PCA Optional Rules for Arbitrating Disputes between Two States Model Arbitration Clauses

• Updated at: February 2023

CONTENTS

Introduction 43

Section I. Introductory Rules 45

Scope of Application (Article 1) 45

Notice, Calculation of Periods of Time (Article 2) 45

Notice of Arbitration (Article 3) 46

Representation and Assistance (Article 4) 46

Section II. Composition of the Arbitral Tribunal 47

Number of Arbitrators (Article 5) 47

Appointment of Arbitrators (Articles 6 to 8) 47

Challenge of Arbitrators (Articles 9 to 12) 49

Replacement of an Arbitrator (Article 13) 50

Repetition of Hearings in the Event of the Replacement of an Arbitrator

(Article 14) 51

Section III. Arbitral Proceedings 52

General Provisions (Article 15) 52

Place of Arbitration (Article 16) 52

Language (Article 17) 53

Statement of Claim (Article 18) 53

Statement of Defence (Article 19) 54

Amendments to the Claim or Defence (Article 20) 54

Pleas as to the Jurisdiction of the Arbitral Tribunal (Article 21) 54

Further Written Statements (Article 22) 55

Periods of Time (Article 23) 55

Evidence and Hearings (Articles 24 and 25) 55

Interim Measures of Protection (Article 26) 57

Experts (Article 27) 57

Failure to Appear or to Make Submissions (Article 28) 58

Closure of Hearings (Article 29) 58

Waiver of Rules (Article 30) 58

Section IV. The Award 59

Decisions (Article 31) 59

Form and Effect of the Award (Article 32) 59

Applicable Law (Article 33) 59

Settlement or Other Grounds for Termination (Article 34) 60

Interpretation of the Award (Article 35) 60

Correction of the Award (Article 36) 61

Additional Award (Article 37) 61

PERMANENT COURT OF ARBITRATION – BASIC DOCUMENTS

Costs (Articles 38 to 40) 61

Deposit of Costs (Article 41) 62

Notes to the Text 64

INTRODUCTION

These Rules have been elaborated for use in arbitrating disputes arising under treaties or other agreements between two States; they can be modified for use in connection with multilateral treaties. The Rules are based on the UNCITRAL Arbitration Rules with changes in order to:

(i) reflect the public international law character of disputes between States, and diplomatic practice appropriate to such disputes;

(ii) indicate the role of the Secretary-General and the International Bureau of the Permanent Court of Arbitration at The Hague, and the relation of these Rules with the 1899 and 1907 Hague Conventions for the Pacific Settlement of International Disputes; and

(iii) provide freedom for the parties to choose to have an arbitral tribunal of one, three or five persons.

Experience in arbitrations since 1981 suggests that the UNCITRAL Arbitration Rules provide fair and effective procedures for peaceful resolution of disputes between States concerning the interpretation, application and performance of treaties and other agreements, although they were originally designed for commercial arbitration.

The Rules are optional and emphasize flexibility and party autonomy. For example:

(i) the Rules, and the services of the Secretary-General and the International Bureau of the Permanent Court of Arbitration, are available for use by all States, and are not restricted to disputes in which both States are parties to either The Hague Convention for the Pacific Settlement of International Disputes of 1899 or that of 1907;

(ii) the choice of arbitrators is not limited to persons who are listed as Members of the Permanent Court of Arbitration;

(iii) States have complete freedom to agree upon any individual or institution as appointing authority. In order to provide a failsafe mechanism to prevent frustration of the arbitration, the Rules provide that the Secretary-General will designate an appointing authority if the parties do not agree upon the authority, or if the authority they choose does not act.

A model clause that States may consider inserting in treaties or other agreements to provide for arbitration of future disputes and a model clause for arbitration of existing disputes are set forth at pages 231-232.

These Rules are also appropriate for use in connection with multilateral treaties, provided that appropriate changes are made in the procedures for choosing arbitrators and sharing costs. Guidelines to assist States in adapting these Rules for use in resolving disputes that may involve more than two parties are included at page 245.

Explanatory ‘Notes to the Text’ appear at pages 64-65.

