Source: https://library.iccwbo.org/content/dr/ARTICLES/ART_0625.htm?l1=Other+Publications&l2=International+Arbitration+Under+Review
Timestamp: 2019-09-17 20:09:10
Document Index: 377632583

Matched Legal Cases: ['ART_0625', '§ 3', '§ 51', '§ 3', '§ 7', '§ 11', '§ 24', '§ 3']

﻿ Article: A Call to Open the ICC Emergency Arbitrator Procedure to Investment Treaty Cases Author: Philippe Pinsolle1 Published in: International Arbitration Under Review: Essays in Honour of John Beechey Link: http://library.iccwbo.org/content/dr/ARTICLES/ART_0625.htm?l1=Other+Publications&l2=International+Arbitration+Under+Review%3a+Essays+in+Honour+of+John+Beechey
Philippe Pinsolle1
Avocat à la Cour; barrister, England & Wales; managing partner of the Paris office of Quinn Emanuel Urquhart & Sullivan LLP; PhilippePinsolle@quinnemanuel.com.
A Call to Open the ICC Emergency Arbitrator Procedure to Investment Treaty Cases
[Emergency arbitrator] [Investment arbitration]
Interim Award in ICC Case 12361
Interim Award in ICC Case 13194
Interim Award in ICC Case 12196
Final Award in ICC Case 14287
Arbitration Involving States and State Entities under the ICC Rules of Arbitration
The drafting of Article 29
A. Conditions governing access to the emergency arbitrator procedure
B. The drafters' principal concerns and how they were addressed
Investment arbitration and the emergency arbitrator procedure
A. No exclusion of investment arbitration in the Rules
B. Both parties are signatories of the arbitration agreement
C. The arbitration agreement is concluded after 1 January 2012
D. The state consents to modifications of the Rules
1. In 2012, the ICC revised its Arbitration Rules (the 'Rules') and decided, among other things, to include a new emergency arbitrator procedure. This procedure addressed the unavailability of recourse to interim measures prior to the constitution of the arbitral tribunal in previous versions of the Rules. When revising its Rules, the ICC also decided not to create a separate set of rules applicable to investor-state arbitrations based on a bilateral or multilateral treaty for the protection of investments.2 So, in theory, the 2012 Rules should apply as a whole to all types of disputes. However, in practice, investors have so far been excluded from the emergency arbitrator procedure, even though there is no exclusion contained in the Rules themselves:
The applicability of emergency arbitration provisions to investment arbitration conducted under the ICC Rules has been excluded by commentators, since the peculiar mechanism of formation of consent in investment cases would prevent the parties from being considered 'signatories' of the arbitration agreement (or successors to signatories).3
2. It is therefore through an interpretation of the Rules that parties in investor-state proceedings have been placed outside the scope of the emergency arbitrator procedure. This interpretation is primarily based on the assumption that in treaty arbitration the parties would not be [Page308:] 'signatories' to the arbitration agreement,4 which is a shaky foundation to say the least. In reality, the exclusion of investment arbitration is more a reflection of ICC policy than rigorous interpretation.
3. There are many reasons that could - and should - lead the ICC to reconsider its current position. Technically, there is nothing in the express wording of the Rules or in well-established principles of arbitration to prevent the emergency arbitrator procedure from being made available to investor-state arbitration, and investment disputes are quite capable of meeting the preconditions for its use, as will be shown later in this article.
4. As a matter of policy, interim measures can be crucial to the resolution of disputes and deserve to be as widely available as possible. They may be vital to preserving evidence or preventing a situation from deteriorating, and they sometimes even contribute to an early settlement of the dispute. The importance of the emergency arbitrator procedure is that it extends the accessibility of interim measures to the period prior to the constitution of the arbitral tribunal, which can only be a good thing, not only for the parties but also for the ICC. Since other institutions already offer a similar procedure in all disputes, the ICC would increase its competitiveness by following suit.
5. In this article, starting from the premise that the ICC Emergency Arbitrator Provisions do not exclude investment arbitration (I), we will argue that none of the objections advanced so far in support of that exclusion can be convincingly maintained (II) and conclude by urging for a change of policy on the part of the ICC (III).
