ICSAS 2 Tier Commodity Arbitration Rules

THE ARBITRATION AGREEMENT
Parties to a contract who wish to have any dispute arising out of that contract referred to arbitration under the following Rules are recommended to insert in the contract an arbitration clause in the following form.

“ Any dispute arising out of or in connection with this contract shall be determined in arbitration under English law in accordance with the Two Tier Arbitration Rules of the International Commodity & Shipping Arbitration Service, which jurisdiction is recognised and accepted by the parties to this contract. ”

PART 1 – PRELIMINARY MATTERS AND FIRST TIER ARBITRATION

PRELIMINARY
1 Any dispute arising out of or in connection with a contract which the parties have agreed shall be subject to the Arbitration Rules (“the Rules”) of the International Commodity & Shipping Arbitration Service (“ICSAS”) shall be referred to and determined by arbitration in accordance with the Rules in force at the time when the dispute is referred to arbitration. Unless the parties have otherwise expressly agreed the governing law of the contract is English law.

2 The procedural law of the arbitration is English law and wherever the arbitration may take place the juridical seat of the arbitration is England.

3 The language of the arbitration is English. It is the responsibility of the party who relies on a document in a foreign language to provide an English translation of the document.

4 The Rules provide for a two tier arbitration system. Subject to Rule 26 there is a right of appeal against the first tier award. However, the parties may agree to proceed by way of a single tier arbitration with no right of appeal. On such agreement being made the parties shall notify ICSAS..

5 References in the Rules to the masculine gender include the feminine gender and, where appropriate, companies, corporations and other legal entities.

THE REFERENCE TO ARBITRATION, TIME LIMITS AND APPOINTMENT OF ARBITRATORS
6 The Dispute - Time Bar
(i) The party who wishes to refer a dispute (as defined in Rule 1) to arbitration (“the Claimant”) shall give notice to the other party (“the Respondent”) and to ICSAS of his intention to do so.
(ii) The said notices shall be given not later than 12 months from the date of the shipment of the goods, or, where the contract does not involve shipment, the date of the delivery or collection of the goods, or, in the event of non-performance of the contract, not later than 12 months from the last day of the shipment/delivery/collection period agreed under the contract (including any agreed extension period).
(iii) If the Claimant fails to give the said notices within the time limited by Rule 6(ii), the claim shall be deemed waived and shall be absolutely barred.

7 Within 7 days of giving the said notices the Claimant shall appoint an arbitrator and shall give notice of the appointment to the Respondent and to ICSAS.

8 Within 14 days of receiving the Claimant’s notice of the appointment of an arbitrator the Respondent shall appoint an arbitrator and shall give notice of the appointment to the Claimant and to ICSAS.

9 Either party may apply in writing to the Secretary for the time being of ICSAS (“the Secretary”) for an arbitrator to be appointed on his behalf and such appointment will thereupon be made and notified to the parties by ICSAS.

10 If either party fails to appoint an arbitrator and to give notice of the appointment in accordance with the provisions of these Rules (or fails to make an application to the Secretary under Rule 9) the Secretary will make an appointment on behalf of the party in default and the appointment will be notified to the parties by ICSAS.

11 The Secretary will appoint a third arbitrator and will give notice of the appointment to the parties and to the other two arbitrators. Thereupon the three arbitrators, appointed in accordance with the provisions of these Rules, will constitute the Tribunal. The third arbitrator will act as Chairman of the Tribunal.

12 The parties may agree that the Claimant’s appointed arbitrator shall act as sole arbitrator. On such agreement being made the Claimant shall notify ICSAS.

13 The sole arbitrator or the three arbitrators as the case may be are referred to in this part of the Rules as “the Tribunal”.

14 Appointed arbitrators must have the following qualifications:
(i) they must have been employed for a period of not less than 10 years by a business engaged, either as trading principals or as brokers, in a physical commodity market
  AND
(ii) they must have acted as arbitrators under the auspices of a recognised arbitration forum for a period of not less than three years.

15 ICSAS maintains a list of persons who have been admitted as members of the ICSAS Panel of Arbitrators ( “the Panel” ) .Any arbitrator appointed under these Rules shall be a member of the Panel. Applications for membership of the Panel may be made to the Secretary in writing by a prospective arbitrator, who must demonstrate that he or she is qualified under Rule 14. Admission to membership of the Panel is at the sole discretion of ICSAS.

ARBITRATION PROCEDURE
16 The Claimant shall serve written submissions (in accordance with the provisions of Rule 47) setting out a statement of his case together with any supporting documents. If the Claimant fails to serve such submissions within three months of having referred the dispute to arbitration under Rule 6, the claim will be deemed to have been withdrawn unless, on the application of the Claimant, the Tribunal in its absolute discretion permits the arbitration to proceed.

