Section ! - Introductory Rules

Article 1 -Scope of Application

This Article had to be "softly" changed so as to "convert" the UNCITRAL Arbitration Rules (being rules for ad hoc arbitration) into a set of rules for institutional arbitration under the Chambers of Commerce and Industry of Basle, Berne, Geneva, Ticino, Vaud and Zurich.

Article 1 ( 1 } Omission: No reference to" ... in writing ... ",

Compare: Article 1 (1) of the UNCITRAL Arbitration Rules starts as follows: "Where the parties to a contract have agreed in writing that disputes in relation to ... ";see also Article 7(2) of the UNCITRAL Model Law. The Swiss Rules, on purpose -and wisely so -do not explicitly require an agreement "in writing". An "agreement as such" is sufficient.

The "in-writing-requirement" has been one of the most extensively debated issues in practice, ever since the writing-requirement became

This wording inspires the understanding that. in any event. the contract -and its proper interpretation In case of need or lacuna -shall be "the law" of the parties. and that the designated national law should only play a secondary role and, of course. should not be applied against contradicting negotiated terms or implied terms of the relevant contract.

Article 1(2} situations. likewise, group of contracts - situations have fostered the approach to review the situation under the single/uniform business transaction theory, or under the concept of the unite economique.

Furthermore, erga omnes offers to arbitrate (without an arbitration clause} are becoming more and more frequent, for instance in BITs and other investment agreements, or in the framework of Arbitral Tribunals missioned to monitor compliance with behavioural commitments bargained for in the framework of EC merger control, or under Article 81 (3) EC.⁵

it is no surprise that the corresponding Article 7(2} of the UNCITRAL Model Law is this time under revision at the UNCITRAL (see hereto the UNCITRAL Secretarial Note of 6 April1999).⁶

Insertion: Designation of the (juridical) seat of the Arbitral Tribunal anywhere in Switzerland;⁷ obviously no such reference is contained in the UNCITRAL Arbitration Rules.

Insertion: Entry into force of the Swiss Rules as of 1 January 2004.

Omission: Article 1 (2} of the UNCITRAL Arbitration Rules states the hierarchy between the UNCITRAL Arbitration Rules and the arbitration

Tons of ink were spent on the issue, and the debate reached a global dimension as many states and jurisdiction areas around the globe re-modelled their local arbitration act along the parameters of the UNCITRAL Model Law. Views are expressed that the writing-requirement is an anachronism. For instance, it was, with quite some justification, argued that businessmen engaging in international business and trade may validly and bindingly agree on any and all contractual terms, including essentials such as price, except on one term, namely the agreement to arbitrate {instead of litigating in ordinary courts) - a requirement which, as it is argued, is devoid of any justification. Other criticism is directed to the notion of

"in writing" in view of modern electronic means. And finally, there are numerous theories and practices which will affirm that a party is bound by an arbitration clause even in the absence of a written submission (for instance in the framework of the "Group of Companies Doclrine", or in the case of extending the scope and reach of an arbitration clause to third parties due to special circumstances), or in the absence of an arbitration clause altogether (for instance in the framework of multiple contracts which, altogether, m ay form one single uniform business transaction, or in the case of inveslment-treaty arbitration, or in the case of arbitrations initiated by a third party on the basis of commitments offered by merged parties to the relevant competition authority). For the purpose of the Swiss Rules, the Swiss institutions applying the same, and ultimately for the arbitrators, the single most decisive question will be whether or not there was, in substance, a mutual agreement (consensus) to arbitrate, and in case of dispute it will be for the arbitrators to determine whether such an agreement could be sufficiently evidenced.

See hereto M. BLESSING, Arbitrating Antitrust and Merger Control Issues, Helbing & lichtenhahn, 2003, also available on the website <www.baerkarrer.ch>.

U.N. Document AICN.91460, Note on "Possible Future Work" regarding the UNCITRAL Model Law, identifying 13 topics for refiection, with priority on the written form requirement, the enforceability of decisions on interim relief and on conciliation proceedings.

Note that the Chambers of Commerce are presently reconsidering the wording specifying a seat in Switzerland and may

act, in the sense that mandatory provisions of the latter shall prevail.

Such a paragraph was unnecessary for the Swiss Rules: The Swiss Rules fully harmonise with the Swiss Arbitration Act, i.e. Chapter 12 of the PI LA.

