- UNCITRAL Arbitration Rules — Arbitrators
2.01 The LCIA Rules follow a slightly disconcerting pattern in that they explain the role and function of the Court and Registrar (ie the Secretariat) in several places throughout the body of the Rules, beginning after the process of starting the arbitration itself has begun (in Articles 1 and 2). Given that, in order to understand how the Rules work, the role played by the Court and Registrar respectively must first be understood, we start with the disparate Articles that explain and define those roles. Articles 3 and 29 cover, respectively, the overall roles of the Court and Registrar (Article 3) and decisions of the Court (Article 29). The related topic of the limitation of the LCIA’s (and its constituent bodies’ and officers’) liability for the administration of the arbitration is contained in Article 31, discussed in chapter 9 below.
2.02 Article 3 describes the mode of working of the LCIA Court and the Registrar, rather than their respective roles in the conduct of an arbitration under the LCIA Rules, which are set out in the relevant articles. It establishes three principles: the Court only acts through sub-divisions, never as a plenary body; the Registrar operates under the supervision of the Court; and the Registrar acts as (p. 18) the go-between for the Court and parties and arbitrators, receiving and transmitting any communications.
The functions of the LCIA Court under these Rules shall be performed in its name by the President or a Vice President of the LCIA Court or by a division of three or five members of the LCIA Court appointed by the President or a Vice President of the LCIA Court, as determined by the President.
The composition of the LCIA Court
2.03 The LCIA Court is not a ‘court’ in the sense that it decides the outcome of LCIA arbitrations. It is a purely administrative body charged under the Rules with the carrying-out of a number of functions in connection with the arbitration. Article 3 does not spell out those functions, which are spread around the body of the Rules, but it does set out how those functions are to be performed and in particular that they shall always be performed on a delegated basis rather than by the whole Court of 35 members.1 Thus, the President alone can perform any of the Court’s functions (and usually does so with respect to the appointment of arbitrators) as can any Vice President. The Court can also be sub-divided into divisions of three or five members, appointed by the President or a Vice President.
2.04 The current (as at the date of publication) President of the Court is Jan Paulsson, based in Paris. He was appointed President in 2004 for a renewable three-year term. He succeeded three equally distinguished arbitrators, all of whom remain members of the Court as Honorary Vice Presidents: they are Professor Dr Karl-Heinz Böckstiegel of Germany, L Yves Fortier, the former Canadian Ambassador to the United Nations, and Professor Dr Gerold Hermann, also of Germany, the former Secretary-General of UNCITRAL. This tradition of having as President a respected and prominent arbitrator from outside England (and not of UK nationality) has, it would seem, been consciously adopted as a policy by the LCIA to emphasize its global vocation. It should not be forgotten, however, that it was under the long presidency of the late Sir Michael Kerr (ably assisted by the then-Registrar, Bertie Vigrass) that the LCIA began to re-emerge from a lengthy period in the doldrums, and so one would hope that no irrevocable decision has been taken to exclude London residents or UK citizens from the presidency.
(p. 19) 2.05 The six Vice Presidents come from the United States, Germany, Ireland, Switzerland, and the UK (there are in fact two Americans and two Swiss but only one Englishman, although the Irishman lives in the UK), once again emphasizing the international nature of the institution. All are lawyers and all bar one are in private practice, the exception being Professor William W ‘Rusty’ Park of the University of Boston. Among the other members of the Court the same pattern is perpetuated: all of the 28 Honorary Vice Presidents and ordinary members of the Court are lawyers or university teachers of law, with one (Andrew Clarke of ExxonMobil, a founder-member of the Corporate Counsel International Arbitration Group) working in-house. There is no representative of the formerly rich stream of non-lawyer arbitrators, coming from the engineering or other professions, who now seem to have almost entirely made way for lawyers, as an effect (or perhaps in some measure a cause) of the now well-established ‘judicialization’ of arbitration.
2.06 The members of the Court are appointed by the LCIA’s Board, on the recommendation of the Court. There is currently some overlap between the memberships of the two bodies. In appointing members of the Court, apart from the injunction in Article A.1 of the Court’s Constitution not to appoint more than six citizens of the UK (the actual words used in Article A.1 are ‘from the United Kingdom’, but this is taken as a reference to nationality rather than simply residence), there are no guides as to whom the Court should appoint or what criteria it should apply. On any view, the membership reflects the international character of the parties to LCIA arbitrations, which is probably one of the most important criteria for the appointment of members of the Court. The current members of the Court include only five British citizens, including one dual national with British and Canadian nationality resident in Canada, and also including the Chairman of the Board and the Director-General, who are members of the Court ex officio. There is one further UK-resident member who does not hold British nationality.
