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Part III The Initiation of the Arbitration and the Identification and Clarification of the Issues Presented, Ch.13 Amendments to the Claim or Defence

David D. Caron, Lee M. Caplan, Matti Pellonpää

From: The UNCITRAL Arbitration Rules: A Commentary (1st Edition)

David D. Caron, Matti Pellonpää, Lee M. Caplan

A newer edition of The UNCITRAL Arbitration Rules is available. Latest edition (2 ed.)
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From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 07 June 2023

(p. 465) Chapter 13  Amendments to the Claim or Defence

  1. Introduction 465

  2. Amendments to the Claim or Defence–Article 20 466

    1. Text of the UNCITRAL Rule 466

    2. Commentary 466

      1. (1)  General Remarks 466

      2. (2)  The Amendment Must Not Fall Outside the Scope of the Arbitration Clause or Agreement 468

      3. (3)  Grounds for Rejecting an Amendment: Delay, Prejudice or Other Circumstances 470

      4. (4)  Procedural Questions 474

    3. Extracts from the Practice of the Iran-US Claims Tribunal 475

    4. Extracts from the Practice of NAFTA Tribunals 491

    5. Extracts from the Practice of Ad Hoc Tribunals 494

Introduction

A party may wish to modify his claim or defence in the course of the arbitral proceedings. For practical and economic reasons, the tribunal should maintain a flexible attitude towards the acceptance of such modifications, as the alternative may be the commencement of new arbitral proceedings. Giving a party an unlimited right to make amendments, however, could be prejudicial to the other party and hamper the orderly conduct of the proceedings. Article 20 of the UNCITRAL Rules seeks to balance these competing interests.

(p. 466) Amendments to the Claim or Defence–Article 20

Text of the UNCITRAL Rule1

Article 20 of the UNCITRAL Rules provides:

During the course of the arbitral proceedings either party may amend or supplement his claim or defence unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances. However, a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitral clause or separate arbitration agreement.

Commentary

(1)  General remarks

The article on statements of claim in the Preliminary Draft of the UNCITRAL Rules contained a provision that “the claim may, with the permission of the arbitrators, be supplemented or altered provided the respondent is given opportunity to express his opinion concerning the change.”2 In the course of the drafting process, the provision in question was not only converted into a separate article,3 but also modified in two basic respects.

First, in accordance with the principle of equality,4 the right to make amendments was extended in the final version of Article 20 to include defences. Although counter–claims are not specifically mentioned in Article 20, there can be no doubt that the amendments to counter–claims must also (p. 467) be treated according to principles enunciated in this provision.5 Accordingly, the Iran-US Claims Tribunal has without any apparent hesitation applied Article 20 to both claims and counter–claims.6

Second, instead of stating that amendments are possible with “the permission of the arbitrators” (the wording of the Preliminary Draft), the final version of Article 20 stipulates that “either party may amend or supplement his claim or defence unless the arbitral tribunal considers it inappropriate …” This shift in emphasis is significant because it makes clear that the acceptance of amendments by the arbitral tribunal is not entirely discretionary.7 Rather, a party has a right to make amendments which should be accepted by the tribunal, provided they remain within the limits defined by Article 20.8 As noted by the Iran-US Claims Tribunal, the UNCITRAL Rules have thereby adopted a “liberal approach” towards the question of a party's right to make amendments.9 This holding of the UNCITRAL Rules accords with a “widely recognized arbitral principle” concerning the subject matter of amendments.10 In arbitration, unlike judicial proceedings, the arbitration agreement sets limits to the jurisdiction of the tribunal. Within these limits, the scope of the proceedings, and, correspondingly, the scope of any amendments are foreseeable to the parties. A “liberal approach” towards amendments is therefore appropriate.

(p. 468) (2)  The amendment must not fall outside the scope of the arbitration clause or agreement

As the preceding discussion implies, there must be limits to the right to amend a claim or defence. A prima facie absolute limitation is set by the arbitral tribunal's jurisdiction as defined in the arbitration clause or agreement. As the second sentence of Article 20 states, “a claim may not be amended in such a manner that the amended claim falls outside the arbitration clause or separate arbitration agreement.”11 Such a claim cannot be characterized as an “amendment” of the original; it is rather a new claim over which the arbitral tribunal lacks jurisdiction.12 This is the case where, for example, the amendment seeks to bring into the proceedings an entity which was not a party to the agreement forming the basis of the arbitration, though it might somehow have been involved in the subject matter (for example, a turnkey project with many parties) of the arbitration. Borderline cases are, however, conceivable. For example, depending on the construction of the contract and its arbitration clause, or the arbitration agreement, the specification of a wholly–owned daughter company of the original claimant/respondent as the proper party (instead of, or in addition to, the mother company) could be viewed as an acceptable clarification of the claim, rather than as a new claim falling outside the tribunal's jurisdiction.13 It is possible to (p. 469) bring an entirely new party into the proceedings by way of an amendment, provided that the amendment keeps within the limits of the arbitration agreement (i.e., the new party is bound by the agreement) and meets the other conditions set forth in Article 20.14

On the other hand, where the arbitral tribunal has doubts about the compatibility of the purported amendment with the arbitration clause or agreement, it should proceed with caution before accepting amendments, despite the generally liberal spirit of Article 20. A court challenge on the ground of lack of jurisdiction is a concrete risk which may affect the validity and enforceability of an international arbitral award.15 Of course, the parties may conclude a new arbitration agreement and thereby extend the (p. 470) jurisdiction of the arbitral tribunal. In principle, an amendment proposed by one party, if acceptable to the other, may constitute such an agreement.16

(3)  Grounds for rejecting an amendment: delay, prejudice or other circumstances

Whereas the second sentence of Article 20 discussed above concerns proposed amendments which fall outside the arbitration clause or separate arbitration agreement, the first sentence of Article 20 regulates situations where the amendment alters the subject matter of the original claim as defined in the statement of claim.17 Compatibility of the amendment with the second sentence is a precondition for its consideration under the criteria enunciated in the first sentence.

An amendment found to fall under the arbitration clause or agreement should be accepted unless it is inappropriate to do so on the grounds of: (1) delay, (2) prejudice to the other party, or (3) any other circumstances. In the words of the Iran-US Claims Tribunal, “the Tribunal must consider whether the other Party would be prejudiced by the proposed amendment, whether the other party has had an opportunity to respond to the newly–added or amended claim, and whether the proposed amendment would needlessly disrupt or delay the arbitral process.”18 The amendment may be inappropriate on a single ground, although in practice more often than not a combination of various interrelated grounds will lead to its rejection.

Under Article 20, the amendment should be rejected if there has been an inordinate delay in making it.19 Whether the delay can be accepted depends, in part, on the reasons why the amendment was not submitted earlier. Delay may be due to circumstances beyond the control of the party seeking the amendment, or excusable for corresponding reasons–for example, the documentary evidence on which the amendment is based has become accessible to the party during the arbitral proceedings through a “discovery” procedure.20 Delays in these cases will be more readily accepted than in those (p. 471) cases where the party could at the outset have raised the arguments put forward in the proposed amendment.21

The acceptance or rejection of the amendment will seldom be based on delay alone;22 rather the acceptability of the delay will normally be assessed by weighing it against the criterion of “appropriateness” listed in Article 20, i.e., possible prejudice to the other party.23 An amendment prejudices the other party where it is raised so late as to deprive that party of the opportunity to defend itself properly.24 An amendment made after the case has been heard on the merits or after the scheduled exchange of written pleadings will therefore only rarely be accepted.25 The reaction of the party potentially prejudiced by the amendment is of considerable–if not decisive–importance in assessing that prejudice. The Iran-US Claims Tribunal, in some cases, cited the absence of any objection alleging prejudice as a factor for accepting an amendment.26

Where such objections are raised, the tribunal must assess their merit in light of all the circumstances. In addition to timeliness, the nature of the proposed amendment must be considered. The tribunal should not (p. 472) immediately disregard as inappropriate amendments that change or modify arguments opposed to those that change or modify the factual circumstances as presented in the statement of claim or the relief sought. The presentation of “unjust enrichment” as an alternative legal theory for what originally has been put forward as a contract or expropriation claim in our view is acceptable, provided the other party has an opportunity to respond to it.27 An amendment seeking an increase in the amount of relief sought should not automatically be barred either, provided that relief is sought on the basis of the original allegations.28 Hence, where a claim for warehousing charges is added to an original claim based on alleged costs of repairs of equipment held in the warehouse, the factual basis of the claim is not changed so as to warrant the rejection of an amendment.29 Amendments concerning increases in interest and costs are least likely to cause undue prejudice.30 Indeed, there is seldom reason not to accept the presentation of such ancillary claims at a late stage of the proceedings.