I. The drafting of Article 29
6. Article 29 defines the conditions that must be satisfied in order for parties to avail themselves of the emergency arbitrator procedure (A). It apparently reflects a consensus reached in the face of concerns held by the drafters of the Rules (B).
7. Article 29 sets out five requirements that must be fulfilled before an application for emergency measures can be submitted to the emergency arbitrator.
8. First, the application must be received by the Secretariat of the ICC prior to the transmission of the file to the arbitral tribunal (Article 29(1)).
[Page309:]
9. Second, the parties to the emergency proceedings must be signatories of the arbitration agreement (Article 29(5)). This provision was included as a safeguard to protect parties from 'being drawn into emergency arbitrator proceedings without having clearly agreed to arbitration under the ICC Rules'.5
10. Third, the arbitration agreement must have been concluded after 1 January 2012, the date of entry into force of the 2012 Rules (Article 29(6)(a)). This requirement is specific to the emergency arbitrator procedure and departs from the general rule expressed in Article 6(1), which provides that, unless otherwise agreed by the parties, the Rules apply to all disputes initiated as of 1 January 2012 even when the arbitration agreement was concluded before the Rules came into force.
11. Fourth, the parties must not have already agreed to another pre-arbitral procedure for granting interim measures (Article 29(6)(c)).
12. Fifth, the parties must not have agreed to opt out of the emergency arbitrator procedure (Article 29(6)(b)).
13. The President of the ICC Court will determine whether the application satisfies all of these conditions other than timing, which is a straightforward matter dealt with by the Secretariat. A statement of reasons is not required if the President rejects the application (Emergency Arbitrator Rules, Article 1(5)).
14. Some authors add a sixth, substantive requirement - urgency - which they say is to be assessed by the emergency arbitrator.6 This proposition is based on Article 29(1) of the Rules, which grants emergency arbitrators the power to order 'urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal ("Emergency Measures")'. The requirement of so-called 'genuine urgency' has been described as a 'key principle' of the ICC emergency arbitrator procedure.7
15. Although the Rules indicate that an emergency arbitrator can render 'urgent' measures, in our view this is neither a precondition nor a condition of admissibility but rather goes to the merits of the application.
16. It is plain from the terms of Article 29 that the test is whether the measure 'cannot await the constitution of an arbitral tribunal'. If this requirement is satisfied, so too will be the requirement of urgency, making any further characterization of urgency unnecessary.
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17. Constituting an arbitral tribunal can take time. Under the 1998 Rules, a party in need of interim measures prior to the constitution of the arbitral tribunal had no choice but to apply to a local court. The drafters viewed this lacuna as a weakness, as it prevented the parties from availing themselves, for this purpose, of the institution to which they had chosen to submit their dispute.8 The emergency arbitrator procedure was created to fill this void.
18. One of the contentious issues regarding this procedure was whether it should offered on an opt-in or an opt-out basis.9 The ICC had prior experience of an opt-in service - its pre-arbitral referee procedure - which, perhaps partly for this very reason, had been little used.10
19. The drafters feared that an opt-out mechanism would take parties by surprise as they would find themselves subjected to the emergency arbitrator procedure without having expressly agreed to it. Therefore, the drafters decided to strike a balance by providing sufficient safeguards to offset the concerns that incorporation of the procedure on an opt-out basis might cause.11
20. The main safeguard is found in Article 29(6)(a), which requires the arbitration agreement to be formed after entry into force of the 2012 Rules. This ensures that, when entering into their arbitration agreement, parties are aware of the existence of the emergency arbitrator procedure and have an opportunity to opt-out if they wish.
21. Another safeguard is the substantive requirement of urgency. While this limits the circumstances in which the emergency arbitrator procedure can be used, it is not, in our view, intended to limit the scope of the measures available. The emergency arbitrator has full discretion to order whatever measure is appropriate, once satisfied that the measure cannot wait for the constitution of the arbitral tribunal.
