Study Note: This module should take around 3.5 hours to study.

MODULE 3. ARBITRATION, INCLUDING EXPEDITED ARBITRATION

LEARNING OBJECTIVES

After completing the study of this module, you should be able to:

1. Describe, in about 200 words, the main features of arbitration.

2. Describe, in about 300 words, the legal framework of arbitration.

3. Describe, in about 300 words, how the tribunal is established in a WIPO arbitration.

4. Describe, in about 200 words, the benefits of arbitration for intellectual property disputes.

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3. ARBITRATION, INCLUDING EXPEDITED ARBITRATION

3.1 Overview

3.1.1 Arbitration Defined

Consensual adjudication

Arbitration is a consensual, adjudicative process in which a third person (or persons)

resolves a dispute within agreed upon parameters.

Comparison to mediation

Mediation and arbitration are similar to the extent they are consensual processes in which a
neutral person participates. However, mediation and arbitration differ fundamentally with
respect to the role of the neutral and the structure of the process. In arbitration, unlike
mediation, the third person neutral imposes on the parties a resolution of the dispute. In
mediation, as we have seen, the parties construct their own resolution. The neutral (the
mediator) serves only to facilitate the parties’ negotiations to find their own resolution.

In arbitration, unlike mediation, the arbitrator is constrained by a formal definition of the

issues to be resolved (e.g., in the form of pleadings, or in the arbitration agreement), the
applicable substantive law, the applicable arbitral law, applicable arbitral rules, factual and
expert evidence the parties choose to adduce, and arguments submitted by counsel. Also,
arbitrators may take into account the law and the public policy of the place(s) where an
arbitral award is likely to be enforced or challenged, in an endeavor to assure that the award
will be durable and enforceable.

Binding decision

Also in arbitration, unlike mediation, the views of the arbitrator on the merits of the defined
issues are binding on the parties. Non-binding, advisory opinions of an arbitrator may be
sought and agreed to by the parties, but the majority of arbitral awards in commercial
disputes are binding on the parties.

3.1.2 Benefits of Arbitration for Intellectual Property Disputes

Party autonomy

One of the main virtues of arbitration is that the parties can “forum shop” in every sense.
This is especially important in intellectual property disputes in which the issues are typically
wide ranging and complex. Some of the benefits for the parties are that they can:

1. Choose the arbitrator(s);

2. Choose the issues to be arbitrated;
3. Choose the place of the arbitration;
4. Choose the substantive law that will control the merits of the dispute;
5. Choose the procedural rules;
6. Choose the schedule;
7. Choose exhibits, witnesses and other evidence to be adduced including arranging
for tests and site visits;

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 8. Choose the form of relief to be awarded;
9. Choose the form of the award; and
10. Agree to facilitate enforcement of the award. In contrast to litigation in national
courts, these features may afford substantial advantages.

As stated, WIPO offers parties two separate arbitration procedures: WIPO Arbitration and
WIPO Expedited Arbitration. The following sections relate to both proceedings except where
specific reference is made to the WIPO Expedited Arbitration Rules. WIPO Expedited
Arbitration is further summarized in section 4.10 below.

Enforceable award

Another feature also provides a substantial advantage: an arbitral award rendered in a country
that is a signatory to the New York Convention on the Recognition and Enforcement of
Foreign Arbitral Awards ([Link]
(the “New York Convention”) may be enforced relatively easily in any of the more than 150
signatory countries
([Link] to
the Convention. No such all-encompassing Convention or Treaty or legal regime applies to
judgments rendered in national courts. Thus it is far more likely that an arbitral award, as
opposed to a court judgment, can be enforced around the world.

Usual concerns

Arbitration may not be appropriate in every intellectual property dispute. First, the parties
must agree to arbitrate. For substantive, tactical or other reasons, one or more parties may not
wish to enter into such an agreement. One or more parties may perceive a need for extensive
discovery. One party may need a precedent-setting judgment from a national court. One or
more parties may want the procedural safeguards of an established national court system (e.g.,
due process, evidentiary rules and the right to appeal). Arbitrability and enforceability of an
award may be in doubt with respect to key issues. Cultural differences, prior “bad”
experiences, and general mistrust of arbitration may pose high barriers to arbitration.

Addressing concerns

Of the foregoing notions as to why arbitration may not be appropriate for a particular dispute,
only the need for immediate equitable relief may withstand scrutiny. As we see from the
ensuing sections, arbitration can often satisfy all the concerns of the parties. Such reservations
should be examined carefully before arbitration is rejected.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 1

What are the principal advantages of arbitration? Which of those advantages apply
especially to intellectual property disputes?

Type your answer here

Click here for answer

Answer to SAQ 1

The principal advantages of arbitration are:

 Party autonomy
Because of the private nature of arbitration, parties may exercise greater control over the
way their dispute is resolved. Parties may choose, inter alia, the arbitrator, issues to be
arbitrated, place of arbitration, applicable law, language, form of relief, form of award and
schedule of proceedings.

 Final, enforceable award

Arbitral awards are not normally subject to appeal, and enforcement of awards across
borders is greatly facilitated by the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention), which provides for recognition of
awards on a par with domestic court judgments without review on the merits.

 A single, neutral procedure

Through arbitration, parties can resolve their dispute in a single forum, which may be
neutral to the law, language and institutional culture of parties.

 Expertise
The parties can select arbitrators who have special expertise in the legal, technical or
business area relevant to the resolution of their dispute.

 Confidentiality
In arbitration, the parties can in principle keep the proceedings and any results
confidential.

The following table lists the advantages of using arbitration in light of the common features of

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intellectual property disputes.

