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Commission on Arbitration

Note to National Committees and Groups

(Action required)

For comments before Monday, 10 November 2003

Please find attached the draft Rules for Dispute Boards that have been elaborated by the Task Force on Dispute Boards and which will be submitted to the Commission on Arbitration for approval at its next meeting on 18 November 2003.

National Committees and Groups are requested to consult with their members and send a consolidated national comment by Monday, 10 November 2003 for the attention of:

Emmanuel Jolivet

Secretary of the Commission on Arbitration

ICC International Court of Arbitration

38 Cours Albert 1er

75008 Paris

France

Fax: +33 1 49 53 57 73

E-mail:

The comments received from National Committees and Groups will be considered by the commission together with the text at its meeting on 18 November 2003.

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DRAFT RULES FOR DISPUTE BOARDS

STANDARD ICC DISPUTE BOARD CLAUSES4

STANDARD ICC Clause with DRB Option4

STANDARD ICC Clause with DAB Option4

STANDARD ICC Clause with CDB option5

DISPUTE BOARD RULES OF THE INTERNATIONAL CHAMBER OF COMMERCE 6

INTRODUCTORY PROVISIONS6

Article 16

Context of application of these Rules6

Article 26

Definitions6

TYPES OF DISPUTE BOARDS6

Article 36

Dispute Review Boards (DRB)6

Article 47

Dispute Adjudication Boards (DAB)7

Article 57

Combined Dispute Boards (CDB)7

ESTABLISHMENT OF THE DISPUTE BOARD8

Article 68

Appointment of the DB Members8

OBLIGATIONS OF THE DB MEMBERS10

Article 710

Impartiality and Independence10

Article 811

Work of the DB and Confidentiality11

Article 911

DBM Agreement11

OBLIGATION TO COOPERATE11

Article 1011

Exchange of information11

Article 1112

Meetings and Site Visits12

Article 1213

Written Notifications or Communications13

OPERATION OF THE DB13

Article 1313

Beginning and End of the DB Activities13

Article 1414

Powers of the DB14

DISPUTE PROCEDURE BEFORE THE DB14

Article 1514

Advice or Guidance concerning Potential Disputes14

Article 1615

Referral of Disputes for Recommendation or Decision15

Article 1715

Statement of Case, Response and Additional Documentation15

Article 1816

Organization of Hearings16

Article 1916

Absence of Submissions, Refusal to Participate16

Article 2017

Conduct of the Hearing and Party Representation17

Article 2117

Stages of the Hearing17

RECOMMENDATIONS AND DECISIONS OF THE DB18

Article 2218

Time-limit for rendering a Determination18

Article 2318

Review of Decisions18

Article 2418

Contents of a Recommendation or Decision18

Article 2519

Unanimity or Majority of a Recommendation or Decision19

Article 2619

Correction and Interpretation of Decisions and Recommendations19

Article 2719

Enforceability of a Recommendation or Decision19

COMPENSATION OF THE DB19

Article 2819

General Considerations19

Article 2920

Monthly Retainer Fee20

Article 3020

Daily Fee20

Article 3121

Travel Costs and other Expenses21

Article 3221

Taxes and Charges21

Article 3321

Administrative Expenses of ICC21

Article 3422

Payment Arrangements22

GENERAL RULES23

Article 3523

Exclusion of liability23

Article 3623

Application of these Rules23

Appendix I24

FOREWORD

Background

Dispute Boards (DB) were initiated in the construction industry over 20 years ago. They have become standard in many large-scale international infra-structure projects and feature prominently in standard forms of contract such as those used by the World Bank and FIDIC. DBs are also beginning to spread into other fields. DBs can be used for any kind of mid- or long-term contract, the execution of which may become problematical over time or subject the Parties' co-operation to difficulties. As a permanent body established at the outset of the contract, a DB assists the Parties to perform their contract in the most efficient and cost-effective manner.

Assistance provided by a Dispute Board

DBs offer two types of assistance. First, they provide the Parties with an efficient tool to identify, and prevent, potential disputes early. Second, if a dispute does arise, a DB provides the Parties with a mechanism to resolve it with as little disturbance as possible to the overall contractual relationship.

