The London Court of International Arbitration

International credentials
The LCIA is one of the longest-established international institutions for commercial dispute resolution. It is also one of the most modern and forward-looking.

Although based in London, the LCIA is a thoroughly international institution, providing efficient, flexible and impartial administration of dispute resolution proceedings for all parties, regardless of their location, and under any system of law.

Its operation and outlook are geared to ensuring that the parties may have complete confidence in its international credentials and in its impartiality.

A brief history of the LCIA may be found here.

The Organisation
The LCIA operates under a three-tier structure, comprising the Company, the Arbitration Court and the Secretariat.

The Company
The LCIA is a not-for-profit company limited by guarantee. The LCIA Board of Directors (made up largely of prominent London-based arbitration practitioners) is concerned with the operation and development of the LCIA's business and with its compliance with applicable company law.

The Board does not have an active role in the administration of dispute resolution procedures, though it does maintain a proper interest in the conduct of the LCIA's administrative function.

The Arbitration Court
The LCIA Court is the final authority for the proper application of the LCIA Rules. Its key functions are appointing tribunals, determining challenges to arbitrators, and controlling costs.

Although the LCIA Court meets regularly in plenary session, most of the functions to be performed by it under LCIA rules and procedures are performed, on its behalf, by the President, by a Vice President or by a Division of the Court.

The Court is made up of up to thirty five members, selected to provide and maintain a balance of leading practitioners in commercial arbitration, from the major trading areas of the world, and of whom no more than six may be of UK nationality.

The Secretariat
Headed by the Registrar, the LCIA Secretariat is based at the International Dispute Resolution Centre in London and is responsible for the day-to-day administration of all disputes referred to the LCIA.

LCIA case administration is highly flexible. All cases are allocated dedicated computer and hard-copy files and computerised account ledgers. Every case is computer-monitored, but the level of administrative support adapts to the needs and wishes of the parties and the tribunal (or ADR neutral), and to the circumstances of each case.

Casework
Many major international businesses entrust their disputes to the LCIA. Many cases are technically and legally complex and sums in issue can run into US$ billions. Parties come from a very large number of jurisdictions, of both civil law and common law traditions.

The subject matter of contracts in dispute is wide and varied, and includes all aspects of international commerce, including telecommunications, insurance, oil and gas exploration, construction, shipping, aviation, pharmaceuticals, shareholders agreements, IT, finance and banking.

Introduction
The LCIA provides an extensive administration service, which is not confined to the conduct of arbitration and ADR under its own rules and procedures. It also acts as appointing authority and administrator in UNCITRAL-Rules cases and will act as fundholder for deposits filed on account of the costs in otherwise entirely ad hoc proceedings.

LCIA ARBITRATION
The LCIA arbitration rules are universally applicable. They offer a combination of the best features of the civil and common law systems, including in particular:

The LCIA arbitration rules are available here and in hard copy on request from the LCIA Secretariat.

Seat of Arbitration
Although the LCIA is headquartered in London, the choice of seat, or legal place, is entirely up to the parties. Parties wishing to provide for a seat elsewhere than London should not, therefore, be deterred from adopting the LCIA rules.

Parties adopting, or adapting, the LCIA's recommended clauses will, anyway, specify the seat in their contract. If they do not follow the standard wording, and cannot subsequently agree the seat, Article 16.1 of the LCIA rules provides the safety net of a London default seat, although, if the parties argue for an alternative seat, the LCIA Court will determine the issue.

Arbitrators
The LCIA has a unique database of arbitrators with the widest range of professional qualifications and expertise (legal and non-legal), guaranteeing a tribunal of the highest calibre.

The database is not, however, a closed list and parties are free to nominate arbitrators who are not on the database. Similarly, the LCIA will look outside its own database when necessary.