On the other hand, prejudice may more easily be established when the amendment contains a claim that is truly new in the sense of being based on a new contract or on factual circumstances different from those relied on in the original claim (though not in the sense of exceeding the arbitration clause or agreement). Such is the case where the claimant “seeks an amendment adding a different kind of relief, which raises new factual and legal issues.”31 Although the liberal main tenet of Article 20 accepts even such fundamental amendments if they are raised soon after submission of the statement of claim, rejection may be quite appropriate if the amendment is not sought until a relatively late stage of the proceedings. The Cal––Maine case decided by the Iran-US Claims Tribunal is illustrative. On the basis of Article 20, the Tribunal rejected a new claim that was raised in the Memorial submitted one and a half years after the filing of the statement of claim and four months (p. 473) before the Hearing, while it accepted a simultaneous amendment which sought to modify the legal theory behind the original portion of the Claimant's claim.32 The amendment rejected in Cal–Maine can also be compared with that accepted in McCollough33 against the respondent's objection. Whereas in the former case the new claim concerned a legal relationship between the parties which differed from that of the original claim, in the latter case the new claim was based on the very same factual circumstances and alleged infractions which formed the basis of the statement of claim.

According to Article 20, “other circumstances” in addition to delay and prejudice may render an amendment inappropriate. It is somewhat difficult to conceive of additional circumstances that could independently, i.e., apart from delay and prejudice, have this effect. The provision can perhaps be interpreted as giving the arbitral tribunal discretion to reject an amendment, even where there is neither inexcusable delay nor any allegation of prejudice, if accepting the amendment (with the consequent opportunity for the other party to respond) would be per se prejudicial to orderly proceedings.34 Such discretion, however, should be applied restrictively. A disruption of orderly proceedings so severe as to justify the rejection of an amendment would thus seem to be a rare possibility

An authoritative source has suggested that the second sentence of Article 20 prohibiting amendments falling outside the scope of the arbitration agreement might “be regarded as one of the ‘other circumstances’ … under which the arbitral tribunal will consider the amendment as inappropriate.”35 This does not on its face appear persuasive, as the second sentence contains in principle an absolute limit to amendments, whereas the grounds of inappropriateness mentioned in the first sentence (including “other circumstances”) are relative and subject to the discretion of the arbitral tribunal.36 As (p. 474) already noted, however, there may be borderline cases where it is hard to determine whether the purported amendment falls outside the agreed–upon scope of arbitration. In such cases, the “other circumstances” ground gives the tribunal the opportunity to reject an amendment in order to protect the award from possible attacks before courts,37 even where the arbitrators find that the amendment more likely than not falls within the limits of the arbitration clause or agreement. In general, the reference to “other circumstances” implies that the decision on amendment should always be based on an assessment of the situation as a whole, keeping in mind that the UNCITRAL Rules have intentionally adopted a liberal approach towards the acceptability of amendments. In keeping with this spirit, the Iran-US Claims Tribunal has emphasized that circumstances which would preclude the acceptance of an amendment should be concrete.38 Parties that are not satisfied with the liberal approach of the Rules can, of course, modify Article 20 to preclude any amendments to the claims and defences.39

(4)  Procedural questions

The Iran-US Claims Tribunal has sometimes determined the acceptability of an amendment as a preliminary issue, and sometimes as joined to the merits. Although both approaches are possible, amendments sought at a relatively early stage of the proceedings should be decided quickly, to remove any uncertainty as to which points the parties have to concentrate on in their subsequent pleadings. Since Article 20 acknowledges the party's right to amend his claim or defence, the arbitral tribunal cannot be required in every case to get the other party's comments on the acceptability of concrete amendments. If, however, there are any prima facie reasons that the amendment might be prejudicial to the other party, it should not be accepted without providing that party an opportunity to comment on the acceptability of the amendment.40 If the amendment ultimately proves to be inappropriate or frivolous, the amending party may be required to compensate the other party for any costs incurred in responding to the amendment.41

(p. 475) Determining the acceptability of an amendment is arguably a procedural matter for the presiding arbitrator to decide according to the conditions set by Article 31(2) of the UNCITRAL Rules.42 It is, however, advisable that the tribunal in its final award ratify any such decision which may have been made by the chairman of the arbitral tribunal.43

Extracts from the practice of the Iran-US Claims Tribunal

In the absence of any objection by the Parties concerned the Tribunal decides that the Supplementary Statement of Claim and the Supplementary Statement of Counter–claim have been timely filed under Article 20 of the Tribunal Rules.

Sylvania Technical Systems, Inc. and The Islamic Republic of Iran, Case No. 64, Chamber One, Order of 10 May 1983.

In response to the Tribunal's order of 19 December 1983, the First Boston Corporation, named as new Respondent in the Claimant's Amendment to the Statement of Claim filed 25 July 1983, has filed objections thereto. The Tribunal sustains those objections and cannot permit a new, unrelated respondent to be named at this stage of the Proceedings.

Bank Markazi Iran and Bank of Boston International, New York, Case No. 733, Chamber Two, Order of 8 Dec 1983.

In this case, the Statement of Claim on its face showed that it concerned a claim of a non–United States company, but it also indicated clearly that this company was a wholly owned subsidiary. Later papers allege that the parent company is a United States national.

In view of circumstances of this case, the Tribunal considers the 22 June Petition to be a clarification of who is the proper Claimant, and not an amendment whereby a new Claimant is named; thus the Tribunal need not address the question whether such an amendment could be permitted under Article 20 of the Tribunal Rules. In view of the foregoing, the claim should now be regarded as claim of AMF Incorporated on behalf (p. 476) of AMF Overseas Corporation. The Statement of Claim is therefore eligible for filing.

Refusal to File Claim of AMF Corporation, Decision No. DEC 17–REF20–FT (8 Dec 1982), reprinted in 1 Iran-US CTR 392, 393 (1981–1982).

Article 20 of the Provisionally Adopted Tribunal Rules provides that a party during the course of the arbitral proceedings [including the refusal proceedings] may amend or supplement his claim unless the Tribunal considers it inappropriate.…However, to substitute a new Claimant for the original one is tantamount to the filing of a new claim and cannot be regarded simply as an amendment to the existing claim, timely received by the Registry.

Refusal to Accept the Claim of Raymond International (UK) Ltd, Decision No. DEC18–REF21–FT (8 Dec 1982) (square brackets in the original), reprinted in 1 Iran-US CTR 394, 395 (1981–1982).

With respect to the argument that Novzohour could not be named a respondent after 19 January 1982 because Article III, paragraph 4 of the Claims Settlement Declaration said that no claim may be filed after that date, the Tribunal notes that it decided to accept that amendment on 4 June 1982. In explanation, we point out that the original Statement of Claim identified Novzohour as the other party to the License and asserted that the Government of the Islamic Republic of Iran “has nationalized Novzohour and is responsible for the control and debt obligations of Novzohour.” In its Statement of Defence filed on 12 March 1982 the Government, which said it was representing Novzohour, presented a counter–claim on Novzohour's behalf. In these circumstances, the Tribunal concluded that acceptance of the amendment pursuant to Article 20 of our Provisional Rules of Procedure would violate neither that Article nor the Claims Settlement Declaration.

Kimberly–Clark Corporation and Bank Markazi Iran et al., Award No. 46–57–2 (25 May 1983) at 8–9, reprinted in 2 Iran-US CTR 334, 338 (1983–I).

Furthermore, in a post–hearing brief Mr. Dallal has argued that if the Respondents' defence were to be sustained, the bank would be unjustly enriched from its own culpable act, i.e. it would be the beneficiary of the US $400,000 worth of Rials which it undertook to pay and which it has not.

Since this additional basis for the claim was first presented in a post–hearing brief, the Tribunal holds, in accordance with Article 20 of the (p. 477) Tribunal Rules, that it would be inappropriate to allow this amendment to the claim. Bank Mellat has declared that the Rials could be recovered directly from the bank by the person entitled to them.

Dallal and The Islamic Republic of Iran, Award No. 53–149–1 (10 Jun 1983) at 3–4, reprinted in 3 Iran-US CTR 10, 11 (1983–III).

