2. International Commercial Arbitration
Lecture 4: The Establishment and Organization of an Arbitral Tribunal. Part one
By Feruza Bobokulova

3. Establishment and Organization of AA
The establishment of an AA follows the decision to start arbitration to resolve a dispute and the sending of a notice/request for arbitration
No procedural orders or directions can be made and no useful steps can be taken in the arbitration until an arbitral tribunal has been appointed
The commencement of arbitration goes along with the establishment of the AA

4. Establishment and Organization of AA
Time matters
Time usually starts to run against a claim from the date on which the cause of action arises. Time limits may be imposed by statutes as well as by contracts
Statutory time limits are imposed by legislation of a country and it is in the best interest of the state that litigation should be started within a reasonable time after the relevant events occurred
In contrast, contractual time limits are often short, usually, a matter of months while statutory time limits may last for years.

5. Establishment and Organization of AA
Time limits
Most problems arise in the area of conflict of laws. In particular, there may be a difference between in both the length and the nature of the time limits laid down by different national systems of law
Civil law countries tend to classify provisions relation to time-limits as substantive, while the approach of common law countries until the second half of the 20th century was to treat questions relation to time-limits as procedural. However, the modern tendency in common law countries is to classify ‘foreign’ laws governing time limits as matters of substance.

6. Establishment and Organization of AA
Contractual Time limits
Contractual time-limits are sometimes drawn so tightly that they may be disregarded by some systems of law on the basis that they offend public policy

7. Commencement of Arbitration under Applicable Law
It is for the claimant to ensure that his claim is brought within the time-limit imposed by the contract or by the applicable law or both
If only arbitration is envisaged in the dispute resolution clause of the contract, time stops running when arbitration is started
Different legislations may require different actions to consider the proceedings as started and they may take one of the following forms:
Lodging a claim with AT, if an AT is designated in the AA;
Calling upon the opposing party to submit the dispute to the AT, if an AT is designated in the AA;
Commencing the procedure for designation of the AT as provided in the AA, or
Requiring the opposing party to appoint or to concur in the appointment of the arbitrator

8. Commencement of Arbitration under Institutional Rules
In order to stop time running, arbitration proceedings must be commenced in accordance with the relevant applicable law
If there is any difference between this law and any institutional rules of arbitration adopted by the parties, the applicable law prevails
ICC Rules require a party to send “A Request for Arbitration” containing a statement of the claimant’s case and particulars concerning the number and choice of arbitrators

9. Commencement of Arbitration under Institutional Rules
Furthermore, ICC Rules state that the date on which the Request is received by the Secretariat shall, for all purposes, be deemed to be the dame of commencement of the arbitral proceedings
In other cases, the institutional requirements for the ‘commencement of an arbitration’ may go beyond what is required by national systems of law
For example, an ICSID arbitration is deemed to have commenced only when the Secretary-General notifies the parties that all the arbitrators have accepted their respective appointments

10. Selecting an AT
It is difficult to choose a suitable arbitrator for a dispute which has not arisen
Ideally, each of the relevant factors should be considered by the parties after the dispute has arisen so that the most suitable arbitrator could be chosen to deal with particular dispute
The qualification of the arbitrator may have been designated in advance of any conflict, f.e. a lawyer of ‘not less than five years’
In the event of a dispute proceeding to arbitration, the arbitral tribunal may be selected by an appointing authority nominated by the parties

11. Arbitrators
The establishment of an AT involves many considerations. The first concerns the number as any number of arbitrators can be chosen by the parties
The laws of most countries provide that the number of arbitrators must be uneven
Clauses providing for two arbitrators and an umpire used principally in shipping and commodities disputes, are inappropriate for international arbitration
Tribunals of five or more arbitrators are reserved for arbitration between states
In commercial cases, the choice in practice is between one and three

12. Sole Arbitrators
The ICC Rules provide that where the parties have not agreed upon the number of arbitrators, a sole arbitrator will be appointed, unless ‘the dispute is such as to warrant the appointment of three arbitrators’
Appointments for meetings or hearings can be more easily arranged with a sole arbitrator than with an AT of three arbitrators, if only because there will be a smaller number of people to consult
The interests of economy are also served, since the parties will only have to bear the fees and expenses of one arbitrator rather than three
Moreover, the arbitral proceedings should be completed more quickly, since a sole arbitrator does not need to ‘deliberate’ with others
Nevertheless, in the practice of ICA, there is a clear preference for the appointment of three arbitrators in all but the smallest cases