Common features of many Court litigation Arbitration

IP disputes

International  Multiple proceedings under  Single proceeding under

different laws, with risk of the law determined by
conflicting results parties
 Possibility of actual or  Arbitral procedure and
perceived home court nationality of arbitrator
advantage of party litigating can be neutral to law,
in its own country language and institutional
culture of parties

Technical  Decision maker might not  Parties can select

have relevant expertise arbitrator(s) with relevant
expertise

Urgent  Procedures often drawn-out  Arbitrator(s) and parties

 Injunctive relief available in can shorten procedure
certain jurisdictions  Arbitrators may render
provisional measures,
parties not precluded
from seeking court
injunctions

Require finality  Possibility of appeal  Limited appeal option

Confidential/trade secrets  Public proceedings  Proceedings and awards

and risk to reputation are confidential

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3.1.3 Recommended WIPO Contract Clauses and Submission Agreements

Model clauses and agreements

WIPO has prepared recommended clauses and agreements

([Link] for arbitration. Most commercial
arbitrations, whether domestic or international, arise out of pre-dispute arbitration clauses.
Accordingly, the arbitration clause in an agreement directed to other relationships between the
parties is of significant importance.

Attention to drafting

Regrettably, dispute resolution clauses in general, and arbitration clauses in particular, are
often inserted at the last minute with little attention paid to their language or implications. Or
when attention is paid to a proposed clause, it is often over-engineered – with excessive detail
that may not be relevant at the time a dispute arises many years later. We discuss some of
these phenomena below.

Pre-dispute clause

WIPO’s recommended pre-dispute arbitration clause states:

“Any dispute, controversy or claim arising under, out of or relating to this contract
and any subsequent amendments of this contract, including without limitation, its
formation, validity, binding effect, interpretation, performance, breach or
termination, as well as non-contractual claims, shall be referred to and finally
determined by arbitration in accordance with the WIPO Arbitration Rules. The
arbitral tribunal shall consist of [three arbitrators][a sole arbitrator]. The place of
arbitration shall be ... . The language to be used in the arbitral proceedings shall
be ... . The dispute, controversy or claim shall be decided in accordance with the law
of ... . ”

Amending standard clauses

Lawyers are sometimes tempted to tinker with standard pre-dispute arbitration clauses. In
some situations this may be helpful, but in many instances it is harmful. Often, lawyers feel
compelled to embellish a standard clause with specificity as to the identity of the arbitrator(s),
their characteristics, limited issues to be arbitrated, time limits, discovery to be taken,
evidence to be presented, the form of the award and the like. These details usually lead to
more difficulties than they resolve. At the time a pre-dispute arbitration clause is drafted, it is
at best difficult to predict the shape and complexion of potential future disputes. Unless the
parties contemplate that one leg of their dispute resolution process will be in national courts
with another leg concurrently in arbitration, they are usually better served by agreeing to a
broad clause, intended to encompass all disputes arising under, out of, or relating to the
underlying agreement. At the time the clause is invoked, the parties can negotiate the details
in light of the circumstances then relevant. It is possible that such negotiations will be
difficult. However, it is more than likely that the specifics of a pre-dispute arbitration clause
agreed to years before the dispute arises will spawn even more difficult negotiations, as the
parties consider whether and how to undo what was previously agreed to in a currently hostile
environment arising out of the break-down of the underlying agreement.

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The eleventh-hour circumstances under which many arbitration clauses are negotiated and
agreed to also render it advisable to rely on standard clauses, such as the WIPO recommended
clauses ([Link] Such clauses cover all the important
bases.

Post-dispute submission agreement

WIPO’s recommended post-dispute submission agreement for WIPO arbitration states:

“We, the undersigned parties, hereby agree that the following dispute shall be
referred to and finally determined by arbitration in accordance with the WIPO
Arbitration Rules:

[Brief description of the dispute]

The arbitral tribunal shall consist of [three arbitrators][a sole arbitrator]. The place
of arbitration shall be ... . The language to be used in the arbitral proceedings shall
be ... . The dispute shall be decided in accordance with the law of ... .”

Elaborating standard agreements

Elaboration of WIPO’s recommended post-dispute submission agreement may well be

warranted – to the extent the parties and their counsel understand and are able to agree on
details such as names of arbitrators, timetables, discovery to be taken, evidence to be adduced,
and the form of the award. Such elaboration is entirely appropriate after the dispute has
arisen. A caveat is that the parties’ agreement to schedules and timetables before the arbitral
tribunal is in place may make it difficult to find otherwise desirable arbitrators who can meet
the parties’ expectations.

Med-Arb submission agreement

WIPO has also prepared a recommended agreement

([Link] for submitting a dispute first to mediation,
and if that fails, to arbitration.

Multi-step, pre-dispute resolution clauses are finding increasing acceptance in international

commercial agreements. Similarly, post-dispute, multi-step procedures are increasingly
accepted. These processes may comprise mediation followed by arbitration, as contemplated
in the WIPO recommended clause. They may also comprise negotiation, followed by
mediation, followed by arbitration. The popularity of multi-step processes reflects recognition
by parties and counsel of the virtues of the parties attempting to solve their dispute by way of
negotiating their own resolution, while relying on arbitration as the last alternative.

Parties and their counsel should research and understand the extent to which multi-step
dispute resolution agreements and clauses are enforceable. Also, they should be aware of the
possible use of the provisions of such agreements or clauses to attempt to forestall
participation in an ensuing step. On occasion, a reluctant party will contend that an ensuing
step is premature because another party has not complied with the terms and conditions
governing a prior step. For example, parties hesitant to engage in arbitration have argued that
an adversary has not negotiated in good faith or mediated in good faith, a condition precedent
to arbitration.

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All the above-mentioned clauses and submission agreements are made available by the
WIPO Arbitration and Mediation Center on its website
([Link] and in its publications
([Link]

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 2

Is it advisable to include in an arbitration clause details as to the identity of the

arbitrator(s)?

