Guide To International Arbitration 2014

Guide to
International
Arbitration
Latham & Watkins

International
Arbitration Practice
Latham & Watkins has an
outstanding, multi-faceted
global practice in international
dispute resolution.
Our international arbitration lawyers represent
private corporations and state-owned enterprises
in major international disputes all over the world.
The practice embraces disputes from a broad
range of areas: oil and gas, construction, energy
and infrastructure projects, concessions, off-take
agreements, finance and corporate transactions, joint
ventures, insolvency, insurance and reinsurance,
fraud, accountants liability, intellectual property,
environment, distribution, import and export, and
numerous others.
We have conducted proceedings in many
jurisdictions and under all of the major international
arbitration rules, and are accustomed to addressing
choice of law, choice of jurisdiction, comparative law
and cross-cultural issues. We take full advantage
of our network of international offices supported
by an advanced, unitary technology platform. This
facilitates communication and coordination, both
internally and with our clients, and enhances our
effectiveness, giving us the edge in transnational,
multi-jurisdictional disputes requiring a coordinated
strategy and the application of multiple laws.
We pride ourselves in our ability to assemble
experienced teams of talented professionals and
dedicated support staff to meet the legal, linguistic,
technical and any other requirements of any given
case across the globe.
Contents
Foreword
Why International Arbitration?
Chapter I
What is Arbitration?........................... 1
Chapter II
When Should Provision for
Arbitration be Made?......................... 3
Chapter III
The Tribunal ...................................... 7
Chapter IV The Choice of Arbitration Rules ........ 9

Chapter V The Place of Arbitration................... 17
Chapter VI Typical Steps in an Arbitration......... 19
Chapter VII Checklist of Areas to Consider........ 21
Chapter VIII Arbitration Between Foreign

Investors and States ....................... 27
Annex 1
Model Arbitration Clauses .............. 31
Annex 2
New York Convention States........... 35
Annex 3
Arbitral Institutions........................... 39
Annex 4
Glossary........................................... 41
FOREWORD
Why International Arbitration?

The expansion and globalisation of cross-border investment
and trade has led to increased and ever more complex
commercial relationships between businesses, investors
and states. As, inevitably, some of those relationships break
down, parties need to consider (preferably at the outset of the
relationship) the best means of resolving any disputes which
may arise. In many cases, that will be arbitration.
Arbitration has been used for centuries, with Plato writing about
arbitration amongst the ancient Greeks. In more modern times,
arbitration became the standard method for resolving disputes
in certain industry sectors (such as construction, commodities,
shipping and insurance) where the arbitrators technical
expertise was particularly valued. However, over the last 50
years or so, arbitration has been increasingly embraced by the
international community, with many recognising its importance
as the primary means of resolving complex, transnational
commercial disputes (as well as the economic benefits for a
state of being perceived as arbitration friendly).
Here, in a nutshell, are a few of the features that have led to
the prominence of arbitration in the international arena:
Enforceability: Arbitration awards are more widely and
readily enforceable than court judgments as a result,
primarily, of the 1958 New York Convention, a multilateral
treaty for the enforcement of arbitral awards to which more
than 145 states are party.
Neutral forum: A party will often prefer not to submit to the
jurisdiction of another partys national courts. International
arbitration can provide a neutral forum for dispute
resolution.
Procedural flexibility: Arbitration rules are streamlined,
flexible and far less complex than most national rules of
civil procedure, making them better suited to parties from
different jurisdictions.
Arbitrators with the appropriate experience: Arbitrators
can be selected for their familiarity with relevant
commercial practices, trade usages and legal structures,
and their ability to apply different national laws and deal
with comparative law issues.
. . . over the last 50 years or so,

arbitration has been increasingly
embraced by the international
community, with many recognising
its importance as the primary means
of resolving complex, transnational
commercial disputes
Party autonomy: The parties to an arbitration can

shape their dispute resolution process by, for example,
selecting the governing law, the place of arbitration,
many aspects of the arbitral procedure and, of course,
arbitrators whom they believe will ensure a fair hearing
of their case.
However, arbitration is not right for every party in every
situation. It might have drawbacks, depending upon
a partys particular circumstances and objectives. It is
therefore necessary to make a considered decision in each
case.
This Guide is designed to help with that decision and, where
appropriate, to assist in the drafting of arbitration provisions.
Although an arbitration clause need not be complicated, as
the source of the arbitrators mandate, it is critical.
Unlike courts, arbitral tribunals have no inherent power or
jurisdiction. Their authority arises from the parties contract
(albeit that, once selected by the parties, arbitration
has the backing of statutes and treaties). It is therefore
particularly important to take care in drafting the arbitration
provisions. Once a dispute has arisen, self interest will
often mean that it is too late to reach further agreement
upon how it should be resolved.
In short, whilst this Guide is not a comprehensive treatise
on arbitration or a substitute for specialist advice, it
provides convenient and practical assistance in relation
to the principal matters to be addressed.
CHAPTER I
What is Arbitration?
Arbitration is a private form of binding dispute resolution,
conducted before an impartial tribunal, which emanates
from the agreement of the parties but which is regulated
and enforced by the state. The state requires the
parties to honour their contractual obligation to arbitrate,
provides for limited judicial supervision of arbitral
proceedings and supports the enforcement of arbitral
awards in a manner similar to that for national court
judgments.
Arbitrations are typically conducted by either one or
three arbitrator(s), referred to in each case as the
tribunal. The tribunal is the equivalent of a judge
(or panel of judges) in a court action. However, the
arbitrators are generally selected by the parties (either
directly or indirectly through a third party or institution)
and, as a result, the parties maintain some control
over who is to determine their dispute. Arbitrators in
international cases are usually very experienced lawyers
and/or experts in the field in which the dispute has arisen.
The tribunals powers and duties are fixed by the terms
of the parties agreement (including, in particular, any
arbitration rules which have been adopted) and the
national laws which apply in each case.
Under most leading legal systems, arbitrators are obliged
to make their awards according to the applicable law
unless the parties have agreed otherwise (for example,
by empowering the tribunal to decide in accordance with
what it perceives to be fair). The tribunal is obliged to
follow due process and ensure that each party has a
proper opportunity to present its case and defend itself
against that of its opponent. However, in other respects,
the procedure can be very flexible.
National laws generally recognise and support arbitration
as a mutually exclusive alternative to litigation as a
means of finally resolving disputes. Some practitioners
Latham & Watkins | Guide to International Arbitration
(particularly in the US) therefore refer to arbitration

as a form of alternative dispute resolution (ADR).
However, the acronym ADR is more often used to
describe non-binding procedures (such as mediation),
thereby distinguishing between litigation and arbitration
on the one hand, and ADR on the other.
In fact, non-binding procedures are not really an
alternative to litigation and arbitration because, unless
the parties reach a settlement, they must still resort to
a binding procedure, such as arbitration or litigation,
to resolve their dispute. This has caused some to
redefine ADR as amicable dispute resolution, thereby
emphasising that that mediation and related approaches
depend upon the voluntary cooperation and agreement
of the parties.
Arbitration is also to be distinguished from binding
expert determination. As the procedures for both can
largely be prescribed in the parties contracts, they can
take very similar forms. On a decision-making level, the
distinction is that whilst the arbitrators may be selected
for their experience in particular fields, they are tasked
with deciding the dispute primarily upon the basis of the
parties submissions and the applicable law, whereas
experts use their own knowledge to come to their
decision.
The distinction between arbitration and expert
determination can be very important because, whereas
arbitration is normally regulated by national arbitration
laws, which safeguard the constitution of the tribunal
and the procedure followed, expert determination
is virtually unregulated. In the international context,
arbitration also benefits from enforcement conventions
which allow the direct enforcement of awards. The
decisions of experts only have the force of contract and,
to enforce them, a new action must be brought in the
appropriate jurisdiction for breach of contract.
2
CHAPTER II
When Should Provision

for Arbitration be Made?
Parties should consider whether or not to provide for
arbitration every time they enter into a contract. However,
it is particularly important to do so where the parties
(or their assets) are in different jurisdictions or where
disputes might give rise to complex technical issues.
Lawyers commonly refer to the advantages and
disadvantages of arbitration. However, whether any given
feature of arbitration is an advantage, a disadvantage
or of no interest to a party is entirely dependent upon its
objectives. We have therefore simply placed the features
which most often prove conclusive in the decision-making
process towards the top of the list that follows.
Enforceability: Due to international conventions, the
potential for enforcing arbitral awards worldwide is
much greater than that for court judgments. As there is
little point in obtaining a court judgment which cannot
be enforced against suitable assets, this feature often
conclusively determines the choice of arbitration for
international contracts. The most important enforcement
convention (although there are others) is the 1958 United
Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (known as the New York
Convention). More than 145 countries are party to the
New York Convention, each of which broadly agrees to
enforce arbitral awards made in other contracting states
subject only to limited grounds for objection. The parties
to the New York Convention are listed in Annex 2. There
is no such wide-ranging convention providing for the
enforcement of court judgments (the closest being the
Brussels Regulation, which is limited to parties in Europe).
Neutrality: A party to an international contract will often
wish to avoid resolving disputes through the local courts
of another party. Arbitration provides the opportunity for
neutral dispute resolution (e.g., with international rules
being applied by a multinational tribunal in a mutually
acceptable venue).
3
Confidentiality: Although the degree of confidentiality

