In a development that brings welcome and constructive changes to arbitration, the German Arbitration Institute (Deutsche Institution für Schiedsgerichtsbarkeit, or DIS) published a revised version of its Arbitration Rules (2018 DIS Rules), which will take effect on 1 March 2018 and apply to all arbitral proceedings, including, unless otherwise agreed by the Parties, proceedings based on arbitration agreements pre-dating the new rules.
Overhauled in a complex process involving German and international arbitration practitioners and experts including significant input from the CMS arbitration team, the 2018 DIS Rules supersede the 20-year-old 1998 Rules.
Efficiency to be increased
The principal objective of the new rules is to streamline certain aspects of arbitral proceedings. These include reducing the period for nominating the second party arbitrator and the president of the arbitral tribunal from 30 to 21 days.
Under the 2018 Rules, the respondent further has 45 days to file an answer from the time a statement of claim is received, which eliminates a weakness in the previous version under which the deadline for the respondent's answer was not set until the arbitral tribunal had been fully constituted This often resulted in a four-to-six-month delay before the answer was submitted. Although this 45-day period can be extended, this change will significantly accelerate proceedings.
The 2018 DIS Rules encourage the parties and the tribunal to conduct proceedings efficiently, such as requiring that a case management conference be held within 21 days after a tribunal is constituted.
A case management conference allows the tribunal and the parties to set out the procedural timetable, and to discuss how the proceedings can be conducted more efficiently. The 2018 DIS Rules list a number of possible ways of increasing efficiency. These must be discussed in the case management conference. This includes the possibility to conduct expedited proceedings, which are possible under the 2018 DIS Rules, and offer the possibility of reaching a settlement within six months.
Other measures in the new rules for speeding up proceedings and increasing procedural efficiency include:
- Faster formation of the arbitral tribunal.
- Greater use of sole arbitrators.
- Earlier dates for submitting answers and counterclaims.
- On-going procedural management, and discussing ways of increasing procedural efficiency.
- Creating incentives for greater efficiency through new rules on cost decisions for remuneration.
As for awards, under the new rules an arbitral award is to be issued within three months of the last oral hearing or the last authorised submission. If this stipulation is not met, an arbitrator’s fees may be reduced.
DIS to play a more active role
Under the new rules, DIS plays a more active role in the proceedings. In the past, proceedings were largely the responsibility of tribunals, which, inter alia, were responsible for security payments for arbitrators' fees and expenses, and ruled on applications to reject an arbitrator. These and other functions will now be handled by the DIS.
The rules also create a new body, the Arbitration Council (Rat für Schiedsgerichtsbarkeit), which will work in parallel with the existing DIS Appointment Committee, responsible for appointing and selecting arbitrators. The newly created Arbitration Council will make decisions on the following:
- Applications for decisions to be taken by sole arbitrator.
- Refusal and termination of an arbitrator's mandate.
- An arbitrator's fee if a mandate ends prematurely, and an increase in fee for an arbitrator working on an exceptionally complex mandate.
- Review of arbitral tribunal decisions on mandate value and fee reduction owing to delay in issuing awards.
Another helpful simplification is that under the new rules the security for arbitrators' fees and expenses to be provided by the parties at the beginning of proceedings will now be paid to and managed by the DIS and not, as previously, the arbitral tribunal itself.
In conclusion, the new DIS Arbitration Rules introduce a number of welcome changes that reflect recent developments in arbitration practice, and provide a contemporary and flexible framework for improving the efficiency of arbitral proceedings.
These progressive new rules are expected to enhance the appeal of the DIS, and lead to wider incorporation of DIS Arbitration Rules in contracts and agreements, and a further rise in the number of DIS arbitration proceedings.