THE PERMANENT COURT OF ARBITRATION

Critical note on arbitration Institutions

DECEMBER 31, 2021

MANSI GANDHI
VIRAL SHAH
 THE PERMANENT COURT OF ARBITRATION
The Permanent Court of Arbitration (PCA) is not a court, but rather an organizer of arbitral
tribunals to resolve conflicts between member states, international organizations, or private
parties.
PCA is an intergovernmental organization established by treaty at the First Hague Peace
Conference, Netherland in 1899. It is not a court in the traditional sense, but a permanent
framework for arbitral tribunals constituted to resolve specific disputes. PCA seeks to
facilitate arbitration and other forms of dispute resolution involving various combinations of
states, state entities, international organizations and private parties.
It was the first permanent intergovernmental organization that provided a forum for the
resolution of international disputes through arbitration and other peaceful means. The
Permanent Court of Arbitration is the oldest global institution for the settlement of
international disputes. The Court offers a wide range of services for the resolution of
international disputes which the parties concerned have expressly agreed to submit for
resolution under its auspices.
The PCA is not a court, but rather an organizer of arbitral tribunals to resolve conflicts
between member states, international organizations, or private parties. The PCA also
administers cases under the arbitration rules of the UNCITRAL.
There are 5 major services provided by the permanent court of arbitration namely, arbitration,
mediation /conciliation, guest tribunals, appointing authorities and fact findings. The
headquarters is situated in the Hague, Netherlands. ARTCILES 30-57 of Hague convention
1899 includes the procedure of arbitration procedure. The tribunal consist of 5 arbitrators
they are selected by each party and one has to be a woman and all these 4 arbitrators choose
one preceding officer. First and foremost, parties have to submit their compromise which
shall state the issues in the dispute. After that Proceedings takes place in the form of written
pleadings and oral discussion. Finally, the issue or the case is decided by majority of votes.
The division is given in the form of writ and the writ is pronounced in front of agents and
lawyer to the parties. The decision given is permanent in nature and there is no way for
appeal.
Parties to the Convention on the Pacific Settlement of disputes of 1899 (71 member states)
and 1907 (101 member states) are automatically parties to the PCA. As 51 are parties to both
conventions, the Permanent Court of Arbitration has in total 121 states as member states out
of which 119 states are the members of the United Nations and India is one of the members
of the Permanent Court of Arbitration.
HISTORY
The modern history of international arbitration is generally recognized as dating from the so-
called Jay Treaty of 1794 between the United States of America and Great Britain. This
Treaty of Amity, Commerce and Navigation provided for the creation of three mixed
commissions, composed of equal numbers of American and British nationals, whose task it
would be to settle a number of outstanding questions between the two countries which it had
not been possible to resolve by negotiation. While it is true that these mixed commissions
were not strictly speaking organs of third-party adjudication, they were intended to function
to some extent as tribunals. They reawakened interest in the process of arbitration.
Throughout the nineteenth century, the United States and the United Kingdom had recourse
to them, as did other States in Europe and the Americas.
The Alabama Claims arbitration in 1872 between the United Kingdom and the United States
marked the start of a second, even more decisive, phase. Under the Treaty of Washington of
1871, the United States and the United Kingdom agreed to submit to arbitration claims by the
former for alleged breaches of neutrality by the latter during the American Civil War. The
two countries set forth certain rules governing the duties of neutral governments that were to
be applied by the tribunal, which they agreed should consist of five members, to be appointed
by the Heads of State of the United States, the United Kingdom, Brazil, Italy and
Switzerland, the last three States not being parties to the case. The arbitral tribunal’s award
ordered the United Kingdom to pay compensation, which it duly did. The proceedings served
to demonstrate the effectiveness of arbitration in settling of a major dispute, and led during
the latter years of the nineteenth century to a range of developments, namely:
a sharp growth in the practice of inserting in treaties clauses providing for recourse to
arbitration in the event of a dispute between the parties;
the conclusion of general treaties of arbitration for the settlement of specified classes of inter-
State disputes;
efforts to construct a general law of arbitration, so that countries wishing to have recourse to
this means of settling disputes would not be obliged to agree each time on the procedure to be
adopted, the composition of the tribunal, the rules to be followed and the factors to be taken
into consideration in making the award;
proposals for the creation of a permanent international arbitral tribunal to avoid the need to
set up a special ad hoc tribunal to decide each individual dispute.
