Soft-Law Guidance from Arbitral Organisations for Conducting Arbitrations

A. Introduction

The globally distributed arbitration system provides excellent theoretical foundations for an alternative to court litigation. Key foundational doctrines of the arbitration system are: party autonomy, separability of arbitration agreement, kompetenz-kompetenz (competence-competence), procedural flexibility, and the limited role of courts. The arbitration system has formidable support from many different institutional arbitration rules. There are also independent rule systems like the UNCITRAL Arbitration Rules for ad hoc arbitrations.

Yet, an arbitrator conducting an arbitration needs many more tools apart from the foundational doctrines and arbitral rules. The arbitrator’s need for additional guidance is fulfilled by soft-law¹ guidance provided by arbitral institutions through guidance notes (Soft-law guidance). These soft-law guidance instruments exist in form of bulletins, reports, guidelines, rules, or opinions. The soft-law guidance exists in the areas that are either not covered by arbitral laws or institutional rules. Further, the soft-law guidance rapidly expands the practical applications of existing laws and rules without formal rule- making.

This article surveys, as an overview, soft-law guidance from institutional sources. It collates and compares the soft-law guidance, particularly on topics where multiple institutions focus on the same topic. The survey’s key focus is on: awards, costs, interest, procedural issues, and choice of law. Institutional soft-law guidance from United Nations Commission on International Trade Law (UNCITRAL), Chartered Institute of Arbitrators (CIArb)², ICC ‘s International Court of Arbitration³, International Bar Association (IBA), International Council for Commercial Arbitration (ICCA), and ASA Swiss Arbitration are reviewed⁴. Soft-law guidance is a child of necessity given the decentralised, diverse nature of the global arbitration system. Soft-law guidance promotes, without imposing, best practices from the global experience of international arbitration practitioners and academics.

B. Efficiency and best practices

The core ICC guide to an arbitration under its rules is titled, “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration”. It describes all the steps in a typical arbitration and the role of ICC Secretariat.

The ICC guide emphasises case management conference as a tool to use the flexibility of arbitration. The ICC guide encourages efficiency by deciding on the mechanics of procedure early in the arbitration. Multiple topics provide guidance on costs, risk, and benefits at each step of an arbitration. The ICC’s guidance in the guide covers: request for arbitration, answer and counterclaims, multiparty arbitration, early determination of issues, rounds of written submissions, document production, need for fact witnesses, fact witness statements, expert witnesses, hearing on the merits, and post-hearing briefs. In more practical terms, ICC has good guidance for building a procedural timetable in its guideline titled, “Model Procedural Timetable” along with a separate guideline for “Model Terms of Reference”.

CIArb has a guideline titled, “Managing Arbitrations and Procedural Orders”. This CIArb guideline covers the nitty-gritty of an arbitration’s administrative aspects. After considering the application of the lex arbitri, applicable rules, and any agreement by the parties, an arbitrator must develop a common understanding of the parties. The arbitrator’s understanding of the parties leads to efficient dispute resolution. The CIArb guideline also provides a list of common points of consideration as administrative and procedural issues.

The ICC has also published an “ICC Commission Report – Controlling Time and Costs in Arbitration” that is styled as guidance for parties and their counsels. The ICC guide explains methods to control party’s representation costs, which usually is the biggest component of overall arbitration expenses. Settlement considerations for the parties are explained in detail starting from whether to settle or not. Various methods of settlement, e.g., mediation, mini-trial, neutral evaluation, or hybrid dispute resolution, are explained. ICCA has published “ICCA Checklist First Procedural Order” that covers common items found in a typical Procedural Order No. 1 (PO-1).

Similarly, the UNCITRAL has helpful soft-law guidance through its “UNCITRAL Notes on Organising Arbitral Proceedings” (UNCITRAL NOAP). The notes have particularly useful guidance beyond the UNCITRAL Rules with a focus on practical aspects. For example, there is good guidance in the UNCITRAL NOAP on hearings, evidence (experts and fact witnesses), documents, submissions, costs, interim measures and the tricky issue of joinder and consolidation.

