(d) If for any reason the appointment cannot be made according to this procedure, the appointing authority may exercise its discretion in appointing the sole arbitrator.

4. In making the appointment, the appointing authority shall have regard to such considerations as are likely to secure the appointment of an independent and impartial arbitrator and shall take into account as well the advisability of appointing an arbitrator of a nationality other than the nationalities of the parties.

Article 7

1. If three arbitrators are to be appointed, each party shall appoint one arbitrator. The two arbitrators thus appointed shall choose the third arbitrator who will act as the presiding arbitrator of the tribunal.

2. If within 30 days after the receipt of a party's notification of the appointment of an arbitrator the other party has not notified the first party of the arbitrator it has appointed:

(a) The first party may request the appointing authority previously designated by the parties to appoint the second arbitrator; or

(b) If no such authority has been previously designated by the parties, or if the appointing authority previously designated refuses to act or fails to appoint the arbitrator within 30 days after receipt of a party's request therefor, the first party may request the Secretary-General of the Permanent Court of Arbitration at The Hague to designate the appointing authority. The first party may then request the appointing authority so designated to appoint the second arbitrator. In either case, the appointing authority may exercise its discretion in appointing the arbitrator.

3. If within 30 days after the appointment of the second arbitrator the two arbitrators have not agreed on the choice of the presiding arbitrator, the pre#siding arbitrator shall be appointed by an appointing authority in the same way as a sole arbitrator would be appointed under article 6.

General provisions

Article 15

1. Subject to these Rules, 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.

2. If either party so requests at any stage of the proceedings. the arbitral tribunal shall hold hearings for the presentation of evidence by witnesses, including expert witnesses or for oral argument. In the absence of such a request, the arbitral tribunal shall decide whether to hold such hearings or whether the proceedings shall be conducted on the basis of documents and other materials.

3. All documents or information supplied to the arbitral tribunal by one party shall at the same time be communicated by that party to the other party. Place of arbitration

Article 16

1. Unless the parties have agreed upon the place where the arbitration is to be held, such place shall be determined by the arbitral tribunal, having regard to the circumstances of the arbitration.

2. The arbitral tribunal may determine the locale of the arbitration within the country agreed upon by the parties. It may hear witnesses and hold meetings for consultation among its members at any place it deems appropriate, having regard to the circumstances of the arbitration.

3. The arbitral tribunal may meet at any place it deems appropriate for the inspection of goods, other property or documents. The parties shall be given sufficient notice to enable them to be present at such inspection.

4. The award shall be made at the place of arbitration.

Language

Article 17

1. Subject to an agreement by the parties, the arbitral tribunal shall, promptly after its appointment, determine the language or languages to be used in the proceedings. This determination shall apply to the statement of

claim, the statement of defense, and any further written statements and, if oral hearings take place, to the language or languages to be used in suct hearings.

2. The arbitral tribunal may order that any documents annexed to the statement of claim or statement of defense, and any supplementary documents or exhibits submitted in the course of the proceedings, delivered in their original language, shall be accompanied by a translation into the language or languages agreed upon by the parties or determined by the arbitral tribunal. Statement of claim

Article 18

1. Unless the statement of claim was contained in the notice of arbitration. within a period of time to be determined by the arbitral tribunal, the claimant shall communicate his statement of claim in writing to the respondent and to each of the arbitrators. A copy of the contract, and of the arbitration agreement if not contained in the contract, shall be annexed thereto.

2. The statement of claim shall include the following particulars: (a) The names and addresses of the parties;

(b) A statement of the facts supporting the claim;

(c) The point at issue;

(d) The relief or remedy sought.

The claimant may annex to his statement of claim all documents he deems relevant or may add a reference to the documents or other evidence he will submit.

Statement of defense

Article 19

1. Within a period of time to be determined by the arbitral tribunal, the respondent shall communicate his statement of defense in writing to the claimant and to each of the arbitrators.

2. The statement of defense shall reply to the particulars (b), (c) and (d) of the statement of claim (article 18, para. 2). The respondent may annex to his statement the documents on which he relies for his defense or may add a reference to the documents or other evidence he will submit.

3. In his statement of defense, or at a later stage in the arbitral proceedings if the arbitral tribunal decides that the delay was justified under the circumstances, the respondent may make a counterclaim arising out of the same contract or rely on a claim arising out of the same contract for the purpose of a set-off.

4. The provisions of article 18, paragraph 2 shall apply to a counterclaim and a claim relied on for the purpose of a set-off.

Pleas as to arbitrator's jurisdiction

Article 21

1. The arbitral tribunal shall have the power to rule on objections that it has no jurisdiction, including any objections with respect to the existence or validity of the arbitration clause or of the separate arbitration agreement. 2. The arbitral tribunal shall have the power to determine the existence or the validity of the contract of which an arbitration clause forms a part. For the purposes of article 21, an arbitration clause which forms part of a contract and which provides for arbitration under these Rules shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

3. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than in the statement of defense or, with respect to a counterclaim, in the reply to the counterclaim.

4. In general, the arbitral tribunal should rule on a plea concerning its jurisdiction as a preliminary question. However, the arbitral tribunal may proceed with the arbitration and rule on such a plea in their final award.

Decisions

Article 31

1. When there are three arbitrators, any award or other decision of the arbitral tribunal shall be made by a majority of the arbitrators.

2. In the case of questions of procedure, when there is no majority or when the arbitral tribunal so authorizes, the presiding arbitrator may decide on his own, subject to revision, if any, by the arbitral tribunal.

Applicable law, amiables compositeurs

Article 33

1. The arbitral tribunal shall apply the law designated by the parties as applicable to the substance of the dispute. Failing such designation by the parties, the arbitral tribunal shall apply the law determined by the conflict of laws rules which it considers applicable.

