Battle of the forms, arbitrator conflicts and interim relief in a cross-border supply dispute
A Turkish clothing manufacturer (Anadolu Textiles) and a German retailer (NordWear GmbH) negotiate a supply agreement. NordWear sends its standard purchase order, which provides for 'ICC arbitration in Paris, three arbitrators, German law'. Anadolu replies with its own acknowledgement form, which provides for 'arbitration in Istanbul under the rules of the Istanbul Arbitration Centre, one arbitrator, Turkish law'. NordWear does not object and takes delivery of three shipments. A dispute over defective garments arises. NordWear commences ICC arbitration in Paris. Anadolu objects, saying it never agreed to ICC. NordWear appoints a German retired judge; Anadolu appoints a Turkish lawyer who, two years earlier, acted as counsel for Anadolu in an unrelated sale. The ICC Court confirms all three. Anadolu then challenges NordWear's arbitrator on the ground that she sat on a panel with NordWear's CEO as co-arbitrator in a prior case. NordWear seeks interim measures in Paris to preserve stock.
1. Which arbitration agreement governs, and how should the tribunal rule on its own jurisdiction? Consider the battle of the forms, separability and competence-competence.
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The parties exchanged conflicting standard terms, so the first question is whether they reached consensus on an arbitration clause at all. Under many governing laws, conflicting standard terms cancel out and the contract is formed on the terms actually performed; the arbitration clause is separable, so it must be shown that both parties consented to the same clause. NordWear's purchase order says ICC Paris; Anadolu's acknowledgement says Istanbul. Anadolu's performance by shipping goods does not necessarily accept the ICC clause, and NordWear's silence does not necessarily accept the Istanbul clause. The tribunal has competence-competence to rule on its own jurisdiction, and the ICC Court has already made a prima facie assessment under the ICC Rules. The tribunal should decide jurisdiction, often as a preliminary issue, after hearing both parties. It may uphold the ICC clause if the conduct and correspondence show NordWear's terms prevailed, or find no consensus and decline jurisdiction. The seat is Paris, so French courts have supervisory jurisdiction; a later award could be challenged under the New York Convention if there was no valid agreement. The tribunal should not treat the ICC Court's confirmation as binding on the jurisdictional question.
2. Advise on the challenge to NordWear's arbitrator and on Anadolu's own appointment. What disclosures and standards apply?
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Arbitrators, including party-appointed arbitrators, must be independent and impartial and must disclose anything that may give rise to justifiable doubts. NordWear's arbitrator sat with NordWear's CEO as co-arbitrator in a prior case. Whether that is material depends on recency, frequency and the nature of the prior case; it is at least disclosable, and may be an Orange List situation under the IBA Guidelines. Anadolu's arbitrator acted as counsel for Anadolu two years ago in an unrelated sale. That is a closer relationship and likely a significant conflict; it must be disclosed, and may be challengeable. Anadolu knew of its own appointee's relationship, so a challenge to its own arbitrator may be time-barred or waived; it cannot rely on a conflict it created. The challenge to NordWear's arbitrator should be brought promptly to the ICC Court, which decides under the ICC Rules; if rejected, a court challenge at the seat may follow. The standard is not proof of actual bias but reasonable apprehension. If the challenge succeeds, the award may later be set aside or resisted under the Convention. Party-appointed arbitrators are not advocates.
3. Can NordWear obtain interim measures from the Paris court, and what is the effect on the tribunal?
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Yes. Court-ordered interim measures in support of arbitration are generally available in France and are not inconsistent with an arbitration agreement; the court acts in aid of arbitration, not in derogation of it. NordWear should show urgency, a credible claim, irreparable harm if the stock is dissipated, and willingness to provide security. The tribunal also has power to order interim measures under the ICC Rules and, if the Model Law applies, under article 17. The two routes are complementary: a court may act before the tribunal is constituted or where its order needs enforcement, while the tribunal controls the merits and can order preservation. A court order does not usurp the tribunal's jurisdiction, and the tribunal may revisit the measure. NordWear should consider whether the stock is perishable or unique and whether a sale-and-retain-proceeds order is more practical than preservation. It should also notify the tribunal and seek directions, because parallel applications can create inconsistent orders and cost. If Anadolu's jurisdictional objection succeeds, the court may still preserve the status quo pending resolution.