Type your answer here

Click here for answer

Answer to SAQ 2

In general, it is not advisable to specify the identity of the arbitrator(s) in a pre-dispute

arbitration clause, as it is difficult to predict, when drafting the clause, the shape and
complexion of potential future disputes. A similar consideration applies to the suitability and
availability of candidates for appointment. The parties can negotiate the details of the
arbitrator(s) to be appointed at the time the arbitration clause is invoked, in light of the
circumstances then relevant.

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3.1.4 Place of Arbitration

Selection

Selection of the place of the arbitration is far from a trivial matter. Article 38(a)
([Link] of the WIPO
Arbitration Rules provides that, unless the parties agree otherwise, the Center shall
select the place of the arbitration, taking into account observations of the parties and
“the circumstances of the arbitration.” The parties themselves should agree on the
place of arbitration. Often, in negotiating the terms and conditions of an agreement to
arbitrate, the place of arbitration is a significant bargaining chip.

Arbitral law

The place of the arbitration normally determines the applicable arbitral law.

The arbitral law is taken into consideration to determine issues such as whether a dispute is
arbitrable, interim measures of protection, the conduct of the arbitration (to the extent not
provided by the WIPO Arbitration Rules), the form and validity of the arbitral award and any
challenges as to its validity brought before the courts of the place of the arbitration. A
jurisdiction that is not hospitable to arbitration is not the best place to arbitrate. If all parties
and their counsel intend to conduct the arbitration in good faith and as efficiently as possible,
the arbitral law may not play a significant role. However, if a party finds it necessary to seek
judicial intervention in aid of the arbitration, an inhospitable court will not be helpful.

Arbitrability

In arbitrations related to the validity of intellectual property rights, it is important that the
law and public policy of the jurisdiction where the arbitration occurs does not prohibit
arbitrating such issues in dispute.

The law or public policy of some jurisdictions does not permit binding arbitration of the
validity of intellectual property rights granted by or registered with a government agency.
Such jurisdictions hold that a right granted by the government can be diminished or denied
only by the granting or registering governmental authority. However, even then it is possible
to obtain an inter partes award, which may be all the parties require.

Elements to be considered

Convenience of parties, witnesses, and counsel, concomitant costs, plus local arbitral law,
may be important factors to a party considering arbitration. Not only are convenience and cost
important, but also whether or not witnesses, documents, equipment, facilities and the like
will be available in the place of arbitration. A party’s claim or defense may fail if it is unable
to present evidence because a witness is not available or if inspection of a remotely located
facility is not possible.

Changing place of arbitration

Because arbitration is a consensual process, it is important that the tribunal consult with the
parties before changing the place of arbitration. If the parties agree, no legal problem should
arise – unless the proposed place of arbitration is not “arbitration-friendly”. If a party objects
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to a change in place of arbitration, the tribunal must consider submissions of the parties on
that issue before determining whether or not to proceed elsewhere.

Venue of hearings

The parties’ choice of the place of arbitration is without prejudice to their freedom, and the
tribunal’s freedom, to hold hearings wherever they consider appropriate. This is confirmed by
Article 38(b) ([Link] of the
WIPO Arbitration Rules which authorizes the arbitral tribunal, after consultation with the
parties, to conduct hearings at any place the tribunal deems appropriate. Video conferencing
during the hearing and pre-hearing videos of testimony, tests and facilities may solve the
problem of otherwise unavailable evidence. Another solution may be for the arbitral tribunal
to hold hearings at a place where the evidence is available.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 3

What is the legal relevance of the “place of arbitration”? Must hearings and meetings be
conducted at the place of arbitration?

Type your answer here

Click here for answer

Answer to SAQ 3

The “place of arbitration” usually determines the law applicable to the arbitration. For
example, if the place of arbitration is Geneva, the arbitration will be subject to Swiss
arbitration law. Hearings and meetings need not be conducted at the place of arbitration.
Article 38(b) of the WIPO Arbitration Rules provides that the arbitral tribunal may, after
consultation with the parties, conduct hearings at any place that it considers appropriate.

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3.1.5 Laws Applicable to the Arbitration

(i) Arbitral law

As we have seen in the preceding section, the law applicable to the arbitration, i.e., the arbitral
law, is usually the law of the place of arbitration. Article 61(b)
([Link] (also, Article 3
([Link] provides that this is the
case under WIPO Arbitration Rules. Article 61(b)
([Link] acknowledges that the
parties may agree on another arbitral law. However, unnecessary disputes could arise if the
parties designate an arbitral law other than the law of the place of the arbitration. If the parties
and the tribunal contemplate conducting hearings in more than one jurisdiction, they must
consider the ramifications of conducting part of the proceeding under an arbitral law that may
differ from the arbitral law of the original place of hearing.

(ii) Law applicable to the arbitration agreement

The law chosen by the parties to govern the substance of the dispute will normally also cover
(as is the case under the WIPO model arbitration clause
([Link] the validity of the underlying commercial
contract and, as part of that contract, the arbitration agreement. Article 61(c)
([Link] more broadly provides
that an arbitration agreement is to be regarded as “effective” if it conforms to either the law or
rules of law applicable in accordance with Article 61(a)
([Link] below, or the law
applicable in accordance with Article 61(b),
([Link] above.

(iii) Law applicable to the substance of the dispute

Article 61(a) ([Link] provides

that the tribunal shall decide the substance of the dispute in accordance with the law or
rules of law chosen by the parties.

This law need not be the same as the arbitral law. In the absence of clear party agreement, the
law that governs the substance of the dispute will depend on the nature of the dispute. For
example, if the dispute centers on the interpretation and enforcement of an agreement, the law
governing the interpretation of the agreement would apply (i.e., the law set out in the
governing law clause). If the dispute centers on the construction and enforcement of an
intellectual property right and the parties have not chosen a different governing law, the law
of the jurisdiction granting or registering the right applies. As we note above, if intellectual
property rights granted or registered in different jurisdictions are the subject of the arbitration,
if the parties have not agreed otherwise, the law of the granting or registering jurisdiction will
control the construction and enforcement of each right.