22. That discretion is on a par with the power of arbitral tribunals under Article 28 of the Rules, which authorizes the tribunal to order 'any interim or conservatory measure it deems appropriate'. Some tribunals have relied on standards that call for prior assessment of the urgency and necessity of the requested measure,12 but there is no such requirement [Page311:] in the Rules themselves. Indeed, ICC tribunals have recognized that they enjoy wide flexibility when ordering interim relief and that they are not bound by the prior practice of other ICC tribunals.13 A laundry-list approach is out of place here, as is the approach of the UNCITRAL Arbitration Rules, which in Article 26(3) sets out certain requirements to be satisfied in order for interim measures to be granted. Given the discretion arbitrators enjoy in ordering ordering interim relief, we would treat these as guidance rather than hard and fast requirements.
23. The drafters of the ICC's Emergency Arbitrator Provisions were also concerned about the risk of abuse. The fact that a party can request and potentially receive an order granting emergency relief before it is required to submit its request for arbitration could lead some parties to use the emergency arbitrator procedure to pressurize the other party or parties into settling.14
24. The drafters sought to prevent such abuse through two safeguards. First, a fee of USD 40,000 must be paid before the application is processed (Emergency Arbitrator Rules, Article 7(1)). Second, the request for arbitration must be filed within ten days of submission of the emergency arbitrator application (Emergency Arbitrator Rules, Article 1(6)), which ensures rapid commencement of proceedings providing the respondent with the full protection of the ICC arbitration process.
II. Investment arbitration and the emergency arbitrator procedure
25. One of the principal goals of the revision of the Rules was to increase the attractiveness of ICC arbitration to investor-state disputes.15 Disputes involving a state or state entity account for approximately 10% of ICC arbitrations.16 It was estimated in 2012 that some 18% of BITs provided for ICC arbitration.17 The question arose as to whether the emergency arbitrator procedure should apply to investment disputes.
26. Although it was a policy decision of the ICC to consider that investment disputes should be excluded from the scope of the emergency arbitrator procedure, no such exclusion is explicitly expressed in the wording of the Rules (A). Moreover, investment cases satisfy the prerequisites of the procedure: both the state party and the investor are signatories to the arbitration agreement (B); in all cases commenced after 1 January 2012 the arbitration agreement is concluded after that date (C); and states have accepted subsequent modifications of the Rules by not freezing them at a certain date (D).
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27. During the drafting of the 2012 Rules it was apparently thought that the emergency arbitrator procedure might be unattractive to states18 and could reduce the appeal of ICC arbitration to states. Consequently, a wish was expressed to exclude investor-state arbitration from the scope of the emergency arbitrator procedure. However, this wish met with opposition from those who did not want a dual system discriminating between commercial and investment users.19 As a result, there was no express or implied exclusion of states or investment arbitration from the ICC emergency arbitrator procedure.20
28. The exclusion of states from the procedure appears rather to be a policy decision of the ICC, but it is arguably inconsistent with the drafting history as it introduces a dual system through the back door.
29. Given that no change of language is required in order to open the emergency arbitrator procedure to investor-state arbitrations, there would appear to be no formal obstacle preventing the ICC from applying to investment arbitrations the same practice and standards as it does to commercial arbitrations with respect to emergency arbitrator proceedings.
30. Article 29(5) provides that the emergency arbitrator procedure 'shall apply only to parties that are either signatories of the arbitration agreement under the Rules that is relied upon for the application or successors to such signatories'.
31. The view taken by both the drafters of the Rules and subsequent commentators is that this provision broadly excluded states because they cannot be considered signatories of arbitration agreements based on investment treaties:
By requiring the parties to emergency arbitrator proceedings to be signatories of the arbitration agreement in the related arbitration, the Rules in effect make the Emergency Arbitrator Provisions inapplicable to arbitrations based on treaties. The particular manner in which the arbitration agreement is formed in those cases (i.e. through a state's open [Page313:] offer to arbitrate that is accepted when an investor submits a Request for Arbitration) would lead the President to find that the parties are not 'signatories' of the arbitration agreement.21
32. This reasoning is mistaken. It is well recognized in international law that states are signatories to their treaties. Not only do they sign their treaties, they must also ratify them.22 The treaty contains the dispute resolution clause, which is the offer by the state to arbitrate a dispute with the investor. By signing the treaty, the state therefore becomes a signatory to the offer to arbitrate contained in the dispute resolution clause.
