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Max Planck Encyclopedia of International Procedural Law [MPEiPro]

Arbitration Rules (2012): Permanent Court of Arbitration (PCA)

Dirk Pulkowski

From: Oxford Public International Law (http://opil.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 28 March 2023

Arbitral tribunals — Awards — Conduct of proceedings — Due process — International courts and tribunals, procedure — Costs and expenses — Arbitral rules

Published under the direction of Hélène Ruiz Fabri, with the support of the Department of International Law and Dispute Resolution, under the auspices of the Max Planck Institute Luxembourg for Procedural Law.

A.  Introduction

The Permanent Court of Arbitration (PCA) Arbitration Rules 2012 (or ‘Rules’) are the most recent rules of procedure adopted by the PCA. The Rules are intended for use in a variety of party constellations, ranging from arbitrations between States or international organizations to mixed (public-private) arbitrations and arbitrations involving only private entities. They are not limited to any particular subject matter. On account of the broad scope of application of the Rules, several provisions contain alternatives for different types of disputes, including in respect of the number of arbitrators to be appointed and the applicable law. The Rules are thus designed to be used in disputes under public international law, commercial disputes, or disputes not involving economic interests (such as human rights or environmental issues).

While the Rules are based on, and in many respects identical to, the Arbitration Rules of the United Nations Commission on International Trade Law (Arbitration Rules: United Nations Commission on International Trade Law (UNCITRAL)), the Rules enshrine substantial roles for the PCA’s International Bureau as registry and the PCA’s Secretary-General as appointing authority. The provisions describing the functions of the Bureau and the Secretary-General reflect the PCA’s practice in, and experience with, providing registry support in international proceedings, notably including proceedings involving one or several States.

The PCA has handled a number of cases under the 2012 Rules (see para 26 below). To date however there is no known case in which parties have consented to the publication of case-related information. As was the case with the UNCITRAL Arbitration Rules upon their adoption in 1976, it may well take a decade or longer until awards issued under the Rules surface in the context of domestic court proceedings. The practical impact of the innovations and modifications to provisions of the UNCITRAL Arbitration Rules made by the PCA in its Rules can thus be more fully assessed only in due course.

B.  The Permanent Court of Arbitration

The PCA is an intergovernmental organization established at the first Hague Peace Conference in 1899 through the Hague Conventions on the Pacific Settlement of International Disputes (Convention for the Pacific Settlement of International Disputes, 1899) (‘1899 Convention’). The PCA’s founding contracting parties were Austria-Hungary, Belgium, Bulgaria, China, Denmark, France, Germany, Greece, Italy, Japan, Luxembourg, Mexico, Montenegro, the Netherlands, Norway, Persia, Portugal, Romania, Russia, Serbia, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom, and the United States. The PCA was thus the first global forum for the settlement of international disputes.

The second Hague Peace Conference in 1907 resulted in the adoption of the 1907 Hague Convention for the Pacific Settlement of International Disputes (Convention for the Pacific Settlement of International Disputes, 1907 (‘1907 Convention’), which confirmed the PCA’s mandate and made certain improvements to the 1899 Convention.

Since 1913, the PCA has been headquartered at the Peace Palace in The Hague, which was specifically built for the PCA. In addition to the PCA’s headquarters in The Hague, today the PCA runs offices with a permanent staff presence in Mauritius (since 2009), Singapore (since 2018), and Argentina (since 2019).

Currently the PCA has 122 Contracting Parties. Its International Bureau consists of over 60 individuals including over 40 lawyers. In recent years, the PCA has consistently registered over 40 new cases every year (Pulkowski, 2021, Introduction, MN 28 and 34). In 2019, the PCA administered 199 cases, 49 of which were initiated that year, ‘comprising four inter-State arbitrations; 125 investor-State arbitrations arising under bilateral/multilateral investment treaties or national investment laws; 60 arbitrations arising under contracts involving a State, intergovernmental organization, or other public entity; four arbitrations between a private entity and a State arising under an arbitration agreement in accordance with the PCA Arbitration Rules 2012; six other proceedings’. In addition, the PCA ‘handled 39 requests relating to its appointing authority services’ (Permanent Court of Arbitration Annual Report, 2019, 10 and 20).

C.  Rules of Procedure Applicable in Permanent Court of Arbitration Proceedings

The 1899 and 1907 Conventions set down fairly detailed rules of procedure for arbitration proceedings. They also set out basic procedural frameworks for administering good offices and mediation proceedings, and commissions of inquiry (fact finding) proceedings.

In addition the Conventions expressly authorize the PCA International Bureau to support special arbitral tribunals (‘est autorise a mettre ses locaux et son organisation a la disposition des Puissances contractantes pour le fonctionnement de toute juridiction speciale d’arbitrage’; Art 26 1899 Convention and Art 47 1907 Convention), highlighting the fact that the PCA was never intended to be limited to the procedural mechanisms set out in its founding conventions.

12  Besides these rules of procedure developed by the PCA, many international instruments, including treaties, refer to the PCA, often setting out specific procedural rules in the instrument.

13  Today proceedings at the PCA are generally conducted under the Arbitration Rules: United Nations Commission on International Trade Law (UNCITRAL) or one of the above-mentioned rules of procedure, rather than the rules in the 1899 and 1907 Conventions.

