UNCITRAL Arbitration Rules

The UNCITRAL Arbitration Rules are a set of procedural rules that govern the process of arbitration and the international resolution of commercial disputes.  These rules may be used both in proceedings administered by UNCITRAL or by parties and arbitrators who have chosen to use them.  They provide a framework for the arbitration process and cover all of the different parts of an arbitration from agreement to enforcement.  As mentioned above, these apply in commercial disputes, and these disputes are usually international.  Parties must agree to apply the Rules, but many international commercial disputes will follow this process.  This article will briefly outline the history and goal of the Rules and how they apply to arbitrations. It will then turn to different aspects of arbitration that the Rules cover and discuss how the process under the Rules works.  Finally, it will end with some considerations when deciding whether the UNCITRAL Arbitration Rules will be the best to govern a dispute.

Introduction and History

UNCITRAL stands for the United Nations Commission on International Trade Law.  This is the portion of the United Nations that oversees the development of law around the world as it relates to international trade and commerce.  In the early 1970s, there was a need for guidance on how to resolve international commercial disputes through arbitration.  UNCITRAL had a great voice in the international trade community to bring a set of rules to follow.  A form of the Rules was first adopted in 1976 and they were updated in 2010 to modernize the process with the vast changes in technology.  Finally, in 2013, UNCITRAL added the UNCITRAL Rules on Transparency for Treaty-based Investor-State Arbitrations to streamline a new and common dispute in the international commercial arbitration world.

These rules apply only to disputes where the parties agree that they will use the UNCITRAL Arbitration Rules as the procedural rules for the arbitration.  These rules may only be used when the dispute involves a commercial relationship between the parties.  The Rules were created to serve the space in arbitration that overlooked business relationships and the unique challenges that are present in commercial disputes.  By creating a process designed specifically for international commercial disputes, UNICTRAL helped businesses and countries solve disputes in a way that focused on the important pieces of the dispute and created awards that helped the parties heal their relationship and move forward.  It also seeks to provide a space that treats the parties with equality and gives the parties a full opportunity to be heard.

Arbitration Rules v. Model Law

Besides the Arbitration Rules, UNCITRAL has also created a Model Law on International Commercial Arbitration.  Both of these texts contain some similar ideas, moving through the entire arbitration process from agreement to enforcement.  However, while the Rules provide procedural frameworks for arbitrations that are decided under the Rules, the Model Law provides a framework for countries to consider international commercial disputes within their arbitration law.  The Model Law is encouraging countries to adopt laws that honor the key aspects of international arbitration practice.  UNCITRAL created the Model Law by drawing a consensus between countries from every region and economic status.

The important distinction between the Model Law and the Arbitration Rules is the way that they are applied.  The Model Law is an exemplary document that outlines ways that countries can make their arbitration laws more friendly toward international arbitration.  The Rules create a procedure for the parties in a dispute to follow with an arbitrator in the arbitration.  Additionally, the Model Law deals more with the relationship between the arbitration and the domestic courts in the areas where the arbitration award will apply, while the Rules focus on the creation of the award.  The Model Law is inspirational, and the Arbitration Rules are the practical rules for handling commercial disputes.

Contents of the Rules

As mentioned above, the Arbitration Rules cover each aspect of arbitration from the agreement and application of the agreement to recognizing and enforcing the award.  This section will discuss each of the steps in arbitration that follows the UNCITRAL Arbitration Rules.

