it impossible for an arbitrator to perform his functions. See Report of Committee II, 9th Sess. para 70 (A/CN.9/IX/CRP.1). The conduct displayed here shows such a fundamental defect in temperament and character, that it is impossible, de facto, for them to perform their functions as arbitrators.

[Footnote] 1. Case re Franco Tunisian Arbitration, [1957] Intl L. Rep. 767, 769, quoted in 12 M. Whiteman, Digest of International Law 1072 (1971). In this case, there was no challenge (p. 292) procedure available and thus the removal was by action of the tribunal. In the present case, Article 13(2) provides that a challenge is the appropriate means of removal.

[Footnote] 2. Similarly, Witenberg has observed that “l’indignité”—unworthiness or unfitness—is a basis for declaring an arbitrator's seat vacant. J. C. Witenberg, L’Organisation Judiciaire 45–46, paras 64–66 (1937).

Blount Bros and Islamic Republic of Iran, Award No 216–53–1 (March 6, 1986) at 3, reprinted in 10 Iran-US CTR 95, 96 (1986–I):

Mr. Richard Mosk participated in the hearing and Award in this case pursuant to Article 13(2) (as amended) of the [1983] Tribunal Rules and pursuant to an agreement between the Governments of the Islamic Republic of Iran and the United States of America.

Presidential Order No 51, February 2, 1987, reprinted in 14 Iran-US CTR 353 (1987–I):

taking due account of:

— Mr. Brower's appointment as Deputy Special Counsellor to the President of the United States of which I have been notified by a letter of Mr. Brower dated January 8, 1987;
— my determination that these are circumstances “of relatively short duration” in the sense of Article 13, paragraph 2 of the [1983] Tribunal Rules;
— the letters of the Agent of the Government of the United States of America dated January 9, 1987 and January 21, 1987, which acting under the Note to Article 13 of the [1983] Tribunal Rules, had appointed Mr. Carl F. Salans as well as Richard M. Mosk as substitute for Mr. Brower in Cases 155, A21, A15 I:C, 830, A19 and 423 and that Mr. Mosk would act as substitute for Mr. Brower in Case 173;

I hereby designate Mr. Salans as member of the Tribunal to act in the Full Tribunal in Cases [see above], and Mr. Mosk to act as a member of Chamber 3 in Case 173.

Uiterwyk and Islamic Republic of Iran, Award No 375–381–1 (July 6, 1988), reprinted in 19 Iran-US CTR 107, 116–17 (1988–II) (footnotes omitted):

30. Mr. Mostafavi took part in the Hearing and in three sessions of oral deliberations on various procedural issues in the Case. However, at the third session, he announced that, in view of his dissent from decisions reached by a majority of the Chamber on procedural issues, he did not wish to take part in further deliberations. The Chairman then informed Mr. Mostafavi that, in accordance with the [1983] Tribunal Rules and Tribunal practice, the Chamber could and would nevertheless continue the deliberations and prepare an Award notwithstanding his absence. Mr. Mostafavi then withdrew from further participation in the arbitration of this Case. The other two Members of the Chamber continued the deliberations and prepared the Award. This is in accordance with the established practice of the tribunal to continue its work and make awards despite the failure of one arbitrator to participate. The practice of the Tribunal in this respect is necessary to prevent disruption and frustration by one Member of the Tribunal's performance of its functions and is fully in accordance with recognized principles of international law. As Judge Stephen Schwebel has observed, “the weight of international authority, to which the International Court of Justice has given its support, clearly favors the authority of an international tribunal from which an arbitrator has withdrawn to render a valid award”. During the period while the deliberations were being conducted Mr. Mostafavi submitted his resignation which in accordance with the Tribunal's usual practice was accepted by the Tribunal effective 17 July 1987, the date on which his successor was appointed and available to take up his duties. It is noteworthy that Mr. Mostafavi had voluntarily withdrawn from deliberations more than six months before his resignation as a Member of the Tribunal became effective. Notwithstanding his resignation and the appointment of his successor, (p. 293) Mr. Mostafavi is a Member of the Tribunal for all purposes of this and certain other Cases pursuant to the provisions of Article 13, paragraph 5 of the [1983] Tribunal Rules. … Pursuant to this provision, after his resignation and return to Iran, Mr. Mostafavi participated in other Cases and signed Awards in those Cases. In accordance with the same provision he has been invited to sign this Award.

Uiterwyk and Islamic Republic of Iran, Award No 375–381–1 (July 6, 1988), Supplemental Opinion of Judges Böckstiegel and Holtzmann (July 6, 1988), reprinted in 19 Iran-US CTR 169, 170–71 (1988–II):

Finally, it is appropriate to comment briefly on Mr. Mostafavi's view that when he failed to act he should have been replaced pursuant to Article 13, paragraph 2 of the [1983] Tribunal Rules. That provision permits the challenge and replacement of an arbitrator “who fails to act or in the event of the de jure or de facto impossibility of his performing his functions.” Article 13, paragraph 2 is not, however, the exclusive procedure for dealing with the failure of an arbitrator to act. As explained in paragraph 30 of the Partial Award, the established practice of the Tribunal, which is in accord with recognized international procedures is for the majority of the arbitrators to continue their work and issue an award despite the voluntary choice of an arbitrator not to participate. In such circumstances, Article 13, paragraph 2 cannot be invoked to disrupt the orderly process of the Tribunal or to obstruct its other functions.

Letter of Judge Mostafavi (June 3, 1988) regarding Uiterwyk and The Islamic Republic of Iran, Award No 375–381–1 (July 6, 1988) at 8–10, reprinted in 19 Iran-US CTR 161, 167–69 (1988–II):

3.1 As noted above, both the way you treated the facts in the Case and your unwillingness to respect recognized principles of equitable proceedings, necessarily and justifiably compelled me, by virtue of my duty to the arbitrating Parties, to refuse to participate any further in the proceedings in this Case. However, it is also clear that even if this refusal were found to be unjustified, the provisions of Article 13, paragraph 2 of the [1983] Tribunal Rules will still apply to this issue ….
3.2 It will be noted that the above paragraph [text of Article 13, paragraph 2] covers both justified and unjustified cases of refusal to perform an arbitrator's functions and applies both to a current arbitrator and to an arbitrator who has resigned but is still “considered a member of the Tribunal” pursuant to Article 13, paragraph 5 of the [1983] Tribunal Rules. …
4.1 I wrote in my letter of 10 April 1988, there is no way that Article 13, para 5 of the [1983] Tribunal Rules—which has been repeatedly invoked for the purpose of establishing that I am still a member of the Tribunal for the purpose of this Case—can be construed as requiring and compelling me to serve in that capacity. Furthermore, the Tribunal's records on the process whereby this paragraph was approved clearly demonstrate that the Tribunal's members were not intent on applying a dictatorial rule. … However, the more fundamental and important point which I insist be kept in mind in this connection, is that even supposing that one were to reject my abovementioned assertion—that is, supposing that Article 13, para 5 were held to be binding in this instance—all that the said paragraph will, in the end, indicate is that my resignation on 1 April 1987 did not affect those cases in which I was serving as an arbitrator at the time that I resigned, and in the hearings in which I participated before my resignation. With respect to the instant Case it is clear, first of all, that I announced my refusal to participate on 17 November 1986; and by applying the provisions of Article 13, para 2 with respect to that same date, the issue of whether to apply the rule set forth in para 5 of that same Article has been altogether extinguished. Second, and more important, Article 13, para 2 deals with an arbitrator's refusal to perform his functions; and applying Article 13, para 5 in connection with any particular case will, in the end, lead to only one conclusion—namely that notwithstanding his resignation, a resigned arbitrator is considered an arbitrator in respect of that particular case.

(p. 294) Letter of the Agent of Iran to the Appointing Authority initiating a Challenge of Judge Arangio-Ruiz, August 8, 1991, at 1, 4–5, reprinted in 27 Iran-US CTR 293–97 (1991–II):

I am writing to you on the basis of Article 13, paragraph 2 of the Iran-United States Claims Tribunal Rules to request you to excuse Mr. Gaetano Arangio-Ruiz from his present office as a third country arbitrator to Iran-United States Claims Tribunal, if he does not voluntarily withdraw. Mr. Arangio-Ruiz now has the post of the Chairman of Chamber Three.

The reason for this motion is that, as the facts described below will show, Mr. Arangio-Ruiz has failed to act as his demanding position requires. Under such circumstances, the above-referenced Provision stipulates that:

“ … the procedure in respect of the challenge and replacement of an arbitrator as provided in the proceeding articles shall apply.”

This notice has been essentially prompted by the revelations made in Iranian Arbitrator's, Dr. Aghahosseini's Dissent to Order of 26 July 1991 in Cases Nos 44, 46, 47 and 146, Shahim S. Ebrahimi et al. v. The Government of the Islamic Republic of Iran (hereinafter Dissent to Order). This document imparts the shocking news that Mr. Arangio-Ruiz for the last 12 months has been present at the Tribunal “no more than 40 working days.”

…

For the above reasons, the Government of the Islamic Republic of Iran believes that Article 13(2) of the [1983] Tribunal Rules concerning an arbitrator's failure to act applies to Mr. Arangio-Ruiz's course of conduct, and thus the procedure in respect of the challenge and replacement of arbitrators provided in Articles 6–12 should be followed to remedy the situation.

And wherefore copies of this letter are sent to Mr. Gaetano Arangio-Ruiz, the Chairman of Chamber Three of the Iran-United States Claims Tribunal, to the other Party (the United States of America) and other Members of the Tribunal in accordance with Article 11(2) of the [1983] Tribunal Rules.

In case the other party does not agree to this application and Mr. Arangio-Ruiz does not withdraw; you, as the Appointing Authority of the Iran-United States Claims Tribunal are requested to decide upon it pursuant to Article 12(b) of the [1983] Tribunal Rules.

The Government of the Islamic Republic of Iran stands ready to file briefs and evidence in support of the legal and factual grounds in this Application, and respond to any points the other Parties might take issue with, according to the schedule you will set for the exchange of memorials.

Letter of Judge Arangio-Ruiz to the Appointing Authority, August 14, 1991, at 1–2, reprinted in 27 Iran-US CTR 311 (1991–II):

I have this honour to advise you that I consider that my conduct does not constitute a failure to act under Article 13, paragraph 2 of the [1983] Tribunal Rules.

I therefore do not intend to withdraw from my office as a third country member of the Iran-United States Claims Tribunal.

I am prepared to refute the allegations in the above-referenced letter of the Agent of the Government of the Islamic Republic of Iran whenever you so instruct me.

I await your further instructions.

Letter and Memorandum of the Agent of the United States to the Appointing Authority regarding the Challenge by Iran of Judge Arangio-Ruiz, September 5, 1991, at 1–2, 3, 4, 6–7 (footnotes omitted), reprinted in 27 Iran-US CTR 312–23 (1991–II):

By letter dated 8 August 1991, the Agent of the Government of the Islamic Republic of Iran has requested that you excuse Judge Arangio-Ruiz as a third country arbitrator of the Iran-United States Claims Tribunal on the ground that Judge Arangio-Ruiz has “fail[ed] to act” within the meaning of Article 13(2) of the [1983] Tribunal Rules.

(p. 295) Pursuant to Article 11(3) of the [1983] Tribunal Rules, the United States responds by stating unequivocally that it does not agree to Iran's application. This is not to say that the United States has changed in any way its consistent position that the Tribunal's chambers should expedite their work and that arbitrators should devote full time to their Tribunal responsibilities. This is, however, a matter which must be addressed by the Tribunal itself, and cannot be resolved by filings with the Appointing Authority.

Iran's letter does not set forth grounds for the removal of an arbitrator for failure to act within the meaning of Article 13(2). Analysis of Iran's allegations against Judge Arangio-Ruiz reveals that Iran is proceeding on the basis of a fundamentally flawed notion of the meaning of the phrase “fails to act” as used in Article 13(2). Furthermore, even if Judge Arangio-Ruiz had failed to act, which he has not, Iran has failed to acknowledge the procedures mandated by the last sentence of Article 13(2), which was added to establish a significant role for the President in such a situation.

The plain meaning of “fails to act” is inactivity, not activity of a type that one arbitrating party does not like. And, as set forth in the enclosed Memorandum of Law, the negotiating history of both the [1976] UNCITRAL Rules and the related provision of the UNCITRAL Model Law confirm that the “fails to act” provision was devised to address the case of an arbitrator who, while not formally resigning, had ceased all activity with respect to arbitral proceedings.

When an application is made to remove an arbitrator under Article 13(2), the sole relevant question is whether the arbitrator has in fact been completely inactive with respect to the arbitral tribunal for a sufficiently long period that it is appropriate to replace him. The answer would be affirmative, for example, in a situation in which an arbitrator failed entirely to attend hearings or deliberations.

There is no basis in the plain meaning or the negotiating history of Article 13(2) for an interpretation that would require or permit inquiry into the manner in which an arbitrator has performed his functions. The article does not allow considerations of whether others disagree with an arbitrator's decisions, whether others think that his working methods have been diligent, or whether he has behaved in a way that others do not approve. To the contrary, as shown in the enclosed Memorandum of Law, the negotiating history expressly rejects such an interpretation. This is not surprising because such an interpretation would violate the most basic precepts of modern arbitration practice. An arbitrator cannot be subject to review on issues such as why he has decided in a particular way or what working methods he used in reaching the decision, without ultimately undermining the principle of the independence of the arbitrator and the finality of his decisions.

Particularly in light of the plain meaning of the phrase “fails to act” in Article 13(2), Iran's letter is striking in its silence concerning the extensive activities of Chamber Three while Judge Arangio-Ruiz has been its Chairman. The activity statistics are illuminating. Since 1 January 1989, the date on which Judge Arangio-Ruiz became Chairman of Chamber Three, Chamber Three has issued a total of 36 substantive rulings in contested cases (21 awards and 15 interlocutory awards, interim awards or decisions). During the same period, Chamber Two has issued 22 (20 awards, and 2 interlocutory awards, interim awards or decisions) and Chamber One has issued 33 (27 awards and 6 interlocutory awards, interim awards or decisions).

Similar results are seen with respect to shorter periods within the overall period of Judge Arangio-Ruiz tenure.

…

Thus, for whatever period one considers, the activity statistics for Chamber Three simply do not support the allegations that the Chairman has “failed to act” within the meaning of Article 13(2).

…

Iran's allegations concerning Judge Arangio-Ruiz do not relate to whether he has “failed to act” within the meaning of Article 13(2) but rather, are criticisms of how he has acted.

…

To summarize, Iran's application to remove Judge Arangio-Ruiz is premised on a flawed interpretation of the “fails to act” phrase in Article 13(2). Analysis of objective factors easily reveals that (p. 296) there has been no “failure to act” within the meaning of Article 13(2). Instead, one party—Iran—disapproves of Judge Arangio-Ruiz's manner of acting and disagrees with some of the majority decisions of his Chamber. Both the plain meaning of the “fails to act” phrase and the negotiating history show that such disapproval and disagreement do not Justify an inquiry under Article 13(2), and much less the removal of Judge Arangio-Ruiz.

Accordingly, the United States requests that you summarily reject Iran's application, and allow Chamber Three to proceed apace with the important business before it.

[The accompanying memorandum follows.]

MEMORANDUM OF LAW OF THE UNITED STATES CONCERNING ARTICLE 13(2) OF THE RULES OF THE IRAN-UNITED STATES CLAIMS TRIBUNAL

Article 13(2) of the [1983] Tribunal Rules contains the entire text of Article 13(2) of the [1976] UNCITRAL Arbitration Rules plus an additional last sentence added by the Full Tribunal pursuant to its powers under Article III, paragraph 2, of the Claims Settlement Declaration.