33. That offer ripens into a binding bilateral arbitration agreement when it is accepted by the investor. Acceptance occurs when the investor gives its consent to arbitration by initiating the arbitral process. It is evidenced by a signed document - generally the request for arbitration - which forms the arbitration agreement.23 It is at this point that an arbitration agreement is reached.24
34. It is well established in international law that, in treaty arbitrations, the dispute resolution provision in the underlying treaty constitutes a written offer by the state to resort to arbitration, and the request for arbitration constitutes the written acceptance of that offer.25 This is also in accordance with universally recognized principles of contract law, under which a contract is formed only after an offer has been accepted.26
35. Therefore, under well-established international law and universal principles of contract law, both the state and the investor are signatories of documents that evidence their intent to be bound by the arbitration agreement. No further formality is required. The ICC's current interpretation of the signatory requirement is therefore difficult to reconcile with the basic principles of investment arbitration.
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36. Article 29(6) states that '[t]he Emergency Arbitrator Provisions shall not apply if: a) the arbitration agreement under the Rules was concluded before the date on which the Rules came into force'. Therefore, the arbitration agreement must be concluded on or after 1 January 2012. There is no doubt that a treaty-based arbitration commenced after 1 January 2012 will satisfy this requirement.
37. It is universally accepted in investment arbitration based on treaties that the date on which an arbitration agreement is concluded is the date on which the offer of arbitration contained in the treaty is accepted. This date of acceptance is generally the date of the filing of the request for arbitration.27 The date of the state's offer to resort to arbitration is irrelevant because the contract is formed only when the investor accepts the offer. This is consequently the date on which the arbitration agreement is concluded.
38. Consequently, all treaty arbitrations commenced after 1 January 2012 will be based on an arbitration agreement entered into after that date.
39. It is argued that a state party to the treaty has not specifically consented to the modification of the Rules that introduced the emergency arbitrator procedure. While this may be true, it is equally true of other modifications of the Rules introduced in 2012 such as the provisions on joinder and consolidation. So why single out the emergency arbitrator procedure?
40. Besides, states have the possibility of excluding any subsequent modification of the Rules by including in the treaty a provision saying that the applicable ICC Rules are are those in force at the time of the signature of the treaty or some similar expression. If, as is generally the case, they do not protect themselves by including such a provision, then they accept that the Rules can be modified in the future.
41. There are many examples of dispute resolution clauses found in investment instruments that provide for recourse to ICC arbitration. The following example is taken from the 2009 Agreement between the Belgium-Luxembourg Economic Union and the Republic of Panama on the Reciprocal Promotion and Protection of Investments (Article 12(3), emphasis added):
In case of international arbitration, the dispute shall be submitted for settlement by arbitration to one of the hereinafter mentioned organisations, at the option of the investor:
[Page315:] the Arbitral Court of the International Chamber of Commerce in Paris;
If the arbitration procedure has been introduced upon the initiative of a Contracting Party, this Party shall request the investor involved in writing to designate the arbitration organisation to which the dispute shall be referred.
42. Another example, worded slightly differently, can be found in the Agreement between the Government of the Republic of Finland and the Government of the Hashemite Kingdom of Jordan on the Reciprocal Promotion and Protection of Investments (Article 9, emphasis added):
1. Any dispute arising from an investment between one Contracting Party and an investor of the other Contracting Party should be settled amicably between the two parties concerned.
2. If the dispute cannot be thus settled, it may, at the choice of the investor, be submitted:
(d) by arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC) …
43. The above clauses refer respectively to 'the Arbitral Court of the International Chamber of Commerce' and 'arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce', without restricting the applicable rules to those in force on the date of signature of the treaty.
44. The ICC's fear is that when signing treaties containing clauses such as those above, states could know not that the emergency arbitrator procedure would be introduced in the future and would therefore be deprived of the opportunity to opt out of the procedure. However, this is a spurious argument for the following reasons.
45. First, it turns things upside down. The real issue is whether the states have accepted a subsequent modification of the Rules. The fact that this modification brings with it an opt-out mechanism is a consequence of the overall modification, the principle of which was accepted by the state's decision not to freeze the applicable ICC Rules. It therefore does not warrant special protection.
