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Matheus Victor Barbosa Meireles

9. Award
A. Introduction

(a) Destination of an international arbitration the award

Parties to transborder transactions who go to the trouble and expense of


taking their disputes to international arbitration do so in the expectation that,
unless a settlement is reached along the way, the process will lead to the
award
They also expect that, subject to any right of appeal or recourse, the award will
be final and binding upon them
o All awards are final in the sense that they dispose finally of the
issues decided in them, they are binding on the parties
o The award that disposes finally of all outstanding issues is known as
the final award
o If it embody an agreed settlement between the parties, it is generally
known as a consent award or an award on agreed terms
o Another category is an award in proceedings in proceedings in which a
party has failed or refused to participate, in which case it is usually
described as a default award
Both international and institutional rules of arbitration reflect this expectation

(b) Definition of an award

There is no internationally accepted definition of the term award

(c) Which rulings/orders have the status of an award?

Distinguishing between an award and an order may not be easy


The Paris Cour dAppel and a US Federal Court of Appeals
o They have classified certain arbitral decisions entitled orders by
tribunals as awards
This make them susceptible to annulment and/or recognitions
and enforcement proceedings in national courts

(d) Rendering an internationally enforceable award

No arbitral tribunal can be expected to guarantee that its award will be


enforceable in whatever country the winner chooses to enforce it
o For an arbitral tribunal to achieve the standard of performance
required to make an internationally enforceable award, it must first
ensure that it has jurisdiction to decide all of the issues before it
o The arbitral tribunal must also comply with any procedural rules
governing the arbitration
Allocation of the cost of the arbitration;

Identifying the seat of the arbitration, and having the award
formally approved by an arbitral tribunal;
Sign and date the award;
Arrange for it to be delivered to the parties in the manner laid
down in the relevant law or by the rules that apply to the
arbitration
Given the complexity of the task facing an arbitral tribunal, the arbitrators
should be adequately trained and experienced

B. Categories of Award

(a) Partial awards

A partial award is an effective way of determining matters that are susceptible


to determination during the course of the proceedings, and which, once
determined, may save considerable time and money for all involved
The power of an arbitral tribunal to issue partial awards may derive from the
arbitration agreement of from the applicable law
o Where the arbitration agreement incorporates international or
institutional rules of arbitration, these rules generally contain
provisions for the making of such awards
In an ad hoc arbitration, it is usual express provision in the submission
agreement for the arbitral tribunal to issue partial awards, if it sees fit to do so
o Where the powers is not conferred expressly upon the arbitral tribunal
by the agreement of the parties, it may nevertheless be conferred by
operation of law
The main disadvantage of a partial award is that a further avenue for judicial
review is created
o Judicial intervention during the course of the arbitration may occur on
an application by one of the parties to annul (or set aside) the partial
award, or on application to confirm it

I. Issues concerning the applicable law

Where there is a dispute between the parties as to the law(s) applicable to the
merits of the case, it may be sensible for the arbitral tribunal to issue a
preliminary decision on the question of the applicable law

II. Separation of issues (jurisdiction, liability, quantum)

The process of rendering a preliminary award can itself be a time-consuming


and expensive one
o It is suggested that an arbitral tribunal should not normally decide to
issue a partial award on its own initiative, but should do so only
following a request by one of the parties
o Where both parties agree that a partial award should be made, the
arbitral tribunal must follow the agreement of the parties
o Where only one party requests a partial award, a tribunal with the
power to make such an award should reach its decision as to whether
or not to comply with the request only after receiving the submissions
of both parties and giving each party a reasonable opportunity to
explain its position

III. Limitation clauses in a contract

Major commercial contracts often contain a clause that limits, or purports to


limit, the type or amount of damages payable in the event of breach
o There may be occasions on which a partial award on the meaning and
effect of such clauses will help to define the amount of the claim, and
may make the prospect of settlement more likely

