ICC Arbitration Process

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 Advantages of Arbitration
A final and enforceable decision can generally be
obtained only by recourse to the courts or by
arbitration.
Because arbitral awards are not subject to appeal, they
are much more likely to be final than the judgments
of courts of first instance.
Although arbitral awards may be subject to being
challenged (usually in either the country where the
arbitral award is rendered or where enforcement is
sought), the grounds of challenge available against
arbitral awards are limited.
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 Advantages of Arbitration
Judicial systems do not allow the parties to a
dispute to choose their own judges.
In contrast, arbitration offers the parties the
unique opportunity to designate persons of
their choice as arbitrators, provided they are
independent.
This enables the parties to have their disputes
resolved by people who have specialized
competence in the relevant field.

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 Advantages of Arbitration
Arbitration is faster and less expensive than
litigation in the courts.
Although a complex international dispute may
sometimes take a great deal of time and money to
resolve, even by arbitration, the limited scope for
challenge against arbitral awards, as compared
with court judgments, offers a clear advantage.
Above all, it helps to ensure that the parties will not
subsequently be entangled in a prolonged and
costly series of appeals.

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 Advantages of Arbitration
Furthermore, arbitration offers the parties the
flexibility to set up proceedings that can be
conducted as quickly and economically as
the circumstances allow.
In this way, multi-million dollar ICC arbitration
was once completed in just over two
months.

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 Enforcement of Awards
Arbitral awards enjoy much greater international
recognition than judgments of national courts.
Over 134 countries have signed the 1958 U.N.
Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, known as the "New York
Convention".
The Convention facilitates enforcement of awards in
all contracting states. There are several other
multilateral and bilateral arbitration conventions that
may also help enforcement.

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 Possibility of Arbitration
ICC arbitration is possible only if there is an agreement
between the parties providing for it.
All parties wishing to have recourse to ICC arbitration
include the following standard clause in their
contracts:
"All disputes arising out of or in connection with the
present contract shall be finally settled under the
Rules of Arbitration of the International Chamber of
Commerce by one or more arbitrators appointed in
accordance with the said Rules."
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 Process of Arbitration
 Request for Arbitration and Respondent's
Answer
 Setting in motion of the arbitration
 Number of arbitrators
 Appointment of arbitrators
 Place of arbitration
 Fixing the advance on costs
 Terms of Reference
 Proceedings
 Scrutiny and final Award
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 Request for Arbitration &
Respondent's Answer
The Request for Arbitration is registered on the day it reaches the Secretariat of
the International Court of Arbitration at ICC Headquarters (38 cours Albert 1er,
75008 Paris, France).
The Secretariat acknowledges receipt of the Request and indicates to the
Claimant the names and contact details of the counsel and other members of
the team in charge of the file. The Request should include the following
elements:
 the name in full, description and address of each of the parties;
 a description of the nature and circumstances of the dispute giving rise to the
claims;
 a statement of the relief sought, including, to the extent possible, an indication
of any amount (s) claimed;
 the relevant agreements and, in particular, the arbitration agreement;
 all relevant particulars concerning the constitution of the Arbitral Tribunal; and
 any comments as to the place of arbitration, the applicable rules of law and
the language of the arbitration.
The Request must be accompanied by a payment of US$ 2500, as an advance
on administrative costs. This sum is not refundable but is credited to any
further cost advance payable by the Claimant.

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 Setting in motion of the
arbitration
The arbitral process is supervised by the International
Court of Arbitration (while the dispute itself is decided by
the Arbitral Tribunal).
Following the receipt of the Respondent's Answer to the
Request (or the expiration of the time-limit for its receipt),
the case is submitted, if necessary, to the Court, which
takes such decisions as may be required to set the
arbitration in motion.
The Court may be called upon to decide whether it is
satisfied of the prima facie existence of an agreement to
arbitrate between the parties. The Secretariat directly
notifies the parties of the Court's decisions.