The DB is a body formed to help Parties identify and resolve disputes. If the determination of a DB is not accepted, either of the Parties will have the possibility to call on a final resolution of the dispute by referring it to arbitration or through state courts.

DBs should not be understood as an alternative to the final resolution of disputes by arbitration, but rather as a complement and preliminary less contentious way of trying to achieve the settlement of a dispute

Types of Dispute Boards

In order to give the Parties the most flexible and the most appropriate alternative for their contractual needs Parties have the option of choosing from three types of DBs:

The Dispute Review Board [“DRB”] gives the Parties a large amount of flexibility because its determination, called Recommendation, becomes binding on the Parties only if it is not contested within the fixed time-limit.. Parties must carry out the DRB’s Recommendation once it has become binding. .

The Dispute Adjudication Board [“DAB”] provides Parties with a more coercive mechanism, because the DAB has the power to issue a determination, called a Decision that becomes binding upon the Parties as soon as it issued, and must be carried out at once. The Parties retain the right to challenge the Decision within the fixed time-limit and can seek to have it either set aside or modified in adjudicatory proceedings.

The Combined Dispute Board [“CDB”] provides the users with the freedom of a DRB while under certain circumstances giving the Parties the possibility to invoke the coercive powers of a DAB.. A CDB will generally act as a DRB issuing Recommendations, but a Party can request it to issue an immediately binding Decision. The CDB will decide which type of determination is appropriate under the circumstances.

Ideally, the constitution of a DB and the type of DB selected should be agreed by the parties not later than the date of signature of the main contract, even though it may be possible to establish a DB at a later time in an amendment to the main contract.

By providing (a) Rules for Dispute Boards (the Rules), (b) Standard Dispute Board Clauses and (c) a Model Agreement between Dispute Board Members and the Parties to the underlying Contract, ICC intends to give all participants in the working of Dispute Boards a comprehensive framework for establishing and operating such Boards in a variety of settings, including situations in which there are more than two parties to the underlying Contract.

STANDARD ICC DISPUTE BOARD CLAUSES

STANDARD ICC Clause with DRB Option

All disputes arising out of or in connection with the present Contract shall be submitted to a Dispute Review Board (“DRB”) in accordance with the ICC Dispute Board Rules (the “Rules”). The DRB shall have _____ member(s) named in this Contract or within the time-limit fixed in the Rules.

The DRB shall issue Recommendations in accordance with the Rules. Each Recommendation of the DRB will become final and binding upon the Parties unless either Party notifies the other Party(ies) in writing of its dissatisfaction with a Recommendation within 30 days of its receipt.

If either Party notifies its dissatisfaction as provided above, or if the DRB fails to issue the Recommendation in accordance with the Rules, the dispute 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 of Arbitration.

STANDARD ICC Clause with DAB Option

All disputes arising out of or in connection with the present Contract shall be submitted to a Dispute Adjudication Board (“DAB”) in accordance with the ICC Dispute Board Rules (the “Rules”). The DAB shall have _____ member(s) named in this Contract or within the time-limit fixed in the Rules.

The DAB shall issue Decisions in accordance with the Rules.[1] The parties shall comply immediately with each Decision of the DAB, which shall remain binding upon them unless and until it has been reversed or modified by an arbitral award.

If either Party is dissatisfied with a Decision of the DAB, or if the DAB fails to issue a Decision in accordance with the Rules, the dispute 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 of Arbitration.

STANDARD ICC Clause with CDB option

All disputes arising out of or in connection with the present Contract shall be submitted to a Combined Dispute Board (“CDB”) in accordance with the ICC Dispute Board Rules (the “Rules”). The CDB shall have _____ member(s) named in this Contract or within the time-limit fixed in the Rules.

The CDB shall, in principle, issue Recommendations.

Each Recommendation of the CDB will become final and binding upon the Parties unless either Party notifies the other Party(ies) in writing of its dissatisfaction with a Recommendation within 30 days of its receipt.

