Drafting the International Arbitration Clause: Part Two

Corporate Counsel has published the second installment of a four-part series entitled “Drafting the International Arbitration Clause.” In Part Two, “Arbitrator Selection in Multiparty Disputes,” Ann Ryan Robertson, Derrick Carson, and David E. Harrell Jr. examine arbitrator selection in a multiparty proceeding under the United Nations Commission on International Trade Law (“UNCITRAL”), International Chamber of Commerce (“ICC”), International Centre for Dispute Resolution (“ICDR”), and London Court of International Arbitration (“LCIA”) Rules.

The authors begin by stating:

Many people believe that appointing an arbitrator is the most critical decision during an arbitration. In the “typical” two-party arbitration, this objective is easily met either by choosing rules that provide for direct selection by the parties or by crafting an agreement that each party will nominate an arbitrator. The typical two-party arbitration, however, is becoming increasingly atypical. In today’s global marketplace, business is more complex, often with back-to-back transactions involving numerous parties across the globe. As a result, arbitrations themselves have also become more complicated with multiple claims, parties and contracts.

As explored in the first part of in this series, to meet this expanding business interconnectivity, the United Nations Commission on International Trade Law (UNCITRAL) Rules and the Rules of the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR) and the London Court of International Arbitration (LCIA) permit the joinder of parties and each of the arbitral institutions permits consolidation. Following joinder or consolidation, however, the paradigm of the claimant on one side and the respondent on the other shifts and, with three or more parties involved in an arbitration, each party appointing an arbitrator is no longer a viable option. The ability to make this “single most important decision” must be abrogated.

The authors conclude:

In the multiparty arbitration, the UNCITRAL Rules recognize that there may be instances in which a tribunal of a number other than one or three is appropriate. In contrast, the LCIA Rules, with their express requirement that the parties agree to multiple claimants and/or respondents jointly nominating, suggest that a three-person tribunal is the maximum number. The ICC Rules and the ICDR Rules do not place this stricture on the parties and acknowledge that the parties may craft their own arbitrator selection agreement. But the one constant across all the rules is power of the institution or in the case of the UNCITRAL Rules, the appointing authority, to intercede and appoint the arbitrators in the event the parties’ agreement fails.

Please stay tuned to Disputing for more on this useful series!

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