Abstract
This article argues that arbitral practice has effectively given rise to a general principle whereby the parties to arbitral proceedings are deemed to have waived rights arising from a procedural rule where they have failed to timely raise an objection against a procedural irregularity. Tribunals do not refer to such a process as abuse of right, or procedural estoppel, but as a tacit waiver of procedural rights. Even so, the effects are the same. This rule is well enshrined in article 4 of the UNCITRAL Model Law on International Commercial Arbitration. There is a line of domestic case law suggesting that the presumption in favour of the waiver does not apply where the party in question had no knowledge of the facts giving rise to the breach; where failure to apply it was not predicated on bad faith and/or; where the delay in exercising the right was not significant.
Introduction
Arbitration is predicated on party autonomy, which means that the parties are at liberty to dictate not only the substantive rules applicable to the dispute, but also its procedural counterparts, so long as the latter are not in conflict with mandatory provisions of the seat (lex arbitri). In practice, the parties usually rely on standard institutional rules, such as those of the London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC). While such institutional rules are elaborate and only seldom, if at all, are in conflict with the civil procedure statutes of the lex arbitri, arbitral tribunals have generally exhibited an inclination to admit all evidence with a clear probative value (although it has to be said that the admission of evidence in arbitral proceedings is a vexing issue, with relevance being a significant factor), while at the same restrict any objections on the basis of procedural estoppel. 1 The same principle is of course also available in domestic procedural rules, but it may not be applied in exactly the same manner as international arbitral proceedings. 2 While the terminology used by arbitral tribunals varies, the application of procedural estoppel under such circumstances is tantamount, mutatis mutandis, to abuse of a procedural right, acceptance by conduct, or waiver of the right to object. 3 Procedural estoppel is typically applied: (a) where a party objects to the validity of the arbitration agreement 4 or (b) a procedure with which it has already complied. Conduct-based estoppel is also treated as a waiver of litigation in favour of arbitration. French courts have also admitted an alternative form of conduct-based estoppel. They generally assume a “common intent to arbitrate” where one of the parties has by its silence accepted arbitration, particularly where there is a history of consistent and repeated practice by the parties to arbitration in successive contracts, even if the disputed contract in question contains no arbitration clause. 5 Such conduct-based estoppel has been confirmed by the courts of Hong Kong, 6 but rejected by Canadian courts on the basis that tacit assent cannot be arbitrarily presumed through other proof of positive action. 7 Equally, in English law, silence is not considered an acceptance of an offer 8 and by extension, this applies to consent to arbitration, given the contractual nature of the arbitration agreement. 9
This broad procedural estoppel is now enshrined as a general principle of transnational procedure and is set out in article 4 of the UNCITRAL Model Law on International Commercial Arbitration. It reads as follows: A party who knows that any provision of this Law from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or, if a time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object.
Article 4 states the very simple, but not obvious, rule whereby a party is estopped from relying on a (non-mandatory) procedural irregularity at a later stage of the arbitral proceedings, if such irregularity was not invoked timely at a time when the claimant was aware of the irregularity. 10 A timely invocation necessarily demands that the party in question was aware, or should have been aware (although the latter standard of knowledge is controversial), of the irregularity. Hence, article 4 assumes that the party not invoking in timely fashion the irregularity waives the right to challenge it all together. Article 4 therefore gives rise to a statutory waiver 11 whose function is to ensure the economy of arbitral proceedings and the pro-enforcement rationale of the Model Law. Besides arbitral laws adapted from the Model Law, the waiver in article 4 is also found in the procedural rules of arbitral institutions. 12 It is not clear from the travaux, nor indeed from the available case law, what is the legal nature of this waiver. As a result, states that have adopted the Model Law can and do apply existing principles to justify the waiver under their procedural laws, namely abuse of process, estoppel, bad faith and others. The party against whom the waiver operates may validly seek to disprove any of its elements: for example, knowledge of the irregularity; timely invocation; or absence of time limits. Depending on the legal nature of the waiver under the lex forum in question, the party against whom the waiver operates may need to demonstrate or disprove the existence of other additional elements. Readers, therefore, should locate the precise contours of the waiver in domestic procedural laws, even if a state has adopted verbatim the text of article 4 of the Model Law. Of course, states may just as well adopt the waiver in article 4 in an autonomous fashion, without necessarily connecting it to an existing legal principle.