This provision affords wide latitude to a party who seeks to amend a claim, and the Tribunal's practice is in accord with this liberal approach. As Article 20 directs, the Tribunal will permit an amendment unless delay, prejudice or other concrete circumstances make it inappropriate to do so. No such circumstances appear here.

First, the Claimant did not unduly delay before making the Amendment.…Claimant tried as long as possible to limit the proceedings to the implementation of the MOU [Memorandum of Understanding], and it was NDIO's refusal to join in a Request for an Award on agreed terms that caused any “delay” in the making of the amendment.

Likewise, the Amendment did not cause prejudice to the Respondents. Again it was NDIO's own refusal, on two separate occasions, to implement the terms of the MOU that prompted the Claimant to return to the claim arising out of the 1976 agreement. While the relief sought was increased, the factual circumstances on which the amendment is based had been presented in the original Statement of Claim. The Respondents can point to no “prejudice” which does not ensue from NDIO's own conduct, and thus the MOU presents no bar to the proffered amendment.

Finally, there are no “other circumstances” which make inappropriate to permit the Claimant to amend its original Statement of Claim. Accordingly, the Amendment submitted on 24 February 1983 is allowed.

International Schools Services, Inc. and The Islamic Republic of Iran, National Defence Industrial Organization, Award No. ITL 57–123–1 (30 Jan 1986) at 10–11, reprinted in 10 Iran-US CTR 6, 12 (1986–I).

Claimant Sedco has also filed indirect claims relating to Sediran under Article VII(2) of the Claims Settlement Declaration. Respondents present additional objections to these indirect claims. Alternatively, Claimant presents a direct claim for its shareholding interest in SEDIRAN.

Respondents object to the Tribunal's jurisdiction over a direct claim by Sedco for its shareholding interest in Sediran on the ground that it (p. 478) involves “the presentation of a new statement of claim.” The Tribunal finds that the claims of Sedco, whether considered jurisdictionally as direct or indirect claims, rest essentially on the same facts, allegations and legal theories. It is also noted that the Tribunal accepted a change from an indirect to direct claim in a similar pleading context in Tippetts, Abbett, McCarthy, Stratton and The Islamic Republic of Iran, Award No. 4 1–7–2 (29 June 1984). Respondents' objection is therefore denied.

Sedco Inc. and National Iranian Oil Company and the Islamic Republic of Iran, Award No. ITL 55–129–3 (28 Oct 1985) at 13–14, 25, reprinted in 9 Iran-US CTR 248, 257, 265–66 (1985–II).

Although Claimant noted in its 18 January 1982 Statement of Claim that its participation in the running of Sea–Cal included “among other activities, sending its employees to Iran to help in the running of Sea–Cal”, Cal–Maine made then no specific claim on the basis of such activities. In its initial Statement of Claim, Cal–Maine sought relief only for its investment in Sea–Cal, interest thereon for two years, and costs of arbitration. A claim for accounts receivable was not raised at the 7 February 1983 Pre–Hearing Conference and was not in any of Cal–Maine's pleadings until its Memorial of 14 July 1983. It did not seek a formal amendment of its claim. Even assuming that the claim for accounts receivable could be deemed a request for amendment, in this case, the delay in asserting such a claim and the likely prejudice to Respondents of such a delay would preclude the acceptance of such an amendment under Article 20 of the Tribunal Rules. In view of this fact and the fact that no such amendment was proposed, the Tribunal does not consider Cal–Maine's claim for accounts receivable.

Cal–Maine's claim for its investment interest in Sea–Cal was asserted in the Statement of Claim. Claimant, however, later altered its theory for recovery of its investment interest. Claimant's Memorial in which the new legal theory was presented was filed three months prior to the hearing. Seamourgh did not object in its October 1983 Memorial to the argument put forward by Cal–Maine in July. Seamourgh had four months in which to prepare its defence for the Hearing. Accordingly, the Tribunal does not believe that Respondents have been prejudiced by any change of theory so as to make such a change inappropriate. Moreover, Respondents were given the opportunity and did in fact file post–hearing memorials.

Cal–Maine in its Statement of Claim stated that it sought “damages in the amount of US $600,000.00 (US $500,000.00 plus 20% interest)”. (p. 479) In the light of Claimant's subsequent submissions this has to be understood as a claim for 10% annual interest for a period of two years which Cal–Maine was entitled to receive on its investment according to the terms of the Letter on Intent. In its July 1983 Memorial Claimant alternatively sought interest from the date of each of its capital contributions until full payment on the basis of general principles concerning contract breaches. The Tribunal does not consider this amendment of the claim inappropriate in the light of Article 20 of the Tribunal Rules.

Cal–Maine Food Inc. and The Islamic Republic of Iran, Award No. 133–340–3 (11 Jun 1984) at 11–12, 15–16, reprinted in 6 Iran-US CTR 52, 59–60, 62–63 (1984–II).

The Tribunal admits the Claimant's request to increase the rate of interest initially sought by it as well as to update the amount of its claim for costs, since both these requests affect only the amounts of calculations and as such do not prejudice the defence by the Respondents.

Pepsico Inc. and The Islamic Republic of Iran et al., Award No. 260–18–1 (11 Oct 1986) at 20, reprinted in 13 Iran-US CTR 3, 17 (1986–IV).

  1. 4.  Pursuant to Article 20 of the Tribunal Rules, the Tribunal allows the Claimant's request alternatively to base its claim for US $547,055 for re–engineering and re–testing costs on the doctrine of unjust enrichment.

  2. 7.  The Parties are invited to file by 5 October 1984 any further memorials in advance of the Hearing in this case.

Aeronutronic Overseas Services, Inc. and The Islamic Republic of Iran et al., Case No. 158, Chamber One, Order of 9 Mar 1984.

  1. 45.  The Claimant further seeks payment of five invoices dated 15 March 1983 for sums totalling US $238,605 in respect of expenses incurred or services rendered subsequent to the termination of the Contract.

  2. 46.  The Tribunal notes that the Claimant asserted this part of the claim before the Tribunal for the first time on 18 July 1984 by the submission of certain exhibits. The Tribunal does not deem this amendment of the Claim to be “inappropriate”, however, within the terms of Article 20 of the Tribunal Rules, as, in the absence of (p. 480) any allegation to that effect, the amendment does not appear to have prejudiced the Respondent.

  3. 50.  In its reply to the Statement of Defence of the Respondent PTT, filed 6 July 1982, the Claimant introduced a claim for “[d]amages to the financial health of ” McCollough.

  4. 52.  Although the Tribunal does not find sufficient cause to declare this amendment inadmissible, the Tribunal notes the utter lack of evidence.

McCollough Company, Inc. and The Ministry of Post, Telegraph and Telephone, Award No. 225–89–3 (22 Apr 1986), reprinted in 11 Iran-US CTR 3, 17–18 (1986–II).

  1. 9.  As already noted, the Claimant amended his Statement of Claim to increase the amount of compensation sought. The Respondent objected to the amendment on the ground that an increase in the amount claimed is not a proper amendment. The Tribunal decides that no prejudice could be considered to have been caused to the Respondent by a change in the Claimant's valuation of the property at issue even if this change is caused by using a different method of valuation. The Respondent had ample opportunity to respond, and did respond, to the revised valuation made by the Claimant. Accordingly, the Tribunal decides the Amendment is admissible in accordance with Article 20 of the Tribunal Rules.

Thomas Earl Payne and The Islamic Republic of Iran, Award No. 245–335–2 (8 Aug 1986), reprinted in 11 Iran-US CTR 3, 6 (1986–III).

The Claimant is requested to file by 31 October 1986 further clarification and supporting documentation concerning the basis of its proposed amendment increasing its claim for invoiced amounts to US $162,472.30. By the same date the Respondent NIOC is requested to file comments on the procedural issue of whether the proposed amendment should be admitted.

Tai, Inc. and The Islamic Republic of Iran, Case No. 421, Chamber One, Order of 12 Aug 1986.

Litton has sought leave to amend its claim to include the costs of warehousing of the 91 retained LN–33 items of equipment. In the view of (p. 481) the Tribunal, no prejudice would be occasioned to the Respondents by the admission of this amendment, and it is therefore allowed in accordance with Article 20 of the Tribunal Rules.

Litton Systems, Inc. and The Islamic Republic of Iran, Award No. 249–769–1 (25 Aug 1986) at 8, reprinted in 12 Iran-US CTR 126, 131 (1986–III).

