Notice of Arbitration

Written by Team Farallon

  • Farallon Law Corporation
  • July 15, 2020

Commencing Arbitration Proceedings: Notice of Arbitration

A Notice of Arbitration is a document that signifies a party’s intention to refer a dispute to arbitration. It is the first formal step in an arbitration.

A simple analogy to a Notice of Arbitration is the Writ of Summons in Singapore’s litigation process, which is a document that signifies the commencement of a civil lawsuit by one party against another.

What Should Be Included in a Notice of Arbitration

Institutional Arbitrations

If the arbitration agreement in the contract between parties specifies that the arbitration is to be conducted under the auspices of a particular arbitral institution such that the said institution’s rules are to apply to the arbitration as a matter of procedure, then a potential claimant should refer to the said institution’s rules to see what exactly what should be included in the Notice of Arbitration.

For example, under Rule 3.1 of the Singapore International Arbitration Centre (“SIAC”) Rules 2016, a Notice of Arbitration shall include:

  • a demand that the dispute be referred to arbitration;
  • the names, addresses, telephone numbers, facsimile numbers and electronic mail addresses, if known, of the parties to the arbitration and their representatives, if any;
  • a reference to the arbitration agreement invoked and a copy of the arbitration agreement;
  • a reference to the contract or other instrument (e.g. investment treaty) out of or in relation to which the dispute arises and, where possible, a copy of the contract or other instrument;
  • a brief statement describing the nature and circumstances of the dispute, specifying the relief claimed and, where possible, an initial quantification of the claim amount;
  • a statement of any matters which the parties have previously agreed as to the conduct of the arbitration or with respect to which the Claimant wishes to make a proposal;
  • a proposal for the number of arbitrators if not specified in the arbitration agreement;
  • unless otherwise agreed by the parties, the nomination of an arbitrator if the arbitration agreement provides for three arbitrators, or a proposal for a sole arbitrator if the arbitration agreement provides for a sole arbitrator;
  • any comment as to the applicable rules of law;
  • any comment as to the language of the arbitration; and
  • payment of the requisite filing fee under SIAC’s Rules.

Importantly, from the list above, the Notice of Arbitration must inform a respondent to the dispute the following types of information: (1) the substantive claim being brought and the dispute sought to be referred to arbitration; (2) the contractual basis that the dispute is to be resolved by arbitration; and (3) the formalities required to progress the matter to arbitration.

Adhoc Arbitrations

If the arbitration agreement in the contract between parties does not specify for the procedural rules of any particular arbitral institution to govern the conduct of the arbitration, then such an arbitration is considered an adhoc arbitration.

For such an arbitration, the United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration Rules are applicable so long as both the claimant and respondent are agreeable to use the UNCITRAL Rules to govern the procedure and conduct of the arbitration. Alternatively, parties may choose not to adopt the UNCITRAL Rules and instead formulate their own procedural rules, but this would necessarily be very time-consuming and may lead to further administrative complications during the arbitration.

Under Article 3.3 of the UNCITRAL Rules, a Notice of Arbitration shall include:

  • a demand that the dispute be referred to arbitration;
  • the names and contact details of the parties;
  • identification of the arbitration agreement that is invoked;
  • identification of any contract or other legal instrument out of or in relation to which the dispute arises or, in the absence of such contract or instrument, a brief description of the relevant relationship;
  • a brief description of the claim and an indication of the amount involved, if any;
  • the relief or remedy sought; and
  • a proposal as to the number of arbitrators, language and place of arbitration, if the parties have not previously agreed thereon.

Prior to Filing the Notice of Arbitration

As arbitration is a dispute resolution method that has been contractually agreed between parties, it is essential that prior to filing a Notice of Arbitration with the relevant arbitral institution (in the case of institutional arbitrations) or sending a Notice of Arbitration to a respondent (in the case of adhoc arbitrations), a claimant should take care to ensure that parties have complied with any pre-arbitration steps that have been stipulated in the arbitration agreement. Examples of such pre-arbitration steps include negotiations between senior representatives of the parties, mediation etc.