The Permanent Court of Arbitration has recently sought to diversify the services that it can
offer, alongside those contemplated by the Conventions. For example, the International
Bureau of the Permanent Court of Arbitration serves as a registry in important international
arbitrations. Moreover, in 1993, the Permanent Court of Arbitration adopted new “Optional
Rules for Arbitrating Disputes between Two Parties of Which Only One Is a State” and, in
2001, “Optional Rules for Arbitration of Disputes Relating to Natural Resources and/or the
Environment”.
Significance of Permanent Court of Arbitration :
Among the aims of the Conference had been the strengthening of systems of international
dispute resolution—especially international arbitration.
The delegates at the Conference were mindful that, during the previous 100 years, there had
been a number of successful international arbitrations, starting with the “Jay Treaty” Mixed
Commissions at the end of the 18th century, and reaching a pinnacle with the Alabama
arbitration in 1871-1872.
In addition, the Institut de Droit International had adopted a code of procedure for arbitration
in 1875.
This movement toward arbitration as a means of international dispute resolution was
continued in 1899, and the most concrete achievement of the 1899 Conference was the
establishment of the PCA as the first global mechanism for the settlement of disputes
between states.
Article 16 of the 1899 Convention recognized that “in questions of a legal nature, and
especially in the interpretation or application of International Conventions” arbitration is the
“most effective, and at the same time the most equitable, means of settling disputes which
diplomacy has failed to settle”.
Accordingly, Article 20 of the 1899 Convention formally established the PCA, stating:
With the object of facilitating an immediate recourse to arbitration for international
differences which it has not been possible to settle by diplomacy, the signatory Powers
undertake to organize a Permanent Court of Arbitration, accessible at all times and operating,
unless otherwise stipulated by the parties, in accordance with the rules of procedure inserted
in the present Convention.
The 1899 Convention was revised at the second Hague Peace Conference in 1907.
Today the PCA provides services for the resolution of disputes involving various
combinations of states, state entities, intergovernmental organizations, and private parties.
FUNCTIONS
PCA tribunals have jurisdiction for disputes based on the PCA founding documents (the
Conventions on Pacific Settlement of International Disputes), or based on bilateral and
multilateral treaties. Its Secretary General furthermore acts as an appointing authority for
arbitration.
Appointing authority
When problems arise in designating arbitrators for an arbitration under UNCITRAL
arbitration rules (e.g., because one of the parties refuses to designate an arbitrator, or when
the designated arbitrators are unable to agree on designation of a third arbitrator), the PCA
Secretary-General may be requested to serve as an appointing authority. This option is also
open for other arbitration agreements, in which the Secretary General is designated.[27]
Between 2011 and 2015, 257 of such requests were submitted.[1]
Interstate arbitration based on the Hague Convention
Arbitration between two states takes place when two member states of the PCA decide to
submit a dispute for arbitration to a PCA Tribunal. The Tribunal consists of 5 arbitrators, two
of which are selected by each party to the arbitration (and one of whom may be a national of
the party concerned). The four arbitrators choose the fifth and presiding arbitrator.[28]
Interstate arbitration based on UNCLOS
The United Nations Convention on the Law of the Sea (UNCLOS) provides for a dispute
resolution mechanism regarding maritime boundaries in which member states can choose
either the
International Tribunal for the Law of the Sea
International Court of Justice, arbitral tribunal (constituted in accordance with Annex VII,
UNCLOS)
a special arbitral tribunal (constituted in accordance with Annex VIII).
If two member states have elected different dispute resolution measures, the third option is to
be used. As of August 2016, the PCA has administered 12 cases initiated by States under
Annex VII to the UNCLOS, thus administering all cases initiated under this Annex except for
one.