In all cases, the LCIA Court alone may appoint arbitrators, whether or not the arbitrators are nominated by the parties, and in accordance with the following procedure*:

The LCIA Secretariat reviews the Request for Arbitration and accompanying contractual documents, and the Response (if any).
A résumé of the case is prepared for the LCIA Court.
Key criteria for the qualifications of the arbitrator(s) are established and recorded.
The criteria are entered into the database, from which an initial list is drawn.
If necessary, other institutions are consulted for further recommendations.
The résumé, the relevant documentation, and the names and CVs of the potential
arbitrators are forwarded to the LCIA Court.
The LCIA Court advises which arbitrator(s) the Secretariat should contact to ascertain their availability and willingness to accept appointment.
The Registrar sends those candidates an outline of the dispute.
When the candidate(s) indicate their availability, confirm their independence and
impartiality, and agree to fee rates within the LCIA's bands, the form of appointment is drafted.
The LCIA Court formally appoints the tribunal and the parties are notified.

* Steps 4 and 5 are omitted in the case of party-nomination.

Charges
The LCIA's charges, and the fees charged by the tribunals it appoints, are not based on the sums in issue. The LCIA is of the view that a very substantial monetary claim (and counterclaim) does not necessarily mean a technically or legally complex case and that arbitration costs should be based on time actually spent by administrator and arbitrators alike.

The LCIA's registration fee is £1,500, payable on filing the Request for Arbitration. Thereafter, hourly rates are applied both by the LCIA and by its arbitrators, with part of the LCIA's charges calculated by reference to the tribunal's fees. The LCIA sets a range within which the arbitrators it appoints must (other than in exceptional cases) set their fees.

Interest on sums deposited by the parties is credited to the account of the party depositing them at the rate applicable to the amount of the deposit.

Every payment on account of arbitrators' fees will be notified in advance and accounted for on disbursement. Parties may call for financial summaries at any time to keep track of costs.

It is the LCIA Court which, under the Rules, must determine the costs of each arbitration, according to the following procedure.

The Secretariat provides the Court with a financial dossier, which includes a complete financial summary of sums lodged by the parties, sums paid to the arbitrators, outstanding fees and expenses and interest accrued. The dossier also includes a copy of the original confirmation to the parties of the arbitrator's fee rate, copies of the arbitrator's accounts, a copy of the LCIA's own time and disbursements ledger, copies of directions for deposits, and copies of all notices given to the parties of payments made from deposits.

The Court reviews the dossier and, if necessary, calls for any further information, or initiates any investigation it may require to satisfy itself that the costs are reasonable and are in accordance with the schedule of costs, before notifying the Secretariat of the amount that may be included in the award.

Any dispute regarding administrative charges or the fees and expenses of the tribunal are determined by the LCIA Court.

UNCITRAL* ARBITRATION
Although the UNCITRAL Arbitration Rules may be used in arbitrations which are not administered by any institution, many parties opting for the UNCITRAL Rules do prefer to have a professional institution administer the proceedings. This is a role frequently undertaken by the LCIA.

LCIA MEDIATION
The LCIA mediation procedure may be used both by parties who are already committed to mediate, by virtue of contractual dispute resolution provisions, and by parties who have not provided for mediation, but who wish to mediate their dispute, either in an attempt to avoid, or during the course of, litigation or arbitration.

As with its arbitrators, the LCIA has access to a large number of experienced and highly-qualified mediators from many jurisdictions.

And, as with the arbitrations it administers, the LCIA aims to make its mediations cost-effective. To this end, mediation costs are also based on the hourly rates of the mediators and of the LCIA's administrative staff, without reference to the sums in issue.

The LCIA mediation procedure is available here and in hard copy on request from the LCIA Secretariat.

EXPERT DETERMINATION, ADJUDICATION AND OTHER SERVICES
The LCIA administers expert determinations, adjudications and other alternatives to arbitration and mediation, for which purpose recommended procedures and clauses are available on request from the LCIA Secretariat.

The LCIA's dispute resolution services are available to all contracting parties, without any membership requirements.

