Professor Antonio Crivellaro
Bonelli Erede Pappalardo
Via Barozzi, 1
Eric A. Schwartz, Esq.
69 Boulevard Haussmann
a. The first issue is whether these arbitral proceedings should be suspended as a result of certain decisions taken by the Federal Supreme Court and Federal First Instance Court of The Federal Democrat Republic of Ethiopia, which are described in more detail in Sections I.G and III below.
b. The second issue is whether this Arbitral Tribunal, constituted under the ICC Rules, has jurisdiction in these proceedings (see paragraph 43(i) of the Terms of Reference, February 17, 2000).
"67.3 Any dispute in respect of which:
(a) the decision, if any, of the Engineer has not become final and binding pursuant to Sub-Clause 67.1, and
(b) amicable settlement has not been reached within the period stated in Sub-Clause 67.2
shall be finally settled, unless otherwise specified in the Contract, under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed under such Rules. The said arbitrator/s shall have full power to open up, review and revise any decision, opinion, instruction, determination, certificate or valuation of the Engineer related to the dispute.
Neither party shall be limited in the proceedings before such arbitrator/s to the evidence or arguments put before the Engineer for the purpose of obtaining his said decision pursuant to SubClause 67.1. No such decision shall disqualify the Engineer from
being called as a witness and giving evidence before the arbitrator/s on any matter whatsoever relevant to the dispute.
Arbitration may be commenced prior to or after completion of the Works, provided that the obligations of the Employer, the Engineer and the Contractor shall not be altered by reason of the arbitration being conducted during the progress of the Works."3
SETTLEMENT OF DISPUTES
Clause 67 - Settlement of Dispute - Arbitration
Add the following new sub clauses to Clause 67.3 of Part I.
67.3.1 The place of arbitration shall be Addis Ababa, Ethiopia
67.3.2 The language of arbitration shall be English
67.3.3 The substantive law(s) applicable shall be the Ethiopian law
67.3.4 The rules for arbitration shall be the Civil Code of Ethiopia under Article 3325 et seq. (Arbitral Submission)."4
"I would like to organise a meeting to discuss the Terms of Reference in this matter. I would propose the dates of February 15 or February 17 at 2 pm.
For the sake of convenience, I would suggest that the meeting be held in Paris. This would be strictly without prejudice to the place of arbitration, which is understood to be Addis Ababa."8
"VIII. PLACE OF THE ARBITRATION
38. In accordance with Sub-Clause 67.3.1 of the Contract, added by the Conditions of Particular Application, Addis Ababa (Ethiopia) is the place of arbitration.
39. However, the Arbitral Tribunal may decide to conduct hearings or meetings at any other appropriate place. Neither such decision nor the participation of the parties in any such hearing shall be construed as a departure from the choice of Addis Ababa as the place of arbitration.
40. Irrespective of the place of signing, the award(s) shall be deemed to have been made in Addis Ababa (Ethiopia)."9
"(8) Place of the Arbitration.
Comparing Articles 39 and 40 of the draft ToR, the Claimant assumes that the Arbitral Tribunal intends to conduct all hearings in Paris. If the assumption is correct, the issue should be discussed during the meeting of 17 February."10
"(8) Place of the Arbitration
We fail to see how the Claimant can assume that Articles 39 and 40 of the draft Terms of Reference mean that all hearings are to be conducted in Paris. In our view, Articles 39 and 40 are clear and do not give rise to any such assumption. We therefore do not consider that this issue requires further discussion."11
"21. The Respondent has objected that there is no agreement between the parties to arbitrate disputes under the ICC Rules. The Respondent’s arguments in this respect are set out principally in its telefaxes to the Secretariat of the ICC Court dated: August 27, 1999; September 25, 1999; and October 5, 1999. In essence, the Respondent argues that through the addition of Sub-Clause 67.3.4 to Sub-Clause 67.3 of the General Conditions of Contract, the Parties have agreed to submit their disputes to ad hoc arbitration under the terms of the Civil Code of Ethiopia, rather than to arbitration under the ICC Rules.
22. The Claimant’s arguments in response are set out principally in the Claimant’s telefaxes to the Secretariat of the ICC Court dated September 22, 1999 and September 30, 1999. In essence, the Claimant argues that the reference to the arbitration rules of the Civil Code of Ethiopia in Sub-Clause 67.3.4 is supplementary to the reference to the ICC Rules in Sub-Clause 67.3 of the General Conditions of the Contract and does not affect the jurisdiction of the Arbitral Tribunal appointed under the ICC Rules of Arbitration.
23. In its session of October 13, 1999, the ICC Court decided to set this arbitration in motion pursuant to Article 6(2) of the ICC Rules. The Arbitral Tribunal will accordingly be required to rule on the question of whether it has jurisdiction in this arbitration.
24. The Respondent also argues that the party to the Contract and to the arbitration agreement is the Addis Ababa Water and Sewerage Authority rather than The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority. The Respondent states that, pursuant to Proclamation No. 10 and Regulation No. 5 of 1995 of the Addis Ababa City Government, the Addis Ababa Water and Sewerage Authority is an autonomous public authority having an independent judicial personality under Ethiopian law, while remaining under the supervision of the Addis Ababa City Government. See the Respondent’s letters to the Tribunal dated January 31, 2000 and February 15, 2000.
25. The Claimant argues that the party to the Contract and to the arbitration agreement is "The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority", as identified in the Request for Arbitration. The Claimant denies that Proclamation No. 10 of 1995 confers independent financial liability on the Addis Ababa Water and Sewerage Authority. The Claimant argues that it has contracted with The Federal Democratic Republic of Ethiopia through one of its governmental organs, and that any payment which is found to be due to the Claimant as a result of this arbitration will be enforceable against The Federal Democratic Republic of Ethiopia. See the Claimant’s telefax to the Tribunal dated February 8, 2000."12
a. The Claimant had made claims based on allegations of: (i) a late coming into force of the Contract; (ii) a failure to provide the design of the Works; (iii) exceptionally adverse weather conditions; (iv) a failure to certify and pay for work completed under the Contract; and (v) other miscellaneous matters.13
b. The Claimant alleged that the Respondent had breached its obligations under the following sub-clauses of the Contract: 11.1; 81.1; 20.4; 47.1; 67.1; and 69.1. The Claimant further alleged that the Respondent had breached the Contract by failing to provide permanent materials for installation in the Works in a timely manner. The Claimant further alleged that the Engineer had breached the Engineer’s obligations under the following sub-clauses of the Contract: 41.1; 46.1; 2.6; 44.1 and 44.3; 45.1; 52.1; 53.1, 60.5; 56.1; and 60.2. The Claimant had stated its intention to supplement these allegations in future submissions.14
c. The Claimant had also notified the Respondent of its intention to submit further disputes to be resolved in the present arbitration.15
d. The Claimant was seeking relief in the order of US$ 26,700,000 based on these claims, together with interest and costs.16
e. The Respondent’s answer was confined, at that time, to its jurisdictional objections that: (i) the parties had not agreed to submit their disputes to arbitration under the ICC Rules but rather had agreed to submit their disputes to ad hoc arbitration under Article 3325 et seq. of the Civil Code of Ethiopia; and (ii) the Respondent was not the correct party to the Contract and the arbitration agreement. The Respondent nevertheless denied the substance of the Claimant’s claims and denied that any additional claims that the Claimant proposed to bring before the Tribunal fell within the Terms of Reference.17
f. The Respondent requested that the Claimant’s claims be dismissed for lack of jurisdiction or, failing that, on the merits. The Respondent sought reimbursement of its legal and other costs incurred for the arbitration.18
"43. The Arbitral Tribunal shall decide upon all issues arising from the submissions, statements and pleadings of the Parties that are relevant to the adjudication of the Parties’ respective claims and defences. In particular, it will decide upon the following issues.
i. Whether the Arbitral Tribunal has jurisdiction in respect of this arbitration.
ii. If the Arbitral Tribunal does have jurisdiction, whether the Claimant is entitled to any relief in respect of its claim and, if so, in what amount.
iii. Whether interest is payable on any amount awarded by the Arbitral Tribunal and, if so, in what amount.
iv. The extent to which each Party should bear the costs of this arbitration."19
"44. In accordance with Sub-Clause 67.3.1 of the Contract, added by the Conditions of Particular Application, Addis Ababa (Ethiopia) is the place of arbitration.