C. Pre-arbitration

CIArb provides a specific guideline on interviewing a prospective arbitrator titled “Interviews for Prospective Arbitrators”. As this is a twilight zone before an arbitrator is appointed, the sensitivities are heightened.

Communication with a potential arbitrator is unilateral by its nature; it is between a prospective arbitrator and a party nominating that arbitrator in a typical three-member tribunal. CIArb provides many other guidelines for conduct of arbitration. CIArb’s guideline on “Interviews for Prospective Arbitrators” provides detailed guidance on topics that can (Article 2) and cannot (Article 3) be discussed in interviews with potential arbitrators.

An enquiry to be appointed as a party-nominated arbitrator is the first step in arbitrator’s appointments. This enquiry is common in three-member tribunals even before an arbitrator consents. As the communication between the party nominating an arbitrator and the arbitrator is a unilateral (ex parte) communication, the CIArb guidelines suggests the potential arbitrator about “… how to respond to a request for an interview by a party prior to an appointment (Article 1)” to avoid a risk of a future challenge by a non-appointing party.

CIArb also provides guidance on the contractual terms of appointment and remuneration of the arbitrators in a guideline titled, “Terms of Appointment including Remuneration”. The CIArb guidelines specify that arbitrators should agree with the parties about the basis of their appointment either, “before or immediately after accepting an appointment” keeping in mind lex arbitri, arbitral rules and contract clauses for arbitration. The appointment should be recorded in writing and should also include arbitrator remuneration. The arbitrator remuneration terms reduced in writing should cover method of calculation, commitment or cancellation fee, taxes, reimbursement of expenses, accounting and special terms for early termination or settlements, if any. Arbitrator remuneration terms are extremely sensitive and practical matters which must be settled early on with a clear agreement between all stakeholders.

For guidance regarding drafting dispute resolution clauses IBA has published “IBA Guidelines for Drafting International Arbitration Clauses”. There is a core of eight drafting guidelines with numerous options that can be inbuilt into an international arbitration clause of a contract. There is also a rather unique ICCA guide for tribunal secretaries titled, “Young ICCA Guide on Arbitral Secretaries”.

D. Parties, non-parties, and non-party participation

A challenge for the arbitration system has been multi-party disputes. The CIArb provides a specific guideline for multi-party arbitration: “Practice Guideline 15: Guidelines for Arbitrators on How to Approach Issues Relating to Multi-Party Arbitrations”. The key feature of this CIArb guideline is the guidance covering “chain contracts” (back-to-back chain of dependent contracts). Chain contracts are familiar in construction subcontracting, resale of goods and sub-chartering of ships. The guideline considers consolidation and joinder under various arbitral rules system. Consent of the parties involved remains the primary requirement for joinder of the third parties in most systems. The guideline provides sound advice to arbitrators: “While arbitrators may make suggestions as to how to deal with the type of questions discussed in this guideline, it is vital that they do not make orders for consolidation or concurrent hearings unless the arbitration agreement (including any rules incorporated in it) permits this.”

CIArb also has a guideline for non-participating party. This CIArb guideline is titled, “Party Non-Participation”. It clarifies an arbitrator’s extended responsibilities when a party does not participate in the arbitration. The responsibilities extend to ascertaining if the claimant has a prima facie case and that the non-participating party has no acceptable excuse. If a party fails to participate in proceedings, that should not lead to an automatic conclusion of liability.

Recently in 2023, CIArb has released a new guideline “Guideline on Multiparty Arbitration (2023)”. A non-party is an entity that was not a party to the arbitration agreement. A non-party’s participation in an arbitration has been a tricky issue. The CIArb guideline states that participation of non-parties in arbitration can enabled by joinder, consolidation, and concurrent hearings. The CIArb guideline covers a situation where a non-party gives its consent to join the arbitration. In institutional arbitrations, the Arbitral Tribunal would have to follow the institutional rules’ provisions for joinder of a non-party to the arbitration.

IBA also has guidelines for arbitration practitioners representing parties in international arbitration. The guidelines are titled “IBA Guidelines on Party Representation in International Arbitration”. This guide is a parallel resource to ICCA’s “Guidelines on Standards of Practice, in International Arbitration -The ICCA Reports No. 3”.

