While the current trend amongst arbitral institutions is to introduce fast-track rules for smaller cases to speed up the process and reduce costs, the latest stats from the LCIA reveal this is happening despite their lack of any expedited rules. The LCIA Report “Costs and Duration: 2013 – 2016” shows that in claims below USD 1m they are appointing sole arbitrators who manage the cases efficiently without the need for special rules designed to speed them up. These smaller cases last 9 months on average, whereas the larger cases last 16 months. This is welcome news, particularly for SMEs, where costs of arbitration have, like litigation, all too often been disproportionate to the sums in dispute.
Many institutions have introduced fast-track procedures to address criticism that arbitration is too slow and too expensive for smaller claims. These broadly followed two approaches. The first, described as opt-in, requires an explicit agreement to fast-track arbitration, either in the arbitration clause or in the submission agreement. The Kuala Lumpur Regional Centre for Arbitration (KLRCA) Fast Track Arbitration Rules 2013 is a good example of this approach. The second, opt-out approach has been adopted by the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC) and the International Chamber of Commerce (ICC). Their fast-track procedures are mandatory for claims up to a range of values - HKD 25m under the HKIAC Administered Arbitration Rules 2013, SGD 6m under the SIAC Rules 2016 and USD 2m under the ICC Rules of Arbitration 2017. In all cases the parties can also choose to use the expedited procedure for higher value cases, or parties can agree to opt-out.
These rules are commendable, and it would seem that they are influencing the speed of arbitrations even when no expedited rules apply. The expedited rules are relatively new, so little information is available to conclude whether they are more effective than arbitrators’ adoption of free-style expedition. It will be interesting to see the reports from the other institutions if this is reflected in their statistics.
The LCIA Approach
One of the criticisms of opt-out rules is their mandatory application unless the parties opted out when entering into the arbitration agreement. In a recent survey by Queen Mary University of London and White & Case, 92% of respondents favoured simplified rules but only 33% were happy with their mandatory application for smaller claims, whereas 59% only wanted them as an option to apply if both parties agreed after a dispute had arisen. The fact that the LCIA does not have such a scheme whilst many others do makes the lack of such a scheme a distinguishing feature, and it will be interesting to see whether this becomes an advantage or a disadvantage.
The LCIA makes a virtue out of the absence of a mandatory scheme and focuses on the adaptability of its Arbitration Rules 2014 by suggesting in its FAQs that “should the parties wish to provide, in their contract, for fast-track arbitration, the LCIA will provide recommended clauses for this purpose.”
This is the latest example of competition between the arbitral institutions to attract users leading to continual innovation, giving users more choices and better solutions.