13. Two Arbitrators
In certain trades and specialized markets the practice is to submit disputes to an AT of two arbitrators, with a subsequent reference to an umpire if the two party- nominated arbitrators cannot agree between themselves
However, it is not a practice to be recommended in ICA
Within the context of a trade association, question related to two-arbitrator arbitrations rarely arise, if they do, they may be dealt with relatively easily by trade practice
In international arbitration, it is preferable to avoid the two arbitrator system

14. Three Arbitrators
Modern preference is for international commercial disputes to be referred to an AT of three arbitrators, unless the amount in dispute is small
Where the AT consists of three arbitrators, each of the parties will usually have the right to nominate one arbitrator, leaving the third arbitrator to be chosen in some other manner
Three arbitrator arbitrations are more expensive than an arbitration conducted by a sole arbitrator, and it will usually take longer to obtain an award

15. Four or More Arbitrators
The practice of states in appointing arbitral tribunals of five, seven or more is usually dictated by political rather than by practical considerations
In the case of the Iran-US Claims Tribunal, practical considerations led to the appointment of a tribunal of nine members, three appointed by each party and three from third countries

16. Appointment of Arbitrators
There are several different methods of appointing an AT. The most usual are as follows:
Agreement of the parties
Arbitral institution
List system
Existing arbitrators
Professional institution
Trade or other association
National court

17. Agreement of the Parties
One of the most common methods of appointing arbitrators is by agreement of the parties
In some cases the name of the person, to whom the dispute will be referred if it arises, is indicated in the contract.
This procedure should not be followed as there is no guarantee that the person designated in the agreement to act as an arbitrator will be willing and able so to act at the time when a dispute eventually arises. Nor is there any guarantee that a person chosen in advance to act as an arbitrator will be suitable to decide the particular dispute that arises

18. Agreement of the Parties
Where a sole arbitrator is to be appointed by agreement of the parties, it is preferable for this agreement to be reached after the dispute has arisen. There is no rigid rule or practice as to how the parties should make their choice
In such instances parties may exchange the lists with names of several arbitrators in the hope that one of them will be chosen
Not only the parties should give their consent to the chosen candidate, but that arbitrator also must give his/her consent

19. Agreement of the Parties
Where the AT is to consist of three arbitrators, it is usual for each party to nominate one arbitrator, leaving the third arbitrator to be appointed by one of the methods available
Sometimes a party seeking to undermine an arbitration will refuse to appoint an arbitrator; or a party-appointed arbitrator will refuse to agree on a third arbitrator
This situation can be best avoided by a provision in the arbitration agreement or in the applicable arbitration rules that allows an experienced institution to intervene and make the appointment

20. Arbitral Institution
Arbitral institutions invariably have mechanisms for appointing arbitrators under their own rules of arbitration
The ICC Rules, f.e., provide that where there is to be a sole arbitrator, and the parties fail to nominate him one within 30 days from the communication of the Request for Arbitration to the other party, the arbitrator will be appointed by the ICC’s Court

21. Arbitral Institution
The Rules also provide that where there is to be an AT of three arbitrators, the third arbitrator will be appointed by the ICC’s Court, unless appointed by agreement of the parties within a limited time
The advantage of that the arbitral institutions and international bodies have to offer is their day to-day involvement in international arbitration. They know the qualities required in the persons they appoint and they usually know the potential candidates

22. List System
When a list system is used, each party compiles a list of three or four persons considered to be acceptable arbitrators
The lists are then exchanged in an attempt to reach agreement
A variation of this system is provided for in the UNCITRAL Rules, whereas the appointing authority sends each party an identical list with at least three names on it
Each party returns the list, deleting any name to which it objects and grading the remainder in order of preference
The appointing authority then chosen an arbitrator from the list, in accordance with the order of preference indicated by the parties

