New "Expedited Procedure" aims to fast-track lower value disputes.
On 4 November 2016, the International Chamber of Commerce (ICC) released amendments to its Arbitration Rules (the 2016 Rules), which will come into effect on 1 March 2017. The most significant change is the introduction of an "Expedited Procedure". This is a streamlined, "fast track" procedure that aims to resolve lower value disputes within six and a half months of transmitting the file to the tribunal. The ICC has also made other amendments to its arbitration rules designed to increase transparency in ICC Court decision-making and efficiency of the arbitral process.
The ICC's Expedited Procedure Rules
Article 30 and Appendix VI of the 2016 Rules introduce a new, streamlined procedure for resolving disputes with a value of US$2 million or less (although parties can also agree to use the procedure for other disputes).
Salient Features of the Expedited Procedure
The ICC's Expedited Procedure departs from the traditional ICC arbitration procedure in significant respects, all with a view to efficiency and expedition. Notably, in an arbitration under the Expedited Procedure, the:
- ICC Court is empowered to appoint a sole arbitrator to hear the dispute, notwithstanding any contrary provision in the arbitration agreement (Appendix VI, Article 2(1))
- Tribunal has discretion to adopt such procedural measures as it considers appropriate, and in particular may decide not to allow document production, or may limit the length and scope of written submissions, witness statements and expert reports (Appendix VI, Article 3(4))
- Tribunal may decide the dispute solely on the basis of the documents submitted by the parties, without holding a hearing (Appendix VI, Article 3(5))
- Terms of Reference are dispensed with (Appendix VI, Article 3(1))
- Tribunal must hold the case management conference within 15 days of the date on which the file was transmitted to the tribunal (Appendix VI, Article 3(3)), and must render the award within six months of that conference (Appendix VI, Article 4), although the ICC Court can extend either time limit
- Tribunal's fees are calculated on an ad valorem basis, but the fee scale is reduced relative to a standard ICC arbitration (Appendix VI, Article 4 and Appendix III)
When Does the Expedited Procedure Apply?
The Expedited Procedure will apply automatically to disputes with a value of US$2 million or less,1 unless the:
- Arbitration agreement was concluded before 1 March 2017 (when the 2016 Rules come into effect)
- Parties have opted out of the Expedited Procedure
- ICC Court determines that it is inappropriate in the circumstances to apply the Expedited Procedure2
Parties may also choose to apply the Expedited Procedure rules to other disputes.3
Benefits and Challenges
While the fees that the ICC and tribunals appointed in ICC arbitrations charge vary according to the amount in dispute, the overall time and costs of pursuing an ICC arbitration (and, in particular, the fees of the parties' counsel) under the normal rules can sometimes be disproportionate if the amounts in issue are relatively low. In the last several years, a number of arbitral institutions have sought to provide for a quicker and cheaper, more streamlined arbitration procedure for relatively low value disputes. The ICC's new Expedited Procedure is the latest of these "fast-track" procedures.
The amended ICC Rules effectively presume disputes falling at or below the US$2 million threshold are better suited to the Expedited Procedure, unless the parties agree or the ICC Court determines otherwise.
Parties can also agree upon the Expedited Procedure for disputes over the US$2 million threshold. Parties may do this, for example, if they believe their disputes are relatively straightforward or they are simply content with a shorter, quicker, process. However, this will require specific agreement.
The challenge for arbitrations conducted under the Expedited Procedure will be to ensure that the procedure adopted does not fall foul of any due process requirements at the seat of arbitration or place of enforcement. As with any arbitration, the tribunal will be required to ensure that the parties are treated equally and given the opportunity to present their case and respond to the case against them.4 All the major legal systems (and arbitral rules) require a tribunal to observe due process requirements and a failure to do so, including potentially the failure to hold a hearing if so asked by a disputing party, 5 could put the resulting award at risk of being set aside at the seat of the arbitration, or render the award unenforceable in the jurisdiction(s) in which enforcement is sought.6
The particularities of each case will determine what is needed to comply with these due process requirements and whether the tribunal will be able, for example, to limit the length and scope of the parties' submissions and factual and expert evidence in practice. The most controversial power under the Expedited Procedure is perhaps that of the tribunal to dispense with a hearing it considers unnecessary. The English Arbitration Act is clear that a tribunal has the power to dispense with a hearing unless otherwise agreed by the parties.7 However, the position may not be so clear in some other jurisdictions, where the right to a hearing may be considered a due process right that parties cannot give up in advance by selecting the ICC Rules.8
Other Measures to Increase Efficiency and Transparency
The ICC has made other changes to its rules, including some designed to increase efficiency and transparency in the arbitral process. The principal changes are:
- Reduced time to prepare the Terms of Reference. A distinctive feature of ICC arbitration is the use of Terms of Reference, which are intended to provide a framework for the arbitration. The Terms of Reference contain some procedural parameters for the dispute, as well as the particulars of the parties' respective claims and the relief sought.9 In practice, the Terms of Reference are typically drawn up in concert between the parties and the tribunal.10 Under the 2012 ICC Rules, the parties and the tribunal had two months from the date on which the file was transmitted to the tribunal to complete this exercise; this time period has now been reduced to 30 days (although it can still be extended where appropriate).
- Improved transparency in ICC Court decision-making on the appointment of and challenges to arbitrators. The ICC has amended Article 11(4) of the ICC Rules to allow the ICC Court to communicate reasons for its decisions as to the appointment, confirmation, challenge or replacement of an arbitrator to the parties. Under the 2012 Rules, the ICC Court could only do this with both parties' consent. However, ICC users have called in recent years for improved transparency in arbitral institutions' decision-making, in particular regarding appointment of and challenges to arbitrators.11 The amendment to Article 11(4) responds to those calls.
- Increased filing fee. The fee for filing a Request for Arbitration with the ICC has increased from US$3,000 to US$5,000.
The ICC Rules are often viewed as providing a heavily administered and full procedure suitable for the most significant international disputes. The Expedited Procedure ushers in a new era for ICC arbitration by introducing a separate, simplified procedure, which may be more appropriate for many lower value disputes. Parties can elect the simplified procedure for higher value disputes if they choose, and similarly, the ICC Court can return to the normal process for lower value disputes if that appears more appropriate. Parties accustomed to ICC arbitration must understand that if the value of their dispute falls below the threshold, under the amended rules the Expedited Procedure will be the default, not the full procedure they may otherwise have expected.