Article 61(a) ([Link] provides

also that, in the event the parties have not chosen the law governing the substance of the
dispute, the tribunal shall determine and apply the appropriate law. In doing so, the tribunal is
to take into account the terms of any relevant contract and applicable trade usages.

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(iv) Law applicable to the enforcement of the award

The law governing the enforcement of the award is the law of the place of enforcement. This
is also important in intellectual property arbitrations. Article V.2
([Link] of the New York
Convention provides that a court in the country where recognition and enforcement of an
award are sought may refuse recognition and enforcement if (a) the subject matter of the
dispute is not arbitrable under the law of that country; or (b) recognition or enforcement of the
award would be contrary to the public policy of that country. Importantly, the court may raise
and rely on these grounds on its own motion. Thus, a court may invoke these grounds
notwithstanding that the challenging party has not proved that recognition or enforcement
would be inappropriate.

3.1.6 Summary

· Arbitration is a consensual adjudicative process.

· An arbitral award rendered in a country that is signatory to the New York Convention
may be enforced in any one of the more than 150 signatory countries to the Convention.
· Arbitration is based on an agreement by the parties to refer to arbitration a dispute at the
time when they concluded their contract or after a dispute arises.
· The place of arbitration normally determines the applicable arbitral law controlling the
procedure. Separate laws might apply to the underlying arbitration agreement, the
substance of the dispute and the enforcement of the award.

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3.2 Commencing the Arbitration

3.2.1 Request for Arbitration and Answer to the Request

Date of commencement

Articles 6 and 7 ([Link] of the

WIPO Arbitration Rules provide that the date of commencement of the arbitration is the date
on which the Request for Arbitration is received from the Claimant by the Center. Thereafter,
as set out in Article 8 ( [Link]
the Center informs the Claimant and the Respondent of the receipt of the Request and of the
date of commencement of the arbitration.

Request for Arbitration

Article 9 ([Link] sets out the

required contents of the Request for Arbitration. Article 10
([Link] provides that the Request
may be accompanied by the Statement of Claim referred to in Article 41
([Link] ).1 Whereas the Request
for Arbitration is a pro forma document containing, inter alia, only a brief description of the
dispute (Article 9(iv) ([Link] the
Statement of Claim contains a comprehensive statement of facts and legal arguments
supporting the claim and is accompanied by documentary evidence (Article 41(b) and (c)
([Link]

Answer to the Request

Article 11 ([Link] provides for

an Answer to the Request to be filed with the Center within 30 days of the Respondent’s
receipt of the Request for Arbitration. The Answer is to include “comments” on the
“elements” of the Request and “may include indications of any counter-claim or set-off.”
Article 43(a) ([Link] requires
the Claimant to reply to a counter-claim or set-off appearing in the Answer as well as in the
later Statement of Defense. In line with normal practice, a reply to a counter-claim in the
Answer should be served, filed and accepted. Article 12
([Link] provides that, if the
Request includes a Statement of Claim, the Answer may (but is not required to) include a
Statement of Defense referred to in Article 42
([Link]

Registration and administration fees

It is important to note that Articles 69 and 70

([Link] require that:

(a) registration fees accompany the Request for Arbitration; and

1
Article 10 of the WIPO Expedited Arbitration Rules provides that the Request for Arbitration shall be
accompanied by the Statement of Claim (emphasis added).
2
Article 12 of the WIPO Expedited Arbitration Rules provides that the Answer to the Request shall be
accompanied by the Statement of Defense (emphasis added).

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(b) administration fees be paid by the Claimant, and by the Respondent if a
counter-claim is filed. Article 70(e)
([Link] provides that
if a party fails to pay any administration fee due, it shall be deemed to have
withdrawn its claim or counter-claim. Article 72(e)
([Link] is to the same
effect with respect to a party’s failure to deposit amounts relating to the costs of
the arbitration.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 4

What are the consequences of a party’s failure to pay the administration fee?

Type your answer here

Click here for answer

Answer to SAQ 4

In accordance with Article 70(e) of the WIPO Arbitration Rules, if a party fails to pay any
administration fee due, it shall be deemed to have withdrawn its claim or counter-claim.

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3.2.2. Representation

Parties’ choice

Article 13(a) ([Link] of the

WIPO Arbitration Rules provides that parties may be represented by persons of their choice,
“irrespective of, in particular, nationality or professional qualification.” Thus, for example,
the WIPO Rules permit a counsel admitted in a specific jurisdiction to represent a party in a
WIPO arbitration regardless of where the arbitration is situated. However, the parties and
their counsel must be aware of the relevant provisions of the applicable arbitral law regarding
persons authorized to represent parties in the place of the arbitration. The local arbitral law
may take precedence over arbitral rules chosen by the parties.

Article 13(b) ([Link] provides

that each party shall ensure that its representatives have sufficient time available to enable
the arbitration to proceed expeditiously.

Article 13(c) ([Link] provides

that the parties may also be “assisted by persons of their choice.” Presumably, this includes
non legal advisers and experts.

3.2.3 Summary

· The date of commencement of the arbitration is the date on which the Center
receives the Request for Arbitration from the Claimant.
· The Answer to the Request for Arbitration must be filed with the Center within
30 days of the Respondent’s receipt of the Request for Arbitration.
· Parties may be represented by persons of their choice.

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3.3 Composition and Establishment of the Tribunal

3.3.1 The Arbitral Tribunal

“Arbitrator, arbitrator, arbitrator”

It is often said that the key to arbitration is “arbitrator, arbitrator, arbitrator.” Experience has
demonstrated that this is indeed so.

