Originally from Arbitration of International Disputes in New York

PREVIEW

6.1  Commencement of Arbitration

Prudent parties will ask specialist arbitration counsel to prepare an early case assessment, which takes the form of a written memorandum addressing all aspects of the contemplated arbitration (including questions of arbitral jurisdiction, key evidence, and the strengths and weaknesses of potential claims), prior to submitting a demand for arbitration to the adverse party. The preparation of such a written assessment, which normally is protected by attorney-client privilege attaching to privileged work-product and hence should not be discoverable by the other party, could result in cost savings in the arbitration, because portions of this document could be used to prepare the demand for arbitration as well as subsequent pleadings submitted during the arbitral proceedings. The assessment also could discuss the possibility of obtaining third-party funding to cover the costs of an arbitration.  However, the parties should keep in mind that, as pre-arbitration costs, the fees and expenses incurred through a preliminary case assessment likely are not recoverable as “arbitration costs” in an eventual cost award as part of the final arbitral award. An outline of an early case assessment memorandum is included on the final page of the Appendix section of this book.

An arbitration must be commenced in accordance with the terms of the parties’ arbitration agreement. In situations where the parties have incorporated the rules of some arbitration institution or Independent rules such as those developed by UNCITRAL, there typically will be institutional mechanisms and requirements that must be fulfilled. If one of the parties refuses to participate in the arbitral process, they may be compelled by the courts to arbitrate.

An arbitration typically is commenced through the submission of a “notice of arbitration” or a “request for arbitration,” a document that is transmitted by the claiming party (the “claimant”) to its adversary (the “respondent”), either directly or through the arbitration institution in the case of an administered arbitration. In an ad hoc arbitration, receipt by the respondent of the demand for arbitration will mark the date on which the arbitral proceedings are deemed to commence, and the demand for arbitration will go directly to the arbitral tribunal once constituted.  In an administered arbitration, the arbitral proceedings typically are deemed to commence on the date on which the selected arbitration institution receives the demand for arbitration together with the appropriate filing fee, which is non-refundable and typically is linked to the amount in dispute.  Once arbitral proceedings are deemed commenced, the non-participation or default of the other party is immaterial and will not frustrate the arbitral process.  The requirements, if any, for the minimum contents of the demand for arbitration are set out in the incorporated rules of the arbitration institution or in independent rules applicable to ad hoc arbitration, as the case may be. In this context, any notice provisions set forth in the Container Contract may be relevant. For arbitrations governed by the FAA, the FAA lacks mandatory rules regarding the provision of notice. In a situation where the arbitration clause is silent regarding notice and New York’s arbitration law applies (because the arbitration is seated in New York), the demand for arbitration must comply with that law, subject to the federal pre-emption doctrine.