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Ms Alessandra Maria Corona Henriques

L.L.M. - Harvard Law School

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Ms Charis Tan

Partner - Peter & Kim

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Stay of Proceedings

I. Definition

1.

A stay of arbitral proceedings takes place when the arbitral tribunal decides to temporarily suspend an arbitration, usually because there are other proceedings, either at a court or another arbitration, that are relevant to settle the dispute. See also Parallel Proceedings.

II. Arbitrator's power to stay proceedings in the presence of parallel proceedings

2.

The power to stay proceedings has been found to be within the inherent powers of arbitrators.1 International arbitration rules such as those of the ICSID, the UNCITRAL and the ICC2 as well as case law3 recognize that arbitrators have ample procedural powers, which include the power to stay the proceedings where the tribunal has jurisdiction.4 However under ICSID, the parties may not unilaterally suspend the arbitral proceedings.5

3.

The tribunal exercises discretion in granting a stay but it also decides for how long the stay should last.6 Nevertheless, the stay of proceedings is an exceptional remedy7 that should not be employed if it would endanger the rights of the parties including equal treatment, no unreasonable delay and the right to a fair hearing.8

A. Relationship with forum non conveniens

4.

In some cases, arbitrators may decide to stay proceedings because another forum is more appropriate to decide the dispute9 or if their decision is necessary to resolve the matter at hand,10 or for reasons of judicial comity.11

5.

However, tribunals tend to refuse to stay the proceedings:

  1. In cases where it must determine the alleged breach of treaty obligations.12 To this extent, an overlap between an investor’s contract and treaty claims may not in itself result in a stay of proceedings.13 See also Parallel proceedings, Treaty claim / Contract claim;
  2. Pending inter-State determinations on the adoption of countermeasures.14
6.

It is unclear as to whether the principle of forum non conveniens applies to parallel enforcement proceedings before national courts.15

B. Relationship with court proceedings

7.

It is more common for courts to stay proceedings in favour of arbitration, rather than vice versa.16 As such, some tribunals held that staying the arbitration proceedings until the court’s decision is rendered might amount to requiring the exhaustion of local remedies.17 However, a tribunal may stay the arbitral proceedings, for instance to enable the claimant to exercise its right to have recourse to domestic courts,18 or to deal efficiently with an admissibility issue.19

8.

Both the New York Convention20 and the UNCITRAL Model Law21 provide that if the matter before the court is covered by a valid arbitration agreement, the court should refer the matter to arbitration, and stay the proceedings when requested by one of the parties. Depending on the State’s arbitration laws, courts may be obliged to stay the proceedings until an arbitration begins or the arbitral award is rendered.22

9.

Arbitral tribunals have notably refused to stay the arbitral proceedings in the following situations involving parallel court proceedings:

  1. In the context of bifurcated proceedings where a party pursued the setting aside of a decision on jurisdiction and liability pending the final award;23
  2. Where a party pursued the setting aside of an interim decision pending the final award;24
  3. Where a party pursued the setting aside of a final award from a previous arbitration pending the decision of a newly constituted arbitral tribunal;25
  4. Where a party sought the stay of arbitral proceedings pending a decision from the EU Commission and/or the European Court of Justice on the question of intra-EU claims.26

III. Stay of proceedings due to procedural issues

A. Arbitrator challenges and tribunal vacancies

10.

Under Rule 22(2) of the ICSID Arbitration Rules, ICSID tribunals are required to stay the proceedings pending arbitrator disqualification27 This “does not in and of itself have as a consequence that the proceedings are adjusted by the number of days of the suspension,” but the schedule of the proceedings may be adjusted.28

11.

According to Rule 26(2), vacancies on the tribunal also result in the stay of proceedings until the vacancy can be filled.

12.

Moreover, at least one tribunal has refused to recommend provisional measures while the proceedings were suspended due to an arbitrator challenge.29

B. Other procedural considerations

13.