Number of arbitrators

Article 14(a) of the WIPO Arbitration Rules provides that the tribunal shall consist of the
number of arbitrators agreed by the parties. Article 14(b) provides that, in the absence of
agreement by the parties, the Center shall appoint a sole arbitrator, except where the Center
in its discretion determines that three arbitrators are appropriate.3

Sole arbitrator

A single arbitrator may be entirely adequate, especially where the arbitrator is thoroughly
experienced and familiar with the subject matter of the issues to be arbitrated. Both
scheduling issues and costs are reduced if only a single arbitrator is appointed.

Three arbitrators

On the other hand, where the subject matter of the arbitration is especially complex, or where
the parties want the benefit of the judgment of more than one arbitrator, three arbitrators may
be the better choice. If the parties can bear the added expense and can resolve the more
difficult scheduling issues, they may benefit from the wisdom of three persons. Assuming
collegiality and respect among the arbitrators, three arbitrators may be more likely to render
an even-handed decision than a sole arbitrator. Also, the award is more likely to cover all
relevant issues objectively. And biases and tendencies of a single arbitrator are more likely to
be balanced through deliberations among three arbitrators.

As we see below, a typical three-person tribunal comprises an arbitrator appointed by each

party to a two-party arbitration, with the two party-appointed arbitrators then appointing the
chair or presiding arbitrator. In international arbitration, all three arbitrators, even those
appointed by the parties, are to be impartial and independent. This may not always be the case
in some domestic arbitrations. To assure that no misunderstandings arise during the course of
the arbitration as to communications with arbitrators or the role of arbitrators in conducting
the arbitration and in deliberations, the parties and all arbitrators should agree expressly that
all three arbitrators will indeed be neutral and impartial. While Article 22(a) requires each
arbitrator to be impartial and independent, a party appointed arbitrator may assume
responsibility for seeing to it that all claims and defenses raised by the party appointing that
arbitrator are considered by the tribunal, but a party-appointed arbitrator should not be an
advocate for the appointing party’s cause.

3.3.2 Appointment Procedures

3
Article 14 of the WIPO Expedited Arbitration Rules provides that the Tribunal shall consist of a sole
arbitrator.

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Control by the parties

Article 15(a) of the WIPO Arbitration Rules provides that, if the parties have agreed upon an
appointment procedure other than that set out in Articles 16 to 20, that procedure shall be
followed. Article 15(b) provides that if the tribunal has not been established pursuant to the
parties’ procedure within the period of time agreed by the parties, or in the absence of such
agreed period within 45 days after commencement of the arbitration, the tribunal shall be
established pursuant to the default provisions of Article 19.4 Because a competent and
acceptable arbitrator, or arbitrators, is critical to the successful implementation of an
agreement to arbitrate, it is important that the parties assume full control of the appointment
of the tribunal to assure that they are satisfied with the tribunal and to forestall later
challenges to the tribunal, the tribunal’s conduct of the arbitration, or the award rendered by
the tribunal.

Appointment of sole arbitrator

Article 16 relates to the appointment of a sole arbitrator. Article 16(a) provides that if the
parties fail to reach an agreement on procedure, they should appoint the arbitrator jointly –
implicitly emphasizing the importance of their control over the selection of the arbitrator.
Article 16(b) provides that if the parties do not make the appointment within an agreed
period of time, or 30 days after commencement of the arbitration,5 in the absence of an
agreed time, a sole arbitrator shall be appointed in accordance with the default provisions of
Article 19.

Appointment of three-member tribunal

Articles 17 and 18 relate to the appointment of three arbitrators.

Article 17(a) provides that, if the parties have not agreed on a procedure to appoint the
arbitrators, the arbitrators shall be appointed in accordance with Article 17.

Article 17(b) provides that the Claimant is to appoint an arbitrator in its Request, and the
Respondent is to appoint an arbitrator within 30 days of receiving the Request. Within 20
days of the appointment of the second arbitrator, the two party-appointed arbitrators are to
appoint the presiding arbitrator.

Article 17(c) provides that, where the Center determines that a three-member tribunal shall be
appointed, pursuant to Article 14(b), the Claimant shall appoint an arbitrator within 15 days of
receiving notice from the Center that the tribunal is to consist of three arbitrators. The
Respondent is to appoint the second arbitrator within 30 days of receiving the notice from the
Center. As in Article 17(b), the two party-appointed arbitrators are to appoint the presiding
arbitrator within 20 days of the appointment of the second arbitrator.

Article 17(d) provides that, if the appointment of any arbitrator is not made within the time
period referred to in the preceding paragraphs, that arbitrator shall be appointed in accordance
with the default provisions of Article 19.

5
In the case of WIPO Expedited Arbitration, Article 14(b) provides that, if the appointment of the sole
arbitrator is not made within 15 days after the commencement of the arbitration, the sole arbitrator shall be
appointed in accordance with the list procedure described in such article.

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Multiple parties

Article 18 contemplates the real and difficult situation where the interests of two or more
parties on one side of the dispute do not coincide, thus complicating the appointment of three
arbitrators where the parties have not agreed to a procedure for appointment. Article 18 sets
out an eminently practicable solution.

Default appointment

Article 19(a) is the default provision applicable where a party fails to appoint an arbitrator in
accordance with Articles 15, 17 or 18. The Center then appoints the arbitrator. Article 19(b)
applies where a sole or presiding arbitrator has not been appointed in accordance with Articles
15, 16, 17 or 18. The Center invites the parties to rank proposed candidates. Ultimately, the
Center selects the arbitrator.

Parties and their counsel should bear in mind that Article 19(c) authorizes the Center to
appoint the sole or presiding arbitrator if the Center determines in its discretion that the
provisions of Article 19(b) are not appropriate.