afforded by the arbitration law of different jurisdictions
(absent express provision by the parties) varies, there
can be no doubt that arbitration provides greater privacy
and confidentiality than litigation (which is often public).
Further, parties can provide for the required degree of
confidentiality in their arbitration agreement (at least until
such time, if ever, that enforcement through the courts
becomes necessary, when confidentiality might be put at
risk by the court process, and subject to any mandatory
reporting obligations).
Technical expertise and experience: The parties can
select arbitrators with relevant expertise or experience.
Although some jurisdictions have very good specialist
courts (e.g. the Commercial Division of the New York
Supreme Court and the English Technology and
Construction Court), in others, parties run the risk of
their dispute being decided by a judge with little or no
relevant experience.
Procedural simplicity and flexibility: Arbitration rules
are generally far simpler and more flexible than court
rules. As a result, they are relatively easy to understand
for parties of different nationalities, the proceedings are
more easily focused on the substantive issues and the
parties are better able to adapt the dispute resolution
process to suit their relationship and the nature of their
disputes. In many cases, parties (or tribunals exercising
discretion left to them by the parties) choose to follow a
procedure which is similar to court procedures, although
they might change, for example, the scope of disclosure
or waive rights of appeal. However, in some cases,
parties go much further, waiving the right to an oral
hearing or empowering the tribunal to decide according
to principles of fairness rather than according to the
law. Of course, a potential drawback arising from the
flexibility and the generality of arbitration rules is that,
4
Chapter II (continued)
where the parties do not reach agreement in advance,

there is a greater risk of debate over procedure, which
can cause uncertainty and lead to delays.
Choice of arbitrators: Unlike court proceedings, where
parties generally have no input into the choice of judge
for their case, the parties to an arbitration usually appoint,
nominate or at least have some input into the selection of
the arbitrator(s). Most developed arbitration laws require
that all of the arbitrators be impartial. However, a party
can use its choice or input into the selection process
to help ensure that, as far as possible, the tribunal will
understand the commercial context, the relevant issues
and the partys procedural preferences. The parties may
agree upon certain criteria for the arbitrators, or for the
presiding arbitrator, although care should be taken not
to narrow the field so far that there are difficulties in
identifying potential candidates. In arbitrations with more
than one party on either side, or where other parties
might be joined in to the proceedings, maintaining the
parties right to choose the arbitrators (rather than simply
delegating the choice to an institution) can be particularly
challenging. For example, if one party has the right to
select an arbitrator but two parties on the other side
cannot agree upon a joint selection, the latter could
claim that they were not being treated equally. Careful
consideration as to the means of appointing the arbitrators
is therefore required in such multi-party scenarios.
Cost: There is no simple answer as to whether arbitration
is cheaper than litigation. As legal fees generally account
for the majority of the costs of proceedings (whether
arbitration or litigation), the controlling factors are largely
the complexity of the dispute, the way the proceedings
are conducted and their length. In arbitration, parties
have to pay for the arbitrators, any administering
institution and the hiring of venues for hearings. On
the other hand, there are no court fees and parties are
free to agree to a process tailor-made for their dispute.
This might, for example, be a streamlined, fast track
procedure (although inflexible and unrealistic schedules
can be problematic). Significantly, parties to international
contracts normally agree that there is no right of appeal
(on the merits) from any award (potentially saving
years of further proceedings). In any event, in many
5
. . . whether any given feature of arbitration

is an advantage, a disadvantage or of no
interest to a party is entirely dependent
upon its objectives.
jurisdictions, awards may only be reviewed in strictly

limited circumstances. International arbitral tribunals are
generally empowered to award the successful party the
majority, or at least a measure, of its costs, although
practice varies depending on the applicable rules/law and
the composition of the tribunal.
Pre-emptive remedies: Whilst arbitral tribunals are often
empowered (by the parties or the applicable law) to grant
preliminary relief, such as an order freezing assets, they
cannot impose criminal sanctions upon a defaulting party.
For this reason, and to allow relief before the tribunal has
been appointed, arbitration rules/laws commonly allow
parties to apply to courts for interim relief (as distinct from
a hearing of the merits of the case).
Joinder of parties and related disputes: In contrast
to court proceedings, it is generally necessary to obtain
all parties consent before additional parties or related
disputes can be joined to an existing arbitration. Whilst
a few national legal systems (e.g., the Netherlands)
allow parties to apply to the courts to order a third
party to be joined to an arbitration, this is unusual.
Where consideration to this issue is given at the time
the contract is drafted, the difficulty can be addressed by
appropriate provisions in the arbitration agreement. In
essence, such provisions record the parties consent to
joinder in advance of the situation arising, and set out a
procedure for the joinder to take place. In multi-contract
and/or multi-party transactions, provisions for joinder
can become complicated and require considerable care
in drafting. However, if provision is not made before a
dispute arises, it will often be difficult to obtain all of the
parties consent because of their differing self-interests.
In such circumstances, relevant parties will have to
decide whether or not to pursue separate proceedings
in relation to the third party.
6
CHAPTER III
The Tribunal
In the vast majority of cases, the arbitral tribunal consists
of either one or three arbitrators. The choice between
one or three arbitrators can be made in advance or left
for agreement between the parties (or for decision by an
arbitral institution or appointing authority) after the dispute
has arisen.
Arbitration with a sole arbitrator is generally cheaper than
using three arbitrators, both because of the savings in
arbitrators fees and because he or she can conduct the
proceedings more quickly, without the need to coordinate
with two other busy professionals. However, providing for
a sole arbitrator means that the parties cannot each select
or nominate an arbitrator and, of course, the proceedings
revolve around just one decision-maker. In addition, the
exchanges and interplay among the arbitrators in a threemember panel can sometimes give more insight into the
tribunals decision-making process, allowing a party to alter
its strategy accordingly. For these reasons, high-value and
complex international disputes are generally referred to
three arbitrators.
Parties usually seek advice from their

lawyers as to suitable arbitrators.
When we advise in this regard, we
draw upon our experience of persons
with the required attributes . . .
The major arbitration rules (and many national laws)
provide methods for the appointment of the tribunal in
default of agreement between the parties. In general, sole
arbitrators are selected by agreement between the parties
or, if no agreement is reached within the allotted time, by
the chosen appointing authority (or, if none, the relevant
court). Where three arbitrators are to be appointed, two
of them are normally selected by the parties, with the

Chairman or President being chosen either by the two
party-selected arbitrators or by the appointing authority
(or court).
The parties can require that the arbitrators (or the
Chairman) possess specified qualities (e.g., persons in
practice for at least 10 years or of different nationalities
from the parties or with experience in international
financial transactions). The arbitrators need not be
lawyers but, for high value international disputes, they
normally are.
Parties usually seek advice from their lawyers as to
suitable arbitrators. When we advise in this regard, we
draw upon our experience of persons with the required
attributes (including experience as an arbitrator) and work
with our client to identify those arbitrators who we would
expect to follow thought processes most in tune with our
clients case. Among the factors we consider are:
the candidates familiarity with the governing law and
the applicable arbitration rules;
the candidates background (e.g., legal training and
experience, experience in the relevant industry or
similar industries);
the language and the place of the arbitration;
the candidates writings (although many arbitrators are
guarded in their publicly expressed views) and past
decisions/awards to the extent known or available;
our interactions with the candidate in previous
arbitrations or at conferences, the views of our
colleagues and the candidates general reputation; and
the candidates ability to influence the selection of
the Chairman/President and the likelihood that the
candidates views will carry weight with the other
arbitrators during deliberations.
8
CHAPTER IV
The Choice of
Arbitration Rules
Many countries have arbitration laws which provide a legal
framework for the conduct of arbitrations. However, subject
to mandatory requirements of the applicable law, parties are
free to agree upon the procedure for their arbitration (or
simply accept the default procedure under that law). Rather
than drafting a custom-made procedure for each contract,
parties usually adopt (and modify as appropriate) a set of
tried and tested ready-made arbitration rules. These rules
(as amended or supplemented by the parties) are then
interpreted against the backdrop of the arbitration law of the
seat (legal place) of the arbitration.
Institutional arbitration
There are many arbitral institutions across the world: some
focus on disputes with a strong tie to the country or region
in which the institution is based, some focus on disputes in
particular subject matters and some are fully international
in scope and are used by parties throughout the world. We
focus below on three pre-eminent international institutions,
which are widely used and provide a good basis for
discussing the factors to be considered when choosing
institutions and rules:
The International Court of Arbitration of the
International Chamber of Commerce (ICC). The
ICC, which is based in Paris, was established in 1923.
It is probably the best known international commercial
arbitration institution. For further information, see
www.iccwbo.org;
The London Court of International Arbitration
(LCIA). The LCIA, which is based in London, was
established in 1892. It is Europes second leading
international arbitration institution (after the ICC)
and is very well known internationally. The LCIA has
affiliated arbitral institutions in Dubai (DIFC-LCIA), India
(LCIA India) and Mauritius (LCIA-MIAC). For further
information, see www.lcia.org; and
There are many arbitration rules to choose

from and, in considering the selection, it is
useful to distinguish between arbitrations
which are to be administered by institutions
(institutional arbitrations) and those
which are not (non-administered and
ad hoc arbitrations).
The International Centre for Dispute Resolution