As regards NIO's status, Article 20 of the Tribunal Rules states that a party may amend its claim, unless delay, prejudice or loss of jurisdiction would result. Claimant's amendment adding NIO as a Respondent was requested after the Claimant discovered that NIO was the entity directly involved in the alleged expropriation. Therefore such a request cannot be considered as untimely filed. Since NIO acted allegedly as an agent of Iran, also a Respondent in this Case, the amendment cannot be said to prejudice Iran or any other Respondent. Finally, there is no suggestion that the amendment may deprive the Tribunal of jurisdiction over the claim.

In view of the foregoing, the Tribunal finds no reason to disallow such an amendment, and it is accordingly accepted.

Fedders Corporation and Loristan Refrigeration Industries, Decision No. DEC 51–250–3 (28 Oct 1986) at 2, reprinted in 13 Iran-US CTR 97, 98 (1986–IV).

  1. 1.  The Tribunal notes Claimant's submission of 11 August 1987, seeking an amendment to increase the amount claimed in this Case from US $244,155 to US $3,022,147 and to change the date of the alleged expropriation from 11 May 1980 to 28 July 1979.

  2. 2.  The Tribunal further notes that only the Statement of Claim has been filed in this Case.

  3. 3.  As stated in Case No. 967, the Tribunal considers that under Article 20 of its Rules of Procedure a party is afforded wide latitude in amending its claims and pleadings during the course of the arbitral proceedings, subject only to a determination by the Tribunal that an amendment would be inappropriate or to the limitation that amendments not render the amended claim “outside the jurisdiction of the arbitral tribunal”. The Rule cites delay or prejudice to the other party as specific circumstances which might persuade the Tribunal that an amendment would be inappropriate.

  4. 4.  The Tribunal notes that the essence of the claim in this Case would not be changed by the proposed amendment. The claim remains a claim for compensation for the alleged expropriation of Mr. (p. 482) Ghaffari's ownership interest in an Iranian company. Whether there was an expropriation, the effective date of such expropriation, and the value of the expropriated interest are matters of proof to be resolved by the Tribunal in the course of the proceedings, and the Parties are free to make such arguments in respect of those issues as they may choose.

  5. 5.  Therefore, the Tribunal accepts the amendment filed on 11 August 1987 and directs the Co–Registrars to reclassify the Claim accordingly.

Fereydoon Ghaffari (a claim less than US $250,000 presented by The United States of America) and The Islamic Republic of Iran, Case No. 10792, Chamber Two, Order of 15 Sep 1987, reprinted in 18 Iran-US CTR 64 (1988–I).

  1. 84.  In determining the admissibility of the amendments, the Tribunal again begins its analysis by examining the Tribunal Rules. The Tribunal notes that Article 20 provides in part that

    [d]uring the course of the arbitral proceedings either party may amend or supplement his claim … unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances (emphasis added).

  2. 85.  As noted in International Schools Services, Inc. and Islamic Republic of Iran, Interlocutory Award No. ITL 57–123–1, p. 10 (30 Jan. 1986), “[t]his provision affords wide latitude to a party who seeks to amend a claim, and the Tribunal's practice is in accord with this liberal approach.” The Tribunal permits amendments unless delay, prejudice, or other “concrete circumstances”, see International Schools Services, supra, Ford Aerospace & Communications Corp. and Government of the Islamic Republic of Iran, Award No. 289–93–1 (29 Jan. 1987), make amendment inappropriate, or unless “loss of jurisdiction would result”, see Fedders Corporation and Loristan Refrigeration Industries, Decision No. DEC 51–250–3, p. 2 (28 Oct. 1986). The same considerations of prejudice, equality of treatment, and delay of the arbitral proceedings are applicable here. Thus, the Tribunal must consider whether the other Party would be prejudiced by the proposed amendment, whether the other Party has had an opportunity to respond to the newly–added or amended claim, and whether the proposed amendment would needlessly disrupt or delay the arbitral process. See Thomas Earl Payne and Government of the Islamic Republic of Iran, Award No. (p. 483) 245–335–2, para 9 (8 Aug. 1986), Questech, Inc. and Ministry of National Defence of the Islamic Republic of Iran, Award No. 191–59–1, p. 28 (25 Sept. 1985); Sylvania Technical Systems, Inc. and Government of the Islamic Republic of Iran, Award No. 180–64–1, p. 39 (27 June 1985).

  3. 86.  In the present Case the Tribunal holds that, except for the amendment withdrawing the set–off for the value of the computer, all of the proposed amendments are admitted. It is the practice of the Tribunal to admit requests to increase the rate of interest initially sought as well as to update the amount of costs claimed, since, as stated in Pepsico, Inc. and Government of the Islamic Republic of Iran, Award No. 260–18–1, p 20 (13 Oct. 1986), such amendments “affect only the amounts of calculations and as such do not prejudice the defence by the Respondents”. As to the other amendments the Tribunal finds that their admission causes neither delay to the arbitral process nor prejudice to the Respondent, and there are no other “concrete circumstances” which would make amendment inappropriate. There have also been no allegations by the Respondents to that effect.

  4. 87.  The withdrawal of the offset of the value of the computer at the Hearing, however, is a different matter. Such a withdrawal significantly alters the relief sought by the Claimant and raises new factual and legal issues to which the Respondents have not had a sufficient opportunity to respond. Allowing this amendment, at this stage of the proceedings, would likely prejudice the Respondents. Moreover, no explanation has been offered for the delay in seeking this alteration of the Claim. Therefore, the Tribunal rejects this proposed amendment to the Claim. Accordingly, $196,417 must be deducted from any amount awarded to the Claimant.

Harris International Telecommunications, Inc. and The Islamic Republic of Iran, Award No. 323–409–1 (2 Nov 1987) (footnotes omitted), reprinted in 17 Iran-US CTR 31, 55–57 (1987–IV).

  1. 37.  The question arises, however, whether Claimant's request for a declaration from the Tribunal that certain letters of credit are null and void, first mentioned in its Hearing Memorial, was an admissible amendment to the Claim. Article 20 of the Tribunal Rules provides that:

    [d]uring the course of the arbitral proceedings either party may amend or supplement his claim … unless the arbitral tribunal (p. 484) considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances.

    Under this provision, the Tribunal is to consider delay in making the amendment as a criterion independent from “prejudice to the other party” or “any other circumstances”. Article 20, read together with Articles 18, 19 and 28 of the Tribunal Rules, makes it clear that the arbitrating parties are obliged to present their claim or defence, in principle, as early as possible and appropriate under the circumstances in each case. Compliance with this obligation is indispensable, in the Tribunal's view, to ensure an orderly conduct of the arbitral proceedings and equal treatment of the parties. It is true that the Tribunal has generally taken a liberal approach in permitting amendments, provided that they neither significantly alter the relief sought, nor raise new factual or legal issues to which the other party could not adequately respond, and that an explanation for the delay has been offered. Harris International Telecommunications, Inc. and The Islamic Republic of Iran, et al., Award No. 323–409–1, paras 84–87 (2 Nov 1987). The Claimant in this Case, however, seeks an amendment adding a different kind of relief, which raises new factual and legal issues. The Tribunal notes that the Claimant, in its Statement of Claim, did not make reference to the existence of outstanding letters of credit securing advance payments or payment of social security premiums. Rather, it merely stated that “all performance guarantees were thus released by TCI”. It was, indeed, the Respondent TCI, in its Statement of Defence and Counter–claim filed on 26 September 1983, which first mentioned these letters of credit. Nonetheless, however, the Claimant did not take up the issue in its “Reply” filed on 10 January 1985. It did so, as stated above, only in the Hearing Memorial which was filed on 25 August 1986. Considering that the Claimant offered no explanation why it raised this request only at such a late stage of the proceedings, the Tribunal finds it inappropriate to allow the amendment sought.

Arthur Young & Company and The Islamic Republic of Iran, Award No. 338–484–1 (1 Dec 1987), reprinted in 17 Iran-US CTR 245, 253–54 (1987–IV).

  1. 18.  The Statement of Claim, signed by the Claimant himself, alleges that the expropriation, which is the basis of the claim, “took place on 28 February 1981”. As the Respondent points out, left (p. 485) unamended, this allegation would place the claim outside the Tribunal's jurisdiction, whatever the dominant and effective nationality of the Claimant. However, on 30 August 1982, the Claimant submitted an letter to the Tribunal in which he stated that he wished “to elaborate on the statement made … [the] Statement of Claim” and that in due course he would prove that “the expropriation in question effectively took place between the dates of November 5, 1980 and January 19, 1981”.