E. Conflict of interest

The IBA has published a set of comprehensive guidelines titled “IBA Guidelines on Conflicts of Interest in International Arbitration”. The IBA guidelines cover in Part I the “General Standards Regarding Impartiality, Independence and Disclosure”, while Part II covers “Practical Application of the General Standards”. The IBA guidelines are focused on arbitrator independence, a central requirement for the integrity of any arbitration process. The IBA guidelines use a reasonable third person standard to judge arbitrator independence expressed as, “… a reasonable third person having knowledge of the relevant facts and circumstances, would give rise to justifiable doubts as to the arbitrator’s impartiality or independence….” The IBA guidelines specify disclosure standards for the arbitrator. Whenever there is a doubtful situation of disclosure, the guidelines require disclosure as the right choice.

In Part II, the IBA guidelines have a colour coded set of guidelines. The non-waivable Red List standard that focuses on relationships between the arbitrator and the parties that make the arbitrator independence impossible. The next standard is the waivable Red List that covers various relationships of the arbitrator with either the dispute or the parties. The Orange List is focused on professional relationship of the arbitrator with the parties within a time-limit. The Green List covers contacts of the arbitrator, the parties, the counsel, and the arbitrator’s previous opinions.

F. Jurisdictional challenges

CIArb has a guideline for jurisdictional challenges in arbitrations with the title, “Jurisdictional Challenges”. This CIArb guideline has four articles. First article advises the arbitrators about how to deal with jurisdictional challenges, which have potential to derail arbitrations. Second and third article describes two common types of challenges: jurisdictional and admissibility challenges. Fourth article advises arbitrators about how and when to deal with jurisdictional challenges in arbitration and the form of a jurisdictional ruling.

G. Interim measures and emergency arbitrations

Interim measures have the potential to delay the main arbitral process. For one, they are sprung as a surprise at unsurprising times. CIArb has a helpful guideline titled, “Applications for Interim Measures”. The guideline states its coverage as: “(i) interim measures in general (Articles 1 to 6); (ii) ex parte applications (Article 7); and (iii) emergency arbitrators (Article 8).”

The CIArb guideline suggests caution while issuing ex parte relief because a fair opportunity has to be provided to all the sides. Any interim relief will have to be aligned to lex arbitri and the arbitration agreement. Further, there is sound advice to not pre-judge parties’ cases at the interim stage. Securities can be sought as a safeguard against improperly obtained interim remedy. Article 3 of this CIArb guideline has sage advice that the arbitrators: (i) cannot issue interim relief against non-parties; (ii) arbitrators have no power to enforce their interim remedies; and (iii) penalties for non-compliance are only possible if allowed by the arbitration agreement, applicable arbitral rules or the lex arbitri.

ICC has a helpful checklist for “ICC Emergency Arbitrator Order Checklist” that covers necessary elements of a typical, enforceable emergency arbitrator’s order under the ICC Rules.

H. Evidence and documents

IBA provides arguably the most popular rules of taking evidence titled, “IBA Rules on the Taking of Evidence in International Arbitration”. These rules are of a recent 2020 vintage. They provide a useful tool for document production or discovery from an opposing party in international arbitration. The process largely works on the lines of a “Redfern Schedule” system, and the process relies on a very stylised document production process from the opponent with summary decisions on allowance or disallowance of production. Article 5 covers special rules for party-appointed experts, while Article 6 covers tribunal- appointed experts. Article 9 has good guidance on determining admissibility issues with the tribunals power to exclude certain evidence.

In a sense, the IBA Rules on taking evidence provide a more uniform evidentiary process that is tailored to international arbitration rather a tribunal adapting evidence rules from the lex arbitri to the arbitration at hand. The civil law practitioners have championed the Prague Rules on taking evidence. The Prague Rules are a recent new option that has a civil law flavour. The Prague Rules emphasise an early and active role for the Tribunal in collecting evidence during an arbitration (Article 2- Proactive Role of the Arbitral Tribunal). Prague Rules also covers documentary evidence, evidence of factual witnesses and expert witness evidence.