45. However, the Arbitral Tribunal may, after consultation of the parties, decide to conduct hearings or meetings at any other appropriate place. Neither such decision nor the participation of the parties in any such hearing shall be construed as a departure from the choice of Addis Ababa as the place of this arbitration.
46. Irrespective of the place of signing, the award(s) shall be deemed to have been made in Addis Ababa (Ethiopia)."20
"47. In accordance with Sub-Clause 5.1.a of the Contract, as modified by the Conditions of Particular Application, the law of the Contract is the law in force in the Federal Democratic Republic of Ethiopia."21
"48. The Arbitral Tribunal shall resolve this dispute in accordance with the procedures prescribed by the Procedural Rules issued by the Arbitral Tribunal this day and, if applicable, by the ICC Rules, and by the rules of arbitration of the Civil Code of Ethiopia under article 3325 et seq. (Arbitral Submission). If these provisions do not address a specific procedural issue, the Arbitral Tribunal shall, after consulting the Parties, determine the applicable procedure."22
a. The language of the arbitration would be English.
b. The Arbitral Tribunal would be free to decide any issue by way of a partial or interim award, or by its final award.
c. The parties had no reservations to express with regard to the constitution of the Arbitral Tribunal.
a. By Friday, April 7, 2000, the Respondent was to submit a memorial on the issue of the jurisdiction of the Arbitral Tribunal.
b. By Tuesday, May 23, 2000, the Claimant was to submit a Statement of Claims on the merits and an answer on the issue of jurisdiction.
c. By Wednesday, August 23, 2000, the Respondent was to submit an Answer to the Claimant’s Statement of Claims on the merits and a rejoinder on the issue of jurisdiction.
d. By Monday, October 9, 2000, the Claimant was to submit a Rejoinder to the Respondent’s Answer on the merits and a rebuttal on the issue of jurisdiction.
e. By Friday, November 24, 2000, the Respondent was to submit a Rebuttal to the Claimant’s Rejoinder on the merits.
f. The Tribunal reserved a one-day hearing on December 15, 2000 for the resolution of further procedural issues.
g. The Tribunal also reserved the following dates for a hearing, at a place to be confirmed: January 22-26, 2001 and February 19-23, 2001.
"The Tribunal would stress its concern to avoid unnecessary disruption to the scheduled hearing dates, which have been in place since February of this year. The Tribunal hopes that the parties will be able to agree a timetable and format for the hearing that allows it to be completed within either or both of the two scheduled weeks."24
a. The Respondent submitted that the hearing scheduled to begin on January 22, 2001 should go ahead.
b. However, the Respondent doubted that one week would be sufficient for the hearing, given the large number of witnesses involved. Accordingly, in the Respondent’s submission, the hearing dates beginning on February 19, 2001 should continue to be reserved.
c. The Respondent submitted that the appropriate venue for the hearing was Addis Ababa. In the Respondent’s view, the choice of Addis Ababa as the place of arbitration created a presumption in favour of Addis Ababa as the venue for the hearing and there were no compelling considerations of convenience to overcome that presumption. To the contrary, there were good reasons to hold the hearing in Addis Ababa: (i) it would allow the Arbitral Tribunal to make a visit to the site of the project; and (ii) there were no obvious alternative venues to Addis Ababa.
a. The Claimant submitted that, taking into account the holiday season, there was insufficient time after receipt of the Respondent’s Rebuttal on December 22, 2000 for the parties to prepare for a hearing beginning on January 22, 2001. Those hearing dates should, in the Claimant’s submission, be cancelled.
b. The Claimant estimated that the witnesses could be heard within four days, with one or two days reserved for legal submissions.
c. The Claimant submitted that, taking into account that the majority of the participants in the hearing were based in Europe, it would be more appropriate to hold this hearing in Paris.
"The February hearings will be intermediate hearings, mainly devoted to examination of the witnesses. The Claimant recommends that they be held in Paris, reserving the next pleadings for a final hearing in Addis Ababa, the legal venue of the present arbitration."25
"With regard to the venue, the Tribunal currently takes the view that it would be more convenient to hold at least the first meeting in Paris, without prejudice to Addis Ababa remaining the place of the arbitration. The Tribunal understands that at least fourteen witnesses would attend the first meeting, together with the parties, their counsel, and the Arbitral Tribunal. The majority of participants in the hearing are based in Europe. Taking into account the significant travel time to and from Addis Ababa, holding such a hearing there is likely to substantially curtail the time available for the hearing itself and make the coordination of attendance by witnesses more difficult. The Tribunal would also find it easier to arrange transcript facilities appropriate to a witness hearing if the venue were Paris.
The Tribunal will take a final decision on this question after having considered the parties’ proposals regarding the duration and format of the hearing. It may prove to be more appropriate to hold at least the second meeting in Addis Ababa."26
"The Respondent leaves it to the Tribunal to decide what further submissions, if any, it requires from the Tribunal [sic] on the matter of jurisdiction. Tn the Respondent’s submission, little hearing time is required to be devoted to this subject as the matter has been fully briefed."27
a. Given that the Respondent had objected to the Arbitral Tribunal’s proposal of dividing the hearing on the merits into two meetings, and that the Claimant had previously indicated that the merits could be resolved in a single meeting, the Arbitral Tribunal decided that the merits would now be resolved in a single meeting.28
b. Given that it appeared from the parties submissions that the five hearing days reserved from February 19-23, 2001 would likely be insufficient, and given that it was not possible for the Arbitral Tribunal to schedule additional hearing days in close proximity to those dates, the Tribunal decided that it was no longer appropriate to use the dates of February 19-23, 2001 for the hearing.29
c. Taking into account the Arbitral Tribunal’s availability and the Respondent’s letters of January 12 and 19, 2001, the Tribunal decided to fix new hearing dates from Monday, May 28 to Friday, June 1, 2001 and from Monday, June 4 to Tuesday, June 5, 2001, with the possibility that the Tribunal would also sit on Sunday, June 3, 2001 if necessary, giving a total of eight available hearing days.30
d. In order to simplify and shorten the hearing on the merits, the Arbitral Tribunal decided to hold a separate, one-day hearing to resolve the issue of jurisdiction. That hearing was to be held on either May 21 or May 22, 2001, depending on the preference of the parties. The Respondent was given the option of choosing to have this hearing in the period from April 17-19, 2001 if it preferred.31
e. The Arbitral Tribunal decided, pursuant to Articles 44-46 of the Terms of Reference, that the appropriate venue for these hearings was Paris:
"15. Under Articles 44-46 of the Terms of Reference, the Tribunal is empowered to decide to hold hearings or meetings at appropriate places other than Addis Ababa, without prejudice to Addis Ababa remaining the place of the arbitration.