However, in addition to those services, the LCIA has a general membership, organised into Users' Councils, for which it organises a worldwide programme of conferences, seminars and other events of interest to the arbitration and ADR community. Membership is open to all interested persons.

As at February 2005, the LCIA had more than 1,500 members from 79 countries, including commercial and trading organisations, international lawyers and firms of lawyers, practising international arbitrators and others.

Members receive the LCIA's quarterly journal Arbitration International, which is recognised as one of the leading scholarly journals on the development and application of international commercial arbitration. Members also receive the LCIA's informative newsletter.

Members' names, contact details, nationality, areas of specialisation, and languages spoken are published in the LCIA's annual Directory of Members. The Directory is sent to all members and to arbitral institutions worldwide.

To enable the LCIA to provide and to maintain its worldwide services and to meet the ever-changing needs of the international business community, it has formed six Users' Councils.

Each Council has its own officers and devises its own programme of activity appropriate to the needs of the region. Members may elect to which Council they wish to be attached.

The LCIA publishes a separate brochure on its membership and conference activities, which is available on request.

Introduction
Arbitration is now the first-choice method of binding dispute resolution in the widest range of international commercial contracts. It is a private process requiring the agreement of the parties, which is usually given by way of an arbitration clause in the contract. If there is no contractual provision to arbitrate, a separate arbitration agreement may be entered into once a dispute has arisen.

Arbitration offers parties the freedom to choose a method of dispute resolution tailored to their precise needs. That freedom extends to the choice of applicable law, the venue, the language, and the choice of arbitration procedures, whether under institutional rules, stand-alone procedures, like the UNCITRAL rules, or entirely ad hoc.

Parties may also choose their arbitrators, thus ensuring the constitution of a tribunal with precisely the right qualifications and experience.

It is this freedom of choice that reinforces the key elements of international arbitration: enforceability, procedural flexibility, party-control, neutrality, privacy and confidentiality, cost-effectiveness and speed.

Enforcement of Awards
For the many parties for whom a final and binding settlement is paramount, the enforcement argument is, perhaps, the most persuasive and enduring.

The rules of the major international arbitration institutions, including the LCIA, expressly provide that any award will be final and binding and will be complied with without delay. By agreeing to be bound by such rules, the parties usually also exclude any right of appeal on the merits to a national court which may have jurisdiction to hear such an appeal.

In the event that a losing party fails to comply with an award against it, enforcement may be considerably easier to achieve than would be the enforcement of the judgment of a national court in another jurisdiction. In the majority of cases, the successful party will be able to rely on the provisions of the New York Convention*, now ratified or acceded to by some 140 States.

Parties wishing to have the reassurance that an award will be enforceable must ensure that the arbitration takes place (and that the award is made) in a Convention State and that the enforcement is against assets of the losing party that are located in another Convention State.

* The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Procedural Flexibility
Arbitration offers parties a great degree of control over the proceedings. It allows them to establish, from the outset, a method of resolving disputes which is not bound by the often rigid procedures and timetables of the courts.

Parties may agree a wide range of procedural matters, including such key issues as the number of arbitrators and their qualifications, the venue and language of the arbitration, the timetable, and the need or otherwise for oral hearings.

Such tailor-made dispute resolution provisions (both domestic and international) have been endorsed by the arbitration laws of many jurisdictions (in England, by the 1996 Arbitration Act) and are reflected in the rules of the major arbitral institutions.

Party-nominated Arbitrators
In arbitration, parties may also choose the judges who will determine their dispute. Where they say so in their contracts, or subsequently agree, each side may nominate an arbitrator to be one of a panel of three. The third and presiding arbitrator may be nominated by the parties, or by the party-nominated arbitrators, or by the chosen arbitral institution.

Each side may satisfy itself that the arbitrator it nominates has the requisite experience and knowledge in the field relating to which the dispute has arisen. An arbitrator may also be nominated because of his or her knowledge of a particular national or state law and/or of a language pertinent to the dispute.