Investor–state investment disputes
Many free trade agreements provide for a mechanism to resolve disputes between investors
and states through arbitration through so-called ISDS clauses. The PCA may play a role in
such proceedings as appointing authority for arbitrators, by use of its arbitration rules or by
providing support to the arbitration case.
RULES
Procedural Rules- The law applicable to the proceedings is that chosen by the parties, in the
first instance by agreeing to the application of a particular set of procedural rules. Modern
procedural rules, such as the various PCA Rules (and the UNCITRAL Rules from which they
are derived), leave a great deal of procedural flexibility in the hands of the parties and the
arbitral tribunal. There are few mandatory provisions, meaning that the parties may, by
mutual agreement, deviate from or modify the procedural rules. All of the PCA Rules contain
the general provision that the arbitral tribunal may conduct the arbitration in such manner as
it considers appropriate, provided that the parties are treated with equality and that, at any
stage of the proceedings, each party is given a full opportunity of presenting its case.29 In
purely private commercial cases, and conceivably in certain other cases as well, the arbitral
tribunal might be likely to apply, or in any event, have reference to, the arbitration law of the
place of arbitration (lex loci arbitrii) to fill gaps in the applicable rules. In inter-State
arbitration, the arbitration agreement or ad hoc rules drawn up by the parties generally give
the arbitral tribunal the express power to fill such gaps without reference to municipal law.
Relevance of the UNCITRAL Rules
The 1976 UNCITRAL Rules allow parties to an arbitration to resort to the Secretary General
of the PCA for the designation of an “appointing authority” which would then proceed to
appointing members of the arbitral tribunal and ruling on challenges to arbitrators. The 2010
UNCITRAL rules expand on this role by providing that a party may propose that the PCA
Secretary General act as appointing authority themselves, and also enables the Secretary
General to review the tribunal’s fees and expenses. In 2019, the Secretary General of the
PCA received 39 new requests relating to appointing-authority services, bringing the total
number of requests ever received by the PCA to 441.
PROCEDURE
Procedure of arbitration
In the Articles 30-57 of the Hague Convention of 1899 the rules of arbitration procedure are
outlined. These rules are an adapted version of pre-existing treaties among the states. They
were amended in 1907, the creation of a summary procedure for simple cases being the most
conspicuous change, and were relevant in the 1920s development of rules for the Court of
International Justice.
The first act of parties before the PCA is the submission of the so-called "compromisis",
stating the issue and the competence of the arbitrator(s). Proceedings are then conducted in
two phases: written pleadings and oral discussion. The Court retires once the debate is over to
deliberate and conclude the case by a simple majority of votes.
The decision is published as a writ, along with any dissenting opinions. Early Court decisions
were countersigned by the arbitrators themselves, but in 1907, that responsibility was passed
to the president and secretary (of the PCA). The writ is read to a public session in the
presence of the agents and lawyers of the parties to the case. The decision is binding on the
parties, and there is no mechanism for appeal.
What are the matters generally included in the PCA?
It is not a court and does not have permanent judges. The PCA is a permanent bureaucracy
that assists temporary tribunals to resolve disputes among states (and similar entities),
intergovernmental organizations, or even private parties arising out of international
agreements.
The cases span a range of legal issues involving territorial and maritime boundaries,
sovereignty, human rights, international investment, and international and regional trade.
What are the methods to solve the case?
The sessions of the Permanent Court of Arbitration are held in private and are confidential.
The Court also provides arbitration in disputes between international organizations and
between states and international organizations.
All decisions, called "awards" are binding on all the parties in the dispute and have to be
carried out without delay. There are some post-award proceedings available to parties
unhappy with the tribunal's decision, but they are limited, particularly in inter-state disputes.
Who are members of PCA?
Parties to the Convention on the Pacific Settlement of disputes of 1899 (71 member states)
and 1907 (101 member states) are automatically parties to the PCA. As 51 are parties to both
conventions, the PCA has 121 member states: 119 members of the United Nations, as well as
Kosovo and Palestine.
India is a party of the PCA according to the Hague Convention on 1899.
