Turkey: Complex Arbitrations: An Overall View Of The ICC Rules - I

Last Updated: 15 April 2019
Article by Fatih Işık

Most Read Contributor in Turkey, April 2019

Introduction

Complex arbitrations are one of the most complicated issues in the arena of international arbitration. The need to resolve complex disputes that arise out of commercial transactions with multiple contracts and multiple parties, on the one hand, and the consensual nature of arbitration agreements, on the other hand, raise several procedural and jurisdictional problems.

One of the topics of the ICC Young Arbitrators' Forum's event that was held in Istanbul on 21 March 2019 focused on complex arbitrations1. This article series summarize the discussions that took place during that event.

The Reasons Underlying Adoption of the ICC Rules on Complex Arbitrations

In 2012, the International Chamber of Commerce ("ICC") updated its arbitration rules ("ICC Rules") to regulate complex arbitrations. The rules adopted in 2017 preserved the perspective that had been adopted in 2012.

Prior to entry into force of the 2012 ICC Rules, the ICC International Court of Arbitration ("Court") already had extensive and established practices on these issues. However, these issues were dealt with using the broad interpretation of arbitration agreements, particularly with extensions of arbitration agreements to non-signatories, using the Court's discretion on prima facie assessments as to jurisdiction. The 2012 ICC Rules codified the existing practices of the Court under the 1998 ICC Rules. These rules brought predictability to the arbitration community, and also provided the Court, the arbitral tribunals, and the parties, with a procedural framework.

The main reason for these complex arbitrations provisions is the rise in the amount of cases extending beyond the classic bipolar model of arbitration. This is a natural consequence of rapidly increasing complex transactions in which multiple parties are involved, and the parties to transactions concluding more than one contract. In such relations, the outcome of these types of arbitrations may affect third parties. Also, there may be direct claims, counterclaims, cross claims, as well as recourse claims between the parties.

According to the 2017 statistics of the ICC2, greater than one-third (37%) of their cases involved multiple parties. Out of these multiparty cases, 13% were comprised of more than five parties; whereas, this rate was 3% for cases involving more than ten parties. The most common configuration in multiparty cases was one claimant versus several respondents (54%), with one case involving as many as 36 respondents.

The Structure of the ICC Rules Related to Complex Arbitrations

The ICC Rules cover complex arbitrations that fall into the provisions as set forth, below:

  • Article 7 as to the joinder of additional parties;
  • Article 8 as to the claims between multiple parties;
  • Article 9 as to arbitrations that are based on multiple contracts; and
  • Article 10 concerning the consolidation of arbitrations.

Articles 7 and 8 may be referred to as the basis for multi-party arbitrations; whereas, Article 9 may be classified as the basis of multi-contract arbitrations. Article 10 covers both of these matters.

The ICC Rules' provisions on complex arbitrations make clear reference to Article 6 of the ICC Rules that regulate the effect of arbitration agreements. Although the ICC Rules regulate provisions on "multi-party arbitrations" and "arbitration with multiple contracts," the alternative dispute resolution nature of arbitrations, based on the consent of the parties, should not be forgotten. For this reason, when the rules of complex arbitrations are examined (namely Articles 7-10), Article 6 and its subparagraphs 3 to 7, should always be taken into consideration, as well.

Under the provisions of complex arbitrations, Article 10, which regulates the consolidation of arbitrations, stands alone by not making any reference to Article 6(3)-6(7). This is conceivable as Article 10 covers the period after the prima facie assessment as to jurisdiction is made by the Court, and the subject matter concerning consolidations concerns arbitrations that are pending.

In addition to Articles 7-10 and 6(3)-(7) of the ICC Rules, Article 4(3) on Request for Arbitration, Article 5(5) on Answer to the Request for Arbitration, Article 12 on Appointment of Arbitrators, and Article 36 on Advance on Costs, are also influenced by the provisions on complex arbitrations. However, in this article series, only Articles 7-10 and 6(3)-(7) of the ICC Rules will be examined.

