By: Luis M. Martinez, Esq., Vice President, International Centre for Dispute Resolution (ICDR)
Each year the ICDR, (International Centre for Dispute Resolution, the international division of the American Arbitration Association, AAA®) administers cases pursuant to various sets of the AAA’s rules and its own International Arbitration Rules, (IAR) which include international mediation rules and expedited procedures. For example international cases can be and are filed either under the ICDR International Dispute Resolution Procedures (including Mediation and Arbitration Rules) or the AAA Commercial Arbitration Rules and Mediation Procedures (CAR). It is important to understand the variations in these Rules in order to make an informed selection as to the suitability of a particular set of rules for the arbitration provision being considered.
The ICDR Arbitration Rules (IAR), based on the UNCITRAL Arbitration Rules, were designed specifically for international disputes and incorporate the latest provisions that are expected in an international arbitration today. The current version underwent a complete revision in 2014, and they provide the arbitrators with the framework and the powers to:
consider different legal traditions and cultural differences,
render all necessary procedural determinations to bring the process to its conclusion, and
issue awards that will be recognized and enforced pursuant to the enforcement treaties.
The ICDR also administers international cases under the AAA’s Commercial Arbitration Rules (CAR), which have a U.S. domestic arbitration focus but routinely are utilized by international parties.
Many of the differences between the CAR and the IAR are consistent with the international focus of the IAR and the domestic one of the CAR.
The IAR provide for extended time frames considering the nature of international cases and the extra time that may be needed for parties located in different countries perhaps dealing with language, legal and cultural issues; for example, the respondent shall have 30 days to provide the Answer, and the Award shall be issued within 60 days from the date of the closing of the hearing. (Articles 3.1 and 30.1)
The CAR require the Answer within 14 days and the issuance of the Award within 30 days. [R-5 (a) and R-45].
Applicable Laws and Remedies
Article 31 of the IAR deals with conflicts of law issues as well as the ability to take into account usages of the trade. It expressly instructs the tribunal not to decide as amiable compositeur (i.e., an unbiased third party acting as a conciliator rather than the decision maker) or ex aequo et bono (i.e, acting in equity) unless the parties have by agreement authorized them to do so. This article also provides the tribunal with instruction on how to consider the currency and interest of the Award and expressly excludes the awarding of punitive damages.
There is no equivalent provision in the CAR except for the reference to awarding interest [R-47, (d)]. In fact, the arbitrators may provide equitable relief, [R-47, (a)].
Exchange of Information
Both the IAR and the CAR seek to control this phase of the arbitration to limit the time and costs associated with arbitration. Discovery is largely unavailable in international arbitration, where most parties are from civil law countries, and neither set of rules contemplates broad discovery.
Yet middle ground is emerging in both international and domestic arbitration, reflected in both sets of rules. IAR Article 21 and CAR R-22 allow narrow and specific requests for documents that parties reasonably believe to exist that are in the possession of the adverse party with an explanation of how these documents are relevant and material and can be exchanged efficiently and economically.
The IAR goes further in expressly excluding depositions and interrogatories along with requests to admit as developed for use in U.S. court procedures as generally not appropriate for obtaining information pursuant to its rules. [IAR Article 21, (10)]. Article 21, (2) requires that parties may depart from the standards expressed in the rules only by written agreement and in consultation with the tribunal. This provision was included so that there was a record of what transpired during the exchange of information phase should a party later wish to examine what was agreed to beyond the permissible scope as envisioned by the rules. The tribunal also is given the authority to draw adverse inferences and allocate costs for any failure by a party to comply with its exchange of information orders [Article 21, (9)].
In contrast, pursuant to the Large Complex Commercial Dispute procedures applied in conjunction with the CAR when the claim or counterclaim exceeds $500,000.00, in exceptional cases, upon good cause shown, and at the discretion of the arbitrator, depositions may be ordered. [LCCP, L-3 (f)] The CAR similarly do provide the tribunal with enforcement powers regarding their exchange of information orders (see R-23).