D.  Drafting of Permanent Court of Arbitration Rules 2012

14  As noted in the Introduction to the Rules, the PCA Arbitration Rules 2012 are based on the UNCITRAL Arbitration Rules 2010. The Rules are specifically intended ‘for use in arbitrating disputes involving at least one State, State-controlled entity, or intergovernmental organization’.

15  While the PCA Arbitration Rules 2012 represent a consolidation of the prior sets of PCA Optional Rules developed in the 1990s, those prior sets of Rules ‘remain valid and available’ (<https://pca-cpa.org/en/services/arbitration-services/pca-arbitration-rules-2012/> (accessed June 2020).

16  The PCA Arbitration Rules 2012 were elaborated by a drafting committee, chaired by Professor Jan Paulsson. The other members of the committee were Ms Lise Bosman, Mr Brooks W Daly, Mr Alvaro Galindo, Professor Alejandro Garro, HE Judge Sir Christopher Greenwood, Mr Michael Hwang, Professor Gabrielle Kaufmann-Kohler, Mr Salim Moollan, Professor Dr Michael Pryles AM, Judge Seyed Jamal Seifi, and Mr Jernej Sekolec (Daly and others, 2014, MN 1.13).

17  On 17 December 2012 the PCA Arbitration Rules 2012 were adopted by the PCA’s Contracting Parties in their capacity as members of the PCA Administrative Council.

E.  Specificities of the Permanent Court of Arbitration Rules 2012

18  Given that the PCA Arbitration Rules 2012 are based on, and in many respects identical to, the UNCITRAL Arbitration Rules, the following discussion will focus on relevant specificities of the PCA Rules.

1.  Intended Scope of Application

19  The Introduction to the PCA Arbitration Rules 2012 provides:

These Rules are for use in arbitrating disputes involving at least one State, State-controlled entity, or intergovernmental organization … The Rules are optional and are based on the 2010 UNCITRAL Arbitration Rules with changes made in order to: (i) Reflect the public international law elements that may arise in disputes involving a State, State controlled entity, and/or intergovernmental organization.

20  Similarly, Article 1 (1) provides:

Where a State, State-controlled entity, or intergovernmental organization has agreed with one or more States, State-controlled entities, intergovernmental organizations, or private parties that disputes between them in respect of a defined legal relationship, whether contractual, treaty based, or otherwise, shall be referred to arbitration under the Permanent Court of Arbitration Arbitration Rules 2012 (hereinafter the ‘Rules’), then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree.

21  While the Rules were drafted with disputes involving public entities in mind, they may nevertheless be used in cases exclusively between private parties. Importantly, the use of the Rules outside their primary scope of application does not call into question the jurisdiction of a tribunal established pursuant to the Rules. As is clarified in Article 1 (4):

The involvement of at least one State, State-controlled entity, or intergovernmental organization as a party to the dispute is not necessary for jurisdiction where all the parties have agreed to settle a dispute under these Rules.

22  The provision may prove important in multi-party arbitrations where the State, State-controlled entity, or intergovernmental organization ceases to be a party to the proceedings, ‘such as when the arbitral tribunal finds in a preliminary phase that it does not have jurisdiction over that specific entity’ (Daly and others, 2014, MN 3.17).

23  Moreover it seems conceivable that the identity of one of the parties, as a State or State entity or an intergovernmental organization, may be subject to debate, such as when the international recognition of an entity that is a party to the arbitration agreement as a State is contested or the degree of control exerted by a State over a related company or agency is disputed (Pulkowski, 2021, Art 1, MN 6).

24  Where none of the parties qualifies as a State, State entity, or intergovernmental organization, the case will proceed as usual, except that the PCA Secretary-General may ‘decide to limit the Permanent Court of Arbitration’s role in the proceedings to the function of the Secretary-General as appointing authority, with the role of the International Bureau under these Rules’—ie the registry role (see sec E.4 below)—‘to be assumed by the arbitral tribunal’ (Art 1 (4); see also Daly and others, 2014, MN 3.15-3.17).

25  In any case, parties who wish to be assured that the PCA’s full range of registry services is available in the event of a dispute may contact the PCA beforehand, at the time of negotiating a compromis or dispute settlement provision of a contract or treaty, in order to confirm the Secretary-General’s position.

26  To date, arbitrations administered by the PCA under the 2012 Rules have arisen under contracts and compromis involving States and other public entities, in various sectors including construction, financial services and insurance, human health and social work, administrative and support services, as well as environmental disputes. Cases under the 2012 Rules have involved parties from Africa, the Americas, Asia, and Europe. So far parties in none of these cases have consented to the publication by the PCA of case-related information, so that the cases remain confidential. The PCA’s Case Repository has not listed any public case instituted under the 2012 Rules at this stage, and no award or other decision in a case instituted under the 2012 Rules appears to have surfaced in the context of ‘satellite litigation’ before domestic courts (such as action for the confirmation or enforcement of an award or set-aside proceedings).

