Arbitration is supposed to offer a swift and efficient solution to disputes. In countries where arbitration is institutionalised, the reduced length of arbitration proceedings in comparison to proceedings before regular courts remains the basic principle and goal. The potential speed of arbitration proceedings is generally one of the main reasons why parties will agree to arbitration in their contracts.
A well known type of arbitration in The Netherlands is institutionalised by the Netherlands Arbitration Institute (NAI), which incorporates several provisions into its arbitration rules that are meant to ensure that proceedings are dealt with swiftly. One of these provisions places an obligation on the arbitral tribunal to render its decisions with all due dispatch. However, the arbitration rules of the NAI contain no sanction for any breach of the rules. Therefore, a question arises as to the options available to the parties in an arbitration where they are faced with an arbitral tribunal that manages the arbitration in an unacceptably slow manner.
In a recent NAI arbitration one of the parties faced exactly this problem. Although the average duration of NAI arbitration is nine months, in this particular case, after two and a half years only an interim decision had been rendered, and the proceedings were likely to last at least another year. The tribunal admitted to being at least partially responsible for the delay, having been reprimanded twice by the NAI itself and also once by a party to the arbitration proceedings.
The Netherlands Arbitration Act ("the Act") mandatorily applies to any arbitration that takes place in The Netherlands. Article 1031 of the Act states that on the request of a party, the (regular) court can, taking all circumstances into account, terminate the arbitral tribunal's mandate if the tribunal has carried out its mandate in an unacceptably slow manner, and has already been subject to a repeated reminder. If the mandate is subsequently terminated, the competence of the regular courts is revived, unless a new arbitration agreement is entered into between the parties.
This provision had never previously been relied upon, and so when such a request was made to the Court of Rotterdam last year, it had to be dealt with without recourse to precedent.
Although the Court of Rotterdam acknowledged that the delay in the proceedings was 'unheard of', it saw particular relevance in the requirement of repeated reminder. Although Article 1031 of the Arbitration Act is silent with regards to who should send reminders to the tribunal, the Court decided that the legislator must have intended this to mean the party making the request. As this party had urged the tribunal only once, the request was eventually rejected, despite the fact that the NAI had also reminded the tribunal twice.
The question is whether the court's decision deserves any applause. As (unsuccessfully) argued in this case, a party to arbitration will generally be very reluctant to urge the arbitrators in a case where that party is dependent on the same arbitrators' decisions.