23. Existing Arbitrators
Where an AT of three arbitrators is to be constituted, the arbitration clause or submission agreement often provides that each party is to appoint one arbitrator and the two arbitrators so appointed will choose the third, who acts as the presiding arbitrator
This is the most satisfactory method as the party-nominated arbitrators are likely to have confidence in the skill and judgment of their chosen presiding arbitrator; otherwise they would not have chosen the person concerned
It sometimes happen that the party-nominated arbitrators are unable to agree upon the choice of the third arbitrator
Where the arbitral institution is involved, this will provide a means of breaking the deadlock

24. Professional Institution
The president or a senior officer of a professional institution is often named in arbitration clauses and sometimes in submission agreements as the person who is to appoint a sole arbitrator or the presiding arbitrator of an AT if the parties fail to agree

25. Trade Association
An arbitration clause may provide that the appointment of an AT is to be made by a trade association or some other marketplace ‘club’
Many groups or associations of merchants and traders prefer to resolve disputes by arbitration amongst themselves rather than by recourse to national courts or arbitration in the classic mode
The procedure followed is often quick and informal with lawyers excluded from the hearings unless the parties expressly agree otherwise

26. Trade Association
Trade tribunals often consist of two arbitrators. The two arbitrators, one appointed by each party, are usually experienced in the particular trade concerned
They are expected to reach their decision not merely on the basis of the evidence and arguments presented to them, but also on the basis of their own experience
If they cannot agree, the dispute is referred to an umpire

27. National Courts
Where the parties are unable to reach agreement upon the appointment of an arbitrator and where no one is expressly empowered to make the appointment for them, it is necessary to consider whether there is any national court that has (a) jurisdiction and (b) the power to make the necessary appointment
If the court has both jurisdiction and power, the consent of the parties is not necessary
It is sufficient for the claimant to apply to the court for the appointment of a sole arbitrator
In making such an appointment, the court will often ask the parties’ lawyer or the party-appointed arbitrator to put forward possible candidates

28. Jurisdiction and Powers of National Courts
A national court will have jurisdiction where the arbitration is to be conducted on its territory
The party wishing to proceed with the arbitration simply applies to the appropriate national court for the appointment to be made. A problem arises when the seat of arbitration has not been specified in the arbitration clause or submission agreement
It may be possible to persuade a court to assume jurisdiction
Failing this, the claimant may have to abandon hope of submitting the dispute to arbitration and may be forced to resort to litigation in a national court instead

29. Jurisdiction and Powers of National Courts
National courts are usually empowered to appoint arbitrators in circumstances in which it becomes necessary for one of the parties to a dispute to request them to do so
Wide powers to appoint arbitrators and umpires are contained in most modern national codes of law governing arbitration

30. Designating an Appointing Authority
Parties should recognize that it is in their common interest to choose an appointing authority by agreement – or at least, to choose a method of designating an appointing authority
One way of doing this, after the dispute has arisen, is to agree to adopt the UNCITRAL Rules, or simply the articles of those Rules that relate to the appointing authority and its functions
The parties may designate a court as the appointing authority, but the intention of the Rules is that they should nominate a person or more usually an instituion likely to maintain a list of names of suitable arbitrators
If the parties have not agreed upon an appointing authority, then after fulfilling certain preliminary requirements, a party may request the Secretary-General of the PCA to designate one

31. Designation by the Secretary General of the PCA
The International Bureau of the Permanent Court of Arbitration is located at the Peace Palace in the Hague, a great centre of international law built in 1913 for arbitration between states
It is also the headquarters of the ICJ
The staff of the International Bureau is headed by the Secretary-General, who performs the functions allocated to him under the UNCITRAL Rules. These include the designation of an appointing authority if the parties have not agreed on one

32. Designation by the Secretary General of the PCA
The first occasion on which the Secretary- General was called upon to designate an appointing authority under the UNCITRAL Rules was in 1983 in connection with the Iran- US Claims Tribunal
In the special circumstances of this tribunal, the Secretary-General chose the then President of the Supreme Court of the Netherlands

33. Reading Materials
Redfern, A., Hunter, M., Blackaby, N., and Partasides, C., Law and Practice of International Commercial Arbitration, 4th edn. London: Sweet and Maxwell.
Tweeddale, A. and Tweeddale, K., Arbitration of Commercial Disptues: International English Law and Practice. Oxford: Oxford University Press.

34. Thank You for your Attention!