Insights in State Thinking through the Travaux Preparatoires of the Model Law
The Model Law is an indispensable tool as a standard setter for states to adapt and harmonize their arbitral legislations meaningfully and in accordance with international best practices. It is not a treaty and hence states are not saddled with the formalities of treaty incorporation, which is typically associated with constitutional hurdles. Given that United Nations member states participated in and contributed to the formulation of the Model Law, an examination of the Working Group's discussions is illuminating. The Working Group's preliminary discussions on the Model Law do not reveal any real contemplation of the waiver now the subject matter of article 4. In passing, the Working Group made reference to a waiver of sovereign immunity in the event of a sovereign party entering into an arbitration agreement 13 and at the same time reference was made to article 21(3) of the UNCITRAL Arbitration Rules, which corresponds to article 8 of the Model Law. 14 In the first draft of the Model Law, no reference to a waiver of non-mandatory procedural rights was made, 15 save for draft article 28, concerning time limits for challenging the jurisdiction of the tribunal. 16 The issue was not discussed in the fourth or the fifth sessions of the Working Group, although by now there was an elaborate draft article on time limits for jurisdictional claims. 17
It was only at the sixth session of the Working Group that a draft article on the waiver of procedural rights was introduced. Draft article I quater stipulated that: A party who knows that any provision of, or requirement under, this Law has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance promptly, or if a time-limit is provided therefor in this Law, within such period of time shall be deemed to have waived his right to object.
18
A footnote to draft article I quater makes it clear that it was modelled under article 30 of the UNCITRAL Arbitration Rules. 19 Although article 4 of the Model Law is a verbatim reproduction of article 30 of the Arbitration Rules, some rather important features render the two distinct despite their similarities. The Rules do not make a distinction between mandatory and non-mandatory rules and omit any reference to the parties’ arbitration agreement. Significantly, the Rules fail to set out a timeliness test for the operation of the waiver, as is the case with article 4 of the Model Law, although it is true that the Model Law does not elaborate on the concept of timeliness. The general feeling was that this matter should be left to party autonomy or the law applicable to arbitral proceedings.
The final wording of article 4 was put in place at the seventh session of the Working Group.
20
During the same session, one version of the final draft included a supplementary knowledge element in brackets, namely ‘ought to have known’,
21
alongside actual knowledge. This, however, did not survive into the final draft. Even so, the UNCITRAL Commentary on the Model Law explained that: the expression “ought to have known” should not be construed as covering every kind of negligent ignorance but merely those instances where a party could not have been unaware of the defect. This restrictive interpretation, which might be expressed in the article, seems appropriate in view of the principle which justifies statutory impliance of a waiver.
22
Interestingly, the Working Group raised the issue as to whether a party would be able to submit a non-compliance claim at the annulment (set aside) or enforcement (in respect of foreign awards) stage. The Working Group was adamant that the waiver in article 4 should have such ‘an extensive effect’, stating that this should be incorporated explicitly in article 36 of the Model Law. 23 States did not make extensive comments on the development of article 4. Sweden felt that the non-mandatory character of a provision is somewhat fluid and should ultimately be left to the judgment of the tribunal or the courts. 24 It went even further, along with India, stating that the waiver should cover in addition to non-mandatory provisions also mandatory ones, because it does ‘not appear appropriate to allow a party who has taken part in the arbitral proceedings without objecting to a deficiency in the form of the arbitration agreement to raise such objection later when the award is made against him’. 25 Poland wished for this matter to be clarified in the text of the Model Law. 26 The Finnish delegation emphasized that parties should be precluded from raising claims at the set-aside and enforcement stages if they had failed to raise these timely during the arbitral proceedings. 27
Scope of the Waiver
Article 4 should be read in conjunction with article 8 of the Model Law. 28 Article 4 encompasses only non-mandatory requirements, thus effectively confirming that waivers in respect of non-mandatory provisions of the Model Law are null and void. 29 This is true, for example, in respect of fundamental due process guarantees, as these are enshrined in article 18 of the Model Law. Secondly, besides non-mandatory requirements stemming from the law, article 4 covers also requirements arising from the arbitration agreement.
