United States: ICC Rules: New Expedited Procedure

 The new expedited arbitration procedure under the ICC Rules of Arbitration (the "ICC Rules") will come into force on 1 March 2017.

The expedited procedure, which will automatically apply to claims not exceeding US$2 million in respect of arbitration agreements concluded on or after 1 March 2017, offers parties a welcome opportunity to resolve disputes in a more expeditious and cost-effective manner.

However, the procedure may not suit all contractual relationships or types of disputes, and so parties should consider carefully whether other institutional rules may be more appropriate to their particular circumstances, or whether they need to expressly 'opt-out' of the expedited procedure regime.

WILL THE EXPEDITED PROCEDURE APPLY TO ME?

If the agreement to arbitrate was concluded prior to 1 March 2017, then the new procedure will not automatically apply to you. However, parties are free to agree to adopt the procedure at a later date (for example, at the onset of a dispute) if they so choose.

If you are a party which is in the process of drafting an arbitration agreement that will likely become effective on or after 1 March 2017 and which incorporates the ICC Rules, then the new procedure will automatically apply to claims that subsequently arise which do not exceed US$2 million in value. If the sums in dispute exceed US$2 mil-lion, then the standard procedure will apply. However, the ICC Court can, on its own initiative or upon an application by a party, decide that the expedited procedure is un-suitable for a particular dispute.

Parties can agree to 'opt-out' if they do not want the expedited procedure to apply. They can do so either by excluding the procedure in the arbitration agreement, or by agreeing (again, in the arbitration agreement) that it shall not apply in relation to a particular category/type of dispute. Parties can also agree to 'opt-in' if the expedited procedure would not otherwise apply. Such provisions should, however, be drafted with great care to avoid 'satellite' disputes and the deployment of dilatory tactics in relation to which process applies.

WHAT WILL BE DIFFERENT ABOUT THE ARBITRATION PROCEEDINGS IF THE EXPEDITED PROCE-DURE DOES APPLY?

The ICC's intention is that proceedings should be shorter, more efficient and cheaper than if they were conducted under the standard procedure. Whilst many of the standard provisions of the ICC Rules will still apply, the expedited procedure (set out at Appendix VI of the ICC Rules) makes the following changes in particular:

  • The Tribunal may (after consultation with the parties) decide the dispute on the documents alone (i.e. without a hearing, document production or the examination of witnesses and experts);
  • The ICC Court will appoint a sole arbitrator within a time limit set by the ICC Secretariat, even if the arbitration agreement provides for a three-member tribunal;
  • The Award must be rendered within six months of the Case Management Conference (unless extended by the ICC Court based on reasoned requests by the Tribunal). However, Awards are still subject to the scrutiny of the ICC Court before publication, which, in practical terms, is likely to mean that the Tribunal will need to conduct the proceedings and finalise the Award in considerably less than six months;
  • The Case Management Conference should be held within 15 days of the date on which the file is sent to the Tribunal;
  • No Terms of Reference need be established;
  • The parties cannot introduce new claims after the Tribunal's appointment unless authorised to do so by the Tribunal;
  • A reduced fee scale (set out in Appendix III of the ICC Rules) will ap-ply, which is anticipated to be approximately 20% lower than as is the case for the standard procedure; and
  • The Secretary General may require the claimant to pay a provisional amount to cover the costs of the arbitration up to the Case Management Conference.

HOW IS THIS DIFFERENT TO OTHER INSTITUTIONAL RULES?

Most of the major institutions have now included an expedited procedure for smaller claims (including ICDR, SIAC, SCC and HKIAC). Whilst the ICC Rules broadly mirror those other fast track procedures, there are some notable differences:

  • The expedited procedure does not apply automatically under the SIAC, HKIAC and SCC Rules (which only provide parties with the right to re-quest that the expedited procedure should apply, if certain financial thresholds are met).
  • The relevant financial values vary between institutional rules - the threshold under the ICDR Rules is US$250,000, while under the SIAC Rules and HKIAC Rules it is, respectively, S$6 million (approximately US$4.2 million) and HK$25 million (approximately US$3.2 million).
  • Under the ICDR Rules, disputes valued at under US$100,000 will normally be decided on the documents, as opposed to simply giving the Tribunal discretion to do so. The SCC Rules also expressly permit the Tribunal to decide issues of fact or law by way of summary procedure.
  • The HKIAC Rules' expedited procedure provides for a sole arbitrator only if the parties have not agreed otherwise (in contrast to the majority of other major institutions (including the ICC) which override any agreement for three arbitrators).

Notably, neither the London Court of International Arbitration (LCIA) nor the UN-CITRAL Rules have a formal expedited procedure, albeit that the LCIA has a provision for an expedited formation of the Tribunal for cases of exceptional urgency (Article 9A).1

HAS ANYTHING ELSE CHANGED IN THE STANDARD PROCEDURE?

The standard ICC Rules will also be updated (with effect from 1 March 2017) to in-crease transparency and efficiency. For example:

  • Article 11(4) has been amended so that the ICC Court can, upon the re-quest of all parties, communicate its reasoning for certain decisions, such as when it appoints or confirms the appointment of an arbitrator.
  • Under Article 23(2), the Terms of Reference must now be signed and returned by the Tribunal within 30 days of it receiving the file, rather than two months.

SUMMARY

Whilst the introduction of the new expedited procedure is a welcome development, parties that may otherwise be subject to the procedure should ensure that they have considered, when drafting their arbitration agreement, whether it is appropriate in their particular circumstances or whether they should 'opt-out', or adopt different institutional rules. Any 'opt-outs' or other bespoke amendments should, however, be drafted with great care.

Footnote

1 See our previous briefing here on the interaction between Article 9A and parties' ability to apply to the courts for urgent relief under s.44 Arbitration Act 1996. 

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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