(ICDR). The ICDR is a part of the American
Arbitration Association (AAA), which was established
in 1926, and is the best known arbitral institution in the
US. The AAA administers a large number of domestic
disputes through its network of US offices. The ICDR
administers international arbitrations (pursuant to its
International Arbitration Rules). For further information,
see www.adr.org.
(For details of many more arbitration institutions by
region, see Annex 3.)
The rules of the ICC, LCIA and ICDR are all suitable for
use around the world and for arbitrations conducted in
various languages and under various governing laws. In
each case, it is for the arbitrators to resolve the dispute,
with the institutions simply administering the arbitrations.
In this capacity, the ICC, LCIA and ICDR each receive
and distribute the parties initial submissions, assist
with the appointment of the tribunal (with or without
party-nominations) and resolve any challenges that a
party may make against an arbitrator. The arbitration
rules of each institution are broadly similar: all leave a
considerable degree of flexibility with the parties
and the tribunal. What particularly distinguishes
10
Chapter IV (continued)
these institutions from each other are the degree of

administration (or supervision) their rules entail and their
fee structure.
Degree of administration
The ICC procedure is more actively administered,
involving two additional steps not found in many other
rules (such as those of the LCIA and ICDR):
the preparation of Terms of Reference, a document
which defines the scope of the arbitration by setting
out the basic claims and defences, the relief sought
and the issues to be addressed; and
the scrutiny of draft awards, especially as regards
issues which might affect their enforceability, by the
ICC Court before the final awards can be issued to
the parties.
The value of these supervisory functions must be
weighed up against the likely additional time and cost to
be devoted to them.
In contrast, the procedures under the LCIA and ICDR
Rules are lightly administered, with the role of the LCIA
and the ICDR in each case being primarily concerned
with the appointment of (and challenges to) the tribunal.
There is no formal requirement for Terms of Reference
or the scrutiny of draft awards.
Fee structure
The fees of the ICC and tribunals appointed pursuant
to its Rules are based upon the amount in dispute.
The ICC requires payment of two advances on the
estimated fees and costs at the start of the process:
a provisional advance to cover the period until the
Terms of Reference; and then a full advance to cover
the rest of the arbitration (although this can be adjusted
later if deemed appropriate). In high value disputes,
this requires parties to pay (or guarantee payment of)
substantial sums up front.
By contrast, the LCIA charges (for itself and the
arbitrators) according to the time actually spent. The
fee rates which the LCIA agrees with arbitrators are
11
Many countries have arbitration laws which

provide a legal framework for the conduct
of arbitrations.
generally far lower than those same arbitrators would

seek to charge if approached directly by the parties.
Although the ICDRs administrative fees are based upon
the amount in dispute, the tribunals fees (as with the
LCIA) are calculated according to the time spent.
There are differing views as to which fee structure
generally works best and, in any event, their suitability
for each case will vary according to factors such as
the amount in dispute and the time taken and effort
required by the arbitrators to bring the proceedings to a
conclusion.
Unadministered and ad hoc arbitrations: the

UNCITRAL Rules and pure ad hoc arbitrations
under national arbitration laws
Although some practitioners refer to all non-institutional
arbitration as being ad hoc, there is a useful distinction
to be made between arbitration under the UNCITRAL
Rules and arbitration which is purely under a national
law.
The UNCITRAL Rules (developed by the United
Nations Commission on International Trade Law) were
originally developed as a neutral alternative to the other
major rule systems which, fairly or not, were viewed
with scepticism in many capital-importing countries.
However, they have been widely used in both general
commercial transactions and arbitrations between
states and individuals (they were used as the basis for
the Iran-US Claims Tribunal Rules and for a number
of Bilateral Investment Treaties). They have also
influenced other rule systems.
12
Although there is no administering institution under

the UNCITRAL Rules, parties commonly designate
an appointing authority to appoint the arbitrator(s)
if the system of party appointments breaks down,
and to deal with any challenges to the arbitrators.
Many arbitral institutions (such as the ICC, the LCIA
and the ICDR) will serve as an appointing authority
under the UNCITRAL Rules for a fee. If no appointing
authority is designated and the system of party
appointments breaks down, all is not lost as, pursuant
to the UNCITRAL Rules, the Secretary General of the
Permanent Court of Arbitration in The Hague (a body
created by the 1899 Hague Convention for the Pacific
Settlement of International Disputes) will appoint an
appointing authority. However, this additional step is
best avoided by the parties designating the appointing
authority in advance.
Rather than drafting a custommade procedure for each

contract, parties usually adopt
(and modify as appropriate)
a set of tried and tested
ready-made arbitration rules.
Most jurisdictions allow parties to agree to arbitrate
without them having to specify any rules or procedures.
In such event, the procedure for the appointment of the
tribunal and the conduct of the arbitration generally will
be that provided by the law of the seat of the arbitration.
However, many national arbitration laws make only
limited provision for the procedure to be followed,
leaving it to the parties and the tribunal to decide how
the arbitration will be conducted (which can lead to
disagreement and delay at the outset).
Ad hoc arbitration often arises because parties do
not agree upon (or simply fail to provide for) any
institutional rules. Parties may, for example, agree
13
Ad hoc arbitration often arises because

parties do not agree upon (or simply fail to
provide for) any institutional rules.
that any arbitration shall be conducted pursuant to a

particular national law. However, in an international
context, parties should first satisfy themselves that they
are content with the relevant legislation and that they
are willing to go to the local courts where necessary to
resolve difficulties.
Parties sometimes also believe that, by avoiding the
fees of arbitral institutions, ad hoc arbitration might
prove cheaper than institutional arbitration. Whilst
this is possible in theory, in practice, the benefits
of the institutions administrative services and the
lower charges of arbitrators under institutional rules
can easily outweigh the costs involved, especially in
connection with large and complex disputes, where
many procedural issues are likely to arise. Ad hoc
arbitration significantly increases the likelihood of court
intervention and these potentially significant costs must
also be considered. In the main, before selecting ad hoc
arbitration, parties should satisfy themselves that they
would not be better served by an institutional form of
arbitration or the use of the UNCITRAL Rules.
Important specialist international arbitration

organisations
There are also specialist arbitration organisations for
specific types of disputes, such as:
The International Centre for the Settlement
of Investment Disputes (ICSID). Based
in Washington, D.C., and operating under the
auspices of the World Bank, ICSID was established
pursuant to the 1965 Washington Convention on the
Settlement of Investment Disputes between states
and nationals of other states. ICSID is concerned
14
exclusively with disputes arising directly out of

an investment between a contracting state and a
national of another contracting state. Jurisdiction
is established on the basis of consent, contract,
local investment legislation or treaty rights. A rise
in investor-state disputes and the explosion in
Bilateral Investment Treaties which provide for ICSID
arbitration have made ICSID of increasing importance
in investor/state disputes. Investor-state disputes are
discussed in greater detail in Chapter VIII;
The World Intellectual Property Organisation
(WIPO) Arbitration and Mediation Center.
Established in Geneva in 1994 as an offshoot of WIPO
(itself an agency of the United Nations), the Center
provides arbitration and mediation services (under its
own rules) for intellectual property disputes; and
The China International Economic and Trade
Arbitration Commission (CIETAC). As many
Chinese counterparties insist upon CIETAC,
companies doing business in China might well find
themselves incorporating CIETAC provisions into
their agreements. CIETAC is one of the most active
arbitration centres in the world.
Summary overview
There are a large number of arbitral institutions and
rules to choose from, some appropriate for a wide range
of disputes and some only for specific types. Whilst
there may be certain advantages and disadvantages for
a party in using a particular set of rules, the ICC, LCIA,
ICDR and UNCITRAL Rules are largely interchangeable
and can all be selected for use wherever the arbitration
is to take place. However, some differences in drafting
might be advisable depending upon the rules selected
(for example, specifying an appointing authority in the
case of the UNCITRAL Rules).
15
CHAPTER V
The Place of Arbitration

