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28 June 2018
Although institutional rules arguably empower arbitral tribunals to streamline procedure and summarily dispose of claims or defences as part of their general case management authority, the trend is for institutional rules to expressly recognise such powers. But do these procedural innovations aimed at cheaper and quicker arbitrations come at the price of a binding and enforceable award?
Since the introduction of an expedited procedure in the 2004 Swiss Rules of International Arbitration, the phrase 'expedited procedure' has become commonplace in institutional rules. In March 2017 the International Chamber of Commerce (ICC) became the latest arbitral institution to introduce an expedited procedure in its arbitration rules.
Broadly, the objective of an expedited procedure is to prescribe shortened timelines for arbitrations in order to facilitate faster and more cost‑effective dispute resolution. Usually, the timeline is between three and six months from the constitution of the arbitral tribunal (or transmission of the file to the tribunal) to the rendering of the final award. It is increasingly common for a fast‑track procedure to apply by default – unless the parties have opted out – if the aggregate value of the claims made in the arbitration fall under a specified monetary value. Parties may also elect to opt in in other circumstances, provided that the institution or arbitrator agrees that an expedited procedure is appropriate.
However, importantly, expedited procedure rules do not limit the scope of the arbitration. This remains to be agreed between the parties or, failing that, to the discretion of the tribunal. Expedited proceedings are ideal for arbitrations that do not involve significant documents or evidence (whether fact or expert evidence). However, arbitrations conducted under an expedited procedure do not necessarily result in 'arbitration‑light' proceedings. On the contrary, expedited procedures can sometimes involve imposing compressed timelines on a full‑blown arbitration which has all the usual stages (ie, witness and expert evidence, disclosure, an evidentiary hearing on liability and quantum and post‑hearing oral and written submissions). Such an intensive process has obvious downsides for counsel, parties and arbitrators. However, the mechanism's benefit is that it necessarily curtails what can be done in the available time, which serves to focus the minds of the parties and the tribunal not only on expedience, but also on what is at the heart of the dispute. Costs and time savings are therefore often made.
'Summary disposition' means the early determination by the arbitral tribunal of issues of fact and law on an expedited, summary basis, without a full hearing of the evidence.
Summary procedures are usually available to parties even if they are not expressly provided for in the institutional rules. It is now widely accepted that this power is inherent in the general case management authority of tribunals. Most recently, the ICC expressly recognised in its 30 October 2017 Note to the Parties and Arbitral Tribunal on the Conduct of Arbitrations that "[a]pplications for expeditious determination of manifestly unmeritorious claims or defences may be dealt with within the broad scope of Article 22 [of the ICC Arbitration Rules]".
This endorses the position taken by arbitral tribunals in past ICC arbitrations that they have the inherent power to utilise summary disposition procedures.
However, in practice, tribunals have been reluctant to utilise summary disposition because of the perceived risk of such awards being set aside, or enforcement refused, on grounds of procedural irregularity or lack of procedural fairness. It remains to be seen whether this reluctance will continue where arbitral institutions have amended their arbitral rules to include express powers of summary disposition.
The cost and length of proceedings are perennial issues in international arbitration. It is therefore pleasing that the major arbitral institutions are continuing to update and adapt their arbitral rules to facilitate more efficient proceedings, including by expressly providing for expedited procedures and summary dismissal. However, it remains to be seen whether these mechanisms will be widely taken up by parties or whether they will lead to significant time and costs savings in practice. As mentioned above, expedited procedures do not necessarily limit the scope of an arbitration. Real savings will therefore be generated only if the parties and tribunal fully commit to conducting the proceedings in a sensible and efficient manner. The inclusion of express summary procedure rules in key institutional rules means that these rules are likely to be more widely used in the years to come. However, an immediate spike in uptake is unlikely. Parties and tribunals will remain wary, particularly where the enforcement of the resulting award is in a jurisdiction where the courts are unfamiliar with the concept.
For further information on this topic please contact James Rogers at Norton Rose Fulbright LLP's London office by telephone (+44 20 7283 6000) or email (firstname.lastname@example.org). Alternatively, contact Katie Chung at Norton Rose Fulbright LLP's Singapore office by telephone (+65 6223 7311) or email (email@example.com). The Norton Rose Fulbright LLP website can be accessed at www.nortonrosefulbright.com.
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