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 SELF-ASSESSMENT QUESTION (SAQ)

SAQ 5

Describe the appointment of arbitrators through the list procedure provided for under
the WIPO Arbitration Rules.

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Answer to SAQ 5

The list procedure described in Article 19 of the WIPO Arbitration Rules combines
party-input with efficiency and safeguards against recalcitrance and breakdowns in the
appointment process. The list procedure runs as follows:

The Center sends a shortlist of potential candidates to each

party, with detailed profiles setting out their qualifications.

Each party may delete names of candidates it objects to and

rank the remaining candidates in the order of preference.

The rankings must be returned to the Center within 20 days,

failing which all candidates are deemed acceptable.

The Center makes the appointment from the shortlist, taking If no candidate is acceptable to both
into account the preferences and objections expressed by parties, or if no acceptable candidate is
the parties. available, the Center makes the
appointment from outside the shortlist.

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3.3.3 Appointment Considerations

Selection criteria

Article 20(a) of the WIPO Arbitration Rules provides that an agreement of the parties
concerning nationality of arbitrators “shall be respected.” Article 20(b) provides that, where
the parties have not agreed on the nationality of a sole or presiding arbitrator, such arbitrator
shall be a national of a country other than the countries of the parties – “in the absence of
special circumstances such as the need to appoint a person having particular qualifications.”
Taking into account desired qualifications, conflicts of interest, availability in terms of time,
and arbitral experience, the nationality of a sole or presiding arbitrator may fade to a
secondary place in the hierarchy of criteria such an arbitrator must meet. Negotiations among
the parties, party-appointed arbitrators, and the Center with respect to the selection of an
appropriate presiding arbitrator, or among the parties and the Center with respect to a sole
arbitrator, may be both intense and time-consuming.

Communication with candidates and the tribunal

Article 21 of the WIPO Arbitration Rules provides that no party or anyone acting on behalf
of a party shall have any ex parte communication with any candidate for appointment as
arbitrator, “except to discuss the candidate’s qualifications, availability or independence in
relation to the parties.”

This is a difficult issue. Of course, parties and their counsel want to know what a candidate’s
biases or predilections are with regard to the merits of the substantive issues. But this very
subject must not be discussed with the candidate. To help to minimize the risk of a future
challenge to an arbitrator, the conduct of the proceedings, or the ensuing award, parties and
their counsel may consider (a) preparing a memorandum of any discussion with a candidate;
(b) filing the memorandum with the Center; (c) submitting a copy of the memorandum to the
adversary; (d) conducting interviews with candidates on an inter partes basis; or (e)
conducting interviews on the basis of jointly agreed upon questions. Parties seldom go beyond
step (a).

Communication after appointment

After a party-appointed arbitrator is appointed, all ex parte communications with any party
relating to the arbitration are inappropriate, again with an exception. It is common and
acceptable for each of the party-appointed arbitrators in a three person tribunal to confer with
their respective appointing party concerning candidates for presiding arbitrator in terms of
their qualifications, availability and independence. However, while each party and its counsel
may research privately the biases and tendencies of candidates for presiding arbitrator, these
subjects should not be part of the discussion with the party-appointed arbitrator. The party-
appointed arbitrator’s role in the arbitral process may be compromised if the presiding
candidate’s biases or views on the merits are discussed.

A sole arbitrator, or the presiding arbitrator, may have an ex parte communication with a
party or its counsel regarding matters such as scheduling joint telephone conferences, but little
beyond that. This rule is set out in Article 45, which prohibits ex parte communication with
any arbitrator with respect to any matter of substance relating to the arbitration, except,

1. Communications concerning matters of “a purely organizational nature, such

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 as the physical facilities, place, date or time of the hearings;” or
2. As otherwise provided in the WIPO Rules or permitted by the tribunal.

Impartiality and independence

Article 22(a) of the WIPO Arbitration Rules requires that each arbitrator, including party-
appointed arbitrators, be “impartial and independent.”

“Impartial” means that the arbitrator will decide the issues in the arbitration on the merits and
the record, not on prior commitments to one side or another, or one position or another. A
person who has never seen an invalid patent is not necessarily impartial with respect to patent
validity issues. “Independent” means the arbitrator has no materially significant relationship
with any party or party representative and has no financial or other interest in the outcome of
the arbitration.

Disclosure before accepting appointment

Article 22(b) requires prospective arbitrators to disclose, before accepting appointment, to the
parties, the Center and any arbitrator already appointed “any circumstances that might give
rise to justifiable doubt as to the prospective arbitrator’s impartiality or independence, or
confirm in writing that no such circumstances exist.” The short answer to any doubts as to
whether or not a candidate should disclose is “disclose, disclose, disclose.”

Later disclosures

Article 22(c) requires the same disclosures from arbitrators previously appointed, “if at any
stage during the arbitration, new circumstances arise that might give rise to justifiable doubt
as to any arbitrator’s impartiality or independence.” A question might arise as to whether or
not an arbitrator is required to make such a disclosure regarding another arbitrator. It seems
that such disclosure should be made.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 6

How do the WIPO Arbitration Rules address the impartiality and independence of the
arbitrator(s)?

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Answer to SAQ 6

The WIPO Arbitration Rules reflect the value which the Center places on the professional
integrity of arbitrators appointed under the Rules. Article 22 of the Rules (and Article 17 of
the WIPO Expedited Arbitration Rules) provides that each arbitrator, including any
party-appointed arbitrator, is required to be impartial and independent. A prospective
arbitrator must, before accepting appointment, disclose any matter that might give the
appearance of lack of impartiality or independence, and this obligation continues to apply
throughout the course of the arbitration.

