Choice of Procedural Rules
In determining the rules that should govern arbitration procedures, parties have a wide degree of freedom to agree to rules of arbitral procedure, and have a wide variety of rules and laws to choose from. They can agree to submit the arbitration proceedings to be dealt with under the national arbitration law of a specific country, where quite often parties prefer to choose the law of the state in which the arbitration is administered.
Many contracts contain clauses which expressly submit them to the law of a certain country. This may be done for several reasons, for instance, in order to obtain the co-operation of the courts in that state. Also a national system of law will be a known and existing system, capable of reasonably accurate interpretation by experienced practitioners. Parties often want a neutral law or a well-developed law to apply. However, this does not prevent the parties from choosing a national procedural law different from the law of the forum.
Parties may also choose to apply the arbitration procedures of an institutional body, such as the ICC, LCIA or the DIAC Rules. Finally, they can determine the applicable procedural law by directly composing the rules with which the arbitral tribunal must comply. This kind of arrangement is usually followed in Ad Hoc arbitration, where parties initially undertake the formation of the arbitration procedures. But due to practical difficulties which may arise from allowing the arbitral procedures to be determined directly by the parties, a process which may conflict with the mandatory procedural rules, parties of international commercial arbitration often choose arbitration rules that are more suitable and are specifically designed to govern such arbitration procedures.
The parties’ free consent to choose the rules that govern the arbitration procedures has been recognised by international conventions *(1), international institutions of commercial arbitration *(2) and by the domestic laws of different countries. For example, Section 16 of the English 1996 Act demonstrates the procedures that should be followed when appointing an arbitral tribunal and gives the parties a free choice in deciding this issue. Moreover, Section 35(1) provides that:
“The parties are free to agree- (a) that the arbitral proceedings shall be consolidated with other arbitral proceedings, or (b) that concurrent hearings shall be held, on such terms as may be agreed.”
Also Section 38 (1) provides that:
“The parties are free to agree on the powers exercisable by the arbitral tribunal for the purposes of and in relation to the proceedings.”
In Egypt, Article 25 of the law No. 27 of 1994, provides that:
“The two parties to the arbitration are free to agree on the procedure to be followed by the arbitral tribunal, including the right to submit the arbitral proceedings to the rules prevailing under the auspices of any arbitral organisation or centre in the Arab Republic of Egypt or abroad. In the absence of such agreement, the arbitral tribunal may, subject to the provisions of this law, adopt the arbitration procedures it considers appropriate.”
The UNCITRAL Model Law of 1985 specifies in Article 19 (1) that:
“Subject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.”
This can also be inferred from Article V (1)(d) of the New York Convention since it requires the composition of the arbitral authority and the arbitral procedure to be “in accordance with the agreement of the parties” otherwise, recognition of the arbitral award may be refused.
These different provisions exemplify the international trend in recognising the freedom of parties to decide the applicable procedural rules. However, while parties can agree to the rules of procedure that will apply to their arbitration, they cannot derogate from the control function of the courts at the seat of arbitration, except to the extent that the law of the arbitration site permits them to do so. This will be explored in more depth later in this chapter.
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(1) For example, Article 2 of the Geneva Protocol provides that the constitution of arbitral tribunals and arbitral procedure shall be governed by the will of the parties and by the law of the country in whose territory the arbitration takes place; Article 1 of the Geneva Convention of 1927 provides the parties with freedom to decide the manner in which the arbitral tribunal is to be constituted; the New York Convention in its list of grounds for refusal to enforce foreign arbitral awards does not include the question of the law applicable to the dispute, nevertheless, Article V (1)(d) of the New York Convention requires that the arbitral procedures are agreed by the parties.
(2) For example, Article 14 (1) of the LCIA Rules of 1998 provides that: "The parties may agree on the arbitral procedure, and are encouraged to do so"; Artilce 15 (1) of the ICC Rules of 1998 provides that: “The proceedings before the arbitral tribunal shall be governed by these rules, and, where these rules are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration.”