COMMENCEMENT OF ARBITRATION PROFESSOR JOSEPH MBADUGHA OUTLINE INTRODUCTION NOTICE OF ARBITRATION PARTY TO COMMENCE ARBITRATION ANSWER TO NOTICE OF ARBITRATION SAMPLES CONCLUSION INTRODUCTION Commencement is a procedural matter When and how depends on parties agreement --To be commenced when a dispute arose and within any period agreed by the parties No agreement by parties on how, then in accordance with the rules or law governing the arbitration Commenced through a written notice of arbitration or demand for arbitration Article 3(1), UNCITRAL Arbitration Rules, 2010 “The party or parties initiating recourse to arbitration...shall communicate to other party or parties...a notice of arbitration” See also Article 4(1) ICC Rules of Arbitration, 1998 which provides that s party requesting for arbitration shall submit its request for arbitration to the secretariat, which shall notify the claimant and respondent of the receipt of the request and the date of such receipt NOTICE OF ARBITRATION A. B. A written demand or notice by a party to arbitration requesting the other that: their dispute within the agreement be referred to arbitration: it appoints its own arbitrator or concur in the appointment of the arbitrator nominated or appointed by it, the party giving the notice Date of Commencement of Arbitration -- it depends on the parties’ agreement --where there is no agreement it depends on the rule or law governing the arbitration Under Article 3(2) UNCITRAL Arbitration Rules, it is commenced on the date the notice is received by the Respondent. See also Article 1188(1) of the Polish CCP and Section 17 of Nigeria’s ACA with similar provisions as the UNCITRAL Rules Under the ICC, it is commenced the date the secretariat received the notice – see Article 4(2) of ICC Rules of Arbitration When is a notice received Unless the parties agree otherwise, it is received when: -- when delivered to the addressee personally or to his place of business, habitual residence or mailing address --or when sent to the addressee’s last known place of business, habitual residence or mailing address by registered letter See Article 3(1) UNCITRAL Model Law; Article 3(2) ICC Rules of Arbitration NOTICE OF ARBITRATION 2 - Form It varies Parties are free to choose the form Where there is no agreement, it is determined by the applicable rules or law It may however include the following a demand that the dispute be referred to arbitration; the names and addresses of the parties a reference to the arbitration clause or the separate arbitration agreement that is invoked a reference to the contract out of which the dispute arose the general nature of the claim and an indication of the amount involved, if any the relief or remedy sought NOTICE OF ARBITRATION 3 f. a proposal as to the number of arbitrators, language and place if the parties have not previously agreed on this g. a proposal for appointment of a sole arbitrator with a request to concur or with a request that the respondent appoints its own arbitrator Articles 3(2) – (3)(g) UNCITRAL Arbitration Rules; Articles 4(3) ICC Arbitration Rules A SAMPLE OF NOTICE OF ARBITRATION CONDITION PRECEDENT Condition precedent to commencing arbitration It may be: A. Contractual: parties may agree that certain actions be taken before arbitration, example attempt at amicable settlement or mediation and conciliation B. Statutory: a statute may require that before any action is brought against certain parties a 3 or 1 months of the intention to sue such a party must be given to it C. Effect of non compliance - It makes the notice and thus the arbitration premature and incompetent VALID NOTICE OF ARBITRATION A notice must b valid, if not: A. Any arbitration commenced through it will be incompetent B. It constitutes a ground for stopping the arbitration C. It becomes a ground for challenging any award rendered therein When is a notice invalid --if it is vague or improperly issued --if it refers to a future rather than a present dispute --if it is contrary to the parties’ agreement or the rule or law that governs the arbitration --if it is issued without complying with a condition precedent INVALID NOTIC OF ARBITRATION 2 Effect of invalid notice --no jurisdiction to entertain the action Any objection must be raised on time before taking fresh step What happens when an objection is raised --it may result in the claim being struck out --under some institutional rules, the claimant may be allowed to correct the error TIME LIMIT Time within which to commence arbitration and/or time within which to commence an action in respect of a given subject It may be provided by law or contractual Difference between both: --statutory time limit prevails over contractual time limit in the event of conflict between both --contractual time limit may be dispensed with on grounds of public policy --contractual time limit may be extended but statutory cannot Effects of time limit -with respect to statutory time limit, it bars the right of action -with respect to contractual time limit, it could bar the claim or right of action or both depending on its wordings Time starts running from the date the cause of action arose PARTY TO COMMENCE ARBITRATION Various arbitration laws and institutional rules require a party seeking for arbitration to commence arbitration. Sometimes an aggrieved party may opt for litigation rather than arbitration. ANSWER TO NOTICE OF ARBITRATION A respondent served with a notice of arbitration should respond by serving an answer to the Claimant after a careful evaluation of the notice with a view to finding whether: the notice is proper, the dispute is within the scope of the arbitration agreement or is arbitrable, the claimant is a party to the agreement or a juridical person the notice is within time. ANSWER TO NOTICE OF ARBITRATION The answer should contain the following: denial or admission of the claim or any part thereof set out in the request; objecting to the jurisdiction of the tribunal or reserving the right to object to the jurisdiction of the tribunal; a brief statement of the respondent’s counterclaim if any; ANSWER TO NOTICE A request for joinder of parties or evincing an intention to subsequently apply for joinder of party; if there is any statement in the notice as to how the arbitration should be conducted to respond to it; to either concur to an arbitrator nominated or suggested by the Claimant or to suggest an arbitrator in the case of a sole arbitrator; to nominate its own arbitrator and state the name and contact details if it is a three panel arbitration and the agreement of the applicable law allows parties to nominate their own arbitrator. CONCLUSION CAREFUL ATTENTION TO THE REQUIREMENTS FOR COMMENCING AN ARBITRAL PROCESS SAVES TIME. THANK YOU FOR YOUR ATTENTION!!