The International Court of Arbitration of the International Chamber of Commerce (“ICC”) is one of the world’s preeminent institutions for arbitrating international disputes, including those among or involving individuals, businesses, state and state entities, and international organizations. To help preserve the traditional advantages of arbitration, such as lower costs and time savings, the ICC’s Executive Board recently approved a set of Expedited Procedure Rules (the “Expedited Rules” or “Expedited Procedure”) that will take effect on March 1, 2017. Expedited Procedures already exist under the rules of other institutions such as the Singapore International Arbitration Centre International Arbitration Rules (the “SIAC Rules”) and the Mumbai Centre for International Arbitration Rules (the “MCIA Rules”), among others.
There are several important characteristics of these Expedited Procedure Rules. Some changes may run against the grain of what experienced practitioners and parties have come to expect in the ordinary course of an arbitration proceeding:
- First, the International Court of Arbitration (the “ICC Court”) may appoint a sole arbitrator to constitute the tribunal—as opposed to a panel comprised of three arbitrators, including two party appointed arbitrators and a chairperson—notwithstanding a contrary provision in the underlying arbitration agreement. The parties are free to nominate the sole arbitrator, but in the absence of a nomination, the ICC Court shall appoint one expeditiously.
- Second, the Expedited Rules dispense with the requirement that the tribunal draw up the Terms of Reference. Under the Expedited Rules, parties are still limited in their ability to make new claims without the permission of the tribunal.
- Third, the tribunal shall have the discretion to adopt appropriate procedural measures, which after consultation with the parties, may include deciding not to allow requests for document production, limiting the number, length, and scope of written submissions and witness statements (both fact witnesses and experts), and doing away with a formal hearing involving witness examination, or alternatively, if one is to be held, doing so by videoconference, telephone or other means.
- Fourth, the time limit within which the tribunal must render its final award is six months from the date of the case management conference, which may be extended by the ICC Court on its own initiative or at the request of the tribunal. (This six-month requirement otherwise exists under the ICC Rules, although under the general rules would run from the effective date of the Terms of Reference.)
- Fifth, disputes administered pursuant to the Expedited Rules will be subject to a significantly reduced scale for administrative expenses and arbitrator’s fees.
After March 1, 2017, the default will be that these Expedited Rules shall apply to any arbitration administered under the ICC Rules of Arbitration (the “Rules”) whose underlying arbitration agreement was concluded after March 1, 2017, provided (i) that the amount in controversy is less than US$2,000,000, and (ii) the parties did not specifically disclaim application of the Expedited Rules in their agreement. Regardless of the amount in dispute, parties can affirmatively avail themselves of these procedural mechanisms by expressly agreeing to them in their arbitration agreement or stipulating to their application at the outset of the proceeding. When deciding whether to agree to arbitrate under the ICC Rules in your next commercial agreement, the question therefore must necessarily be: “Do I opt-in” or “Do I opt-out” of the Expedited Rules?
Benefits of New Expedited Rules
The Expedited Rules are designed, in part, to counteract a growing skepticism from the international business and legal communities regarding international arbitration’s ability to provide parties to international disputes with a low-cost and quicker alternative to national court litigation. In promoting the new Expedited Rules, ICC Court President Alexis Mourre stated that they are “an entirely new offer to our users. Disputes will now be resolved on a very expeditious and cost-effective manner, providing an effective answer to the legitimate concerns of the business community as to time and costs.”
The Expedited Rules seek to restore and re-emphasize international arbitration’s most desired characteristics of efficiency and economy in a number of ways. With respect to costs, in addition to reducing parties’ administrative expenses and arbitrator fees, the Expedited Rules limit or eliminate some of the most expensive elements of arbitration, including document production and oral hearings. The Expedited Rules also seek to reduce the duration of a case by mandating that final awards be issued within six months from the initial case management conference, thereby limiting the legal fees and other ancillary expenses that protracted disputes often entail.
The Expedited Rules also seek to improve upon efficiency and economy by appointing, as the default, a single arbitrator to preside over the arbitration. A sole arbitrator will often be able to act more quickly in resolving both substantive and procedural matters than a panel of three or more tribunal members. Any concerns regarding the integrity of a final award issued pursuant to the Expedited Procedure Rules should be mitigated by the fact that the ICC Court and its Secretariat will maintain their strict quality control scrutiny protocol over awards.
Potential Risks Associated with the Expedited Rules
Despite the apparent benefits of the ICC’s new Expedited Rules, the automatic adoption of the Expedited Rules could result in non-consensual revisions to an arbitration clause. Arbitration arises out of the consent of the parties to a dispute. This fundamental principle of party consent is enshrined in a number of legal instruments that provide for the international enforcement of arbitral awards, such as the New York Convention. Problems can arise where the content of an arbitration agreement inadvertently includes provisions that directly contradict the provisions in the Expedited Rules.
In particular, inconsistencies between the content of an arbitration agreement and the content of the Expedited Rules could result in an inoperative clause or a due process challenge from a dissatisfied party. Article II of The New York Convention does not support the recognition of arbitral agreements where they are found to be “null and void, inoperative or incapable of being performed.” Similarly, under Article V of the New York Convention, recognition and enforcement of an award may be denied where a party can prove that it was denied the opportunity to fully present its case, and, as a result, was denied due process.
For example, under the Expedited Rules, the ICC Court has the discretion to appoint a sole arbitrator even when the parties’ arbitration agreement specifies that the dispute be heard by a tribunal of three or more arbitrators. The justification for departing from the parties’ expectations in the underlying arbitration agreement appears to be based on a theory of implied consent, whereby the parties, through their acceptance of the ICC Expedited Rules as the framework for resolving their dispute, are presumed to have allowed for such procedural deviations.
Courts have already faced this issue in the context of the expedited rules of the Singapore International Arbitration Centre International Arbitration Rules (the “SIAC Rules”). The Singapore High Court rejected a challenge to the appointment of a sole arbitrator under the SIAC Rules instead of the three arbitrators stated in the arbitration agreement.
The Expedited Rules may also contradict the express agreement of the parties in that they indicate that tribunals may have the authority to dispense with hearings on the merits of the dispute. Some arbitration clauses actually state that a hearing will take place or can imply it by stating where a hearing will take place. An arbitrator’s dispensation of a hearing that is otherwise contemplated in an arbitration agreement could potentially give rise to a challenge to enforcement with the losing party claiming a due process violation.
In sum, contradictory clauses may result in arbitration proceedings being referred to national courts or refusal of enforcement. Nevertheless, judicial practice under the New York Convention generally places the burden of demonstrating inoperability on a defendant, and courts are also recommended to regard that burden as a “heavy one.”
The new ICC Expedited Rules should be widely welcomed by parties to international arbitration seeking to cut costs and increase efficiency, regardless of the amount in controversy. Nevertheless, given certain innovations in the Expedited Rules, there will likely be disputes concerning the enforceability of arbitral agreements that are inconsistent with the procedures set forth in the Expedited Rules and potentially with awards issued under them. Contrary to the very purpose of the Expedited Rules, this uncertainty could lead some parties to a longer and more expensive dispute than otherwise anticipated. As other institutions adopt similar rules and judicial interpretation becomes more predictable, these issues will fade. Until then, parties must be careful in deciding whether to “opt-in,” “opt-out,” or otherwise go about creating a bespoke arbitration agreement.