27  There is no requirement under the PCA Arbitration Rules 2012 that parties to a treaty, contract, or compromis notify the International Bureau of their intention to refer to the Rules in a dispute settlement clause. Therefore, the precise extent to which the Rules have been incorporated into international instruments is unknown. Numerous references to the PCA Arbitration Rules 2012 are documented however in instruments relating to climate change regulation, including the Accreditation Master Agreement of the Green Climate Fund, set up by the States parties to the United Nations Framework Convention on Climate Change (‘UNFCCC’) as part of the Convention’s financial mechanism (see, for example, <https://www.greenclimate.fund/sites/default/files/document/ama-ifad.pdf> (accessed June 2020)).

2.  Modifications on Account of Specificities of States and Intergovernmental Organizations

28  The PCA Arbitration Rules 2012 reflect peculiarities commonly encountered in arbitrations involving States, the most important of which are the following.

(a)  Number and Appointment of Arbitrators

29  As noted in the Introduction to the Rules, the Rules envisage ‘an arbitral tribunal of one, three, or five persons’, with the choice of such arbitrators ‘not limited to persons who are listed as Members of the PCA’.

30  The Introduction, as well as Article 10 (4) of the Rules, draw the disputing parties’ attention to the fact that the PCA maintains a list of ‘Members of the Court’ (National Groups: Permanent Court of Arbitration (PCA)), without limiting the choice of the parties (or the appointing authority) to these individuals. Members of the Court are potential arbitrators appointed by the PCA’s Contracting Parties. Pursuant to the 1899 and 1907 Conventions, each Contracting Party is entitled to nominate up to four persons of ‘known competency in questions of international law, of the highest moral reputation and disposed to accept the duties of arbitrators’. Members of the Court are appointed for a term of six years, and their appointments can be renewed (for an up-to-date list of the Members of the Court, see <https://pca-cpa.org/en/about/structure/members-of-the-court/> (accessed June 2020)).

31  The possibility of constituting a five-member tribunal is a unique feature in the PCA’s rules of procedure, not envisaged in other institutional rules. While historically many interState arbitrations were decided by three-member tribunals, the appointment of five members appears to have become the norm in modern inter-State arbitration: ‘In 19 out of the 28 inter-State proceedings at the PCA since 1996 (including one conciliation), five arbitrators (or conciliators) were appointed; in 8 cases, three arbitrators were appointed; in one case, seven arbitrators were appointed’ (Pulkowski, 2021, Introduction, MN 17, and Art 10, MN 5).

32  In addition, the Eurotunnel arbitration (PCA Case No 2003-06) suggests that a five-member tribunal may usefully be considered in mixed arbitrations involving more than two parties. In Eurotunnel, the constitution of a five-member tribunal permitted each of the respondent States, France, and the United Kingdom, to appoint an arbitrator (Daly and others, 2014, MN 4.26, fn19; Pulkowski, 2021, Art 9, MN 7).

33  The option of a five-member tribunal results from the operation of Articles 7 and 9. Article 7 of the Rules (‘the parties have not agreed on the number of arbitrators’) is phrased more open-endedly than the parallel provision under the UNCITRAL Arbitration Rules 2010 (‘the parties have not agreed that there shall be only one arbitrator’) on account of there being three options, rather than two, for the composition of a tribunal. Article 9 of the Rules sets out the mechanism for constituting a five-member tribunal (in addition to the more conventional mechanism for constituting a three-member tribunal familiar from Article 9 of the UNCITRAL Arbitration Rules 2010). Pursuant to the third sentence of Article 9 of the Rules, each party may appoint one member of the tribunal, and ‘the two party-appointed arbitrators shall choose the remaining three arbitrators and designate one of those three as the presiding arbitrator of the tribunal’. The drafters thus opted for a tribunal in which the majority of its members are appointed by the common accord of the co-arbitrators or the PCA Secretary-General as neutral appointing authority, therefore limiting the role of party appointment.

34  In contrast to this default approach under the Rules, which is consistent with the mechanism for the composition of tribunals under Annex VII Arbitration: United Nations Convention on the Law of the Sea (‘UNCLOS’), States have occasionally preferred to strengthen party autonomy and reserve for themselves the right to appoint two arbitrators per side (see Abyei Arbitration, Sudan v Sudan People’s Liberation Movement/Army, Arbitration Agreement, Art 5 (1); Eritrea-Ethiopia Claims Commission, PCA Case No 2001-2; Eritrea-Ethiopia Boundary Commission, PCA Case No 2001-1, Arts 4 (4), 5 (2) Agreement between the Government of the State of Eritrea and the Government of the Federal Democratic Republic of Ethiopia for the resettlement of displaced persons, as well as rehabilitation and peacebuilding in both countries, 2000; Iron Rhine Arbitration, Belgium v Netherlands, Rules of Procedure, Article 5 (1)). An approach such as that adopted in these arbitrations—involving four party-appointed arbitrators and a chairperson—remains possible by agreement of the parties in proceedings under the PCA Arbitration Rules 2012, as those Rules—as is made explicit in Article 1 (1)—apply ‘subject to such modification as the parties may agree’.

(b)  Appointment of Agents

35  Article 5 PCA Arbitration Rules 2012 reflects the customary practice in inter-State proceedings that each State appoints an agent to represent it in the proceedings. As under the Statute of the International Court of Justice (ICJ) (Art 42: ‘[t]he parties shall be represented by agents’), Article 5 (1) of the Rules makes such appointment mandatory in ‘disputes involving only States and/or intergovernmental organizations’.