(b) Foreign and domestic awards

Chapter 10

(c) Default awards

Occasionally, international arbitrations are commenced in which one party


fails or refuses to take part
o This failure or refusal may be complete that is, it occurs from the
outset of the proceedings or it may happen during the proceedings
as a result of a change of mind or strategy
o The task of an arbitral tribunal is to make a determination of the
claims that are presented to it

(d) Additional Awards

When the tribunal renders an award that does not address all of the issues
presented, the parties may, within a limited frame, request an additional
award to remedy this gap

(e) Consent awards and termination of proceedings without an award

As in litigation in national courts, parties to an international arbitration often


arrive at a settlement during the proceedings
o Where this occurs, the parties may simply implement the settlement
agreement and thus revoke the mandate of the arbitral tribunal

C. Remedies

The arbitral tribunals power to grant appropriate relief is based on the


arbitration agreement and the applicable arbitration law
The basis on which an arbitral tribunal orders a remedial measure flows from
the arbitration agreement and subsequent submission of the dispute to
arbitration
Arbitrations awards may cover a range of remedies, including:
o Monetary compensation;
o Punitive damages and other penalties;
o Specific performance and restitution;
o Injunctions;
o Declaratory relief;
o Rectification;
o Filling gaps and adaptation of contracts;
o Interests; and
o Costs

(a) Monetary compensation

The type of award most often made by an international arbitral tribunal is one
that directs the payment of a sum of money by one party to the other
o This payment mar represent money due under a contract (debt), or
compensation (damages) for loss suffered, or both
The sum of money awarded is usually expressed in the currency of the
contract or the currency of the loss

(b) Punitive damages and other penalties

Punitive damages are not awarded to compensate the wronged party, but
instead to punish and deter the wrongdoer
In general, punitive damages are an exceptional and extreme measure
permitted only, for example, in cases of fraud and substantial malice

(c) Specific performance

An arbitral tribunal may be authorized by the parties or by the applicable law


to order specific performance of a contract

(d) Restitution

Restitution seeks to put the aggrieved party in the same position as that in
which it would have been had the wrongful act not taken place
o In common law terminology, it is a form of specific performance
In the field of commercial arbitration, it is a remedy that is
hardly ever used in practice perhaps because international
tribunals rightly tend to avoid making awards that are difficult
to enforce

(e) Injunctions

There is no objection in principle to an arbitral tribunal granting relief by way


of injunction, if requested to do so, either on an interim basis or as final relief
For present purposes, it is sufficient to state that an arbitral tribunal is not
usually empowered to make effective orders against third parties, and if
injunctive relief against third parties is required, it is generally quicker and
more effective to seek directly from a national court

(f) Declaratory relief

An arbitral tribunal may be asked to make an award that is simply declaratory


of the rights of the parties
o Modern arbitration legislation often makes express provision for the
granting of declaratory relief

(g) Rectification

Rectification essentially is a common law equitable remedy


Rectification is a remedy virtually unknown in civil law countries, where it
tends to be treated in the same sense as adaptation of contracts and filling
gaps

(h) Filing gaps and adaptations of contracts

An arbitral tribunal does not, in general, have power to create, or write, a


contract between the parties

(i) Interest

The payment of interest on a loan, or in respect of money that is paid later


than it should have been, is a common feature of modern business
relationships, and the award of interest in international arbitration has
likewise become routine
o Indeed it has become rare for interest not to be awarded where an
award provides for the payment of monies due

I. Basis upon which interest can be awarded

The basis upon which interest is awarded in international arbitration does,


however, vary
Most institutional rules of arbitration do not contain express provisions for the
payment of interest
The right to interest will therefore flow from the parties underlying contract,
or by virtue of the applicable law

II. How much interest to award

More problematic in practice than the question of whether an arbitral tribunal


can award interest in principle are the more practical questions of the rate of
interest to be awarded
III. Compound interest

Most systems of national law expressly permit arbitral tribunals to award some
form of interest on an amount awarded in respect of a claim or counterclaim,
whether the principal amount awarded is due under a contract or as
compensation or as restitution