2.07 The Court should be composed of members who understand and care for the institution of arbitration as a means of resolving disputes as well as representing the wide geographical coverage of the LCIA Users’ Councils. As to the former criterion, it has already been remarked that there is only one real ‘user’ of arbitration on the Court at the time of going to press, in the sense of a representative of parties to an arbitration, namely Andrew Clarke of ExxonMobil, and not one non-lawyer arbitrator. It could be argued that a little more representation of these other groups could only give the LCIA Court more insight into the issues facing international arbitration as it continues its development. As to the second major criterion, there can be no doubt that the Board has appointed some of the most prominent members of the arbitration community over the last decades. Further criteria for appointment will obviously be the wish and ability to devote the time (p. 20) needed to fulfil the functions of a Court member, including service on divisions of the Court, and a wish to promote the activities of the LCIA as an institution.
The exercise of delegated authority
2.08 As Article 3.1 explains, the Court’s functions can be exercised by its President, one of the Vice Presidents, or by a division of three or five members. This increases the speed with which the Court can fulfil its many roles under the Rules and ensures efficient service to users. If, for example, a party applies to the Court for the expedited formation of a tribunal under Article 9,2 it would utterly defeat the purpose of Article 9 for the Court to wait for a plenary meeting in order to appoint the tribunal.
2.09 The principle established by Article 3.1 is therefore to ensure that the Court as such in fact rarely takes decisions, most of which are taken by the President, Vice Presidents, or a division. As a rule, therefore, the Court itself thus needs to meet only twice a year. (Administrative functions are delegated to the Registrar or a deputy Registrar under Article 3.2, as discussed below.) The Court’s Constitution goes further and actually specifies that all arbitral appointments shall be made by the President or, if he or she (always he, to date) is unavailable, one of the Vice Presidents, to the exclusion of a three- or five-member division.3
2.10 This exercise of the Court’s functions exclusively by delegated bodies is to be contrasted with the regime under the ICC Rules. Article 1(3) of the ICC Rules provides only that the Chairman of the ICC Court or, in his absence, one of the Vice-Chairmen, can take urgent decisions on behalf of the ICC Court. This leaves begging the question of what is urgent: for example, it can certainly be argued with some cogency that any decision regarding the constitution of an arbitral tribunal is urgent to at least some degree. The LCIA’s choice of delegating the Court’s authority should, at least in theory, dispense with debates about what is or is not urgent.4
2.11 Apart from that example, there is nothing in the Court’s Constitution that determines when a particular role should be exercised by the President, a Vice President, or a division of the Court, but it is interesting to note that it has been the practice of Presidents to appoint a three-member division to hear challenges to arbitrators under Article 10.5
2.12 One of the Court’s most important functions is of course the initial appointment of a tribunal. As the Court (and a fortiori its President and Vice Presidents) is composed for the most part of eminent arbitration practitioners, most or all of whom could expect to be on a short-list for most arbitral appointments, the following provision of the Court’s Constitution is particularly important in allaying any fears that the Court may be tempted to do favours for those who are at that time its members:
1. All appointments of arbitrators and mediators in the name of the Court pursuant to D.1(a) and D.1(b) shall be made by the President or by a Vice President on the President’s behalf pursuant to B.2 above.
2. All members of the Court shall be eligible for appointment as arbitrators. However:
a. the President shall only be eligible if the parties agree to nominate him as sole arbitrator or as Chairman; and
The President or Vice Presidents so nominated shall take no part in the appointment of an arbitral tribunal to which they have been nominated or in any other function of the Court relating to such an arbitration.
2.13 This provision is essential to ensure that there is no doubt as to the integrity of the process of formation of a tribunal and also to remove any possibility for a serving arbitrator who is also an office-holder of the Court to use improper influence in the conduct and oversight of an arbitration in which he or she is sitting. It would have been a self-defeating measure, indeed it would have looked like the LCIA cutting off its nose to spite its face, for all members of the Court to be disqualified from sitting as arbitrators in LCIA arbitrations, since this would have deprived the parties and the LCIA of the services of prominent members of the arbitration community for no substantive benefit. The compromise embodied by Article F.2 of the Court’s Constitution is both necessary, to guard against the appearance of any impropriety, and also sufficient in avoiding any actual conflict of interest for the members of the Court.
(p. 22) 2.14 There is no prohibition on any member of the Court acting as a party’s counsel. This does not in practice seem to have posed any problem, although one would imagine that the President, in particular, would need to watch appearances very carefully to avoid negating the positive effect of the Constitution of the Court as regards arbitral appointments.
The functions of the Registrar under these Rules shall be performed by the Registrar or any deputy Registrar of the LCIA Court under the supervision of the LCIA Court.