The question was asked to what extent the rules are meant to be mandatory, and to what extent parties would be free to opt out in respect of provisions they would not deem appropriate to apply. This is indeed one of the frequently asked questions in respect of any institutional rules, and I would not wish to give a general "hard and fast" answer:

Obviously, the very nature of the system should not be alienated. and truly core ideas of this type of institutional arbitration need to be respected. But on the other hand, parties could certainly e.g. agree that there should be no consolidation under Article 4 of the Swiss Rules.

One "core idea", at least at this time, is that the Swiss Chambers would not wish to administer proceedings where the legal seat of the Arbitral Tribunal is outside Switzerland.

Of course. we may remark in this context that the entire arbitration proceedings may nevertheless. under the Swiss Rules, take place abroad, as do - for instance - most of the sports arbitrations handled by the Court of Arbitration for Sport whose legal seat is and remains to be in lausanne, although all of the proceedings may take place elsewhere, typically at the place of the sporting event. a

Article 2 - Notice, Calculation of Periods of Time

In general: Article 2 of the UNCITRAL Arbitration Rules finds its way into the Swiss Rules without any changes.

Article 2(1) The provision speaks of a "physical delivery to the addressee" of any notice or notification (see also Article 3(1) of the UNCITRAL Model Law).

The UNCITRAL Secretariat Note. however. does express the view that notices can also be delivered "by electronic means of communication".

Certainly, it should be accepted that an electronic communication meets the delivery requirement at least in those cases where the parties. during the life of the relevant contractual relationship, have used electronic means of communication and have. thereby, established a practice of their mutual communication.

See also the comments to Article 16(2) of the Swiss Rules.

Article 2(3) Insertion: lt was appropriate to insert a provision that the Chambers may extend time-limits.

In general: The Swiss Rules not only contain some helpful clarifications regarding the points to be addressed in a Request for Arbitration, but also deal with the Answer to such a Request. The UNCITRAL Arbitration Rules are silent in the latter respect (a matter which has given rise to significant criticism).⁹

Article 3 -Notice of Arbitration and Answer to the Notice of Arbitration

Article 3( 1 ) Insignificant changes: Use of Claimant or Claimants. The Notice of Arbitration¹⁰ must of course be filed to the Institution, and not to the other party.

Article 3(2) Slight change: Proceedings shall be deemed commenced if the Request for Arbitration is received by the Chambers (and not only, when the same is received by the respondent party).

Article 3(3) Article 3(3)(b)

Addition: The number of required copies of the Notice of Arbitration. Addition: The parties' communication details (telephone, fax numbers, e-mail) should be submitted, as well as those of counsel.¹¹

Article 3(3)(c) Slight change: A "copy" of the arbitration clause or separate arbitration agreement should be submitted (whereas the UNCITRAL Arbitration Rules only require a "reference" to an arbitration clause).¹²

Article 3(3)(d) Addition: The reference to "contract', as in the UNCITRAL Arbitration

The lacuna in the UNCITRAL Arbitration Rules has been identified as one of the most important elements to be considered in the framework of a revision of the UNCITRAL Arbitration Rules.

The header speaks of "Notice of Arbitration"; Article 3(3)(a) speaks of a "demand". All three words (notice, request, demand) intend to designate the same manifestation of the claimant party's intent to commence arbitration proceedings.

The reference to "counsel" should of course be understood under the proviso "If any·. The Swiss Rules should not be misunderstood in the sense that parties, when arbitrating In Switzerland, should or must be represented by outside counsel. Parties are entirely free to act themselves, through their organs, employees, in-house counsel. They are entirely free, if they so wish or deem it necessary, to appoint outside counsel for assistance or representation purposes, whether admitted to a bar or not.

Again, this requirement is self-evident. However, there may be cases where the party initiating the arbitration wiU not be able to produce a copy of the arbitration clause or separate arbitration agreement and where, nevertheless, the Chambers will have to accept the Request for Arbitration and then leave it to the Arbitrators to determine their own jurisdiction, thereby examining whether the agreement to arbitrate could be established by other means, or whether a particular mutual arbitration agreement was unnecessary, as for instance in the case of BIT arbitration or arbitration initiated on the basis of behavioural commitments under the EC Merger Regulations, or under Article 9 of EC Regulation 1/2003 (entering into force as of 1 May 2004 ).