…

Proper application of Article 13(2) must take into account both the first sentence, unchanged from the [1976] UNCITRAL Rules, and the last sentence, added for the purposes of the Tribunal.

The negotiating history of Article 13 of the [1976] UNCITRAL Rules reveals clearly the context in which the “failure to act” aspect of the Rule was devised. The preliminary draft of the article that, in relevant part, became Article 13 dealt only with death, incapacity or resignation of an arbitrator. The Summary of Discussion of the preliminary draft at the Eighth Session of UNCITRAL, the first session to take up the drafting of the Rules, notes the following:

The reference in this paragraph to the “resignation” of an arbitrator was examined. It was pointed out that this term might not be sufficiently wide to cover certain situations which might arise in relation to the conduct of the arbitrator. One such situation arose where an arbitrator did not formally resign, but simply ceased to attend the arbitral hearings, or otherwise ceased to participate in the arbitral proceedings. It was suggested that an appropriate provision should be added for a presumption of resignation in such cases. Alternatively it was suggested that the phrase “failure to act” might be added to cover this situation. … It was also suggested that a provision be inserted to the effect that, where an arbitrator resigns or ceases to act, he must give his reasons for such action.

United Nations Commission on International Trade Law, Summary of Discussion on Preliminary Draft—Eighth Session, U.N. Doc. A/10017, para 89 (emphasis added). This reflected the views of the representative of Greece that the rule should make some provision for “informal resignation”—the situation in which an arbitrator “stopped attending the proceedings if he realized that they were proceeding unfavorably from the point of view of the party who had appointed him” and of the representative of the United Kingdom who said that “the problem most commonly encountered was … [the arbitrator's] failure to take any action.” U.N. Doc. A/CN.9/SR.16 (1975), at 157–58. Thus, it is clear what was meant by the phrase “failure to act” at the time it was suggested for inclusion in the Article: intentional and complete non-attendance at and non-participation in arbitral proceedings.

Following the Eighth Session, the draft was revised to include a “failure to act” provision. In the Commentary on the Revised Draft, reference was made to the inclusion of a provision on replacement for “unwillingness to perform the functions of an arbitrator.” United Nations Commission on International Trade Law, Commentary on Revised Draft—Considered at Ninth Session, U.N. Doc. A/CN.9/112/Add.1, para 1. In the same document, the “failure to perform the functions of an arbitrator.” Id., para 3.

In the discussion at the Ninth Session, the representative of Belgium stated that a time-limit for non-performance should be fixed because “otherwise it would be difficult to know at what stage an arbitrator could be judged to have ‘failed to act’.” The representative of the Philippines supported this view, stating that “‘failure to act’ would be difficult to establish if no time-limit was stipulated.” The Chairman, however, was of the view that the appropriate authority would decide whether and when an arbitrator had failed to act and that “[e]stablishing a time-limit would lead to a lack of flexibility.” No alteration was made in the draft. United Nations Commission on (p. 297) International Trade Law, Summary of Discussion—Ninth Session. Committee II, U.N. Doc. A/CN.9/9/C.2/SR.5, at 5–6.

Accordingly, all the discussion of the drafters concerning the “failure to act” provision related solely to the question of the length of time that should elapse before complete non-participation in arbitral proceedings could be regarded as constituting a failure to act. There was absolutely no consideration of, much less adoption of, any proposal that would have endorsed the use of the provision as a test of how versus whether, an arbitrator performed his functions.

UNCITRAL revisited the subject of “failure to act” when it considered what became Article 14 of the Model Law. In the Model Law as finally adopted, the phrase was modified by the addition of the clause “without undue delay,” so that the procedures set forth in that Article would be invoked.

[i]f an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay …

(Emphasis added.) Because the negotiating history of the Model Law indicates that “the addition served merely to clarify the text and should not be construed as attaching to the words ‘fails to act’ a meaning different from the one given to the wording in the [1976] UNCITRAL Arbitration Rules” (Report of the United Nations Commission on International Trade Law on the work of its Eighteenth Session, Official Records of the General Assembly, Fortieth Session, Supplement No 17, 3–21 June 1985 (adopted 21 June 1985) (“Commission Report”), U.N. Doc. A/40/17 (21 Aug. 1985), para 139), this history is instructive in considering the meaning of Article 13(2) of the Rules.

The legislative history of the “failure to act” provision demonstrates the elements that UNCITRAL considered as the term evolved. By the Fifth Draft the wording was identical to Article 13(2) of the Arbitration Rules. Draft Text of a Model Law on International Commercial Arbitration as Adopted by the Working Group, U.N. Doc. A/CN.9/246 (Annex) (6 Mar. 1984). In connection with that Draft, the Secretariat prepared a Commentary for discussion at the next session of the Commission. In that discussion, the Commission reached somewhat different views, as reflected in its Report—and the Report is, of course, the controlling document. Recalling that, as noted above, UNCITRAL expressly stated that it intended the meaning of the Model Law on this point to be the same as in the Arbitration Rules, it is useful in understanding that meaning to analyze both the Secretariat's Commentary and the Commission's later decision, as reflected in its Report.

The Secretariat Commentary states:

It is submitted that in judging whether an arbitrator failed to act the following considerations may be relevant: Which action was expected or required of him in the light of the arbitration agreement and the specific procedural situation? If he has not done anything in this regard, has the delay been so inordinate as to be unacceptable in the light of the circumstances, including technical difficulties and the complexity of the case? If he has done something and acted in a certain way, did his conduct fall clearly below the standard of what may reasonably be expected from an arbitrator? Amongst the factors influencing the level of expectations are the ability to function efficiently and expeditiously and any special competence or other qualifications required of the arbitrator by agreement of the parties.

Analytical Commentary on Draft Text of a Model Law on International Commercial Arbitration, Report of the Secretary-General, UN Doc A/CN.9/264 (25 Mar 1985), para 4.

Two observations are appropriate concerning the Secretariat Commentary. First, it confirms that the “fails to act” phrase is applicable in the situation where the arbitrator “has not done anything” at which point the relevant question becomes whether the resulting delay has been “unacceptable.” In this regard, the Commentary does not go beyond the previous interpretation of the phrase in the [1976] UNCITRAL Rules. Second, the Commentary appears to support an interpretation of the phrase that could include a review of the performance of the arbitrator in certain circumstances—an analysis of whether he functioned “efficiently and expeditiously,” whether his conduct reflected his “special competence or other qualifications.” This aspect of the Commentary (p. 298) appears to expand upon the interpretation of the phrase as discussed in the context of the Rules, although, even in this expanded form, it is clear that the phrase would apply only where the conduct was “clearly below the standard of what may reasonably be expected from an arbitrator.”

It appears that the Secretariat Commentary provoked significant discussion at the next meeting of the Commission in June 1985. A number of representatives suggested changes adding specific language relating to performance of the arbitrator. Thus, for example, the representative of Italy suggested adding specific addition of the phrase “with appropriate speed and efficiency,” and the representative of India suggested “with due diligence” or “with due despatch.” United Nations Commission on International Trade Law, Eighteenth Session Summary Records of the 305th to 333rd Meetings, 3–21 June 1985, U.N. Doc. A/CN.9/SR.314 (7 June 1985). The Commission's disposition of the issue is summarized in its Report:

Another suggestion was to describe more precisely what was meant by the words “fails to act,” for instance, by adding such words as “with due dispatch and with efficiency” or “with reasonable speed.” It was stated in reply that the criteria of speed and efficiency, while important guidelines for the conduct of an arbitration, should not be given the appearance of constituting absolute and primary criteria for assessing the value of an arbitration. It was pointed out that the criterion of efficiency was particularly inappropriate in the context of Article 14 since it could open the door to court (i.e. appointing authority under the Tribunal Rule) review and assessment of the substantive work of the arbitral tribunal. There were less reservations to expressing the idea of reasonable speed, which was regarded as a concretization of the time element inherent in the term “failure to act.”

While considerable support was expressed for leaving the wording of Article 14 unchanged, which corresponded with the wording of Article 13(2) of the [1976] UNCITRAL Arbitration Rules, the Commission, after deliberation, was agreed that the expression “fails to act” should be qualified by such words as “with reasonable speed.”

Commission Report at paras 138–9 (emphasis added).

Two points are significant concerning the Commission's actions as summarized in the Report. First, the addition of the phrase “without undue delay” to Article 14 of the Model Law, as explained by the commission Report, confirms that the phrase “failure to act” in Article 13(2) of the Rules is concerned only with the length of time that an arbitrator must fail to participate in arbitral proceedings before he may be replaced. Second, the Commission expressly rejected the efforts to expand the scope of the provision to include a requirement that the arbitrator perform his functions “efficiently” or “with due diligence.” Despite some sentiment for adding such a provision, and despite the Secretariat Commentary which appeared to view some such standard as implicit in the “fails to act” phrase, the Commission refused to expand the “fails to act” provision to include considerations of the manner in which an arbitrator performs his functions. It chose, instead, to maintain the phrase solely as a limitation on complete inactivity by an arbitrator, and the resultant delay.

Even in the context of delay of the proceedings, the drafters of the Model Law showed some flexibility. As the definitive commentary on the Model Law has observed:

The text finally adopted recognizes that some “delay” is to be expected in arbitration. That is, it does not mean that a court (i.e., appointing authority under the Tribunal Rules) is to ensure that the arbitration is proceeding in a manner that the court (i.e., appointing authority) deems to be “efficient.” In fact, a proposal to add the phrase “with appropriate speed and efficiency” was specifically rejected because it might involve the courts in reviewing whether a particular procedural step—such as an extra hearing day or a request for further briefing—was necessary. Article 14 invites review only of the question whether the arbitration is moving along, not whether the conduct of the proceedings is wise and efficacious. It is intended to catch the egregious cases and not to place a judge with a stopwatch over the shoulder of every arbitrator.

H. Holtzmann and J. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary 440 (1989)(emphasis added). The same points obviously also apply in the context of Article 13(2) of the [1976] UNCITRAL Rules.

(p. 299) Strong policy reasons underlie UNCITRAL's refusal to make criticism of an arbitrator's efficiency or manner of working a ground for replacement under either the Rules and the Model Law. Modern arbitration practice is premised on the principle that an arbitrator cannot be challenged, and the validity of a decision cannot be questioned, based on the correctness of the arbitrator's decision on questions of facts or law. It is equally fundamental that a party cannot question the arbitrator's manner of reaching his decision. Just as the grounds for replacement must be strictly limited. To broaden the grounds for replacement to include consideration of the arbitrator's modus operandi—his working habits, his manner of conducting proceedings—in anything but an egregious case where an arbitrator fails to work at all, would be to undermine one of the foundations of contemporary arbitration.

Finally, consideration of the proper scope of Article 13(2) of the Tribunal Rules must take into account the sentence added at the end of the [1976] UNCITRAL Rule provision pursuant to Article II, paragraph 2, of the Claims Settlement Declaration. The addition bears repeating:

In applying the principles of this paragraph, if the President, after consultation with the other members of the full Tribunal, determines that the failure of a member to act or his impossibility to perform his functions is due to a temporary illness or other circumstance expected to be of relatively short duration, the member shall not be replaced but a substitute member shall be appointed for the temporary period in accordance with the same procedures as are described in Note 5 to Articles 9–12.

This sentence modifies the [1976] UNCITRAL Rule provision as it applies to the Tribunal by specifying an important role for the President of the Tribunal when an allegation of “failure to act” is made. As modified, the Article requires the President to determine, after consultations with the other members of the Tribunal, whether a measure short of replacement of the arbitrator will solve the problem. In a case in which the President determines that the failure to act is the result of temporary illness or other circumstances that are likely to be of short duration, the Article expressly provides for a substitute arbitrator rather than a replacement. In such a case, disruption to the Tribunal is minimized. It follows that if the President were to determine, after consultation with the other members of the Full Tribunal, that the circumstances that allegedly constituted a failure to act no longer existed, the arbitrator would not be replaced.

Letter of the Agent of Iran to the Appointing Authority regarding its Challenge of Judge Arangio-Ruiz, September 17, 1991, at 1, 2–3, reprinted in 27 Iran-US CTR 324–27 (1991–II):

The main point with which Iran has taken issue is as simple as this: whether an arbitrator who has made a full time commitment—as the United States also appears to concede—to work as an arbitrator at an arbitral tribunal seated in the Hague can be absent from the seat of the Tribunal for a year except for appearances of a few hours duration on 40 days? The irregularities which Iran has discussed with respect to Chamber Three's decisions are merely intended to show some tangible unfortunate results of Mr. Arangio-Ruiz's long absence from the Tribunal and neglect of his arbitral responsibilities. We do not argue—however the US wishes to make believe that we did—the manner in which Mr. Arangio-Ruiz has performed his functions: but rather, our point is that, he has not acted as his demanding position as the Chamber Chairman of the Iran-US Claims Tribunal requires.

…

The negotiating history of Article 13(2) [of the 1976 UNCITRAL Rules] as presented by the United States is not supportive of its view that “failure to act” means complete inaction. The study of the discussions leading to the formulation of that article cannot but lead one to conclude that “failure to act” is not meant to be absolute and that the level of an arbitrator's performance has to be taken into account in the light of the circumstances of every situation. The United States itself quotes the Secretariat Commentary in a controlling document, in part, as follows:

(p. 300) “It is submitted that in judging whether an arbitrator failed to act the following considerations may be relevant: Which action was expected or required of him in the light of the arbitration agreement and the specific procedural situation? If he has not done anything in this regard, has the delay been so inordinate as to be unacceptable in the light of the circumstances, including technical difficulties and the complexity of the case? If he has done something and acted in a certain way, did his conduct fall clearly below the standard of what may reasonably be expected from an arbitrator? Amongst the factors influencing the level of expectations are the ability to function efficiently and expeditiously and any special competence or other qualifications required of the arbitrator by agreement of the parties.” U.S. Memorandum of Law, p. 4.

And for the reasons stated in our application, Mr. Arangio-Ruiz, because of his uncontested absence of almost eleven months of a year from the seat of the Tribunal, has manifestly failed to act as expected or required of him as a Chamber Chairman.

…

[The United States] would have the absurd result that all arbitrators, party appointed and third country arbitrators alike can return to their sweet homes and ask their legal assistants to do their job. If the work of a legal assistant is as good as that of an arbitrator, there should have been no reasons for the parties to bother so much about the appointment of a right arbitrator. If a legal assistant can do everything else, there is no reason for him not to be able to replace an arbitrator at a hearing or a deliberation session.

The fact of the matter is that a legal assistant, by definition, may not be expected to do more than assist an arbitrator. He cannot practically substitute the arbitrator. The Tribunal arbitrators’ power of adjudication has been delegated to them by the States parties to the Algiers Declarations and, as such, according to a settled principle of law, they cannot grant that delegated power to someone else, in the absence of a provision to the contrary. Delegata potestas non potest delegari.

…

The activity statistics provided by the United States to prove that not only has Mr. Arangio-Ruiz not been less active, but he has been far more productive than the Chairmen of the two other Chambers are irrelevant, misleading and erroneous.

They are irrelevant because the central point at issue is that Mr. Arangio-Ruiz has been absent from the Tribunal's seat for almost a year and thus has not sufficiently attended to his responsibilities as a Chamber's presiding arbitrator; and that, as a result, his arbitral work has been done by his legal assistants to an unacceptable measure.

