Is the existence of expedited arbitration rules mandatory for expedited arbitration proceedings?

The discussion over the necessity of expedited arbitration rules is a hotly-debated topic. One reason for its relevance is the draft UNCITRAL Expedited Arbitration Rules currently under discussion by the UNCITRAL Working Group II. In the light of these recent developments, this article explains why the existence of expedited rules is not mandatory. More specifically, the article discusses the tribunal’s power to expedite proceedings, and addresses tensions between due process and efficiency, and between party autonomy and efficiency.

Starting point: tribunal’s powers

Considering the general approach from the ILA,[1] tribunals indeed have discretionary powers to ensure the efficient conduct of proceedings.[2] If tribunals have discretionary powers to safeguard the integrity and efficient conduct of proceedings, it can be said that tribunals have the power to expedite proceedings at their discretion, too. For instance, one can refer to Art 14.1(ii) of the 2020 LCIA Rules, which gives broad powers to a tribunal, including to expedite proceedings. Therefore, the lack of separate expedited arbitration rules does not automatically mean that expedited proceedings may not take place. However, explicit expedited arbitration rules, as well as the UNCITRAL draft, can be regarded as a response to some tensions which occur in expedited proceedings in general but especially when the conduct of expedited proceedings is only at the tribunal’s discretion.

Due Process – Efficiency

Response to Due Process Paranoia

The Working Group’s discussions noted arbitrators’ concerns that an award might be challenged due to the violation of the parties’ right to be heard .[3] The Working Group explained that one of the draft’s aims is to find a balance between prompt and efficient arbitration proceedings and the principle of due process.[4] A lack of codified powers may create uncertainties with the consequence being that the tribunal might be reluctant to exercise its powers to expedite proceedings. There may be cases, however, in which a tribunal needs to expedite proceedings. In that case, established rules provide a workable rubric of powers for the tribunal to exercise. These will allow the tribunal to act as it deems appropriate to ensure efficient proceedings without being concerned that its own discretion might override the parties’ rights.

Exemplary case

The interplay of efficiency and due process can be best understood with reference to case law where courts have tried to find a balance between “arbitrators’ powers and discretion in […] giving effect to the policy of time and cost efficiency and, […] due process and fairness.”[5] The Svea Court of Appeal, for instance, decided that according to Article 27(1) of the 2010 SCC Rules for Expedited Arbitrations, the tribunal’s decision to expedite the proceedings and, therefore, not to conduct a hearing, was indeed in accordance with the applicable rules and due process.[6] The court’s confirmation of the tribunal’s powers to expedite the proceedings does justice to the principle of efficiency. Indeed, efficiency is considered to be the “key of success of an arbitral institution”[7] as it leads to a reduction of costs and duration of proceedings.[8] Thus, this case illustrates very well that a simple confirmation of the extent of the tribunal’s powers can provide clarity in terms of its competences and prevent an override of the principle of due process.

Tensions: Party Autonomy – Efficiency

Interplay in practice

Furthermore, expedited arbitration rules can dissolve tensions between efficiency and party autonomy. Without such rules, parties may claim that the tribunal’s decisions override party autonomy as the tribunal might act differently than the parties’ expectations. After agreeing to arbitration rules, it will be difficult for the parties to claim that the tribunal’s actions (assuming that they are in accordance with the respective arbitration rules) violate party autonomy. The issue that a tribunal has the power to exercise its codified powers from arbitration rules when the parties have agreed to them was addressed in BXS v. BXT.[9] The Singapore International Commercial Court held that, when agreeing to the 2016 SIAC Arbitration Rules, the parties also agree to certain rules, which include the default option that a dispute will be heard by a sole arbitrator, and not by three arbitrators, as stated by the parties.[10] By balancing the tribunal’s powers and the principle of party autonomy, this decision allows the tribunal to conduct efficient proceedings and limits its impact on party autonomy at the same time.

Context of the UNCITRAL draft

Putting this approach into the context of the UNCITRAL draft, it is remarkable that the draft gives preference to the parties’ consent but also provides a default option in absence of consent.[11] The draft, therefore, creates a balance between party autonomy and the tribunal’s power to conduct efficient proceedings and allows both poles to coexist without overriding each other. Default options avoid lengthy consultations on individual issues and ensure the efficiency of the proceedings. Efficiency could be further ensured if the Working Group decides on the adoption of an opt-out option.[12] As disputes which fulfill certain circumstances are automatically decided in expedited arbitration,[13] this approach prevents lengthy proceedings to the detriment of efficiency.