Unless otherwise agreed to by the parties, written witness statements may be used pursuant to the IAR. The tribunal may require any witness to appear and may determine the manner in which witnesses are to be examined. If a witness fails to appear as required, the tribunal may disregard that witness’s statement. [Article 23, (3), (4)] Cross-examination is not referenced in IAR and does not exist in principle in the civil law tradition of civil procedure.
The CAR have a similar framework but expressly provide for cross-examination [R-32, (c)].
IAR Provisions Not Found in the CAR
Joinder. To accommodate an increase in multiparty cases and international construction cases, a joinder provision allows a party to join an additional party to an arbitration by submitting a Notice of Arbitration against the additional party.
No additional party may be joined after the appointment of any arbitrator, unless all parties, including the additional party, otherwise agree. (IAR Article 7).
Consolidation. A consolidation provision allows a party to request the Administrator to appoint a consolidation arbitrator with the power to consolidate two or more arbitrations pending under these Rules or any other rules administered by the AAA or ICDR into a single arbitration.
IAR Article 8 provides the standards to be applied by the consolidation arbitrator. The decision need not include a statement of reasons. Once the consolidation is completed, absent the agreement of all parties, the consolidation arbitrator shall not be appointed to the consolidated proceeding.
Language. If the parties have not agreed otherwise, the language of the arbitration shall be the language of the document containing the arbitration provision; the provision gives the tribunal the ability to determine otherwise. (IAR Article 18)
Privilege. IAR includes a provision on privilege whereby the tribunal shall take into account applicable principles of privilege and in situations where the applicable law would lead to different rules, the tribunal should, to the extent possible, apply the same rule to all parties (IAR Article 22). The commercial rules have a provision on privilege but do not provide the tribunal with guidance when its application would lead to different rules, (see R-34, (c)).
Award. The IAR require that the reasons upon which the award is based are included, unless the parties have agreed otherwise (which is strongly discouraged by the ICDR). The award must include the place and date for enforcement purposes. A statement of reasons should accompany any dissent. In addition, if the applicable law requires an award to be filed or registered, the tribunal shall make sure that this is done. [IAR Article 30 (1) through (5)].
Interpretation and correction. The IAR contain a provision for interpretation and correction of the award (IAR Article 33), whereas the CAR have one for modification, which is applicable for corrections of clerical, typographical, or computational errors in the award but no provision for interpretation (R-50).
CAR Provisions Not Found in the IAR
Dispositive motion. The CAR provide for an arbitrator to make a ruling on a dispositive motion if the moving party can show that they will likely succeed and dispose of a narrow issue in the case (R-33). There is no equivalent provision in the IAR, although dispositive motions are not expressly prohibited.
Sanctions. The CAR contain a provision on sanctions. A party who fails to comply with its obligations under these rules may be faced with a sanction ordered by the tribunal. [(R-58 (a)]. There is not an equivalent provision on “sanctions” in the IAR, although Article 20, (7) does allow the tribunal to allocate costs, draw adverse inferences, and take such additional steps as are necessary to protect the efficiency and integrity of the arbitration.
Provisions Shared by Both Sets of Rules
Impartiality and Independence – Challenges
Both the ICDR International Arbitration Rules and the AAA Commercial Arbitration Rules have undergone extensive revisions with input from the user communities and arbitration experts, as well as that gleaned from the AAA-ICDR’s 90+ years of experience in the field of administering domestic and international matters to provide tried and tested rules. The IAR contain a number of provisions and language that has been tailored for international arbitrations, but the commercial rules are often used by the parties and are included in the arbitration agreements for international matters. An understanding of these differences in the rules will be necessary when negotiating your arbitration provision and selecting the appropriate set of rules for your cross-border transaction.
Established in 1996, the ICDR (International Centre for Dispute Resolution®) is the international division of the American Arbitration Association® (AAA®).
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