In October 2017, the International Chamber of Commerce (the ICC) published an update to its practice note to parties and arbitral tribunals (the Practice Note), which makes explicit the availability under its current rules of an 'expeditious determination' procedure for 'manifestly unmeritorious claims or defences'. In this Speedread, we take a look at the growing trend for the provision of such summary procedures in arbitration.
What is a 'summary procedure'?
A summary judgment, or expeditious determination, is a procedure whereby a party may apply to have all or some of the claims or defences in the matter dismissed in advance of a full hearing on the merits on the grounds that:
(i) such claims or defences have no real prospect of success; or
(ii) such claims or defences are outside the jurisdiction of the arbitral tribunal.
Availability of summary procedures in arbitral proceedings
Provision for summary procedures already exists under the rules of the various arbitral institutions. Under Article 14.4(ii) of the London Court of International Arbitration (LCIA) rules, for example, the tribunal's general duties include the duty to:
"adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay and expense, so as to provide a fair, efficient and expeditious means for the final resolution of the parties' dispute".
Many institutions have similar provisions, but in practice tribunals are reluctant to use summary procedures to dismiss claims/defences, because of concerns that doing so deprives a party of a fair and reasonable opportunity to put their own case. A disappointed party may challenge the resulting award or seek to resist enforcement.
The Singapore International Arbitration Centre (SIAC) introduced in August 2016 its new Rule 29, which gives parties the opportunity to apply for early dismissal of a claim or defence on grounds that it is "manifestly without legal merit". Safeguards to fairness take the form of the tribunal having discretion as to whether to hear such an application, and, if it decides to do so, to ensure that the parties have "the opportunity to be heard".
The Stockholm Chamber of Commerce (SCC) followed suit in January 2017, with Article 39 providing a relatively broad range of grounds for summary judgment, including on "issues of jurisdiction, admissibility or the merits [of the claim]". Again, each party must be given an "equal and reasonable opportunity to present its case", although the tribunal is not given the opportunity to dismiss an application for summary judgment without a hearing.
Summary procedures in the ICC
The ICC's Practice Note now states that the power to allow 'expeditious determination' of a claim or defence is available under the existing 'broad scope' of Article 22. Article 22 sets out how the arbitral tribunal and the parties should conduct the arbitration, and states that the arbitral tribunal shall "make every effort to conduct the arbitration in an expeditious and cost-effective manner", "adopt such procedural measures as it considers appropriate" and "act fairly and impartially and ensure that each party has a reasonable opportunity to present its case".
The grounds on which such expeditious determination might be founded are that such claims or defences are manifestly devoid of merit, or that they fall manifestly outside the arbitral tribunal's jurisdiction. The tribunal has full discretion as to whether the application should be heard, and, if it allows a hearing, the responding parties are to be given a fair opportunity to rebut the application. A further level of rigor is added to the process, as the ICC Court will scrutinise any award made by a tribunal after a successful application for expeditious determination.
Some pros and cons of summary procedures in arbitration
Clearly the main benefit of successful use of a summary procedure in arbitration is the rapid and early dismissal of a baseless claim or defence, rather than having to go through the time-consuming and expensive process of a full arbitration. Likewise, using summary procedures to narrow complicated disputes by early disposal of certain issues or defences can again help to minimise time and costs, and to crystallise issues between the parties.
Such benefits must, however, be weighed against the potential downsides. Summary procedures can be used tactically, adding another set of proceedings to the full arbitration timetable (possibly disrupting the agreed timetable) and increasing cost, expense and delay – the very mischiefs that summary procedures are intended to address.
There is also, as discussed above, the possibility that any award made under a summary procedure might be open to challenge on the grounds that the losing party was not given a fair opportunity to put forward its case. A risk-averse tribunal might well err on the side of caution and dismiss a deserving application.
The increasing availability of summary proceedings in arbitration is welcome.
In keeping with similar procedures in litigation, any decision to apply for summary judgment should be a carefully considered one. If appropriate, however, considerable time and money can be saved with judicious use of the procedure to target an unmeritorious claim or defence. In the longer term, the availability - and use - of summary determination in arbitration might also help to deter or dismiss spurious or vexatious claims, further increasing the reputation of arbitration as a preferred dispute resolution option for commercial disputes.