  2. 19.  This letter can be considered as an amendment to the Statement of Claim. Such an amendment may be submitted, under Article 20 of the Tribunal Rules, “unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances”. Given the fact that the letter in question was filed eight months subsequent to the filing of the Statement of Claim and one month before the filing of the Statement of Defence, the Tribunal finds that there was no unreasonable delay in making this amendment and that the Respondent is not prejudiced by it. Furthermore, the Tribunal previously has interpreted this Rule as affording “wide latitude” to a party wishing to amend his claim and has noted that “the Tribunal's practice is in accord with this liberal approach”: International School Services and Islamic Republic of Iran, Award No. ITL 57–123–1 (30 January 1986). A priori, such an amendment can therefore be considered as admissible.

Reza Said Malek and The Islamic Republic of Iran, Award No. ITL 68–193–3 (23 Jun 1988), reprinted in 19 Iran-US CTR 48, 52–53 (1988–II).

  1. 23.  The Amended Claim was filed on 24 December 1986, almost two and one–half years before the final Hearing was held. The Tribunal notes that all the named Respondents as well as MIO and the Customs Agency have filed a substantive response to the Amended Claim. In addition, Isiran and the Bank have presented rebuttal memorials. The Tribunal is satisfied, therefore, that the increase of the amount claimed, which increase constitutes an amendment or supplement within the scope on Article 20 of the Tribunal Rules, has not caused prejudice to the Respondents.

  2. 24.  With respect to certain parts of the Amended Claim, however, the question arises whether they constitute a new claim rather than an amendment or supplement as foreseen by Article 20 of the Tribunal Rules. To the extent they represent a new claim, the Tribunal must reject these items. See Refusal to Accept the Claim of (p. 486) Raymond International (U.K.) Ltd, Decision No. DEC 18–ref 21–FT, p.3 (8 Dec. 1982), reprinted in 1 Iran-U.S. C.T.R. 394, 395.

  3. 25.  The claim items to be reviewed in this context all relate to the alleged breach of the TRC Contract. Based on the Amended Claim they may be summarized as follows. First, the Claimant contends that he assisted a business associate in the formation of an Iranian company named Chutco. In return, Mr. Buckamier allegedly was entitled to a 10% commission on all gross sales of Chutco products resulting from his efforts. The TRC Contract also entailed an order to Chutco, but TRC's alleged breach prevented the Claimant from collecting his commission.

  4. 26.  It is incorrect to state that “there is not even a hint” of the Chutco claim in the Claimant's original pleadings. In addition to being mentioned in the testimony of Mr. Abdulazim Fakhami, the commission arrangement and Chutco's involvement in TRC Contract are described in Part VI of the Statement of Claim. Thus, the original claim and the Amended Claim share the same factual basis. The Tribunal notes, however, that “Mr. Buckamier is not trying to collect the balance owed to him by Chutco.” This statement compels the conclusion that the Amended Claim relating to Chutco is a new claim. In view to its filing date, the Tribunal therefore must reject this part of the Amended Claim.

  5. 27.  The second claim item at issue is Mr. Buckamier's share of the installation fee of US $23,780.00 for twenty–nine of the garbage compactors which HNB was to install under the TRC Contract. The Tribunal notes that the Statement of Claim describes both the basis and the amount of this claim. The Claimant did not include this item in his summary of “ ‘known’ unpaid debts” of TRC, apparently because “Mr. Buckamier isn't sure whether this total amount of US $23,780.00 has been paid and if any amount has been withheld.” In the light of the wording of this statement and of the opportunity afforded to the Parties to collect and to present evidence in the course of the proceedings, it would be unreasonable to interpret this statement as an abandonment by the Claimant of this part of his claim. The Tribunal is satisfied, therefore, that the installation fee claim constitutes an amendment or a supplement permitted under Article 20 of the Tribunal Rules.

  6. 28.  The third part of the Amended Claim to be addressed concerns Mr. Buckamier's share of profits in the amount of US $60,013.18 that he claims HNB lost as a result of the breach by TRC of the (p. 487) TRC Contract. Specifically, Mr. Buckamier claims a sales commission for the twelve compactors, out of the agreed total of 282, that were not delivered due to force majeure. He also claims his share of the profits that would have resulted from modification and repair by HNB of the 241 delivered compactors. Mr. Buckamier further seeks his share of the profits that would have been made on the installation of the 253 compactors not installed.

  7. 29.  Review of the original pleadings reveals that, while these lost profits are not included in the amount originally claimed, Part I of the Statement of Claim as well as the correspondence, the TRC Contract and the testimony submitted therewith, set forth the basis for the claim eventually raised in the Amended Claim. The Tribunal therefore finds that this part of the Amended Claim supplements the Statement of Claim in conformity with Article 20 of the Tribunal Rules.

Jack Buckamier and The Islamic Republic of Iran, Award No. 528–941–3 (6 Mar 1992), reprinted in 28 Iran-US CTR 53, 60 (1992).

  1. 17.  The Tribunal's Order of 18 February 1987 accepting the Claimant's First Amendment forecloses the Respondent's present objection to that amendment.

Harold Birnbaum and The Islamic Republic of Iran, Award No. 549–967–2 (6 Jul 1993), reprinted in 29 Iran-US CTR 260, 265 (1993).

  1. 11.  On 16 June 1992, the Tribunal rendered a Decision, Mohsen Asgari Nazari and The Government of the Islamic Republic of Iran, Decision No. DEC 105–221–1 (16 June 1992), reprinted in 28 Iran-US CTR 192, regarding the Claimant's application to amend his Claim. Referring to Article 20 of the Tribunal Rules and the significant lapse of time involved, and emphasizing that the Tribunal had already issued Interlocutory Award No. ITL 79–22–1 in this Case and that the proposed new respondents had not had an opportunity to submit evidence during the preliminary stage of the proceedings or otherwise to participate therein, and the fact that the Claimant had not offered any justification for his delay in making this application, the Tribunal considered it inappropriate to allow the proposed amendment adding seven new respondents to the Case.

Mohsen Asgari Nazari and The Government of the Islamic Republic of Iran, (p. 488) Award No. 559–221–1 (24 Aug 1994), reprinted in 30 Iran-US CTR 123, 126 (1994).

  1. 103.  In regard to the Respondent's request for the rejection of the Claimants' valuation, the Tribunal refers to its Award in Rockwell International Systems, in which the Tribunal held:

    In exercising its discretion under Article 20 to permit amendments to claims, the Tribunal must consider whether the other party would be prejudiced by the proposed amendment, whether the other party has had an opportunity to respond to the newly–added or amended claim, and whether the proposed amendment would needlessly disrupt or delay the arbitral process. Subject to these considerations, an amendment is generally admissible if the underlying facts of a dispute, as presented in the Statement of Claim, essentially remain the basis of the dispute, and if the amendment is so closely interrelated to the initial claim that it would be contrary to judicial economy to separate the issues and litigate them separately, or possibly, in different fora.

    Rockwell International Systems, Inc. and The Government of the Islamic Republic of Iran, Award No. 438–430–1, para. 73 (5 September 1989), reprinted in 23 Iran-U.S. C.T.R. 150, 166 (“Rockwell ”). The Tribunal is satisfied that the Claimants' revised valuation of the Company meets the criteria laid down in Rockwell. Accordingly, the Respondent's request for dismissal of the valuation, and indeed of the claim, is rejected.

Shahin Shaine Ebrahimi, et al. and The Government of the Islamic Republic of Iran, Award No. 560–44/46/47–3 (12 Oct 1994), reprinted in 30 Iran-US CTR 170, 204 (1994).

  1. 44.  For the first time at the final Hearing, Westinghouse requested permission to amend its claims by adding to the relief sought a request for a declaration by the Tribunal that all bank guarantees and good performance bonds established in connection with the IED contracts are null and void. The proposed amendment thus adds a different kind of relief–a declaratory relief–to the original monetary relief sought and raises new factual and legal issues which had neither been raised nor discussed before. In the Tribunal's view, therefore, rather than making an amendment as foreseen by Article 20 of the Tribunal Rules, it appears that Westinghouse is in fact asserting a new claim after the deadline for (p. 489) filing of claims provided for in Article III, paragraph 4, of the Claims Settlement Declaration. In addition, due to the substantial delay with which Westinghouse made the amendment, the Air Force was not given a sufficient opportunity to respond to the factual and legal aspects of the amended claim. In light of these circumstances, the Tribunal rejects the amendment as inadmissible….