Similarly, it may be expressly provided, or agreed by the parties, that arbitrators should not be of the same nationality as the parties, and/or that, if two are, then the chairman will not be.

A party-nominated arbitrator is not, however, the representative of the party which nominates him or her. He or she must confirm and maintain his or her independence and impartiality.

Where, in the interests, for example, of speed and cost saving, the parties agree on a sole arbitrator, an administering body will be able to select an arbitrator with the requisite neutrality and the relevant legal/commercial/linguistic expertise, if the parties are unable to do so.

Neutrality
Parties to international agreements may be concerned that the national courts of the party with which they are contracting may have an instinctive, or even a manifest, bias towards a party of the same nationality. Whether or not such concerns are well-founded, international tribunals and the administration of a recognised arbitral institution may be seen as offering greater neutrality than the courts.

Privacy and Confidentiality
Litigation in national courts is generally open to the public and to the media. By contrast, arbitral proceedings are conducted in a private (and less formal) forum, in which the identities of the parties, and the nature of the dispute, may remain confidential.

This may assist to preserve trade secrets and, in some cases, even to re-build commercial relations. It will also provide an environment that may be more conducive to reaching a settlement.

Cost-Effectiveness and Speed
There is a strong case for international arbitration as the cost-effective alternative to litigation across different jurisdictions. It may be easier to get parties of different nationalities into a neutral arbitration venue in the first place than into the national courts of one of them. So, the costs of initiating proceedings and of preparing the case are less likely to be wasted than in court litigation. Also, and crucially, at the end of the proceedings (assuming no settlement), an award may be more likely to be complied with, or to be enforced, than would be the judgment of the courts of one jurisdiction in the courts of another. So, the successful party to an arbitration is less likely to experience the hollow victory that often besets international litigation.

Time is money (though undue haste may be more costly in the long run) and the inherent flexibility and party control of arbitration enable parties and tribunals to adopt as tight a procedural timetable as they wish, with potentially substantial cost savings.

The LCIA encourages parties to adopt as expeditious an approach as possible and the LCIA arbitration rules include all that is required for fast-track procedures, which can dispose of a matter in a fraction of the time that would be spent in litigation.

And the issue of a final award is most likely to be the conclusion of the proceedings, in contrast to the judgment of a court of first instance, from which there may be several levels of appeal, each involving significant time and cost.

Given that there are effective arbitration laws in place in the jurisdictions of most of the important trading regions of the world, and that there is growing expertise and sophistication on the part of parties and practitioners in this field, it is, perhaps, not surprising that the number of ad hoc arbitrations exceeds the number of administered arbitrations.

There follow a number of points that may demonstrate why there remains significant added value in opting for administered arbitration, if arbitration is the chosen method of dispute resolution.

Ad hoc clauses are frequently either inadequate or overly complex. By incorporating established rules into their contract, the parties have the comfort of a comprehensive and proven set of terms and conditions upon which they can rely, regardless of the seat of the arbitration; minimising the scope for uncertainty and the opportunity for delaying or wrecking the process.

The incorporation of a set of established rules will reliably take care of the fundamentals, including the mechanism and timeframe for the appointment of the tribunal; determining challenges to arbitrators; default provisions for the seat and language of the arbitration; interim and conservatory measures; and control of the costs of the arbitration.

The applicable procedural law may well also provide for these matters, but it can be time-consuming and costly to invoke the jurisdiction of state courts at every procedural impasse. Court intervention may also jeopardise the confidentiality of the process.

Institutional rules, as opposed to general provisions, like the UNCITRAL rules (currently under comprehensive review), bring with them the additional advantage of a professional administrative service, which an ad hoc tribunal, with or without the co-operation of the parties, frequently cannot adequately provide.