36  As has been noted with respect to the ICJ, the agent fulfils a ‘central and representative function … with the full authority to speak for the State in the litigation’ (Berman, 2012, 1087). Statements from the agent may thus bind the State, in the sense of constituting unilateral acts. These powers distinguish agents from counsel or advisers. The same analysis must apply in arbitration proceedings involving States: in fact, the practice of appointing agents appears to have developed in inter-State arbitration, to be eventually ‘carried over’ to proceedings before the PCIJ and the ICJ. Since the PCA’s first case in 1902, The Pious Fund of the Californias (United States v Mexico), governments in inter-State arbitrations at the PCA have appointed high-ranking government officials as agents.

37  The PCA Arbitration Rules 2012—like the Statute of the ICJ—do not constrain the choice of States as to whom to appoint as agent. As the Court noted, ‘the word “agent”’ is used ‘in the most liberal sense, that is to say, any person who, whether a paid official or not, and whether permanently employed or not, has been charged by an organ of the organization with carrying out, or helping to carry out, one of its functions—in short, any person through whom it acts’ (Reparation for Injuries Suffered in the Service of the United Nations, 1949, 174 at 177).

38  There is no requirement under the Rules to appoint an agent in other arbitrations, such as investor-State arbitrations. While it is unusual for States to appoint an agent in mixed arbitrations, recent commentary has argued that there is an ‘indispensable role’ for agents in such disputes because agents:

generally enhance the State’s credibility and reliability as a litigating party; increase the legitimacy of the adjudicative process; improve coordination and management of the State’s international disputes; and help the State formulate litigation positions consistent with its broad, long-term legal and policy interests (Sharpe, 2018, 675).

An instructive precedent would be the PCA arbitration in the Eurotunnel case, referred to above, in which the governments involved appointed agents to represent them in the proceedings.

(c)  Time Limits

39  The PCA Arbitration Rules 2012 are intended to accommodate difficulties that States may face in complying with procedural deadlines in arbitral proceedings.

40  The drafters of the Rules took the view that the 15-day time limits under the UNCITRAL Arbitration Rules 2010 for sending a notice of challenge (i) upon the appointment of an arbitrator or (ii) upon becoming aware of circumstances raising justifiable doubts as to impartiality or independence were unreasonably short for proceedings involving governments. Article 13 (1) of the Rules thus extends the time period for a ‘party that intends to challenge an arbitrator’ to ‘send notice of its challenge’ to 30 days after that party has been notified of the appointment of the challenged arbitrator or has become aware of the circumstances giving rise to concerns about impartiality and independence.

41  In respect of most other time limits however, the PCA Arbitration Rules 2012 seek to accommodate governmental concerns through a different technique: while the PCA Optional Rules adopted in the 1990s had prolonged the UNCITRAL Arbitration Rules time limits across the board, the PCA Arbitration Rules 2012 tend to maintain the more stringent time limits of the UNCITRAL Arbitration Rules while empowering the PCA’s International Bureau to extend those time limits in appropriate cases.

42  The International Bureau has issued an Explanatory Note explaining its approach in this regard. Acknowledging that certain time periods provided in the 2012 PCA Rules are shorter than those set forth in the PCA arbitration rules adopted in the 1990s, the Bureau explains that it is empowered under the 2012 PCA Rules to extend the default time periods provided for in Articles 4 (1), 8 (2) (b), 9 (3), and 43 (4) of the Rules. In this regard, the Bureau notes that it will consider the time periods set forth in the 1990s PCA Rules ‘as a guideline for the extensions that the International Bureau may decide to grant’ (Explanatory Note of the International Bureau of the Permanent Court of Arbitration Regarding Time Periods Under the PCA Arbitration Rules 2012).

43  This approach appears intended to address concerns, often expressed by private parties in mixed arbitrations, that the involvement of a government invariably leads to delay; contrary to the PCA arbitration rules adopted in the 1990s, the 2012 Rules do not grant more generous time periods as a matter of right (save for the example of Art 13 (1) mentioned in para 40 above). Rather, the default approach under the 2012 Rules is to replicate the stringent time periods familiar from the UNCITRAL Arbitration Rules. One may expect that these time periods will indeed prove adequate for many contract-based proceedings involving a State entity. At the same time, the Rules provide some flexibility to ensure that States have a fair opportunity to participate effectively in all stages of the proceedings, including in public international law cases requiring a heightened degree of political coordination or presenting other complexities.

(d)  Applicable Law

44  Article 35 (1) PCA Arbitration Rules 2012 provides detailed direction to arbitral tribunals in the event that the parties have not expressly designated the law applicable to the substance of the dispute. The UNCITRAL Arbitration Rules empower the tribunal in such circumstances to ‘apply the law which it determines to be appropriate’. The PCA Arbitration Rules 2012 opt for a more expansive approach, which distinguishes between different party configurations: cases involving only States (para 1 (a)); cases involving only States and intergovernmental organizations (para 1 (b)); cases involving intergovernmental organizations and private parties (para 1 (c)); and all other cases (para 1 (d)).