IV. Enforcing awards that carry interest

It has already been seen that an award of interest may be prohibited by a


relevant national law
o If this is the law of the arbitration agreement, or of the contract under
which the dispute arises, it seems that an arbitral tribunal has no
option but to apply it
Where parties to a contract have chosen as the substantive law of their
agreement a law that prohibits the payment of interest, they can scarcely
complain if interest is not payable

V. Post-award interest

In general, it is also open to arbitrators to set a rate of post-award interest in


any amount that they deem appropriate

(j) Costs

A claim in respect of the costs incurred by a party in connection with an


international arbitration is, in principle, no different from any other claim,
except that it usually cannot be quantified until the end of the arbitral
proceedings
There are three categories for the purpose of discussing claims in respect of
costs
o Costs of the tribunal
o Costs of the arbitration
o Costs of the parties

I. Costs of the tribunal

The costs of the tribunal usually include not only the fees, and travel-related
and other expenses, payable to the individual members of the arbitral tribunal
itself, but also any directly related expenses, such as the fees and expenses of
any experts appointed by the arbitral tribunal

II. Costs of the arbitration

The costs of arbitration include hiring rooms for hearings, and other meetings,
between the parties and the tribunal, as well as the fees and expenses of the
reporters who prepare the transcripts
III. Costs of the parties

The costs of the parties include not only the fees and expenses of the legal
representatives engaged to represent the parties at the arbitration hearing,
but also costs incurred in the preparation of the case

(k) Requirements imposed by national law

Most national legislation is silent concerning awards of costs in international


arbitrations

D. Deliberation and Decisions of the Tribunal

(a) Introduction

(b) Tribunal psychology

Most international arbitrations are determined by an arbitral tribunal


composed of three arbitrators
The aim of their deliberations must be to achieve a unanimous award, since
this will be seen as both authoritative and conclusive
o If unanimity cannot be achieved, however, the next best thing is to
have a majority award, rather than an award by the chairman alone
or no award at all

(c) Bargaining process

An award of monetary compensation arrived at by a majority vote is


sometimes the result of a bargaining process in the deliberations that might be
more common in a marketplace than in a judicial, or quasi-judicial, proceeding

(d) Majority voting

As an example of majority voting, Article 33(1) of the UNCITRAL Rules


provides: When there is more than one arbitrator, any award or other
decision of the arbitral tribunal shall be made by a majority of the arbitrators
However, Article 33(2) makes an exception to this rule in relation to questions
of procedure and allows the presiding arbitrator to decide such questions on
his or her own, subject to revision by the tribunal

(e) Concurring and dissenting opinions

I. Concurring opinions

A separate or concurring, opinion is one that is given by an arbitrator who


agrees with the result of their arbitration, but who either does not agree with
the reasoning or does not agree with the way in which the award is formulated
II. Dissenting opinions

Dissenting opinions pose greater problems and are less frequently delivered
There is a broad division of philosophy and practice as to wheter the giving of
dissenting opinions should be permitted

III. Position in national laws

Modern arbitration tends not to refer expressly to dissenting opnions

IV. Position under institutional rules

V. Practice at the Iran-United States Claims Tribunal

VI. When and how should dissenting opinions be given in international arbitrations?

As already indicated, there is no tradition of dissenting opinions in civil law


systems
Dissenting opinions have come to international arbitration from the common
law tradition and it is a disputed question wheter the have added value to the
arbitral process

E. Form and Content of Awards

(a) Generally

The bests awards are short, reasoned, and simply written in clear,
unambiguous language
An arbitral tribunal should aim at rendering a correct, valid, and enforceable
award

(b) Form of the award

In general, the requirement of form is dictated by the arbitration agreement

I. Arbitration agreement

It is necessary to check whether the arbitration agreement specifies any


particular formalities for the award
The UNCITRAL rules lay down the following requirements
o The award shall be made in writing;
o The reasons upon which the award is based shall be stated;
o The award shall be signed by the arbitrators, and shall contain the date
on which and the place where it was made; and
o Where there are three arbitrators and one of them fails to sign, the
award shall state the reason for the absence of the signature

