Australia: Expedited arbitration: Asia-Pacific Institutional Rules – Overview and comparative table guide

Expedited Arbitration is an arbitral mechanism that provides for fast and efficient resolution of certain arbitral disputes.

This article briefly examines the institutional rules of:

  • the Australian Centre for International Commercial Arbitration (ACICA);
  • the Hong Kong International Arbitration Centre (HKIAC);
  • the Singapore International Arbitration Centre (SIAC);
  • the Asian International Arbitration Centre (AIAC – formerly KLRCA);
  • the China International Economic and Trade Arbitration Commission (CIETAC); and
  • the International Chamber of Commerce (ICC).

We have also developed a comparative table of the Expedited Procedure provisions of the above institutions, which is available for download here.

WHAT ARE THE KEY TAKEAWAYS?

  • Parties appear to have an appreciation of the benefits flowing from the use of Expedited Procedure, with statistics confirming that its use is on the rise.1 Certainly, it appears to be much better understood and utilised than Emergency Arbitration.
  • By adopting Expedited Procedure provisions, the deadline for the delivery of an award ranges from 3-6 months, depending on the institution. The HKIAC has recently reported that, on average, the mechanism can reduce the duration of an arbitration proceeding by 50%. 2
  • Parties should be aware that the default position under some institutional arbitral rules is that if the dollar value of a dispute is sufficiently low (ranging from US$1m-$6m), the Expedited Procedure may be engaged.
  • Notably, the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules do not feature an Expedited Procedure.

IS EXPEDITED ARBITRATION APPLICABLE TO MY DISPUTE?

There are a range of subtle differences that exist between the different institutional rules.

According to the 2017 ICC Rules of Arbitration, the Expedited Procedure will automatically apply to all arbitration agreements which were signed on, or after, 1 March 2017 if one of two criteria are satisfied,3 and irrespective of whether or not contrary terms are present in the arbitration agreement.4

The first of these criteria is where the amount in dispute is less than US$2m.5 The second is where, irrespective of the amount in dispute, the parties opt in.5 Clauses such as the latter further enhance the already significant level of party autonomy and control present in arbitration.

Instances where the mechanism is not applicable include:

  • arbitration agreements which were concluded before 1 March 2017, where the parties have agreed to opt out; or
  • where the ICC Court determines that Expedited Procedure is 'inappropriate in the circumstances'.7 It is noted that the ICC Court may, at any time, exercise its discretion to abandon the mechanism either of its own volition, or in response to a request from a party. 8

ACICA, HKIAC, and SIAC take a different approach to the engagement criteria in the ICC Rules. First, each have an amount in dispute threshold which is significantly higher than what the ICC has prescribed in its rules – ACICA (AUD$5m),9 HKIAC (HKD$25m),10 and SIAC (S$6m). Second, they all include a third route – where parties are able to demonstrate a case of 'exceptional urgency'. 11

Of all the institutions covered in this article, CIETAC has the most restrictive threshold (RMB$5m), and like the ICC Rules it does not include the criterion of 'exceptional urgency'. It is worth highlighting that CIETAC has adopted the term 'Summary Procedure' in place of the more commonly used term 'Expedited Procedure'. The AIAC refers to its Expedited Procedure provisions as 'Fast Track Arbitration Rules', and the only criteria is where parties have agreed to refer to arbitration, whether before or after the dispute. 12

As CIETAC and ICC have a more restrictive threshold, this naturally leads to the situation where less arbitrations automatically proceed via the Expedited Procedure route. SIAC changed its monetary threshold from SGD$5m to SGD$6m to allow more parties to make use of this mechanism. It will be interesting to see if the ICC or CIETAC follow suit in future revisions to their arbitration rules.

Interestingly, each institution has also situated Expedited Procedure provisions among its respective standard arbitration rules. Most institutions embed provisions within the main arbitration rules (as a standalone clause or via an appendix). ACICA and KLRCA both consider them as a separate set of rules. While ACICA has incorporated the rules into the same document, the AIAC's Fast Track Arbitration Rules are an entirely separate document (effective as of 9 March 2018). As AIAC also published a revised version of its standard arbitration rules on the same date, it remains surprising that the two sets were not amalgamated. This may end up being the new approach – something we may see when the HKIAC publishes its latest rules, likely towards the end of 2018.