45  In cases involving only States, public international law is presumed to be the applicable law (unless the parties designate a different law as applicable). In this regard, the Rules substantially reproduce Article 38 (1) ICJ Statute. This choice reflects a desire to promote the consistency of decisions emanating from different international judicial and arbitral bodies (Daly and others, 2014, MN 6.24).

46  In cases involving only States and intergovernmental organizations, and intergovernmental organizations and private parties, the applicable law clause in Article 35 (1) of the Rules reproduces the corresponding clauses of Article 33 (1) Optional Rules for Arbitration between International Organizations and States (1996) and Optional Rules for Arbitration between International Organizations and Private Parties (1996), respectively.

47  As is generally recognized in commercial arbitration rules, an arbitral tribunal constituted pursuant to a contractual arbitration clause or contractual arbitration agreement is competent to examine, and rule on, its own competence or jurisdiction. In the event that a dispute is governed by public international law however, questions may arise as to the extent to which doctrines generally accepted in contract-based arbitration, such as Competence-Competence and severability of the arbitration agreement, also apply in public international law (see Pulkowski, 2021, Article 23, MN 2-5, referring to Nottebohm, 1953, 119; Abyei Arbitration, 2009, para 498; Pulkowski, 2010, 129).

48  Article 13 (1) PCA Arbitration Rules 2012 clarifies that both principles are applicable in proceedings conducted pursuant to the Rules, including in proceedings instituted under an international treaty:

The arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause that forms part of a contract, treaty, or other agreement shall be treated as an agreement independent of the other terms of the contract, treaty, or other agreement. A decision by the arbitral tribunal that the contract, treaty, or other agreement is null, void, or invalid shall not entail automatically the invalidity of the arbitration clause.

(e)  Immunity from Jurisdiction

49  Arbitral proceedings are not infrequently accompanied by satellite litigation in domestic courts (including freezing assets, assisting the arbitration process through document disclosures, or obtaining interim relief) and followed by enforcement proceedings. In this context domestic courts may need to consider whether the submission by a State or intergovernmental organization to an arbitration agreement, and/or its participation in subsequent arbitral proceedings, constitutes a waiver of the immunity enjoyed by that State or organization under international law. Institutional rules of procedure typically do not address that issue, nor do the UNCITRAL Arbitration Rules.

50  In this regard Article 1 (2) PCA Arbitration Rules 2012 provides:

Agreement by a State, State-controlled entity, or intergovernmental organization to arbitrate under these Rules with a party that is not a State, State-controlled entity, or intergovernmental organization constitutes a waiver of any right of immunity from jurisdiction in respect of the proceedings relating to the dispute in question to which such party might otherwise be entitled. A waiver of immunity relating to the execution of an arbitral award must be explicitly expressed.

51  The approach is consistent with the prevailing view that an arbitration involving a sovereign State ‘can proceed validly only on the basis that the state concerned has agreed to arbitrate, and such an agreement is generally held to be a waiver of immunity. This is also taken to extend to the jurisdiction of the relevant court at the seat of the arbitration to supervise the arbitration taking place in its territory’ (Blackaby and others, 2015, MN 11.144; waiver of immunity). In contrast, ‘whilst the existence of an arbitration agreement is usually held to be a waiver of immunity from jurisdiction, such a waiver is generally not held to extend to immunity from execution’ (Blackaby and others, 2015, MN 11.146).

52  The scope of application of Article 1 (2) PCA Arbitration Rules 2012 is limited to agreements to arbitrate with a private party (‘a party that is not a State, State-controlled entity, or intergovernmental organization’). In relations between States or intergovernmental organizations, sovereign entities should not be presumed to have waived their immunity (Pulkowski, 2021, Article 1, MN 3).

3.  Powers of the Permanent Court of Arbitration Secretary-General

53  The PCA Arbitration Rules 2012 combine elements of ad hoc arbitration and institutional arbitration, as is evidenced by the powers vested in the PCA Secretary-General. Under the UNCITRAL Arbitration Rules, the PCA Secretary-General has a limited role in supporting the ad hoc arbitration process, including most importantly the power to designate an appointing authority (in the event that no such appointing has been agreed). Article 6 (1) PCA Arbitration Rules 2012 vest the powers of the appointing authority directly with the Secretary-General.

54  Accordingly, appointing authority functions in the context of the appointment process (Arts 7–9), in respect of decisions on challenges (Art 13), replacement of an arbitrator (Art 14), and in reviewing and—if necessary—adjusting the fees of the members of the tribunal (Art 41) are exercised by the PCA Secretary-General. In substance, the appointing authority function under the PCA Arbitration Rules 2012 is generally similar to that under the UNCITRAL Arbitration Rules, with certain modifications.

55  Article 13 (5) PCA Arbitration Rules 2012 for example, dealing with decisions on arbitrator challenges, clarifies that ‘the appointing authority may indicate the reasons for the decision, unless the parties agree that no reasons shall be given’. This provision is evidence of a general trend in international arbitration towards reasoned decisions on challenges and ‘reflects the consistent practice of the PCA’s Secretary-General to provide a reasoned decision as long as at least one party so requests’ (Pulkowski 2020, Art 13, MN 4).