Arbitral tribunals have also decided to stay the proceedings for the following procedural considerations:

  1. Where an order for security for costs is not complied with (See further Security for costs, Section VI);
  2. For the non-payment of advances on costs (See further Arbitrator compensation, Section V);
  3. Pending a decision on consolidation according to NAFTA Article 1126(9);30
  4. In order to enable the parties to reach a settlement.31
14.

However, the difficulties imposed by the COVID-19 pandemic alone may not suffice in obtaining the stay of proceedings.32

IV. Stay of enforcement proceedings before national courts

15.

Once an award is rendered, the parties may seek its enforcement or its setting aside and these proceedings may be brought in parallel before different jurisdictions. See Enforcement of ICSID awards, Enforcement of non-ICSID awards, Compliance with the award. National courts requested to enforce the award may decide to stay the proceedings pending other courts’ decisions (See further Stay of enforcement of non-ICSID awards) or pending the annulment decision before an ICSID ad hoc Committee (See further Stay of enforcement of ICSID awards).

Bibliography

Binder, P., Analytical Commentary to the UNCITRAL Arbitration Rules, Sweet & Maxwell, 2013.

Brown, C., A Common Law of International Adjudication, 2007.

Caron, D.D. and Caplan, L.M., The UNCITRAL Arbitration Rules: A Commentary, Oxford University Press, 2nd ed. 2012.

Chan, D., Stay of proceedings in favour of arbitration under the court’s inherent jurisdiction, Kluwer Arbitration Blog, 15 August 2012.

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, The United Nations Commission on International Trade Law (UNCITRAL), 6 June 1958.

Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, International Centre for Settlement of Investment Disputes (ICSID), 18 March 1965.

ICC Arbitration Rules, 1 March 2017.

Paulsson, J. and Petrochilos, G., UNCITRAL Arbitration, Wolters Kluwer, 2018.

Fry, J., Greenberg, S. and Mazza, F., The Secretariat’s Guide To ICC Arbitration: A Practical Commentary on the 2012 ICC Rules of Arbitration, International Chamber of Commerce, 2012.

Khvalei, V. and Ponniya, N., Staying Court Proceedings— Compelling Arbitration, International Arbitration Checklists, 3rd ed., 2016.

Luttrell, S. and Devendra, I., Inherent Jurisdiction and Implied Power to Stay Proceedings in Aid of Arbitration: “A Nice Question”, Journal of International Arbitration, Vol. 32, Issue 5, 2015.

Paparinskis, M., Inherent Powers of ICSID Tribunals: Broad and Rightly So, Volume 5, Investment Treaty Arbitration and International Law, 2012.

Reiner, A. and Aschauer, C., Chapter II: ICC Rules, in Schütze, R.A. (ed), Institutional Arbitration: Article-by-Article Commentary, 2013.

ICSID, Rules of Procedure for Arbitration Proceedings, 2006.

Schreuer, C. et al., Article 44: Rules on Procedure, in The ICSID Convention: A Commentary, Cambridge University Press, 2010.

UNCITRAL Arbitration Rules, As amended in 2010, 2011.

UNCITRAL Model Law on International Commercial Arbitration 1985, with Amendments as Adopted in 2006, 2008.

Verbist, H., Schäfer, E. and Imhoos, C., ICC Arbitration Practice, Wolters Kluwer, 2015.

Webster, T.H., Handbook of UNCITRAL Arbitration, Sweet & Maxwell, 2019.

Webster, T.H. and Bühler, M.W., Handbook of ICC Arbitration: Commentary and Materials, Sweet & Maxwell, 2018.

Weiss, F., Inherent Powers of National and International Courts: The Practice of the Iran-U.S. Claims Tribunal, in Binder, C., Kriebaum, U., Reinisch, A. and Wittich, S. (eds.), International Investment Law for the 21st Century – Essays in Honour of Christoph Schreuer, 2009.

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