There is an important distinction between the legal
place (the seat) of any arbitration and the place where
one or more of the hearings or other procedural steps
physically take place. Although the two often coincide
in practice, it is the seat which determines the legal
framework within which the arbitration takes place, not
the location where the parties or the tribunal choose (as
a matter of convenience) to meet.
When selecting the seat of arbitration, parties should
consider, in particular, the effect that this might have
upon the conduct of the arbitration and the potential
enforceability of the ultimate award.
The conduct of the arbitration

In choosing the seat of the arbitration, the parties
are selecting the procedural law which applies. For
example, by selecting London, England, as the seat,
the parties bring about the application of the 1996
Arbitration Act.
The procedural laws applicable in arbitration friendly
centres (such as London, New York, Paris, Hong Kong
and Singapore) have few mandatory provisions and
allow the parties considerable freedom to agree upon
the lawyers to represent them, the procedure to be
followed, the language of the arbitration and the tribunal
to decide their dispute. The result is that these centres
and the specialist lawyers, experts and technical staff
(such as translators, stenographers and IT personnel)
who service them are able to accommodate the
considerable diversity of disputes which arise in the
international arena. Arbitration is encouraged (often in
order to promote trade) and, accordingly, the role of the
courts is kept to a minimum, being primarily to support
the arbitration process and to assist, if necessary, with
the enforcement of the award.
17
In less arbitration-friendly countries, the courts have

greater powers to assume control over disputes within
their jurisdiction and tend to be more interventionist
(particularly where disputes have a political dimension).
There are also sometimes constraints upon the conduct
of the arbitration, such as the requirement to use locally
qualified lawyers and restrictions upon who can act
as arbitrators.
In choosing the seat of

arbitration, parties should
consider, in particular, the
effect that this might have
upon the conduct of the
arbitration and the potential
enforceability of the ultimate
award.
Enforceability of the award
The seat of arbitration is also of critical importance
to the enforceability of the resulting award pursuant
to the New York Convention. By becoming party to
the Convention, each of the states (see Annex 2) has
agreed, subject to limited grounds of refusal, to enforce
commercial arbitral awards made in other contracting
states. Accordingly, by selecting a state which is party to
the New York Convention as the seat for any arbitration,
parties provide considerable scope for enforcement of
their awards.
18
CHAPTER VI
Typical Steps in an
Arbitration
The procedure for an arbitration can take many forms.
In some arbitrations, parties agree that the dispute
shall be resolved upon the basis of written submissions,
without a hearing. In others, such as commodity
arbitrations, the parties rely very heavily upon the
arbitrators own expertise, blurring the distinction
between arbitration and expert determination (which
does not enjoy the statutory backing and enforcement
regimes applicable to arbitration).
Typically, a substantial international arbitration will

include most of the following steps (although some of
them may overlap or take place simultaneously):
Claimants Request for Arbitration, including at least a
summary of the claims
Respondents Answer, which will indicate any
counterclaims to be made
Claimants Reply to Counterclaim (if appropriate)
Appointment of the tribunal
Procedural hearing setting the steps and timetable for
the arbitration
Claimants full Statement of Case (if not served with
the Request for Arbitration)
Respondents full Defence and Counterclaim (if not
served with the Answer)
Claimants Reply and Defence to Counterclaim
19
For a substantial and complex dispute,

an arbitration typically takes about 12-18
months from commencement to the final
hearing, although it can be shorter or longer
depending upon, for example, the procedures
adopted, the availability of the tribunal and
the parties conduct.
Disclosure of the documents relied upon or of

the (often very limited) categories of documents
requested by the other party
Exchange of witness statements (sometimes
followed by rebuttal statements)
Exchange of expert reports (sometimes followed by
rebuttal reports)
Meeting of experts to narrow issues and joint
statement of matters agreed/in dispute
Exchange of pre-hearing submissions
Hearing
Post-hearing submissions
Award
20
CHAPTER VII
Checklist of Areas
to Consider
Model arbitration clauses promulgated by the ICC,
LCIA, ICDR and UNCITRAL are set out in Annex 1.
However, those model clauses are very basic and might
well require adaptation to suit the needs of a particular
case. We set out below a checklist of the principal
matters to be considered in drafting an arbitration
agreement (or determining whether and, if so, how to
modify one of the model clauses).
ADR: The parties might wish to include provision for
them to attempt an ADR procedure (such as mediation)
prior to commencing (and as a means of potentially
avoiding) arbitration. A sample ADR and arbitration
clause is set out in Annex 1.
Parties are always free to agree to an ADR procedure
at any stage, but providing for it in advance avoids
concerns that proposing ADR after a dispute has arisen
might be seen as a sign of weakness. However, parties
might be more inclined to settle (in which case ADR
proceedings will have a greater chance of success)
after a dispute has reached a stage where their
respective positions are better defined.
There are a number of organisations which will assist
parties with ADR procedures, such as CEDR (Centre for
Effective Dispute Resolution), which is based in London,
and the Center for Public Resources, which is based
in the US. Many arbitral institutions, including the ICC,
LCIA and ICDR will also administer ADR proceedings.
Option clauses: Parties sometimes wish to provide
an option for one or more parties to choose between
referring a dispute to arbitration or the courts. As well
as raising drafting issues, this requires careful legal
analysis as, under some laws (but not English law),
option clauses can, by their very nature, invalidate the
arbitration provision (for uncertainty or, where the option
is one-sided, lack of mutuality).
21
Capacity/authority: The capacity and/or authority of

the parties and signatories to the arbitration agreement
should be checked. For example, some laws require
governmental entities to obtain parliamentary (or other)
approval before executing an arbitration agreement.
Mandatory requirements: The governing law of the
arbitration agreement and/or the law of the seat of
arbitration and/or the law of the place of enforcement
might impose mandatory requirements on the parties as
to the form and/or contents of the arbitration agreement
(especially if a governmental party is involved). For
example, the arbitration agreement might have to be
initialled or signed, the seat might have to be that of a
governmental party and/or the involvement of an arbitral
institution might have to be clearly stated.
Scope and arbitrability: The parties should decide
what disputes they wish to be referred to arbitration.
Generally, clauses are drafted very broadly so as to
capture all disputes which might arise between the
parties. However, sometimes parties wish certain
categories of disputes to be resolved by other means,
such as expert determination. This requires careful
drafting, including provision for the resolution of
disputes regarding the category into which a dispute
falls. It should also be noted that, as a matter of public
policy, some disputes might not be arbitrable under the
applicable law.
The tribunal and its powers: The selection of the
tribunal is addressed in Chapter III. The parties should
also consider the powers of the tribunal under the
chosen rules and applicable law, and whether they
wish to adjust or clarify them by express provision (for
example, the parties might prohibit awards of punitive
damages or empower the tribunal to reach a decision
in simple cases upon documents alone or to decide
22
Chapter VII (continued)
the dispute according to notions of fairness rather than

strictly according to the law).
Procedural rules, including disclosure/discovery:
The choice of suitable arbitration rules is addressed
in Chapter IV. Consideration should be given as to
whether, in light of the applicable law or otherwise, any
amendments should be made to the selected rules. For
example, whilst the ICC and LCIA Rules both exclude
any appeal to the courts on the merits of the dispute,
there is no such provision in the UNCITRAL Rules. The
incorporation of the UNCITRAL Rules into a contract
might therefore need to be supplemented by a specific
provision excluding any right of appeal under the
applicable law. Consideration might also be given as to
whether to provide for the application of the IBA Rules
on the Taking of Evidence in International Commercial
Arbitration, or the application or exclusion of other rules
addressing disclosure/discovery.
Seat: The selection of the seat of arbitration is
addressed in Chapter V.
Language: If the language of the arbitration might
otherwise be open to debate, it is preferable, in order to
save time and costs, to make an express selection in
the arbitration agreement. The language chosen should
generally be that of the underlying contract and/or the
majority of the documentation.
Governing law: Unless stated elsewhere, the
governing law of the contract (and, where there
might be some argument, the governing law of the
arbitration agreement) should be stated in the arbitration
agreement. If there is a separate governing law clause,
it is advisable to check that it does not also contain a
submission to courts which would be inconsistent with
the arbitration agreement.
Confidentiality: The extent to which (if at all) the
confidentiality of the arbitration will be protected by the
rules or applicable law varies and parties might wish to
make an express contractual provision.
23
The powers of the courts (including appeals): The