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 Arbitrators
Number
The parties are free to decide upon the number of arbitrators, either in their
arbitration agreement or later. Failing agreement between the parties, the
Court appoints a sole arbitrator save where it appears that the dispute is
such as to warrant the appointment of three arbitrators. If the amount in
dispute is small and the parties have chosen three arbitrators, the
Secretariat draws the attention of the parties to the consequences of their
choice, including the tripling of arbitrators' fees and expenses and the longer
time generally required for cases with three rather than one arbitrator.
Appointment
 The parties are also free to select the arbitrator or arbitrators of their choice.
The Court or the Secretary General confirm arbitrators nominated by the
parties. The Court appoints arbitrators on behalf of defaulting parties and/or
appoints sole or third arbitrators. Arbitrators may also be nominated by co-
arbitrators or through other procedures for nomination.
 In all cases, the prospective arbitrators are asked to declare their
independence. If arbitrators disclose facts or circumstances that might call
into question their independence in the eyes of the parties, such facts and
circumstances are communicated to the parties for comments. All arbitrators
not appointed by the Court must be confirmed

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 Arbitrators
Nationality of the arbitrator
 When the Court appoints a sole or a third arbitrator, the arbitrator
comes from a "neutral" country. In other words, the sole or third
arbitrator should be a national of a country other than those of the
parties, unless none of the parties object.
 However, when the Court appoints an arbitrator on behalf of a party
that has failed to nominate one (appointment of a co-arbitrator in a
three-member arbitral panel), a proposal is requested from the
national committee, if any, in the country of which that party is a
national.

Challenge - In those exceptional cases where a party challenges one

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 Place of arbitration
In the vast majority of ICC cases, the place
of arbitration is agreed upon by the
parties. When this place has not been
agreed, it is fixed by the Court, normally in
a "neutral" country, that is, neither the
Claimant's nor the Respondent's country.

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 Fixing the advance on costs
As soon as practical, the Court fixes an advance on costs intended to
cover the estimated fees and expenses of the arbitrators, as well as
the administrative expenses of ICC.
The estimate of the arbitrators' fees and the ICC's administrative
expenses is made by applying the scales appended to the Rules of
arbitration. The scales are based on the amount in dispute in the
arbitration.
The advance fixed may be modified subsequently depending on
developments in the arbitration. The scales are regressive: the
higher the sum in dispute, the lower the percentage of the arbitration
costs due by the parties.
The fees of the arbitrator (s) are finally fixed by the Court at the end of
the arbitration proceedings, taking into account the diligence of the
arbitrator, the time spent, the rapidity of the proceedings and the
complexity of the dispute.

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 Terms of Reference
Once the Arbitral Tribunal has been constituted
and the advance requested at this stage has
been paid, the Secretariat transmits a copy of
the file to each member of the Arbitral Tribunal.
From that time on, the parties are requested to
correspond directly with the Arbitral Tribunal
(while sending copies of their correspondence
and submissions to the Secretariat and to the
other parties)

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 Establishing the Terms of
Reference
Before the actual merits of the case can be addressed, the Arbitral
Tribunal must first draw up the Terms of Reference.
The Terms of Reference should include the particulars listed in the ICC
Rules. Apart from the full names and description of the parties and
arbitrators, the place of arbitration and a summary of the parties'
respective claims, they contain particulars concerning the applicable
procedural rules and any other provisions required to make the
Award enforceable at law.
They also contain, unless the Arbitral Tribunal considers it
inappropriate, a list of issues to be determined. At this stage, the
Arbitral Tribunal establishes a provisional timetable to be followed in
the conduct of the arbitration.
The Terms of Reference must be transmitted to the Court within 2
months of the file being transmitted to the Arbitral Tribunal. Should
one of the parties refuse to take part in drawing up or to sign the
Terms of Reference, the latter are submitted to the Court for
approval, whereupon the arbitration may proceed
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 The purposes of the Terms of
Reference
The Terms of Reference offer various technical, psychological
and legal benefits:
 they allow the claims and answers submitted by the parties
to be ordered and structured
 the document can also be used to record definitively an
agreement between the parties on such important matters
as the law applicable to the merits, the language to be used
in the arbitration or even certain points pertaining to the
merits of the dispute
 the establishment of the Terms of Reference is said to
encourage parties to reach a settlement by clarifying the
issues;
A significant proportion of ICC cases are in fact withdrawn at
this stage, following a settlement between the parties.
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 Proceedings
The Terms of Reference become operative once they have
been signed by the parties and the arbitrators, or have
been approved by the Court where a party has failed to
sign them.
The Arbitral Tribunal must then proceed to establish the
facts of the case. When it is satisfied that the parties
have had a reasonable opportunity to present their
cases, the Arbitral Tribunal declares the proceedings
closed and proceeds to draft an Award, indicating to the
Secretariat the approximate date by which the draft
award will be submitted to the Court.
The award is rendered within 6 months from the signature
or approval of the Terms of Reference, a time-limit which
the Court may extend.