Article 4 does not concern itself with a tacit waiver of arbitral proceedings in favour of litigation in the event that one of the parties to an arbitration agreement fails to request a stay of court proceedings. 30 Such a waiver is dealt with by article 8 of the Model Law, but several cases concerning the application of article 8 shall be relied upon here because of their conceptual similarities with the issues encountered in respect of article 4 of the Model Law. Article 4 encompasses all those situations following the triggering of the arbitration clause by one of the parties and even before the tribunal has been constituted.
This means that a party is precluded from challenging the violation of a non-mandatory provision even at the stage of enforcement of a foreign award. The New York Convention (as well as articles 35 and 36 of the Model Law) is silent as to whether the party challenging an award before the courts of the country where enforcement is sought must have availed itself of pertinent remedies available at the seat of the arbitration, namely set-aside proceedings. This observation is significant because set-aside remedies are almost identical to challenges against awards under the New York Convention and hence failure to avail oneself of the former may be perceived as an abuse of process that serves to preclude later challenges at the enforcement stage. 31 Given the absence of a direction in the Convention, two considerations are relevant. On the one hand, the Convention clearly grants the right to challenge recognition and enforcement of a foreign award without subjecting it to preclusion limitations; this individual entitlement must no doubt be preserved. On the other hand, the Convention gives significant weight to the lex fori and it is natural that the aforementioned individual entitlement under the Convention cannot override the forum's fundamental principles of civil procedure. This argument is even more convincing where such civil procedure principles are common to several nations, thus giving rise to a general principle of law.
The practice of national courts demonstrates some uniformity in their approach to a party's failure to raise defences before the courts of the seat, especially if it had participated in the arbitral proceedings. As regards challenges against arbitral jurisdiction these must be raised no later than one's statement of defence. In respect of other challenges under sub-paragraph (1) of article V of the New York Convention failure to raise a challenge in the course of arbitral proceedings generally precludes similar objections in enforcement proceedings. 32 Three legal justifications are utilized in order to preclude subsequent challenges, namely estoppel, waiver (especially by conduct) and bad faith. Estoppel precludes the invocation of an otherwise legitimate claim by reason of the fact that the claimant has consistently induced others to rely on prior contradictory conduct. 33 The French Court of Cassation has employed estoppel to bar further challenges under article V of the Convention if: (a) there is a change in position of the concerned party and (b) its behaviour is such as to mislead the other party with a view to relying on said behaviour. 34 A waiver suggests that the claimant has implicitly waived its right to invoke a particular claim by consciously failing to exercise that claim, 35 or by engaging in conduct that necessarily extinguishes the claim. 36
Preclusion on the basis of bad faith is similar to estoppel in that the claimant is not permitted to rely on its claim after having misled its counterpart. A party will be precluded from making fresh challenges under the New York Convention, as a matter of bad faith, where its behaviour is contradictory and at the same time said behaviour constitutes an abuse of law. 37
Overall, despite the clear inclination in favour of precluding challenges not raised in the course of arbitral proceedings (including set-aside), if the claimant was for some compelling reason prevented from exercising its right to challenge the award at the seat (particularly absence of knowledge and incapacity to make a claim), the forum should not lightly preclude its claims against enforcement.
