Estimated reading time: 8 minutes
- What is the ICC?
- What is arbitration?
- Benefits of arbitration
- How do international disputes get resolved?
- ICC arbitration step by step: The basics
- Example of an ICC International Court of Arbitration case
- Key statistics from 2020
- Additional information
ICC Explained
The International Chamber of Commerce (ICC) is an international trade association that offers policy advocacy, dispute resolution services, and is also involved in rules and standards setting for international trade.
It has a vast global membership, made up of 45 million companies in 100 countries.
The main arms of the ICC’s dispute resolution service are the ICC International Court of Arbitration and the ICC International Centre for Amicable Dispute Resolution (ADR), which provides mediation services.
Both of these entities work with the Commission on Arbitration and ADR, which “drafts and revises…rules for dispute resolution.”
Additionally, the ICC International Centre for ADR also monitors the Documentary Instruments Dispute Resolution Expertise (DOCDEX), which provides dispute resolution services for trade finance instruments.
Another entity, the Governing Body for Dispute Resolution Services, proposes changes to business plans and policies, and monitors the efficacy of dispute resolution services.
The governing body also provides model clauses and contracts to be used in international business contacts available in multiple languages.
Arbitration defined
Arbitration is a process by which parties to a commercial transaction settle disputes. It is an alternative to litigation, which takes place in domestic courts. In an arbitration case, the parties will agree to use a certain location, language, and legal system, and will follow an arbitration procedure that is usually designed by an arbitration institution.
The case outcomes (also known as awards) are then enforced by the arbitration laws of the parties’ chosen legal system.
For example, if parties choose the English legal system, then English arbitration laws enforce the awards, as opposed to the arbitrator or arbitration institution.
Moreover, the outcome of arbitration cases is binding. This differs from that of alternative dispute resolution (ADR) processes, such as mediation, which are non-binding.
Benefits of arbitration
The use of arbitration processes in commercial contracts has benefits over litigation in national courts.
In international business law, for example, The UN Convention on the Recognition and Enforcement of Foreign Arbitral awards, recognised by 166 countries in 2020, makes arbitration awards enforceable without the need for national courts.
Such international conventions, and their general acceptance among trading nations, mean that awards from arbitration may be more enforceable than some jurisdictions’ domestic court judgements.
The use of international rules in arbitration can also offer a more neutral approach than the laws and judgements of domestic courts.
Moreover, for disputes involving specific assets, languages, or business fields, arbitrators can be chosen based on their expertise and their experience in specialised disputes.
Finally – and perhaps most importantly – the details of the arbitration can be kept confidential.
International disputes
Most international commercial arbitration institutions support inputting clauses into contracts that promote independent dispute resolution, and where this fails, the dispute escalates to arbitration.
First, claimants should notify the counterparty of a dispute and should attempt to come to an ‘amicable’ resolution or settlement.
If this fails, then parties should follow alternative dispute resolution processes such as mediation. And if this fails, then parties can commence to arbitration.
The ICC has a set of four model Mediation Clauses that are available for commercial parties to use in contracts.
Disputes can be resolved following this procedure. In fact, the majority of cases that start the arbitration process end in settlement or withdrawal.
The ICC International Court of Arbitration (the Court) is the most used arbitration institution for commercial contracts.
Parties to contracts do not have to be members to use the ICC. However, they must agree either within contract, by including an ICC Arbitration Clause, or the parties can both agree to use the Court.
It’s important to note that the Court doesn’t have the authority to enforce awards made from arbitration or make judicial judgements.
As mentioned above, this falls to a nominated and mutually agreed on national jurisdiction.
Instead, the Court focuses on facilitating the arbitration process, supporting the parties involved, and scrutinising the awards.
ICC arbitration step by step: The basics
Let’s zoom in on the step-by-step process that parties are required to follow to open a case at the ICC International Court of Arbitration.
First, a party to a contract (the Claimant) will file a request for arbitration, and will pay a $5,000 fee to the ICC.
The Secretariat (a body of the Court) will file the request, and will send it to the Respondent for counterclaims, which must be made within 30 days.
After this period, the Court will then confirm the arbitrators that are nominated by the parties, and will assess the impartiality and competencies of the arbitrators. If there are no nominations, the Court will appoint an arbitrator.
There will either be a sole arbitrator or three arbitrators, depending on the needs of the case. This forms the Arbitral Tribunal.
Before the Arbitral Tribunal proceeds, both the Claimant and Respondent will have to pay an advance on costs for fees and expenses for the arbitrators and ICC administration costs. For this purpose, the ICC provides a cost calculator.
The Arbitral Tribunal will then start a Case Management Conference, which builds a timetable and puts in place the procedural rules and applicable laws for use in the arbitration.
The tribunal will hear witnesses and experts, and it also has the option to request further evidence from both parties.
The Court will be monitoring these proceedings to ensure impartiality and that the rules are adhered to.
Once a decision is made, the Arbitral Tribunal will close the proceedings and set a date for the publication draft of the Award to Court.
The Court will then scrutinise and offer modifications if needed. Once approved by the Court, the Arbitrators sign the award.
There are two pathways based on the value of the dispute. If the value of the dispute is above $3 million, during or before the Case Management Conference convenes, the Arbitral Tribunal will build a terms of reference containing the details of the claims made by parties and the issues that need to be assessed.
The median time taken for this format is 22 months (as of 2020). If the value of the dispute is below $3 million (on or after January 2021), then the parties can agree or the Court can follow the Expedited Procedure Provision.
This is a simplified procedure with no Terms of Reference, and the Case Management Conference is held within 15 days of the dispute file being sent to the Arbitral Tribunal.
The Arbitral Tribunal can come to a decision based only on documentary evidence provided (i.e. without expert or witness testimony) and can also limit the written submissions and witness statements. Using this process, the final award is given within six months.
If the dispute requires urgent resolution due to valid business circumstances, Emergency Arbitrator proceedings can also be triggered. This is useful for when the parties need a resolution faster than the time it takes to create an Arbitral Tribunal.
They do this by applying to the Secretariat. The procedure followed is dependent on the case, but tends to lead to a fast-track order from the Emergency Arbitrator. These orders can also be taken to an Arbitral Tribunal afterwards.
For more details on the ICC International Court of Arbitration procedure, you can find the ICC Arbitration Rules here.
Example of an ICC International Court of Arbitration case
Aceris Law LLC represented a claimant in an ICC arbitration in London under Saudi Arabian law.
The claimant’s dispute dealt with unpaid invoices and indirect costs, for which the claimant – after his arbitration was successful – was ultimately compensated with $7.3 million.
The case concerned construction works related to a gas plant that was designed to treat non-associated gas from onshore and offshore fields.
Key statistics from 2020
The ICC has published the details of the ICC Arbitral Awards for some cases where parties have consented to publicise the dispute.
Normally, the ICC keeps the private information of parties confidential, but will publicise the arbitrators.
Here are some key statistics form 2020:
- The ICC recorded 946 new arbitration cases.
- The choice of law varied, but the top three were English, US, and Swiss law respectively.
- The language of arbitration also varied, but the top three used were English, French, and Spanish.
- The majority of cases used English, and 13 languages are used in total.
- The average value of filed disputes in 2020 was $54 million.
Additional information
The ICC Court can also act as an Appointing authority, supporting the constitution of an Arbitral Tribunal in any commercial arbitration proceedings.
The ICC is also offering Belt and Road Dispute Resolution, which deals with cases related to China’s Belt and Road Initiative.
The ICC suggests that these services be used in relation to multi-party infrastructure contract disputes.
Read our latest issue of Trade Finance Talks, May 2022