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3.3.4 Availability

Arbitrators

Time is a valuable commodity in arbitration. Article 23(a) of the WIPO Arbitration Rules
provides that, by accepting appointment, each arbitrator is deemed to make available
sufficient time to enable the arbitration to be completed expeditiously. Like other competent
professionals, arbitrators are busy people. It is imperative that they take this undertaking
seriously.

Counsel and parties

The same holds true for counsel and the parties. If the parties intend to conduct and complete
the arbitration expeditiously, the parties, their counsel, and other party representatives must
also undertake to make available “sufficient time.” Counsel and other representatives of the
party are often quick to seek extensions of time and adjournments. Legal work tends to fill
newly created voids. Arbitrators have difficulty in denying joint requests for extensions and
adjournments.

Extensions and adjournments

But senior management of a party may want to trim costs and accelerate resolution of the
issues arbitrated. When a party requests or concurs in an extension or adjournment, to assure
that it is indeed the party (i.e., its senior management) who authorizes the request or
concurrence, senior management should expressly endorse the party’s request or concurrence
on the record. Two salutary consequences flow from such endorsement: (a) the party’s request
or concurrence, and its ramifications, will have been carefully considered – and may even be
withdrawn; and (b) the party will find it difficult to later criticize the rate of progress in the
arbitration.

3.3.5 Challenges to Arbitrators

Justifiable doubt

Article 24(a) of the WIPO Arbitration Rules provides that any arbitrator may be challenged
by a party “if circumstances exist that give rise to a justifiable doubt as to the arbitrator’s
impartiality or independence.” Thus, any party may at any time challenge any arbitrator.

Time limit

Article 24(b), however, limits a party who appointed the arbitrator or concurred in the
arbitrator’s appointment to a challenge to that arbitrator only for reasons of which the party
“becomes aware after the appointment has been made.” Thus, while a party may challenge
such arbitrator, the party must demonstrate that it became aware of the grounds for the
challenge only after the appointment, even if those grounds existed prior to the appointment.
This suggests that, at minimum, a party appointing or concurring in the appointment of an
arbitrator must do its homework.

Procedure

Articles 25 to 29 set out the procedure for dealing with challenges. Importantly, Article 27

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provides that the tribunal may, in its discretion, suspend or continue the arbitral proceedings
during the pendency of the challenge. If there is no agreement by all parties to proceed, it
seems that few circumstances would warrant a sole arbitrator’s continuing the proceedings
pending a bona fide challenge.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 7

Who decides on a challenge to an arbitrator under the WIPO Arbitration Rules?

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Answer to SAQ 7

If circumstances exist that give rise to justifiable doubts as to an arbitrator’s impartiality or

independence, either party may challenge the arbitrator at any time during the procedure. To
avoid obstruction, a party which has appointed the arbitrator or concurred in the arbitrator’s
appointment can only bring a challenge for reasons of which the party has become aware after
the appointment (WIPO Arbitration Rules, Article 24). Challenges are decided by the Center.
Where both parties agree on the challenge or the concerned arbitrator withdraws voluntarily,
the latter is replaced without implication that the grounds for the challenge are valid (WIPO
Arbitration Rules, Article 28).

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3.3.6 Release from Appointment and Replacement of an Arbitrator

Release

Article 30 of the WIPO Arbitration Rules provides that an arbitrator may be released from
appointment at his/her own request, either with the consent of the parties or by the Center.

Article 31 provides that the parties may jointly release an arbitrator, even absent a request by
the arbitrator.

Article 32 provides that the Center may release an arbitrator, at the request of the parties or
on the Center’s own motion, if the arbitrator has become de jure or de facto unable to fulfil,
or fails to fulfil, the duties of an arbitrator. In the event of such release, Articles 26 to 29,
relating to the procedure for dealing with challenges, apply.

Replacement

With respect to replacing an arbitrator, Article 33(a) provides that the appointment
procedures of Articles 15 to 19 apply. Article 33(b) limits the right of an appointing party
when that party’s appointed arbitrator has been released.

Suspension

Importantly, and in contrast to Article 27, Article 33(c) provides that pending replacement of
an arbitrator, the arbitral proceedings shall be suspended, unless the parties agree otherwise.

Hearing

Article 34 provides that when a substitute arbitrator has been appointed, the tribunal shall
determine, in light of observations of the parties, whether all or some part of any prior
hearings should be repeated.

Truncated tribunal

Article 35 deals with the circumstances under which, and procedures for determining whether,
a truncated tribunal (i.e., a tribunal in which an arbitrator fails to participate) may proceed
with the arbitration.

3.3.7 Liability and Defamation

Article 79 of the WIPO Arbitration Rules provides that, except in respect of “deliberate
wrongdoing,” arbitrators, WIPO and the Center shall not be liable to a party for “any act or
omission in connection with the arbitration.”6

Article 80 provides that the parties and the arbitrators (by accepting appointment) agree that
any statements made or used during the arbitration shall not be relied on “to found or maintain
any action for defamation, libel, slander or any related complaint.”

3.3.8 Jurisdiction of the Tribunal

6
See comments on Article 25 of the WIPO Mediation Rules in section 2.6 above.

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Determination by tribunal

Article 36(a) of the WIPO Arbitration Rules adopts the virtually universal rule that the
arbitral tribunal has the power to determine its own jurisdiction. Article 36(b) adds that the
tribunal has the power to determine the existence or validity of any contract of which the
arbitration agreement “forms a part or to which it relates.”

Challenges to jurisdiction

Article 36(c) provides that challenges to the tribunal’s jurisdiction must be raised no later than
(i) in the Respondent’s Statement of Defense with respect to the Claimant’s claim; or (ii) in
the Claimant’s Statement of Defense with respect to a counterclaim or set-off raised by the
Respondent.

Challenge to authority

Article 36(c) provides also that a plea that the tribunal is exceeding the scope of its authority
must be raised as soon as the matter alleged to be beyond the scope of its authority is raised
during the arbitral proceedings. However, the tribunal may consider a later plea, if the tribunal
considers the delay justified.