16. The Tribunal has carefully considered the parties’ submissions regarding the appropriate venue for the hearings. The Tribunal has decided that it is more appropriate to hold the hearings, including the separate hearing on jurisdiction, in Paris.
17. In reaching this decision, the Tribunal has taken particular account of the fact that the majority of the participants in the hearing are based in Europe. Given the significant travel time from Europe to Addis Ababa, and the relative difficulty of coordinating travel arrangements for the non-Ethiopian party, counsel, the arbitrators, and particularly the non-Ethiopian witnesses, it will greatly simplify matters if the hearings take place in Paris. This is especially the case given the Respondent’s estimation that the hearing might take up to 10 days.
18. Of course, this decision has no effect on Addis Ababa remaining the place of arbitration.
19. The Tribunal leaves open the question of whether any further hearing(s), if required, should be held in Addis Ababa."32
"The Claimant believes that the Tribunal is in a position to decide the issue of jurisdiction on the basis of the written evidence that has already been produced by the parties. With respect, it is submitted that the taking of oral testimony in relation to this issue, as requested by the Respondent, would be inappropriate and unnecessary in the presence of such exhaustive written evidence."33
"In compliance with the Terms of Reference, as well as Article 15(2) of the ICC Rules, the Arbitral Tribunal invited both parties to make submissions on the issue of the appropriate venue for the hearing. Having received and reviewed submissions from both parties, the Tribunal then held a meeting, in the absence of the parties, at which it deliberated on the question before reaching its decision to hold the hearings in Paris.
Ultimately, the Tribunal had regard to the fact that the majority of witnesses as well as the arbitrators and counsel for the parties reside in Europe. The Tribunal investigated the schedules and duration for airline travel from Europe to Addis Ababa and, taking into account the concerns of maximising the time available for the hearing and coordinating the examination of witnesses, decided that it was more appropriate to hold the hearing in Paris. This is consistent with the agreement of the parties expressed in the Terms of Reference.
Accordingly, while we appreciate that the Respondent may disagree with the Tribunal’s decision, we must stress that the decision was taken for appropriate reasons, following a fair procedure."34
"On a separate point, we would stress that the Tribunal’s decision not to consider the Respondent’s challenge to the Tribunal’s jurisdiction as a preliminary issue, which you also raise as a ground of complaint in your letter, was a decision that was taken by the Tribunal after receiving written submissions from both parties and after conducting an oral hearing on the point.
The Tribunal cannot accept your suggestion that this decision indicates a lack of fair-mindedness or impartiality on the Tribunal’s part. The Tribunal only decided that it was not appropriate to hear the jurisdiction challenge as a preliminary issue. This decision was taken on the merits of the arguments presented to us and was not in any way motivated by partiality in favour of one or other party. We remain ready to hear both parties on the jurisdiction question and will decide this issue with an open mind according to the appropriate legal principles, taking into account the facts and the written and oral submissions of both parties."35
"1. The present challenge is being submitted on behalf of the Addis Ababa Water & Sewerage Authority (the "Respondent") in accordance with Article 11 of the ICC Rules of Arbitration in order to request the removal and replacement of the three arbitrators, Professor Emmanuel Gaillard (Chairman), Professor Piero Bernardini and Dr. Nael Bunni, who constitute the Arbitral Tribunal in the above-reference arbitration. The challenge is submitted with considerable reluctance and regret but has become unavoidable. In its Procedural Order No. 2 of January 25, 2001 (Attachment 1 hereto), the Arbitral Tribunal refused to hold a hearing on the merits (scheduled for May 28-June 6, 2001 for the purpose of oral argument and the examination of all of the witnesses) at the agreed place of arbitration, which is Addis Ababa, and decided to conduct it instead in Paris. In refusing to conduct the hearing at the place of arbitration, the Arbitral Tribunal has:
(i) failed to perform its functions in accordance with the Rules, contrary to Article 12 thereof;
(ii) failed to act "fairly and impartially," in violation of Article 15(2); and
(iii) abused the discretion that it enjoys under Article 14(2) to hold hearings at "appropriate" locations other than the place of aibitration."36
"Indeed, by deciding to hold hearings in this arbitration in a location other than the place of arbitration, the Arbitral Tribunal has not disregarded the arbitration agreement concluded by the parties stipulating that the place of arbitration shall be Addis Ababa, Ethiopia, nor has it failed to comply with any of its duties under the ICC Rules. The Arbitral Tribunal has merely exercised the discretion granted to it under paragraph 45 of the Terms of Reference of the arbitration, signed by counsel on behalf of the parties and by the arbitrators on February 17, 2000:
"However, the Arbitral Tribunal may, after consultation of the parties, decide to conduct hearings or meetings at any other appropriate place. Neither such decision nor the participation of the parties in any such hearing shall be construed as a departure from the choice of Addis Ababa as the place of this arbitration."
This power granted to the Arbitral Tribunal under the Terms of Reference renders the situation entirely different, from a legal perspective, from that if the right to hold hearings elsewhere had resulted only from the ICC Rules, for in such a case the parties could argue that their arbitration agreement derogated from the Rules. In the present case, however, there can be no debate as to whether the Arbitral Tribunal enjoys the discretion to hold hearings elsewhere, given the subsequent express grant of this power by the Terms of Reference.
As for the Arbitral Tribunal’s exercise of this discretion in deciding to conduct the hearings in Paris, the Arbitral Tribunal concedes that reasonable individuals acting in good faith may have diverging views as to the relative convenience of various potential venues at which hearings could be held. However, the decision of the Arbitral Tribunal in the present case was based on considerations of convenience and costliness, not on any form of bias or partiality in favor of one party or the other. The Arbitral Tribunal has, moreover, left open the question of where future hearings will take place, thus allowing ample possibility for such hearings - including final argument and the rendering of the award - to take place in Addis Ababa (see paragraph 19 of Procedural Order No. 2).
In a given arbitration, the Arbitral Tribunal will be led to take any number of decisions, from minor procedural points up to the rendering of an award on the merits. Each of these decisions is likely to satisfy one party more than the other; this is inherent in the very role of the Arbitral Tribunal as adjudicator of a dispute. This obviously does not signify that in each instance the Arbitral Tribunal has shown bias vis-à-vis the less satisfied party.
In the present case, the Arbitral Tribunal must reject any allegations of bias in connection with its decision to hold hearings in Paris, which was taken on the basis of objectively legitimate considerations after consulting the parties."39
"We wish to inform you of the latest developments before the Supreme Court and, in particular, of the Supreme Court’s Order of yesterday, May 3, 2001. We understand that the Supreme Court, composed of a panel of three judges, has reached the following decisions:
(i) The Supreme Court has satisfied itself that it enjoys jurisdiction to hear the Respondent’s appeal pursuant to Article 3342(3) of the Ethiopian Civil Code.