Summary

The agreement on expedited arbitration goes along with compromises for both the tribunal and the parties.[14] As shown above, these compromises might have various implications which can be resolved by codified rules on expedited arbitration. Admittedly, the arbitral tribunal has broad powers to expedite proceedings even without the application of explicit expedited arbitration rules. This is why the existence of expedited arbitration rules is not mandatory in order to allow expedited proceedings.

On the other hand, expedited arbitration rules can be regarded as a response to resolve the tension caused by expedited arbitral proceedings. Expedited arbitration rules set a default option for issues which would be up to the tribunal’s discretion. Setting codified default options on the one hand prevent tribunals from the ‘due process paranoia’ but also provide a procedural framework to the parties, enabling them to understand the actions of the tribunal which are or are not covered by the rules. Following actions by the tribunal will then be based on party autonomy and be covered by the parties’ agreement. Moreover, these rules contribute to efficiency of expedited proceedings as well, since codified rules give clarity to both the tribunal and the parties and can prevent potential disputes based on a lack of regulation. This clarity allows the tribunal to provide quick and effective proceedings which will be in the interest of the parties, too.

References

 

[1] ILA Report on Inherent and Implied Powers of International Arbitral Tribunals (2014) 4, 6; ILA Resolution No 4/2016 (2016) 2, 65.

[2] Abdel Wahab, M. S., ‘Chapter 6: Expedited Institutional Arbitral Proceedings Between Autonomy and Regulation’ in Expedited Procedures in International Arbitration, Dossiers of the ICC Institute of World Business Law (Lévy, L. and Polkinghorne, M., eds, Volume 16, Kluwer Law International; International Chamber of Commerce 2017) 135.

[3] Baltag, C., ‘Chapter 6: Expedited Arbitration Rules for Investment Disputes: ICSID Amendment Process and UNCITRAL Working Group II’ in Stockholm Arbitration Yearbook Series (Calissendorff, A. and Schöldström, P. eds, Volume 2, Kluwer Law International 2020) 88.

[4] UNCITRAL, A/CN.9/WG.II/WP.212, 12; see also UNCITRAL, A/CN.9/969, 2.

[5] UNCITRAL, A/CN.9/WG.II/WP.209, 12.

[6] Case No T6238-10, Judgment of the Svea Court of Appeal, 24 February 2012, 9.

[7] Yas Banifatemi, ‘Chapter 1: Expedited Proceedings in International Arbitration’ in Expedited Procedures in International Arbitration, Dossiers of the ICC Institute of World Business Law (Lévy, L. and Polkinghorne, M. eds, Volume 16, Kluwer Law International; International Chamber of Commerce (ICC) 2017)11.

[8] UNCITRAL, A/CN.9/969, 13; see also White & Case – Queen Mary Arbitration Survey 22, 31, http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2015_International_Arbitration_Survey.pdf (last accessed 27 June 2021).

[9] BXS v. BXT [2019] SGHC (I) 10.

[10] BXS v. BXT [2019] SGHC (I) 10, 12.

[11] Baltag, (n4) 88, see as example: draft provision 4 in UNCITRAL, A/CN.9/WG.II/WP.212/Add. 1, 2.

[12] UNCITRAL, A/CN.9/1010, 20.

[13] See Seraglini, C. and Baeten, P., ‘Chapter 2: Expedited Rules and the Possibility of Immediate Measures once a Tribunal is Constituted’ in Expedited Procedures in International Arbitration, Dossiers of the ICC Institute of World Business Law (Lévy, L. and Polkinghorne, M. eds, Volume 16, Kluwer Law International; International Chamber of Commerce 2017) 36, 37.

[14] ICISD, World Bank Group, Proposals for Amendment of the ICSID Rules — Working Paper #1, Volume 3, ICSID Secretariat (2018) 663.

Author:

Alexander Lojan

Alexander Lojan recently graduated with an LLM in International Commercial Arbitration Law from Stockholm University, and is a student member of the Chartered Institute of Arbitrators.