17 On receipt of the Claimant’s submissions the Tribunal will issue directions regarding the future conduct and progress of the arbitration, which will include a timetable for the service of the Respondent’s submissions and any further submissions in reply. At any time either party may apply to the Tribunal for further directions or for a variation of directions already given.

18 Where appropriate the arbitration will proceed on written submissions alone, but if the Tribunal considers that an oral hearing is necessary the parties will be notified by ICSAS of the date, time and place of the hearing. Each party may appear personally at the hearing or may be represented by any agent whose name has been given to ICSAS and the other party before the hearing takes place. The agent may be a solicitor or a barrister.

19 If there is not to be an oral hearing ICSAS will notify the parties of the date when the Tribunal intends to determine the dispute. Dispute determination may take place at a meeting of the members of the Tribunal but the Tribunal may decide that a meeting is not necessary.

FEES, COSTS AND EXPENSES OF THE ARBITRATION
20 Within 14 days of giving the notices referred to in Rule 6(i) the Claimant shall pay a Case Registration Fee to ICSAS, which will be non-refundable.

21 In respect of any application made pursuant to Rule 9, or of any appointment made pursuant to Rule 10, an Arbitrator Appointment Fee shall be payable to ICSAS by the applicant or by the defaulter as the case may be.

22 At any time during the course of the arbitration ICSAS may call upon the Claimant, and if the Respondent has served a counterclaim may also call upon the Respondent, to pay a deposit or a further deposit on account of the fees, costs and expenses of the arbitration. If the party who is required to pay a deposit fails to make payment, the Tribunal may in its absolute discretion stay the proceedings relating to the claim or counterclaim as the case may be until payment is made, or may issue an award dismissing the claim or counterclaim as the case may be, after giving notice of its intention to do so.

THE ARBITRATION AWARD
23 The Secretary, who will be a person who is or has been a practising solicitor or barrister, will be responsible for ensuring that the award is expeditiously drafted and finalised in accordance with the Tribunal’s determination of the issues raised in the arbitration.

24 The award will be a fully reasoned award. When it has been signed by the members of the Tribunal, and provided that no further sum is due in respect of the fees, costs and expenses of the arbitration, ICSAS will date the award and will issue a signed copy to each of the parties. If any further sum is due, the parties will be notified by ICSAS that the award is ready to be issued on payment of the said sum. On payment being made ICSAS will date and issue the award.

PART 2 - APPEALS

LODGING AN APPEAL AND APPEAL PROCEDURE
25 In this part of the Rules and in Part 3 the sole arbitrator or the three arbitrators as the case may be will be referred to as “the First Tier Tribunal”. The award of the First Tier Tribunal will be referred to as “the arbitration award”.

26 There is no right of appeal against the arbitration award where the matter in dispute is the quality and/or condition of the goods.

27 Subject to Rule 26 either party shall have the right to appeal to an Appeal Tribunal against the arbitration award provided that not later than 12 noon, London time, on the 28th day after the date of the arbitration award the party wishing to appeal (“the Appellant”):
(i) gives notice to the other party (“the Respondent”) and to ICSAS of the Appellant’s intention to appeal; and
(ii) makes payment to ICSAS of the sum required by way of a deposit in respect of the fees, costs and expenses of the appeal, the sum required being that stated in the arbitration award.

28 If there is an appeal against an arbitration award it may not be enforced by either party unless the appeal is withdrawn or is dismissed under Rules 37, 38 or 40.

29 An appeal is a new hearing of the dispute between the parties. Accordingly the Appeal Tribunal’s jurisdiction is not limited to the issues raised by the Appellant. Its jurisdiction is the same as that of the First Tier Tribunal.

30 The Appeal Tribunal will consist of three persons each of whom will be a member of the Panel of Arbitrators. As soon as reasonably practicable after ICSAS has received a notice of appeal under Rule 27 the Secretary will appoint the members of the Appeal Tribunal.

31 The Appeal Tribunal will appoint one of its members as chairman of the Appeal Tribunal. If they are unable to agree the Secretary will make the appointment. ICSAS will notify the parties of the names of the members of the Appeal Tribunal and the name of the chairman.

32 Within 21 days of giving notice of appeal the Appellant shall serve written submissions (in accordance with the provisions of Rule 47) setting out a statement of his case together with any supporting documents. This time limit is intended to be strictly observed but the Appeal Tribunal may, on the application of the Appellant, grant an extension of time.

33 On receipt of the Appellant’s submissions the Appeal Tribunal will issue directions regarding the future conduct and progress of the appeal, which will include a timetable for the service of the Respondent’s submissions and any further submissions in reply. At any time either of the parties may apply to the Appeal Tribunal for further directions or for a variation of directions already given.