(ii) The Supreme Court has summoned the Claimant in this arbitration to appear before it on June 27, 2001, in order to present its case in response to the Respondent’s appeal.
(iii) The Supreme Court has issued a temporary injunction against the Arbitral Tribunal ordering the suspension of the arbitration proceedings with immediate effect pending its determination of the Respondent’s appeal."41
"Federal First Instance Court") for the purposes of obtaining a judgment that the Tribunal lacks jurisdiction over this arbitration.
"Further, given that the Tribunal has failed to rule on the Respondent’s objection on jurisdiction, first raised in this arbitration in September 1999, and given the Tribunal’s determination to move this arbitration from Addis Ababa to Paris in violation of the Respondent’s reasonable expectations, the Respondent has initiated a suit at the Federal First Instance Court of Ethiopia ("the First Instance Court") in order to obtain a judgment that the Tribunal has no jurisdiction over this arbitration. We understand that the First Instance Court has satisfied itself that it enjoys jurisdiction to hear the Respondent’s application and, moreover, it has summoned the parties to appear before it on June 11, 2001."42
a. The arbitration is an ICC arbitration and the Respondent’s applications to the Ethiopian courts contravened the ICC Rules. In particular, Article 7(4) of the ICC Rules makes clear that the ICC Court’s rejection of the Respondent’s challenge is final.
b. The Federal First Instance Court has no authority to decide upon the jurisdiction of the Arbitral Tribunal over the arbitration, which is a matter for the Tribunal itself. This follows from the principle of competencecompetence, which is observed by the ICC Rules and recognised by Article 3330(2) of the Civil Code of Ethiopia. In any event, the Federal First Instance Court had not taken any decision purporting to suspend the arbitration.
c. The order issued by the Federal Supreme Court was invalidly made. In particular, it was made without notifying or hearing the Claimant. The order was not, in any event, directed to the Arbitral Tribunal and had not yet been served on the Claimant.
d. As an ICC tribunal in an international arbitration, the Arbitral Tribunal should give precedence to the decision of the ICC Court over any suspension order from an Ethiopian court.
"As an alternative, and still on the assumption that the Order of the Supreme Court is ineffective and does not affect the arbitration, if prior to proceeding with the hearings the Tribunal wishes to resolve the objection raised by AAWSA as to its jurisdiction, the Tribunal has collected all needed information to make an award on this issue.
It has not done it so far because the Respondent offered the evidence of witnesses on the same issue who were to be heard at the scheduled hearings. The Respondent does now refuse and boycott those hearings, and the Claimant has constantly argued that the jurisdictional issue can be properly decided upon the contract documents and the parties’ pleadings, completely exhausted on this matter also by admission of the Respondent, who however blames the Tribunal for having arbitrarily delayed its decision on jurisdiction [...].
The Claimant invites the Tribunal to consider the possibility to amend the Procedural Orders, also in view of the most recent events, and to firstly make an award on jurisdiction, so that the future destiny of this arbitration shall depend on this award."43
a. It had not yet been decided whether this arbitration is an ICC arbitration. The Respondent had never accepted that this is an ICC arbitration.
b. In any event, even if it were an ICC arbitration, the arbitration would still be subject to the supervising jurisdiction of the Ethiopian courts to the extent allowed under Ethiopian law, including their authority to hear appeals of ICC decisions rejecting the challenge of arbitrators during the course of the arbitration proceedings.
c. The principle of competence-competence does not necessarily prevent national courts deciding upon the arbitrators’ jurisdiction before the arbitrators themselves do so.
d. The Federal Supreme Court is entitled to issue temporary injunctions ex parte where it is warranted in the circumstances.
e. The Arbitral Tribunal must comply with the rulings of the Ethiopian courts: (i) to ensure as far as possible, pursuant to Article 35 of the ICC Rules, that any award issued by the Tribunal would be enforceable in Ethiopia; and (ii) since, if it did not, the arbitrators would be in contempt of court and would then be unwilling to travel to Ethiopia, preventing them from fulfilling their functions under the ICC Rules and necessitating their replacement.
"In the circumstances, the Arbitral Tribunal obviously has no choice but to respect the Orders of the Ethiopian Supreme Court and, accordingly, to suspend the arbitration proceedings. The Claimant’s proposed alternative of an early award on jurisdiction obviously is no longer feasible as it could not be effected without violating the Ethiopian court’s Order."44
a. The Court had retained provisional jurisdiction over the appeal on the basis of a unilateral declaration of the appellant (the Addis Ababa Water and Sewerage Authority) that this is an ad hoc arbitration exclusively governed by Ethiopian procedural law.
b. The respondent in the appeal before the Federal Supreme Court was Salini Costruttori S.p.A. and the order had been sent to the arbitrators for information only.
"The Tribunal is unwilling to take any decision or step in relation to the injunction issued by the Federal Supreme Court of Ethiopia, or in relation to the Respondent’s initiation of an action before the Federal First Instance Court of Ethiopia challenging the Tribunal’s jurisdiction, without hearing the parties and without having considered the issue in full. These matters will, accordingly, be addressed at the outset of the hearing beginning on May 28, 2001.
Until these issues are properly reviewed and appropriate decisions are taken, the parties should assume that the hearing on jurisdiction and the merits of the disputes may proceed on May 28, 2001 and should prepare accordingly. The Tribunal would emphasise that, as confirmed by Article 6(2) of the ICC Rules, the Tribunal has the jurisdiction to decide whether it has jurisdiction in this dispute."45
"The Tribunal remains of the view, stated in its letter of May 14, 2001, that it would be inappropriate to take any decision suspending the arbitration, on the basis of the Respondent’s actions before the Ethiopian courts, without having the benefit of hearing the parties. Accordingly, this issue will be considered at the outset of the hearing on May 28, 2001. The Respondent, if it attends, will be invited to address the Tribunal on its actions before the Federal Supreme Court of Ethiopia and the Federal First Instance Court of Ethiopia. The Claimant will then be given a chance to respond.
Depending upon the views the Tribunal reaches on the suspension issue, the Tribunal may then consider in the same hearing the Respondent’s challenge to its jurisdiction in this matter.
In its letter of May 21, 2001, the Claimant has indicated that it does not wish to proceed with the hearing on the merits at this stage. In light of this and of the position taken by the Respondent in its letter of May 16, 2001, the merits will not be considered in this hearing in any event.
In case the Tribunal proceeds to consider the Respondent’s jurisdictional challenge, the Tribunal is prepared to hear the parties’ witnesses on jurisdiction. However, the Tribunal considers that, in the event that the Respondent declines to attend, it would be inappropriate to hear the Claimant’s witnesses. In that event, and in light of the positions taken by the parties on this issue, the Tribunal would address the Respondent’s jurisdictional challenge on the basis of the written and oral submissions of the parties alone."46
1. The Chairman welcomed the Claimant and its representatives and expressed the Arbitral Tribunal’s regret that the Respondent and its representatives had chosen not to attend the hearing, even to discuss the issue of whether this Arbitral Tribunal should suspend its proceedings in light of the decisions taken by the Federal Supreme Court and Federal First Instance Court of the Federal Democratic Republic of Ethiopia as a result of procedural steps taken by the Respondent in Ethiopia.
2. The Claimant made its submissions regarding the effect of the injunctions issued by the courts of the Federal Democratic Republic of Ethiopia.