PERMANENT COURT OF ARBITRATION OPTIONAL RULES FOR ARBITRATING DISPUTES BETWEEN TWO STATES

Effective October 20, 1992

SECTION I. INTRODUCTORY RULES

Scope of Application

Article 1

1. Where the parties to a treaty or other agreement have agreed in writing that disputes shall be referred to arbitration under the Permanent Court of Arbitration Optional Rules for Arbitrating Disputes between Two States, then such disputes shall be settled in accordance with these Rules subject to such modification as the parties may agree in writing.

2. The International Bureau of the Permanent Court of Arbitration (the ‘International Bureau’) shall take charge of the archives of the arbitration proceeding. In addition, upon written request of all the parties or of the arbitral tribunal, the International Bureau shall act as a channel of communication between the parties and the arbitral tribunal, provide secretariat services and/or serve as registry.

3. If on the date the arbitration commences either The Hague Convention for the Pacific Settlement of International Disputes of 1899 or The Hague Convention for the Pacific Settlement of International Disputes of 1907 is in force between the parties, the applicable Convention shall remain in force, and the parties, in the exercise of their rights under the Convention, agree that the procedures set forth in these Rules shall govern the arbitration as provided for in the parties’ agreement.

   Notice, Calculation of Periods of Time

   Article 2

1. For the purposes of these Rules, any notice, including a notification, communication or proposal, is deemed to have been received when it has been delivered to the addressee through diplomatic channels. Notice shall be deemed to have been received on the day it is so delivered.

2. For the purposes of calculating a period of time under these Rules, such period shall begin to run on the day following the day when a notice, notification, communication or proposal is received. If the last day of such period is an official holiday or a non-work day in the State of the addressee, the period is extended until the first work day which follows. Official holidays or non-work days occurring during the running of the period of time are included in calculating the period.

   Notice of Arbitration

   Article 3

1. The party initiating recourse to arbitration (hereinafter called the ‘claimant’) shall give to the other party (hereinafter called the ‘respondent’) a notice of arbitration. 2. Arbitral proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the respondent.

3. The notice of arbitration shall include the following:

   (a) A demand that the dispute be referred to arbitration;

   (b) The names and addresses of the parties;

   (c) A reference to the arbitration clause or the separate arbitration agreement that is invoked;

   (d) A reference to the treaty or other agreement out of or in relation to which the dispute arises;

   (e) The general nature of the claim and an indication of the amount involved, if any;

   (f) The relief or remedy sought;

   (g) A proposal as to the number of arbitrators (i.e., one, three or five), if the parties have not previously agreed thereon.

4. The notice of arbitration may also include the statement of claim referred to in article 18.

   Representation and Assistance

   Article 4

   Each party shall appoint an agent. The parties may also be assisted by persons of their choice. The name and address of the agent must be communicated in writing to the other party, to the International Bureau and to the arbitral tribunal after it has been appointed.

   SECTION II. COMPOSITION OF THE ARBITRAL TRIBUNAL

   Number of Arbitrators

   Article 5

   If the parties have not previously agreed on the number of arbitrators (i.e., one, three, or five), and if within thirty days after the receipt by the respondent of the notice of arbitration the parties have not agreed on the number of arbitrators, three arbitrators shall be appointed.

   Appointment of Arbitrators (Articles 6 to 8)

   Article 6

1. If a sole arbitrator is to be appointed, either party may propose to the other:

   (a) The names of one or more persons, one of whom would serve as the sole arbitrator; and

   (b) If no appointing authority has been agreed upon by the parties, the name or names of one or more institutions or persons, one of whom would serve as appointing authority.

2. If within sixty days after receipt by a party of a proposal made in accordance with paragraph 1 the parties have not reached agreement on the choice of a sole arbitrator, the sole arbitrator shall be appointed by the appointing authority agreed upon by the parties.

   If no appointing authority has been agreed upon by the parties, or if the appointing authority agreed upon refuses to act or fails to appoint the arbitrator within sixty days of the receipt of a party’s request therefor, either party may request the Secretary-General of the Permanent Court of Arbitration at The Hague (the ‘Secretary-General’) to designate an appointing authority.

3. The appointing authority shall, at the request of one of the parties, appoint the sole arbitrator as promptly as possible. In making the appointment the appointing authority shall use the following list-procedure, unless both parties agree that the list-procedure should not be used or unless the appointing authority determines in its discretion that the use of the list-procedure is not appropriate for the case:

   (a) At the request of one of the parties the appointing authority shall communicate to both parties an identical list containing at least three names;

   (b) Within thirty days after the receipt of this list, each party may return the list...