Identifier
Created
Classification
Origin
09USUNNEWYORK194
2009-02-27 21:42:00
UNCLASSIFIED
USUN New York
Cable title:  

MEETING OF UNCITRAL WORKING GROUP ON REVISION OF

Tags:  AORC EINV ETRD UNCITRAL AU UN 
pdf how-to read a cable
VZCZCXYZ0020
RR RUEHWEB

DE RUCNDT #0194/01 0582142
ZNR UUUUU ZZH
R 272142Z FEB 09
FM USMISSION USUN NEW YORK
TO RUEHC/SECSTATE WASHDC 5964
INFO RUEHUNV/USMISSION UNVIE VIENNA 0758
UNCLAS USUN NEW YORK 000194 

SIPDIS

L/PIL

E.O. 12958: N/A
TAGS: AORC EINV ETRD UNCITRAL AU UN
SUBJECT: MEETING OF UNCITRAL WORKING GROUP ON REVISION OF
THE UNCITRAL MODEL ARBITRATION RULES

UNCLAS USUN NEW YORK 000194

SIPDIS

L/PIL

E.O. 12958: N/A
TAGS: AORC EINV ETRD UNCITRAL AU UN
SUBJECT: MEETING OF UNCITRAL WORKING GROUP ON REVISION OF
THE UNCITRAL MODEL ARBITRATION RULES


1. Summary. UNCITRAL Working Group II met in New York
February 9-13 to continue its second reading of the draft
revised model arbitration rules. The Working Group completed
its review of nine articles: 18 through 26. (The draft text
currently contains 41 articles.) Considerable discussion was
devoted to provisions relating to the conduct of hearings and
testimony by fact witnesses and experts. A particularly
controversial issue was interim
measures - specifically, the use of ex parte communications
with the arbitral tribunal to request a preliminary order in
exceptional circumstances. The text agreed upon for articles
18-26 is consistent with U.S. objectives. It is clear that
the Working Group will not meet its target of submitting to
the UNCITRAL Commission, at its annual summer meeting this
year, a completed text for adoption. The Working Group is
scheduled to meet again in September with a view to
completing its work then, with continuation at a subsequent
meeting in February 2010 if necessary. It is understood
that, when it completes its current work, the Working Group
will - consistent with the existing mandate of the Commission
- take up immediately the topic of transparency in
treaty-based investor-State arbitration. End summary.


2. Issues of note that were addressed by the Working Group
(WG) at this session include:

-- The ability of a respondent to raise a counterclaim or to
rely on a separate claim for the purpose of setoff (Art. 19):
It was debated to what extent, in different legal systems, a
counterclaim or a claim for set-off would need to arise out
of the same legal relationship as the main claim, and/or fall
within the scope of the underlying arbitration agreement. It
was concluded that, in order to avoid identifying a
substantive rule, it was preferable to state that the
respondent may make a counterclaim or rely on a claim for
set-off where the tribunal has jurisdiction over either such
claim thereby leaving it to the tribunal to determine in a
given case whether a counterclaim or set-off falls within its
jurisdiction and, ultimately, allowing each legal system to
establish substantive rules regarding the extent of such
jurisdiction.


-- Witnesses and experts (Art. 25): It was noted that there
was lack of clarity in the text about distinguishing fact
witnesses from experts presented by a party, and about
distinguishing the latter from experts appointed by the
tribunal. It was agreed that the text would need to be
scrubbed carefully to ensure consistency in terminology about
fact witnesses, experts presented by a party, and experts
named by the tribunal. There was also agreement to revise
the text to clarify that individuals admitted to testify to
the arbitral tribunal on any issue of fact or expertise shall
be treated as a witness under the Rules, notwithstanding that
the individual is a party to the arbitration or in any way
related to a party. (The latter is designed to address
situations in which the party is a legal person.) The
current text further notes that the tribunal "shall determine
the admissibility, relevance, materiality and weight" of
evidence that is offered.

-- Sequestration of witnesses (Art. 25): After some
discussion, language was preserved from the 1976 Rules
affirming that the tribunal may require the retirement of a
witness during the testimony of other witnesses. The
Secretariat was asked to draft an additional provision
stating that, as a general matter, a party appearing as a
witness should not be requested to retire during the
testimony of other witnesses (as this might be seen as
interfering with the rights of the party),but this
possibility should not be foreclosed.

-- Interim measures (Art. 26): It was agreed to import
language from the recently revised UNCITRAL Model Law on
International Commercial Arbitration that identifies both the
types of interim measures that might be ordered by a tribunal
(while noting that the list was not necessarily exclusive),
as well as the conditions that would need to be met in order
to justify the granting of interim measures. There was
extended debate over whether to include language
acknowledging that tribunals could issue preliminary orders
on the basis of an ex parte request from one party. Several
delegations said that, in their legal systems, arbitral
tribunals had no such authority, and that only courts could
entertain such ex parte requests. Ultimately, it was agreed
to include language that approached the matter neutrally,
without prejudice to what national law might provide:
Nothing in these Rules shall have the effect of creating a
right, or of limiting any right which may exist outside these
Rules, of a party to apply to the arbitral tribunal for, and
any power of the arbitral tribunal to issue, in either case


without prior notice to a party, a preliminary order that the
party not frustrate the purpose of a requested interim
measure.

-- Liability for interim measures (Art. 26): The current
draft text provides that a party requesting an interim
measure, including a preliminary order as discussed above,
might be liable for costs or damages arising from such
measure/order if the tribunal later determined that the
measure/order should not have been granted. It was suggested
that conditioning the liability for damages in this way might
preclude an award of costs in circumstances where it was
nonetheless appropriate to award them because the party that
obtained the interim measure did not succeed in its case,
even though the criteria for granting the measure/order had
been originally satisfied. Before reaching a conclusion on
how to handle this issue, the Working Group requested that
the Secretariat conduct a study of practice in different
legal systems regarding liability for interim measures.


3. Future work: The Working Group acknowledged that more
time was needed to complete the second reading of the draft
text, and that the text was not ready for submission to the
UNCITRAL Commission for consideration at its annual meeting
this summer. The Working Group intends to resume its review
of the text in September in order to complete its work then
or, at the latest, in February 2010. It was noted that the
Commission had previously directed the Working Group, upon
completion of revision of the 1976 Rules, to take up as a
matter of priority the topic of transparency in treaty-based
investor-State arbitration. Some delegations noted that,
during the weeks discussion, other questions had arisen
relating to treaty-based arbitration, and it was suggested
that the work of the Working Group in that regard might be
expanded to include issues relating to investor-State
arbitration in addition to transparency. That suggestion
remains for future consideration. The U.S. delegation stated
that it strongly endorsed consideration of the issue of
transparency in keeping with the mandate of the Commission
and that, while there may be merit to consideration of other
issues relating to investor-State arbitration, that should
not detract from addressing transparency as directed by the
Commission.
Rice