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Procedures and Basic Processes of International Commercial Arbitration

Release time：2024-02-21 10:35:10

Introduction

The procedures upon which arbitration is based are an important part of the international commercial arbitration system. In international commercial arbitration activities, parties often make agreements on certain specific matters. To avoid unclear or non-existent agreements on some procedures, parties often choose specific arbitration rules. Although the arbitration rules of different international commercial arbitration institutions vary, they all provide detailed regulations on the arbitration process. In light of this, this article will provide a general description of the procedural steps in international commercial arbitration, while also sorting through the arbitration rules of the ICC International Court of Arbitration (ICC), the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKIAC), and the Asia Pacific International Arbitration Chamber (APIAC), and comparing and analyzing the differences in their arbitration processes and procedures.

 

I. Notice of Arbitration and Response to the Notice of Arbitration

The Notice of Arbitration (or Request for Arbitration) is the starting point of the international commercial arbitration process and the first document that a party sends to the international arbitration institution. The Notice of Arbitration usually contains the following specific information: (1) the expression of intent to submit the dispute to arbitration; (2) identification and contact information of the parties and their representatives; (3) a copy of the invoked arbitration agreement and one or more contracts or other legal documents related to or causing the dispute; (4) a brief description of the dispute; (5) a statement of the claims and, as far as possible, quantification of the claim amount; (6) relevant explanations, opinions, or suggestions about the seat of arbitration, applicable legal rules, arbitration language, and number of arbitrators. The Notice of Arbitration must be served on the Respondent. Some institutions require the claimant to submit a copy to the institution, which then forwards it to the Respondent, while others require the Applicant to serve the respondent directly.

According to the arbitration rules of most institutions, the Respondent should respond to the Notice of Arbitration and submit counterclaims within a specified period. The Respondent’s reply may include the following: (1) full name, address, and contact information of the Respondent and its representative; (2) any objection to the jurisdiction of the arbitral tribunal constituted under the arbitration rules; (3) response or counterclaims to the Applicant’s arbitration request; (4) relevant explanations, opinions, or suggestions about the place of arbitration, applicable legal rules, arbitration language, and number of arbitrators. Although the arbitration rules stipulate the time for the Respondent’s reply, this period can also be extended or shortened according to the agreement of the parties.

This article collates the arbitration rules of the ICC, SIAC, HKIAC, and APIAC, and organizes the start date of arbitration, the requirement for the Notice of Arbitration to be served on the Respondent, and the deadline for the response to the Notice of Arbitration, as shown in Table 1.

II. Composition and Challenging of the Arbitration Tribunal

In international commercial arbitration, parties have wide discretion in determining the composition of the arbitral tribunal, the selection mechanism, and the specific appointment of arbitrators. In practice, the number of arbitrators in the tribunal is often one or three. Parties may choose arbitrators from the institution’s list of arbitrators or appoint individuals not listed. Typically, when one party informs the other party in writing of the designated arbitrator, the appointment becomes effective. However, some institutions require confirmation from the institution before the party’s designation becomes effective, such as ICC and SIAC. If parties agree on a nomination procedure for arbitrators, they must follow the agreement; failure to comply may render the appointment invalid and could even lead to the arbitration award being set aside or not recognized. If there is no agreement, the international commercial arbitration institution selected by the parties will form the arbitral tribunal according to its arbitration rules.

In international commercial arbitration, when parties have legitimate reasons to doubt the impartiality and independence of the appointed arbitrator, they may apply for the arbitrator’s disqualification under the institution's arbitration rules. To ensure the neutrality of arbitrators, some arbitration institutions impose restrictions on the nationality of sole arbitrators or presiding arbitrators.

This article compiles the provisions of ICC, SIAC, HKIAC, and APIAC arbitration rules regarding the composition of the arbitral tribunal, the arbitrators’ appointment procedure, challenging, and other related matters. See Table 2 for details.

III. Case Management Conference or Preliminary Procedural Conference

The Case Management Conference or Preliminary Procedural Conference is a preparatory meeting held between the arbitral tribunal, the parties, and their lawyers, as necessary for the case. Its primary purpose is to introduce the arbitrators, parties, and lawyers, and to discuss and establish a procedural timetable as well as the main aspects of the arbitration proceedings. In practice, these conferences often take place via video or telephone conferencing.

Arbitral tribunals typically set up a procedural timetable at the outset of the arbitration, specifying deadlines and formats for the submission of written documents and evidence by the parties. They may also establish rules regarding the participation of witnesses in hearings and the conduct of cross-examination.

The Case Management Conference or Preliminary Procedural Meeting serves to clarify matters such as the arbitration language, applicable law, and arbitral seat in advance, ensuring that the parties are familiar with the arbitration process and facilitating the efficient progress of the arbitration.

 

IV. Hearings

Many arbitration institution rules and some domestic laws stipulate that oral hearings must be conducted upon the request of the parties (unless the parties' arbitration agreement expressly excludes oral hearings). The procedures for oral hearings vary depending on the legal system. In common law jurisdictions, oral hearings in international commercial arbitration typically involve opening statements, examination of witnesses, tribunal questioning, and closing arguments. In civil law systems, the arbitral tribunal oversees the entire hearing process.

In cases where certain parties refuse to participate in the arbitration proceedings, most institutional arbitration rules provide that arbitration can proceed and the tribunal may render an award in absentia if one party is absent without valid reasons. Institutions such as the ICC, SIAC, HKIAC, and APIAC all stipulate that if a party fails to attend the hearing without valid reasons, the arbitral tribunal has the authority to continue with the hearing.

V. Awards and the Time Limit for Awards

Most institutional rules do not set a specific time limit for rendering the award, but some institutional rules require the award to be rendered within a certain period. Article 31 of the ICC Arbitration Rules stipulates that the arbitral tribunal must render the final award within six months from the date of the last signature on the terms of reference by the tribunal members or from the date of the last signature by the parties on the terms of reference, whichever is later. Article 31.2 of the HKIAC Arbitration Rules states that the award shall not be made later than three months after the date on which the arbitral tribunal declares the closure of the entire arbitration proceedings or any stage thereof (if applicable). This period may be extended with the consent of the parties or, in appropriate circumstances, by the HKIAC.

The award in international commercial arbitration should be signed by the members of the arbitral tribunal, indicate the place of arbitration, and set out the procedural history, facts, legal issues, parties' positions, the tribunal's analysis of facts and law, and the decision. Depending on the case, the award may vary in length from ten pages to several hundred pages. Some institutions require the award to be reviewed by the institution before being signed by the arbitral tribunal. For example, the ICC provides: "The draft award shall be submitted to the Court before it is signed by the arbitral tribunal. The Court may make modifications to the form of the award and, without affecting the arbitral tribunal's decision-making autonomy, may draw its attention to issues of substance. The arbitral tribunal shall not make the award until the form of the award has been approved by the Court." In some jurisdictions, the award must be registered and deposited with the court after its preparation, such as in Indonesia.

 

Conclusion

International commercial arbitration has matured in recent years and has become the preferred method for resolving international commercial disputes. Due to the influence of different legal systems, there are differences in the initiation and progression of international commercial arbitration procedures compared to domestic commercial arbitration procedures in China, and international arbitration procedures are more complex. Understanding the process and procedures of international commercial arbitration can help Chinese enterprises maximize the advantages of international arbitration and better resolve international commercial disputes. It also benefits Chinese lawyers in effectively protecting the legitimate rights and interests of the parties in international commercial arbitration.



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