HOW EFFICIENT IS AN EXPEDITED ARBITRATION?

Although international arbitration is generally regarded as a highly efficient method of dispute resolution, Expedited Arbitration imposes stricter deadlines on parties, institutions, and tribunals, further enhancing the speed at which disputes can be resolved.

Arbitral institutions promote Expedited Procedure as a solution to party complaints regarding delays and excessive costs. It is also beneficial to SMEs who often cannot justify the expenses associated with a standard arbitration.

As with Emergency Arbitration, the tribunal is faced with a two competing tensions – the urgency of delivering an award, and allowing a party sufficient time to present its case. Recently, institutions have tended to recognise that urgency is often more important to parties, and as a result have abbreviated certain time limits.13 Some of these include:

  • Number of arbitrators and appointment process – institutional rules have sought to address procedural inefficiencies associated with the arbitrator appointment process by referring the dispute to a sole arbitrator. The ICC,14 CIETAC,15 and HKIAC16 rules allow parties to deviate from the default provision via mutual agreement, while the SIAC Rules only allow the President of SIAC to determine otherwise.17 The ACICA Rules only allow for a sole arbitrator, which ACICA must appoint within 14 days from the commencement of the arbitration.18 In a standard arbitration, it may take well over 40 days for a sole arbitrator to be appointed, and perhaps longer where there is a panel of arbitrators.19 In contrast, CIETAC's Summary Procedure reverts back to the appointment process in the standard provisions, where parties may jointly nominate the arbitrator, or agree to allow the Chairman of CIETAC to do so. The rules suggest this must be finalised within 15 days.20 The AIAC Fast Track Arbitration Rules now allow the parties to choose the number of arbitrators, but if they fail to do so a sole arbitrator will preside over the case.21 The previous approach was to refer to a sole arbitrator as the default, but required parties to agree in writing within 7 days of the commencement of the arbitration. 22
  • The overall benefit (from an efficiency/speed perspective) of proceeding with a sole arbitrator in simple cases, cannot be overstated. As there are less parties to consult, hearings dates can be agreed to promptly and there is no need to consult with other tribunal members during the arbitration regarding procedural issues, nor is there a need to discuss, or draft, a joint award with other tribunal members. This ensures that the final award may be delivered promptly. However, a sole arbitrator may not be suitable where disputes are highly complex and require the expertise of a panel of three or more arbitrators.

  • Rendering of final award – by adopting Expedited Procedure provisions, the deadline for the award ranges from 3-6 months, depending on the institution. This is significant as awards from standard arbitrations have in some instances only been rendered after a few years. If parties adopt the ACICA rules (4-5 months), time begins to run from the date the Arbitrator was appointed. SIAC (6 months) adopts the approach where time beings to run from the date the Tribunal is constituted. This is an important consideration as the date of appointment may often be different to the date of the constitution of the tribunal, particularly where there is a panel of arbitrators. HKIAC Rules (6 months) provide that time begins to run from the date the file was transmitted to the arbitral tribunal. CIETAC (3 months) is the shortest of the three, where time begins to run from date the arbitral tribunal is formed. Interestingly, ICC (6 months) adopts a different approach and provides that time begins to run from the date of the case management conference.23 According to Article 24, the tribunal must convene this conference no later than 15 days from the date the file was transmitted to the tribunal.24

Expedited Procedure often allows for extensions of time limits, which assist where deadlines cannot realistically be met by parties or the arbitral tribunal, particularly in complex disputes.

This then raises the question: how is Expedited Procedure any different to a standard arbitration if such extensions are granted?

CURRENT STATISTICS

Expedited Procedure is being utilised at an entirely different rate across arbitral institutions:

  • SIAC's latest statistics report a total of 414 applications between 2010 and 2017.25 Of those applications, 236 were accepted (57%). In 2017 alone, SIAC received 107 requests, 55 were accepted (51%).
  • HKIAC's latest statistics report a total of 15 applications in 2016.26 Of those applications, 8 were granted (53%). The HKIAC has published a report on the costs and duration of arbitrations, confirming that the average27 cost28 of an expedited arbitration (US$35,056) was less than one third of a standard arbitration (US$117,045).29 It was also reported that the duration was exactly half that of a standard arbitration (8.1 months).30
  • The ICC amended its rules, effective 1 March 2017, to include provisions for Expedited Procedure.31 The ICC's latest statistics indicate that 50 requests to opt in were submitted and of these 10 resulted in an agreement, with three cases already concluded by the prescribed six-month time limit.