46. Second, opting out is a joint decision. In theory, the investor should agree to opt out as well, and some would say that this is unlikely to happen. However, the investor's position is irrelevant, given that an arbitration agreement in a treaty can be compared to a pre-formulated standard contract that cannot be renegotiated by the investor. The real issue is therefore whether the two states party to the treaty would agree to the opt-out, and it is not certain that they always would.
47. Third, and more importantly, if both States were to agree to the opt-out, an exchange of letters would be sufficient to confirm their common understanding of the ICC arbitration agreement. This is perfectly manageable and would not require the treaty to be renegotiated.
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48. The arguments put forward in support of the ICC's current position are based on the belief that state parties should, in one way or another, specifically consent to interim measures, and that they cannot be imposed without such consent.
49. There have long been discussions on the willingness of states to submit themselves to interim measures. The Statutes of the International Court of Justice say that the ICJ may 'indicate' provisional measures rather than order them (Article 41(1)), and the ICSID Convention, in like fashion, says that an arbitral tribunal may only 'recommend' provisional measures (Article 47). In practice, however, neither the ICJ nor ICSID tribunals have been shy to order interim measures when needed, albeit worded as indications, recommendations or invitations, and states have fully understood the mandatory character of such measures.
50. The situation is different when it comes to the ICC Rules. When agreeing to arbitration under the ICC rules, states implicitly accept Article 28 of the Rules, which provides that an arbitral tribunal can 'order any interim or conservatory measure it deems appropriate'. Consequently, states should be regarded as having accepted without reservation the principle of interim measures and the fact that these measures can be ordered.
51. It follows that the issue of specific consent to the emergency arbitrator procedure does not concern the principle of interim measures but their timing. By giving access to the emergency arbitrator procedure in treaty-based investment arbitrations, the ICC would merely be anticipating what will in any case happen when the arbitration proper subsequently gets under way.
52. As a final point, there seems to be a general assumption that requests for interim measures, including by emergency arbitrators, serve claimants rather than respondents, which means investors in investor-state arbitration. However, it is easy to imagine situations in which respondents' interests are also protected by the emergency arbitrator procedure, as, for example, when a state might wish to prevent an investor from selling its assets or escaping the jurisdiction of its courts. So it cannot be assumed that states would systematically object to this procedure.
53. The ICC revised its rules to increase its competitiveness as an arbitration institution. In doing so, it also wanted to increase its appeal to states.28 This is important as states draft the dispute resolution clauses in investment treaties. However, it appears to have been overlooked that it is the investors that initiate the dispute resolution proceedings and therefore choose the forum.
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54. The emergency arbitrator procedure offers a means of responding with speed to an urgent need or a risk of irreparable harm at a stage when the arbitral tribunal has not yet been formed. There is no reason why these benefits should be limited to contractual disputes. Moreover, they are likely to be taken into consideration by investors when choosing the forum for their disputes. Investors seeking these benefits today will turn to an institution where the procedure is open to investment disputes, such as the Stockholm Chamber of Commerce.
55. It is to be regretted that the ICC has closed its emergency arbitrator procedure to such disputes through an interpretation of its Rules that, we hope, it will one day reconsider.
Report of the ICC Commission on Arbitration & ADR, Arbitration Involving States and State Entities under the ICC Rules of Arbitration (2012) § 3. In this article the terms investor-state arbitration, investment arbitration, treaty arbitration and the like will be used interchangeably to designate arbitrations based on treaties providing for the protection of investments, as opposed to arbitration between private parties and states based on a contract.
A. Carlevaris, 'Preliminary Matters: Objections, Bi-furcation, Request for Provisional Measures' in C Giorgetti, ed., Litigating International Investment Disputes (Brill, 2014) 173 at 204. See also N. Voser & C. Boog, 'ICC Emergency Arbitrator Proceedings: An Overview' in Interim, Conservatory and Emergency Measures in ICC Arbitration, ICC ICArb. Bull., 2011 Supplement, 81 at 83(84; E. Castineira, 'The Emergency Arbitrator in the 2012 ICC Rules of Arbitration', The Paris Journal of International Arbitration 2012-1, 65 at 74; ICC Commission Report, supra note 2 at §§ 51(52; N. Voser, 'Overview of the Most Important Changes in the Revised ICC Arbitration Rules' (2011) 29 ASA Bulletin 783 at 817.
