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Auteur

M. Fernando Alvarez Perez

Associate in International Arbitration - Hogan Lovells US LLP

Auteur

M. Ivan Bracho Gonzalez

Associate in International Arbitration - Hogan Lovells US LLP

Editors
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Withdrawal from Arbitral Proceedings

I. Introduction

1.

Unlike the liberal rules for discontinuing litigation in some national court systems, discontinuance in investment arbitration tends to be more restrictive. This note will cover withdrawal of the request for arbitration as well as discontinuance of the proceedings after the registration of the request for arbitration. The ICSID Rules provide the most comprehensive treatment of this topic, as well as the most guidance from the jurisprudence of tribunals interpreting the applicable rules on withdrawal and discontinuance. Other rules, including the UNCITRAL Rules and the rules of the Iran-US Claims Tribunal, are also examined herein.

II. Withdrawal of the request for arbitration

2.

In ICSID proceedings, a request for arbitration can be unilaterally withdrawn only before its registration.1 Once registered, the request for arbitration can no longer be withdrawn and a claimant seeking to withdraw from the proceedings will need to seek the “discontinuance” of the proceedings. It should be noted the Additional Facility Rules do not contain an analogous provision.2

III. Discontinuance of the proceedings

3.

Discontinuance of ICSID proceedings can occur in three scenarios:

(i) mutual consent or a joint request;

(ii) a request to discontinue the proceedings that is not timely opposed; or

(iii) a continuing failure of the parties to act.

4.

If the parties jointly agree to discontinue the proceedings before the award is rendered, under Rule 43 of the ICSID Arbitration Rules, the tribunal can issue an order taking note of the discontinuance or, if both parties ask and the tribunal agrees, embody the parties’ settlement in an award. It should be noted that under Rules 43 through 45, the Secretary-General may act for the tribunal if the tribunal has not been constituted.

5.

Pursuant to Rule 44, however, if one party requests that the proceedings be discontinued, then the tribunal must issue an order fixing a time limit in which the other party may state whether it opposes the discontinuance. If the other party does not respond within the time limit, then the tribunal or Secretary-General must issue an order noting the discontinuance of the proceedings. This being said, the tribunal lacks the discretion to discontinue the proceedings if a party opposes the discontinuance; if the opposing party objects within the prescribed time limit, the proceedings must continue.

6.

The tribunal or Secretary-General must discontinue an arbitration if, after notice to the parties, the parties have not taken any steps in the proceedings for six months (or for such period agreed with the approval of the tribunal or Secretary-General).3

7.

The ICSID Rules on discontinuance cover only the discontinuance of proceedings, not the discontinuance of parties, however tribunals have interpreted the ICSID Arbitration Rules to apply to the withdrawal of parties in multi-party proceedings, leaving the arbitration to continue with respect to the remaining parties.4

8.

The discontinuance of proceedings is also contemplated by the UNCITRAL Arbitration Rules in Article 36. Article 36, however, though containing similar provisions as to joint or unilateral requests for discontinuance as those of Rules 43 and 44 of the ICSID Arbitration Rules, also grants the Tribunal the authority to enter a discontinuance order ex officio should continuation of the arbitral proceedings become unnecessary or impossible before the award is made.5

9.

By contrast, the arbitration rules of the Iran-U.S. Claims Tribunal do not limit discontinuance to situations involving joint requests or unopposed requests. Article 34(2) allows a tribunal the discretion to discontinue the proceedings of its own accord if it finds that continuing would be “unnecessary or impossible”.

IV. Discontinuance of annulment proceedings

10.

The rules on discontinuance apply mutatis mutandis to Annulment Proceedings and Revisions Proceedings.6 An award taking note of the discontinuance of the proceedings is technically capable of being annulled, but the grounds for doing so (especially when the discontinuance was agreed) will likely be extremely limited.7

V. Costs

11.

Under Article 40(1) of the UNCITRAL Rules, withdrawal by a claimant may make the claimant the “unsuccessful party” triggering the “costs follow the event” principle in Article 40(2), meaning the claimant is liable for the costs of the proceedings.8

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