Financial institutions have long felt that traditional arbitration procedures are not appropriate for the settlement of disputes arising in connection with the provision of financial services because they fail to offer the speed and certainty that business users in the sector require. To meet their needs, the Financial Sector Branch of The Arbitration Club has produced a number of clauses that could serve as the basis for an expedited arbitration procedure to resolve financial services disputes.
The Financial Services Expedited Arbitration Procedure was launched on 30 April 2015. The procedure is freely available for use by parties contemplating the use of arbitration and can be downloaded at http://arbitrationclub.org.uk/financial-sector/eplaunch.
The expedited procedure is designed to be consistent with, and to supplement, the standard rules of the major arbitral institutions including the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the International Center for Dispute Resolution (ICDR), the Swiss Chambers’ Arbitration Institution, and the Hong Kong International Arbitration Centre (HKIAC) (who were all consulted during the drafting of the procedure).
The procedure allows the parties to specify a Tribunal of a sole arbitrator or of 3 arbitrators whilst recognising that it will usually save time and cost if a sole arbitrator is appointed. The procedure also requires that the arbitrator or arbitrators nominated by the parties should have “experience and/or expertise related to financial services”.
The procedure then comprises of a number of clauses which the parties may include in their arbitration agreement. Unless otherwise stated, each clause can stand alone and may be included separately from the other clauses. The clauses, all of which are designed to expedite the arbitration process, include:
- Limiting the time periods for service of pleadings and evidence;
- a hearing to be held only if requested by a party and deemed necessary by the Tribunal, any such hearing to be a single hearing for the resolution of issues of jurisdiction, liability, and quantum, and to be held within 4 months of the formation of the Tribunal;
- the option for the parties to agree that the Tribunal should state the reasons for its award in summary form only;
- a power for the Tribunal to dispense with discovery/disclosure of documents;
- a limit on the length of any pleading, witness statement or expert report to 20 single-sided A4 pages using 12pt Arial font;
- oral evidence of factual or expert witnesses, and hence cross-examination of witnesses, to be admitted only with the agreement of the other party or if ordered by the Tribunal but in exceptional circumstances only;
- an overall timetable for the proceedings which anticipates the handing down of an award within 21 weeks of service of the response to the request for arbitration plus the length of the hearing (where a sole arbitrator is appointed) and 22 weeks plus the length of the hearing if the Tribunal consists of 3 arbitrators.
Expedited arbitration procedures are not new and a number of international arbitral institutions, including the Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC) have incorporated an expedited procedure into their rules. The Financial Services Expedited Arbitration Procedure offers the parties the tools to create a bespoke expedited procedure that is compatible with arbitration rules both in the UK and abroad.
Expedited arbitration procedures can be used to resolve disputes in an efficient and cost-effective manner, but they are not suitable for every type of dispute. Financial institutions will need to consider whether an expedited arbitration procedure is the best way to resolve disputes and take advice from their lawyers on which clauses in the procedure are best suited to the nature of the financial services which they provide. That said, the Financial Services Expedited Arbitration Procedure is to be welcomed as a code of potential measures which can lead to awards in financial services disputes being handed down far more speedily than if the standard arbitration rules of arbitral institutions are relied upon. Furthermore, by requiring the Tribunal to have experience and/or expertise related to financial services, the procedure can be viewed as returning the determination of disputes in a specialised area to experts whose knowledge and expertise gives authority to their determination of the dispute.