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Rules governing the proceedings
The parties and arbitrators are free to fix the rules of
procedure to be applied in the arbitration, subject to
any mandatory provisions that may be applicable.
The parties may determine, for instance, whether and
to what extent discovery or cross-examination will
be allowed.
The Arbitral Tribunal proceeds within as short a time
as possible to establish the facts of the case by all
appropriate means. The parties have the right to be
heard; the tribunal may also decide to hear
witnesses and experts, and may summon any party
to provide additional evidence.
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 Scrutiny and final Award
Submission of the draft Award and scrutiny
 After the closing of the proceedings, the Arbitral Tribunal
draws up a draft Award which is submitted to the Court's
scrutiny. The Court may lay down modifications as to
form and, without affecting the Arbitral Tribunal's liberty
of decision, may draw its attention to points of
substance. In scrutinizing draft awards, the Court
considers, to the extent practicable, the requirements of
mandatory law at the place of arbitration.
Notification of the Award
 Once approved by the Court, the Award is signed by the
arbitrators. It is deemed to be made at the place of the
arbitration on the date it indicates. It is then notified to
the parties by the Secretariat.
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 Time-limits and duration of the
arbitration
In most cases it would be unrealistic to expect that the final Award can
be made in less than 1 year, although complex ICC arbitration
proceedings have been conducted in as little as 2 and a half
months. Adherence to time-limits is monitored closely by the Court
and its Secretariat.
Once the Arbitral Tribunal has been constituted and the financial and
other conditions have been met, two important time-limits govern
the actual proceedings - the 2 months already referred to for
transmitting the Terms of Reference to the Court, followed by 6
months for rendering the final Award. The Court can extend these
time-limits if circumstances so require.
The Court follows each case by means of progress reports that are
submitted to it periodically by the Secretariat.
In addition, the ICC system of arbitrator remuneration is designed to
encourage the efficient conduct of the arbitration as the arbitrators
are not paid on an hourly or daily basis.

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 Arbitrators' fees
The arbitrators' fees are managed by the Court and fixed on the basis
of the relevant scale, taking into consideration the diligence of the
arbitrators, the time spent, the rapidity of the proceedings and the
complexity of the dispute. Based on the amount in dispute, the scale
provides a minimum and a maximum for 1 arbitrator.
The fees are multiplied by the number of arbitrators up to a maximum
which shall normally not exceed 3 times the fees of 1 arbitrator. In
case of necessity due to exceptional circumstances, the Court may
fix the fees of the arbitrators at a figure higher or lower than that
which would result from the application of the relevant scale.
Where the sum in dispute is not stated, the Court fixes the arbitrators'
fees at its discretion.
Arbitrators' expenses
 The arbitrators' expenses are also managed by the Court and
include such expenses as for travel, accommodation, meals,
couriers and facilities for hearings.