Westinghouse Electric Corporation and The Islamic Republic of Iran Air Force, Award No. 579–389–2 (20 Mar 1997) (citations omitted), reprinted in 33 Iran-US CTR 60, 75–76 (1997).

  1. 9.  An examination of Tribunal precedents shows that the Tribunal has been liberal in allowing amendments unless those amendments are made so late that their acceptance would cause prejudice to the other party. Thus, in McCollogh & Co. and Iran, Award No. 225–89–3, (22 April 1986), reprinted in 11 Iran-US C.T.R. 3, 17, the Tribunal held that an amendment made in 1984 raising new claims for expenses subsequent to the termination of the contract on which the original claims were based was not inappropriate within the terms of Article 20 of the Tribunal Rules, as it “does not appear to have prejudiced the Respondent.” [Other citations omitted.] In several cases, new respondents were added by amendment. [Citations omitted.] In International Sch. Servs., Inc. and Iran, Award No. ITL 57–123–1 (30 January 1986), reprinted in 10 Iran-U.S. C.T.R. 6, the Tribunal permitted a claim for the enforcement of a settlement agreement to be amended by adding a claim on the underlying debt. Referring to Article 20, the Tribunal said:

    This provision affords wide latitude to a party who seeks to amend a claim, and the Tribunal's practice is in accord with this liberal approach. As Article 20 directs, the Tribunal will permit an amendment unless delay, prejudice or other concrete circumstances make it inappropriate to do so.

    In the present case, the reasons to permit Westinghouse to amend its claims are even more persuasive, as uniquely in Tribunal practice it has been the Respondent that has expanded the case by bringing the contracts in question into the case. Our acceptance of a responsive amendment by Westinghouse would not have prejudiced the Air Force, but our rejection of it seriously prejudices Westinghouse.

Westinghouse Electric Corporation and The Islamic Republic of Iran Air Force, (p. 490) Award No. 579–389–2 (20 Mar 1997), Separate Opinion of George H Aldrich (20 Mar 1997), reprinted in 33 Iran-US CTR 195, 198–200 (1997).

  1. 4.  …The Tribunal stated that

    The Request … seeks to add as a Claimant a person who was not mentioned in the Statement of Claim. While such an amendment may be possible under Article 20 of the Tribunal Rules, the Tribunal finds that the Claimants have not provided sufficient and consistent information concerning the ownership of the claimed shares and that consequently the Request can be read as an attempt to add a claim by a new Claimant for shares different from those alleged to be owned by the existing Claimants, which might not be a permissible amendment under Article 20 of the Tribunal Rules but rather might be an assertion of a new claim after the deadline contemplated in the Claims Settlement Declaration.

    The Tribunal concluded that it did not have enough information to make a decision on the matter and ordered the Claimants to clarify the identity of the persons who are alleged to own the shares to which the Claim relates. On 1 June 1987 the Claimants withdrew their request to include Bettie Tavakoli as a Claimant.

Vivian Mai Tavakoli et al. and The Government of the Islamic Republic of Iran, Award No. 580–832–3 (23 Apr 1997), reprinted in 33 Iran-US CTR 206, 210 (1997).

  1. C.  Admissibility of Late Claims and Amendment of Claims

  2. 1.  Alterations in the Amount Claimed

  3. 55.  In her Rebuttal Memorial, the Claimant, relying on Article 20 of the Tribunal Rules, …, requested that she be permitted to amend and supplement her Claim to conform to the evidence submitted with her Hearing Memorial and with her Rebuttal Memorial. The Claimant alleged that the new amount claimed reflects information from documents recently obtained from Iran, which information was not available when she filed her Claim or made her initial submission of evidence. According to the Claimant, the revised amount also reflects new expert appraisals, which are based in part on information not previously available.

  4. 56.  Therefore, the amount of compensation sought in the Rebuttal Memorial has been increased to US $40,930,443, plus interest (p. 491) and costs, compared to the Statement of Claim, where the Claimant sought US $6,528,116.90, and the Hearing Memorial, where the compensation sought was US $16,263,578.44. Although the amount of each of the Claimant's individual claims are not itemized in the Statement of Claim, the amounts are itemized in the Hearing Memorial and in the Rebuttal Memorial. At the Hearing the Claimant sought US $33,508,923, explaining that there had been an error in her valuation calculations.

  5. 57.  The Respondent is opposed to the increased amounts and to their having been increased over five–fold from the amount originally sought in the Statement of Claim. The Respondent holds that before the filing of the Statement of Claim, the Claimant enjoyed ample time, and was in the best possible position, to appraise her claimed property and shares. Any changes in the value of the alleged property subsequent to the filing of the Statement of Claim cannot affect the amount of compensation, which must be determined as of the date of expropriation. The Respondent argues that the Claimant has produced no acceptable reason for her revised valuation. Hence, it argues that the Tribunal may not accept such an increase in the relief sought.

  6. 58.  The Tribunal notes that its practice has been to allow claimants to increase the amounts sought in stated claims, whether as a result of new evidence or the application of a different valuation or appraisal method.

    [Discussion of practice omitted.]

  7. 61.  For these reasons, the Tribunal holds that the Respondent will not be prejudiced by the amended Claim, as the Tribunal has afforded it ample opportunity to respond to the amended Claim, both in subsequent filings and at the Hearing. Accordingly, the Tribunal rejects the Respondent's objection and decides that the amendments are admissible in accordance with Article 20 of the Tribunal Rules.

Frederica Lincoln Riahi and The Government of the Islamic Republic of Iran, Award No. 600–485–1 (27 Feb 2003).

Extracts from the Practice of NAFTA Tribunals

  1. 130.  …[Canada argues that] leave to amend the statement of claim to provide greater precision should not be granted if the other party would be prejudiced or the amendment fell outside the submission to arbitration.

  2. (p. 492)
  3. 131.  The last submission refers to one of the controls which the Tribunal has over the development of the claim to ensure that it understands the essential matters and that the other party has proper notice. Under article 20 of the UNCITRAL Rules, either party may amend or supplement its claim or defence unless the tribunal considers the amendment inappropriate having regard to delay, prejudice or other circumstances; further, a claim may not be amended to take it outside the scope of the arbitration claim. It will be observed that the article does not have quite the balance that Canada would suggest. While the tribunal may exercise control over amendments, its leave need not be sought in the first instance. Article 22 is also relevant, as both parties remind the Tribunal. It has the power to decide whether further written statements, in addition to the statements of claim and defence, should be required from the parties or may be presented by them. Those powers are to be read with the broad powers of the tribunal under article 15 of the UNCITRAL Rules to conduct the arbitration in such manner as it considers appropriate provided that the parties are treated with equality and given a full opportunity to present their cases.

United Parcel Service of America Inc. and Government of Canada, Award on Jurisdiction (NAFTA Chapter Eleven, 22 Nov 2002), at 40, available at http://www.dfait-maeci.gc.ca/tna-nac/NAFTA-en.asp.

(d)  Has a “New Claim” Been Asserted?

  1. 93.  The Tribunal finally deals with Canada's contention that reliance in the Statement of Claim on the MMT Act, which was enacted some six months following delivery of the Notice of Arbitration, which Notice was directed at Bill C–29 (which became the MMT Act), and specific reference in the Statement of Claim for the first time to the produce Greenburn, constitute the assertion of “new claims” which the Tribunal is prohibited from considering.

  2. 94.  The revised and expanded terminology in the Statement of Claim is not intrinsically of such great significance.…

  3. 95.  The nub of the matter, however, is that the specific inclusion of references to the MMT Act and the product Greenburn in the Statement of Claim is not, as the Tribunal sees it, to be viewed as adding “new claims,” but rather, if anything, as amending the claim previously described in the Notice of Arbitration. Article 20 of the UNCITRAL Arbitration Rules, which Part B does not (p. 493) modify, provides that Claimant “may” so amend “unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances.” An amendment of Ethyl's claim, if one there has been, made as early as in the Statement of Claim hardly can be regarded as involving any “delay.” No prejudice or any other circumstances are cited by Canada which would tend to rebut Article 20's presumption of amendability and the Tribunal apprehends none. Therefore, to the extent, if any, that the Statement of Claim amends the claim of Ethyl, the Tribunal accepts such amendment.

Ethyl Corporation and The Government of Canada, Award on Jurisdiction (NAFTA Chapter Eleven, 24 Jun 1998), at 45–47 (footnotes omitted), reprinted in 38 ILM 708, 730 (1999).