Decision of the Appointing Authority on the Challenge of Judge Arangio-Ruiz, September 24, 1991 at 3–5, 7–8, reprinted in 27 Iran-US CTR 328–36 (1991–II):

B. Grounds of the Request

The letter mentioned above under A sub a of the Agent of the Islamic Republic of Iran cites a number of grounds as warranting the complaint that Mr. Arangio-Ruiz failed to act within the meaning of Article 13(2) of the [1983] Tribunal Rules. These grounds may be summarized as follows:

1. during the last 12 months Mr. Arangio-Ruiz did not spend more than 40 working days at the Tribunal, 14 days of which were spent physically participating in hearings;
2. the limited time Mr. Arangio-Ruiz did spend at the Tribunal cannot have been sufficient to read carefully the parties’ pleadings and to examine their evidence; therefore it must be assumed that he has been wholly depending on condensed and selective versions of those pleadings and evidence that his legal assistant chose to communicate to him;
3. Mr. Arangio-Ruiz failed to study properly the cases brought before his Chamber and several times demonstrated that he was insufficiently informed; the joinder question discussed in the dissenting opinion of Mr. Aghahosseini, mentioned above under A sub a, shows a “discernible vice” of an arbitrator's insufficient knowledge of the issues to be decided;
(p. 301) 4. Mr. Arangio-Ruiz's rare attendance at the Tribunal accounts for the sluggish adjudicating process of Chamber Three, in which Chamber there is a comparatively large backlog of unresolved cases.

C. Considerations about Article 13(2) of the Tribunal Rules

a. Text of paragraph 2 of the Article 13 of the [1976] UNCITRAL Rules:

…

In the [1983] TRIBUNAL RULES the following is added as the last sentence of paragraph 2 of Article 13 of the [1976] UNCITRAL RULES:

…

This addition does not prevent a party from making a request such as the present to the Appointing Authority, nor does it bar the reviewing of such a request by the latter. However, I share the view expressed in the letter of the Agent of the United States, dated 5 September 1991, mentioned above under A sub c, that, as a consequence of this addition, in the event that the Appointing Authority considers that an arbitrator has failed to act within the meaning of Article 13(2), the removal and replacement of that arbitrator will not be possible if the President of the Tribunal, after consultation with the other members of the Full Tribunal, determines that the failure is due to a temporary illness or other circumstance expected to be of relatively short duration.

b. The meaning of “failed to act” in Article 13(2) of the Tribunal Rules

It is clear that an arbitrator who, while not having formally resigned, has totally ceased to participate in the arbitral proceedings “fails to act” within the meaning of Article 13(2) of the [1983] Tribunal Rules.

It is also clear, in the light of the negotiating history, that the drafters of Article 13(2) of the [1976] UNCITRAL Rules were reluctant to jeopardize the independence of an arbitrator by allowing the efficiency of his working methods to be an object for review.

However, taking into account the purpose of the provision—to safeguard the regular progress of the adjudicatory process—it is reasonable to assume that the phrase “fails to act” also covers the situation in which an arbitrator, though not completely inactive, consciously neglects his arbitral duties in such a way that his overall conduct falls clearly below the standard of what may be reasonably expected from an arbitrator.

…

E. Conclusions

a. No conclusive evidence has been supplied that the complaints made against Mr. Arangio-Ruiz, mentioned above under B sub 2 to 4, are justified.

The only issue that remains to be decided by me is whether, taking into account all relevant circumstances, the limited number of days Mr. Arangio-Ruiz spent at the Tribunal, as mentioned above under B sub 1, in itself warrants the conclusion that he failed to act within the meaning of Article 13(2) of the [1983] Tribunal Rules.

It is not up to the Appointing Authority or to the President of the Tribunal to answer the question whether a more frequent presence of Mr. Arangio-Ruiz at its seat would have been desirable—and still is to be desired—in the interest of an efficient functioning of the Tribunal.
b. It should be noted: 1. that it appears to me that Mr. Arangio-Ruiz's absences from the Tribunal were not due to any unwillingness to perform his Tribunal duties properly, but in all probability can be attributed to his preference to prepare his cases not at his Tribunal office but at other places where he would not be disturbed, and that his dedication to important work outside the Tribunal demanded of him, while not prejudicing the discharge of his duties as arbitrator of the Tribunal, also required his frequent presence elsewhere than in the Hague; 2. that the absence of arbitrators and of chairmen of a Chamber of the Tribunal for substantial periods of time has not been exceptional and may have appeared to be a regular feature of the Tribunal; 3. that while it is one of the primary responsibilities of a Tribunal President to safeguard the proper functioning of the Tribunal, apparently no President of the Tribunal found sufficient reason to require a more frequent presence of Mr. Arangio-Ruiz at the Tribunal.

(p. 302) For these reasons I must come to the conclusion that Mr. Arangio-Ruiz has not consciously neglected his arbitral duties in such a way that his overall conduct as an arbitrator and chairman of one of the Tribunal's Chambers falls clearly below the standard of what may be reasonably expected of an arbitrator and chairman in a Tribunal such as the Iran-United States Claims Tribunal, and that therefore he cannot be said to have failed to act within the meaning of Article 13(2) of the [1983] Tribunal Rules.

(3 ) Tribunal Rules (1983), Article 13(3)

Dissenting Opinion of Judge Khalilian with Respect to the Orders, dated August 11, 1989, in Case Nos B1 (Claim 1), 197 and 476, August 22, 1989, reprinted in 21 Iran-US CTR 279 (1989–I):

I dissent to the above-mentioned orders canceling the hearings in the three captioned Cases, because of the improper procedure through which they have been issued … Having been recently challenged by the Government of the Islamic Republic of Iran, he [Briner] has obviously forfeited all competence to handle any of the Tribunal's judicial or administrative affairs including issuance of the aforementioned orders …

…

8. Nor should the fact that Mr. Briner is the Tribunal President be construed as conferring upon him the privilege of an interpretation of the Rules which is contrary to the challenge mechanism. A de jure or de facto impossibility (which may be permanent) of the presiding Member's performance of his functions, is at least a case which is obviously analogous to the president's temporary absence. For this latter case, the Rules have provided as follows:

“In the event of the temporary absence of the President, the senior other member of the Tribunal not appointed by either of the two Governments shall act as President of the Tribunal and as Chairman at the meetings of the Full Tribunal. Article 13(3).”

This situation could have been applied in the instant case without disrupting the Tribunal's current proceedings.

(4 ) Tribunal Rules (1983), Article 13(4)

No practice is being extracted in this area.

(5 ) Tribunal Rules (1983), Article 13(5)

Amendment to Tribunal Rules, Article 13, reprinted in 7 Iran-US CTR 317 (1984–III):

Provisionally applied by decision of the Tribunal on 7 October 1983 at its 86th meeting (FTM 86, paragraph 9) and definitively adopted as an amendment to the Tribunal Rules by decision of the Tribunal on 7 March 1984 at its 90th meeting (FTM 90, paragraph 14). The following is the text as issued by the Tribunal:

Article 13 of the [1983] Tribunal Rules is amended by the addition of a new paragraph as follows: [See above section 2, paragraph 5 of Article 13 of the Tribunal Rules].

Morrison-Knudsen Pacific Ltd and Ministry of Roads and Transportation, Award No 143–127–3 (July 13, 1984) at 4, reprinted in 7 Iran-US CTR 54, 56 (1984–III):

Following the Hearing, the member of the Tribunal appointed by the Islamic Republic of Iran resigned. A new member was appointed. The Tribunal has hereby determined not to repeat the prior hearing (see Article 14 of the [1983] Tribunal Rules). As from 15 January 1984, the member appointed by the United States also resigned. Pursuant to an amendment to Article 13 of the Tribunal Rules, provisionally adopted on 7 October 1983 and definitively adopted on 7 March 1984 [Article 13, paragraph 5], the resigned member participated in the Award.

(p. 303) Harnischfeger Corp and Ministry of Roads and Transport, Award No 144–180–3 (July 13, 1984) at 4, reprinted in 7 Iran-US CTR 90, 92 (1984–III):

Pursuant to Article 13, paragraph 5, of the [1983] Tribunal Rules, a member who had resigned after the Hearing on the merits of this claim participated in this Award.

Sedco Inc and Islamic Republic of Iran, Decision No DEC 64–129–3 (September 18, 1987) at 3, n 1, reprinted in 16 Iran-US CTR 282, 284 n 8 (1987–III):

One of NIOC's allegations of procedural error contains a factual error which warrants comment, however. NIOC states that Judge Mangård was “not competent” to participate in the issuance of the Award under Article 13, paragraph 5 of the [1983] Tribunal Rules, since before his resignation from the Tribunal he had not participated in a Hearing on the merits of the Case but only in a Pre-Hearing Conference. In fact, the final Hearing in this Case was held on 21–23 June 1985, before Judge Mangård's resignation took effect on 1 July 1985.

Presidential Order No 53 (April 8, 1987), reprinted in 14 Iran-US CTR 354 (1987–I):

Having now determined that the aforesaid circumstances expected to be of relatively short duration terminated with effect from 6 April 1987;

I hereby order that, without prejudice to the application, as appropriate, of Article 13, paragraph 5 of the [1983] Tribunal Rules, Presidential Order No 51 shall cease to have effect today.

Letter of the President regarding American Bell Intl Inc and Islamic Republic of Iran (September 12, 1985), reprinted in 9 Iran-US CTR 409 (1985–II):

Noting that Article 13, paragraph 5, constitutes a derogation from the normal composition of Chambers (Article III, paragraph 1, Claims Settlement Declaration, Article 5 and Article 13, paragraph 1 of the [1983] Tribunal Rules), and noting further that in the Full Tribunal no majority could be found either for or against the applicability of Article 13, paragraph 5, to Mr. Mangård in Case No 48, it appears to me that Article 13, paragraph 1, should be considered to prevail and that Chamber 3 in its present composition with Mr. Virally as Chairman should further deal with this case.

Dissent by Charles N Brower to the Letter of the President regarding American Bell Intl Inc and Islamic Republic of Iran, reprinted in 9 Iran-US CTR 410 (1985–II):

Accepting arguendo the President's premise that Article 13(5) “constitutes a derogation” from the “normal composition” of Chambers … , whatever validity there might have been to the conclusion that such “derogation” not prevail was lost when Chamber Three decided in 1984 thenceforward to apply such “derogation” itself as “the normal composition” in this Case.

… Thus it is the exclusion of Judge Mangård from further proceedings in this Case (and not his inclusion) that constitutes a “derogation” from the presently established norm. Accordingly, the conclusion that an even division of opinion in the Full Tribunal leaves the status quo intact should lead to confirmation of Judge Mangård's further participation rather than its curtailment.

… The exclusion of Judge Mangård from completing this Case can mean only one of two things: Either it constitutes an interpretation of Article 13(5) at variance with that previously made by Chamber Three, in which case the previous Award would be called into question; or it means that Article 13(5) thereby is changed, presumably to make its application discretionary (which was not the Tribunal's intention in adopting it). The latter possibility would have the additional problem that a change of Article 13(5) was never discussed in the Full Tribunal, a fact which in turn would cast doubt on the character of the Tribunal deliberations if not on the validity of the amendment itself. Either result would leave the Tribunal undeservedly blemished.

The only course open to the President that would not have impaired our institutional integrity would have been (1) either to note officially that the Tribunal had failed to disaffirm the application of Article 13(5) to Case No 48 by Chamber Three or (2) in the exercise of his powers under Article 31(2) to confirm such application.

(p. 304) Jimmie B Leach and Islamic Republic of Iran, Award No 440–12183–1 (October 6, 1989) at 2, para 3, reprinted in 23 Iran-US CTR 233, 234 (1989–III):

Mr. Karl-Heinz Böckstiegel, whose resignation took effect on 15 December 1988, continued to participate in the Award in this case in accordance with Article 13, paragraph 5 of the [1983] Tribunal Rule.

Decision by the Tribunal, Islamic Republic of Iran and United States of America, Case Nos A3, A8, A9, A14 and B61, May 7, 2007:

10. The Tribunal finds that it has applied the Mosk Rule to Mr. Noori's participation in Case No B61 by its decisions of 6 November 2006 and 7 March 2007. In light of Mr. Noori's communications to the President of 13, 18, and 22 April 2007, however, the Tribunal decides that he has clearly failed to accept the financial terms fixed by the Tribunal for his participation under the Mosk Rule. The Tribunal notes that Mr. Noori has repeatedly refused to indicate his willingness to serve under the Mosk Rule on the financial terms set by the Tribunal, and, in particular, that he failed to sign and return the document sent to him by the President following the 7 March 2007 meeting of the Tribunal by mid-April 2007 as required, or, indeed, at all. Mr. Noori's refusal to comply already has forced the postponement of deliberations in Case No B61. It would be contrary to an important interest underlying the Mosk Rule – the facilitation of efficient proceedings – to continue to apply the Mosk Rule to Mr. Noori. Article 13, paragraph 5, of the Tribunal Rules of Procedure does not compel the Tribunal or the Member who has resigned to continue his or her services so long as the Tribunal is satisfied, as it is here, that such continuation does not advance the conduct of the proceedings and that the replacement of such Member does not result in undue delay in the proceedings. Accordingly, the Tribunal decides that, under the present circumstances, Mr. Noori has removed himself from application of the Mosk Rule as regards Case No B61.

11. The Tribunal wishes to add that, when it took its 6 November 2007 decision, both it and the States Parties had every reason to believe that Mr. Noori would serve fully under the Mosk Rule until the final disposition of Case No B61. Subsequently, however, as a consequence of Mr. Noori's conduct, both the Tribunal and the States Parties were confronted by a situation they thought had been excluded. The Tribunal would note in that regard that it has no power to compel compliance with the Mosk Rule, that it fixed reasonable financial terms for Mr. Noori's Mosk-Rule service in Case No B61, and that the subsequent actions of Mr. Noori himself have made unavoidable the non-application of that Rule to him in that Case. The Tribunal has acted throughout this matter entirely consistently with the Tribunal Rules of Procedure, its precedents, and practices.

II. The Composition of the Tribunal

12. In view of its decision with respect to the Mosk Rule as regards Case No B61, the Tribunal must decide the effect of that decision on the composition of the Tribunal for the remaining proceedings in that Case. While the United States asserts that the appropriate composition should be a truncated Tribunal of eight Members, so that all will be persons who participated in the many hearing sessions, the Tribunal decides that such a result would be both unnecessary and inconsistent with its past practice and inconsistent with the structure of the Tribunal as provided in the Algiers Declarations. In that connection, the Tribunal notes that the substantial pleadings and evidence are all available to its new Member and that all hearings, which took place over a period of some fifteen months, were transcribed and are also available to him. Those resources are and will be important for all Members. Furthermore, Mr. Oloumi Yazdi will be afforded the time he requires fully and adequately to prepare for deliberations in Case No B61. The Tribunal notes, further, that it would be open for Mr. Oloumi Yazdi at any time, should he so desire, to avail himself of Article 14 of the Tribunal Rules of Procedure. Consequently, the Tribunal decides that Mr. Oloumi Yazdi will succeed Mr. Noori for all further proceedings in Case No B61.