3. In the course of its submissions, the Claimant distributed three documents identified by the letters ‘A’, ‘B’ and ‘C’, copies of which are attached.
4. After deliberation, the Arbitral Tribunal announced its conclusions, which are recorded in the transcript of the hearing and are confirmed by Procedural Order No. 3 of today’s date."48
"Before we start this hearing I would like to make three comments on behalf of the Arbitral Tribunal; one is we very much regret that the Defendant has decided not to appear before us today, because we would have been very interested in their views orally on the issue which we want to address today, including the issue of suspension of the proceedings.
However, we have received their written submissions on this issue, and will study that carefully.
The second comment is that we feel compelled to make two remarks on the status of the situation we face today.
It has been stated in some of the documents that we, the Arbitral Tribunal, have decided that the venue of this arbitration is Paris, and this is factually incorrect.
The venue of this arbitration is Addis Ababa, and we have never said anything to the contrary.
What we have said is that we have decided, pursuant to the language agreed by the parties in the Terms of Reference, that we will have one hearing in Paris, and that is very different.
The second remark in this respect is that we did, we took this decision on the basis of the Terms of Reference which were specifically agreed by the parties and their representatives, and which state unequivocally that we are granted by the parties the power to have hearings in a place other than Addis Ababa, and we can decide that after having heard the views of the parties in this respect.
What we did is we did hear the parties in this respect, and after careful consideration we have decided that we will have one hearing in Paris, not ruling out the possibility to have further hearings in Addis Ababa, and in any case the place of arbitration remaining Addis Ababa as agreed by the parties."49
a. The Claimant noted that it had not yet been formally served with any order from the Ethiopian courts suspending the arbitration.
b. During the course of its submissions, the Claimant referred to three new documents in Amharic relevant to the suspension issue, copies of which were distributed at the hearing and which are appended to the ‘Minutes of the Hearing Held in Paris on May 28, 2001’ and marked ‘A’, ‘B’, and ‘C’, respectively.
c. The Claimant also stated that it would attend hearings before the Federal Court of First Instance on June 11, 2001 and before the Federal Supreme Court on June 27, 2001, at which it would correct alleged misrepresentations made by the Respondent to those courts and apply for the revocation of the orders granted by those courts. The alleged misrepresentations were that: (i) the Arbitral Tribunal had changed the venue of the arbitration to Paris; and (ii) the Arbitral Tribunal had refused to rule on the issue of its own jurisdiction.
Regrettably, because the Respondent failed to attend the hearing, the Arbitral Tribunal did not receive any explanation from the Respondent of the basis on which it had obtained the two injunctions. Furthermore, it emerged from the Claimant’s submissions at the hearing, during which the Claimant submitted documents in Amharic identified as ‘A’, ‘B’, and ‘C’, which are attached to the Minutes of the Hearing issued today, that the Arbitral Tribunal is not in possession of a number of documents that could clarify the motivation and effect of the injunctions, which might be relevant to its decision.
Therefore, the Arbitral Tribunal could not reach a definitive conclusion at the hearing on May 28, 2001 on the question of suspension.
THE ARBITRAL TRIBUNAL DECIDES AS FOLLOWS:
1. Both parties are given one week from the date of receipt of the transcript of the May 28, 2001 hearing to submit their comments on the issue of suspension discussed at the hearing.
2. The Respondent is to submit by June 13, 2001 to the Arbitral Tribunal, with a copy to the Claimant, the complete file of the documents that it has submitted to the Federal Supreme Court of the Federal Democratic Republic of Ethiopia, with an English translation of any documents in Amharic.
3. The Claimant is to submit by June 13, 2001 to the Arbitral Tribunal, with a copy to the Respondent, an English translation of the documents referred to in the May 28, 2001 hearing as documents ‘A’, ‘B’, and ‘C’, copies of which are attached to the Minutes of the Hearing, issued today.
4. The Arbitral Tribunal would appreciate being kept informed by both parties of any developments in the proceedings before the Federal Supreme Court and the Federal First Instance Court of the Federal Democratic Republic of Ethiopia.
5. The Arbitral Tribunal will issue a decision regarding the suspension of the arbitration once it has received and considered the documents identified above and has better information regarding the facts relating to the Respondent’s applications before the Ethiopian courts."52
"4. To avoid any confusion in the proceedings before the Ethiopian courts, the Arbitral Tribunal would like to make the following points clear, as to what has always been and still is its own position:
a. The seat of this arbitration is, and always has been, Addis Ababa. This is made clear by the parties’ original arbitration agreement (Sub-Clause 67.3.1 of the Conditions of Particular Application of the Contract dated August 7, 1996). This is further made clear by Section VII of the Terms of Reference, signed by Bonelli Erede Pappalardo on behalf of the Claimant, by Freshfields on behalf of the Respondent, and by the Arbitral Tribunal, on February 17, 2000. Neither party disputes that Addis Ababa is the seat of this arbitration.
b. The Arbitral Tribunal decided to hold the hearing beginning on May 28, 2001 in Paris rather than Addis Ababa, without displacing Addis Ababa as the legal seat of this arbitration. This decision was taken after due consultation of the parties and due deliberation by the Arbitral Tribunal. The decision was based on considerations of practicality. Nevertheless, the Arbitral Tribunal has made clear that subsequent hearings may be held in Addis Ababa. Furthermore, the Arbitral Tribunal has not ruled out the prospect of visiting the site of the project that is the subject of the dispute, near Addis Ababa, as requested by the Respondent.
c. The Arbitral Tribunal’s decision to hold the May 28, 2001 hearing in Paris was based on a specific agreement freely entered into by both parties at the Terms of Reference hearing on February 17, 2000. This agreement was embodied in the Terms of Reference, which were signed six months after the submission of the dispute to arbitration under the Rules of Arbitration of the International Chamber of Commerce, and three and a half years after the signature of the contract containing the arbitration agreement. The parties expressly agreed that the Arbitral Tribunal could hold hearings in places other than Addis Ababa. Indeed, the Terms of Reference provide (pp. 12-13):
"44. In accordance with Sub-Clause 67.3.1 of the Contract, added by the Conditions of Particular Application, Addis Ababa (Ethiopia) is the place of arbitration.
45. However, the Arbitral Tribunal may, after consultation of the parties, decide to conduct hearings or meetings at any other appropriate place. Neither such decision nor the participation of the parties in any such hearing shall be considered as a departure from the choice of Addis Ababa as the place of this arbitration."56
"5. The parties are in dispute as to whether they have agreed to submit their disputes to ad hoc arbitration under Articles 3325 et seq. (Arbitral Submission) of the Civil Code of Ethiopia (as the Respondent contends), or to institutional arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, supplemented where appropriate by Articles 3325 et seq. of the Civil Code of Ethiopia (as the Claimant contends).
This Arbitral Tribunal, set up under the auspices of the ICC, will thus have to determine, pursuant to the principle of compétence-compétence embodied in Article 3330 of the Civil Code of Ethiopia, whether it has jurisdiction to rule in the dispute submitted to it. This issue has now been fully briefed by both parties and the Arbitral Tribunal is ready to issue an award in this respect.