The role of the Registrar
2.15 The Registrar is the head of the LCIA’s Secretariat and can be assisted in his functions by a number of deputy Registrars. The two posts are expressly recognized by Article 3.2, which provides that they shall exercise their functions under the supervision of the Court. Currently, the Director-General also acts as an additional Registrar, alongside the actual Registrar (who is also deputy Director-General).
2.16 The Registrar is responsible for all administrative functions of the LCIA. The LCIA Secretariat is based at the IDRC in London, where many of its hearings are held. The Registrar’s functions under the Rules are purely administrative in nature. He (or perhaps in the future she7) is involved at the very beginning of an LCIA arbitration, in that he receives the Request for Arbitration and verifies whether it complies with the requirements set out in the Rules.8
All communications from any party or arbitrator to the LCIA Court shall be addressed to the Registrar.
2.17 The Registrar not only receives copies of correspondence between parties and arbitrators and the Court: he also receives copies of all correspondence between the parties and the arbitral tribunal (and he alone receives it before the formation of the tribunal) and he keeps the records of the case at the LCIA. He also prepares the reports to the LCIA Court that form the basis of the decisions taken by the Court. The parties thus have no direct contact with the Court: all day-to-day communication, (p. 23) and all party contact, is with the Registrar, and such communication is, in the overwhelming number of cases, conducted in English, which is the sole working language of the Secretariat. The LCIA differs sharply from the ICC in this respect. The ICC International Court of Arbitration has ‘teams’ of counsels dealing with cases arising in different areas of the world and capable of doing business in various languages. Thus, correspondence with the ICC Secretariat will generally be in the language of the arbitration. The international developments referred to in chapter 1 above, namely the LCIA’s establishment of local branches and the joint venture with the DIFC, are unlikely to change this to any great degree, at least in the short term.
2.18 The Secretariat is also responsible for ensuring that deposits on account of costs are paid, and if not to advise tribunals as to the consequences.9 The Secretariat will provide financial summaries to the parties, and the members of the Secretariat are generally available to help the parties (and, even more frequently, arbitrators) with questions about the application of the Rules and the progress of the case. This can cover all the stages of an arbitration, from initial advice as to the drafting of the Request through evidential matters and preparations for hearings to the making of awards. It is therefore vital that the members of the casework Secretariat have sufficient expertise to help often inexperienced parties and counsel and even (relatively) inexperienced party-nominated arbitrators. Naturally, the Secretariat has to maintain a strict neutrality in dealing with requests for advice from the parties and their representatives, but within those bounds it is able to provide considerable help and guidance as to the application and interpretation of the Rules.
2.20 Under this provision of its Constitution, the LCIA Court not only authorizes the Registrar to do that which the Rules require him to do, but can also delegate further of its administrative functions to him, always to be exercised under the Court’s supervision. Thus, the Court has issued three directives delegating certain of its (p. 24) powers to the Registrar. It has issued a directive under Article 26.5, in respect of the issuance of awards, one under Article 24 concerning the directions for the payment of deposits on account of costs and one clarifying the procedure to be followed by the Registrar and the Court for the purposes of determining the costs of the arbitration pursuant to Article 28. These directives are discussed in chapters 7 and 8 below respectively.10
2.21 Article 29’s importance stems from the fact that it establishes not only the administrative, rather than judicial, character of the LCIA Court, but also the principle of finality for its decisions. If one of the most oft-cited advantages of arbitration is the final nature of awards and the very limited grounds of recourse against them by way of setting-aside actions, it would be odd indeed if dissatisfied parties were able to get around that principle by starting actions against the LCIA Court. This provision therefore not only reinforces the finality of arbitral awards and the arbitral process in general, it also (as with Article 31, discussed below) reduces the scope for satellite litigation.
The decisions of the LCIA Court with respect to all matters relating to the arbitration shall be conclusive and binding upon the parties and the Arbitral Tribunal. Such decisions are to be treated as administrative in nature and the LCIA Court shall not be required to give any reasons.
To the extent permitted by the law of the seat of the arbitration, the parties shall be taken to have waived any right of appeal or review in respect of any such decisions of the LCIA Court to any state court or other judicial authority. If such appeals or review remain possible due to mandatory provisions of any applicable law, the LCIA Court shall, subject to the provisions of that applicable law, decide whether the arbitral proceedings are to continue, notwithstanding an appeal or review.