56  Article 14 (2) PCA Arbitration Rules 2012, addressing the powers of the appointing authority exceptionally to deprive a party of its right to appoint a substitute arbitrator, limits the scope of those powers somewhat, as compared to the UNCITRAL Arbitration Rules 2010, in that the appointing authority can appoint a substitute arbitration but cannot ‘authorize the other arbitrators to proceed with the arbitration and make any decision or award’; such authority to determine whether to continue as a truncated tribunal is vested with the arbitral tribunal itself pursuant to Article 12 (4) of the Rules. In this context, it is also worth noting that, in the event that an arbitrator ‘fails to participate in the arbitration’, Article 12 (4) empowers the tribunal, at its sole discretion, to decide either to continue as a truncated tribunal or declare the office of an arbitrator vacant (and thus enable the appointment of a substitute arbitrator).

57  The power in Article 14 (2) UNCITRAL Arbitration Rules 2010 to deprive a party of the right to appoint an arbitration has been described as an ‘extraordinary remedy’ (Caron and Kaplan, 2013, 309), the precise contours of which were highly controversial during the UNCITRAL Working Group discussions of the draft provision (Caron and Kaplan, 2013, 312–13). The allocation of the power to authorize proceeding with a truncated tribunal to the appointing authority also raises the question whether the remaining arbitrators concurrently retain the power to make such an order. As noted by a tribunal constituted under the UNCITRAL Arbitration Rules 1976, ‘[t]he weight of well-established international authority makes clear that an arbitral tribunal has not only the right, but the obligation, to proceed when, without valid excuse, one of its members fails to act, withdraws or—although not the case here—even purports to resign’ (Himpurna California Energy Ltd v Republic of Indonesia, 2000, 194). In the interest of legal certainty, Article 12 (4) PCA Arbitration Rules 2012 expressly spells out that power of the remaining members of the tribunal.

58  Article 41 PCA Arbitration Rules 2012 sets out a unique approach to overseeing the costs of arbitration. Paragraph 3 requires the arbitral tribunal to submit its ‘determination of the costs referred to in Article 40, paragraphs 2 (a), (b) and (c)’, thus including the fees and expenses of the arbitrators and tribunal-appointed experts, to the PCA Secretary-General for review prior to fixing the costs of arbitration. Importantly that review is mandatory and conducted by the Secretary-General ex officio. The mechanism avoids the difficulties presented by the cost control mechanism under the UNCITRAL Arbitration Rules 2010, pursuant to which action by the appointing authority is dependent on a request from a party after the tribunal has already fixed its fees.

59  While these provisions address particular—and as far as Article 14 (2) PCA Arbitration Rules 2012 is concerned, fairly exceptional—procedural circumstances, arbitrating parties are likely to be especially interested in more specific information as to the procedure typically adopted by the PCA Secretary-General when acting in the capacity as appointing authority under the Rules. In this regard the PCA has published information concerning the practice of the PCA Secretary-General as appointing authority on its website (Permanent Court of Arbitration, ‘Spotlight on the PCA’s Appointing Authority Activities’). The PCA also made submissions on its activity specifically in the context of investment disputes and commercial disputes in the context of UNCITRAL Working Groups II and III (Permanent Court of Arbitration, ‘Mechanisms for selection and appointment of presiding arbitrators or sole arbitrators / Mécanismes de sélection et de nomination des arbitresprésidents et des arbitres uniques’, 2020; ‘Settlement of commercial disputes: Submission by the Permanent Court of Arbitration’, 2019; ‘Submission by the Permanent Court of Arbitration, Arbitrator Appointments and Arbitrator Challenges’, 2018. See also Grimmer 2015; Grimmer 2011; Daly and others, 2014, Chapter 4).

4.  Role of the Permanent Court of Arbitration International Bureau

60  As noted above, the PCA Arbitration Rules 2012 combine elements of ad hoc arbitration and institutional arbitration. The role of the PCA’s International Bureau is further evidence of the Rules’ hybrid nature.

61  As in ad hoc arbitration, proceedings under the PCA Rules commence with the claimant’s service of a notice of arbitration on the opposing party. Claimants should make appropriate arrangements to ensure that they retain evidence of compliance with the notice requirements of Article 2 PCA Arbitration Rules 2012 (including, as the case may be, proof of delivery of the notice to the respondent).

62  At the same time Article 3 (1) of the Rules requires that the notice of arbitration is also sent to the PCA’s International Bureau, which acts as registry pursuant to Article 1 (3) of the Rules. Several other provisions equally require relevant communications to be copied to the International Bureau (Arts 4 (1), 5 (3), 17 (4), 20 (1), 21 (1), 37 (1), 38 (1), and 39 (1)), to enable the Bureau to maintain a full record of the arbitration and facilitate effective action by the PCA Secretary-General as appointing authority where called for under the Rules. The PCA’s involvement in all correspondence and filings exchanged in the arbitration, which goes well beyond the usual practice of commercial arbitration institutions, justifies the qualification of the Rules as institutional arbitration rules.