34 Unless the parties otherwise agree there will be an oral hearing of the appeal. After the Respondent’s submissions have been served the parties will be notified by ICSAS of the date, time and place of the hearing. Each party may appear personally at the hearing or may be represented by any agent whose name has been given to ICSAS and to the other party before the hearing takes place. The agent may be a solicitor or a barrister.

35 If the parties have agreed that there will not be an oral hearing ICSAS will notify the parties of the date when the Appeal Tribunal intends to determine the appeal. The determination may take place at a meeting of the members of the Appeal Tribunal but the Appeal Tribunal may decide that a meeting is not necessary.

36 The Appeal Tribunal has discretion to extend the time limits set out in Rules 27 and 38 and to permit an appeal to proceed notwithstanding any non-compliance with those Rules.

THE PROVISION OF SECURITY
37 The Appeal Tribunal has the power, on application being made by the Respondent at any time during the course of the appeal, to direct that the Appellant shall provide security for the whole or any part of any sum awarded to the Respondent by the arbitration award. The form of security may be the deposit of the amount directed to be secured into the client account of the Secretary, if the Secretary for the time being is a practising solicitor, or the provision of a bank guarantee, or any other form of security which the Appeal Tribunal considers to be appropriate in the particular circumstances of the case. If the Appellant fails to provide the required security the Appeal Tribunal may issue an award dismissing the appeal, after giving notice of its intention to do so.

WITHDRAWAL OF APPEAL
38 The Appellant may withdraw the appeal at any time on giving notice to the Respondent and to ICSAS, whereupon the arbitration award will become final and enforceable unless within 14 days of his receipt of the notice of withdrawal the Respondent gives notice to the Appellant and to ICSAS of his intention to appeal. On giving such notice the Respondent will become the Appellant under this part of the Rules.

39 On the withdrawal of the appeal by the Appellant (and provided that the Respondent has not given notice of appeal under Rule 38) the following provisions will apply:
(i) the Respondent shall have the right within 14 days of his receipt of the notice of withdrawal to apply to the Appeal Tribunal for an award of his costs in connection with the appeal;
(ii) if such application is made the Appeal Tribunal will determine the application and will issue an award which will deal with all the fees, costs and expenses of the appeal;
(iii) if no such application is made ICSAS will notify the parties of the fees, costs and expenses of the appeal (excluding the Respondent’s costs), and any further sum due or any rebate payable shall be paid by or paid to the Appellant as the case may be;
(iv) the arbitration award shall become final and enforceable.

FEES, COSTS AND EXPENSES OF THE APPEAL
40 At any time during the course of the appeal ICSAS may call upon the Appellant to pay further sums by way of further deposit in respect of the fees, costs and expenses of the appeal. If the Appellant fails to make such payment the Appeal Tribunal may issue an award dismissing the appeal, after giving notice of its intention to do so.

THE APPEAL AWARD
41 The Secretary will be responsible for ensuring that the appeal award is expeditiously drafted and finalised in accordance with the Appeal Tribunal’s determination of the issues raised in the appeal.

42 The appeal award will be a fully reasoned award. When it has been signed by the members of the Appeal Tribunal, and provided that no further sum is due in respect of the fees, costs and expenses of the appeal, ICSAS will date the award and will issue a signed copy to each of the parties. If any further such sum is due, the parties will be notified by ICSAS that the award is ready to be issued and the Appellant will be requested to pay to ICSAS the said sum. On payment of the said sum (which if the Appellant fails to pay will become payable by the Respondent) ICSAS will date and issue the award.

43 The Appeal Tribunal’s discretionary powers with regard to costs are set out under Rule 53. In accordance with those powers the Appeal Tribunal will make an award in respect of the fees, costs and expenses of the appeal. Its powers extend to the costs awarded by the First Tier Tribunal. The Appeal Tribunal will review and will make an award in respect of those costs.

PART 3 - RULES APPLICABLE BOTH TO THE FIRST TIER ARBITRATION AND TO APPEALS

GENERAL
44 In this part of the Rules references to an arbitrator or arbitrators include a member or members of an Appeal Tribunal, references to a Tribunal include both the First Tier Tribunal and the Appeal Tribunal and references to arbitration include both the first tier arbitration and any appeal.

45 Arbitrators must be and must be seen to be impartial. A person is disqualified from acting as an arbitrator who has any interest, direct or indirect, in the transaction giving rise to the dispute, or who is associated with a party to the proceedings in any way which could reasonably give rise to the suspicion of bias.