If these pre-arbitration steps have not been complied with, it may be open to the respondent to subsequently challenge the dispute on the basis that the arbitral tribunal has no jurisdiction to hear the matter, given that the pre-arbitration steps set out in the arbitration agreement have not been complied with.

If the arbitral tribunal is found to have no jurisdiction over the matter, then any award (i.e. decision) made by the tribunal would not be binding. Costs would also have been wasted by parties in the process.

Difference between a Notice of Arbitration and a Statement of Claim

A Notice of Arbitration is a separate document from a Statement of Claim.

A Statement of Claim sets out, in full detail, a statement of facts supporting a claimant’s claim, the legal grounds or arguments supporting the claim, and the relief claimed together with the amount of all quantifiable claims (see, for example, Rule 20.2 of the SIAC Rules 2016). Material documents that support the claim are to be exhibited to the Statement of Claim as well (see, for example, Rule 20.6 of the SIAC Rules 2016).

On the other hand, where the claim is concerned, a Notice of Arbitration can contain just “a brief statement describing the nature and circumstances of the dispute”, specify “the relief claimed” and “where possible, an initial quantification of the claim amount” (see, for example, Rule 3.1(e) of the SIAC Rules 2016 above).

It is possible for a claimant to file the Statement of Claim together with the Notice of Arbitration – however, the claimant must ensure that it has sufficient information and documentation before doing so. Otherwise, the claimant runs the risk of being limited to the contents in the Statement of Claim, and/or will have to incur additional costs in the event it wishes to amend its Statement of Claim to insert additional facts/particulars/claims.

Filing and Serving a Notice of Arbitration

Filing a Notice of Arbitration

For institutional arbitrations, in order for a claimant to commence an arbitration, the Notice of Arbitration has to be filed with the relevant arbitral institution. This means the Notice of Arbitration must be sent to the said arbitral institution.

For example, where an arbitration is to be administered under the auspices of the SIAC, Rule 3.3 of the SIAC Rules 2016 states that “the date of receipt of the complete Notice of Arbitration by the Registrar shall be deemed to be the date of commencement of the arbitration”.

For adhoc arbitrations, Article 3.2 of the UNCITRAL Rules states that the arbitration shall be deemed to commence “on the date on which the notice of arbitration is received by the respondent”.

Service of the Notice of Arbitration on the Respondent

The Notice of Arbitration must be served on the respondent. This means delivering the document to the respondent, such that the respondent is aware that the claimant has decided to refer the dispute to arbitration.

For example, Rule 3.4 of the SIAC Rules 2016 states that a claimant shall, “at the same time as it files the Notice of Arbitration with the Registrar, send a copy of the Notice of Arbitration to the Respondent, and shall notify the Registrar that it has done so, specifying the mode of service employed and the date of service”.

Where a respondent is an individual, the Notice of Arbitration can be served by delivering the document to the individual at his/her last known residential address and sending an electronic copy of the same to his/her email.

Where a respondent is a company, the Notice of Arbitration can be served by delivering the document to the company at its registered business address and sending an electronic copy of the same to the company’s relevant email addresses, such as those of the company’s directors and legal department etc (i.e. not generic or general email addresses or to just an individual employee of the company).

If the respondent is based overseas, it may be prudent for a claimant to obtain legal advice from lawyers in the country where the respondent is based as to what are the applicable modes of service in that country, so to ensure that service will be effective.

After Filing and Serving a Notice of Arbitration: What’s Next?

Once a Notice of Arbitration is filed with the relevant arbitral institution and/or served on the respondent, the respondent will have to respond to the contents and claims stated in the document, by filing and serving a Response to Notice of Arbitration within the time stipulated in the relevant arbitral institution’s rules, the SIAC Rules or the UNCITRAL Rules (whichever set of rules is applicable).

 

Some prominent arbitral institutions include the Singapore International Arbitration Centre (SIAC), London Court of International Arbitration (LCIA), Hong Kong International Arbitration Centre (HKIAC), Asian International Arbitration Centre (AIAC), International Chamber of Commerce (ICC)’s International Court of Arbitration etc.

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