Introduction to Answer to the Request and Defence

The Answer to the Request and Statement of Defence are crucial documents in any arbitration.

Commercial arbitration is a key method of resolving disputes, particularly in international business transactions. Unlike litigation, arbitration provides parties with the benefits of privacy, flexibility, and the ability to choose arbitrators with expertise in the relevant field. The process typically begins with a Request for Arbitration, submitted by the claimant, which initiates the formal dispute resolution procedure.

The Answer to the Request and the Statement of Defence are critical procedural steps in commercial arbitration. These documents allow the respondent to formally address the claimant’s allegations, present their own version of events, and introduce any legal or jurisdictional objections. The quality and content of these documents can shape the outcome of the arbitration, as they form the foundation of the respondent’s defence strategy.

Legal Framework and Procedural Rules

Governing Arbitration Rules

Different arbitration institutions such as the ICC (International Chamber of Commerce), LCIA (London Court of International Arbitration), or DIAC (Dubai International Arbitration Centre) have their own procedural rules. These rules outline important elements like timelines for submissions, the form and content of the Answer and Statement of Defence, and the procedures for appointing arbitrators.

For example, under DIAC rules, the respondent typically has 30 days to submit the Answer, while other institutions may provide different time frames. It’s crucial to adhere to the specific institution’s rules, as deviations can result in sanctions or procedural disadvantages.

Applicable Laws

In addition to institutional rules, the arbitration process is governed by national arbitration laws, which may vary depending on the seat of arbitration. The UNCITRAL Model Law on International Commercial Arbitration is frequently adopted as the legal framework for arbitration in many countries, but national variations exist. Furthermore, international conventions like the New York Convention ensure that arbitration agreements and awards are enforceable across borders. Understanding the interplay between these laws and rules is essential for crafting an effective defence.

Elements of the Answer to the Request

Acknowledgement of the Request for Arbitration

The first step for the respondent is to formally acknowledge receipt of the Request for Arbitration. This acknowledgment usually includes confirmation that the arbitration agreement is valid and binding, and that the respondent has received all documents submitted by the claimant.

Response to the Claims

In this section, the respondent must respond to the claimant’s specific allegations. The response can either admit or deny the claims, and in some cases, the respondent may partially accept responsibility while challenging the amount of damages or remedies sought. Precision in addressing each allegation is crucial, as this lays the groundwork for the subsequent defence.

Jurisdictional Challenges

The Answer to the Request is also the appropriate forum for raising jurisdictional objections. For instance, if the respondent believes that the arbitration agreement is invalid, unenforceable, or does not cover the dispute at hand, these arguments must be raised promptly. Jurisdictional objections might also include arguments about the arbitrability of the dispute or whether the correct arbitration institution has been chosen.

Selection of Arbitrator

If the arbitration agreement allows the respondent to nominate an arbitrator, this nomination is often included in the Answer to the Request. The choice of arbitrator is a critical strategic decision, as the tribunal’s composition can significantly influence the outcome of the case. Respondents should select arbitrators who are experts in the relevant legal or industry field, and whose professional background aligns with the defence strategy.

Statement of Defence

Substantive Response to Claims

In the Statement of Defence, the respondent provides a comprehensive response to the claimant’s allegations. This involves presenting a detailed factual account that either contradicts the claimant’s version of events or provides additional context that supports the respondent’s position. It is essential to ensure that the facts are aligned with the legal arguments to create a coherent defence.

Counterclaims

If the respondent believes that the claimant is liable for damages or other relief, they may file counterclaims as part of the Statement of Defence. Counterclaims can strengthen the respondent’s bargaining position and offer a potential pathway for recovery of losses. However, the respondent must ensure that the counterclaims fall within the scope of the arbitration agreement and the jurisdiction of the tribunal.

Presentation of Evidence

A successful Statement of Defence includes a well-organized presentation of evidence to support the respondent’s case. This can consist of documentary evidence (e.g., contracts, correspondence), witness statements, and expert reports. Adhering to the institution’s rules on the submission of evidence, including timelines and format, is essential to avoid procedural challenges from the opposing side.

Legal Defences and Theories

The respondent may rely on various legal defences, such as:

Force Majeure:

The respondent argues that unforeseen events (e.g., natural disasters, political unrest) prevented them from fulfilling their contractual obligations.

Breach of Contract by the Claimant:

The respondent might assert that the claimant’s own failure to perform key obligations caused the dispute.

Limitation Periods:

If the claimant’s claims are time-barred under applicable law, the respondent can raise this defence to limit the claimant’s ability to recover damages.

Timelines and Strategic Considerations on Answer to the Request and Defence

Deadlines and Extensions on Answer to the Request and Defence

The rules governing commercial arbitration generally establish strict deadlines for submitting the Answer and Statement of Defence. Missing these deadlines can have serious consequences, such as waiving the right to raise certain objections or proceeding to default. In exceptional circumstances, a respondent may request an extension, but such requests should be justified with clear reasons, such as the need for additional time to gather evidence.

Strategic Considerations on Answer to the Request and Defence

Timing is critical in arbitration. The respondent must balance the need for a thorough, well-supported defence with the obligation to meet procedural deadlines. Early in the process, the respondent must also decide which defences to raise and whether to concede certain points to focus on more important issues. Strategic decisions made at this stage will influence the rest of the arbitration process.

Consequences of Failing to Submit an Answer to the Request or Defence

Default Proceedings

If the respondent fails to submit an Answer or Statement of Defence within the prescribed deadlines, the arbitration may proceed without them, often leading to default awards. In such cases, the tribunal is likely to rule in favor of the claimant, as there would be no challenge to the facts and legal claims presented by the claimant.

Impact on the Tribunal’s Decisions

Even if the respondent participates later in the arbitration, the failure to provide a timely Answer or Defence can negatively impact the tribunal’s perception of the case. A tribunal might view the respondent’s subsequent arguments with skepticism, assuming that the initial failure to respond reflects the strength of the claimant’s positioN.

Best Practices for Drafting an Effective Answer to Request and Defence

Clarity and Precision

The defence should be drafted with clear, precise language. Overly technical or vague arguments can confuse the tribunal and weaken the respondent’s position. The facts and legal arguments should be presented logically, and the document should be organized in a way that makes it easy for the tribunal to follow.

Legal and Factual Consistency

The factual narrative and legal defences must be internally consistent. Any contradictions can be exploited by the opposing side, weakening the respondent’s credibility.

Engaging Expert Counsel

Given the complexities involved in arbitration, particularly in international disputes, engaging experienced arbitration counsel is highly recommended. Counsel can ensure that the defence is properly aligned with procedural rules, legal requirements, and the overarching strategy.

Conclusion to Answer to The Request

The Answer to the Request and Statement of Defence are key components of the respondent’s overall strategy in arbitration. A well-prepared defence that addresses both legal and factual issues comprehensively can significantly influence the outcome of the dispute.

Respondents should approach this process strategically, utilizing the available legal defences, submitting compelling evidence, and ensuring compliance with procedural rules. Proper planning and execution at this stage set the tone for the entire arbitration, increasing the likelihood of a favorable outcome.

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We trust that the above is of assistance when considering to start an arbitration or an arbitration is filed against you. Expert advice is recommended at an early stage of the dispute to evaluate the best procedural route.

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**This publication is not intended as legal advice and rather as general information.