  1. Agreement: The Rules require that they apply to any contract that agrees that the parties will submit the disputes to arbitration under the UNCITRAL Arbitration Rules.  It also allows the parties to modify the rules if needed by agreement in writing.  It also states that the Rules will apply unless there is a provision of the law chosen by the parties that are in direct conflict with the Rules, in which case the law will control over the Rules.  The Rules also provide a model arbitration agreement that parties may use in their contracts.
  2. Notice and Timing: The Rules provide a method of establishing and calculating timing for notice requirements.
  3. Commencement: The claimant—the person initiating arbitration—is required to provide notice to the respondent—the answering party.  Arbitration begins after the respondent receives this notice.  The Rules also outline what this notice must include and suggestions for what it could include.
  4. Representation: The Rules allow the parties to be represented by the attorney of their choosing, but the information of the other person must be communicated to the other party.
  5. Composition of the Panel: The parties may agree to one or three arbitrators, but if they do not decide, three will be appointed.  It also provides a procedure for the parties to appoint the arbitrator or arbitrator, or for the panel to be appointed by an institution.  These processes look slightly different if there is one arbitrator or three arbitrators.
  6. Conflicts: The arbitrator must disclose anything that may cast doubt on their impartiality or independence.  The Rules allow the parties to challenge the appointment of the arbitrator if there is a question of their impartiality and provides a procedure for the challenge to be decided.
  7. Proceedings: The Rules give the tribunal general freedom to conduct the proceedings in the order that they choose provided that they treat the parties equally and allow them an opportunity to present their case.  It also provides that the parties can request a hearing for the presentation of evidence by witnesses.
  8. Language and Place: The parties or the tribunal may choose both the place and the language to be used.
  9. Pleadings: The claimant will submit a statement of the claim and the respondent will submit a statement of defense.  The parties may have the opportunity to amend their pleadings or submit other written statements.  The period to submit these pleadings must not exceed forty-five days unless an extension is justified as decided by the tribunal.
  10. Hearings: The tribunal may allow the parties to present evidence at an oral hearing, or they may make their determination based only on the written pleadings.  The parties are also able to ask for a written hearing.
  11. Interim Measures: The parties may request interim measures and the tribunal may award it.
  12. Closing the Hearing: Once the parties have had a chance to present their evidence, the tribunal may close the hearings.  The parties may make a motion to reopen until the award is made.
  13. Settlement: The parties can settle at any point during the proceedings. If this happens, they must notify the tribunal, and the tribunal will terminate the proceedings.
  14. Award: The tribunal will issue an award when they have decided on the case.  This will be given to the parties.
  15. Interpretation or Correction: The parties may request that the arbitrators interpret or correct the award if needed.
  16. Costs: The Rules also provide rules to establish costs in the dispute and awarding costs.

These rules establish a procedure for the arbitration to follow that allows the parties the freedom to ask for the dispute to be decided in the ways that they need.

Considerations for UNCITRAL Arbitration

When deciding what rules will apply to arbitration, it is important to consider what a party may need to find the best rules to control the arbitration.  These considerations range from large-scale issues that can affect the whole arbitration to small decisions that can fit into most systems.  When evaluating the UNCITRAL Rules, it is important to consider:

  • Flexibility: The UNCITRAL Arbitration Rules provide the parties and the tribunal a bit of flexibility with their hearings.  This can be beneficial for certain disputes that need the ability to have more control over the proceeding.  This can also be a drawback when the parties are unable to agree and need more structure to the proceedings.
  • Time: The UNCITRAL Rules have some shorter timelines, so this process will be great for disputes that need to be resolved quickly.  However, if a party will need more time to gather evidence.
  • International: These rules are designed for international commercial arbitration.  While they could likely be followed in domestic arbitration, many of the rules may be unnecessary or overbroad to help allow for a variety of countries’ laws.  These Rules are most suited to international disputes.

Conclusion

The UNCITRAL Arbitration Rules provide a process for parties to resolve international disputes.  They created rules to fill a hole in arbitration rules that did not take commercial arbitration into account when they were created.  It is also important to differentiate the Arbitration Rules from the Model Law because the Rules apply to disputes while the Model Law is an aspirational law for countries to integrate into their domestic systems.  These rules create a process from the inception of the agreement through to the award.  Using the UNCITRAL Arbitration Rules can be incredibly beneficial to the process of resolving international commercial disputes, but it is important to consider the benefits and drawbacks of a specific dispute.  The UNCITRAL Arbitration Rules are a pillar in the commercial arbitration world and provide necessary rules to complement the process of international arbitration.

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