Both parties will, of course, have an opportunity to institute an action to set aside any award on jurisdiction issued by this Arbitral Tribunal, through an application to the competent Ethiopian courts. Accordingly, both parties will be in a position to ensure that any award rendered by this Arbitral Tribunal is fully compliant with the laws of the Federal Democratic Republic of Ethiopia."57
a. The Respondent denied that it had represented to the Federal Supreme Court that the Arbitral Tribunal had changed the venue of the arbitration to Paris.
b. The Respondent also argued that, contrary to submissions made by the Claimant at the May 28, 2001 hearing, the Federal Supreme Court’s order was binding on the Arbitral Tribunal.
c. The Respondent argued that the effect of the order of the Federal First Instance Court was that the Claimant was restrained from pursuing its claims before this Arbitral Tribunal.
"24. The Respondent also argues that the party to the Contract and to the arbitration agreement is the Addis Ababa Water and Sewerage Authority rather than The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority. The Respondent states that, pursuant to Proclamation No. 10 and Regulation No. 5 of 1995 of the Addis Ababa City Government, the Addis Ababa Water and Sewerage Authority is an autonomous public authority having an independent judicial personality under Ethiopian law, while remaining under the supervision of the Addis Ababa City Government. See the Respondent’s letters to the Tribunal dated January 31, 2000 and February 15, 2000.
25. The Claimant argues that the party to the Contract and to the arbitration agreement is "The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority", as identified in the Request for Arbitration. The Claimant denies that Proclamation No. 10 of 1995 confers independent financial liability on the Addis Ababa Water and Sewerage Authority. The Claimant argues that it has contracted with The Federal Democratic Republic of Ethiopia through one of its governmental organs, and that any payment which is found to be due to the Claimant as a result of this arbitration will be enforceable against The Federal Democratic Republic of Ethiopia. See the Claimant’s telefax to the Tribunal dated February 8, 2000."58
"37. If Salini’s claim is intended at joining a third party to the current proceedings, i.e. the Federal Democratic Republic of Ethiopia, then Salini must first obtain the consent of AAWSA and the Arbitral Tribunal, as well as the consent of the party it wishes to join. If, however, Salini’s claim is properly clarified as an issue with respect to its ability to enforce a future award against a proper party, then the claim concerns the issue of enforcement and is therefore not an issue for this Arbitral Tribunal."59
"22. [...] Salini has now accepted to leave the matter out of the issues to be decided in this arbitration and has characterized the issue as one to be more properly decided at the enforcement stage. AAWSA is in agreement with Salini and concurs with its view that the issue should be abandoned with respect to this arbitration."62
"Art. 26 of the ICC Rules [the predecessor of the current Article 35] must be understood as requiring every arbitral tribunal to avoid any grounds of nullity, since if the award is unenforceable the whole arbitration proceeding will have been a waste of time and energy.
But this requirement of Art. 26 is not relevant to the question of jurisdiction. It is obvious that if a tribunal would decline to exercise jurisdiction on the basis of the possible difficulties of a future enforcement in a given country, then there would be no award at all, susceptible of being enforced in other jurisdictions.
In this case there may be difficulties, perhaps not insuperable, in the enforcement of this tribunal [sic] awards, in some national jurisdictions.
But if the tribunal finds, as it does, that it has jurisdiction, it cannot fail to exercise it. Otherwise, it would be concurring in a failure to exercise jurisdiction and could even be accused of a denial of justice."
(Interim award of November 1984 by Messrs. Jimenez de Arechaga, chairman, K.-H. Bockstiegel and J. H. Pickering, arbitrators, in ICC Case No. 4695, XI Y.B. Com. Arb. (1986) at p. 158)
"44. In accordance with Sub-Clause 67.3.1 of the Contract, added by the Conditions of Particular Application, Addis Ababa (Ethiopia) is the place of arbitration.
45. However, the Arbitral Tribunal may, after consultation of the parties, decide to conduct hearings or meetings at any other appropriate place. Neither such decision nor the participation of the parties in any such hearing shall be construed as a departure from the choice of Addis Ababa as the place of this arbitration.
46. Irrespective of the place of signing, the award(s) shall be deemed to have been made in Addis Ababa (Ethiopia)."66
"From the reading of the evidence attached with the file and the translation of Article 67 of the Contract, which the Respondent [Salini] agreed and signed thereto, shows that should a dispute arises between the Applicant and the Respondent, it has been expressly provided that the place of Arbitration being Addis Ababa and the Applicable laws being the Ethiopian Civil Code Art. 3325 and addition (Arbitral Submission).
While the situation being so, the Court is so convinced, as submitted by the Applicant’s [AAWSA’s] affidavit number 3(a) and (c), that the initiation of an arbitration proceeding against the Applicant and the continuation of the same in Paris before the Arbitral Tribunal, will cause damages to the Applicant which can not be compensated in money. Therefore, until the determination of the issues under this File or the giving of a revised order, the Court in accordance with Article 155 of the Civil Procedure Code hereby issued an injunction order against the Respondent to stop the breach of its obligation under Article 67 of the Special Conditions of the Contract signed on August 6,1996."67
"L’ordre public international s'opposerait avec force à ce qu’un organe étatique, traitant avec des personnes étrangères au pays puisse passer ouvertement, le sachant et le voulant, une clause d’arbitrage qui met en confiance le cocontractant et puisse ensuite, que ce soit dans la procédure arbitrale ou dans la procédure d’exécution, se prévaloir de la nullité de sa propre parole."
(Award in ICC Case. No. 1939, Italian company v. African state-owned entity, cited in Le statut des usages du commerce international devant les juridictions arbitrales, 1973 Rev. Arb. 122, 145 and 109 J.D.I. 971, 977 (1982) with commentary by Yves Derains)
"International public policy would be strongly opposed to the idea that a public entity, when dealing with foreign parties, could openly, knowingly, and willingly, enter into an arbitration agreement, on which its cocontractor would rely, only to claim subsequently, whether during the arbitral proceedings or on enforcement of the award, that its own undertaking was void."
"Il est superflu d’ajouter qu’un principe général, aujourd'hui universellement reconnu tant dans les rapports interétatiques que dans les rapports internationaux privés (que ce principe soit considéré comme d'ordre public international, comme appartenant aux usages du commerce international ou aux principes reconnus tant par le droit des gens que par le droit de l'arbitrage international ou la "lex mercatoria") interdirait de toute façon à l'Etat iranien - même s'il en avait eu l'intention, ce qui n'est pas le cas - de renier l'engagement d'arbitrage qu'il aurait souscrit lui-même ou qu’un organisme public comme l'AEOI aurait souscrit précédemment. La position du droit positif contemporain des relations internationales est bien résumée par le Juge Jimenez de Arechaga, ancien Président de la Cour internationale de Justice, qui écrit (dans une étude des Mélanges Gidel (1961) p. 367 s.) qu'un gouvernement engage par la clause arbitrale - et l'observation vaut aussi bien pour les engagements pris directement que pour ceux qui ont été pris par F intermédiaire d'un organisme public, comme en l'espèce - "ne peut pas se libérer validement de cette obligation par le fait de sa propre volonté, comme par exemple par un changement de son droit interne ou par une résiliation unilatérale du contrat"."