(p. 305) 3. Replacement of an Arbitrator—Article 14

A. Text of the 2010 UNCITRAL Rule⁴⁸

Article 14 of the 2010 UNCITRAL Rules provides:

1. Subject to paragraph 2, in any event where an arbitrator has to be replaced during the course of the arbitral proceedings, a substitute arbitrator shall be appointed or chosen pursuant to the procedure provided for in articles 8 to 11 that was applicable to the appointment or choice of the arbitrator being replaced. This procedure shall apply even if during the process of appointing the arbitrator to be replaced, a party had failed to exercise its right to appoint or to participate in the appointment.
2. If, at the request of a party, the appointing authority determines that, in view of the exceptional circumstances of the case, it would be justified for a party to be deprived of its right to appoint a substitute arbitrator, the appointing authority may, after giving an opportunity to the parties and the remaining arbitrators to express their views: (a) appoint the substitute arbitrator; or (b) after the closure of the hearings, authorize the other arbitrators to proceed with the arbitration and make any decision or award.

B. Commentary

Article 14 determines the consequences of an arbitrator's permanent absence from the arbitral proceedings, whether due to a failure to act or impossibility to perform, or some other disruption, such as the resignation, absence, or death of an arbitrator. Article 14(1) establishes the general rule: where an arbitrator “has to be replaced” a substitute arbitrator is appointed pursuant to the same procedures under which the arbitrator being replaced was originally appointed.⁴⁹ Article 14(2) creates an exception to the general rule which may be applied in “exceptional circumstances.” Under these circumstances, the appointing authority has discretion to appoint a substitute arbitrator or approve the continuation of the proceedings to conclusion by a truncated tribunal. Article 14 reflects a significant change in approach under the UNCITRAL Rules, designed in large part to avoid a rigid categorization of arbitrator conduct that could limit the effectiveness of the Rules in addressing for example, resignations intended to disrupt the arbitral proceedings.

(1 ) Rationale for the revised approach: the problem of spurious resignations

Article 13(1) of the 1976 UNCITRAL Rules provided that “[i]n the event of the death or resignation of an arbitrator during the course of the proceedings” an arbitrator “shall” be replaced pursuant to the procedures originally used to make his or her appointment. The Working Group responsible for revising the Rules recognized that this original formulation (p. 306) might not function as effectively as possible in dealing with cases of “mala fide or tactical resignations of arbitrators.”⁵⁰ As discussed above, prime examples of such spurious resignations were when an Iranian arbitrator resigned in order to disrupt the arbitral proceedings before the Iran–US Claims Tribunal. In that situation, the re-appointment procedures required under Article 13(1) of the 1976 UNCITRAL Rules may not be effective in preventing a party from appointing another arbitrator who would resign in bad faith at another opportune time for disrupting the proceedings again.

In the course of revising the Rules to address this problem, the Working Group considered the question of “whether the conditions for resignation of an arbitrator should be defined, in order to dissuade spurious resignations, or at least minimize their impact on the overall process.”⁵¹ There were significant doubts as to whether to answer this question in the affirmative. Under the prevailing view, any criteria for determining whether a resignation was made in bad faith would likely be “too rigid,” and the better approach would be “to permit either the remaining members of the arbitral tribunal or the appointing authority to determine, by reference to the relevant facts and circumstances whether the resignation was acceptable or not.”⁵²

Another question considered by the Working Group was whether Article 13(1) of the 1976 UNCITRAL Rules was formulated in a way that could preclude the application of certain remedies in the face of a spurious resignation, such as the arbitral tribunal proceeding in truncated fashion. Because Article 13(1) of the 1976 UNCITRAL Rules lacked an express reference to truncated tribunals, some delegates believed that an award rendered pursuant to this unique procedure “might not be recognized under some national laws.”⁵³ Other delegates noted that the original provision risked being interpreted as expressly precluding the use of truncated tribunals because, by its plain terms, in the event of a resignation a substitute arbitrator “shall” be chosen or appointed pursuant to the procedures originally used to choose or appoint the resigning arbitrator.⁵⁴

These drafting issues presented difficulties for the Working Group, particularly as it recognized that two extraordinary remedies may be necessary in effectively addressing the problem of spurious resignations. First, it may be useful in some cases for the appointing authority to appoint a substitute arbitrator, thus depriving the party that initially appointed the resigning arbitrator of its right to appoint a replacement.⁵⁵ Second, in certain situations, the best solution may be for the remaining arbitrators to proceed with the arbitration (p. 307) in truncated fashion, “which would preserve the existence of a three-person arbitral tribunal and thus satisfy the provision found in some national laws that prohibited even-numbered arbitral tribunals. … ”⁵⁶

The considerations described above resulted in substantial revisions to Article 13(1) of the 1976 UNCITRAL Rules. Article 14(1) of the 2010 UNCITRAL Rules omits the original phrase “[i]n the event of the death or resignation of an arbitrator during the course of the proceedings.” Instead, the procedures originally used for an arbitrator's initial appointment apply more generally whenever an arbitrator “has to be replaced.” This general rule is subject to an exception that permits, “in view of the exceptional circumstances of the case,” either the appointment of a substitute arbitrator by the appointing authority or the use of a truncated tribunal in limited situations. The new Rules thus ensure greater flexibility in addressing arbitrator absences. Whereas Article 14 starts from the presumption that any replacement of an arbitrator will be addressed under the normal appointment procedures of the Rules, it also affords the appointing authority discretion to address extreme cases of arbitrator misconduct, such as spurious resignations that may significantly disrupt the arbitral proceedings.

(2 ) Procedures when an arbitrator “has to be replaced”—Article 14(1)

Article 14(1) establishes the “general rule on the replacement procedure” under the UNCITRAL Rules.⁵⁷ The scope of Article 14(1) is broad; it applies “in any event where an arbitrator has to be replaced during the course of the arbitral proceedings.” Circumstances falling under Article 14(1) thus include a determination by the appointing authority that an arbitrator must be removed on grounds of a lack of impartiality or independence or a failure to act, and the resignation, death or permanent incapacity of an arbitrator. Whether an arbitrator has to be replaced should be an objective inquiry but, in practice, will depend on whether the party or parties with the right to appoint a replacement arbitrator agree that replacement is necessary. For example, if an arbitrator appointed by the respondent becomes absent from the proceedings for some reason, the respondent will only follow the rule of Article 14(1) if it believes the rule applies, in other words, that the arbitrator who it appointed “has to be replaced.” In this sense, the Rules respect a party's right of appointment. At the same time, however, the Rules allow a party to challenge another party's assessment by bringing a complaint before the appointing authority on the basis, for example, that the respondent-appointed arbitrator has failed to act.

The replacement procedures contemplated under Article 14(1) are straightforward: where an arbitrator has to be replaced, a substitute arbitrator shall be chosen or appointed pursuant to the procedure that was applicable to the original appointment or choice of arbitrator. According to the travaux préparatoires: “The underlying idea for the [replacement] procedure to be followed in these cases is that the substitute arbitrator will be appointed in the same way as his predecessor.”⁵⁸ Thus, if a sole arbitrator has to be replaced, the procedures in Article 8 govern, and if a party-appointed arbitrator or the presiding arbitrator has to be replaced, Article 9 procedures should be followed.⁵⁹ In the case of (p. 308) multi-party arbitration, Article 10 applies. Finally, in all cases of replacement, the substitute arbitrator must follow the disclosure requirements of Article 11.

The last sentence of Article 14(1) provides that the procedures in Articles 8 through 11 apply, as the case may be, “even if during the process of appointing the arbitrator to be replaced, a party had failed to exercise its right to appoint or to participate in the appointment.” Thus, a party's right of appointment is revived in full upon re-appointment regardless of whether it waived such rights in the course of the initial appointment.

Finally, the parties should be aware that Article 14(1) is subject to the exception established in Article 14(2). As explained in the following section, the appointing authority has discretion to derogate from the normal appointment procedures under the Rules in exceptional circumstances

(3 ) Replacement of an arbitrator in “exceptional circumstances”—Article 14(2)

Whereas Article 14(1) establishes the general rule on the appointment of a substitute arbitrator, Article 14(2) establishes an exception whereby the appointing authority has discretion to impose two remedies in exceptional circumstances, such as “spurious resignations” and other “obstructionist behaviour by an arbitrator.”⁶⁰ First, the appointing authority may decide to appoint a substitute arbitrator itself, as opposed to the party otherwise entitled to do so under the general appointment rules. Second, the appointing authority, after the closure of the hearing, may authorize the remaining arbitrators to proceed with the arbitration as a truncated tribunal, without the appointment of a substitute arbitrator, eg, a three-member tribunal may proceed with the two remaining members.⁶¹ These remedies are extraordinary in nature and can have serious consequences for the parties. As Article 14(2) expressly states, they operate to “deprive [a party] of its right to appoint a substitute arbitrator.”

(a ) Depriving a party of its right to appoint

Because of the serious consequences of applying Article 14(2),⁶² the Working Group discussed at length how best to delimit the appointing authority's powers under Article 14(2).⁶³ Views among Working Group delegates diverged significantly even as to the basic (p. 309) purpose of such an extraordinary remedy. Some delegates argued that deprivation of a party's appointment right should occur only as a “sanction in case a party or an arbitrator misbehaved.”⁶⁴ The precise circumstances under which such a “sanction” should apply were heavily debated, however. Because of its severity, some believed a party's appointment right should only be curtailed to address “the faulty behaviour of a party to the arbitration.”⁶⁵ Others focused more on the arbitrator's conduct, believing that “the loss of [the appointment] right should not be connected with the need to prove [a party's] collusion with the resigning arbitrator.”⁶⁶ Yet another view was that deprivation of a party's appointment right should be applied not as a sanction, but simply “in a most efficient manner,” even where a party's misconduct was not implicated.⁶⁷

Views among Working Group delegates also differed on how a rule depriving a party of the right to appoint a substitute arbitrator should be drafted. Some argued for an enumerative approach according to which a party could be subject to an extraordinary remedy only after satisfying expressly enumerated conditions.⁶⁸ Proponents favored this approach because they believed it would limit the discretion of the appointing authority and thus “provide more safeguards to the parties.”⁶⁹

Achieving consensus on the enumerative approach proved to be difficult, however. An early draft of Article 14(2), for example, contained references to situations in which an arbitrator “has resigned for invalid reasons” or “refuses or fails to act.”⁷⁰ While the latter description of arbitrator conduct was not problematic,⁷¹ the former raised concerns. Opposition was expressed on the basis that the word “invalid” (before “reasons”) was too vague and susceptible to divergent interpretations.⁷² Other variations on this proposal also failed to gain the support of the Working Group for similar reasons.⁷³

Another proposal before the Working Group sought to justify application of Article 14(2) in the more general case of an arbitrator's “improper conduct.”⁷⁴ This proposal was said to cover more clearly situations of “abuse and manipulation,” which the term “invalid reasons,” in the context of a resignation, might not adequately capture.⁷⁵ This proposal was also unpopular because many delegates believed that use of the term “improper conduct” (p. 310) would require the appointing authority to make a “subjective assessment of the conduct of the arbitrator.”⁷⁶ Thus, some feared that the proposal would “run counter to the goal of predictability and consistency in the application of the Rules, particularly where less experienced appointing authorities were involved.”⁷⁷

As support for the enumerative approach waned in the Working Group, another approach began receiving more serious consideration—one which favored a “generic description” of the situations in which a party should be deprived of its right to appoint a substitute arbitrator.⁷⁸ It was noted that the proposals under the enumerative approach (including those with references to an arbitrator who “resigns for invalid reasons” or “refuses or fails to act”) failed to distinguish adequately between “situations that differed in nature.”⁷⁹ Some of these situations “implied misconduct from either the parties or members of the arbitral tribunal, while others involved the arbitrator being prevented from performing his or her functions for legitimate reasons.”⁸⁰ One example that seemed to defy classification was where a local court or other public authority enjoined an arbitrator from participating in the arbitral proceedings.⁸¹ Working Group delegates thus believed a more effective approach was to afford the appointing authority greater discretion to “better delineate the cases that triggered the application of the exceptional procedure [of Article 14(2)].”⁸²

Article 14(2), in its final form, clearly reflects the shift toward granting the appointing authority wider, albeit not unbounded, discretion to address the problem of an arbitrator's unjustifiable absence. In the absence of precisely defined criteria for exercising authority, the appointing authority must engage in a fact-specific inquiry to determine whether it is appropriate to intervene.⁸³ At the same time, the appointing authority may exercise such discretion “only in exceptional circumstances.”⁸⁴ The Rules do not define the phrase “exceptional circumstances,” as included in Article 14(2), leaving that interpretation to the appointing authority in evaluating the specific circumstances of a particular case.⁸⁵ The travaux préparatoires provide some guidance, however. Even before the Working Group had settled on a final formulation for Article 14(2), (p. 311) the written record describes what was the “prevailing view” among the Working Group—that Article 14(2) should apply only in “cases of improper conduct” of an arbitrator or a party.⁸⁶ Another view, however, recognized that application of Article 14(2) might still be necessary “in a variety of situations, not limited to misconduct of a party or an arbitrator.”⁸⁷

The broad language of Article 14(2) suggests that both views may be relevant to understanding the scope of the appointing authority's authority under that provision. On the one hand, “exceptional circumstances,” within the meaning of Article 14(2), would likely exist in the case of demonstrable collusion between a party and an arbitrator with the aim of disrupting the arbitral proceedings. On the other hand, Article 14(2) may also apply where a local court enjoins an arbitrator or a party, or both, from participating in the arbitral proceedings.⁸⁸ Though not necessarily a situation involving improper conduct on the part of an arbitrator or a party, application of Article 14(2) may be necessary to ensure the integrity of the arbitral process.

Finally, by its own terms, Article 14(2) can only apply where a party has a “right” to appoint a substitute arbitrator in the first place. The term “right” was chosen by the Working Group over a competing proposal to include the word “opportunity.”⁸⁹ In practice, Article 14(2) would apply with respect to the appointment of an absent party-appointed arbitrator or sole arbitrator, where the parties have a direct right of appointment, but not in the case of appointment of a substitute presiding arbitrator, where that right has been delegated, pursuant to Article 9, to the two party-appointed arbitrators and those arbitrators have been appointed.

(b ) Procedural requirements

Important procedural constraints established in Article 14(2) ensure that the provision is applied only in exceptional circumstances.⁹⁰ First, the appointing authority may act only “at the request of a party”; it cannot act sua sponte. Second, the appointing authority's decision to apply Article 14(2) must be “justified,” meaning that it must take into consideration not only the “exceptional circumstances of the case,” but also the serious consequences of depriving a party of its right to appoint a substitute arbitrator. Third, the appointing authority must provide the parties and the remaining arbitrators, along with the absent arbitrator, the opportunity to “express their views.” No practice in this regard is currently known to the authors. Nonetheless, the plain terms of Article 14(2) contemplate a (p. 312) decision-making process that is both considered and objective, with an emphasis on the solicitation and careful consideration of information and arguments provided by the affected parties as to whether the extraordinary procedure of the provision should be applied.

(c ) Exclusivity of the discretion of the appointing authority

The discretion to apply the extraordinary remedies of Article 14(2) resides exclusively with the appointing authority. The Working Group considered whether, where an arbitrator is unjustifiably absent, the remaining arbitrators on the tribunal should possess such authority, particularly in cases in which it may be appropriate for the remaining arbitrators to proceed as a truncated tribunal.⁹¹ Some delegates argued that such a provision would be most useful in situations in which other arbitrators on a tribunal knew an arbitrator was failing to act, but “none of the parties were aware of that fact.”⁹² Others pointed out, however, that to afford the remaining arbitrators exclusive authority to proceed without the replacement of their absent colleague, for example, would not provide “sufficient safeguards” for the parties “in particular in case of collusion between arbitrators.”⁹³ Another proposal was to afford the remaining arbitrators not the power to impose a particular remedy itself, but the same right the parties would have to request action by the appointing authority.⁹⁴ None of these suggestions are reflected in the final version of Article 14(2).