Article 36(d) provides that challenges to jurisdiction and scope of authority may be
determined by the tribunal as a preliminary matter or in the final award. It is not uncommon
for tribunals to defer determination of these jurisdictional questions until the final award.

An important question as to the tribunal’s jurisdiction arises when an entity which is not a
signatory to the agreement containing an arbitration clause or to an agreement to arbitrate is
named as the Claimant or the Respondent. Arbitration is consensual. Consent to an agreement
to arbitrate may be evidenced in various ways in addition to signing an agreement. For
example, the issue may arise with respect to, among others,

1. A third-party beneficiary to a contract containing an arbitration clause.

2. A principal whose agent is a party to an agreement to arbitrate.
3. A member of a group of companies where another member signed a contract
containing an arbitration clause.
4. A subsidiary of a corporation which is a party to an agreement to arbitrate.
5. A sub-contractor whose agreement with the contractor contains an arbitration
clause, where the arbitration clause is incorporated by reference into another
contract to which the sub-contractor is not a party.
6. Proposed consolidation of multiple arbitration proceedings regarding similar
issues, and in part, the same parties.

These jurisdictional questions typically require thorough factual and legal investigations by
the tribunal. If possible, they should be dealt with at the contracting stage, i.e., when the
agreement to arbitrate is negotiated and executed.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 8

Who decides on a challenge to the jurisdiction of the arbitral tribunal under the WIPO
Arbitration Rules?

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Answer to SAQ 8

Article 36 of the WIPO Arbitration Rules provides that the arbitral tribunal decides, either as
a preliminary matter or in the final award, challenges to its own jurisdiction.

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SELF-ASSESSMENT QUESTION (SAQ)

SAQ 9

How does arbitration differ from mediation?

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Answer to SAQ 9

The main differences between mediation and arbitration stem from the fact that, in a
mediation, the parties retain responsibility for and control over the dispute, whereas in an
arbitration, the decision-making power is transferred to the arbitrator(s). In concrete terms,
this means two things principally:

1. In an arbitration, the outcome is determined in accordance with an objective legal

standard. In a mediation, any outcome is determined by the will of the parties, on the basis
of their respective interests.

2. In an arbitration, a party’s task is to convince the arbitral tribunal of its case. In a

mediation, since the outcome must be accepted by both parties and is not decided by the
mediator, a party’s task is to convince, or to negotiate with, the other side.

In view of these differences, mediation is a more informal procedure than arbitration.

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3.3.9 Summary

· The arbitral tribunal shall consist of the number of arbitrators agreed by the
parties.
· If the parties have agreed upon an appointment procedure, that procedure shall be
followed, otherwise, a list procedure will be followed.
· Each arbitrator shall be impartial and independent.
· By accepting appointment, each arbitrator is deemed to make available sufficient
time to enable the arbitration to be conducted expeditiously.

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MODULE THREE – End of Module Test

1. Which of the following is not a benefit of arbitration?

a. Parties can obtain a precedent-setting erga omnes decision

b. Parties can select arbitrators who may have special expertise in the disputed matter
c. Parties can choose the place of arbitration
d. Parties can choose the form of relief sought

2. Which of the following elements is not generally recommended for inclusion in a WIPO
arbitration clause?

a. The place of arbitration

b. The number of arbitrators to be appointed
c. The law applicable to the substance of the dispute
d. The language of the arbitral proceedings
e. The identity of the arbitrator(s)

3. Which of the following is false about the place of arbitration under the WIPO Arbitration
Rules?

a. The place of arbitration normally determines the law applicable to the arbitration procedure
b. Hearings must be held at the place of arbitration
c. The arbitral award shall be deemed to have been made at the place of arbitration
d. The place of arbitration need not match the jurisdiction of the law applicable to the
substance of the dispute

4. Under the WIPO Arbitration Rules, the Answer to the Request for Arbitration must be filed
with the Center within ( ) of the Respondent’s receipt of the Request for Arbitration.

a. 10 days
b. 15 days
c. 20 days
d. 30 days

5. A party who appointed the arbitrator or concurred in the arbitrator’s appointment may
challenge such arbitrator,

a. Only after the arbitral award is rendered

b. Only for reasons of which it becomes aware after the appointment
c. Only for reasons that arise after the appointment
d. At no time

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True or False

True False

1. The enforcement of a foreign arbitral award is frequently

easier than the enforcement of a foreign court judgment.

2. Under the WIPO Arbitration Rules, for an arbitral award

to be enforceable, the hearings must have been conducted
at the place of arbitration designated by the parties in the
arbitration clause.

3. Under the WIPO Arbitration Rules, if the Claimant has

filed a Statement of Claim with the Request for Arbitration,
the Respondent must also file the Statement of Defense
with the Answer to the Request.

4. In a WIPO arbitration, parties must be represented by

counsel admitted to legal practice in the jurisdiction of the
place of arbitration.

5. In a three-member tribunal, because each of the

co-arbitrators is party-appointed, the presiding arbitrator is
the only member of the tribunal required to be impartial and
independent.

6. Under the WIPO Arbitration Rules, in the absence of

agreement otherwise by the parties, the tribunal in principle
shall consist of a sole arbitrator.

7. A final award rendered by a sole arbitrator may be

appealed to a tribunal consisting of three arbitrators.

8. Pending replacement of an arbitrator, the arbitral

proceedings shall be suspended, unless otherwise agreed
by the parties.

9. A party may have ex parte communication with a

candidate for sole or presiding arbitrator regarding the
candidate’s views on the merits of the dispute, as long as
the communication takes place before formal appointment
as arbitrator.

10. In the absence of party agreement, challenges to an

arbitrator are decided by the Center.

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