The International Chamber of Commerce (ICC) has published a guide on Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives (‘the Guide’).
The guide was issued on 6 June 2014 and may be accessed here. Having regard to the complexity and value of the dispute, the guide aims to provide in-house counsel and other party representatives with a practical toolkit for making decisions on how to conduct arbitration in a time and cost-effective manner (Article 22(1) of the ICC Rules of Arbitration).
This client alert seeks to outline some of the salient points of the guide below:-
A great deal of time and cost can be saved when a negotiated settlement is reached between the parties.
In deciding whether or not to settle, parties may consider the following:-
Preservation of relationships – settlement may support the preservation of an on-going relationship than litigation;
Difficulties of enforcement – a settlement for a lower amount may be appropriate when enforcement is uncertain;
Reasons not to settle – example, settlement may be interpreted as an admission of liability;
Importance of confidentiality – ICC arbitration proceedings are not confidential unless agreed upon by the parties. A settlement may then be preferable compared to arbitration.
If parties have decided to explore settlement, various methods are available to them under the ICC Mediation Rules and these include mediation, neutral evaluation, mini trial or a combination of methods.
Even where settlement is not feasible, the arbitration can be managed in such a way so as to facilitate the settlement throughout the proceedings.
Some of the several case management techniques that can be used include bifurcation, early consideration of controlling issues and engagement of the arbitral tribunal. Case management conference
The case management conference provides the mechanism for determining the manner in which the arbitration will be conducted.
During the course of the arbitration, decisions made at the case management conference can be modified either by agreement of all of the parties or by a decision of the arbitral tribunal.
The arbitral tribunal is required to convene an early case management conference to consult the parties on the conduct of the arbitration (Article 24(1) of the ICC Rules of Arbitration).
The arbitral tribunal and the parties are also required to make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute (Article 22(1) of the ICC Rules of Arbitration).
Thereafter, the arbitral tribunal may adopt procedural measures for the conduct of the arbitration provided that they are not contrary to any agreement of the parties (Article 22(2) of the ICC Rules of Arbitration). Request for arbitration
As it would be prudent for the claimant to make all of its claims prior to the signing of the Terms of Reference, an early assessment of the nature, strengths and weaknesses of its case must be considered by a claimant before filing a Request (Article 4 of the ICC Rules of Arbitration).
The claimant must also decide whether to file a shorter or longer Request depending on the circumstances of the case and strategic considerations.
The guide lists out questions that are to be asked when deciding to file a Request and these include:-
What is the desired result of filing the Request?
Are there any valid reasons for not conducting an early case assessment?
Are there any real cost savings in filing a shorter Request? Would they be outweighed by the benefits of filing a longer Request?
Are there any other strategic or legal considerations that may affect the timing of the filing of the Request and consequently whether it should be shorter or longer? Answer and counterclaims
Once a claimant has filed a Request, the respondent is required to file an Answer with the Secretariat (Article 5 of the ICC Rules of Arbitration).
The Answer must contain the information required by Article 5(1) of the Rules and it may also contain a counterclaim pursuant to Article 5(5) of the Rules.
The question is, how detailed or extensive should the Answer and any counterclaim be?
Some of the questions that may be asked by the respondent before filing the Answer include:-
Are there any real cost savings or any other advantages in filing a shorter Answer? Would they be outweighed by the benefits of filing a longer Answer?
Is there sufficient time to conduct an early assessment of the defence and file the Answer within the 30 days specified in the Rules, or is it necessary to request an extension of time for filing the Answer pursuant to Article 5(2)?
Are there any serious counterclaims that can and should be raised in the arbitration? Should they comply with only the minimum requirements set out in the Rules or be more detailed and accompanies by evidentiary exhibits?
The guide also provides that consideration should be given to whether filing a shorter or longer Answer might facilitate settlement discussions. Multiparty Arbitration
When parties agree, an arbitration having more than two parties may occur under the ICC Rules of Arbitration.
Although a single multiparty arbitration could result in more comprehensive proceedings, avoids the risk of conflicting decisions in separate arbitrations, it could also increase the length and cost of the arbitration.
Question is when is it beneficial to choose a multiparty arbitration?
According to the guide, consideration should be given as to whether a single multiparty arbitration as opposed to two or more separate arbitrations would save time and money.
Consideration should also be given as to whether the time and cost benefits outweigh any of the potential disadvantages if a single multiparty arbitration is opted and whether it would be beneficial to the contractual role of each party and the specific interests flowing from that role.
Early determination of issues
In arbitration, there may be threshold issues or discrete issues to be decided upon.
The issue is in what circumstances would it be beneficial to break out certain issues for early determination by the arbitral tribunal in a partial award?
The guide lists out some questions to ask in considering the issue above:-
Does the case contain any threshold or discrete issues that could be determined in a separate award?
Would the early determination of those issues by the arbitral tribunal be beneficial?
Would early determination (a) potentially resolve the entire dispute, (b) facilitate settlement or (c) simplify the rest of the arbitration? Rounds of written submissions
The length and cost of arbitration may increase with each round of written submissions.
It is therefore important to determine whether, in a particular case, the benefits of an additional round are worth the extra time and cost.
Parties may consider asking the following questions in deciding on how many rounds of written submissions are appropriate:-
Does the case justify the extra time and cost caused by additional written submissions?
Are additional rounds of submissions genuinely useful or necessary for a party to make its case to the arbitral tribunal, and if so, why?
What is the estimated cost of such additional rounds?
Is the benefit worth the cost, and if so, why?
Further, parties may agree or the arbitral tribunal may make an order that the following considerations are also to be taken into account:-
Limiting the number of pages of written submissions.
Limiting the scope of such submissions.
Having the arbitral tribunal indicate issues to focus on.
Whether any subsequent rounds of submissions should be simultaneous or sequential.
Whether post hearing briefs are genuinely useful or necessary. Document production
The extent to which one party may demand another party produce documents is referred to as document production.
As document production can involve substantial time and cost, the guide lists out the following considerations that could be taken into account by the parties:-
Whether it is appropriate to deal with document production in the arbitration clause.
Whether parties could agree to a limited document production in accordance with the IBA Rules or by agreeing to broad document production or “discovery”.
Whether document production should occur once or more than once and whether it should occur prior to or after written submissions.
Whether it is appropriate to limit documents transmitted to the arbitral tribunal to a manageable quantity.
If the parties agree or the tribunal orders the production of electronic documents, special considerations may be needed.