2. The arbitral tribunal shall decide as amiable compositeur or ex aequo et bono only if the parties have expressly authorized the arbitral tribunal to do so and if the law applicable to the arbitral procedure permits such arbitration.

3. In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.

Costs (articles 38 to 40)

Article 38

The arbitral tribunal shall fix the costs of arbitration in its award. The term "costs" includes only:

(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with article 39;

(b) The travel and other expenses incurred by the arbitrators;

(c) The costs of expert advice and of other assistance required by the arbitrators;

(d) The travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;

(e) The costs for legal representation and assistance of the successful party if such costs were claimed during the arbitral proceedings, and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;

(f) Any fees and expenses of the appointing authority as well as the expenses of the Secretary-General of the Permanent Court of Arbitration at The Hague.

Article 40

1. Except as provided in paragraph 2, the costs of arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case. 2. With respect to the costs of legal representation and assistance referred to in article 38, paragraph (e), the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if it determines that apportionment is reasonable.

Model Arbitration Clause or Separate Arbitration Agreement

Any dispute, controversy or claim arising out of or relating to this contract. or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force.

Note-Parties may wish to consider adding:

(a) The appointing authority shall be . . . (name of institution or person);

(b) The number of arbitrators shall be . . . (one or three);

(c) The place of arbitration shall be . . . (town or country);

(d) The language (s) to be used in the arbitral proceedings shall be ...

Conciliation

U.S.-People's Republic of China

On October 28, 1977, Donald B. Straus, president of the American Arbitration Association (AAA) Research Institute, announced the successful conclusion of the first joint conciliation case between a U.S. corporation and a Chinese foreign trade organization. The conciliation was jointly administered by the AAA and the Legal Affairs Department of the China Council for the Promotion of International Trade (CCPIT).

Portions of the text of the October 28, 1977, announcement by the AAA follow:

... An American corporation and a Chinese foreign trade organization, assisted by an American conciliator appointed by the AÃA and a Chinese conciliator appointed by the CCPIT, agreed upon terms for the friendly settlement of a commercial dispute which had ! arisen in U.S.-China trade.

The unique arrangements for joint conciliation were developed in three years of discussions on dispute resolution initiated by the National Council for U.S.-China Trade and carried on by the AAA and the Foreign Trade Arbitration Commission (FTAC) of the CCPIT.

The joint conciliation took place in Peking over a ten-day period in October. Although the first conciliation was in Peking, future cases may be conducted either in China, the United States or at some other mutually agreed location. Before the conciliation meetings in Peking, the parties had exchanged written statements concerning the issues in dispute.

The conciliation was administered jointly by the AAA and the FTAC. Donald B. Straus, president of the AAA Research Institute, and Howard M. Holtzmann, chairman of the AAA International Arbitration Committeee, attended the conciliation in Peking as observers and to assist in the administration of the case. Walter Sterling Surrey was the conciliator appointed by the AAA.

**

The AAA and the CCPIT have begun to review the experience of the first case with the aim of further improving the process of joint conciliation. While in Peking, Mr. Straus and Mr. Holtzmann had extensive consultations for this purpose with Mr. Jen Tsienhsin, head of the Legal Department of the CCPIT and Secretary General of the FTAC. Also discussed were various arrangements for arbitration, including arbitration in a third country when the

!

parties mutually agree. Together with Mr. Surrey, Mr. Straus and Mr. Holtzmann had discussions with Mr. Wang Yao-ting, chairIman of the CCPIT and chairman of the FTAČ.

News from the American Arbitration Association, Oct. 28, 1977.

In the matter of Banque de Financement, S.A. v. First National Bank of Boston, 586 F.2d 911, the U.S. Court of Appeals for the Second Circuit reversed and remanded with instructions a judgment entered in the Southern District of New York affirming an order of a bankruptcy judge dismissing as improvidently filed the petition of the debtor, a bankrupt Swiss banking corporation, under chapter XI of the Bankruptcy Act, 11 U.S.C. 701 et seq. (1970). The second circuit, in an opinion by Circuit Judge William H. Timbers issued on August 30, 1977, held that under the circumstances of the case, which included ongoing judicial proceedings in the Court of Justice of the Canton of Geneva, it was not appropriate for the bankruptcy court to exercise its inherent power to dismiss a chapter XI petition for an arrangement.

The case arose when the debtor-appellant Banque de Financement, S.A. (Finabank) became bankrupt with substantial assets in New York. The First National Bank of Boston (FNBB) and The Chase Manhattan Bank, N.A. (Chase) brought separate breach of contract actions against Finabank in the U.S. District Court for the Southern District of New York. Just before the expiration of the four-month limitation period provided by the Bankruptcy Act, § 60a (1), 11 U.S.C. 96(a)(1) (1970), for the avoidance of a preferential transfer, Finabank filed a petition for an arrangement under chapter XI. Subsequently, Finabank failed to file a plan of arrangement after having received five deadlines to do so. Finabank also did not disclose a complete list of creditors as required by the Bankruptcy Act § 324(1), 11 U.S.C. 724(1) (1970), and Bankruptcy Rule 11-11(b). Though Finabank did disclose the names of those foreign and domestic banks which were its creditors, it did not disclose the names or addresses of its individual depositors due to the constraints imposed by Swiss banking secrecy laws. The district court subsequently granted the motion of FNBB and Chase to dismiss the chapter XI petition because there appeared to be no prospect of rehabilitation on the part of the debtor.

Set forth below are portions of the opinion of the court of appeal in which Finabank's delay in filing a plan of arrangement in the