An arguable consequence of the inclusion of Article 14(2) is that the tribunal is deprived of its inherent power to proceed in truncated fashion. Given that implied powers are partly justified by the necessity of their implication, the intentional lodging with the appointing authority of the decision of whether the tribunal can and should proceed in truncated tribunal thereby makes it unnecessary for the tribunal to possess such a power. We hesitate to conclude, however, that such inherent power is therefore denied because it remains possible that some set of circumstances we cannot foresee would necessitate such a power with the tribunal.

Article 14(2) does not, however, overlook the potentially important role that the remaining arbitrators may serve in the appointing authority's determination of whether to apply the extraordinary procedure of Article 14(2). As discussed, Article 14(2) requires that before deciding to take action under the provision, the appointing authority must provide “the arbitrators,” meaning in this context the remaining arbitrators, an opportunity to express their views. Such an opportunity allows the remaining arbitrators to share information that may be useful to the appointing authority's decision-making process, particularly information known to the remaining arbitrators but not by the parties.

(p. 313) (d ) Agreement between the parties

In addition to establishing extraordinary remedies to address extreme cases of an arbitrator absence, Article 14(2) functions as an agreement between the disputing parties as to the use of that procedure. This dimension of the provision's operation was important to the Working Group, which early in its discussions considered the question of how best to ensure the validity of an award rendered pursuant to the extraordinary remedies of Article 14(2), particularly with respect to the use of a truncated tribunal.⁹⁵ In reviewing corresponding Article 13 of the 1976 UNCITRAL Rules, some delegates of the Working Group believed that because the original provision lacked an express reference to truncated tribunals, an award rendered pursuant to such a unique procedure “might not be recognized under some national laws.”⁹⁶ Other delegates noted that original Article 13 risked being interpreted as expressly precluding the use of truncated tribunals because, by its plain terms, the procedures for appointment of a substitute arbitrator under the Rules “shall” apply to the appointment of a substitute arbitrator in all situations.⁹⁷

Article 14(2) squarely addresses the principal concerns of the Working Group regarding original Article 13. Both possible extraordinary measures—direct appointment by the appointing authority and the use of a truncated tribunal—are expressly referenced in the revised rule. Application of these measures is regulated by the various conditions on the appointing authority's authority described above, thus creating defined procedural parameters to which the disputing parties have agreed in adopting the Rules. With respect to the use of truncated tribunals, in particular, an additional temporal requirement applies: the appointing authority is further constrained by only having authority to authorize the use of a truncated tribunal “after closure of the hearings.”⁹⁸ Article 14(2) represents the consent of the parties to applying such remedies in certain situations, which may serve to limit the potential grounds for challenging the validity of an award before local courts on the basis of procedural irregularity.⁹⁹

The Working Group's revisions bring the UNCITRAL Rules in line with the procedural rules of the leading arbitral institutions.¹⁰⁰

(p. 314) (4 ) Comparison to the 1976 UNCITRAL Rules

While retaining the basic procedure for replacement of an arbitrator, Article 14 represents a significant departure from the approach of its predecessor Article 13 of the 1976 UNCITRAL Rules, particularly in the treatment of arbitrator conduct that leads to his or her unjustified absence.

The preliminary draft of Article 13(1) of the 1976 UNCITRAL Rules covered replacement procedures for the incapacity of an arbitrator as well as death and resignation. There were two main points of discussion on the Preliminary Draft of the 1976 UNCITRAL Rules. The first was whether the term “resignation” was sufficiently broad to cover situations which were more accurately described as “failures to act.” This included, for example, when an arbitrator did not resign, but simply ceased to attend the arbitral hearings, or otherwise ceased to participate in the proceedings.¹⁰¹ The second addressed how the term “incapacity” was to be defined and what authority would decide when an arbitrator was incapacitated.¹⁰²

To clearly distinguish situations that were perceived to be relatively unambiguous, like death and resignation, from those situations requiring some additional, objective evaluation of the circumstances, the drafters created a separate paragraph (Article 13(2) of the 1976 UNCITRAL Rules) for failure to act and incapacity.¹⁰³ In order to replace a member under Article 13(2) of the 1976 UNCITRAL Rules, there first would have to be a challenge proceeding as described in Articles 10–12 of the 1976 UNCITRAL Rules. Once it was established that Article 13(1) of the 1976 UNCITRAL Rules would address only the issue of replacing an arbitrator in the event of death or resignation, discussion at the Ninth Session focused on whether the Rules should require an arbitrator to either provide good reasons for his resignation or to risk the possibility of liability for damages.¹⁰⁴ The Committee decided not to require a statement of reasons: “Even if the reasons for resigning were unsatisfactory, it would be difficult to oblige an arbitrator to fulfill his functions, since the arbitration rules constituted nothing more than a private agreement between two parties.”¹⁰⁵

Article 14, in contrast, eliminates the references to “death or resignation” in Article 13(1) of the 1976 UNCITRAL Rules. As described above, concerns that the general replacement procedures of the Rules may be suited in all cases of resignation, such as spurious resignations designed to disrupt the arbitral proceedings, prompted the change in approach. Under the revised rule, the general replacement procedures under the Rules apply whenever an arbitrator “has to be replaced,” but the extraordinary remedies of Article 14(2) may apply to arbitrator absences that give rise to “exceptional circumstances.” Article 14(2) thus fills an important procedural gap under the Rules. Under the 1976 UNCITRAL Rules, no procedure exists to address an unjustified arbitrator absence most effectively, giving rise to two threshold questions: does the Tribunal have the power to continue its proceedings despite the absence of the arbitrator and, if so empowered, is it (p. 315) appropriate to so proceed?¹⁰⁶ The question of appropriateness will often, but not always, include a determination of whether the absence is justified.

Whether a tribunal applying the 1976 UNCITRAL Rules should continue with its proceedings despite an absence depends in part on when the absence occurs. On the one hand, it may be appropriate to continue in truncated fashion when the absence occurs during deliberations.¹⁰⁷ On the other hand, it may be inappropriate to do so when a lengthy absence occurs early in arbitration.¹⁰⁸ In such a case application of Article 13(2) of the 1976 UNCITRAL Rules on the basis of failure to act would be more appropriate. But even in such early stages, it may be appropriate to continue through a brief absence. Because absence can take many forms, only the two most difficult cases are addressed here: absence from deliberations and absence from the hearing.¹⁰⁹

(a ) The express power to proceed

One ad hoc tribunal applying the 1976 UNCITRAL Rules has held that “an arbitral tribunal has not only the right, but the obligation, to proceed when, without valid excuse, one of its members fails to act, withdraws or … even purports to resign.”¹¹⁰ What is the source of such a power to proceed? An examination of a tribunal's power to do any act must begin with an examination of the agreement of the parties expressed in the compromissory clause.

The 1976 UNCITRAL Rules do not specifically address the problem of absence of an arbitrator.¹¹¹ Article 15(1), however, provides some basis for the Tribunal to proceed:

Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the Parties are treated with equality and that at any stage of the proceedings each Party is given a full opportunity of presenting his case.

The issue is whether it may be “appropriate” for a tribunal to proceed in truncated fashion when an unjustified absence occurs. Such a possibility of truncated proceedings obviously would have to be applied “with equality” to both parties.

The agreement of the parties must be examined for both an express grant of a power and a clear denial of such a power. In the case of the Iran–US Claims Tribunal, the Agent for Iran, for example, repeatedly argued that the provision of Article III(1) of the Claims (p. 316) Settlement Declaration, which states that “[c]laims may be decided by the Full Tribunal or by a panel of three members,” established a quorum requirement that renders any proceedings in the absence of an arbitrator legally invalid.¹¹² The Tribunal interpreted this provision, however, as merely definitional and not as establishing a quorum rule. It was thus not viewed by the Tribunal as a limitation on the power of the Tribunal to proceed in truncated fashion.

Although the language of Article 15(1) of the 1976 UNCITRAL Rules arguably grants a tribunal broad discretion to carry out the arbitration agreement, it can also be argued that the option open to the parties under Article 13(2) of the 1976 UNCITRAL Rules is to raise a challenge to the arbitrator failing to act, not the demand that the tribunal proceed in truncated form. However, it may be a mistake to assume that by expressly providing a mechanism that does not permit a tribunal to resolve the problem presented, the Rules necessarily preclude a tribunal from resorting to its general powers to devise a mechanism that could do so. An arbitration agreement or a set of procedural rules cannot take up in express terms every conceivable problem that may be confronted. Many eventualities are simply too remote to provide for in an arbitration agreement.

For example, in the Cauca Company case, differences between a private company and the Government of Colombia were submitted to arbitration pursuant to an agreement which allowed the Arbitral Commission a maximum of 210 days in which to render its award. After the Commission had heard the case and deliberated almost to the point of signing an award, 203 days into the Commission's existence, the Colombian commissioner announced his resignation. The compromis provided a procedure through which the resigned arbitrator could have been replaced. However, this express procedure, while applicable, was problematic in view of the short time remaining before the termination of the Commission's mandate. The two remaining commissioners determined that the action of the Colombian commissioner was a bad-faith maneuver to paralyze the commission; they therefore decided to render an award despite the absence of their colleague and without awaiting a replacement. The Government of Colombia attacked this award in the federal courts of the United States. The US Supreme Court, upholding the Commission's decision to proceed in truncated form, observed that the short time remaining to the Commission rendered the expressly provided replacement procedure all but useless: “Manifestly it was possible, if not certain, that [the Commission's] only way of saving the proceedings from coming to naught was to ignore the communication and to proceed to the award. This it did.”¹¹³ The Court therefore endorsed the Commission's action, taken in spite of an express provision that, while applicable, was ineffectual in the face of a fraudulent attempt to undercut the arbitral process.

In the case of the 1976 UNCITRAL Rules, Article 13(1) deals with replacement of an arbitrator in “the event of the death or resignation of an arbitrator during the course of the arbitral proceedings.” In the case under consideration, however, an arbitrator does not tender a resignation but merely absents himself.

Article 13(2) of the 1976 UNCITRAL Rules provides that if an arbitrator fails to act or if there is the de jure or de facto impossibility of further performance, the challenge and (p. 317) replacement procedures outlined earlier will apply. But when an arbitrator intends only a brief absence, it seems inappropriate to require referral to the lengthy procedure of challenge.¹¹⁴ Indeed, the Iran–US Claims Tribunal modified Article 13(2) to provide also that in the event of impossibility to perform because of temporary illness or other circumstances of a relatively short duration, the member shall not be replaced but a temporary substitute member shall be appointed.¹¹⁵

If an absence from a hearing occurs without notice, the Iran–US Claims Tribunal, as a practical matter, could not invoke the substitute provision provided for in Article 13(2) and still continue with the hearing as scheduled. If several days’ flexibility exists in the holding of the hearing, then the Tribunal could have provided the Government of Iran an opportunity to designate a substitute arbitrator. But since Iran, as noted above, did not appoint substitute arbitrators to stand by, the substitution process could not work because there was not a means to arrange for timely disclosure of possible conflicts.

Moreover, in cases where a party is a state, the arbitrator involved may not wish to absent himself but may be required to do so at the order of his government. In the Himpurna arbitration, for example, the arbitrator appointed by the Republic of Indonesia went missing during an advanced stage of the proceedings. After rather extraordinary first-hand attempts to locate the arbitrator,¹¹⁶ the remaining members of the tribunal concluded that the missing arbitrator's absence was the result of an “involuntary departure.”¹¹⁷

It would be extremely unfortunate if, in such circumstances, a challenge of the state's arbitrator were the only means of addressing the situation. Such a remedy punishes the arbitrator and not the government that ordered the absence. As the Himpurna Tribunal rightly concluded, the state party causing the withdrawal “should not benefit from its own wrong.”¹¹⁸ Accordingly, to proceed in truncated fashion offers the only real deterrence to the offending government. Assuming the government has no concern for its arbitrators, the remedy of challenge would only encourage the offending government inasmuch as it further obstructs the proceedings of a tribunal.

(b ) The inherent power to proceed

Inherent powers have been characterized as powers necessary to fulfill the objective intentions of the parties. The principles of effectiveness and good faith appear to be applicable whenever the question arises as to whether an agreement to arbitrate should be interpreted as impliedly granting some power necessary for the tribunal to carry out its task in the face of behavior which is, in essence, a threat to the original agreement to submit to arbitration.

The arbitral literature refers to the inherent power of a tribunal to deliberate and to render a judgment despite the absence of one or more arbitrators, when such absence is (p. 318) attributable to a bad-faith attempt to paralyze the tribunal.¹¹⁹ Lalive observes that this power must be implied from the compromis. Specifically, the principles of effectiveness and good faith require the compromis to be interpreted as impliedly granting the powers necessary for the tribunal to carry out its task in the face of one party's attempt to frustrate it:

C’est bien ce principe de l’effectivité qui, en définitive, avec celui de la bonne foi, commande d’interpréter l’accord de l’arbitrage en ce sens que le retrait de l’Arbitre, sur la pression ou les ordres d’une Partie, n’empêche pas le tribunal de poursuivre sa tâche et de rendre une sentence obligatoire.¹²⁰

4. Repetition of Hearings in the Event of Replacement of an Arbitrator—Article 15

A. Text of the 2010 UNCITRAL Rule¹²¹

Article 15 of the 2010 UNCITRAL Rules provides:

If an arbitrator is replaced, the proceedings shall resume at the stage where the arbitrator who was replaced ceased to perform his or her functions, unless the arbitral tribunal decides otherwise.

B. Commentary

(1 ) General comments

Article 15 sets forth the procedural rule for continuation of the arbitral proceedings once an arbitrator has been replaced. When revising the UNCITRAL Rules, the Working Group considered two related proposals to modify corresponding Article 14 of the 1976 UNCITRAL Rules. The first proposal was to grant the arbitral tribunal “the power to decide whether or not to repeat a hearing when the sole or presiding arbitrator [i]s replaced,”¹²² thereby reversing the rule contained in original Article 14. Under that article, the tribunal had discretion to repeat prior hearings where a party-appointed arbitrator was replaced, but was required to repeat a hearing upon replacement of the sole or presiding arbitrator.

The second proposal considered by the Working Group was to include a general rule that “the proceedings should resume at the stage where the arbitrator who was replaced had ceased his or her functions, unless the tribunal decided otherwise.”¹²³ Thus, a new rule would presume that no aspect of the proceedings would be repeated, unless the tribunal decides that repetition was appropriate under the circumstances. This proposal was based, in part, on the practice of the Iran–US Claims Tribunal, which modified Article 14 of the (p. 319) 1976 UNCITRAL Rules in order to afford the Tribunal discretion to decide whether to repeat a hearing regardless of which arbitrator was replaced.¹²⁴ The proposal also recognized the similarly broad discretion in the practice of commercial arbitration tribunals applying the ICC Arbitration Rules and the Swiss Arbitration Rules.¹²⁵ Notably, Article 15 tracks the language of Article 14 of the Swiss Rules nearly verbatim.¹²⁶

The Working Group adopted both proposals discussed above, thus modifying the approach of the UNCITRAL Rules in certain respects. Under Article 15, whether a hearing is repeated no longer depends on the type of arbitrator that is replaced. Namely, the replacement of the sole or presiding arbitrator does not compel repetition of a hearing. While the general rule of Article 15 presumes no break in the proceedings will occur, it reserves to the arbitral tribunal the discretion to “decide otherwise” as to how to proceed. Further, such discretion extends beyond repetition of a hearing repetition of any stage of the arbitral proceedings.