parties should consider the powers of the courts of the
seat under the selected rules and applicable law, and
whether they wish to adjust or clarify them by express
provision. Courts often have power to make orders in
support of the arbitration (for example, interim relief
prior to the appointment of the tribunal). They also
usually have limited powers to review the award. Court
powers to challenge the award for lack of jurisdiction
or procedural irregularities are usually (but not always)
mandatory. However, where the courts have power to
hear appeals against the award (such as the English
law right of appeal on a point of law) these can often be
excluded by agreement.
Multi-party/agreement issues: Where any disputes
might be between more than two parties and/or under
more than one contract, specific drafting issues might
arise. For example, where there are only two parties to
a dispute and they wish to appoint a tribunal of three
arbitrators, they often agree to select one each.
However, if there are three or more parties, this method
will not work. One common solution is for the claimant
parties to select one arbitrator and the respondent
parties another. However, this assumes that the
interests of the claimants and respondents respectively
are aligned. Moreover, in some jurisdictions (notably
France), concerns have been raised that stipulating
in advance that multiple parties must agree upon one
arbitrator between them (out of a tribunal of three)
might be held contrary to public policy. Where this is a
concern, parties can avoid the issue by, for example,
providing for a sole arbitrator or that all three arbitrators
are to be appointed by an appointing authority.
24
Chapter VII (continued)
Other multi-party/agreement issues arise out of the

fact that arbitration is based upon the contract between
the disputing parties. For example, it is generally not
possible to join a third party to an arbitration unless all
of the parties concerned agree (which, if you are likely
to want joinder, should preferably be done in advance
in the arbitration agreement). Where there are two or
more related contracts, this can be achieved by the
parties entering into a separate umbrella arbitration
agreement. This also provides the parties with an
opportunity to agree that the same tribunal will hear all
disputes between them and empower it to consolidate
related arbitrations where appropriate.
State immunity: Where a contract is to be made with
a state or one of its instrumentalities, consideration
should be given to the express waiver of any immunities
or privileges attaching to that party which might impact
upon the resolution of disputes. In particular, whilst
entering into an arbitration agreement will itself often
be treated as a waiver of any immunity from suit, an
express waiver will normally be required to deal with
immunity from enforcement of any award.
25
CHAPTER VIII
Arbitration Between
Foreign Investors and States
Arbitration between foreign investors and states
under bilateral investment treaties and multilateral
agreements
No guide to international arbitration would be complete
without a brief discussion of the availability of
international arbitration as a means to resolve disputes
between investors and states that fall within the scope of
bilateral investment treaties (BITs) or multilateral trade
agreements (such as the North American Free Trade
Agreement).
In recent years, the value and significance of arbitration
as a dispute resolution mechanism has grown as the
number of BITs has increased, and as foreign investors
(or their lawyers) have become progressively more
familiar with the substantive protections and procedural
rights that many BITs create. With more than 2,500 BITs
concluded throughout the world, savvy foreign investors
are wise to consider obtaining specialist legal advice
both when they structure a foreign investment, which
will determine whether these protections and rights
will ultimately be available, and after a dispute actually
arises. The discussion here is intended to introduce BITs,
but should not be understood to serve as a replacement
for that advice.
BITs: A BIT is a treaty between two states that is designed
to promote and reciprocally protect investments made by
nationals of one state (the home state) in the territory
of the other (the host state). BITs confer covered
investors with a wide range of legal rights that are directly
enforceable against the host state and usually provide
for international arbitration. Importantly, investors enjoy
these rights, including the right to enforce them through
international arbitration in a neutral forum, even if they are
not parties to a contract with the host state. In international
dispute resolution circles, this is commonly referred to as
arbitration without privity.
27
BITs confer covered investors with

a wide range of legal rights that
are directly enforceable against the
host state and usually provide for
international arbitration.
Core investment protections: Because each BIT
is a product of negotiations between two states, the
content and scope of the investment protections differ
from BIT to BIT. Nevertheless, there are a number of
core protections that are common to most BITs. These
include the following:
Protection against the expropriation of investments
or other forms of severe interference with property
rights, except where accompanied by the payment
of prompt, adequate and effective compensation.
It is generally understood that expropriation is not
limited to the outright nationalisation of a sector
or the seizure of a specific investment. Rather, it
encompasses actions tantamount to expropriation,
including incremental acts attributable to the state
that unreasonably interfere with an investment
to such a degree that the investor is essentially
deprived of its fundamental rights of ownership.
Whilst the line between expropriatory and nonexpropriatory state action is always case-specific,
tribunals have concluded that actions such as the
forced renegotiation of contracts and the cancellation
of an operating licence can give rise to a right to
compensation.
The right to fair and equitable treatment and
full protection and security to investors and their
investments. This standard is understood to protect
investors against arbitrary, deliberate or grossly
28
Chapter VIII (continued)
careless actions by host states that harm the investors

legitimate interests. This standard could be breached,
for example, if the host state manifestly disregarded
an investment agreement or failed to implement the
required authorisations for an approved investment
project. Since the judiciary is an organ of the state,
this standard could similarly be breached if an investor
faced a denial of justice before the courts or the host
state.
Prohibition against discriminatory treatment, frequently
combined with a requirement that the host state treat
investors no less favourably than it treats its own
nationals or the nationals of any third state (also
known as most-favoured-nation or MFN treatment).
This basic protection allows investors to rely on and
invoke more favourable provisions in other investment
treaties binding on the host state, as well as how the
host state has actually treated other investors in like
circumstances.
The right to transfer funds into and out of the host state,
in freely transferable currency and without delay. This
protection would include, for instance, the right to make
dividend or debt payments outside of the host state.
The right to resolve disputes directly with the host
state through international arbitration: Most modern
BITs allow foreign investors to enforce their treaty rights
directly against the host state through international
arbitration. The most frequent types of arbitration specified
in BITs are institutional arbitrations under the auspices
of ICSID and ad hoc arbitrations using the UNCITRAL
Rules. Significantly, a series of recent decisions rendered
by ICSID tribunals confirm that when an investor pleads
that the host state has violated the rights established by
a BIT, the investor has a right to arbitrate under the BIT
even if the same conduct would also constitute a breach
of contract, and the underlying contract limits recourse
to the host states courts or some other form of dispute
resolution.
Conclusion: The degree of the legal protections
granted by most BITs is significant, both in terms of the
substantive and procedural rights they create, and in
terms of the types of investments that they cover (ranging,
for instance, from tangible property such as a factory or an
29
If an investor is to maximise the possible

benefits of BIT protection against the host
state, the key time for the investor to consider
whether a BIT will be available is when it
structures the investment.
oil field, to intangible property such as concession rights,

shares in a corporation, a licence or IP rights). Whilst it is
natural for an investor to consider what, if any, recourse
it may have under a BIT once a dispute has materialised,
in some cases this may be too late. If an investor is to
maximise the possible benefits of BIT protection against
the host state, the key time for the investor to consider
whether a BIT will be available is when it structures the
investment. For instance, all other things being equal,
an investor might decide to invest through a subsidiary
incorporated in a state which has a comprehensive BIT
in force with the host state, rather than a subsidiary
incorporated in a state that does not.
Although this is not an exhaustive list, these are the types
of questions that an investor should take into account at
the project formation and contract negotiation stages:
What BITs or other investment treaties are in effect with
the host state?
What is the scope of those BITs or other investment
treaties? How do they define covered investors and
investments? Do they require investment registration?
What substantive rights do they confer?
Does it make sense to structure the company making
the investment so that it is directly or indirectly
controlled by a national of a state that is party to a BIT
or another investment treaty?
If the investment vehicle is an offshore entity organised
in an overseas territory of another state (such as
Bermuda, the British Virgin Islands, the Cayman Islands
or the Netherlands Antilles), has the state extended the
treaty to cover investors from that territory? If not, does
it make sense to re-structure the investment vehicle in
another territory?
30
ANNEX 1
Model Arbitration Clauses

The following standard clauses are recommended
by their respective organisations as basic provisions
for arbitration. However, the clauses might well need
amending to suit the needs of particular cases (see
the checklist for drafting an arbitration agreement in
Chapter VII).
ICC
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.
LCIA
Any dispute arising out of or in connection with this
contract, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved by arbitration under the Rules of the LCIA,
which Rules are deemed to be incorporated by
reference into this clause.
The number of arbitrators shall be [one / three].
The seat, or legal place, of arbitration shall be [city
and / or country].
The language to be used in the arbitral proceedings
shall be [ ].
The governing law of the contract shall be the
substantive law of [ ].
ICDR International Rules

Any controversy or claim arising out of or relating to
this contract, or the breach thereof, shall be determined
by arbitration administered by the International
Centre for Dispute Resolution in accordance with its
International Arbitration Rules.
31
The ICDR also provides the following guidance:

The parties should consider adding:
The number of arbitrators shall be (one or three).
The place of the arbitration shall be
[city, (province or state), country].
The language(s) of the arbitration shall be [ ]".
UNCITRAL
Any dispute, controversy or claim arising out of or
relating to this contract, or the breach, termination
or invalidity thereof, shall be settled by arbitration in
accordance with the UNCITRAL Arbitration Rules.
The following guidance is provided:
Note: Parties should consider adding:
a) The appointing authority shall be ... [name of
institution or person].
b) The number of arbitrators shall be ... [one or three].
c) The place of arbitration shall be ...
[town and country].
d) The language to be used in the arbitral proceedings
shall be [ ].
A sample ADR and arbitration provision

If any dispute, controversy or claim arises out of or in
connection with this contract, including any question
regarding its existence, validity, interpretation, breach
or termination (a Dispute), it shall be referred, upon
written notice (a Dispute Notice) given by one party
to the other, to a senior executive from each party.
32
Annex 1 (continued)
The senior executives shall seek to resolve the Dispute

on an amicable basis within 14 days of the Dispute
Notice being received.
Any Dispute not resolved within 14 days of the Dispute
Notice being received may be referred by either party
to mediation before a mediator to be agreed between
the parties or, failing such agreement, to be appointed
by [CEDR / CPR]. The parties shall share (equally)
the costs of the mediator, the mediation venue and
[CEDR / CPR].
If either party fails or refuses to agree to or participate
further in the mediation procedure or if, in any event,
the Dispute is not resolved within 35 days from receipt
of the Dispute Notice, the Dispute shall be referred to
and finally resolved by arbitration pursuant to the Rules
of the [ICC / LCIA], which Rules are deemed to be
incorporated by reference into this Clause.
The tribunal shall consist of three arbitrators, two of
whom shall be nominated by the respective parties.
The Chairman of the tribunal shall be nominated by
agreement between the two party-nominated arbitrators
within 14 days of the nomination of the second such
arbitrator. Failing such agreement, the Chairman shall
be appointed by the [ICC / LCIA Court].
The seat of arbitration shall be [ ].
The language of the arbitration shall be [ ].
The governing law of this contract shall be the
substantive law of [ ].
33
ANNEX 2
New York
Convention States
The 1958 New York Convention on the Recognition
and Enforcement of Foreign Arbitral Awards provides
for the enforcement of arbitral awards in more than 145
countries worldwide, subject only to limited defences
set out in the Convention. To take advantage of the
Convention, it is often necessary for the award to be
made in a country that is a party to the Convention.
Key Articles of the Convention

Article III of the Convention sets out the basic obligation
undertaken by contracting states, being to recognise
and enforce foreign arbitral awards:
Each Contracting State shall recognize arbitral awards
as binding and enforce them in accordance with the rules
of procedure of the territory where the award is relied
upon, under the conditions laid down in the following
articles. There shall not be imposed substantially more
onerous conditions or higher fees or charges on the
recognition or enforcement of arbitral awards to which
this Convention applies than are imposed on the
recognition or enforcement of domestic arbitral awards.
Article V of the Convention sets out the limited grounds
upon which contracting states may refuse to recognise
and enforce foreign arbitral awards:
1. Recognition and enforcement of the award may
be refused, at the request of the party against
whom it is invoked, only if that party furnishes to
the competent authority where the recognition and
enforcement is sought, proof that:
a) The parties to the agreement referred to in article
II were, under the law applicable to them, under
some incapacity, or the said agreement is not valid
under the law to which the parties have subjected
it or, failing any indication thereon, under the law of
the country where the award was made; or
35
b) The party against whom the award is invoked was

not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was
otherwise unable to present his case; or
c) The award deals with a difference not contemplated
by or not falling within the terms of the submission
to arbitration, or it contains decisions on matters
beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted
to arbitration can be separated from those not so
submitted, that part of the award which contains
decisions on matters submitted to arbitration may
be recognized and enforced; or
d) The composition of the arbitral authority or the
arbitral procedure was not in accordance with
the agreement of the parties, or, failing such
agreement, was not in accordance with the law of
the country where the arbitration took place; or
e) The award has not yet become binding on the
parties, or has been set aside or suspended by
a competent authority of the country in which, or
under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award
may also be refused if the competent authority in the
country where recognition and enforcement is sought
finds that:
a) The subject matter of the difference is not capable
of settlement by arbitration under the law of that
country; or
b) The recognition or enforcement of the award would
be contrary to the public policy of that country.
36
Annex 2 (continued)
Convention states
The following states had acceded, ratified or succeeded
to the Convention as of 15 February 2013:
Afghanistan
Czech Republic
Albania
Denmark
Algeria
Djibouti
Antigua and Barbuda
Dominica
Argentina
Dominican Republic
Armenia
Ecuador
Australia
Egypt
Austria
El Salvador
Azerbaijan
Estonia
Bahamas
Fiji
Bahrain
Finland
Bangladesh
France
Barbados
Gabon
Belarus
Georgia
Belgium
Germany
Benin
Ghana
Bolivia (Plurinational State of)
Greece
Bosnia and Herzegovina
Guatemala
Botswana
Guinea
Brazil
Haiti
Brunei Darussalam
Holy See
Bulgaria
Honduras
Burkina Faso
Hungary
Cambodia
Iceland
Cameroon
India
Canada
Indonesia
Central African Republic
Iran (Islamic Republic of)
Chile
Ireland
China
Israel
Colombia
Italy
Cook Islands
Jamaica
Costa Rica
Japan
Cte dIvoire
Jordan
Croatia
Kazakhstan
Cuba
Kenya
Cyprus
Kuwait
37
Kyrgyzstan
Romania
Lao Peoples Democratic Republic
Russian Federation
Latvia
Rwanda
Lebanon
Saint Vincent and

the Grenadines
Lesotho
Liberia
Liechtenstein
Lithuania
Luxembourg
Madagascar
Malaysia
Mali
Malta
Marshall Islands
Mauritania
Mauritius
Mexico
Monaco
Mongolia
Montenegro
Morocco
San Marino
Sao Tome and Principe
Saudi Arabia (Kingdom of)
Senegal
Serbia
Singapore
Slovakia
Slovenia
South Africa
Spain
Sri Lanka
Sweden
Switzerland
Syrian Arab Republic
Tajikistan
Thailand
Nepal
The Former
Yugoslav Republic
of Macedonia
Netherlands
Trinidad and Tobago
New Zealand
Tunisia
Nicaragua
Turkey
Niger
Uganda
Nigeria
Ukraine
Norway
United Arab Emirates
Oman
United Kingdom of Great Britain

and Northern Ireland
Mozambique
Pakistan
Panama
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Republic of Korea
United Republic of Tanzania

United States of America
Uruguay
Uzbekistan
Venezuela (Bolivarian Republic of)
Vietnam
Zambia
Zimbabwe
Republic of Moldova
38
ANNEX 3
Arbitral Institutions
The following is a non-exhaustive list, by region, of
some of the best known arbitral institutions:
Asia
China: the China International Economic and
Trade Arbitration Commission (CIETAC visit
www.cietac.org);
Hong Kong: the Hong Kong International Arbitration
Centre (HKIAC visit www.hkiac.org);
India: LCIA India (visit www.lcia-india.org);
Japan: the Japanese Commercial
Arbitration Association (JCAA visit
www.jcaa.or.jp); and
Singapore: the Singapore International Arbitration
Centre (SIAC visit www.siac.org.sg).
Europe
Austria: the International Arbitration Centre for
the Austrian Federal Economic Chamber (visit
www.wko.at/arbitration);
England: the London Court of International
Arbitration (LCIA visit www.lcia.org);
France: the International Court of Arbitration of the
International Chamber of Commerce (the ICC visit
www.iccwbo.org);
Germany: the German Institute of Arbitration (DIS
visit www.dis-arb.de);
39
The Netherlands: the Netherlands Arbitration

Institute (NAI visit www.nai-nl.org);
Sweden: the Arbitration Institute of the
Stockholm Chamber of Commerce (SCC visit
www.sccinstitute.com); and
Switzerland: the Swiss Arbitration Association
(ASA visit www.arbitration-ch.org); the
Chamber of Commerce & Industry of Geneva (visit
www.ccig.ch); the Zurich Chamber of Commerce
(visit www.zurichcci.ch); the World Intellectual
Property Organisation (WIPO) Arbitration and
Mediation Centre (visit www.wipo.int).
Middle East and Africa

Bahrain: the Bahrain Chamber for Dispute
Resolution ("BCDR-AAA" visit www.bcdr-aaa.org);
Dubai: the Dubai International Arbitration Centre
(visit www.diac.ae);
Egypt: the Cairo Regional Centre for International
Commercial Arbitration (visit www.crcica.org.eg); and
Mauritius: the LCIA-MIAC Arbitration Centre (visit
www.lcia-miac.org);
The United States