(Award on jurisdiction of April 30, 1982 in ICC Case No. 3896, Framatome S.A. v. Atomic Energy Organization of Iraq (AEOI), 111 J.D.I. 58(1984))
"It is superfluous to add that there is a general principle, which today is universally recognized in relations between states as well as in international relations between private entities (whether the principle be considered a rule of international public policy, an international trade usage, or a principle recognized by public international law, international arbitration law or lex mercatoria), whereby the Iranian state would in any event - even if it had intended to do so, which is not the case - be prohibited from reneging on an arbitration agreement entered into by itself or, previously, by a public entity such as AEOL The position of the current positive law of international relations is summarised well by Judge Jimenez de Arechaga, the former President of the International Court of Justice, who wrote (in a study in Mélanges Gidel (1961) p. 367 s.) that a government bound by an arbitration clause - and this observation applies equally to obligations assumed directly and those assumed through an intermediary of a public organ, as in this case - "cannot validly free itself from that obligation by an act of its own will, for example, by a change in its internal law or by a unilateral repudiation of the contract"."
"It is a recognized principle of international law that a state is bound by an arbitration clause contained in an agreement entered into by the State itself or by a company owned by the State and cannot thereafter unilaterally set aside the access of the other party to the system envisaged by the parties in their agreement for the settlement of disputes."
(Ad hoc preliminary award of January 14, 1982 by Mr. B. Gomard, sole arbitrator, Elf Aquitaine Iran v. NIOC, XI Y. B. Com. Arb. 97, ¶24 at 104 (1986))
"Une troisième formule, très largement utilisée par les arbitres du commerce international, consiste à tenir la prohibition de l'arbitrage comme contraire à Tordre public international [...].
Sans aller aussi loin, on peut également concevoir que l'arbitre international écarte le moyen pris de cette prohibition lorsque les circonstances de la cause sont telles que l'Etat irait contra factum proprium en la soulevant."
(Ad hoc award of November 18, 1993 by Messrs. C. Reymond, chairman, K.-H. Bockstiegel and M. Franchimont, arbitrators, Benteler v. Etat belge, 1989 Rev. Arb. 39)
"A third formula, very widely used by international commercial arbitrators, consists in considering the prohibition on arbitration as being contrary to international public order [...].
Without going that far, one can also conceive that the international arbitrator should dismiss the argument based on this prohibition when the circumstances of the case are such that the State would act contra factum proprium in raising it."
"62. The Court concludes that the Government of Malaysia had an obligation, under Article 105 of the Charter and under the General Convention, to inform its courts of the position taken by the Secretary-General. According to a well-established rule of international law, the conduct of an organ of a State must be regarded as an act of that State.
This rule, which is of a customary character, is reflected in Article 6 of the Draft Articles on State Responsibility adopted provisionally by the International Law Commission on first reading, which provides:
"The conduct of an organ of the State shall be considered as an act of that State under international law, whether that organ belongs to the constituent legislative, executive, judicial or other power, whether its functions are of an international or an internal character, and whether it holds a superior or a subordinated position in the organization of the State." (Yearbook of the International Law Commission, 1973, Vol. II, p. 193)"
(Difference Relating to Immunity From Legal Process of a Special Rapporteur of the Commission of Human Rights, I.C.J Reports 1999, p. 62, at p. 87, ¶ 62)
"Appartiennent au « gouvernement », au sens du droit international, non seulement les autorités exécutives de l’État, mais l’ensemble de ses « pouvoirs publics ». C’est tout l’ordre politique, juridictionnel et administrative qui est visé (cf. l’article 5 du Project d’articles de la C.D.I. sur la responsabilité des États)."
(Patrick Daillier & Alain Pellet, Droit international public (6e éd., 1999), P. 413, ¶271)
"Not only the executive authorities of the State but all of its "public powers" belong to the "government" in the public international law sense. The entire political, judicial and administrative power is implicated (cf. Article 5 of the draft articles of the I.L.C. on the responsibility of States)."
a. The parties’ arbitration agreement unambiguously provides for ad hoc arbitration under the Civil Code of Ethiopia and not for arbitration under the ICC Rules.
b. The Claimant’s contrary interpretation would deprive the language of the parties’ arbitration agreement, specifically Sub-Clause 67.3.4, of any meaning.
c. On a subsidiary basis, the history of the precontract negotiations supports the Respondent’s interpretation of the arbitration agreement.
a. Clauses 2 and 3 of the Contract Agreement of August 7, 1996 provide, inter alia, that the Special Conditions of Particular Application (Part 2) take precedence over the General Conditions (Part 1) in the event of "ambiguities or discrepancies".70 As a result, the mandatory language of Sub-Clause 67.3.4 displaces the. standard language of Sub-Clause 67.3 in favour of ad hoc arbitration pursuant to the Civil Code of Ethiopia.71
b. Sub-Clause 67.3 states that, "unless otherwise specified in the Contract", all qualifying disputes shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce. In the Respondent’s submission, the parties did ‘otherwise specify’ in this case by adding SubClause 188.8.131.52
"There is no basis for such an assumption. Indeed, Satini merely points to a sample clause contained in the Guidelines for Preparation of Part II Clauses issued by FIDIC in 1987 ("the FIDIC Guidelines"), which Salini wrongly asserts the parties incorporated into their agreement by reference. But the FIDIC Guidelines have no binding authority, and the sample clause in question is no more than an example. The parties are not precluded from expressing their intentions in another manner."75
"1. USE OF (FIDIC) AND PARTICULAR CONDITION
The Contract Condition for Dire Dam Project between the Contractor and the Client is subject to the provisions of (FIDIC) fourth edition, 1987. Furthermore, the special and particular condition was also prepared on the bases of the guideline for preparation of particular conditions issued by FIDIC in 1987. Therefore there will not be any negotiation on any clause of the conditions of the Contract."79
Where it is decided that a settlement of dispute procedure, other than that of the International Chamber of Commerce (ICC), should be used the Clause may be varied.
Sub-Clause 67.3 - Arbitration
Following paragraph (b), delete the words ‘shall be finally settled...International Chamber of Commerce' and substitute ‘shall be finally settled under the UNCITRAL Arbitration Rules as administered by a (insert name of administering authority)
Where alternatives to ICC are considered care should be taken to establish that the favoured alternative is appropriate for the circumstances of the Contract and that the wording of Clause 67 is checked and amended as may be necessary to avoid any ambiguity with the alternative."80
The participants had agreed to undertake arbitration process in accordance with Clause 67 of particular conditions. But the following statements should be deleted "the whole of Clause 67 is deleted and the following substituted therefore" and the addition to Clause 67.3 should be numerated as 67.3.1; 67.3.2; 67.3.3 and 67.3.4."82
"As used in this Chapter, the terms ‘arbitral submission’ or stipulation of the parties’ include the provisions of the arbitral code to which the parties may have referred."86
"The words arbitral code clearly refer to institutional arbitration rules that the parties may have jointly selected. Article 3346 assures the prevalence and priority of same rules whenever the parties’ autonomy (the so called arbitral submission or stipulation of the parties) is admitted by the law. Hence, the Ethiopian provisions recalled in Sub-clause 67.3.4 clearly also apply to institutional arbitrations, and established the validity of their choice made by the parties."87
a. Sub-Clause 67.3.4 states that "the rules for arbitration shall be the Civil Code of Ethiopia under Article 3325 et seq. (Arbitral Submission)" but does not state that these rules will operate in place of the ICC Rules invoked in SubClause 67.3.
b. Sub-Clause 67.3.4 is the fourth of four new sub-clauses, the first three of which are clearly meant to supplement rather than override Sub-Clause 67.3. Sub-Clause 67.3.4 is not marked out as being any different from the earlier sub-clauses in this respect.
c. The Special Conditions of Particular Application clearly state that they "add" Sub-Clauses 67.3.1-67.3.4 to Sub-Clause 67.3. This suggests that those subclauses supplement, rather than override, Sub-Clause 67.3.