WHEN SHOULD THE EXPEDITED ARBITRATION ROUTE BE USED?

Expedited Arbitration may automatically apply to your dispute. If your dispute value is higher than the prescribed threshold, you may still be able to agree to proceed with this mechanism.

Expedited Procedure is most suited to parties primarily concerned with the duration and costs associated with resolving their disputes as expedited arbitration will, largely, relieve these concerns. However, parties seeking immediate interim relief should opt for emergency arbitration. Refer to our Emergency Arbitrator Provisions.

Ultimately, parties must be aware that these arbitral mechanisms, along with others such as Early Dismissal of Claims and Defences32and the proposed Early Determination Procedure33 serve an entirely different purpose. Expedited Procedure may not be suitable to your dispute. Parties must seek proper legal advice to accommodate the specific nature of each case.

The Corrs Chambers Westgarth International Arbitration team has prepared an Asia Pacific Guide on Expedited Procedure Provisions (2018–19), covering the following rules:

  1. ACICA (2016)
  2. HKIAC (2013)
  3. SIAC (2016)
  4. AIAC (2018)
  5. CIETAC (2015)
  6. ICC (2017)

Footnotes

1Though it is interesting that the 2015 International Arbitration Survey (Queen Mary and White & Case) did not report on Expedited Procedure. See http://www.arbitration.qmul.ac.uk/docs/164761.pdf.

2 http://www.hkiac.org/content/costs-duration. Mean quoted.

3 Article 30.2, 2017 ICC Rules of Arbitration.

4 Article 30.1, 2017 ICC Rules of Arbitration.

5 Article 30.2(a), 2017 ICC Rules of Arbitration.

6 Article 30.2(b), 2017 ICC Rules of Arbitration.

7 Article 30.3, 2017 ICC Rules of Arbitration.

8 Appendix VI, Article 1.4, 2017 ICC Rules of Arbitration.

9Article 7.1(a), 2016 ACICA Arbitration Rules.

10Article 41.1(a), 2013 HKIAC Administered Arbitration Rules.

11 Article 7.1(c), 2016 ACICA Arbitration Rules; Article 41.1, 2013 HKIAC Administered Arbitration Rules; Rule 5.1, 2016 SIAC Rules.

12 Rule 1(1), 2018 AIAC Fast Track Arbitration Rules.

13 Note Article 41.2(c) of the 2013 HKIAC Administered Arbitration Rules provides HKIAC with a broad discretion to shorten any time limits.

14 Article 2.1, Appendix VI, 2017 ICC Rules of Arbitration.

15 Article 58, Chapter IV, 2015 CIETAC Arbitration Rules.

16Article 41.2(a), 2013 HKIAC Administered Arbitration Rules.

17Rule 5.2(b), 2016 SIAC Rules.

18 Article 8.1, ACICA 2016 Expedited Arbitration Rules.

19 Article 11.1, ACICA 2016 Arbitration Rules.

20 Articles 58, 27, 28, 2015 CIETAC Arbitration Rules.

21 Rules 4(2),(3), 2018 AIAC Fast Track Arbitration Rules.

22 Article 4(1), 2013 KLRCA Fast Track Arbitration Rules.

23 Appendix VI, Article 4.1, 2017 ICC Rules of Arbitration.

24 Appendix VI, Article 3.3, 2017 ICC Rules of Arbitration.

25 http://www.siac.org.sg/images/stories/articles/annual_report/SIAC_Annual_Report_2017.pdf.

26http://www.hkiac.org/about-us/statistics.

27 Mean quoted.

28 These figures only take into account the arbitral tribunal's fee as well as HKIAC's registration fee and administrative fee.

29http://www.hkiac.org/content/costs-duration.

30 Mean quoted.

31 https://iccwbo.org/media-wall/news-speeches/icc-announces-2017-figures-confirming-global-reach-leading-position-complex-high-value-disputes/.

32 http://www.siac.org.sg/our-rules/rules/siac-rules-2016#siac_rule29.

33 http://www.hkiac.org/news/revision-2013-administered-arbitration-rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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