Arbitration: What is it?

As opposed to mediation, which is the continuation of direct negotiations between the parties with the aid of a neutral intermediary, arbitration involves the adjudication of rights by a tribunal composed of one or several arbitrators (referred to in the following as "the Tribunal"), who have the power to render a decision that is binding on the parties.

The procedure followed by the Tribunal, the power of the Tribunal, the rights and obligations of the parties and the role of the WIPO Arbitration and Mediation Center as administering authority are defined in the WIPO Arbitration Rules.

It is for the parties to choose whether there will be a sole arbitrator or several arbitrators. If they do not exercise a choice, the WIPO Arbitration Rules provide for a sole arbitrator, unless the circumstances of the case are such that the Center, in its discretion, determines that a Tribunal composed of three arbitrators is appropriate.

The parties also choose the language of the arbitration. If they do not do so, the WIPO Arbitration Rules provide that the language of the arbitration will be the language of the contract clause or submission agreement by virtue of which the dispute has been referred to arbitration under the WIPO Arbitration Rules, subject to a power on the part of the Tribunal to determine otherwise, in the light of any observations made by the parties and the circumstances of the arbitration.

The law applicable to the substance of the dispute is also chosen by the parties. Failing a designation on the part of the parties, the Tribunal is empowered under the WIPO Arbitration Rules to apply the law that it determines to be appropriate.

The decision rendered by the Tribunal in the form of an award is final and binding on the parties and not usually subject to an appeal on the merits to a court of law.

In the majority of cases of international commercial arbitration, the parties comply with the award without the need to seek court enforcement. Where court enforcement is necessary, the procedure is relatively straightforward by virtue of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Over 90 States are party to the New York Convention, which obliges contracting States to recognize and enforce foreign arbitral awards subject to a limited number of specified exceptions.

Role of the Center

The role of the Center as administering authority is, as mentioned above, set out in the WIPO Arbitration Rules. In general, the Center's role extends to six main functions:

• Upon the commencement of an arbitration, it is for the Center to ensure that the arbitral proceedings get under way smoothly and that the Tribunal is established as required. In particular, at this stage, the Center

• processes the written statements and other communications by the parties up until the establishment of the Tribunal,

• appoints, in accordance with the provisions of the Rules, where the parties themselves do not do so or where an arbitrator is not appointed within the applicable time limit, the arbitrator,

• determines the fees of the arbitrator.

• The Center monitors compliance with certain prescribed time limits. In particular, it has the power, under the Rules, to extend certain time limits. In addition, the Rules require the Tribunal to give a status report to the Center where the arbitration proceedings are not declared closed or the award not rendered within certain designated time periods.

• After the establishment of the Tribunal, the Center may be called upon to take certain decisions which it is either impossible or inappropriate for the Tribunal itself to take, notably decisions on the challenge, release or replacement of an arbitrator. Such decisions will be referred by the Center to an ad hoc committee of the WIPO Arbitration Consultative Commission for an opinion. The parties are notified of the composition of the committee of the WIPO Arbitration Consultative Commission to which the decision is referred for opinion.

• The Center will, where the parties so desire, arrange for administrative support services for the arbitration, in the form of hearing rooms, retiring rooms for the parties, recording equipment, interpretation and secretarial assistance. Where the arbitration is held at WIPO, the hearing and party rooms are provided free of charge. A charge is made for the provision of other services, such as interpretation, translation or secretarial assistance, which is separate from the Center's fees for administering the arbitration (see below).

• The Center requires the payment of an advance deposit from each party in respect of the costs of the arbitration, administers payments under those deposits and accounts to the parties on the deposits at the conclusion of the arbitration. Interest accruing on deposits administered by the Center is credited to the parties.

• The Center processes the award rendered by the Tribunal.

Fees of the Center

Two kinds of fees are payable to the Center in respect of an arbitration administered by it.

The first is a registration fee, which is calculated by reference to the amount in dispute, and which is payable by the Claimant at the time of submitting the Request for Arbitration.

The second is an administration fee, again calculated by reference to the amount in dispute, which is payable in respect of the claim by the Claimant and in respect of any counter-claim by the Respondent.

The basis of calculation of the registration fee and the administration fee is set out in the Schedule of Fees.

As mentioned above, where the hearings are held at WIPO, the Center provides hearing and party rooms free of charge. For other administrative support services, such as interpretation or secretarial assistance, a separate charge from the registration fee and the administration fee is made.

Arbitrator's Fees

The Center is responsible for fixing the amount and currency of the fees of the arbitrator, and the modalities and timing of their payment, after consultation with the arbitrator and the parties.

For this purpose, the Schedule of Fees establishes minimum and maximum ranges for the fees of the arbitrator. Within the minimum and maximum ranges, the fees will be determined taking into account the estimated time needed by the arbitrator for conducting the arbitration, the amount in dispute, the complexity of the subject-matter of the dispute, the urgency of the case and any other relevant circumstances.

Recommended Contract Clause and Submission Agreement

The Center has established a recommended contract clause for the reference of future disputes under a contract to arbitration under the WIPO Arbitration Rules.

The Center has also established a recommended submission agreement for the reference of an existing dispute to arbitration under the WIPO Arbitration Rules.

Place of Arbitration

The place of arbitration usually determines the law that will apply to the arbitration, that is, the law that will regulate, in particular, the relationship between the arbitration proceedings and the extent to which the courts of the place of arbitration may or will entertain actions in relation to the arbitration.

Under the WIPO Arbitration Rules, it is for the parties to agree upon the place of the arbitration, which may be anywhere in the world. If the parties do not so agree, the Center decides the place of arbitration in the light of any observations made by the parties and the circumstances of the arbitration.