Articles 6(3)-(7) of the ICC Rules

The consensual nature of arbitration as a dispute resolution mechanism is emphasized again via the references to Article 6(3)-6(7) in Articles 7-10. Moreover, these references reiterate two basic principles of arbitration: prima facie assessment of the Court and competence-competence. Article 6(3) and 6(5) set forth that the jurisdictional issues are decided by the Court on a prima facie basis, and will finally be resolved by the arbitral tribunal.

The provisions of Article 6(3)-(7) follow a specific order. Article 6(3) and Article 6(5) regulate the authorities in assessing matters of jurisdiction. This article grants a gatekeeping role to the Secretary General. Unless the Secretary General refers the matter to the Court, jurisdictional issues do not prevent arbitrations from proceeding, and the arbitral tribunal decides, in its sole discretion, either in the final award, or in a separate preliminary award, its findings as to jurisdiction. The Secretary General shall not refer the matter to the Court, unless he/she is unclear as to the prima facie jurisdiction of the arbitral tribunal. With this authority, the Secretary General's rendering of a positive decision is the first step as to prima facie jurisdiction of the arbitral tribunal. However, the Secretary General is not authorized to render a negative decision with respect to jurisdiction.

Article 6(4) regulates the authority of the Court to decide as to jurisdiction, and to what extent the arbitration shall proceed in cases the matter is referred to the Court. If the Court renders a negative decision, the arbitration shall not proceed, and Articles 6(6)-(7) of the ICC Rules will be applicable; otherwise, the arbitration shall proceed. In such case, the Court's decision is only administrative and temporary, and any arguable questions as to jurisdiction are to be dealt with by the arbitral tribunal (Article 6(5)). What is remarkable in Article 6(4) is that unlike the 1998 ICC Rules, the Court may decide to allow arbitrations only for some parties and for some claims, rather than declaring a negative jurisdictional decision for all of the parties and claims.

Article 6(4)(i) relates to multi-party arbitrations; whereas, Article 6(4)(ii) sets forth the requirements for multi-contract arbitrations if there are multiple arbitration agreements. It should be underlined that "multiple contracts" and "multiple arbitration agreements" are separate issues and have different legal effects. Article 6(4)(ii) applies only in cases where there are multiple arbitration agreements. If there are multiple contracts but only one arbitration agreement, only Article 9 applies, and the requirements set forth under Article 6(4)(ii) will not be sought.

As a reflection of the competence-competence principle, Article 6(5) states that the arbitral tribunal is the final authority to decide on jurisdictional issues, except in cases where the Court has granted a negative decision that prevents the arbitration from proceeding. As mentioned above, upon the Court's negative decision as to jurisdiction, the arbitration shall not proceed, the proceedings shall be concluded, and the file shall not be transmitted to the arbitral tribunal.

Article 6(6) and Article 6(7) regulate the stages following the Court's negative decision. Article 6(6) relates to the parties that are excluded from the arbitration by the Court's negative decision as to jurisdiction; whereas, Article 6(7) relates to claims excluded by the Court. Pursuant to Article 6(6), where the Court has decided that the arbitration cannot proceed in respect of some or all of them, any party retains the right to ask any court having jurisdiction whether or not, and in respect of which of them, whether there is a binding arbitration agreement. Article 6(7) sets forth that where the Court has decided that the arbitration cannot proceed in respect of any of the claims, such decision shall not prevent a party from reintroducing the same claim at a later date in other proceedings.

Conclusion

In this first article of the article series on complex arbitrations, the structure of the ICC Rules on complex arbitrations is examined. The details of the ICC Rules, and the requirements thereto, will be examined in the upcoming articles.

Footnotes

[1] http://www.erdem-erdem.av.tr/media/news/icc-yaf-event-on-tips-on-arbitrating-under-icc-rules-of-arbitration/

[2] https://iccwbo.org/publication/2017-icc-dispute-resolution-statistics/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions