Consolidation in International Commercial Arbitration – the ICC and Swiss Rules

323 Pages·2011·2.02 MB·English

by  Lara Pair

Consolidation in International Commercial
Arbitration –
the ICC and Swiss Rules

D I S S E R T A T I O N
of the University of St. Gallen,
School of Management,
Economics, Law, Social Sciences
and International Affairs
to obtain the title of
Doctor of Philosophy of Law

submitted by

Lara Michaela Pair

from

Germany

Approved on the application of

Prof. Dr. Ivo Schwander

and

Prof. Dr. Markus Müller-Chen

Dissertation no. 3923

Eleven Publishing / 2011, Den Haag
The University of St. Gallen, School of Management,
Economics, Law, Social Sciences and International Affairs
hereby consents to the printing of the present dissertation,
without hereby expressing any opinion on the views herein
expressed.

St. Gallen, May 17, 2011

The President:

Prof. Dr. Thomas Bieger
III
Zusammenfassung
Diese Dissertation befasst sich mit der Zusammenlegung von
Schiedsverfahren nach den Regeln der Internationalen
Handelskammer (ICC Rules) oder der Schiedsordnung der
Schweizer Handelskammern (Swiss Rules) . Zu Beginn erfährt
der Leser die praktischen und rechtlichen Gründe,
welche solche Konsolidierungsnormen als wünschenswert
erscheinen lassen. Ausgehend von einem Schiedsgericht mit
Sitz in der Schweiz und einer fiktiven Vollstreckung
in Deutschland oder den USA werden anschliessend die
Implikationen einer Verfahrenszusammenlegung unter den
genannten Schiedsordnungen ausgeleuchtet und analysiert.
Angesprochen wird zuerst, ob und unter welchen
Voraussetzungen mit dem Verweis auf eine der beiden
Schiedsordnungen auch die Zustimmung zu einer
Konsolidierung angenommen werden kann. Anschliessend
widmet sich die Dissertation dem Spannungsfeld zwischen
Gleichbehandlung respektive Autonomie
der Partein und zwingendem lokalen Recht. Schlussendlich
wendet sich die Analyse den konsoliderungsbedingten
Verfahrensanpassungen zu und schliesst mit einer kritischen
Gegenüberstellung der eingangs dargestellten
Rechtfertigungsgründe und der im Laufe der Dissertation
erarbeiteten Konklusionen.
Die These kommt zum Schluss, dass der durch sie beabsichtigte
Effekt nur durch eine massvolle Anwendung der bestehenden
Konsolidierungsnormen erreicht werden kann.
Voraussetzung hierzu bildet die Aufstellung klarer
Voraussetzungen für die Verfahrenszusammenlegung. Nur
dann halten die behandelten Normen einer richtlichen
Überprüfung stand.
IV

Summary
This dissertation treats consolidation of arbitral disputes
pending before either the International chamber of Commerce
or the Swiss Chambers of Commerce. It is mainly concerned
with determining both the logical and the legal justifications for
these rules. Using Switzerland as the seat country and Germany
and the United States as sample enforcement countries, this
analysis will go into detail.
First, the validity of choosing consolidation by reference to
these institutional rules will be addressed. Second, the choice of
arbitrators will be discussed in light of party equality and party
autonomy versus mandatory local laws. Third, procedural
adjustments, made necessary by the use of a consolidation
procedure, will be analyzed. Fourth, the logical justifications
for consolidation will be tested.
This dissertation concludes that only a policy of restraint and a
spelling out of criteria for consolidation will serve the purposes
of consolidation and withstand judicial scrutiny.
V

Preface of the Author
Dedicated to my parents and my partner for their love and
everything else. I do not know how to express my devotion
better.
To Prof. Ivo Schwander, Prof. Markus Müller-Chen, Prof.
emertitus Robert N. Coleman, Prof. David J. Bederman, and
Chief Judge Benjamin Studdard III, I extend my deepest respect
for their guidance throughout my professional life.
Ulrike Demelius, Céline Hofer, Dr. iur. Christoph Bauer and
Pascal Rey have supported me wherever they could - to them
my heartfelt gratitude.
I would also like to thank the Swiss Chambers of Commerce,
specifically the Chamber of Commerce and Industry of Geneva
and Zürich, and the International Chamber of Commerce for
access to information and exceeding curtesy.
This analysis includes material up to June 28, 2011.

June, 2011 Lara Michaela Pair
VI

Table of Contents
1 Introduction ................................................................................ 1
1.1 Methodology ........................................................................ 1
1.2 Preface .................................................................................. 2
1.3 Limitations ........................................................................... 6
1.3.1 Institutional Rules .......................................................... 7
1.3.2 Jurisdictions .................................................................... 8
1.3.3 Independent Cases .......................................................... 9
1.3.4 Forcible Consolidation ................................................. 10
1.3.5 Accomplished Consolidation ....................................... 10
1.3.6 No Intertemporal Issues ............................................... 11
1.4 Outlook ............................................................................... 11
2 Purpose of Consolidation ......................................................... 13
2.1 Layman’s View .................................................................. 13
2.2 Definition ........................................................................... 14
2.3 Avoidance of Contradictory Judgments ......................... 15
2.4 Efficiency ........................................................................... 16
2.5 Fairness, Truth and Justice .............................................. 16
2.6 Outlook ............................................................................... 17
3 Consolidation Procedures in Institutional Arbitration ........ 21
3.1 Introduction ....................................................................... 21
3.2 UNCITRAL ....................................................................... 22
3.3 American Arbitration Association .................................. 25
3.4 London Court of International Arbitration ................... 26
3.5 International Chamber of Commerce ............................. 28
3.6 Swiss Chambers of Commerce ........................................ 30
3.7 The Austrian Federal Economic Chamber ..................... 34
3.8 Arbitration Institute of the Stockholm International
Chamber of Commerce .............................................................. 35
3.9 Other Institutional Rules .................................................. 37
3.10 Summary .......................................................................... 38
4 ICC and Swiss Rules Consolidation in Detail ........................ 39
4.1 The Provisions – ICC Rules 4(6) or 10 and Swiss Rule
4(1) 39
4.2 Applicable Institutional Rules ......................................... 42
4.3 Arbitrators ......................................................................... 43
4.4 Initiation Procedure .......................................................... 45
VII
4.5 Timing ................................................................................ 46
4.5.1 ICC Rules ..................................................................... 47
4.5.2 Swiss Rules .................................................................. 49
4.6 Seat ..................................................................................... 50
4.7 Language ............................................................................ 52
4.8 Secrecy ............................................................................... 54
4.9 Costs ................................................................................... 55
4.10 Connection Between Cases ............................................. 56
4.10.1 ICC Rules ................................................................... 56
4.10.1.1 Parties ................................................................... 57
4.10.1.2 Legal Relationship ............................................... 59
4.10.2 Swiss Rules ................................................................ 60
4.11 Procedural Adjustments in the Consolidated Case ..... 61
4.12 Summary .......................................................................... 63
5 Consent to Consolidation ......................................................... 65
5.1 Applicable Law .................................................................. 67
5.2 Incompatible Clauses ........................................................ 71
5.3 Swiss Law Regarding Validity of Consent to
Consolidation .............................................................................. 76
5.3.1 Principles of Interpretation ........................................... 76
5.3.2 Consolidation Not Prohibited ....................................... 81
5.3.3 Violation of the Principle of Undue Surprise ............... 81
5.3.4 Violation of Article 27 Swiss Civil Code ..................... 82
5.3.4.1 One Contract - Same Parties .................................. 86
5.3.4.2 One Contract – Differing Parties ........................... 87
5.3.4.3 Multiple Contracts – Same Parties ......................... 89
5.3.4.4 Multiple Contracts – Differing Parties ................... 91
5.3.4.5 Interim Conclusion ................................................. 92
5.4 Institutional Approach ..................................................... 93
5.5 Alternative Approach ....................................................... 96
5.5.1 Admissible Claims and Parties ..................................... 98
5.5.1.1 Claims .................................................................... 99
5.5.1.2 Parties ................................................................... 101
5.5.2 Interim Conclusion ..................................................... 105
5.6 Advance Consent and Waiver ........................................ 106
5.6.1 Dutco .......................................................................... 106
5.6.2 Swiss Law .................................................................. 108
5.7 Conclusion ....................................................................... 109
6 Background on Consolidation Decisions .............................. 111
VIII