If either Party notifies its dissatisfaction as provided above, or if the CDB fails to issue a Recommendation in accordance with the Rules, the dispute 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 of Arbitration.

The CDB can, upon the request of a party, issue a Decision in accordance with the Rules.[2]

The Parties shall comply immediately with each Decision of the CDB, which shall remain binding upon them unless and until it has been reversed or modified by an arbitral award.

If either Party is dissatisfied with a Decision of the CDB, or if the CDB fails to issue a Decision in accordance with the Rules, the dispute shall be finally settled by arbitration under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.

DISPUTE BOARD RULES OF THE

INTERNATIONAL CHAMBER OF COMMERCE

INTRODUCTORY PROVISIONS

Article 1

Context of application of these Rules

The International Chamber of Commerce provides the international business community with Dispute Resolution Services including these ICC Dispute Board Rules. In application of these Rules, ICC can provide administrative services to the Parties, when they so agree, including the appointment of DBMs and the review of Decisions.

Article 2

Definitions

In these Rules:

(i)“Contract” means the agreement, which contains the provisions for setting up a DB.

(ii)“Parties” means the Parties to the Contract

(iii)“Dispute Board” (DB) means either a "Dispute Review Board" (DRB), or a "Dispute Adjudication Board" (DAB) or a "Combined Dispute Board" (CDB) including one or more Dispute Board Members (DBM).

(iv)“Dispute” means any kind of disagreement between the Parties arising out of the Contract which is referred to a DB under the terms of the Contract or these Rules.

(v)“Determination” means either a Recommendation or a Decision as described under these Rules.

TYPES OF DISPUTE BOARDS

Article 3

Dispute Review Boards (DRB)

Where the Contract contains the Standard ICC Clause with DRB Option or where the contract provides that the DB shall have the power to issue a determination which the Parties are not required to implement immediately, the Parties are deemed to have selected a Dispute Review Board(DRB).

The determination of a DRB is a Recommendation. A Recommendation which has not been contested by a Party in accordance with the terms of the Contract or these Rules shall become a term of the Contract between the Parties, and they shall be contractually bound to comply with it forthwith.

Unless agreed otherwise, any Party may contest the Recommendation within 30 days of receiving it by informing the other Party and the DRB of its dissatisfaction with the Recommendation. It shall also give the reasons for its dissatisfaction.

Unless agreed otherwise, if either Party contests the Recommendation, or if the DRB does not issue its Recommendation within the time-limit prescribed, the dispute shall be settled by arbitration conducted under the ICC Rules of Arbitration or otherwise.

If the Contract does not specify what type of decision the DB shall take, the Parties are deemed to have opted for a DRB issuing Recommendations.

Article 4

Dispute Adjudication Boards (DAB)

Where the Contract contains the Standard ICC Clause with DAB Option or where the contract provides that the DB shall have the power to issue a determination which the Parties are required to implement immediately, the Parties are deemed to have selected a Dispute Adjudication Board(DAB).

The determination of a DAB is a Decision. A Decision shall be complied with immediately by the Parties after it is issued by the DAB. A Decision may be contested only in accordance with the terms of the Contract or these Rules. A Decision which has not been so contested shall become a term of the Contract between the Parties.

Unless agreed otherwise, each Party retains the right to have the Decision reviewed by arbitration or otherwise. However, until the dispute is resolved by arbitration or otherwise, the Party seeking review remains bound to carry out the Decision.

Article 5

Combined Dispute Boards (CDB)

Where the Contract contains the Standard ICC Clause with CDB Option or where the contract provides that the DB shall have the power to decide to issue either a Recommendation or a Decision, the Parties are deemed to have selected a CombinedDispute Board(CDB).

The CDB will generally issue a Recommendation. However, a Party may request that the CDB issue a Decision.