The Nature of the Waiver
The waiver contemplated in article 4 of the Model Law is of a procedural, rather than a contractual (substantive) nature. This distinction is important because if the conduct giving rise to the waiver was premised on contract it would have to be assessed on the basis of pertinent principles of contract law. These principles are similar in both name and content in the law of civil procedure and contract, but there might be small or significant differences between them in the two bodies of law. Hence, it is of vital importance that counsel does not simply transplant a contractual principle and apply it in the realm of civil or arbitral procedure. For the purposes of article 4, the legal nature of the waiver may be grounded on general procedural principles such as good faith, estoppel or its civil law equivalent venire contra factum proprium, 38 as these are found in the law of civil procedure, which in turn would apply to arbitration as a lex specialis creature of the procedure. The Model Law is silent as to the precise legal nature of the waiver in article 4 and hence states adapting the Model Law into their domestic legal systems may rely on existing principles, 39 or enact the waiver as an autonomous principle that is unconnected to existing procedural rules/principles. The autonomy model seems to prevail in all those Model Law jurisdictions that have adopted article 4 verbatim. One should, however, investigate whether more detailed elements of the waiver exist in discrete laws (eg timeliness test or time limits). A discussion of all relevant connecting principles is beyond the scope of this short article, so we shall confine our analysis to two, namely good faith and abuse of right.
Good Faith
Good faith constitutes a general contractual duty in civil law legal systems, 40 but it is not a contractual obligation as such (both pre-contract and post-contract formation) in several jurisdictions, most famously under English law (unless the parties have specified as much). 41 Good faith does exist as a principle of civil procedure law, in addition to its contractual manifestation, and is encountered in (a) general international law; (b) domestic procedural laws; (c) soft law instruments; and (d) the rules of arbitral institutions.
As regards (a), the key principle is article 31(1) of the 1969 Vienna Convention on the Law of Treaties (VCLT), where good faith is a rule of treaty interpretation. Given that the VCLT applies to all treaties, it naturally encompasses treaties or treaty provisions with a procedural character. The International Court of Justice (ICJ) has confirmed that although good faith ‘is not in itself a source of obligation’ 42 it has nonetheless made it clear that it is a fundamental principle of legal obligations, 43 including also procedural obligations.
As regards (b), good faith is also enshrined in a significant number of domestic procedural laws, such as article 247(1) of the Spanish Code of Civil Procedure, 44 and is also recognized as a mandatory principle under Islamic law. 45
Concerning (c), there exists a significant body of lex mercatoria. Article 11.1 of the ALI/UNIDROIT Principles of Transnational Civil Procedure provides that ‘[t]he parties and their lawyers must conduct themselves in good faith in dealing with the court and other parties’. A similar principle may be found in paragraph 3 of the Preamble and article 9(7) of the IBA Rules on the Taking of Evidence in International Arbitration, whereby the tribunal may take into account a party's failure to conduct itself in good faith. The drafters of the IBA Guidelines have described good faith as an ‘overarching balancing exercise to be conducted [by the arbitral tribunal] in addressing matters of misconduct by a party representative in order to ensure that the arbitration proceeds in a fair and appropriate manner’. 46
Finally, as regards the rules of arbitral institutions, it is natural that they are not constrained by the vexing debate as to the status of good faith in substantive and procedural law. Article 14.5 of the 2014 of the LCIA Arbitration Rules provides, for example, that: ‘at all times the parties shall do everything necessary in good faith for the fair, efficient and expeditious conduct of the arbitration, including the arbitral tribunal's discharge of its general duties’. Although no express reference to good faith is made in the ICC Arbitration Rules, article 40 thereof iterates the procedural estoppel enunciated in article 4 of the Model Law.