Again. an even broader wording would, in my view, have been preferable. A cause of action can not only originate from a particular contract or a particular legal instrument, but may also originate from a particular

Article 3(3)(h) Article 3(4)

Addition: Reference to the filing fee (registration fee).

This is the optional list (as opposed to the mandatory list of items as per Article 3(3)).

Article 3(4)(a) The Swiss Rules carefully distinguish between the "appointment" of an arbitrator (which as such will be done by the Chambers) and the

"designation" of an arbitrator made by the parties.••

Article 3(5) Addition: There is a typical "institutional" sentence to deal with incomplete filings. Moreover, the Chambers may request translations of the Notice of Arbitration if the same is not submitted in any of the four languages English, German, French or Italian. Prompt compliance with such a request will have the effect that the Notice of Arbitration will be deemed to have been validly filed on the date when the initial version had been received by the Chambers. This may be of significance if a statute of limitations has to be tolled by such a filing.

Article 3(6) Institutional addition: The provision that the Chambers will transmit a copy of the Notice of Arbitration to the Respondent is self-explanatory.

However, there is also a provision for the situation where arbitral jurisdiction is doubtful.¹⁵ In such a situation, which will always have to be examined very carefully, the Swiss Rules, wisely so, provide that the matter should be referred to the Special Committee. This will guarantee that those critical (and often highly important) cases be reviewed by professionals having very wide experience in international arbitration).

Article 3(7) Addition: There is a detailed provision regarding the filing, by Respondent. of its Answer to the Notice of Arbitration. with a mandatory list and an optional list (in Article 3(8)) of the Swiss Rules}. As stated

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act (such as an infringement) or -as those familiar with anWust laws will know -from an omission (an arbitral jurisdiction will have to be affirmed even absent a particular arbitration agreement between the parties; see the cases in antitrust matters, in investment disputes and in several different types of regulatory arbitrations).

In essence. this is in conformity with other institutional arbitration rules such as ICC and LCIA. Typically, for a three person Arbilral Tribunal, each party may 'designate" an arbitrator. but the formal 'appointmenr of such arbitrator (and all members of the Arbitral Tribunal) shall be a matter for the institution. Arbitration clauses used by parties in their contracts rarely reflect this distinction and, for Instance, in most arbitration clauses referring to ICC arbitration. one will read that each party "shall appoint one Arbitrator". for the third arbitrator to be appointed by the ICC. The use of the word "appoint" for the parties' nominees is not hundred percent "politically correct". However, this in no way affects the validity of the clause. The word

"appoint" used In the context of a party-nominee may in fact mean that the nominating party requests the appointment of its nominee by the ICC Court.

For instance where no arbitration clause or arbitration agreement could be submitted, or whether arbitration is initiated against parties other than those named in the arbitration agreement (or arbitration clause).

Article 3 (9)

Article 3( 1 0)

Article 3(11) Article 3(12)

Article 3(13)

above, this certainly marks a significant progress as compared to the UNCITRAL Arbitration Rules.¹⁶

Addition: Respondent shall "in principle" raise any counterclaim or set-off defence together with its Answer to the Notice of Arbitration. The words

"in principle" leave room for flexibility, and the admissibility of any such counterclaim or set-off defence raised at a later stage will be for the Arbitral Tribunal to determine.

Significant institutional addition: The indication as to the amount in dispute has a particular significance, in view of the Swiss Rules' Expedited Procedure, as per Article 42. Where the amount in dispute is below CHF one million, the arbitration will be handled on fast track, unless the Chambers decide otherwise for specific reasons.

Institutional addition: The Chambers transmit the Answer to Claimant(s).

Institutional addition: The files are transmitted to the arbitrators or Arbitral Tribunal once the registration fee has been paid and the arbitrators have been confirmed.

The Chambers should, in my view, take the care to transmit the files to each of the Arbitrator immediately after confirmation of the appointment.

The ICC, under its old practice, had been criticised for keeping the files back until all three arbitrators were nominated and confirmed. Moreover, the availability of the full file for the party-nominated arbitrators, immediately after their confirmation, is highly important so as to enable them to reflect on the criteria to be met for the selection of the chairperson.

This provision essentially corresponds to Article 4 of the UNCITRAL Arbitration Rules, but of course contains the requirement that the designation of representatives must also be notified to the Chambers.