  1. 78.  At the jurisdictional hearing of July 2001, the Tribunal ordered that: “Subject to all jurisdiction and admissibility issues and subject to any order as to costs, the Tribunal will allow the Claimant to amend its Statement of Claim in the form of the draft Amended Statement of Claim”.…In short, apart from the jurisdiction and admissibility issues, the Tribunal decided, in principle, that Methanex should be allowed to amend its Original Statement of Claim in the form of its Amended Statement of Claim, subject to an order that Methanex should ultimately bear, regardless of the result of the arbitration on the eventual merits of its claim, the wasted costs of the arbitration thrown away by its amendment (including the legal costs of the USA assessed in a reasonable sum). In the Tribunal's view, subject to recovering such costs, the USA would suffer no unfair prejudice from such an amendment; and the overall interests of fairness and procedural efficiency would have supported an order allowing Methanex to amend its claim, as requested.

Methanex Corporation and The United States of America, Partial Award on Jurisdiction (NAFTA Chapter Eleven, 7 Aug 2002), at 34 (citation omitted), reprinted in (2002) 14(6) WTAM 109, 143.

  1. 19.  However, for the reasons which follow, insofar as Methanex is relying on the amended § 2262.6(c) as an additional “measure” under Article 1101 NAFTA, the Tribunal decides that Methanex cannot advance the proposed amendment to its case in these arbitration proceedings.

  2. (p. 494)
  3. 20.  Methanex has never previously pleaded the amended § 2262.6(c) as an additional measure under Article 1101 NAFTA. Accordingly, any such plea would clearly require an amendment to its Second Amended Statement of Claim; and such an amendment would also require the permission of the Tribunal. Pursuant to Article 20 of the UNCITRAL Rules, a claim may not be amended in such a manner that the amended claim falls outside the scope of the arbitration clause, in this case, Section B of Chapter 11. In seeking to introduce a new claim relying on amended § 2262.6(c) as a measure for the purposes of Article 1101(1) NAFTA, in the Tribunal's view, Methanex fails to meet the essential requirements for bringing a claim under Section B of Chapter 11 and Article 20 of the UNCITRAL Rules.

Methanex Corp. and The United States of America, Award (NAFTA Chapter Eleven, 3 Aug 2005), at 9 (Part II, Chapter F), available at http://www.state.gov/s/l/c3439.htm.

Extracts from the Practice of Ad Hoc Tribunals

2.  Scope of the arbitration

  1. [54]  PLN has argued that “the dispute” crystallised, with respect to its “subject matter,” as of Claimant's initial notices under Section 8 of the ESC. Since those notices complained only of PLN's non–payment of one invoice, failure to provide one letter of credit, and failure to provide requested assurances of its intention to perform the ESC, PLN argues that no other matters are properly within the scope of this arbitration…

  2. [57]  In the first place, Article 20 of the UNCITRAL Rules provides that:

    “either party may amend or supplement his claim unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it or prejudice to the other party or any other circumstances.”

    The only limitation is that any claim so amended must fall within the scope of the arbitration clause (n.b. not the notice of arbitration).

  3. [58]  Secondly, in evaluating the “circumstances” with regard to such amendments [to the Statement of Claim pursuant to Article 20] the Arbitral tribunal takes account of (i) the fair and efficient (p. 495) administration of arbitral justice, a consideration which militates against any unduly static or formalistic rule that would require parties to recommence proceedings every time the adversarial evolution of argument and evidence suggests the need for a different legal articulation of claims; and, yet more importantly (ii) the good principle that procedural rules should not be conceived and applied in such a fashion as to impel the parties to adopt maximalist and confrontational positions, such as demanding rescission at a time when there may still be a hope to save the contract.

  4. [59]  In this case, the Claimant should not be penalised for having omitted to ask for termination, or termination damages, in its initial notices.

Himpurna California Energy Ltd and PT. (Persero) Perusahaan Listruik Negara, Final Award (Ad Hoc UNCITRAL Proceeding, 4 May 1999), at 31–32, reprinted in (2000) XXV YCA 28, 28–29.(p. 496)

Footnotes:

Article 20 was adopted by the Iran-US Claims Tribunal with the following modification:

The last sentence of Article 20 of the UNCITRAL Rules is modified to read as follows:

However, a claim may not be amended in such a manner that it falls outside the jurisdiction of the arbitral tribunal.

Note to Article 20

As used in Article 20 of the UNCITRAL Rules, the term “party” means the arbitrating party.

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, 173–74 (Draft Article 16(3)).

In the UNCITRAL Model Law, on the other hand, the provision on amendments is found in Article 23(2) on “Statements of Claim and Defence.” Paragraph 2 reads as follows: “Unless otherwise agreed by the parties, either party may amend or supplement his claim or defence during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard for the delay in making it.”

See above, Chapter 2, discussing Article 15(1).

Counter–claims can either be regarded as a sub–category of “claims” or as something falling under the concept of “defence” as understood in Article 20 of the UNCITRAL Rules. See Article 19 entitled “Statement of Defence” in which counter–claims are also dealt with.

See, e.g. the Sylvania case, Order of 10 May 1983, Reprinted below, section C.

See United Parcel Service of America, Inc., para 131, Reprinted below, section D (“While the tribunal may exercise control over amendments, its leave need not be sought in the first instance.”).

The travaux préparatoires indicate the change of the wording was intended to effectuate the kind of clarification suggested. See Report of the UNCITRAL on the Work of its Ninth Session, UN GAOR, 31st Session, Supp No. 17, UN Doc A/31/17, para 96 (1976), Reprinted in (1976) VII UNCITRAL Ybk 66, 73. For the relevant discussion in the Committee, see Summary Record of the 7th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.7, at 4–7, paras 23–46 (1976). See also S Baker & M Davis, The UNCITRAL Arbitration Rules in Practice: The Experience of the Iran-United States Claims Tribunal (1992) 92 (concluding that “the travaux clearly show that the tribunal's authority is not meant to discourage legitimate amendments to claims and defences, but rather to prevent frivolous or vexatious amendments.”).

See International Schools Services, Inc. and Judge Aldrich's separate opinion in Westinghouse Electric Corporation, Reprinted below, section C. On the Tribunal's practice in general, see also J van Hof, Commentary on the UNCITRAL Arbitration Rules: The Application by the Iran-U.S. Claims Tribunal (1992) 136–41.

10  Swedish Chamber of Commerce, Arbitration in Sweden (1984) 116. According to section 25 of the Finnish Arbitration Act of 1992 (Act No. 967/92) amendment of the claim is possible in so far as it does not unduly delay the decision on the dispute.

11  The “claim” which is subject to amendment is typically set forth in the Statement of Claim or Statement of Defence, not the Notice of Arbitration. See Himpurna California Energy Ltd, Reprinted below, section E. See also Ethyl Corporation; Methanex Corporation, Award of 3 Aug 2005, Reprinted below, section D.

12  This being the case, one can say that the limitation on the power to make amendments, put forward in the second sentence of Article 20, is “inherent” in that it would exist even without the explicit provision in question. In Article 23(2) of the UNCITRAL Model Law (above n 3) there is no provision corresponding to the second sentence of Article 20 of the UNCITRAL Rules. Yet it is clear that the Model Law also prohibits amendments going beyond the arbitration agreement. See H Holtzmann & J Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (1989) 649.

13  Although in the Tribunal Rules of the Iran-US Claims Tribunal the second sentence of Article 20 has been modified (see above n 1), the Tribunal's practice is illustrative from a more general point of view. Thus even in ad hoc arbitration the substitution of a new claimant (not party to the arbitration agreement or clause) would normally mean a new claim falling outside the arbitral tribunal's jurisdiction. The exception to this rule is where it is clear from the circumstances that the original claim concerned on its face the newly introduced party which is owned and controlled by the party in whose name the original claim was submitted. See Refusal Case Nos. 20 and 21, Reprinted below, section C. As regards ad hoc arbitration, whether in circumstances like those in Refusal Case No. 20 this kind of modification would be acceptable depends on whether the arbitration clause or agreement could be interpreted to encompass disputes immediately concerning daughter or the like dependent companies of the original claimant. Similar considerations would apply to cases such as American International Group, et al. and The Islamic Republic of Iran, et al., Award No. 93–2–3 (19 Dec 1983), Reprinted in 4 Iran-US CTR 96 (1983–III), in which part of the shares, the nationalization of which was at issue, were owned by the main claimant's wholly owned subsidiary (ALICO), which was not originally named as claimant. The Tribunal accepted the amendment, as it did “not change the amount sought or the factual or legal basis of the claim and cannot be said to prejudice the Respondent.” Similarly, the specification of the proper respondent would not be prohibited where the original claim (although not addressed against that respondent) indicated that respondent as party to the transaction in question, and the arbitration clause or agreement can be interpreted to have been concluded on behalf of that party. See Kimberly–Clark, Reprinted below, section C. See also ICC Case No. 1434 of 1975, partly reproduced in (1976) 103 Journal du droit international 978. In that case, a state enterprise of a developing country claimed against a multinational group of companies which had contracted to build and operate a company in the country. The arbitration clauses in various contracts in question were of such a nature as to create confusion concerning the parties. Some of the companies challenged the jurisdiction of the tribunal over them. The arbitral tribunal, however, held it was the true intention of the parties that all companies could be subjected to the same arbitral proceedings. The case (in which the amendments were not at issue) is commented upon in J Paulsson, “Third World Participation in International Investment Arbitration,” (1987) 2 ICSID Rev–FILJ 19, 25–26.