6.1 Secrecy as Obstacle to Consolidation ............................ 111
6.2 Administrative Effect of Consolidation ........................ 116
6.3 Reasoning for (Initially) Placing Decision with
Institutions ................................................................................ 117
6.4 Institutional Decision Makers ........................................ 118
6.4.1 ICC Decision Makers ................................................. 118
6.4.2 Swiss Rules Decision Makers .................................... 119
6.5 Judicial Treatment of Consolidation in Arbitral Cases
120
6.5.1 Consolidation of Arbitrations in Switzerland ............. 122
6.5.2 Consolidation of Arbitrations in Germany ................. 123
6.5.3 Consolidation of Arbitrations in United States .......... 124
7 Challenge of the Decision on Consolidation ......................... 129
7.1 Challenge Before Arbitrators ........................................ 130
7.1.1 Opinion Affirmative of a Challenge Before Arbitrators
131
7.1.2 Opinion Against a Challenge Before Arbitrators ....... 133
7.1.3 Author’s Opinion ........................................................ 133
7.1.3.1 Jurisdictional Character ........................................ 133
7.1.3.2 Institutions Retain Sufficient Control .................. 134
7.1.3.3 Limits to Party Autonomy .................................... 135
7.1.3.4 Procedural Authority Rests With Arbitrators ....... 139
7.1.3.5 Practical Considerations ....................................... 140
7.1.4 Summary .................................................................... 140
7.2 Challenge in the Seat Country ....................................... 141
7.2.1 Institutional Decision Cannot Be Challenged Directly
141
7.2.2 Grounds for Challenge ............................................... 144
7.3 Challenge in the Enforcement Countries ...................... 148
7.3.1 Waiver of Challenge ................................................... 149
7.3.2 Lack of Jurisdiction – Articles V(1)(a) and (c) NYC . 151
7.3.3 Violation of Party Agreement – Article V(1)(d) NYC
153
7.4 Conclusion ....................................................................... 155
8 Arbitrators’ Choices .............................................................. 157
8.1 Involuntary Loss of Mandate ......................................... 157
8.2 Arbitrators With Enlarged Case ................................... 158
9 Arbitrator Selection ............................................................... 165
IX
9.1 Common Selection Methods ........................................... 166
9.2 Composition of the Consolidated Panel ........................ 169
9.3 Right to Party Arbitrators ............................................. 171
9.4 Impact of Qualifications of Arbitrators ........................ 174
9.5 Implications of Arbitrator Selection for Annulment ... 175
9.5.1 Improper Constitution - Article 190(2)(a) SPILA ...... 176
9.5.2 Lack of Equal Treatment - Article 190(2)(d) SPILA . 179
9.5.2.1 Definition of Violations of Equal Treatment ....... 179
9.5.2.2 Waiver of the Right to Equal Treatment .............. 180
9.5.3 Violation of Public Policy - Article 190(2)(e) SPILA 185
9.5.4 Interim Conclusion ..................................................... 186
9.6 Implications for Refusal of Recognition and Enforcement
187
9.6.1 Improper Constitution - Article V(1)(d) NYC ........... 188
9.6.2 Public Policy - Article V(2)(b) NYC ......................... 191
9.6.2.1 Applicable Standard ............................................. 191
9.6.2.2 Content of the Provision ...................................... 193
9.6.3 Summary .................................................................... 197
9.7 Solutions ........................................................................... 197
10 Aside: Duty to Create an Enforceable Award .................. 201
11 Procedural Adjustments Required by the Lex Fori .......... 205
11.1 Impartiality – Article 190(2)(a) SPILA ....................... 206
11.2 Jurisdiction – Article 190(2)(b) SPILA ....................... 208
11.3 Incongruence – Article 190(2)(c) SPILA .................... 210
11.4 Equality and the Right to be Heard - Article 190(2)(d)
SPILA ........................................................................................ 210
11.4.1 File Transfer and Confidentiality ............................. 213
11.4.2 Procedural Orders ..................................................... 214
11.4.3 Oral Testimony and Hearings .................................. 215
11.5 Public Policy – Article 190(2)(e) SPILA ..................... 217
11.6 Summary ........................................................................ 218
12 Procedural Adjustments Required by the New York
Convention .................................................................................... 219
12.1 Introduction ................................................................... 219
12.2 Agreed Procedure - Article V(1)(d) NYC .................. 222
12.3 Due Process and Public Policy - Articles V(1)(b) and
V(2)(b) NYC .............................................................................. 223
12.3.1 Overview .................................................................. 223
12.3.2 Content of Due Process and Public Policy ............... 225
X

12.3.3 Causal Nexus ............................................................ 228
12.3.4 Implications for Procedure ....................................... 229
12.3.4.1 Challenge of Arbitrators ..................................... 229
12.3.4.2 File Transfer and Confidentiality ....................... 230
12.3.4.3 Procedural Orders ............................................... 230
12.3.4.4 Oral Proceedings ................................................ 231
12.4 Summary ........................................................................ 232
13 Usefulness of Consolidation ................................................ 233
13.1 Avoidance of Contradictory Judgments ..................... 233
13.2 Efficiency ....................................................................... 237
13.2.1 Time ......................................................................... 237
13.2.2 Costs ......................................................................... 240
13.2.2.1 Allocation of Costs ............................................. 242
13.2.2.2 Total Cost ........................................................... 243
13.2.3 Conclusion on Efficiency ......................................... 245
13.3 Fairness, Truth and Justice .......................................... 246
13.4 Alternatives to Consolidation ...................................... 247
13.5 Summary ........................................................................ 249
14 Proposed Solutions ............................................................... 251
14.1 Consolidation Requirements ........................................ 251
14.2 Arbitrator Selection ...................................................... 253
14.3 Procedural Adjustments ............................................... 253
14.4 Conclusion ..................................................................... 254