This change in approach represents a shift in emphasis under the Rules. As discussed in the following section, the drafters of the 1976 UNCITRAL Rules sought to strike an important balance. On the one side, a party should be able to demand that the hearing be repeated, if such repetition ensures that the substitute arbitrator will sufficiently understand the case that has been recently placed before him or her. On the other side, the need for efficiency in the arbitral process argues against repetition, particularly if a party seeks, for example, to repeat a hearing as a dilatory tactic. As compared to Article 14 of the 1976 UNCITRAL Rules, revised Article 15 shifts this balance of interests more towards the goal of efficiency, leaving all matters concerning the repetition of proceedings to the tribunal to determine on a case-by-case basis.

Finally, it is clear that Article 15 applies in all cases of replacement of an arbitrator under the UNCITRAL Rules. The travaux préparatoires of both Article 14 of the 1976 UNCITRAL Rules and Article 15 confirm this rule. Original Article 14 was initially proposed as a second paragraph to the article concerning replacement of arbitrators in the event of “death, incapacity or resignation.” The Committee decided later, however, that the paragraph should also apply to replacements resulting from a successful challenge of an arbitrator. The relevant paragraph was thus redrafted as a separate article, which became original Article 14.¹²⁷ For greater clarity, Article 14 of the 1976 UNCITRAL Rules included express references to (p. 320) other articles of the UNCITRAL rules under which an arbitrator could be replaced.¹²⁸ Though revised Article 15 begins more generally with the words “If an arbitrator is replaced,” it is clear from that article's similar relationship to other rules on replacement that this change reflects merely a technical drafting preference.¹²⁹

(2 ) Comparison to the 1976 UNCITRAL Rules

Whereas Article 15 grants the arbitral tribunal full discretion after replacement of an arbitrator to repeat any phase of the arbitration, including hearings, Article 14 of the 1976 UNCITRAL allowed such discretion only after replacement of a party-appointed arbitrator; after replacement of the sole or presiding arbitrator, repetition was required. The more restrictive rule in original Article 14 was extensively discussed by the UNCITRAL drafters.

The discussion focused on the question of whether all hearings should be repeated regardless of what type of arbitrator was replaced. Some drafters called for the decision on repetition of hearings to be left to the discretion of the new sole arbitrator¹³⁰ or the newly re-constituted arbitral tribunal as a whole. Such discretion, it was argued, would avoid needless repetition of hearings when, for example, a verbatim record of the hearings had been kept.¹³¹ Other drafters, on the other hand, argued that because arbitrators (especially sole or presiding arbitrators) play such a crucial part in arbitration, oral arguments and the presentation of evidence should be repeated.¹³² There was widespread agreement that the sole or presiding arbitrator plays a “special role” in the arbitration and that therefore the replacement of such arbitrators requires that all hearings previously held be repeated.¹³³

Such a special role was not recognized for party-appointed arbitrators. Thus, after the replacement of such arbitrators, the repetition of hearings was at the discretion of the new arbitral tribunal.¹³⁴ This rule was adopted despite strong argument that such hearings should be repeated unless the party making the replacement and the tribunal decided to (p. 321) dispense with such repetition.¹³⁵ In this vein, the representative for the United Kingdom stated that “[i]f any arbitrator was replaced, any hearing should be repeated, unless otherwise agreed by the Parties. It should not be possible for the arbitral tribunal to decide, against the will of one or both parties, that hearings should not be repeated.”¹³⁶

Other representatives argued that the new arbitrator alone should have the right to insist that hearings be repeated.¹³⁷ However, in the end, arguments concerning the considerable expense entailed with rehearings¹³⁸ and the possibility that the losing party could insist on all hearings being reheard in order to frustrate the procedure¹³⁹ prevailed. As a result, the question of whether to repeat a hearing in the case of a party-appointed arbitrator being replaced was left to the discretion of the new arbitral tribunal.

Article 14 of the 1976 UNCITRAL Rules should be understood to require only repetition of the hearing previously held, not the granting of a new hearing that would allow submission of new evidence. A tribunal might separately decide that a round of post-hearing pleadings or a new hearing is needed, but such expanded proceedings are not contemplated under original Article 14. Consistent with this approach, the Iran–US Claims Tribunal did not allow new evidence in the only case thus far in which that Tribunal repeated a hearing for the benefit of a replacement arbitrator. Typically, the Tribunal did not decide to repeat hearings.¹⁴⁰

Further, it should be noted that “hearing” as used within the 1976 UNCITRAL Rules and as understood by the original UNCITRAL drafters means the oral submission of evidence or the oral presentation of argument. The specification that “any” hearings should be repeated indicates that Article 14 of the 1976 UNCITRAL Rules applies not only to final hearings, but also to hearings held, for example, on interim measures or preliminary jurisdictional questions. The tribunal should take into account that a party has no right to a hearing on preliminary or ancillary questions when considering repetition of hearings after a party-appointed arbitrator has been replaced. This factor is not relevant when the sole or presiding arbitrator is replaced because original Article 14 requires repetition in those cases.

Finally, Article 14 of the 1976 UNCITRAL Rules does not apply to hearings predating a phase of the arbitration that has already been resolved by an award or decision of the tribunal. Thus repetition of “any hearings held previously” does not mean that the replacement of an arbitrator after the final hearing but prior to the award makes original Article 14 applicable to, for example, an earlier hearing as to jurisdiction for which an award has been rendered. In accordance with Article 32(2) of the 1976 UNCITRAL Rules, any previous awards are “final and binding on the parties” and there is thus no basis for considering repetition of such earlier hearings.¹⁴¹

Before the Iran–US Claims Tribunal, there were numerous instances of replacement that (p. 322) implicated Article 14 of the 1976 UNCITRAL Rules.¹⁴² One instance was emblematic of the Tribunal's general reluctance to repeat proceedings. In particular, Judge Mostafa Johangir Sani submitted his resignation from the Tribunal to the Government of Iran on August 10, 1983, to take effect on that same date. However, the Tribunal later accepted this resignation as being effective September 13, 1983. Judge Sani's departure on August 10, 1983 thus left thirteen cases under submission undecided. Six of the cases¹⁴³ were signed by Chairman Mangård and Judge Mosk prior to the Tribunal's designated effective date for Judge Sani's resignation. This left seven cases¹⁴⁴ under submission with Judge Sani's replacement Judge Parviz Ansari Moin. Judge Ansari requested rehearings in the seven cases under Article 14. However, a rehearing was held in only one of the seven cases,¹⁴⁵ with that rehearing being strictly limited to a repetition of the prior hearing without the introduction of any new evidence.

C. Extracts from the Practice of the Iran–US Claims Tribunal

American Intl Group, Inc and Islamic Republic of Iran, Award No 93–2–3 (December 19, 1983) at 3, reprinted in 4 Iran-US CTR 96, 97–98:

(Virtually identical statements are contained in Dames & Moore and Islamic Republic of Iran, Award No 97–54–3 (December 20, 1983), Pereira Associates and Islamic Republic of Iran, Award No 116–1–3 (March 19, 1984), Schering Corp and Islamic Republic of Iran, Award No 122–38–3 (April 16, 1984), and Morrison-Knudsen Pacific Ltd and Islamic Republic of Iran, Award No 143–127–3 (July 13, 1984).)

R J Reynolds Tobacco Co and Islamic Republic of Iran, Case No 35, Chamber Three, Order of December 21, 1983:

A Hearing was held in this case on 9 and 10 May 1983. Subsequently, the arbitrator appointed by the Islamic Republic of Iran resigned. A new arbitrator was appointed.

The Tribunal has determined, by virtue of Article 14 of the Tribunal Rules, that a Hearing for continued oral argument will be held on 1 March 1984, at 9:30 a.m., at Parkweg 13, The Hague, The Netherlands. No further written submissions will be allowed except for the brief mentioned in the Tribunal Order of 29 November 1983.

R J Reynolds Tobacco Co and Islamic Republic of Iran, Case No 35, Chamber Three, Dissent of December 21, 1983 by Richard M Mosk to Order of December 21, 1983:

The Hearing was held in this case in early May of 1983. There was no reason why an award could not have been issued prior to the resignation of the Iranian arbitrator. Nevertheless, the Tribunal (p. 323) for months and months after the Hearing continued to allow Respondents additional time to file a memorial on one legal issue. Seven months after the Hearing, that memorial has still not been filed.

In September 1983, the new Iranian arbitrator was appointed. From September 1983 until December 20, 1983 the Tribunal gave no indication that any new hearing was necessary in this case. The case has been fully set forth in writing. Absolutely no reason has been given or exists for a new hearing in this case. Indeed, in other cases in which the new Iranian arbitrator participated and in which decisions were against United States Claimants (Ultrasystems Incorporated (Award No 89–84–3) and Dames & Moore (Award No 97–54–3)), no new hearings were deemed necessary.

R J Reynolds Tobacco Co and Islamic Republic of Iran, Partial Award No 145–35–3 (August 6, 1984) at 3, reprinted in 9 Iran-US CTR 181, 183 (1985–II):

Inasmuch as the arbitrator appointed by the Islamic Republic of Iran who had participated in the above mentioned Hearing had meanwhile resigned, the Tribunal, by Order of 21 December 1983, determined by virtue of Article 14 of the Tribunal Rules that a Hearing for continued oral argument be held on 1 March 1984. After this continued Hearing the matter was taken under consideration.

Footnotes:

¹ Corresponding Article 13(2) of the 1976 UNCITRAL Rules provides:

² See Chapter 5 on Article 12(1).

³ Report of the Secretary-General on the Revised Draft Set of Arbitration Rules, UNCITRAL, 9th Session, Addendum 1 (Commentary), UN Doc A/CN.9/112/Add. 1 (1975), reprinted in (1976) VII UNCITRAL Ybk 166, 171 (Commentary on Draft Article 12(2)).

⁴ Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 5, para 34 (1976) (Comment by Mr Jenard, Belgium).

⁵ UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, n 4, at 5, para 35 (Comment by the Chairman).

⁶ Report of the UNCITRAL on the Work of its Ninth Session, UN GAOR, 31st Session, Supp No 17, UN Doc A/31/17, para 70 (1976), reprinted in (1976) VII UNCITRAL Ybk 66, 71 (Commentary on Draft Article 12(2)).

⁷ See Letter of the Agent of the United States dated August 16, 1983 regarding the absence of Judge Sani:

It is evident that the agreement of the parties cannot be carried out if the only remedy for the willful and unjustified absence of arbitrators is challenge and replacement. This mechanism by itself cannot prevent disruption of Tribunal operations for months at a time. Under Article 7 of the Tribunal Rules, a party has 30 days to appoint a replacement party arbitrator. If the party fails to do so, the appointing authority is allowed in principle another 30 days to make such appointment. If an appointment is named, but does not act, some time must be allowed for the process of challenge. If such challenge is successful, the process of appointment begins anew. Thus, the Tribunal must be empowered to act in the interim, and cannot simply wait for a replacement to be named.

See also discussion of absence of Judge Mostafavi in Uiterwyk Corp (1983 Tribunal Rules) in section 2(B)(3)(b).

⁸ Note that the service of the substitute member is then governed in part by Article 13(4) of the 1983 Tribunal Rules which states that “[a] substitute member appointed for a temporary period shall continue to serve with respect to any case in which he has participated in the hearing, notwithstanding the member for whom he is a substitute is again available and may work on other Tribunal cases and matters.”

⁹ For some examples of “failure to act” see T Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (2010) 200–1.

¹⁰ Additions made to the rule are discussed in section (2)B(3)(a) on substitute arbitrators.

¹¹ Memorandum of the Agent of the United States to the Appointing Authority supporting the Initiation of the Challenge of Judges Kashani and Shafeiei, September 17, 1984, at 13–14, reprinted in section 2(D)(1).

¹² Memorandum, (1983 Tribunal Rules) n 11, at 16.

¹³ Memorandum, (1983 Tribunal Rules) n 11, at 16–17.

¹⁴ Letter of the Agent of Iran to the Appointing Authority initiating the Challenge of Judge Arangio-Ruiz, August 8, 1991, reprinted in 27 Iran-US CTR 293 (1991–II), also reprinted in section 2(D)(2).

¹⁵ Letter of the Agent of the United States to the Appointing Authority regarding the Challenge by Iran of Judge Arangio-Ruiz, September 5, 1991, reprinted in 27 Iran-US CTR 312 (1991–II), also reprinted in section 2(D)(2).

¹⁶ Letter of the Agent of the United States, n 15.

¹⁷ Letter of the Agent of Iran to the Appointing Authority, September 17, 1991, reprinted in 27 Iran-US CTR 324–27 (1991–II), also reprinted in section 2(D)(2).

¹⁸ Decision of the Appointing Authority on the Challenge by Iran to Judge Arangio-Ruiz, September 24, 1991, reprinted in 27 Iran-US CTR 328, 332 (1991–II), also reprinted in section 2(D)(2).

¹⁹ Letter of Judge Arangio-Ruiz to the Appointing Authority, August 14, 1991, at 1–2, reprinted in 27 Iran-US CTR 311 (1991–II), also reprinted below, section 2(D)(2).

²⁰ Presidential Order No 51, February 2, 1987, reprinted in 14 Iran-US CTR 353 (1987–I), partly reprinted in section 2(D)(2).

²¹ Dissenting Opinion of Judge Khalilian with Respect to the Orders dated August 11, 1989 in Case Nos B1 (Claim 1), 197 and 476, August 22, 1989, reprinted in 21 Iran-US CTR 279–82 (1989–I), also reprinted in section 2(D)(3).

²² Letter of the Agent for the Government of the United States to Judge Briner, August 8, 1989, reprinted in 21 Iran-US CTR 351 (1989–I).

²³ For an additional example from the practice of investor–state arbitration, see Himpurna California Energy Ltd (1976 Rules), reprinted in section (2)C.

²⁴ As to this decision, see dissenting letter of Judges Kashani and Shafeiei to President Lagergren, dated January 18, 1983, and the written comments of February 3, 1983 of the American Arbitrators to President Lagergren concerning that dissenting letter.

²⁵ Statement of Judges Bellet and Aldrich appended to Gruen Associates and Islamic Republic of Iran, Award No 61–180–2 (July 27, 1983), reprinted in 3 Iran-US CTR 97, 108 (1983–II).

²⁶ Statement of Judges Bellet and Aldrich, n 25. See also “Reason for Absence of Signature of Mr. Shafeiei” filed by Judge Shafeiei in Case No 449 on August 9, 1983.

²⁷ See Letter of Judge Shafeiei to President Lagergren, dated August 8, 1983, at 26 (“The final hearing in this case was held on May 26, 1983. This was precisely one day prior to Mr. Aldrich's departure on leave. From 27 May until the end of June Mr. George Aldrich was absent … Throughout July, I too was absent. … Naturally, then I neither attended nor played any kind of part or role in the deliberative session … ). See also the statement attached by Judges Bellet and Aldrich to the Award in Case No 188 with the statement attached to the Award in Case No 220.

²⁸ See “Comment of George H Aldrich” filed October 13, 1983 in Case Nos 449, 220, 83 and 188.

²⁹ Disputing the extent of deliberations, see the Letter of the Agent of Iran to President Lagergren, dated September 2, 1983, and alleged “testimony” of A H Hosseini cited therein.