The American Arbitration Association
(AAA visit www.adr.org); and
The International Centre for Settlement of Investment
Disputes (ICSID visit www.icsid.worldbank.org).
40
ANNEX 4
Glossary
AAA: The American Arbitration Association see Ch. IV and
visit www.adr.org.
ADR: Alternative Dispute Resolution see Ch. I.
Ad hoc arbitration: An arbitration which is not administered
by an institution see Ch. IV.
Amiable compositeur: A tribunal empowered to decide a
dispute in accordance with its notions of fairness / ex aequo
et bono / according to equity, rather than being bound to
decide according to the parties strict legal rights. The effect of
empowering a tribunal in this way differs depending upon the
applicable law. For example, under English law it might rule out
any possibility of an appeal on a question of law.
Appeal: Referral of an award to another tribunal or to a national
court for reconsideration of its merits. For many arbitrations,
there is no right of appeal, either because the applicable law
does not provide such a right or because the parties have
waived it. Appeals should not be confused with challenges
see below. See also Remission and Set aside below.
Applicable law: The law which applies. Many international
arbitrations require the application of more than one law. See
also Governing law, Lex arbitri, Lex fori, Lex mercatoria
and Procedural law below.
Arbitrability: Whether, under the applicable law, a particular
dispute can be settled by arbitration. This is essentially a
question for the public policy of the state in question, and which
types of dispute (for example, bankruptcy, matrimonial and
criminal matters) it wishes to reserve to the jurisdiction of its
national courts. If a dispute is not arbitrable under an applicable
law (for example, the law of the agreement, the place of
arbitration or the place of enforcement) any award might
be unenforceable.
Arbitral tribunal: The arbitrator(s) see Ch. III.
Arbitration agreement: The parties agreement to submit their
disputes (future or existing) to arbitration. Whilst such agreement
usually consists of a clause(s) within another contract, it is
generally deemed by the applicable law to be a separate
agreement which will, for example, survive the termination of
the contract of which it forms a part. See also Competence
Competence, Submission agreement, Ch. VII and Annex 1.
41
Arbitration: A private form of final and binding dispute resolution

by an impartial tribunal, based upon the agreement of the parties
but regulated and enforced by the state see Ch. I.
Arbitrator: The decision-maker in an arbitration (akin to a judge
in court proceedings).
Award: The decision of an arbitral tribunal on a substantive
issue (as distinct from a merely procedural order or direction).
Awards are often referred to as interim, partial and/or
final awards, although, confusingly, the term interim is also
sometimes used to mean partial. Interim awards have only
temporary effect and do not finally decide an issue (which can,
accordingly, be revisited by the tribunal at a later stage of the
arbitration). A partial award finally decides one or more (but not
all) of the issues before the tribunal. A final award decides all
the (or all the remaining) issues and (subject to any corrections)
essentially ends the arbitration. See also Consent award below.
BITs: Bilateral Investment Treaties see Ch. VIII.
CEDR: The Centre for Effective Dispute Resolution, an
independent body (based in London) which provides a broad
range of services in connection with ADR procedures
visit www.cedr.com.
Challenge to award: The word challenge is often used to
describe the procedures, other than an appeal on the merits,
by which awards can be impugned in the courts of the seat of
arbitration. Challenges are usually concerned with the jurisdiction
of the tribunal or the procedure followed. In contrast to rights
of appeal, most major jurisdictions provide rights to challenge
awards and, in many cases, the parties cannot waive such
rights. See also Appeal, Remission and Set aside.
CIETAC: The China International Economic and Trade Arbitration
Commission. Based in Beijing but with sub-commissions
elsewhere in China, CIETAC is an international arbitral institution
with its own rules and panel of arbitrators visit www.cietac.org.
CompetenceCompetence: The legal doctrine by which an
arbitral tribunal can decide upon its own jurisdiction, even where
the contract containing the arbitration agreement is invalid or has
been terminated. See also Separability below.
Conciliation: A form of ADR, similar to mediation (see below),
whereby an independent third party conciliator assists the
42
Glossary (continued)
parties in attempting to settle their dispute. A conciliator cannot

force parties to settle but may be requested to express his
opinion on the possible outcome of any legal proceedings.
Conflict of laws: The legal rules in each jurisdiction by which
the applicable law is determined. Factors which might be taken
into consideration in deciding the law applicable to the merits
of the dispute include the parties nationality, the place of
performance of the contractual obligations and the place
and subject-matter of the arbitration.
Consent award: An award recording the terms agreed by
the parties to settle their dispute. The principal advantage of
obtaining a consent award is that, if not complied with, it may
be enforced as with any other award (whereas a settlement
agreement is merely a contract). See also Award above.
Consolidation: The merger of separate arbitrations. This
normally requires the agreement of all of the parties and, where
consolidation is a possibility, consideration should be given to
including appropriate language in the arbitration agreement.
See also Joinder below.
Costs of the arbitration: Depending upon the applicable law,
rules and the discretion of the tribunal, the successful party
will often be awarded all or part of its costs of the arbitration,
including the fees and expenses of the lawyers, the tribunal, any
institution, experts, witnesses and the costs of hearing facilities,
interpreters, translators and reporting services. Although possible
in limited circumstances, parties will not normally recover sums
in respect of their management and employee time engaged on
the arbitration.
CPR: The Center for Public Resources is an independent body
established in the US to promote ADR visit www.cpradr.org.
Designation of arbitrator: The proposal of an arbitrator
for appointment by an institution see also Nomination of
arbitrator below and Ch. III.
Disclosure / Discovery: The process by which the parties make
available to each other certain documents in their possession
or under their control which are relevant to the dispute. There
is a range of possibilities as to the extent of disclosure (from
none at all to all relevant documents) and the order made is
usually a matter for the discretion of the tribunal (which is often
influenced by the legal traditions of the jurisdiction to which
each arbitrator belongs civil law jurisdictions generally having
far more restricted disclosure than common law jurisdictions).
The obligation to disclose normally arises whether or not the
documents are damaging to the position of the party handing
them over.
43
Domestic arbitration: Some jurisdictions distinguish between

international and domestic arbitrations, according to criteria
such as the nationality of the parties, the nature of the dispute
and the applicable law. The importance of the distinction lies
in the different rules which are applied to the two categories
(for example, the distinction sometimes affects the ability of the
parties to set aside, remit or appeal an award).
Enforcement of award: If a party does not comply with an
award, the other party may apply to a court for the recognition
(see Recognition of award below) and enforcement of the
award using that courts enforcement processes (for example,
the seizure of assets). For the wide scope for the international
enforcement of awards; see Ch. II and Annex 2.
Equity clauses: See Amiable compositeur above.
Ex aequo et bono: See Amiable compositeur above.
Experts: Experts appointed by the parties and/or the tribunal
for an arbitration provide their impartial opinions on specified
matters in dispute by drawing on their experience and/or
qualifications. For the distinction between expert determination
and arbitration, see Ch. I.
Geneva Convention: The Convention on the Execution
of Foreign Arbitral Awards. Signed in Geneva in 1927, this
Convention provided for the recognition and enforcement of
certain foreign awards in convention states but has now largely
been superseded by the New York Convention (see below).
Governing law: The law according to which the relevant
contract is to be interpreted.
IBA: The International Bar Association visit www.ibanet.org.
IBA Rules of Evidence: The IBAs Rules on the Taking of
Evidence in International Commercial Arbitration.
ICA: The International Court of Arbitration see ICC Court
below.
ICC: The International Chamber of Commerce. The ICC provides
a number of services to the international business community.
The most significant aspect of the ICCs work in the context of
arbitration is the ICC Court (see below), but it also provides other
dispute resolution assistance (for example, a conciliation service,
a centre for expertise and a pre-arbitral referee procedure to
enable parties to obtain urgent interim relief).
ICC Court: The International Court of Arbitration of the
International Chamber of Commerce see Ch. IV and visit
www.iccwbo.org.
44
ICSID: The International Centre for the Settlement

of Investment Disputes see Ch. IV, Ch. VIII and visit
www. icsid.worldbank.org.
ICSID Convention: The Convention on the Settlement of
Investment Disputes between States and Nationals of Other
States made at Washington, D.C. in 1965 (also referred to as
the Washington Convention), which provides for the resolution
of investment disputes through ICSID (see above).
Impartiality and independence: All arbitrators in international
arbitrations must act impartially (i.e., not be biased towards or
against a party or in relation to the issues in dispute), failing
which they may be removed, the award challenged or its
enforcement resisted. As part of this, many arbitration rules
and laws emphasise the need for arbitrators to be independent
of (i.e., unconnected to) the parties.
Interim relief: National courts are sometimes able to support
an arbitration by granting interim relief (for example, ordering
a party to preserve property or assets) pending the tribunals
award. This is particularly helpful if urgent relief is needed before
the tribunal has been appointed and/or where the powers of
the courts to impose criminal sanctions in the event of noncompliance are required (the tribunal not having such powers).
International arbitration: See Domestic arbitration above.
Investment treaties: See Ch. VIII.
Joinder: Bringing a new party into an ongoing arbitration.
Joinder generally requires the agreement of all of the parties
and, where anticipated, a term providing for joinder should be
included in the arbitration agreement (thereby providing the
consent to joinder in advance). See also Consolidation above.
Jurisdiction: A jurisdiction is a national legal system. The
tribunals jurisdiction is its scope of authority or competence.
Language(s) of the arbitration: The language(s) in which
all matters connected with the arbitration will be conducted,
including the parties written submissions, evidence (whether
written or oral) and the award itself.
LCIA: The London Court of International Arbitration see Ch. IV
and visit www.lcia.org.
Lex arbitri: The procedural law of the arbitration, which is
usually that of the seat of the arbitration (and is often different
from the law governing the matters in dispute). See also Seat
of the arbitration below.
Lex fori: The law of the country where the arbitration takes
place.
45
Lex mercatoria: A set of legal principles based on concepts