14  See Fedders Corporation; Vivian Mai Tavakoli, Reprinted below, section C. In ad hoc arbitration, the arbitration clause or agreement usually cannot be interpreted to cover so many parties as is the case with the jurisdiction of the Iran-US Claims Tribunal as defined in Article VII of the Claims Settlement Declaration.

15  In 1984, the Paris Court of Appeal set aside an ICC award rendered in Paris for lack of jurisdiction, in what is known as the Pyramids case. The award was successfully challenged by the Egyptian Government, a respondent in the arbitration, who denied that its written approval of the agreement in question on the signature page meant that the Government was a party to the agreement. For the text of the award, see SPP (Middle East) Ltd and Southern Pacific Properties Ltd and The Arab Republic of Egypt and the Egyptian General Company for Tourism and Hotels, (1983) 22 ILM 752. The Judgment of the Paris court is reproduced in English in (1984) 23 ILM 1048, the affirmation of that decision by the Cour de Cassation in (1987) 26 ILM 1004. See also A Redfern & M Hunter, Law and Practice of International Commercial Arbitration (2nd edn, 1991) 439–41. After the annulment the claimant instituted proceedings under the auspices of ICSID. These led to an award on the merits in 1992. See Southern Pacific (Middle East) Limited and Arab Republic of Egypt, Case No. ARB 84/3, Award of 20 May 1992, Reprinted in (1993) 32 ILM 933. See also P Sanders, “Commentary on UNCITRAL Arbitration Rules,” (1977) II YCA 206 (“the arbitrators should not hesitate to reject an amendment of the claim which falls outside the scope of the arbitration agreement.”).

16  See H Holtzmann & J Neuhaus, above n 12., at 649; M Aden, Internationale Handelsschiedsgerichtsbarkeit (1988) 235.

17  See Summary Record of the 7th Meeting of the Committee of the Whole (II), UNCITRAL, 9th Session, UN Doc A/CN.9/9/C.2/SR.7, at 5, para 27 (1976) (Comment by Mr. Sanders, Special Consultant).

18  Harris International Telecommunications, para 85, Reprinted below, section C. See also Shahin Shaine Ebrahimi, Reprinted below, section C.

19  See Mohsen Asgari Nazari, para 11, Reprinted below, section C (rejecting request for amendment because of “significant lapse of time involved”).

20  See Frederica Lincoln Riahi, Reprinted below, section C. See also below, discussion on Article 24(3) in Chapter 16.

21  In the Sedco case, the Iran-US Claims Tribunal rejected a modification of the claim submitted after the Hearing. However, following an interlocutory award, in so far as it contained arguments which the claimant could have raised earlier, the Tribunal accepted the modification to the extent it only reflected certain findings made in the interlocutory award which the claimant reasonably had not been able to take into account earlier. An interlocutory award or other such decision of the arbitral tribunal like the one in Sedco is more or less the only conceivable situation where the Tribunal amending a claim after the closure of hearings is appropriate in accordance with Article 29(1). See Sedco Inc. and Iranian National Oil Company and The Islamic Republic of Iran, Case No. 129, Order of 6 Jan 1986, Reprinted in MLR: Iranian Claims 3705 (7 Feb 1986). See also Westinghouse Electric Corporation, Reprinted below, section C (rejecting claimant's request at the final hearing to amend its claim by adding an additional remedy).

22  But see Arthur Young & Company, Reprinted below, section C (“the Tribunal is to consider delay as … a criterion independent from ‘prejudice to the other party’ …”).

23  See Article 23(2) of the UNCITRAL Model Law (above n 3, where only “delay” is specifically mentioned as a bar to the acceptability of amendments. However, “[t]he result is probably a shift in emphasis rather than an absolute bar on considerations of any factors that might be considered under the UNCITRAL Arbitration Rules.” H Holtzmann & J Neuhaus, above n 12, at 649. The authors continue: “… it appears to have been intended that prejudice to the other party should be taken into account as a function considering the delay in making the amendment.…” Ibid. See Jack Buckamier, para 23, Reprinted below, section C.

24  See, e.g. Reza Said Malek, Reprinted below, section C (amendment submitted eight months after the statement of claim and one month prior to the statement of defence accepted).

25  See Flexi–Van Leasing, Inc. and The Islamic Republic of Iran, Award No. 259–36–1 (13 Oct 1986), Reprinted in 12 Iran-US CTR 335, 346 n 9 (1986–III) (“Insofar as the Claimant, in its Post–Hearing Memorial to which no written answer was given, purports to modify the essence of the bases of its claim, such modification is not admissible.”).

26  See the McCullough and Sylvania cases, Reprinted below, section C. See also Bank Markazi Iran, Reprinted below, section C.

27  See Cal–Maine Food, second quoted paragraph, and Aeronutronic Overseas Services, Reprinted below, section C. In Dallal, Reprinted below, section C, an amendment presenting unjust enrichment as an alternative legal theory was rejected. The amendment, however, was sought very late, in a post–hearing brief.

28  See International Schools Services; Thomas Earl Payne (amendment increasing the amount of compensation accepted, although it involved a new valuation method); Feregdoon Ghaffari (the amount claimed increased, but the “essence of the claim” remained the same); Jack Buckamier, paras 28–29 (while the lost profits in question had not been sought in the original claim, the “basis” for the amended claim was set forth in the Statement of Claim), Reprinted below, section C.

29  See Litton System, Reprinted below, section C.

30  See Pepsico, Reprinted below, section C.

31  Arthur Young & Company, Reprinted below, section C. See also Westinghouse Electric Corporation, Reprinted below, section C.

32  Cal–Maine Foods, Reprinted below, section C. See also Arthur Young & Company, Reprinted below, section C.

33  Reprinted below, section C.

34  See Harris International Telecommunications, Reprinted below, section C and the text accompanying n 18 above (“the proposed amendment would needlessly disrupt or delay the arbitral process.”). In the Himpurna case, the tribunal concluded that the phrase “other circumstances” takes into account not only “the fair and efficient administration of arbitral justice,” but also “the good principle that procedural rules should not be conceived and applied in such a fashion as to impel the parties to adopt maximalist and confrontational positions.” See Himpurna California Energy Ltd, para 113, Reprinted below, section E.

35  P Sanders, above n 15, at 206. The view of Sanders would appear to get some support from the decision rendered by the Iran-US Claims Tribunal in Fedders Corporation, Reprinted, below, section C (“a party may amend its claim, unless delay, prejudice or loss of jurisdiction would result”).

36  See K Rauh, Die Schieds– und Schlichtungsordnungen der UNCITRAL (1983) 97–98.

37  Ibid.

38  See International Schools Services; Harris International Telecommunications, Reprinted below, section C. See also S Baker & M Davis above, n 8, at 92. It is worth noting that the “other circumstances” ground was omitted from the Model Law for fear that it would give too much discretion to the arbitrators to reject an amendment. See H Holtzmann & J Neuhaus above, n 12, at 648–49.

39  See Article 23(2) of the Model Law, above n 3.

40  See Tai, Inc., Reprinted below, section C.

41  See Methanex Corporation, Partial Award of 7 Aug 2002, Reprinted below, section D.

42  Article 31(2) provides: “In the case of questions of procedure, when there is no majority or when the arbitral tribunal so authorizes, the presiding arbitrator may decide on his own, subject to revision, if any, by the arbitral tribunal.” According to paragraph 1, the majority requirement is the main rule concerning the decision–making. For more in–depth discussion, see below Chapter 21 on decision–making by the arbitral tribunal.

43  See Harold Birnbaum, Reprinted below, section C.