The most vociferous and sustained criticism of commercial arbitration is levelled at cost and delay. However, many of the leading institutions, including the LCIA, seek actively to moderate their costs and the fees charged by the tribunals they appoint. It is, therefore, frequently the case that these costs are better controlled and contained under the supervision of the leading institutions than in ad hoc proceedings.

The LCIA is of the view that a very substantial monetary claim (and/or counterclaim) does not necessarily mean a technically or legally complex case and that arbitration costs should be based on time actually spent by administrator and arbitrators alike. The LCIA’s charges, and the fees charged by the tribunals it appoints, are not, therefore, based on the sums in issue.

Ad hoc arbitrations do not run themselves and important administrative tasks can only be allocated to a member of the arbitrator’s own staff; to members of the parties’ legal teams; or to the parties themselves, at considerable opportunity and financial cost. The counterpoint to the concern that the institution’s costs are costs which would not otherwise be incurred, therefore, is that the administration will be more efficiently, and more cost-effectively, done by an institution whose speciality it is.

The major institutions also act as secure and independent fundholders of sums deposited by the parties, disbursing these funds as required and, at all times, accounting to the parties for sums held and disbursed. The LCIA provides this service not only in cases conducted under the LCIA rules, but also in UNCITRAL-rules and ad hoc arbitrations.

The parties’ own legal costs, are, however beyond the control of the institution and, if these are to be reduced, the parties and their attorneys must work together to avail themselves of the leaner and more expeditious procedures that are inherent in good arbitration practice.

Closely related to the costs issue, then, is the issue of delay. Whilst it is not the role of an institution to interfere with the conduct of the proceedings, as agreed between the parties, directed by the tribunal or prescribed by the rules, institutions do have an important role in monitoring the process, in lending support to parties, counsel and arbitrators, and in keeping the process moving at as lively a pace as due process will allow.

And if the parties wish to adopt “fast track” procedures, these are readily available from the LCIA and from a number of other institutions.

The cure for the costs and delay complaint is, therefore, largely in the hands of the parties and their Counsel, which will certainly have the support of the institution in any effort to effect that cure.

There are at least two sides to every dispute. In many cases, however, there is not a balance of knowledge, experience, expertise and sophistication in the arbitral process, either on the part of the parties or of their attorneys.

Established rules can help to redress such imbalance and thus act to safeguard due process and, thereby, the reputation of the arbitral process and, indeed, the integrity and enforceability of awards.

It is a truism that arbitration is only as good as the arbitrator, but no less a fundamental principle for that.

Institutions have their finger on the pulse of developments and individual progress within the pool of arbitrators and will have detailed knowledge of, and ready access to, the most eminent and most appropriately qualified arbitrators.

Parties may, therefore, find that that the institution is better placed than they to propose not only an arbitrator of the requisite skills, but also one whose diary is clear enough to allow him or her to devote the time needed, and when needed, to the matter.

There is also anecdotal evidence that arbitrations conducted under the auspices of the major institutions may be regarded by parties, and by the Courts, with greater respect and confidence than some ad hoc arbitrations.

The institutions see a number of decisions rendered by the Courts in the context of their arbitrations, in which the fact of the institution’s involvement is favourably cited.

Introduction
In most jurisdictions, ADR is taken to mean only the non-adjudicative dispute resolution options, of which mediation is the most frequently used. In essence, mediation is a negotiated settlement, conducted and concluded with the assistance of a neutral third-party. The process is voluntary and does not lead to a binding decision, enforceable in its own right.

Most commercial disputes, in which it is not imperative that there should be a binding and enforceable decision, are amenable to mediation. Mediation may be particularly suitable where the parties in dispute hope to preserve, or to renew, their commercial relationships. As mediation is likely to be a shorter process than either litigation or arbitration, there may also be economic arguments for attempting a mediated settlement.

Commencing the mediation
Mediation is an entirely consensual process. There must be agreement to mediate, and agreement to continue to mediate once the process has begun. Parties will either have agreed to mediation in their contract, or they may agree to attempt a mediated settlement once a dispute has arisen, even when they have provided in their contract for some other form of dispute resolution, and even when they are in the course of litigation or arbitration.