DECISION
Award
The final decision of the tribunal is in the form of a written award decided by the majority of
arbitrators. The award must include the reasons for the decision, unless the parties have
agreed that no reasons are to be provided. While the 1899 and 1907 Conventions contemplate
that awards will be made public, the PCA Rules require the agreement of the parties for this.
The award is final and binding upon the parties and is to be executed without delay. If the
parties reach a settlement before the end of the proceedings, they may request the tribunal to
record their agreement in the form of an award on agreed terms.
Interpretation and Revision
After the award has been rendered, either party may request from the tribunal an
interpretation of the award, correction of errors in computation, clerical or typographical
errors, or an additional award on claims presented during the proceedings but omitted from
the award. The time limits for this are brief, and differ slightly among the various sets of
rules. The tribunal is also authorized to correct errors in the award on its own initiative within
30 days from the date of communication of the award.
Appeal
Awards are final and binding, and there is no right of appeal.
Enforcement
In agreeing to arbitration under the PCA Rules, the parties undertake to carry out the award
without delay.
To the extent that the arbitration law of the place of arbitration requires that the award be
filed or registered, the pertinent rules prescribe that the tribunal shall do this. As pointed out
above, the waiver of jurisdictional immunity by States and intergovernmental organizations
that arises from an agreement to arbitrate under the PCA Rules does not amount to a waiver
of immunity from execution.
Which are the important cases related to India in PCA?
• An Italian marine accused of killing two Indian fishermen:
Two Italian marines — Massimiliano Latorre and Mr. Girone are facing the charge of
murdering 2 Indian fishermen in 2012 off the Kerala coast. The fishermen were killed when
the marines on duty aboard MV Enrica Lexie, an Italian-flagged oil tanker, fired at them. The
order is binding for both countries as there is no appeal process in the UN tribunal. For his
return to his homeland, the tribunal has suggested conditions such as Girone surrendering his
passport so that he doesn’t travel abroad and reporting his presence to an Italian authority
designated by the Indian top court.
• Rules against “Antrix”:
In 2005, the Indian Space Research Organisation’s (ISRO) commercial arm Antrix
Corporation entered into an agreement with Devas to lease out satellite spectrum which the
Bangalore-based company could use to provide high-quality telephony and Internet services.
The deal involved Antrix committing to manufacturing and launching two ISRO satellites
and then leasing nearly 70 MHz of S-band satellite spectrum to Devas for a period of 12
years. In return, Devas committed to paying upfront fees of a little over $30 million. In 2011
however, a leaked draft audit report noted that there were potentially a number of
irregularities in the agreement including conflict of interest, favouritism, financial
mismanagement and non-compliance of standard operating procedures.
An international tribunal in The Hague has ruled against the Indian government over the
cancellation of a contract between telecommunications firm Devas Multimedia and Antrix
Corporation Ltd., in a decision that could cost the Centre billions of dollars in damages.
PHILIPPINES V. CHINA
In the case the Philippines v. China, the Arbitral Tribunal contracted the Permanent Court of
Arbitration to act as its registry. The PCA provided courtroom facilities, a law library,
administrative support, and served as the registry for all communications. All
communications by the Arbitral Tribunal were sent out by the PCA on its stationary. Each
item was numbered and later became part of the permanent archive at the PCA.
The source of confusion over the PCA’s role arose from the Arbitral Tribunal’s Award. It
was numbered and issued on PCA stationary. But the cover of the Award clearly indicated
that it was issued by the Arbitral Tribunal.
On the fifth anniversary of the Arbitral Tribunal Award it is time to correct the public record
and give UNCLOS its due. The case brought by the Philippines against China was handled by
an Arbitral Tribunal established under Annex VII of UNCLOS.
Conclusion
In the early period, the Concept of Arbitration was introduced but by the efforts of due
recognition to Model Law of International Commercial Arbitration and Conciliation rules
given by the United Nations Commission on trade and law (UNCITRAL). The model law
and rules have played a significant role in the settlement of commercial disputes and provided
rules to various other countries which they can adapt and make according to their municipal
laws as earlier there was no unified law related to trade and its need felt when globalization
started which further gave rise to disputes related to it. Further the Act was amended in 2015
with better updates.