If the other Party objects to the CDB issuing a Decision, the CDB shall have the power to decide which type of determination it will issue. In determining this issue the CDB may take into account, but shall not be limited to, the following factors:

-whether a Decision would protect the performance of the Contract or the rights of either Party from irreparable loss or damage;

-whether the urgency of the situation requires a Decision to protect the performance of the Contract or the rights of either Party from irreparable loss or damage;

-whether a Decision is necessary to preserve evidence

-whether a Decision would protect the Contract from the misconduct of a Party

The Party selecting the CDB option should clearly notify the CDB and the other Party when referring a dispute to the CDB, whether it requests a Recommendation or a Decision. If no specific request is made, the referral shall be deemed to constitute a request for a Recommendation.

ESTABLISHMENT OF THE DISPUTE BOARD

Article 6

Appointment of the DB Members

The DB shall be established in accordance with the provisions of the Contract or, where the Contract is silent, in accordance with these Rules.

Where the Parties have agreed that the dispute shall be referred to a sole DBM, they shall jointly appoint the sole DBM. If the Parties fail to appoint the sole DBM within 30 days after signing the Contract, or within such additional time as they may agree, the sole DBM shall be appointed by ICC upon request of one of the Parties.

Where the Parties have agreed that the dispute shall be referred to three DBMs, each Party shall nominate one DBM within 30 days after signing the Contract. If the DBM proposed by one Party has not been rejected by the other Party within 15 days of receipt of his or her written disclosure, the proposed DBM is deemed to be approved by the other Party.

A Party rejecting a proposed DBM must notify its decision in writing and give the reasons of its rejection. The nominating Party shall nominate another DBM within a further 15 days from receipt of notice of rejection. In case of a second rejection the nominating Party may request the appointment of the DBM by ICC.

Where the Parties have agreed that the dispute shall be referred to three DBMs and in the case that more than two Parties are involved in the Contract, they shall jointly select the first two members of the DBM within 30 days of signing the Contract, failing which ICC shall appoint both members upon the request of one of the Parties.

Within 30 days of the last approval becoming effective, the two party-nominated DBMs shall nominate the third DBM, who will act as chairman of the DB unless all DBMs agree upon another chairman with the consent of the Parties. If neither Party rejects the third DBM within 15 days of receipt of his or her nomination, the proposed DBM is deemed to have been approved by all Parties.

Should either Party reject the third DBM, the two Party-nominated DBMs will make a second proposal within 15 days of receiving notice of the rejection. In case of a second rejection, either Party may request the appointment of the third DBM by ICC.

In case a DBM must be replaced, the other two DBMs remain on duty and assure the continued functioning of the DB. The new DBM shall be nominated 30 days after the vacancy is known. A new DBM will be proposed in the same manner as the departing one was.

The appointment of any DBM shall be made by ICC, upon request of either Party in the event of:

-Any untimely nomination or action under paragraphs 2, 5, and 8

-A second rejection of a DBM under paragraphs 4 and 7

-ICC’s being satisfied that there is a sufficient basis for doing so

OBLIGATIONS OF THE DB MEMBERS

Article 7

Impartiality and Independence

Every DBM must be and remain independent of the Parties.

Upon accepting to act as a DBM, that person will immediately provide the nominating Party, or fellow DBMs, as the case may be, with all relevant information concerning the proposed DBM’s qualifications, including language abilities and other information relevant to his or her ability to assume the duties as a DBM under the Contract along with a written disclosure setting forth any facts or circumstances which might be of such a nature as to call into question the DBM’s independence in the eyes of the Parties.

A DBM shall immediately disclose in writing to the Parties and the other DBMs any facts or circumstances of a similar nature which may arise in the course of such DBMs performance.

The nominating Party, or the other two DBMs, as the case may be, will communicate the written disclosure to all others concerned at the same time that they inform them of the identity of the proposed DBM.

Should either Party learn of facts and circumstances which lead it to doubt the impartiality or independence of a DBM, it may within 15 days of learning such facts challenge that person by submitting to the DB and the other Party a written statement of the facts upon which its challenge is based. After having heard the other Party and the challenged DBM, the two remaining DBM will decide upon the challenge. For the challenge to be accepted the decision must be unanimous.