The process
Although the process should be as flexible as possible, parties often find it helpful to have the framework provided by a set of established procedures, like the LCIA mediation procedure, to bring shape and discipline to the process.

The parties are free to select the mediator, though this will usually be somebody from the lists maintained by the recognised mediation organisations. All mediators must declare and maintain their independence and impartiality of the parties in dispute.

A representative of each of the parties will be confirmed as having the requisite authority to settle the dispute on behalf of that party. The representative must also have instructions as to the financial limit of his or her authority.

The conduct of the mediation is in the hands of the parties and the mediator. However, most mediations take a similar form in a combination of joint sessions, with all parties and the mediator, and separate sessions, or caucuses, in which each side meets for private and confidential discussions with the mediator.

There is no set time limit for a mediation, though most meetings take no more than one or two days. Parties should, however, set an overall time limit for the achievement of a mediated settlement, after which the dispute (if not settled) will be referred to an adjudicative tribunal.

Unless they agree otherwise, parties are free to commence or to continue arbitration or judicial proceedings, despite having commenced, or being in the process of, mediation. However, parties may not introduce, or rely upon, anything arising out of the mediation for the purposes of any arbitration or litigation.

Concluding the mediation
The mediation will be at an end when either a settlement agreement is signed by the parties, or the parties advise the mediator that it is their view that a settlement cannot be reached, or the mediator advises the parties that, in his or her judgment, the mediation process will not resolve the issues, or the agreed time limit for mediation has expired and the parties have not agreed to extend that time limit.

Privacy and confidentiality
Mediation is a private and confidential process. The mediation itself and all negotiations, and the statements and documents prepared for the purposes of the mediation are confidential and are covered by without prejudice or negotiation privilege. No formal record is kept of the mediation.

FUTURE DISPUTES
For contracting parties who wish to have future disputes referred to arbitration and/or mediation under the auspices of the LCIA, the following clauses are recommended. Words/blanks in square brackets should be deleted/completed as appropriate.

Arbitration only
Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the Rules of the LCIA, which Rules are deemed to be incorporated by reference into this clause.

Mediation only
In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall seek settlement of that dispute by mediation in accordance with the LCIA Mediation Procedure, which Procedure is deemed to be incorporated by reference into this clause.

Mediation and Arbitration
In the event of a dispute arising out of or relating to this contract, including any question regarding its existence, validity or termination, the parties shall first seek settlement of that dispute by mediation in accordance with the LCIA Mediation Procedure, which Procedure is deemed to be incorporated by reference into this clause.

If the dispute is not settled by mediation within [ ] days of the commencement of the mediation, or such further period as the parties shall agree in writing, the dispute shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause.

In any arbitration commenced pursuant to this clause,
(i) the number of arbitrators shall be [one/three]; and
(ii) the seat, or legal place, of arbitration shall be [City and/or Country].

Arbitration under the UNCITRAL Rules
Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the UNCITRAL Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause.

Any arbitration commenced pursuant to this clause shall be administered by the LCIA.

The governing law of the contract shall be the substantive law of [ ].

Modifications to Recommended Clauses
The LCIA Secretariat will be pleased to discuss any modifications to these standard clauses. For example, to provide for party nomination of arbitrators or for expedited procedures.

Expert Determination, Adjudication and other forms of ADR
Recommended clauses and procedures for Expert Determinations, Adjudications and other forms of ADR. To be administered by the LCIA, or in which the LCIA is to act as appointing authority, are available on request from the LCIA Secretariat.

EXISTING DISPUTES
If a dispute has already arisen, but there is no agreement between the parties to determine the dispute by arbitration or by some form of ADR, the parties may enter into an agreement for those purposes. In such cases, please contact the LCIA Secretariat if recommended wording is required.