63  The precise scope of registry services may vary considerably between different cases. As is evident from the PCA website, the scope of services provided by the International Bureau is dependent on what the ‘Parties may agree or tribunals may request’. Typical functions include serving as a channel for oral and written communications from the parties to the arbitral tribunal and vice-versa and between the parties; maintaining an archive of filings and correspondence; making all arrangements concerning the amounts of the arbitrators’ fees and advance deposits to be made on account of such fees in consultation with the parties and the arbitrators; holding the party deposits and disbursing tribunal fees and expenses; assisting the arbitral tribunal to establish the date, time and place of hearings, and giving such advance notice thereof to the parties as the tribunal determines; making its hearing and meeting rooms in the Peace Palace or elsewhere available to the parties and the arbitral tribunal at no charge (costs relating to catering, court reporting, or other support associated with hearings or meetings at the Peace Palace or elsewhere is borne by the parties); making arrangements for transcription, recording, interpretation, translation, catering, or other support associated with hearings or meetings at the Peace Palace or elsewhere, the costs of which is borne by the parties; assisting with travel and hotel reservations, as well as procurement of visas (<https://pca-cpa.org/en/services/arbitration-services/case-administration/> (accessed June 2020)).

64  In addition the PCA’s services may include ‘carrying out any other tasks entrusted to it by the parties or the arbitral tribunal’ (<https://pca-cpa.org/en/services/arbitration-services/case-administration/> (accessed June 2020)). Pursuant to that provision, a senior PCA lawyer may act as tribunal secretary or registrar to facilitate the conduct of the proceedings. In a large number of PCA cases, including all inter-State cases instituted in the past, tribunals have relied on the support of a PCA secretary or registrar.

65  The PCA’s hearings and meetings in the Peace Palace in The Hague (the Netherlands) are available to parties in PCA-administered proceedings at no charge. Similar arrangements are in place at the PCA’s permanent offices in Buenos Aires (Argentina), Port Louis (Mauritius), and Singapore. The PCA can also arrange facilities for hearings at various locations around the world pursuant to its Host Country Agreements with various Contracting Parties and cooperation agreements with other arbitral institutions (<https://pca-cpa.org/en/services/arbitration-services/case-administration/> (accessed June 2020)).

66  Article 43 (1) and (2) of the Rules empowers the International Bureau, as part of its registry function, to request initial advances toward the costs of arbitration and ensure that adequate deposits are maintained. Article 43 (3) clarifies that the International Bureau may also accept to hold amounts deposited as security for costs, pursuant to an order of interim measures by the arbitral tribunal in accordance with Article 26 of the Rules, in escrow. Such funds deposited with the PCA are subject to immunity under the Headquarters Agreement with the Netherlands and Host Country Agreements that the PCA has concluded with several of its Contracting Parties.

67  Article 43 (1) also entrusts the International Bureau with responsibility to:

ensure that any disbursements of arbitral tribunal fees and expenses made prior to the fixing of the costs of arbitration pursuant to article 40 are consistent with the criteria in article 41, paragraph 1 and with the arbitral tribunal’s proposal (and any adjustments thereto) under article 41, paragraph 2.

This includes the requirement that any fees and expenses must be ‘reasonable in amount’ in the concrete circumstances of the case. The enlarged role of the International Bureau in respect of cost control, in comparison to the UNCITRAL Arbitration Rules and many institutional rules, is designed to limit the need for the PCA Secretary-General to intervene in the capacity as appointing authority to adjust the arbitrators’ fees.

68  The award of the tribunal ‘signed by the arbitrators shall be communicated to the parties by the International Bureau’ in accordance with Article 34 (6) PCA Arbitration Rules 2012.

69  Pursuant to Article 34 (7) PCA Arbitration Rules 2012, in cases involving only States, ‘the parties shall communicate to the International Bureau the laws, regulations, or other documents evidencing the execution of the award’. This provision is inspired by obligations undertaken by the PCA’s Contracting Parties in Article 22 1899 Convention and Article 43 1907 Convention. It is intended to ‘encourage compliance, and facilitate the creation of a record of the actions taken by states in execution of arbitral awards’ (Daly and others, 2014, MN 6.19).

F.  Model Clauses and Statements

70  The annex to the PCA Arbitration Rules 2012 sets out various ‘[m]odel clauses that parties may consider inserting in treaties, contracts, or other agreements to provide for arbitration of existing or future disputes’. In this regard separate clauses have been designed for inclusion in contracts and treaties, respectively. The annex to the PCA Arbitration Rules 2012 further sets out a model waiver clause in the event that ‘the parties wish to exclude recourse against the arbitral award that may be available under the applicable law’. The annex finally contains model statements for use by arbitrators to confirm their impartiality and independence and their availability to devote the necessary time to the arbitration. These statements are based on the practice of the International Bureau in respect of arbitrator appointments.

G.  Conclusion

71  The PCA Arbitration Rules 2012 combine the tried and tested approach of the UNCITRAL Arbitration Rules with modifications and innovations intended to facilitate the conduct of proceedings involving States and international organizations. While these modifications will no doubt meet with interest among users, the most important practical difference to ad hoc proceedings under the UNCITRAL Rules will probably lie in the built-in roles for the PCA International Bureau as registry and the PCA Secretary-General as appointing authority. The PCA’s involvement under the Rules, at all stages of the arbitration, should increase the efficiency of the proceedings and lead to greater predictability for the parties.

Dirk Pulkowski Arbitration Rules (2012): Permanent Court of Arbitration (PCA)

Cited Bibliography

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  • Sarah Grimmer, ‘The Expanded Role of the Appointing Authority under the UNCITRAL Arbitration Rules 2010’ (2011) 28 Journal of International Arbitration 501.