found in developed legal systems and widely recognised by
the international business community. The existence, scope
and application of lex mercatoria is the subject of much debate.
However, it has been successfully invoked in arbitrations as the
basis on which the tribunal should resolve issues in the absence
of any clearly applicable law. In such cases, the UNIDROIT
principles (see below) are frequently used.
Mandatory requirements: Those provisions of the applicable law
which are not subject to any contrary agreement of the parties.
Model Law: The Model Law on International Commercial
Arbitration. The Model Law, which was adopted by UNCITRAL
in 1985, was promoted as the basis for the reform and
harmonisation of arbitration legislation around the world.
To date, the arbitration laws of at least 40 countries have
been reformed having regard to the Model Law.
Mediation: A form of ADR (see above) involving an independent
third party mediator who seeks to facilitate the settlement of
the parties dispute. A mediator cannot impose a settlement
and tends not to give his opinion on the legal merits. See
Conciliation above.
NAFTA: North American Free Trade Agreement see Ch. VIII.
New York Convention: The 1958 United Nations Convention
on the Recognition and Enforcement of Foreign Arbitral Awards
see Ch. II and Annex 2.
Nomination of arbitrator: The proposal of an arbitrator for
appointment by an institution see Designation of arbitrator
above and Ch. III.
Panama Convention: The 1975 Inter-American Convention on
International Commercial Arbitration. This Convention provides
for the enforcement of awards in more than 15 countries in
the Americas (including the United States) subject to specified
grounds of refusal. In order for an award to be enforced
under the Convention, it must normally have been made in a
Convention state.
Party autonomy: The parties freedom of choice (for example,
to determine the procedure to be followed).
Permanent Court of Arbitration: Established in 1899 and
based in The Hague, the Permanent Court of Arbitration (PCA)
deals with disputes between states which are party to the 1899
or 1907 Hague Conventions (see www.pca-cpa.org). Under
the UNCITRAL Rules, the Secretary-General of the PCA will
designate an appointing authority if the parties fail both to make
the necessary appointment(s) of an arbitrator(s) and to designate
an appointing authority themselves see Ch. IV.
46
Preliminary issue: An issue decided in advance of the main

hearing, usually in an attempt to save time and costs by resolving
an important issue (such as jurisdiction) at an early stage.
Public policy: A states notions of justice and public morality.
Public policy considerations may affect whether a dispute is
arbitrable or an award enforceable (for example, where the
dispute arises out of a contract regarded as void for public
policy reasons).
Procedural law: The law applicable to the procedure for the
arbitration (typically the law of the seat). In many cases, the
procedure for the arbitration will be a mixture of the rules
adopted by the parties (often through the incorporation by
reference of a recognised set of rules, such as those of the
ICC, LCIA, AAA or UNCITRAL) and the rules set down by the
law of the seat. See also Lex arbitri, Mandatory requirements
and Seat of the arbitration.
Recognition of award: Confirmation by a court that an award
is valid and binding.
Remission: The power of a court, upon the application of one
of the parties, to refer an award back to the arbitral tribunal
for reconsideration in whole or in part. See also Appeal,
Challenge to award and Set aside.
Rules of arbitration: The procedural rules pursuant to which
the arbitration is conducted see Ch. IV.
Seat of the arbitration: The jurisdiction in which the arbitration
is deemed to take place and the award made (regardless of
the physical location of the tribunal) see Ch. V.
Separability: The legal doctrine by which the arbitration clause
(agreement) is deemed to be separate from the contract in which
it is included (allowing, for example, the arbitration agreement
to survive the termination of the main contract). See also
Competence Competence above.
Settlement: The voluntary resolution of a dispute by the parties
involved. See also Consent award above.
Set aside: A court in the seat of the arbitration generally has
the power, in certain circumstances, to set aside (i.e., annul) the
award. See also Appeal, Challenge to award and Remission
above.
Slip rule: A rule allowing a tribunal to correct minor (for example,
typographical or mathematical) errors in its award.
Sovereign (or state) immunity: The protection enjoyed by
sovereign states and/or their entities both against the jurisdiction
of other states courts or tribunals and from the execution of any
judgment or award see Ch. VII.
47
Stay of court proceedings: A court order suspending

proceedings before it, which were commenced in breach of
an agreement to submit disputes to arbitration.
Submission agreement: An arbitration agreement in respect
of existing disputes. See also Arbitration agreement above.
Terms of Reference: A document required by the ICC Rules,
which sets out the names and addresses of the parties and
their representatives, a summary of their claims, the place
of arbitration and, if appropriate, a list of the issues to be
determined.
Trade usages: The standard terms on which members of a
particular business community are accustomed to deal. Under
some arbitration rules (notably those of the ICC), the tribunal
is required to take account of any relevant trade usages.
UNCITRAL: The United Nations Commission on International
Trade Law. The UNCITRAL arbitration rules are discussed in
Ch. IV. See also Model Law above and visit www.uncitral.org.
UNIDROIT Principles: A system of international contract law
rules published by the International Institute for the Unification
of Private Law in 1994. The UNIDROIT Principles are based
on concepts familiar to many legal systems and are therefore
reflective of lex mercatoria (see above).
Washington Convention: The ICSID Convention see above.
WIPO: The World Intellectual Property Organisation see Ch. IV
and visit www.wipo.int.
Other relevant Latham & Watkins materials that may be of

interest are:
Public International Law Practice brochure
International Investment Protection Practice brochure
Should you wish to receive a copy of either of these

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48
Guide to International Arbitration

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Why International Arbitration?

When Should Provision for

The Tribunal ...................................... 7

Chapter IV The Choice of Arbitration Rules ........ 9

Model Arbitration Clauses .............. 31

New York Convention States........... 35

Why International Arbitration?

. . . over the last 50 years or so,

Party autonomy: The parties to an arbitration can

Latham & Watkins | Guide to International Arbitration

(particularly in the US) therefore refer to arbitration

Latham & Watkins | Guide to International Arbitration

When Should Provision

Latham & Watkins | Guide to International Arbitration

Confidentiality: Although the degree of confidentiality

Latham & Watkins | Guide to International Arbitration

where the parties do not reach agreement in advance,

Latham & Watkins | Guide to International Arbitration

. . . whether any given feature of arbitration

jurisdictions, awards may only be reviewed in strictly

Latham & Watkins | Guide to International Arbitration

Parties usually seek advice from their

Latham & Watkins | Guide to International Arbitration

of them are normally selected by the parties, with the

Latham & Watkins | Guide to International Arbitration

Latham & Watkins | Guide to International Arbitration

There are many arbitration rules to choose

The International Centre for Dispute Resolution

Latham & Watkins | Guide to International Arbitration

these institutions from each other are the degree of

Latham & Watkins | Guide to International Arbitration

Many countries have arbitration laws which

generally far lower than those same arbitrators would

Unadministered and ad hoc arbitrations: the

Latham & Watkins | Guide to International Arbitration

Although there is no administering institution under

Rather than drafting a custommade procedure for each

Latham & Watkins | Guide to International Arbitration

Ad hoc arbitration often arises because

that any arbitration shall be conducted pursuant to a

Important specialist international arbitration

Latham & Watkins | Guide to International Arbitration

exclusively with disputes arising directly out of

Latham & Watkins | Guide to International Arbitration

The Place of Arbitration

The conduct of the arbitration

Latham & Watkins | Guide to International Arbitration

In less arbitration-friendly countries, the courts have

In choosing the seat of

Latham & Watkins | Guide to International Arbitration

Typically, a substantial international arbitration will

Latham & Watkins | Guide to International Arbitration

For a substantial and complex dispute,

Disclosure of the documents relied upon or of

Latham & Watkins | Guide to International Arbitration

Latham & Watkins | Guide to International Arbitration

Capacity/authority: The capacity and/or authority of

* In association with the Law Office of Salman M. Al-Sudairi