Who will serve as appointing authority? Another consideration is who will serve as the appointing authority for the arbitration. The role of an “appointing authority” is to name arbitrators if the parties fail to do so, and to consider challenges to arbitrators based on alleged lack of impartiality or independence. If the parties have chosen any of the institutional rules, those functions will be performed by the chosen institution. If they have chosen the UNCITRAL rules (which do not name an appointing authority in advance), the parties should designate an appointing authority. Thus, if the parties have selected the UNCITRAL rules, they should use the first of the bracketed sentences in the model clause. Otherwise the sentence should be deleted. Any arbitral institution may be named as appointing authority for UNCITRAL arbitrations.
What procedural law will govern the arbitration? The agreement should be specific as to what country’s procedural law will govern the arbitration. Except in rare circumstances, the law of the “seat” of arbitration governs procedures — including such matters as the interpretation, validity and enforcement of arbitration agreements, interim judicial relief, discovery and appeals of awards. The seat may also be referred to as the “place” of arbitration, and should not be confused with the location of the hearings described below.
The choice of seat is very important as it can greatly influence arbitral procedures and the enforceability of an arbitral award, and can determine the extent to which the courts may assist or interfere with the arbitration. Good practice demands that the seat of arbitration be stated in the arbitration clause. The seat should be one whose laws are hospitable to arbitration. In an international transaction, the seat of arbitration should a nation that has ratified the New York Convention or the comparable Inter-American Convention.
Where will the arbitration be held? Design professionals should try to ensure a location for the arbitration is designated in their contract. The arbitration hearings may be held at any place the parties designate before or after the arbitration commences, and it may or may not also be the seat of the arbitration. If they fail to designate, a place will be chosen (pursuant to the governing procedural law or arbitral rules) by an arbitral institution, the arbitrators or a court.
What will be the language of the arbitration? If the parties do not choose the language or languages, the arbitrators will chose for them.
What discovery will be possible, if any? Discovery is a process in U.S. court proceedings where the opposing parties in litigation can request documentation, depositions, and information from one another, such as information to support the party’s claims. Whether discovery will be possible in an international arbitration depends on what the parties have agreed to. If the parties say nothing in their contract, their rights to discovery will depend principally on the governing procedural law and, to a lesser degree, on the chosen rules. The laws of the United States and England, like most Common Law countries, give arbitrating parties the right to discovery of relevant documents. In the United States, arbitrators, as well as the courts, may order discovery from non-parties as well as parties. Although practices are evolving, most Civil Law countries do not permit American-style discovery.
The International Bar Association has adopted Rules on the Taking of Evidence in International Commercial Arbitration that strike a balance between the almost unfettered discovery practices in the United States and the more limited practices in Civil Law jurisdictions. I recommend you add language stating: “The International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration shall apply.”
In addition to monetary damages, what relief may the arbitrators award? The governing law or the chosen arbitration rules may determine whether an arbitral award can include injunctions or interim relief, specific performance of a contract, punitive damages, or costs and attorney fees. Most national laws outside the United States prohibit punitive damages.
National procedural law and arbitral rules vary greatly on the availability of interim relief. Parties that want to be sure they can apply to the courts for interim relief before and during arbitration should consider one or more of the following suggestions: (1) provide in the arbitration clause that the parties consent to interim measures; (2) select arbitration rules that expressly authorize applications to the courts for interim judicial relief; (3) avoid jurisdictions where the courts have shown themselves reluctant to grant interim relief.