J. Fry, S. Greenberg, F. Mazza, The Secretariat's Guide to ICC Arbitration (ICC, 2012), § 3-1099.
N. Voser & C. Boog, supra note 3 at 85.
See e.g. N. Voser & C. Boog, supra note 3 at 85.
R. Bose & I. Meredith, 'Emergency Arbitration Procedures: A Comparative Analysis' [2012:5] International Arbitration Law Review 186 at 187.
N. Voser & C. Boog, supra note 3 at 82, where they also point out that requesting interim measures from national courts may be unattractive or even futile in some circumstances.
Ibid. at 82(83.
See L. Barrington, 'Emergency arbitrators: can they be useful to the construction industry?' (2012) 7:2 Construction Law International at 39 ('ICC has made only a dozen appointments under these rules, all of which have taken place in the past 11 years'); M. Bühler, 'ICC Pre-Arbitral Referee and Emergency Arbitrator Proceedings Compared' in Interim, Conservatory and Emergency Measures in ICC Arbitration, ICC ICArb. Bull., 2011 Supplement, 93 at 94; N. Voser & C. Boog, supra note 3 at 83.
N. Voser & C. Boog, supra note 3 at 83.
See interim awards in ICC cases 12361 and 13194 in Interim, Conservatory and Emergency Measures in ICC Arbitration, ICC ICArb. Bull., 2011 Supplement, 60 at 62, 72 at 73 (need to show urgency and irreparable harm).
Interim award in ICC case 12361, supra note 12; see also interim award in ICC case 12196 and final award in ICC case 14287, in Interim, Conservatory and Emergency Measures in ICC Arbitration, ICC ICArb. Bull., 2011 Supplement, 56, 74, in neither of which was there a discussion of urgency or necessity.
N. Voser & C. Boog, supra note 3 at 84.
Ibid. at 83.
ICC Commission Report, supra note 2, § 7.
Ibid., § 11.
This was confirmed by Andrea Carlevaris, Secretary General of ICC International Court of Arbitration and Director of ICC Dispute Resolution Services, supra note 3 at 205, in something of an understatement: an intention to exclude investment disputes 'is not clearly reflected in the relevant provision eventually adopted'.
J. Fry, S. Greenberg, F. Mazza, supra note 4 at 3-1099; see also N. Voser & C. Boog, supra note 3 at 83; N. Voser, supra note 3 at 817.
United Nations, 'Understanding International Law', Fact Sheet #1 (2011), available at https://treaties.un.org/doc/source/events/2013/Press_kit/fact_sheet_1_english.pdf. Some multilateral treaties may close for signature, in which case a state may no longer sign the treaty but may become a party to the treaty by accession.
UNCTAD, Dispute Settlement, International Centre for Settlement of Investment Disputes, 2.3 Consent to Arbitration (2003), available at http://unctad.org/fr/Docs/edmmisc232add2_en.pdf.
See American Manufacturing & Trading, Inc. v. Republic of Zaire, Award, 21 Feb. 2011, ICSID Case No. ARB/93/1, at 5.23; see also AAPL v. Sri Lanka, Award, 27 June 1990, ICSID Case No. ARB/87/3; Fedax v. Venezuela, Decision on Jurisdiction, 11 June 1997, ICSID Case No. ARB/96/3; CSOB v. Slovakia, Decision on Jurisdiction, 24 May 1999, ICSID Case No. ARB/97/4.
See C. Schreuer, L. Malintoppi, A. Reinisch, A. Sinclair, The ICSID Convention: A Commentary (Cambridge University Press, 2012) at 206(208, 212; see also R. Dolzer & C. Schreuer, Principles of International Investment Law (Oxford University Press, 2012) at 242(243; J. Paulsson, 'Arbitration Without Privity' (1995) 10:2 ICSID Review 232 at 234.
E. Peel, The Law of Contract, 13th ed. (Sweet & Maxwell, 2011) at 17; US Restatement of Contracts § 24 (1981).
C. Schreuer, L. Malintoppi, A. Reinisch, A. Sinclair, supra note 25 at 217.
See ICC Commission Report, supra note 2, § 3.