Abuse of Right and Estoppel
While we have already explained that several domestic laws view the absence of a formal objection under the terms of article 4 of the Model Law as a violation of procedural good faith, others have viewed it also from its opposite lens. The Indian Supreme Court, for example, has consistently held that failure to raise an objection estops the party from raising an objection after the award is issued.
47
The Supreme Court has effectively described a party's failure to raise an objection to constitute a tacit waiver as to the claim,
48
which in turn estops it from its entitlement as to that particular claim. The principle of estoppel (in its many manifestations) requires knowledge on the part of the actor that fails to make a timely claim and this is expressly recognized in article 4 of the Model Law.
49
The plea of estoppel is often associated with the plea of waiver. The French Supreme Court has defined this type of procedural estoppel as: procedural behaviour…constituting a change of position, on the merits, the nature of which misleads [the opposing party] about [the challenging party]'s intentions.
50
In Telestat Canada v Juch-Tech, it was alleged by the applicant that the tribunal had exceeded its jurisdiction by apportioning costs in its award, even though the arbitration agreement explicitly stated that each party was to bear its own costs. The award was issued in New York, but was contested during its enforcement in Ontario. The Ontario Superior Court of Justice held that the applicant had not waived the parties’ clause providing that each was to bear its own costs. The Court emphasized that for a waiver of the right to object to be considered as such under the Model Law, the waiving party must have unequivocally and consciously abandoned rights of which it had full knowledge. 51 In equal manner, the Swedish Supreme Court in AJ v Ericsson AB was confronted with a challenge of impartiality against an arbitrator after the award had been issued. The Court held that the claimant was not precluded from making the claim because he only found about the facts giving rise to impartiality at a late stage of the proceedings. 52
In Merial SAS v Klocke Verpackungs – Service GmbH, the claimant, sought to set aside an award, arguing that it was not given the opportunity to reply in writing to new claims introduced by the defendant, two months before a scheduled hearing during the arbitration proceedings and that in addition, the tribunal passed judgment on claims in tort contrary to the parties submission agreement. The Paris Court of Appeal rejected the claimant's arguments on the basis that the claimant had not objected to a procedural order issued by the arbitral tribunal stating that both parties had an opportunity to explain their views about the admissibility of the defendant's new claims. The Court also added that the claimant signed the transcript of the hearing, which took place after the introduction of the defendant's new claims, without protesting. It concluded that the claimant was estopped from entertaining its claims in accordance with article 1466 of the French CCP. 53
Knowledge
All domestic procedural principles related to the waivers require some degree of knowledge as to the irregularity on the part of the claimant. Without actual knowledge, the right to challenge the irregularity cannot be waived. The thorny issue is the degree of knowledge required by the claimant. While the Model Law is silent, during the negotiating history of article 4 a draft circulated at the seventh session enunciating an ‘ought to have known’ standard, in addition to actual knowledge. 54 This, however, was omitted from the final version of article 4 of the Model Law, so it is clear that the drafters purposely decided to uphold a standard of actual knowledge. Even so, given that article 4 allows adapting states to ground the waiver on existing principles within their legal systems, negligence-based standards should not be ruled out. By way of illustration, a waiver based on good faith may demand that if the irregularity could have been ascertained by a very simple and logical due diligence, then failure to do so substantiates bad faith and abuse of process, in which case the claimant is deemed to have waived its right to invoke the irregularity. In State Oil Company of the Republic of Azerbaijan (SOCAR) and Frontera Resources Azerbaijan Corporation (Frontera), the Svea Court of Appeal, relying on article 30 of the UNCITRAL Arbitration Rules, whereby the waiver applies to a party ‘who knows’ of a procedural error, held that the waiver does not apply to circumstances which a party ought to have known. 55 No doubt, the result would be different where a party suspects a procedural irregularity but intentionally omits to investigate when it could have done so. 56 Even so, there is a thin line between the ‘ought to have known’ standard and one's failure to investigate. A claimant's knowledge is presumed as being within its reach if under the circumstances acquisition of the information was within its grasp, available and without the need for further investigation.
