Notice of Arbitration; Respondent not Available

>>Notice of Arbitration; Respondent not Available

Notice of Arbitration; Respondent not Available

In a recent international arbitration case under the Rules of Tehran Regional Arbitration Centre (TRAC), with Tehran as the seat, the Secretariat faced difficulty in notifying the notice of arbitration to Respondent in accordance with Iran law, who was for other criminal reasons imprisoned in Dubai.

This was particularly a challenging matter, because pursuant to article 33 of Iran Law on International Commercial Arbitration (LICA), if either the notice of arbitration or the appointment of arbitrator (and not other communications, necessarily) are not notified correctly to the Respondent in accordance with Iran law, each may serve as a serious ground for setting aside of arbitral award:

Article 33:   Application for setting aside

The arbitral award may be set aside, at the request of a party, by the court specified in Article 6 on the following grounds:

[…]

3. The provisions of this Law have not been complied with in regard to the service of notices concerning the appointment of arbitrator or the application for arbitration;

The Secretariat of TRAC, therefore, had to take care of the matter of notice of arbitration under Iran law very cautiously and examine all possibilities to assure that the requirements of above article are met.

Fortunately, TRAC 2018 Rules of Arbitration provide a very detailed and well elaborated mechanism for services of notifications. Article 2 of Rules reads as below:

1. […] 

2. If an address has been designated by a party specifically for this purpose or authorized by the Arbitral tribunal, any notice shall be delivered to that party at that address, and if so delivered shall be deemed to have been received. Delivery by electronic means such as facsimile or e-mail may only be made to an address so designated or authorized.

3. In the absence of such designation or authorization, a notice is:

– Received if it is physically delivered to the addressee; or

– Deemed to have been received if it is delivered at the place of business, habitual residence or mailing address of the addressee.

4. If, after reasonable efforts, delivery cannot be effected in accordance with paragraphs 2 or 3, a notice is deemed to have been received if it is sent to the addressee’s last-known place of business, habitual residence or mailing address by registered letter or any other means that provides a record of delivery or of attempted delivery.

In the case at hand, the Secretariat, in order to ensure that all requirements of article 2 are fulfilled, followed below steps:

  • First, the notice of arbitration was initially sent to the contractual address of Respondent, but was returned as the address was not existing at all (seemed to be a fake address);
  • Second, the notice of arbitration was then sent to the habitual address of the Respondent, provided by the Claimant, but again returned as nobody accepted to receive and sign the receipt of notification; and
  • Third, after the Claimant informed the Secretariat that the Respondent is in prison and further requested that the notice of arbitration is sent by DHL to the prison, the Secretariat followed the same instruction, but the notice was again returned, as the prison refused to receive the notification and notify it to the Respondent.

After all these attempts, the Secretariat declared that reasonable efforts were spent for notifying the commencement of arbitration to Respondent to any possible and available address. The records of all these attempts (with tracking numbers and the reasons of non-delivery) are filed and saved in the case and therefore, the requirements of article 2 of TRAC Rules are fulfilled and the arbitration proceeding can now continue in accordance with section 4 of the same article.

I keep my eyes open on the case to see how Iranian court might rule on this matter, after the award is rendered and perhaps, one party requests for setting aside on the basis of none or poor notification of the notice of commencement of arbitration under Iran law. I will update here accordingly.