I. Experts and witness conferencing

CIArb has a guideline for “Party-appointed and Tribunal-appointed Experts”. The guideline covers power to appoint experts, assessing need to appoint an expert, methods of presenting expert evidence, directions for experts, and testing of experts’ opinion. It is to be applied along with an annexed CIArb protocol titled, “CIArb Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration”. In the commentary, there is sage advice, “Arbitrators should not simply adopt an expert’s opinion as this may result in a challenge on the ground that they have failed to make the decision and have delegated their decision-making responsibilities to the expert.”

While witness conferencing is a relatively new phenomenon in international arbitration, CIArb has a guideline on this new procedural innovation. This guideline is titled, “Guidelines for Witness Conferencing in International Arbitration”. Unlike many other CIArb guidelines, this guideline includes a checklist of issues to be considered by an arbitrator. Key factors for witness conferencing are discussed. The factors are: conflicting opinions on factual and specialist issues, factual evidence of multiple witnesses that needs to be tested, witness credibility, relationship of witnesses and logistical issues.

J. Cost and security for costs

CIArb has provided useful guidance for costs in awards under the guideline titled, “Drafting Arbitral Awards Part III – Costs”. The guideline discusses the best practices related to costs, interim costs, control of costs, and allocation of costs among other factors. One key feature, particularly used in some common law countries, discussed in the CIArb guideline is the impact of settlement offers on costs. Arbitrators are advised to first consider reasonableness of costs and then the proportionality of costs with respect to the claim. Considerations for interim and final costs are also discussed.

CIArb has a useful guideline for “Applications for Security for Costs”. This guideline operates in tandem with CIArb’s guideline on “Guideline on Applications for Interim Measures”. The arbitrator must keep fairness of making one party pay security for costs in mind while not prejudging the dispute. Also, a caution is sounded that the arbitration may get derailed if the security for costs is not paid, particularly due to inability to pay. The arbitrator must practice procedural fairness in security of costs, e.g., a reasoned procedural order for such security, release of security in final award, time period for security, and the form of security.

ICC has published an ICC Commission report titled “Decisions on Costs in International Arbitration” that is a detailed analysis of cost decisions⁵. Various aspects of costs such as jurisdictional approaches to costs, types of costs, cost allocation’s relationship to effective case management, practical aspects of cost allocations like proof of costs, and third-party funding among other issues.

K. Interest

CIArb provides a specific guideline for interest titled, “Practice Guideline 13: Guidelines for Arbitrators on How to Approach the Making of Awards on interest”. Starting from two distinct periods, pre-award and post-award, the guide explains several critical issues an arbitrator should consider in awarding interest. The guideline advises to establish a basis for awarding interest. Factors that are critical in the awarded interest i.e. period, discretion, rate, currency, delay in payment and type (simple or compound), are discussed. Specific issues related to the UK’s Late Payment of Commercial Debts (Interest) Act, 1998 are considered. The guideline ends with sample interest clauses in an arbitration award.

CIArb also has a guideline “Drafting Arbitral Awards Part II – Interest”. This guideline covers interest claims, time periods for interest claims, post-award interest, rate of interest and simple/compound interest. The advice is general as curial law, rules and party-agreements have a large role in determining interest claims. Key guidance in this CIArb guideline is to invite submissions early in the process for interest claims and that interest in awards has to be compensative and not punitive.

L. Awards

CIArb has a set of guidelines on drafting awards. The general one is titled, “Drafting Arbitral Awards Part I – General”. This guideline discusses drafting and communication of awards, common titles, conduct of deliberation, form and content of the award, and issues that arise after the awards are issued. The other CIArb award related guidelines, viz., “Drafting Arbitral Awards Part II – Interest” and “Drafting Arbitral Awards Part III – Costs” are covered under the headings of costs and interest in this essay.

Apart from its basic checklist titled “ICC Award Checklist”, the ICC has published an award checklist that covers most common and core requirement of an ICC award. Further, ICC also has a checklist titled “ICC Checklist on Correction and Interpretation of Awards”. As the ICC Rules have a mechanism for a review of a proposed award by the ICC staff, this checklist serves to standardise the ICC review process for arbitral awards.

