As part of the drive to achieve faster, more cost efficient arbitrations, a number of arbitral institutions offer an expedited arbitration procedure, designed to deliver an award within a fixed timeframe.
The ICC has recently announced amendments to it arbitration rules, introducing a new expedited procedure. The new rules come into effect on 1 March 2017 and will bring the ICC into line with the arbitration rules of other institutions like SIAC and the HKIAC which already offer an expedited procedure.
The Stockholm Chamber of Commerce (SCC) has a separate set of Arbitration Rules for Expedited Arbitration and has recently announced amendments to its Arbitration Rules and Rules for Expedited Arbitration which will come into force on 1 January 2017.
The SCC’s statistics for 2015 indicate that parties chose Expedited Arbitration in about 28% of cases. However, statistics from the HKIAC indicate that a much lower percentage of arbitrations were conducted in accordance with its expedited procedure, only 2.6% in 2015.
This blog looks at the expedited arbitration procedures offered by the ICC and the SCC and considers whether we are likely to see an increase in the number of expedited arbitrations in 2017.
Elective or automatic
The biggest difference between the two institution’s expedited rules is their modus operandi at the outset.
The SCC’s Rules for Expedited Arbitration only apply if both parties consent to their application, regardless of the value of the dispute - although the SCC describes the rules as being suitable for disputes of a simpler nature.
The ICC’s new expedited arbitration procedure will apply automatically if the amount in dispute is below US$ 2 million unless:
- the arbitration agreement was concluded prior to 1 March 2017;
- the parties have expressly opted out of the expedited arbitration procedure; or
- the ICC Court decides it is inappropriate in the circumstances to apply the expedited procedure.
Parties can also choose to adopt the new expedited procedure in cases where the amount in dispute exceeds US$2 million.
The results of the 2015 International Arbitration Survey conducted by White & Case and QMUL, suggested that, whilst the majority of respondents favoured a “fast-track” procedure, the majority (59%) favoured an optional as opposed to mandatory procedure.
Both SIAC and the HKIAC operate their expedited arbitration procedures on an elective, not automatic basis – although interestingly the threshold for claims under both procedures is higher (SIAC US$4 million and HKIAC US$3 million).
It will be interesting to see whether the introduction by the ICC of a mandatory expedited procedure for claims under US$2 million will result in a significant increase in the number of expedited arbitrations and the extent to which parties choose to adopt the new procedure for claims in excess of US$2 million.
A key feature of expedited arbitration procedures is that the case is generally referred to a sole arbitrator. The SCC Expedited Procedure provides that the arbitration shall be decided by a sole arbitrator. Under the new ICC expedited procedure rules, the ICC Court will normally appoint a sole arbitrator, irrespective of any contrary term of the arbitration agreement.
This new provision will have an impact for ICC arbitration agreements concluded after 1 March 2017. Parties will need to bear in mind that any agreement that disputes should be decided by three arbitrators will not be effective if the amount in dispute is below US$2 million, unless the ICC Court decides that it is inappropriate to apply the expedited procedure or the parties agree to opt out of the expedited procedure.
That said both the ICC rules and the SCC rules give the parties to participate in the appointment of the arbitrator. The SCC rules allow the parties 10 days to jointly appoint the arbitrator, failing which the SCC Board will make the appointment. Under the ICC rules, the parties may nominate an arbitrator within the time fixed by the ICC Secretariat, failing which the ICC Court will make the appointment.
Under the ICC’s expedited procedure rules there will be no Terms of Reference and the tribunal will have discretion to decide the case on documents only, with no hearing, no requests to produce documents and no examination of witnesses. A case management conference is to be held within 15 days of the file being transmitted to the arbitrator and the arbitrator has a broad discretion to adopt such procedural measures as are considered appropriate.
A distinct feature of the SCC’s expedited procedure is that the Request for Arbitration also constitutes the Statement of Claim and the Answer also constitutes the Statement of Defence. The parties may make one supplementary written submission, but such submission must be brief and the time limits for submission may not exceed 15 working days. A case management conference is to be held promptly after referral of the case to the arbitrator and a timetable will be established within 7 days.
Another distinct feature is the introduction of a new summary procedure. The procedure (which is available under the SCC Rules of Arbitration and the Expedited Rules) allows a party to request that the arbitrator decide one or more issues of fact or law by way of summary procedure, without necessarily undertaking every procedural step that might otherwise be adopted for arbitration. The SCC is one of the first arbitral institutions to introduce a summary procedure. The procedure may be used for issues of jurisdiction, admissibility and the merits and is designed to be used in circumstances where an allegation material to the outcome of the case is manifestly unsustainable or is, for any other reason, suitable for determination by way of summary procedure.
Time frame for award
ICC awards must be given within 6 months from the date of the case management conference. SCC awards are even quicker, and must be given within 3 months of the date the case is referred to the arbitrator. Both time limits can be extended by the ICC Court or SCC Board.
Data published by the SCC suggests that the average duration of an expedited arbitration is 3-6 months, considerably quicker than the average duration of a standard SCC arbitration which is 6-12 months. There is no comparable data from the ICC, but it is clear from that the ICC see the new expedited procedure as an opportunity for parties to resolve disputes in an expeditious and cost effective manner.
The available statistics indicate that a relatively low percentage of arbitrations are conducted on an expedited basis. It would appears that, whilst the majority of arbitration users favour so-called “fast-track arbitration”, few want expedited arbitration to become the default procedure, preferring to limit its application to less complex, lower value claims.
The reality is that an expedited arbitration procedure requires the parties to limit or forgo certain stages of the arbitral process (be that the ability to have their case heard by a three member tribunal or the ability to make submissions to the tribunal in a hearing) and it’s not always feasible to complete a process with which both parties feel comfortable within a limited time frame. A balance always has to be found between ensuring a fair process by which both parties have a reasonable opportunity to put their case and a process that satisfies the commercial needs of the parties in terms of timing.
The ICC’s new expedited procedure proposes something of sea-change - applying automatically if the amount in dispute is below US$ 2 million (unless the parties choose to opt out) and offering parties the option to adopt the procedure for higher value claims. It remains to be seen whether this drive to achieve faster and more cost efficient will result in an increase in the number of arbitrations that are conducted on an expedited basis.
This blog post first appeared on Practical Law Arbitration Blog on 10 January 2017.