In practice, it will not always be possible to demonstrate the claimant's knowledge of an event or fact, so the tribunal or the court will have to rely on circumstantial evidence in order to infer knowledge. In the absence of a valid arbitration clause, the submission of the dispute to arbitration by the claimant, followed by a submission of defence by the respondent has been found to constitute a waiver in favour of arbitration. 57 Of equally quantifiable nature one may cite the absence of any submissions in respect of claims made at a much later stage of the proceedings. In Clout Case 1349 one of the parties claimed at the enforcement hearing in Moscow that the award should not be enforced because the tribunal had breached the equal treatment principle under article 18 of the Model Law. Whatever the validity of these arguments, the enforcement court emphasized that on the basis of the case file, the claimants had participated in the arbitral hearings and had not made any objections regarding the way in which the arbitration proceedings had been conducted nor how their rights to due process had been violated. Their representative had not submitted any evidence to the contrary to the courts, either. 58 The Supreme Commercial Court of the Russian Federation rightly rejected the application for non-enforcement.
The same line of reasoning applies in respect of late challenges against arbitrators concerning alleged bias, although in these cases institutional rules typically prescribe definitive time limits. Tacit waivers in such cases typically concern the amount of information available to the claimant during the proceedings. In Atlantic Industries Ltd v SNC-Lavalin Constructors (Pacific) Ltd, once the arbitrator had been confirmed he realized that his law firm was representing one of the parties in an unrelated transaction and duly informed the parties, noting that if they felt uncomfortable he was happy to resign. The arbitrator subsequently informed the parties through a series of letters of pertinent developments but neither asked him to resign. It was only at the end of the proceedings that one of the parties challenged the arbitrator's impartiality and the case ultimately reached the British Columbia Supreme Court. Gaul J. noted that a waiver cannot occur if the party's knowledge is incomplete. In my view, full knowledge or complete disclosure in the context of waiver does not mean everything that could be known about the relationship between the decision-maker and another person that allegedly creates a reasonable apprehension of bias. Instead, as the court in Rothesay Residents Association Inc. concluded, waiver requires that a party must have all the ‘material’, ‘pertinent’, ‘salient’, or ‘essential’ facts to support a potential bias allegation (at paras. 28, 30, 31, 33, 34). What constitutes such facts will depend on the unique circumstances of each case.
59
‘Without Undue Delay’
Article 4 does not explain the meaning of this phrase, and rightly so. This is a matter that is dealt with on a case-by-case basis by arbitral tribunals on the basis of context and circumstances. What constitutes undue delay in a relatively straightforward dispute of a small duration may not be so in a much more complex and lengthy dispute. Unlike article 4, article 8 of the Model Law sets out a much more definite time limit, namely ‘not later than when submitting his first statement on the substance of the dispute’. Given that the drafters of the Model Law deliberately chose not to use the same language in both provisions, it is clear that different time limits are envisaged in respect of the two waivers. But even in respect of article 8, the courts have not hesitated to interpret ‘the submission of first statement’ contextually, rather than literally. In Louis Dreyfus Trading Ltd v Bonarich International (Group) Ltd, the plaintiff argued that the defendant could not rely on the waiver in article 8 of the Model Law because it had made a first statement on the substance of the dispute. In an affirmation, the defendant had stated: ‘(T)he defendant denies liability to the plaintiff and will dispute the plaintiff's claim on the ground that the contracts in question do not bind the defendant’. The Hong Kong Supreme Court concluded that a single paragraph in an affirmation did not amount, in the circumstances, to a first statement. 60
In another case concerning an application for set aside proceedings because one of the parties was prevented from appointing a substitute arbitrator, the Supreme Commercial Court of the Russian Federation upheld the challenge. It noted that the challenging party had submitted its first application for the case to be reheard with a substitute arbitrator without undue delay after the original arbitrator's death. 61
Time Limits
