Following the constitution of the arbitral tribunal, it is common that a meeting or telephone conference is arranged with the parties to discuss the timetable and applicable rules for the proceedings. This normally results in the arbitral tribunal's first procedural order. During the course of the proceedings the arbitral tribunal may issue several other procedural orders, including orders regarding:
- the production of documents;
- the admission or refusal of evidence; or
- amendments to previous orders.
The Arbitration Act distinguishes between awards and decisions or orders. Substantive issues are determined by an award, while determinations that do not concern the merits of the case (eg, procedural issues) are made by decisions. Procedural orders are categorised as decisions. This means, as a starting point, that they are not final and binding.
The arbitral tribunal has wide discretion to decide on the conduct of the arbitral proceedings. Most of the procedural orders may therefore be changed by the arbitral tribunal (eg, a decision to refuse certain evidence), while some are irreversible (eg, a decision that discharges an arbitrator).
However, it has been debated in several cases whether a procedural order may reflect an agreement between the parties and, therefore, that the arbitral tribunal cannot amend such an order without exceeding its mandate or otherwise committing a procedural error, which may result in the setting aside of the award. The Svea Court of Appeal in Stockholm clarified these issues in URETEK Worldwide Oy v Doan Technology Pty Ltd(1) and Cypress Oilfield Holdings Limited v China Petrochemical International Company Limited.(2)
In URETEK the claimant argued, among other things, that what the parties had agreed on during a telephone conference with the arbitral tribunal regarding procedural matters, and which was subsequently reflected in a procedural order, was a determination of the mandate of the arbitral tribunal. Therefore, the claimant argued that it could not be amended by the arbitral tribunal. The procedural orders in question concerned the summoning of witnesses to the hearing and the cut-off date for new submissions and evidence. The first procedural order included a provision to the effect that the procedural order may be amended or supplemented, and the procedures for the conduct of the arbitration could be modified by further directions or procedural orders.
The court stated that "in most cases, a 'procedural order' does not reflect an agreement between the parties, but instead is an administrative decision made by the arbitral tribunal". It further stated that "it is clear that each individual administrative decision cannot, irrespective of whether or not it is rendered after the parties have agreed on the issue, always be construed as a determination of the arbitral tribunal's 'mandate'". The court referred to Gary B Born in International Commercial Arbitration(3) in this regard.
The court concluded that the decisions in the procedural orders were not determinations of the arbitral tribunal's mandate, and thus amendments of these procedural orders did not constitute an excess of mandate.
Referring to the express provision in the procedural order that it may be amended by the arbitral tribunal, the court went on to say that the arbitral tribunal did not commit any other procedural error on this ground.
In Cypress the claimant argued, among other things, that the arbitral tribunal had no right to review previous procedural orders regarding production of documents, cut-off dates for new evidence and dismissal of evidence. The arbitral tribunal had expressly stipulated in its first procedural order that it could be amended.
As in URETEK, the court stated that a procedural order is not necessarily a record of the parties' agreement and is therefore not always a determination of the arbitral tribunal's mandate. The court concluded that the arbitral tribunal was entitled to review its earlier procedural orders and that the tribunal had not exceeded its mandate or committed a procedural error in this regard.
The principle of party autonomy applies in arbitration law. According to this principle, the arbitral tribunal must comply with the parties' agreement on how arbitration should be conducted. Therefore, should the arbitral tribunal disregard such an agreement between the parties, it would be a starting point to constitute an excess of mandate or another procedural error, which may result in the setting aside of the award.
However, it follows from URETEK and Cypress that a procedural order issued by the arbitral tribunal is not necessarily an expression of an agreement between parties. Therefore, procedural orders do not always determine the mandate of the arbitral tribunal. This may also apply when a procedural order has been issued after consultation with the parties (eg, at a procedural conference).
However, it appears from the two judgments that the conduct could potentially have constituted procedural errors were it not for the provision in the procedural orders that the arbitral tribunal reserved the right to amend the orders. To avoid challenges on the ground that a procedural order has been amended, it is recommended that arbitrators include an express provision in the first procedural order that the arbitral tribunal has the right to modify decisions and orders regarding the procedure of the arbitration.
For further information on this topic please contact Fredrik Norburg or Catarina Rivero Lira at Norburg & Scherp by telephone (+46 8 420 035 00) or by email ([email protected] or [email protected]). The Norburg & Scherp website can be accessed at www.norburgscherp.se.
(1) Case T 975-15, December 16 2015. See www.arbitration.sccinstitute.com/dokument/Court-Decisions/2690167/Judgment-in-the-Court-of-Appeal-16-December-2015-Case-No-T-975-15?pageid=79572 (unofficial English translation).
(2) Case T 5296-14, February 19 2016.