M. Technology, privacy, and cybersecurity

In international arbitration, there are ever present concerns of technology’s improper use. While technology brings efficiency and reduced costs, the risk of due process violations remains. CIARb has a guideline titled, “CIArb Framework Guideline on the Use of Technology in International Arbitration (2021)”. There is considerable guidance provided on deciding the scope of technology to be used without affecting the arbitrator’s neutrality and other functions. Cybersecurity concerns are addressed with basic advice about password safety, avoiding public internet, among other suggestions. Virtual hearings have a key focus in the guideline. The guideline highlights that chronobiology matters in virtual hearings, because one international party may find a time zone very convenient, but it may affect others who are in different time zones. Arbitrators should also be concerned about the security of data when technology is being used.

As virtual hearings became the norm during the pandemic, the ICC has published a “Checklist for a Protocol on Virtual Hearings and Suggested Clauses for Cyber-Protocols and Procedural Orders Dealing with the Organisation of Virtual Hearings”. This checklist provides guidance on procedural orders, hearings, witnesses among other issues that are very peculiar to virtual hearings. CIArb has also issued “Guidance Note on Remote Dispute Resolution Proceedings” (2020) for ease of doing virtual hearings.

N. Hybrid mediation — Arbitration process combinations

CIArb has a specific guideline covering “Professional Practice Guideline on the Use of Mediation in Arbitration (2021)”. The guideline refers to such combinations as, “These interactions are sometimes described as ‘hybrid’ processes and are known by various shorthand titles according to the sequence of processes — e.g., ‘Med-Arb’, ‘Arb-Med’ or ‘Arb-Med-Arb….’ The absence of such a description will not prevent the parties from choosing mediation.” The hybrid med-arb process puts special responsibilities on the roles of arbitrators and mediators. A key issue in hybrid dispute resolution models is whether the same person can act as mediator and arbitrator. The guideline provides advice as to the stage when mediation is invoked in arbitration and consequential path of dispute resolution.

O. Short form arbitrations

Documents only arbitrations and expedited arbitrations are prominent short-form arbitrations. CIArb has a guideline on “Documents-Only Arbitration Procedures”. It provides interesting guidance on situations when in a document only arbitration, one of the sides seeks an oral hearing when either it has or has not waived its right to an oral hearing.

P. Consumer arbitrations

CIArb’s provides, “Practice Guideline 17: Guidelines for Arbitrators Dealing with Cases Involving Consumers and Parties with Significant Differences of Resources”. The guideline recognises the imbalance of power in consumer arbitration. This is a major problem in United States where consumer dispute arbitration is a significant category of arbitrations. Large companies in US favour consumer arbitrations as an alternative to class action litigation. But there is significant political and social resistance in US to consumer arbitrations as it gives an advantage to the corporations of confidentiality, but it may be a loss of bargaining power of consumers as a group in class actions.

Q. Arbitration toolbox

ASA Swiss Arbitration provides an innovative online toolbox. This is a rather unique collection of arbitration tools in once place. The ASA website of arbitration toolbox is a veritable “Swiss-Knife” of arbitration guidance. There are a set of eight “decision trees” set out in a system of helpful charts. For example, there is a detailed decision tree for the commencement of an arbitration. Among other decision trees, there is rich guidance in one of the decision trees regarding organisation of the arbitration. ASA arbitration tool box is a very useful, free resource for use by the parties and arbitrators in any arbitration.

R. Other guidance

Data protection is a growing concern globally. Hence, ICC has a specific guideline titled “Model Data Protection Clause for Procedural Order One”.

S. Conclusion

For an arbitrator looking for soft-law guidance, there are ready set of rules and guidelines available for most common issues. But arbitration, and international arbitration in particular, regularly throws-up challenges unknown to the existing soft-law guidance or statutes. Yet, a seasoned arbitrator will lean towards existing guidelines, as applicable to circumstances, to find a solution. That said, international arbitration thrives on procedural innovation. Today’s experiments become tomorrow’s guidelines. Hence, procedural innovations from arbitral organisations through soft-law guidance should continue in the international arbitration world.