Article 4 of the Model Law makes it clear that if a time limit has been set by the parties, for example, by their chosen arbitration rules, then failure to make a pertinent submission within such a deadline constitutes a waiver of the procedural right in question. In contrast, article 8 of the Model Law makes no reference to time limits for challenging the arbitration agreement. In Clout case 435, which concerned a challenge under article 8 of the Model Law, the defendant did not challenge the jurisdiction of the tribunal within the time limit set by the court for the defence, but invoked the existence of the arbitration clause before the hearing and before taking any steps on the merits. The German Supreme Court held the defence to be timely. On the basis of section 1032(1) ZPO, the courts have an obligation to stay court proceedings if one party invokes the existence of an arbitration agreement before the oral hearing on the merits. Therefore, the expiry of the time limit set for the submission of the defence was found to be immaterial. 62 Such an outcome seems untenable for the purposes of article 4 of the Model Law, as opposed to article 8, because of its express stipulation therein. The rationale, of course, is that the subject matter of article 8 concerns the arbitral process as a whole (and the variety of rights and freedoms circumscribed therein) and hence cannot readily be dispensed by artificial time limits, whereas article 4 encompasses a number of procedural issues of a non-mandatory nature, from which the parties may freely depart by consent.
In Fibre Excellence v Tembec, the French Supreme Court dismissed an application to set aside an award rendered by a truncated tribunal because the claimant had failed to submit within the eight-day timeframe imposed by the ICC Arbitration Rules its comments regarding the continuation of the proceedings without one of the arbitrators. 63
Article 13 of the Vietnamese Law on Commercial Arbitration (LCA) reproduces article 4 of the Model Law. While it does not set out ‘time-limits’ article 6 of Resolution no. 01/2014/NQ-HDTP issued by the Council of Judges of the Supreme People's Court stipulates that the time limit to object is determined in accordance with the LCA. Where the LCA does not specify such time limit, this may be determined by the parties’ agreement or their chosen institutional or other rules.
Conclusion
There is a clear tendency in international commercial arbitration in favour of the uninterrupted continuity of arbitral proceedings without at the same time compromising procedural fairness. Unlike litigation where the parties have limited choices, arbitrators face several challenges. On the one extreme, the proceedings may be subject to one or more national procedural laws, in addition to other institutional rules. Moreover, one, or both parties, may find it expedient not to make use of a right, under contract or statute, in a particular phase of the proceedings, yet retain such right for a later stage when things do not go their way. This is certainly the case where a party refuses to object to arbitration in the absence of a relevant agreement or relies on a procedural norm because it perceived the outcome as potentially more favourable. In all such cases, arbitral tribunals have followed the uniform principle set out in their institutional rules whereby failure to object at the appropriate time constitutes an abuse of process or a tacit waiver of an otherwise valid right. While this outcome may seem harsh in light of the very tight periods in international arbitral proceedings, it is justified by the fact that such expedited periods are after all agreed to by the parties and they are of one of the reasons parties choose arbitration over litigation. Moreover, it is assumed in international arbitration that parties have sufficient recourse to expert counsel, such that raises a presumption of absolute familiarity with relevant procedural rules and processes. 64 Finally, arbitral proceedings and indeed the existence of the tribunal is not infinite. If the parties could invoke a procedural right at any time of the proceedings, then tribunals would be forced to retreat to earlier stages, re-shift and evaluate their evidence and restore the parties’ status quo over and over. In equal measure, the parties could seek an appellate review of the non-exercised right. Alas, once the tribunal issues a final award and set aside timelines elapse the tribunal becomes functus officio and can no longer be reinstated. In equal measure, no appeals are allowed against arbitral awards and the parties are bound to accept final awards without recourse to further scrutiny. This is a welcome outcome and the principle of procedural estoppel is part and parcel of this process that must be considered as giving rise to a general principle of international procedural law.
Footnotes
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.