Arbitral institutional rules have been developing in a way to encourage parties to deal with substantive issues on a preliminary basis. They have been developing their arbitration rules to reflect the complexities of large scale, document intensive matters.
Traditionally, when thinking about the advantages of arbitration compared to litigation, proponents of arbitration refer to the cost, speed and flexibility that arbitration affords parties However, in the midst of arbitral proceedings, parties may find that these benefits are lost as a result of extensive documentary and witness/expert evidence which, perhaps more often than not, can characterize commercial disputes.
These barriers to the benefits of arbitration that may be lost to parties arbitrating complex multi-issue disputes have not gone unnoticed by arbitral institutions.
Some of these institutes have developed rules, in addition to those that provide for interim and emergency relief, to permit a party to seek the early disposition of issues before the Tribunal. For example:
1. Rule 5.1.1 of the ADR Institute of Canada (ADRIC) Arbitration Rules 2016 empowers the Tribunal to make awards of substance on both an interim and final basis.
2. Rule 41(5) of the International Centre for Settlement of Investment Disputes (ICSID) arbitration rules provides an expedited procedure to dispose of a claim which is “manifestly without legal merit”.
3. Rule 29 of the Singapore International Arbitration Centre (SIAC) arbitration rules 2016 allows a party to apply to the Tribunal for early dismissal of a claim or defence on the basis that “the claim or defence is manifestly without legal merit” or “outside the jurisdiction of the Tribunal”.
In practice, the effect of these rules is to allow parties to have elements of their claim determined at an early stage rather than waiting for the final award. Of course, certain issues will be more appropriate than others to be dealt with at an early stage. However, once there is clarity regarding the issues in dispute, the parties would be well served to carry out an assessment as to whether there are any issues which can be resolved early in the proceedings.
Advantages of the early resolution of issues
It is possible that the parties will not agree as to whether an issue should be dealt with on a preliminary basis. One party may feel that it is best for all issues to be heard together as opposed to carving out a specific issue for consideration by the Tribunal. In those cases, it will be for the Tribunal to decide whether there is merit in considering all issues or a specific issue at an early stage.
Whether the parties apply to the Tribunal on a joint basis or one party approaches the Tribunal on its own, the benefits of having issues dealt with on a preliminary basis will depend on the nature of the case. In addition to making the overall proceedings more efficient, there can also be tactical advantages to having substantive issues addressed early in the proceedings, including:
1. Gaining insight into the “thinking” of the Tribunal at an early stage. This will particularly be the case if there is a “live” hearing to deal with the preliminary issue. However, even if the issue is addressed in writing it will be possible to get a sense of the perspective of the Tribunal.
2. Gaining momentum as a result of an early “win”. A party that believes it has a very strong position in relation to a certain issue could bolster the morale of its team by succeeding on a preliminary issue.
3. Encouraging settlement discussions. Depending on the nature of the issue, it is possible that when parties consider dealing with issues on a preliminary basis it may focus their minds on the strengths and weaknesses of their own case and push them in the direction of settlement.
The early resolution of issues may not be appropriate in all cases. However, as part of the parties’ overall case assessment they should be considering their own position on each issue and how that can be addressed in the most efficient and practical way. Over the course of arbitral proceedings, the early resolution of issues(s) could alleviate some frustration which parties can experience as they tackle a complex claim.