46 Any application which either party wishes to make to a Tribunal shall be made through ICSAS. Any directions made by a Tribunal will be notified to the parties by ICSAS.

47 The party who is serving submissions shall effect service as follows:
(i) four copies of the submissions and any supporting documents shall be sent to ICSAS, but where the Tribunal consists of a sole arbitrator only two copies are required; and
(ii) one copy of the submissions and any supporting documents shall be sent to the other party.

48 Apart from the powers given by the Rules a Tribunal will be acting under the powers given to arbitrators under the Arbitration Act 1996 (or under any statutory modification or re-enactment thereof for the time being in force). By and within the limits of the statutory provisions (and subject to the Rules) a Tribunal has full power to decide all procedural and evidential matters. A Tribunal will have in mind that the object of arbitration is to obtain the fair resolution of disputes without unnecessary delay or expense.

49 A Tribunal may consult a legal adviser (who may be the Secretary of ICSAS) and, if it does so, any information, opinion or advice offered by such person shall be confidential to the Tribunal and shall not be disclosed to the parties unless the Tribunal in its absolute discretion decides otherwise.

50 A Tribunal may, on application being made by the parties and only with the agreement of all parties, direct that two or more arbitration proceedings shall be consolidated or that there shall be concurrent hearings.

51 The date of an award is to be taken to be the date on which the award is made.

INTEREST
52 In addition to the powers to award interest given to them by the Arbitration Act 1996 arbitrators have the power to award damages (which may be expressed as interest) for the late payment of any sum due under a contract by way of a debt or damages (“the capital sum”). Such damages may be awarded even though the capital sum may have been paid before the commencement of arbitration proceedings under these Rules.

COSTS
53 A Tribunal has discretion with regard to awarding costs. In normal circumstances costs will follow the event. Therefore the losing party will usually be ordered to pay the fees, costs and expenses of the proceedings, including the reasonable costs of the winning party. Unless both parties have asked for an award of legal costs, if a party chooses to be represented by a lawyer the losing party will only in exceptional circumstances be ordered to pay the legal costs of the winning party.

REMOVAL OF AN ARBITRATOR
54 The Secretary may remove an arbitrator on any of the following grounds:
(i) that circumstances exist that give rise to justifiable doubts as to his impartiality;
(ii) that he does not possess the qualifications required by the Rules;
(iii) that he is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to his capacity to do so;
(iv) that he has refused or failed properly to conduct the proceedings, or to use reasonable despatch in conducting the proceedings or making an award.

55 On the removal of an arbitrator under the provisions of Rule 54 the Secretary will appoint another arbitrator to fill the vacancy.

NOTICES
56 Where these Rules require one of the parties to give a notice to the other party or to ICSAS the following provisions shall apply:
(i) the notice shall be in writing;
(ii) any form of written communication (including facsimile and electronic mail) may be used;
(iii) subject to sub-Rules (v) and (vi) the notice is not given until it is received by the intended recipient;
(iv) there is no presumption of receipt of a notice sent by post;
(v) a notice may be given to ICSAS by delivering the same to the offices of ICSAS or by transmitting the same by facsimile and it is deemed to have been received on the date and at the time of its delivery or transmission as the case may be;
(vi) a notice may be given to the other party by delivering the same to the other party’s last known address or by transmitting the same to the other party’s facsimile number and it is deemed to have been received by the other party on the date and at the time of its delivery or its transmission as the case may be;
(vii) if the last day for giving a notice is a non-business day either in England and Wales or in the country where the party giving the notice carries on business or in the country where the other party carries on business, the notice shall be deemed to have been given in time if given on the next following business day.

LIABILITY OF THE PARTIES TO ICSAS
57 Each party to an arbitration proceeding under these Rules shall be liable to ICSAS (jointly and severally with the other parties to the proceedings) for all the fees, costs and expenses of the proceedings. This joint and several liability of all parties applies notwithstanding that the Rules provide, or an award may direct, that one of the parties shall pay such fees, costs or expenses.

COURT PROCEEDINGS
58 Under the Arbitration Act 1996 the English court has certain powers both in relation to arbitral proceedings and in relation to the award, which the court may exercise on an application being made. The service of court proceedings relating to any such application under the said Act (or under any statutory modification or re-enactment thereof for the time being in force) upon a party to the arbitration by leaving the same at the offices of ICSAS and by posting a copy of the same to the party’s last known address shall be deemed good service, any rule of law or equity to the contrary notwithstanding.

59 The obtaining of an award under these Rules is a condition precedent to the right of either party to bring court proceedings against the other in respect of any of the matters which the parties have agreed to refer to arbitration under these Rules. This condition precedent is limited to the substantive issues. It does not apply to ancillary proceedings, such as proceedings brought to preserve assets.