2.23 Article 29.2 deals with the circumstance of a party’s feeling dissatisfied with a decision of the Court and seeking to challenge it. It is not intended to stop a genuine (p. 25) challenge to LCIA Court decisions (indeed actions in the English Court with regard to decisions on challenges to arbitrators have been threatened in England under section 24 of the Arbitration Act, discussed below). It is rather intended to stop ‘wrecking tactics’ by a party with no legitimate grievance. It is a different point to the finality and binding nature of an arbitral award, which is dealt with in the discussion of Article 26.9.11 It seems rather clear that the decisions of the Court that would be most likely to give rise to dissatisfaction and possible challenge are those dealing with the appointment and, much more so, the removal of arbitrators. The aim of this provision can therefore be seen to restrict the parties’ ability to appeal to state courts in respect of decisions of the LCIA Court on challenges to arbitrators for lack of independence and impartiality.12
2.24 What is interesting is the formulation that the parties waive such a right ‘to the extent permitted by the law of the seat of the arbitration’. It is unclear how many arbitration laws deal with recourse against decisions of arbitral institutions (as opposed to the question of recourse or appeals against awards, dealt with in chapter 7 below) in a general way. The English Arbitration Act, for example, which has by far the greatest significance in this area as the arbitration law of the seat of almost all LCIA arbitrations, contains the principle of the immunity of arbitral institutions, in section 74, discussed in the context of Article 31 in chapter 9 below.
2.25 It is also rather unclear why the law of the seat (if not England and Wales) would have any role to play in any proceeding brought against the LCIA as such: the LCIA is an English company and one would have expected it to be sued (if at all) in the English court. Nonetheless, this provision can be seen as a ‘belt and braces’ attempt to prevent the possibility of actions against the Court and its inclusion may indeed have prevented such actions being brought, although this is of course by definition unknowable.
2.26 In the context of challenges to arbitrators, however, the position is different. For arbitrations with their seat in England and Wales, section 24 of the Arbitration Act provides the English court with a right to remove arbitrators that the parties to the arbitration cannot opt out of. Section 24(2) makes this clear: in requiring parties to exhaust ‘any available recourse to [the] institution’ before making an application to the court, the English Act makes it plain that decisions of the LCIA Court in respect of challenges to arbitrators are effectively appealable. The position is the same under Article 13(3) of the UNCITRAL Model Law. In both cases, the tribunal can continue with the arbitration while the challenge is pending, and even make an award.
(p. 26) 2.27 Article 29.2 itself reflects this in providing that the LCIA Court retains the discretion to allow the arbitration to continue notwithstanding a challenge to one of its decisions. In practice, the LCIA Court would, it is surmised, leave it to the tribunal hearing the case to decide whether the arbitration should continue while a challenge in the state courts is under way. This would be consistent with the philosophy of the LCIA Rules in letting the tribunal decide all matters concerned with the actual running of the arbitration, rather than pure questions of administration.
2.28 It can thus be seen that, at least so far as decisions on challenges to arbitrators are concerned, the attempt to limit recourse by the parties against such decisions in Article 29.2 is ineffective if (as they nearly all do) the arbitration has its seat in England and Wales. It is still worth having, however, as other jurisdictions (including France) do not allow challenges to institutional decisions to remove or not remove arbitrators. There are no known instances of parties actually bringing challenges to decisions of the LCIA Court in local state courts.13
1 The composition of the Court as at the date of publication is set out at app 5. Its Constitution is reproduced at app 4. The Constitution is itself the result of a decision of the LCIA’s Board and the LCIA Court. It was last revised in 2008.
4 For a discussion of the powers of the ICC Court, see Derains & Schwartz.
6 This provision raises an interesting philosophical point. Co-arbitrators are required to be as neutral as presiding arbitrators. So why, therefore, is the restriction on the President’s acting as a party-nominated arbitrator written into the Court’s Constitution? The answer has to be that the notion of the independence of party-nominated arbitrators may not yet be wholly and universally accepted, leading the LCIA to err on the side of caution.
7 Art 5.1 actually confirms that the use of the masculine in the Rules when referring to the Registrar, arbitrators, and officers and members of the LCIA Court is to be taken as including the feminine.
8 The role of the Registrar in the early stages of an arbitration is discussed in ch 3 below.
9 See ch 8 below for a discussion of all aspects of the costs of LCIA arbitrations.
10 Copies of these directives appear at app 6.
11 See ch 7 below.
12 Dealt with in ch 4 below.
13 In contrast to the fate of its ICC equivalent. Derains & Schwartz have a full discussion. More recently, Argentina has started an action against the ICC in the Argentine courts in relation to the refusal of the ICC Court to provide reasons for its rejection of a challenge brought by Argentina to an arbitrator in an investment-treaty claim brought by National Grid plc of the UK: Causa 2.660/2006 Procuración del Tesoro v International Chamber of Commerce (Deci 15-XII-05).