"2. The following documents shall be deemed to form and read and construed as part of this Agreement, viz:
(a) The Contract Agreement (Volume I)
(b) Letter of Acceptance (Volume I)
(c) Minutes of Meeting (Volume I)
(d) The Said Bid (Offer) (Volume I)
(e) Addendum No. 1-6 (Volume I)
(f) The Special Conditions of Contract (Part II) (Volume I)
(g) The General Conditions of Contract (Part I) (Volume I)
(h) The Technical Specifications (Volume II)
(i) The Bill of Quantities (Volume I)
(j) The Drawings (Volume III)
(k) The Schedules of Supplementary Information (Volume IV)
3. The aforesaid document shall be taken as complementary and mutually explanatory of one another, but in the case of ambiguities or discrepancies shall take precedence in the order set out above."92
"The proceedings before the Arbitral Tribunal shall be governed by these Rules, and, where these Rules are silent, by any rules which the parties or, failing them, the Arbitral Tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration."
"Notwithstanding Sub-clause 67.3.4 makes reference to the Ethiopian law provisions for arbitration, it must be emphasized that also this Sub-clause is placed under the language "Add the following (...) to Cl. 67.3", which means that the Ethiopian law on arbitration has been added to the ICC Rules.
The result is that the reference to the ICC Rules in the first part of SubClause 67.3 stands, and that the Ethiopian law on arbitration must be applied in addition to them. This means that the Ethiopian law provisions are applicable by way of integration, when the ICC Rules do not provide otherwise.
The parties having agreed that the place of arbitration is Addis Ababa, the above result is not surprising, but in accordance with the common practice. Whether or not the specific reference to the local procedural law has been made by the parties, the Arbitral Tribunals constituted under the ICC Rules refer - as procedural rules - first to the ICC Rules themselves and then to the procedural rules of the venue as "lex loci arbitri", for whatever matter not governed by and not in contrast with the ICC Rules.
Of course, as the Respondent observes and the Claimant accepts, this hierarchy applies to local law provisions which are not mandatory. As seen above, however, the majority of the Ethiopian law provisions are not such and, on the contrary, give prevalence to the autonomy of the parties."101
"By referring to both sets of rules, they intended to pay respect also to the local rules to the maximum possible extent. The compliance with the local procedural rules - either because mandatory, or because nonmandatory but in harmony with the ICC Rules - was the genuine Parties' will when they agreed on a ICC arbitration held in Ethiopia."103
a. From the outset of the negotiations, the Respondent made clear that it wished to preclude ICC arbitration and provide for ad hoc arbitration instead.
b. The Respondent maintained this position throughout the negotiations and explicitly advised the Claimant that it would not be awarded the Contract if it insisted on ICC arbitration.
c. The Claimant initially proposed arbitration under the ICC Rules. However, it is not true, contrary to the Claimant’s allegation, that the Claimant refused to enter into the Contract unless it provided for ICC arbitration.
d. At the pre-award meeting on August 5-6, 1996, the parties agreed to submit their disputes to ad hoc arbitration under the arbitration rules of the Civil Code of Ethiopia. This agreement is recorded in Minute II.3 of the ‘Pre-Award Minutes of the Meeting for Emergency Dire Dam Contract DDI’ of August 5 and 6, 1996 (Annex 4 to the Request for Arbitration, August 11, 1999).
"In substance, [the Claimant’s witness statements] confirm that what happened was simply the following: the Claimant required as a condition for signing the Contract that, amongst others, Sub-clause 67.3 referring to ICC arbitration be reinstated in the Particular Conditions; the Respondent accepted but wished to maintain the set of sub-clauses from 67.3.1 to 67.3.4; after negotiation, the parties agreed to reinstate reference to ICC arbitration by reintroducing the standard text of Sub-clause 67.3 in the Particular Conditions and to add thereto the set of sub-clauses wished by the Respondent.
Both witnesses point out that the Claimant has been working in Ethiopia since the early 1960’s and that their numerous contracts regularly contained an ICC arbitration clause in the standard FIDIC form of Clause 67."107
"It is thus established that the parties, prior to signing the Contract, agreed to:
1. erase the deletion and substitution of Clause 67 made by the Respondent in the tender documents initially issued by him;
2. reinstate Clause 67 in its entirety (from Sub-clause 67.1 to 67.4) of FIDIC standard form of General Conditions, including Sub-clause 67.3 which refers to ICC arbitration unless otherwise agreed in the Contract;
3. renumber the four additional provisions requested by the Respondent as additional clauses to Sub-clause 67.3 (from 67.3.1 to 67.3.4)."108
"IX. Clause 67
We’ve noticed a possible contradiction in the wording of the new Clause 67 of the Special Conditions of Contract and we would like to clarify the matter during the eventual negotiation phase."110
"13. This confusion [concerning the wording of Clause 67 of the Special Conditions of Particular Application in the tender], amongst other miscellaneous contractual issues, was discussed at the pre-award meeting which commenced on August 5, 1996. I, as well as the other representatives of AAWSA, and the Consultant, explained to Salini how AAWSA had made a mistake in the wording of Clause 67 of the Conditions of Particular Application in its tender documents. It had not intended to delete the whole of Clause 67 but wished to retain the references to the role of the Engineer, the possibility of amicable settlement and the timing of submission to arbitration. What it did not wish to retain was the reference to ICC arbitration.
15. At the meeting of August 5, 1996, Salini also expressed some reservation about ad hoc arbitration, preferring that the Contract provide for ICC arbitration. AAWSA emphasized its disagreement with this and that it wished to maintain the existing provision in the draft Clause 67 of the Conditions of Particular Application of Contract stipulating ad hoc arbitration. AAWSA explained that if Salini were unwilling to accept ad hoc arbitration, AAWSA would not award the Contract to Salini. After making its position on Clause 67 crystal clear to Salini, the meeting was adjourned until the following day, with Salini promising to inform us then of their response.
16. On August 6, 1996, when the meeting reconvened, Salini informed us that it had decided to accept ad hoc arbitration.
17. Representatives of AAWSA and the Consultant presented to Salini a revised draft of Clause 67 of the Conditions of Particular Application, which was exactly the same as the previous draft Clause 67 of Conditions of Particular Application contained in AAWSA’s tender, but was to be added to (rather than to completely substitute) Clause 67 of the General Conditions of the Contract, and was renumbered. The draft was reviewed and agreed by Salini and was subsequently included in the signed Contract."114
"3.3 Salini requested that the FIDIC Part I Conditions be reinstated inasmuch as the Contract would be awarded to an international contractor and that the deletion of the Clause by the Part II provisions would have removed the procedures of the Engineer’s Decisions and the international arbitration provided therein.
3.4 I recall that these discussions were low-keyed and were carried out as a matter of ordinary administration.
AWASA accepted to reintroduce ICC arbitration as part of the wholly reintroduced Clause 67, particularly Sub-Clause 67.3, and wished to maintain the particular conditions as already issued and placing them as an addition to that sub-clause."115