  • Fausto Pocar, ‘An Introduction to the PCA’s Optional Rules for Arbitration of Disputes Relating to Outer Space Activities’ (2012) 38 Journal of Space Law 171.

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  • Sarah Grimmer, ‘The Determination of Arbitrator Challenges by the Secretary-General of the Permanent Court of Arbitration’ in Chiara Giorgetti (ed), Challenges and Recusals of Judges and Arbitrators in International Courts and Tribunals (Brill 2015).

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Further Bibliography

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  • International Bureau of the Permanent Court of Arbitration (ed), International Investments and Protection of the Environment (Kluwer Law International 2001).

  • Shabtai Rosenne (ed), The Permanent Court of Arbitration: The Hague Peace Conferences of 1899 and 1907 and International Arbitration – Reports and Documents (TMC Asser Press 2001).

  • Brooks W Daly, ‘The Potential for Arbitration for Cultural Property Disputes: Recent Developments at the Permanent Court of Arbitration’ (2005) 4 The Law & Practice of International Courts and Tribunals: A Practitioners Journal 261.

  • Nisuke Ando, ‘Permanent Court of Arbitration (PCA)’, in Rüdiger Wolfrum (ed), Max Planck Encyclopedia of Public International Law (OUP 2006).

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  • Christiaan MJ Kroner, ‘The Work of the Permanent Court of Arbitration in the Field of Environmental Dispute Resolution’, in A Postiglione (ed), International Conference on Global Environmental Governance (Rome, Ministry of Foreign Affairs 2010).

  • Judith Levine, ‘The View from Arbitration: the PCA’s Experience with Finance, Witnesses and Unrepresented Parties’ (2010) 36 Commonwealth Law Bulletin 539.

  • Brooks Daly, ‘Permanent Court of Arbitration’ in Chiara Giorgetti (ed), The Rules, Practice, and Jurisprudence of International Courts and Tribunals (Nijhoff 2012).

  • Anneliese Quast Mertsch, ‘The Relationship between the Permanent Court of Arbitration and the Permanent Court of International Justice and its Significance for International Law’ in Christian J Tams and Malgosia Fitzmaurice (eds), Legacies of the Permanent Court of International Justice (Nijhoff 2013).

  • Manuel Indlekofer, International Arbitration and the Permanent Court of Arbitration (Kluwer Law International 2013).

  • Lise Bosman, ‘The PCA’s Contribution to Dispute Resolution in Africa’ (2014) 25 Stellenbosch Law Review 308.

  • Martin Doe Rodríguez, ‘Cause and Coincidence: The renaissance of the Permanent Court of Arbitration in Latin America in the field of foreign investment – Causas y Azares: El renacimiento de la Corte Permanente de Arbitraje en América Latina en el campo de las inversiones extranjeras’ in A Tanzi, A Asteriti, R Polanco, P Turrini (eds), International Investment Law in Latin America: Problems and Prospects (Brill 2016).

  • Brooks W Daly and Judith Levine, ‘Permanent Court of Arbitration’, in Encyclopaedia of International Economic Law (Edward Elgar 2017).

  • Judith Levine, ‘Adopting and Adapting Arbitration for Climate Change-Related Disputes’ in Wendy Miles (ed), Dispute Resolution and Climate Change: The Paris Agreement and Beyond (ICC 2017) Chapter 3.

  • Judith Levine and Ashwita Ambast, ‘Responsibility Rising from the Rubble: Lessons from the Bangladesh Accord for Business and Human Rights Arbitration’ (2018) 25 AILJ 1.

  • Judith Levine and Camilla Pondel, ‘There are Not Plenty of Fish in the Sea: PCA Case No. 2018-13 On Ecuador’s Objection to a Decision of the Commission of the South Pacific Regional Fisheries Management Organisation (2018) 24 AILJ 221.

  • Judith Levine and Garth L Schofield, ‘Navigating Uncharted Procedural Waters in a Rising Sea of Cases at the Permanent Court of Arbitration’ in Stephen Minas, H Jordan Diamond, and Holly Doremus (eds), Stress Testing the Law of the Sea: Dispute Resolution, Disasters, and Emerging Challenges (Brill 2018).

  • Judith Levine and Nicola Peart, ‘Environmental Disputes in Investor-State Arbitration: Procedural Issues’ in K Miles (ed), Research Handbook on Investment Law and the Environment (Edward Elgar 2019).

  • Judith Levine and Susan Kimani, ‘Peace, Water and the Permanent Court of Arbitration: Supporting Dispute Settlement from the Rhine to the Corentyne’ in H Ruiz Fabri, E Franckx, M Benatar, and T Meshel (eds), Dispute Resolution in the Law of International Watercourses and the Law of the Sea: A Bridge over Troubled Waters (Brill 2019).

  • Martin Doe Rodríguez and Julian Bordaçahar, ‘Argentina and the Permanent Court of Arbitration’ in F Fortese (ed), Arbitration in Argentina (Wolters Kluwer 2019).

  • Judith Levine and Ashwita Ambast, ‘The Bangladesh Accord Arbitrations: Arbitrating Business and Human Rights Disputes’ (2020) Transnational Commercial Law Review 116.

Cited Documents