³⁰ Uiterwyk Corp and Islamic Republic of Iran, Award No 375–381–1 (July 6, 1988), para 30, reprinted in 19 Iran-US CTR 107, 116 (1988–II), reprinted in section 2(D)(2).

³¹ Uiterwyk Corp (1983 Tribunal Rules), n 30.

³² Uiterwyk Corp (1983 Tribunal Rules), n 30, at 116–17.

³³ Letter of Judge Mostafavi to President Böckstiegel, dated June 3, 1988, Sections 3.1 and 3.2, reprinted in this volume, section 2(D)(2).

³⁴ Supplemental Opinion of Judges Böckstiegel and Holtzmann to Award No 375–381–1 (July 6, 1988), reprinted in section 2(D)(2).

³⁵ See Letter of Judge Shafeiei to President Lagergren, dated August 5, 1983, objecting to notification. In this regard, see also the Letter of President Lagergren to the Iranian Arbitrators, dated September 25, 1984.

³⁶ See Dissent of Judge Mosk to Orders in Case Nos 42, 48, 60, 167, 439, filed August 26, 1983 (postponements following the absence of Judge Sani).

³⁷ For a more detailed discussion of an arbitrator's failure to sign the award, see Chapter 24, section 2(B)(4) on Article 34(4).

³⁸ See Letter of the Agent of Iran to President Lagergren, dated July 17, 1983, and received July 27, 1983.

³⁹ See the Chamber's Order, dated June 6, 1985, in Case No 261.

⁴⁰ See Iranian Assets Litigation Reports 4234 (February 19, 1982).

⁴¹ Letter of John Crook to Gunnar Lagergren, dated August 10, 1983.

⁴² A previous version of The Netherlands Code of Civil Procedure, for example, provided:

Arbitrators who have accepted their mandate cannot withdraw except for reasons to be approved by the Court. They are liable to compensate the damages of the parties, should they, without any justifiable reason, fail to make their award within the period of time fixed for it

Netherlands Code of Civil Procedure, Article 628 (Unofficial translation by the TMC Asser Institute—1980). Article 1029 of the New Dutch Arbitration Act provides: “An arbitrator who has accepted his mandate can at his own request, be relieved of his office by the President of the District Court for compelling reasons only.” For other examples see G Born, International Commercial Arbitration, (2009) 1635 n 233 (Italian Code of Civil Procedure, Art. 813(2) (implying that arbitrator may resign without liability for “just cause”); Lebanese New Code of Civil Procedure, Art. 769(3) (“Once he has accepted his functions, the arbitrator cannot resign without serious grounds for doing so … ”); [ … ] Portuguese Law on Voluntary Arbitration, Art. 9(3) (“An arbitrator who, having accepted his or her functions, refuses, without justification to exercise them, shall be liable for any damages which he or she may cause.”).

In a comparative study, Martin Domke wrote: the premature withdrawal of an arbitrator, more often a party-appointed one, may sometimes cause new arbitration proceedings with new expenses to the parties for which no immunity from liability exists. M Domke, “The Arbitrator's Immunity from Liability: A Comparative Survey,” (1971) 3 U Toledo L Rev 99, 102. Indeed a California State appeals court permitted a cause of action in breach of contract against an arbitrator who failed to render his award in timely fashion, Baar v Tigerman, 140 Cal App 3d 979, 985, 189 Cal Rptr 834, 839 (1983). See also Olesen, “Baar v. Tigerman: An Attack on Absolute Immunity for Arbitrators!” (1985) 21 California Western L Rev 564 (1985).

In his Commentary on the 1976 UNCITRAL Arbitration Rules, Professor Sanders wrote:

The Rules do not give any indication as to the circumstances in which a resignation may be justified, and, indeed, they could hardly be expected to do so. Once the arbitrator has agreed to function, he should fulfil his task. Exceptionally there may be good reasons for not continuing, such as a heart attack. If not, an arbitrator who resigns may possibly be sued for damages (costs) consequent upon his resignation.

P Sanders, “Commentary on UNCITRAL Arbitration Rules,” (1977) II Ybk Commercial Arb 172, 191. See also P Sanders, “Has the Moment Come to Revise the Arbitration Rules of UNCITRAL?” (2004) 20(3) Arb Intl 243, 262 (proposing a new provision in the UNCITRAL Rules that would empower two arbitrators to render the award when the third withdraws inappropriately).

⁴³ See section 2(D)(5).

⁴⁴ Decision by the Tribunal Islamic Republic of Iran and United States of America, Case Nos A3, A8, A9, A14 and B61, May 7, 2007, available at Iran Dec A3, 2007 WL 727080. See also S Baker and M Davis, The UNCITRAL Arbitration Rules in Practice: The Experience of the Iran-United States Claims Tribunal (1992) 69 (observing that the “Mosk Rule” provides “a common-sense rule of thumb for a resigning arbitrator in a multi-case arbitration.” Baker and David also note:

Of course, the Tribunal could not realistically force an arbitrator who wishes to resign to continue deliberations in cases that may take many months or years to resolve. Nevertheless the obligation to continue may have discouraged tactical resignations by a party-appointed arbitrator. Importantly, the rule provided the Tribunal with an explicit basis on which to complete its deliberations on cases despite the absence of an arbitrator. In a normal, single-case arbitration, however, the “Mosk rule” would rarely be appropriate, since it would in effect prohibit resignation after a hearing, a situation the Rules explicitly contemplate.

S Baker and M Davis, The UNCITRAL Arbitration Rules in Practice, n 44, at 69–70.

⁴⁵ See in this context, Whittaker Corp (1983 Tribunal Rules), Dissenting Opinion of Judge Holtzmann (April 27, 1987), reprinted in 14 Iran-US CTR 271 n 2 (1987–I), also reprinted in section 2(D)(1).

⁴⁶ For a comprehensive description of the Tribunal's practice in applying the “Mosk Rule,” see Attachment A (Relevant Tribunal Practice) to Decision by the Tribunal, Islamic Republic of Iran and United States of America, Cases Nos A3, A8, A9, A14 and B61, May 7, 2007, available on Westlaw at Iran Dec A3, 2007 WL 727080. For an example in which an Iranian arbitrator refused to observe the “Mosk Rule” and the Tribunal allowed his successor to participate in deliberations in place of him see Islamic Republic of Iran and United States of America (1983 Tribunal Rules), reprinted in section 2(D)(5). For other instances of application of “Mosk Rule”/Article 13(5), by the Tribunal, see other cases reprinted in section 2(D)(5), namely, Morrison-Knudsen Pacific Ltd, Harnischfeger Corp, Sedco Inc, American Bell International Inc, Jimmie B Leach (all 1983 Tribunal Rules).

⁴⁷ In one case, the parties agreed to allow the tribunal to proceed in truncated fashion in the event of the death of an arbitrator. See Vito G Gallo (1976 Rules), reprinted in section 2(C).

⁴⁸ Corresponding Article 13 of the 1976 UNCITRAL Rules provides:

1. In the event of the death or resignation of an arbitrator during the course of the arbitral proceedings, a substitute arbitrator shall be appointed or chosen pursuant to the procedure provided for in articles 6 to 9 that was applicable to the appointment or choice of the arbitrator being replaced.
2. In the event that an arbitrator fails to act or in the event of the de jure or de facto impossibility of his performing his functions, the procedure in respect of the challenge and replacement of an arbitrator as provided in the preceding articles shall apply.

⁴⁹ Report of Working Group II (Arbitration and Conciliation) on the Work of its Forty-Ninth Session (Vienna, September 15–19, 2008), UNCITRAL, 42nd Session, UN Doc A/CN.9/665, at 19, para 103 (2008) (describing Article 14(1) as the “general rule on replacement procedure”).

⁵⁰ Report of the Working Group on Arbitration and Conciliation on the Work of its Forty-Fifth Session (Vienna, September 11–15, 2006), UNCITRAL, 40th Session, UN Doc A/CN.9/614, at 15, para 67 (2007).

⁵¹ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 15, para 67.

⁵² UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 15–16, para 69. For examples of “justifiable” reasons for resignation, see G Born, International Commercial Arbitration, (2009) 1636.

⁵³ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 73. The principle concern seemed to be that some jurisdictions imposed strict requirements on the number of arbitrators. See UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, para 70 (noting that some national laws “prohibited even-numbered arbitral tribunals”). Some delegates favored addressing the issue concerning the validity of an award at the enforcement stage under the local arbitration law, including under Article 34 of the Model Law, if applicable, or Article V of the New York Convention. The view that gained consensus support in the Working Group, however, was that “it was desirable to provide a solution during the proceedings rather than leave the issue to be dealt with at the enforcement stage.” UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, para 73.

⁵⁴ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, para 73; Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.143 at 12, para 55 (2006).

⁵⁵ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 70.

⁵⁶ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 70.

⁵⁷ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 19, para 103.

⁵⁸ Report of the Secretary-General on the Preliminary Draft Set of Arbitration Rules, UNCITRAL, 8th Session, UN Doc A/CN.9/97 (1974), reprinted in (1975) VI UNCITRAL Ybk 163, 172 (Commentary on Draft Article 11).

⁵⁹ These procedures apply even if the two party-appointed arbitrators resign, leaving only the presiding arbitrator in place. As explained in one challenge decision, this situation leaves “untouched the existence and the identity of the Arbitral Tribunal and the office of the Presiding Arbitrator.” Challenge of April 15, 1993, reprinted in part in (1997) XXII Ybk Commercial Arb222, 225.

⁶⁰ The problem to be addressed by Article 14(2) was described in Working Group discussions varyingly from “spurious resignations” by arbitrators, UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 15, para 67, to “mala fide or tactical resignations by arbitrators,” para 67, to “obstructionist behaviour by an arbitrator,” para 74.

⁶¹ This rule is new to the 2010 Rules, though some tribunals applying the 1976 Rules have adopted express rules on proceeding in truncated fashion. See Vito G Gallo (1976 Rules), reprinted in section 2(C) (adopting a rule with respect to procedural matters).

⁶² In Working Group discussions, the right to appoint an arbitrator was described as a “fundamental right.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 105. The act of depriving a party of its right to appoint a substitute arbitrator was thus “a serious act.” UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 71.

⁶³ Even before the Working Group discussed the approach of imposing extraordinary measures that deprive a party of its right to appoint a substitute arbitrator, it considered other ways “to avoid spurious resignations, or at least minimize their impact on the overall arbitral process.” UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 15, para 67. Two options were proposed, but ultimately rejected. First, an arbitrator's resignation could be approved by the other arbitrators, which would “require an arbitrator to provide reasons for resigning and to submit to the other arbitrators’ scrutiny and judgement. … ” Para 68. Second, the appointing authority could approve the resignation; “However it was said that the other arbitrators would be in a better position to approve or refuse such resignation as they would be aware of the circumstances and facts of the arbitral proceedings.” Para 68. Yet another suggestion was to have resignation “take effect on a date decided upon by the arbitral tribunal [which] would permit arbitral tribunals to continue with the proceedings in an orderly way.” Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.143 at 11–12, para 53 (2006) (citing the so-called “Mosk Rule” followed at the Iran–US Claims Tribunal).

⁶⁴ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 112.

⁶⁵ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 71.

⁶⁶ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 71.

⁶⁷ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 112.

⁶⁸ Some delegates believed that application of Article 15(2) should be “automatic or subject to conditions.” UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 71.

⁶⁹ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 112.

⁷⁰ Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.145 at 19, para 55 (2006) (Draft Article 13(2)).

⁷¹ Report of the Working Group on Arbitration and Conciliation on the Work of its Forty-Sixth Session (New York, February 5–9, 2007), UNCITRAL, 40th Session, UN Doc A/CN.9/619, at 22, para 108 (2007) (noting a preference for the phrase “refuses or fails to act” over the prior formulation “failing to perform his or her functions”).

⁷² UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 109.

⁷³ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 109. Other proposals included different qualifying words in place of “invalid,” such as “insufficient,” “untenable,” “unwarranted,” “unjustified,” or “objectively frivolous.” Another suggestion was to include the phrase “without valid reasons,” instead of “invalid reasons” in order to emphasize that “the withdrawing arbitrator should provide reasons for his or her withdrawal.” Para 109. Still others proposed establishing a higher standard by including the words “manifestly” before “without valid reasons” and “in exceptional circumstances.”

⁷⁴ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 110.

⁷⁵ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111.

⁷⁶ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111.

⁷⁷ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111. In a later proposal, the use of the term “improper conduct” was objected to on the ground that it “might be too vague a concept.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, at 22, para 116. See also T Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (2010) 233 (“to the extent possible, the Appointing Authority should consider the decision that it has rendered and that have been rendered by other Appointing Authorities as to replacement of arbitrators. There should be some attempt at consistency in deciding whether or not to replace arbitrators.”).

⁷⁸ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111.

⁷⁹ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 106.

⁸⁰ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 106.

⁸¹ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, para 107.

⁸² UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 106.

⁸³ This understanding of the appointing authority's discretion was expressed throughout Working Group discussions. UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 15–16, para 69 (noting the appointing authority's discretion should be made “by reference to the relevant facts and circumstances, whether the resignation or non-performance was acceptable or not” in a particular case); para 71 (noting that “the loss of that right [of appointment of a substitute arbitrator] should be based on a fact-specific inquiry, and should not be subject to defined criteria”).

⁸⁴ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111.

⁸⁵ The travaux préparatoires merely state that “a reference to ‘exceptional circumstances’ should be added to better qualify the conditions under which the provisions of [Article 14(2)] would apply.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 22, para 116.

⁸⁶ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 112. See also G Born, International Commercial Arbitration, (2009) 1589 (“Just as institutional rules validly provide that a party may waive its right to nominate a co-arbitrator, through failure to exercise or otherwise, so a party should be subject to losing its right to nominate a co-arbitrator through the nomination of someone who is obstructive or uncooperative. The counter-argument is that a truncated tribunal is a disproportionate and fundamentally unfair means of addressing a co-arbitrator's obstruction.”).

⁸⁷ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 21, para 111.

⁸⁸ For example: “The Working Group first considered the situation where an arbitrator would refuse to fail to act, and therefore would not exercise its functions, for any reason, not necessarily tainted by misconduct. The attention of the Working Group was drawn to the objective situations where the appointing authority would need to make the appointment, for example, where a court decision or another public authority enjoined an arbitrator from participating in the proceedings.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 107.

⁸⁹ UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 22, para 116.

⁹⁰ In Working Group discussions, it was observed that “[s]afeguards should be provided … to ensure that they would apply only in exceptional circumstances.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 20, para 105.

⁹¹ For views in favor of involving the remaining arbitrators in the determination to apply Article 14(2), see UNCITRAL, 40th Session, UN Doc A/CN.9/619, n 71, at 22, paras 109–110.

⁹² UNCITRAL, 40th Session, UN Doc A/CN.9/619, n 71, at 22, para 109.

⁹³ UNCITRAL, 40th Session, UN Doc A/CN.9/619, n 71, at 22, para 109.

⁹⁴ Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.147 at 19, paras 56–57 (2007) (Draft Article 13(2)). For example, a preliminary draft of Article 15(2) granted to both a party and “the arbitral tribunal” the right to apply to the appointing authority for extraordinary relief following an arbitrator absence. Some opposed this approach because they believed it could pose problems in cases in which the parties had not chosen an appointing authority. Others disagreed, arguing that such an obstacle could be readily overcome by requiring the remaining arbitrators in such cases to refer the matter to the parties, who could then designate an appointing authority. UNCITRAL, 40th Session, UN Doc A/CN.9/619, n 71, at 22, para 109.

⁹⁵ Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.143 at 12, para 56 (2006).