II. Law governing the arbitration


The requirements of form imposed by national systems vary from the
comprehensive to the virtually non- existent

III. Introductory section of an award

Awards will often begin by setting out the names addresses of the parties, and
the names and contact details of their representatives
The award will then usually contain a brief narrative setting out a number of
facts relating to the arbitration

IV. Signatures

Some national systems of law require that all arbitrators should sign the award
in order for it be valid
o This is highly unsatisfactory, since, in such cases, a dissenting arbitrator
may frustrate an arbitration simple by refusing to sign the award

V. Language of the award

The award will normally be rendered in the language of the arbitration,


although occasionally it may be made either in the language that is the de
facto working language of the arbitral tribunal or in the language that is most
convenient for the parties

(c) Contents of the award

I. Arbitration agreement

Arbitrations agreements usually provide that the award is to be final and


binding upon the parties

II. Unambiguous

Most national systems of law require an award to be unambiguous and


dispositive

III. Determination of the issues

An award must also be dispositive, in that it must constitute an effective


determination of the issues in dispute

IV. Reason

The way in which reasons are given in arbitral awards varies considerably
o Sometimes, the reasoning, or motivation, is set out with extreme
brevity

V. Different ways of giving reasons


The general practice of arbitral tribunals in international cases is to devote
more time and space in the award to giving the reasons for its determination
of the legal arguments than to a review of the factual issues

(d) Time limits

A limit may be imposed as to the time within which the arbitral tribunal must
make its award

I. Disadvantages of mandatory time limits

It is rare to find time limits for delivery of the award in non-institutional rules
o Where such limits are imposed, it is usually by an express agreement
between the parties, contained in the arbitration clause or the
submission agreement
Undoubtedly, such a provision is inserted with the intention of putting
pressure on the arbitral tribunal to complete its work with due dispatch and in
order to minimize the opportunities for delaying the resolution of disputes by
the parties themselves

II. Non-mandatory provisions

Perhaps the best way in which the parties can put time pressure on an arbitral
tribunal, without placing the effectiveness of the proceedings at risk, is to
insert some form of non-mandatory provision

(e) Notification of awards

International and institutional rules of arbitration generally make provision for


the notification of the award to the parties

(f) Registration or deposit of awards

In some countries, it may be necessary to register or deposit the award with


the national court, generally on payment of an appropriate fee
o In other countries, registration for the purposes of recognition by the
courts is optional

F. Effect of Awards

(a) Res judicata

The basic principle of res judicata is that a legal right or obligation, or any facts,
specifically put in issue and determined by a court or tribunal of competent
jurisdiction cannot later be put back into question as between the same
parties

(b) Existing disputes


As far as the parties themselves are concerned, it is clear that the award
disposes of those disputes between the parties that were submitted to
arbitration
This even extends to cases in which the arbitrators acted as amiables
compositeurs

(c) Subsequent disputes

Where there are subsequent disputes between the same parties, more
difficult questions arise

(d) Effect of award on third parties

An arbitral tribunal has no power to make orders or to give directions against


someone who is not a party to the arbitration agreement, unless that party has
in some way acquiesced in a manner that, without actually making him or her
a party to the arbitration agreement, indicates an intention on his or her part
to be bound by the award

G. Proceedings after the award

(a) Under national law

Many systems of national law with developed arbitral rules permit the
correction of minor clerical or typographical errors in awards, either at the
request of one or both of the parties, or by the arbitral tribunal on its own
initiative

(b) Under rules of arbitration

Exception to the general rule of functus officio vary considerably under


different sets of arbitration rules

(c) Review procedures other than by national courts

Challenging awards in national courts is considered in Chapter 10

(d) Review of the award by way of settlement

After the award has been made, parties can also settle a dispute by voluntarily
agreeing to vary the terms of the award themselves
o In a study of the record of compliance with, and variation of, awards
once rendered, it was found that more than 18 per cent had been
renegotiated post-award to establish final settlement

(e) Publication of awards