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 Administrative expenses
The "administrative expenses", also referred to as "administrative costs",
represent the fee charged by the ICC Court for the administration of an
arbitration case.
The amount of US$ 2500, the payment of which accompanies the Request,
is an advance on administrative expenses. Since this first advance is not
refundable, it is often called the registration fee, or filing fee. The Court
fixes the administrative expenses on the basis of the scales set out or,
where the sum in dispute is not stated, at its discretion.
In exceptional circumstances, the Court may fix the administrative expenses
at a lower or higher figure than that which would result from the
application of the scale provided the expenses shall normally not exceed
the maximum amount of the scale (US$ 88 800).
Fees and expenses for expert (s)
 In those cases where an expertise is ordered by the Arbitral Tribunal, the
latter fixes the fees and expenses of the expert (s) and is responsible for
the management and payment of such fees and expenses by the parties.
The costs of an expertise are not covered by the advance on costs
required by ICC, although the Secretariat may administer the accounts as
a service to the Arbitral Tribunal.
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 Advance Costs
Advance on administrative expenses (filing fee)
 A first advance on administrative expenses of US$ 2500 is payable
by the Claimant with the Request for Arbitration.
Provisional advance
 After a review of the Request, the Secretary General normally
requires the Claimant to pay a provisional advance in an amount
intended to cover the costs of the arbitration until the Terms of
Reference have been drawn up. This advance shall normally not
exceed the amount obtained by adding together
(1) the administrative expenses resulting from the scale,
(2) the minimum on the scale of arbitrators' fees, and
(3) the expected reimbursable expenses of the Arbitral Tribunal
incurred with respect to the drawing of the Terms of Reference
These calculations are made on the basis of the Claimant's claim
only. Current practice indicates that the provisional advance is
usually in the range of 25% to 35% of the advance as calculated
for the entire arbitration.
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 COSTS OF ARBITRATION
ADMINISTRATIVE EXPENSES
Sum in dispute (in US Dollars) Administrative expenses(*)
up to 50 000 $ 2 500
from 50 001 to 100 000 3.50%
from 100 001 to 500 000 1.70%
from 500 001 to 1 000 000 1.15%
from 1 000 001 to 2 000 000 0.70%
from 2 000 001 to 5 000 000 0.30%
from 5 000 001 to 10 000 000 0.20%
from 10 000 001 to 50 000 000 0.07%
from 50 000 001 to 80 000 000 0.06%
over 80 000 000 $ 88 800
(*) For illustrative purposes only, the table on the following page indicates the
resulting administrative expenses in US$ when the proper calculations have
been made.

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 COSTS OF ARBITRATION
B. ARBITRATOR'S FEES
Sum in dispute (in US Dollars) Fees(**) minimum maximum
up to 50 000 $ 2 500 17.00%
from 50 001 to 100 000 2.00% 11.00%
from 100 001 to 500 000 1.00% 5.50%
from 500 001 to 1 000 000 0.75% 3.50%
from 1 000 001 to 2 000 000 0.50% 2.75%
from 2 000 001 to 5 000 000 0.25% 1.12%
from 5 000 001 to 10 000 000 0.10% 0.616%
from 10 000 001 to 50 000 000 0.05% 0.193%
from 50 000 001 to 80 000 000 0.03% 0.136%
from 80 000 001 to 100 000 000 0.02% 0.112%
over 100 000 000 0.01% 0.056%
(**) For illustrative purposes only, the table on the following page
indicates the resulting range of fees when the proper calculations have
been made.
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 COSTS OF ARBITRATION
SUM IN DISPUTE B. ARBITRATOR'S FEES
(in US $) (in US $)
  Minimum Maximum
17.00% of amount in
up to 50 000 2500
dispute
from 50 001 to 2500 + 2.00% of amt. 8500 + 11.00% of amt.
100 000 over 50 000 over 50 000
14 000 + 5.50% of amt.
from 100 001 to 3500 + 1.00% of amt.
500 000 over 100 000
over 100 000
from 500 001 to 7500+ 0.75% of amt. 36 000 + 3.50% of amt.
1 000 000 over 500 000 over 500 000

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 COSTS OF ARBITRATION
from 1 000 001 to 11 250 + 0.50% of amt. 53 500 + 2.75% of amt.
2 000 000 over 1 000 000 over 1 000 000
from 2 000 001 to 16 250 + 0.25% of amt. 81 000 + 1.12% of amt.
5 000 000 over 2 000 000 over 2 000 000
from 5 000 001 to 23 750 + 0.10% of amt. 114 600 + 0.616% of amt.
10 000 000 over 5 000 000 over 5 000 000
from 10 000 001 to 28 750 + 0.05% of amt. 145 400 + 0.193% of amt.
50 000 000 over 10 000 000 over 10 000 000
from 50 000 001 to 48 750 + 0.03% of amt. 222 600 + 0.136% of amt.
80 000 000 over 50 000 000 over 50 000 000

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 COSTS OF ARBITRATION
from 80 000 001 to 57 750 + 0.02% of amt. 263 400+ 0.112% of amt.
100 000 000 over 80 000 000 over 80 000 000

61 750 + 0.01% of amt. 285 800 + 0.056% of amt.

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