Article 4 -Consolidation of Arbitral Proceedings (Joinder), Participation of Third Parties In general, this entire Article is new and certainly marks a desired progress as compared to the UNCITRAL Arbitration Rules, which are silent on this matter. The ICC has very recently devoted a Special Supplement to its Bulletin, published in December 2003, to deal with these

16 Often, in UNCITRAL arbilrations, a full panel of arbitrators had to be constituted without having the benefit of knowing for that purpose, what will be Respondent's case. In order to overcome this difficulty, the undersigned has sometimes required, from Respcndent, at least a short "Position Paper" setting out, or providing an idea of Respondent's most essential parameters, essentially far allowing the arbitrators to reflect an suitable candidates to serve as chair.

situations; reference may be made to the Special Supplement of the ICC Bulletin 2003 on

"Complex Arbitrations" with excellent reports on multi-party and multi-contract arbitrations, on joinder of parties to arbitral proceedings and on the consolidation of arbitral proceedings (with further reports on matters of res judicata, lis alibi pendens and issue of estoppel.

The essential point here is to remark that all of these situations require a very careful, thoughtful and cautious handling by the administering bcdy, i.e. by the Chambers' Special Committee. The members of that Committee will know from their own rich experience that these matters are particularly delicate and may require a thorough understanding of the implications on both, the substantive level and the procedural level.

Hence, parties need not fear that Article 4 is going to be a "mouse-trap", and it is more than unlikely that, in the future, Article 4 and its application will provide the stuff for some of those horror stories as were reported in respect of some consolidations in US proceedings.

Article 4(1)

Article 4(2)

This entirely new article is a "cautious" provision allowing consolidation of related cases. Such consolidation may be decided by the Chambers, of course after consultation with the parties and, moreover, after consultation with the Special Committee. lt is clear from this provision that consolidation can be ordered even over the objection of one party;

however, as expressed above, the intricacies are to be clearly understood.

The same solution is adopted where a Notice of Arbitration is submitted between the parties that are not identical to the parties in the existing arbitra! proceedings. A consolidation decided by the Chambers will have the effect that the parties to the new case shall be deemed to have waived their right to designate an arbitrator.

New provision on the joinder by third parties, covering the two distinct circumstances, i.e. the joinder upon motion by a third party "C"

requesting to join the arbitral proceedings between "A" and "B", and the request by party A or B, requesting that C should join in the proceedings.

Only a few institutional arbitration rules contain provisions to this effect.

For instance the LCIA Rules in Article 22.1(h}, providing for the second type of joinder (as above referred}. Others, such as !CC 1998, WIPO 1994, AAA IAR 2003¹⁷, are silent.

Allowing a joinder of a third party (either voluntary or forced} is always a critical matter and may have significant impact on the procedure and

far-11 International Arbitration Rules of the International Centre for Dispute Resolution (being the International Division of the American Arbitration Association) as of 1 July 2003.

reaching further procedural and substantive law consequences.

Occasionally, Arbitral Tribunals have allowed such a joinder only if all parties agree. However, this rule might be too stiff, and the more modern approach certainly is to vest the Arbitral Tribunal with the authority to decide itself, after consultation with the parties.

5.2 Section 11 • Composition of the Arbitral Tribunal Article 5 -Confirmation of Arbitrators

Article 5( 1)

Article 5(2)

Institutional addition: Institutions typically reserve to themselves the authority to appoint arbitrators. The notion is most clearly expressed in the 1998 LCIA Rules which state, in Article 5.5: "The LC/A Court alone is empowered to appoint Arbitrators." In other words, the parties may of course designate (or "nominate") a sole arbitrator, or designate a party-nominated arbitrator, but the formal appointment is a matter reserved to the institution which will have the authority to confirm a designation (or nomination) made by the parties, or may itself proceed with the making of an appointment. In case the appointment of a nominee is not confirmed, the Chambers will be under no obligation to give reasons.

Again, this is a rule of "Institutional wisdom". indeed, as the long-standing !CC practice has shown, there may sometimes be very good reasons not give reasons for this type of decisions.

Again, this is a rule of "Institutional wisdom". indeed, as the long-standing !CC practice has shown, there may sometimes be very good reasons not give reasons for this type of decisions.