⁹⁶ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 73.

⁹⁷ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 16, para 73; Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.143 at 12, para 55 (2006). See also n 48, for the text of the 1976 Rule.

⁹⁸ The inclusion of this requirement was a response to Working Group delegates who believed that the unique mechanism of a truncated tribunal should apply “within strict time limits.” UNCITRAL, 42nd Session, UN Doc A/CN.9/665, n 49, at 22, para 114. See T Webster, Handbook of UNCITRAL Arbitration: Commentary, Precedents and Materials for UNCITRAL Based Arbitration Rules (2010) 234 (“an Appointing Authority may therefore only act if the Tribunal has either expressly or by implication declared that the hearings are closed. … If the deliberations have not yet occurred, then the party whose nominee is not replaced will be at a disadvantage and the Tribunal may not have the benefit of a balanced discussion of the issues.”).

⁹⁹ See N Blackaby and C Partasides with A Redfern and M Hunter, Redfern and Hunter on International Arbitration, (5th edn 2009) 290 (“So far as the UNCITRAL Rules are concerned, there is thus respectable authority supporting the legitimacy of a truncated tribunal's decision to proceed and render an award where appropriate. … It seems clear that the option of proceeding as a truncated tribunal, rather than as a reconstituted full tribunal, will remain as an exceptional measure to be adopted only where the arbitration is nearing its end and where there is clear evidence that the arbitrator concerned, voluntarily or involuntarily, has been associated with an abuse of the process.”).

¹⁰⁰ Regarding discretion for whether to follow the original nominating process, compare to the 1998 LCIA Rules, art 11.1; and the 2010 AAA Rules, art 10. Regarding truncated tribunals, compare to the 2010 AAA Rules, art 11; and the 2012 Swiss Rules, art 13(2).

¹⁰¹ Report of the UNCITRAL, 8th Session, Summary of Discussion of the Preliminary Draft, UN Doc A/10017, para 89 (1975), reprinted in (1975) VI UNCITRAL Ybk 24, 34.

¹⁰² Report of the UNCITRAL, 8th Session, n 101, paras 90–91.

¹⁰³ Report of the UNCITRAL, 8th Session, n 101, paras 90–91.

¹⁰⁴ Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 5, para 31 (1976) (Comment by Mr Mantilla-Molina, Mexico).

¹⁰⁵ UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, n 104, para 32 (Comment by the Chairman).

¹⁰⁶ In addition to the discussion in the text, see S Schwebel, International Arbitration: Three Salient Problems (1987) 144–296.

¹⁰⁷ See Himpurna California Energy Ltd (1976 Rules), para 59, reprinted in section 2(C).

¹⁰⁸ Himpurna California Energy Ltd (1976 Rules), para 5, reprinted in section 2(C).

¹⁰⁹ See Chapter 24, section 2(B)(4) on Article 34(4) for discussion of an arbitrator's failure to sign the award.

¹¹⁰ Himpurna California Energy Ltd (1976 Rules), para 43, reprinted in section 2(C).

¹¹¹ Nor were the UNCITRAL Rules modified by the Tribunal in anticipation of such absence. Article III(2) of the Claims Settlement Declaration provides that “the Tribunal shall conduct its business in accordance with the arbitration rules of [UNCITRAL] except to the extent modified by the Parties or by the Tribunal to ensure that this Agreement can be carried out.”

The circumstances presented by absence arguably threaten the Tribunal's ability to carry out the provisions of the Claims Settlement Declaration. The Tribunal's express power “to ensure that this agreement can be carried out” is limited only by the requirements of good faith and reasonableness in the determination of what measures are appropriate to ensure the carrying out of the Declaration. It would seem well within the reasonable exercise of this express power for the Tribunal to modify its Rules to provide that the Full Tribunal or the Chambers may proceed with a hearing despite the absence of one of the Members when such absence is unjustified. Such a modification was perhaps not originally made because such absences were not foreseen as likely to occur or because the Tribunal did not desire to commit a great deal of its energy and time to passing a rule which might never be needed.

¹¹² See Letter of the Agent of Iran in Case No 129, filed May 31, 1985, Letter of the Agent of Iran to the President of the Tribunal, dated July 17, 1983, and received July 27, 1983, regarding an Award on Agreed Terms in Case No 449; Letter of the Agent of Iran to the President of the Tribunal, dated September 1, 1983.

¹¹³ Colombia v Cauca Co, 290 US 524, 527–28 (1903) (Holmes, J).

¹¹⁴ See Letter of the Agent of the United States dated August 16, 1983, n 7, regarding the absence of Judge Sani.

¹¹⁵ Note that the service of the substitute member is then governed in part by Article 13(4) of the 1983 Tribunal Rules which states that “[a] substitute member appointed for a temporary period shall continue to serve with respect to any case in which he has participated in the hearing, notwithstanding the member for whom he is a substitute is again available and may work on other Tribunal cases and matters.”

¹¹⁶ The events surrounding the departure are contained in the arbitral tribunal's interim award of September 26, 1999, reprinted in (2000) XXV Ybk Commercial Arb109, 154–65.

¹¹⁷ Himpurna California Energy Ltd and Republic of Indonesia, Final Award (October 16, 1999), at para 26 (Ad Hoc Proceeding, 1976 UNCITRAL Rules, Concession Agreement), reprinted in (2000) XXV Ybk Commercial Arb186, 191.

¹¹⁸ Himpurna California Energy Ltd (1976 Rules), para 63, reprinted in section 2(C).

¹¹⁹ G Scelle, Report of Arbitration Procedure, UN Doc A/CN.4/18, at 33–4 (1950); A Mérignhac, Traité théorique et pratique de l’arbitrage international (1895) 277.

¹²⁰ P Lalive, “Les règles de conflit de lois appliquées au fond du litige par l’arbitre international siégeant en Suisse” (April 1976) 84, in No 53, Mémoires publiés par la Faculté de Droìt de Genève, L’arbitrage international privé et la Suisse (1977) (emphasis in original). Translation: “It is certainly this principle of effectiveness which, definitively, with that of good faith, mandates the interpretation of the agreement to arbitrate in such a way that the improper withdrawal of an Arbitrator, under the pressure or the orders of a Party, will not prevent the tribunal from pursuing its task and rendering a binding award.”

¹²¹ The corresponding Article of the 1976 UNCITRAL Rules provides:

If under articles 11 to 13 the sole or presiding arbitrator is replaced, any hearings held previously shall be repeated; if any other arbitrator is replaced, such prior hearings may be repeated at the discretion of the arbitral tribunal.

¹²² UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 17, para 75.

¹²³ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 17, para 75.

¹²⁴ Article 14, as modified and adopted by the Iran–US Claims Tribunal, leaves the question of repetition of any hearings, even in the case of replacement of the presiding arbitrator, to the discretion of the new arbitral tribunal. This modification reflects in part the fact that the Tribunal rendered its awards primarily on the basis of the written record with only one or two day hearings being held. Indeed, this modification was made despite the fact that transcripts of hearings were generally not made. The modification also exemplifies the general tendency of the Tribunal when modifying the 1976 UNCITRAL Rules to increase its discretion. This tendency can be understood in part by noting that the State representatives at UNCITRAL (unlike the arbitrators of the Iran–US Claims Tribunal) generally viewed the Rules from the perspective of an arbitrating party and thus preferred not to leave issues of concern to the discretion of future tribunals of unknown composition.

¹²⁵ Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.143 at 13, para 60 (2006).

¹²⁶ UNCITRAL, 40th Session, UN Doc A/CN.9/614, n 50, at 17, para 75. Article 14 of the 2006 Swiss Arbitration Rules provides: “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.”

¹²⁷ Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 7, paras 46 (Comment by the Chairman), 48 (Comment by Mr Szasz, Hungary), 57 (Comment by Mr Lebedev, USSR) (1976). Given the apparent consensus on that point, the Chairman requested that the representative of the Union of Soviet Socialist Republics redraft the relevant paragraph as a separate Article.

¹²⁸ Original Article 14 began: “If under articles 11 to 13. … ”

¹²⁹ The drafting change was made by the UNCITRAL Secretariat, and approved by the Working Group, with little substantive comment. Settlement of Commercial Disputes: Revision of the UNCITRAL Arbitration Rules, Note by the Secretariat, UNCITRAL, UN Doc A/CN.9/WG.II/WP.151 at 15, para 33 (2008) (providing that “[t]he reference to articles 11 to 13 which was contained in the 1976 version of that article has been deleted, as it might not be necessary to limit the application of that provision”).

¹³⁰ See, eg, Report of the UNCITRAL, 8th Session, Summary of Discussion of the Preliminary Draft, UN Doc A/10017, para 92 (1975), reprinted in (1975) VI UNCITRAL Ybk 24, 34.

¹³¹ Report of the UNCITRAL, 8th Session, n 130. See also Report of the Secretary-General on the Revised Draft Set of Arbitration Rules, UNCITRAL, 9th Session, Alternative Provisions to Revised Draft, UN Doc A/CN.9/113 (1975), reprinted in (1976) VII UNCITRAL Ybk 181, 185. It was noted by the representative of Mexico that the many municipal legal systems emphasized use of a written record and not oral proceedings. Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 7, para 53 (1976) (Comment by Mr Mantilla-Molina, Mexico).

In Saudi Arabia and Aramco (Sauser Hall, Badawi/Hassan and Habacy arbs, August 23, 1958) the arbitrator appointed by Saudi Arabia, Dr Badawi, died following oral argument but prior to the rendering the award. He was replaced by Mahmoud Hassan. Hassan was given time to “study the Memorials exchanged by the parties and hear the tape-recording of the oral arguments and hearings … The proceedings were therefore resumed in the state in which they were at the time of Dr. Badawi's death.” (1963) 27 Intl L Rev 117, 137.

¹³² Report of the UNCITRAL, 8th Session, n 130, para 93 (1975), reprinted in (1975) VI UNCITRAL Ybk 24, 34.

¹³³ The representative of Belgium did attempt to draw a distinction between sole arbitrators and presiding arbitrators, arguing that in the latter case there was no need to repeat hearings especially when accurate records of proceedings were available. Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 7, para 51 (1976) (Comment by Mr Jenard, Belgium).

¹³⁴ The decision must be taken by the new arbitral panel inasmuch as the replaced arbitrator is no longer a member.

¹³⁵ Report of the Secretary-General on the Preliminary Draft Set of Arbitration Rules, UNCITRAL, 8th Session, Addendum 3 (Observations by Norway), UN Doc A/CN.9/97/Add.3, Annex I (1975); and Report of the UNCITRAL, 8th Session, n 130, para 94 (1975), reprinted in (1975) VI UNCITRAL Ybk 24, 34.

¹³⁶ Summary Record of the 5th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, at 6–7, para 47 (1976) (Comment by Mr Guest, United Kingdom).

¹³⁷ UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, n 136, at 6–7, para 48 (Comment by Mr Szasz, Hungary).

¹³⁸ See, eg, UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, n 136, at 7, para 52 (1976) (Comment by Mr Melis, Austria).

¹³⁹ UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.5, n 136, at 7, para 49 (Comment by Mr Straus, Observer).

¹⁴⁰ For the Tribunal practice on this issue, see extracts reprinted in section 4(C).

¹⁴¹ See Chapter 24, section 2(B)(2) on the final and binding nature of awards.

¹⁴² Two other instances, for example, involve Judges Hamid Bahrami-Ahmadi and Judge Seyed Mostafavi-Tafreshi, who were appointed as replacements for Judges Shafeiei and Kashani respectively, the latter Judges having been withdrawn by their Government pursuant to Article 11(3) of the 1983 Tribunal Rules. Judge Bahrami inherited two cases under submission (Case Nos 285 and 179), Judge Mostafavi, eleven (Case Nos 134, 161, 299 (settled), 111, 174, 61, 37 and 231 (consolidated), 18, 24, 480, and 36). Both Judges requested under Article 14 that re-hearings be held; to our knowledge no hearings were repeated.

¹⁴³ Case Nos 62, 67, 84, 124, 185, and 346.

¹⁴⁴ Case Nos 1, 2, 35, 38, 54, 100, and 283.

¹⁴⁵ Case No 35.

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Part II Arbitral Procedures to Control the Selection and Conduct of Arbitrators, Ch.6 Failure to Act, other Disruptions, and the Replacement of an Arbitrator

From: The UNCITRAL Arbitration Rules: A Commentary (2nd Edition)

David D Caron, Lee M Caplan

(p. 276) (p. 277) Chapter 6 Failure to Act, other Disruptions, and the Replacement of an Arbitrator

1. Introduction

2. Failure to Act and other Disruptions—Article 12(3)

A. Text of the 2010 UNCITRAL Rule1

B. Commentary

(1 ) Drafting history of the rule and general comments

(2 ) Iran–US Claims Tribunal practice with respect to an arbitrator's failure to act

(p. 282) (3 ) Iran—US Claims Tribunal practice with respect to other disruptions

(a ) A note on substitute arbitrators

(b ) A note on truncated proceedings

(1 ) The absence of Mr Sani, Fall 1983

(2 ) The absence of Judge Mostafavi, Spring 1988

(3 ) The practice of the Tribunal regarding absence from the hearing

(4 ) The practice of the Tribunal regarding the rendering of awards despite a refusal to sign

(5 ) The practice of the Tribunal regarding the rendering of awards on agreed terms despite no participation by an arbitrator

(6 ) The practice of the Tribunal regarding the holding of pre-hearing conference despite the absence of an arbitrator

(c ) A note on resignation of an arbitrator

(4 ) Comparison to the 1976 UNCITRAL Rules

C. Extracts from the Practice of Investment Tribunals

D. Extracts from the Practice of the Iran–US Claims Tribunal

(1 ) Tribunal Rules (1983), Article 13(1)—Resignation

(p. 291) (2 ) Tribunal Rules (1983), Article 13(2)—Failure to act

B. Grounds of the Request

C. Considerations about Article 13(2) of the Tribunal Rules

a. Text of paragraph 2 of the Article 13 of the [1976] UNCITRAL Rules:

b. The meaning of “failed to act” in Article 13(2) of the Tribunal Rules

E. Conclusions

(3 ) Tribunal Rules (1983), Article 13(3)

(4 ) Tribunal Rules (1983), Article 13(4)

(5 ) Tribunal Rules (1983), Article 13(5)

II. The Composition of the Tribunal

(p. 305) 3. Replacement of an Arbitrator—Article 14

A. Text of the 2010 UNCITRAL Rule48

B. Commentary

(1 ) Rationale for the revised approach: the problem of spurious resignations

(2 ) Procedures when an arbitrator “has to be replaced”—Article 14(1)

(3 ) Replacement of an arbitrator in “exceptional circumstances”—Article 14(2)

(a ) Depriving a party of its right to appoint

(b ) Procedural requirements

(c ) Exclusivity of the discretion of the appointing authority

(p. 313) (d ) Agreement between the parties

(p. 314) (4 ) Comparison to the 1976 UNCITRAL Rules

(a ) The express power to proceed

(b ) The inherent power to proceed

4. Repetition of Hearings in the Event of Replacement of an Arbitrator—Article 15

A. Text of the 2010 UNCITRAL Rule121

B. Commentary

(1 ) General comments

(2 ) Comparison to the 1976 UNCITRAL Rules

C. Extracts from the Practice of the Iran–US Claims Tribunal

Footnotes:

Go to full text on:

A. Text of the 2010 UNCITRAL Rule¹

A. Text of the 2010 UNCITRAL Rule⁴⁸

A. Text of the 2010 UNCITRAL Rule¹²¹