Austria: The UNCITRAL Expedited Arbitration Rules – Six Questions And Answers

On 19 September 2021, the Expedited Arbitration Rules (EAR) of the United Nations Commission on International Trade Law (UNCITRAL) entered into force. The EAR were adopted by the Commission on 21 July 2021 and, next to UNCITRAL's well-known instruments like the Arbitration Rules (UAR) and the Model Law, represent another chapter in the Commission's impactful work in the field of international arbitration. This article will serve to outline the core features and characteristics of the EAR by presenting answers to 6 questions that may arise in practice.

1. What are the Expedited Arbitration Rules?

Expedited arbitration is increasingly used by parties and is growing in popularity. The basic idea behind the establishment of expedited arbitration rules is to create the possibility for the parties to a dispute to agree on a simplified and streamlined procedure, with the aim of having an arbitration award issued within a short period of time. The associated cost savings for the parties is another benefit.¹

After a discussion on whether to create a stand-alone set of rules or amend the UAR itself, it was decided to adopt an annex to the UAR. The EAR modifies the UAR in certain respects and always must be read in context with the UAR.

2. When do the Expedited Arbitration Rules apply?

Article 1(5) of the Revised UNCITRAL Arbitration Rules provides that the EAR "shall apply to the arbitration where the parties so agree." The application of the EAR is thus solely based on party consensus. Parties either need to explicitly agree on the applicability of the EAR in their arbitration clause – for instance, by including the EAR model arbitration clause (see question 6 below) – or agree to apply the EAR after the dispute has arisen.

Notably, the parties may still agree to apply the EAR if their dispute arose, or their arbitration agreement was concluded, prior to the EAR's entry into force. If the parties already referred their dispute to arbitration under the UAR before the effective date of the EAR, they may even subsequently decide to refer their dispute to arbitration under the EAR.²

While the EAR are noteworthy in that their operation only requires party consensus, by comparison, various institutional rules commonly link provisions on expedited proceedings to the amount in dispute. For example, the ICC's expedited procedure is generally applied when the amount in dispute does not exceed USD 2 million or USD 3 million, depending on the date of the arbitration agreement.³ The same holds true for arbitrations conducted under the CIETAC Arbitration Rules (RMB 5,000,000),⁴ the Swiss Rules (CHF 1,000,000),⁵ and the ICDR Arbitration Rules (USD 500,000).⁶

3. When should parties agree to apply the Expedited Arbitration Rules?

Expedited arbitration is not appropriate for every type of dispute. The Explanatory Note to the EAR, which will be finalized during the Working Group's fall 2021 session,⁷ lists various factors for the parties to carefully consider when deciding whether expedited arbitration is suitable for their situation:

• The urgency of resolving the dispute;
• The complexity of the transactions and the number of parties involved;
• The anticipated complexity of the dispute;
• The anticipated amount of the dispute;
• The financial resources available to the party in proportion to the expected cost of the arbitration;
• The possibility of joinder or consolidation; and
• The likelihood of an award being rendered within the time frames provided in Article 16 of the Expedited Rules (i.e. 6 months/9 months, see question 5 below).

Expedited arbitration entails an inherent trade-off between a speedier outcome on one hand and the scope of the proceedings on the other. This list thus reflects a consensus that an expedited procedure is better suited for simpler and lower-value disputes. Whether or not to resort to expedited arbitration should be decided upon careful consultation with legal counsel and will depend primarily on the parties' commercial needs.

4. How do the Expedited Arbitration Rules work?

4.1. The Arbitral Tribunal

According to Article 7 EAR, unless otherwise agreed by the parties, there shall be one arbitrator.

4.2. Initial Stages

Arbitration proceedings are condensed at the initial stages. According to Article 4 EAR, a notice of arbitration, which shall be communicated along with the statement of claim, shall already include a proposal for the designation of an appointing authority (unless previously agreed upon) as well as for the appointment of an arbitrator.

Article 5 EAR stipulates that the respondent shall communicate its response, including a response to the claimant's proposal for the designation of an appointing authority (if applicable) and for the appointment of an arbitrator, within 15 days of the receipt of the notice of arbitration (as opposed to 30 days under the UAR). The respondent's statement of defense shall be communicated within 15 days of the constitution of the arbitral tribunal.

Pursuant to Article 9 EAR, the arbitral tribunal, within 15 days of its constitution, shall consult with the parties by way of case management conference or otherwise in order to establish the manner in which the arbitration will be conducted.

4.3. The Appointing Authority

If the parties have not agreed on the choice of an appointing authority 15 days after all parties have received a proposal for the designation of an appointing authority, any party may request the Secretary-General of the Permanent Court of Arbitration (PCA) to designate the appointing authority or to serve as such itself (Art. 6(1) EAR).

Article 6(3) EAR grants the Secretary-General of the PCA a measure of discretion in allowing it to designate an appointing authority if it, in view of the circumstances of the case, determines that more appropriate than serving as appointing authority itself.

Article 6 EAR thus streamlines the procedure contained in Article 6 UAR, which provides that the parties must wait 30 days after a proposal is made before requesting the Secretary-General of the PCA to designate the appointing authority. Additionally, the procedure is simplified, as the parties may now directly request the Secretary-General to act as the appointing authority rather than having to go through the UAR's two-step process by which the Secretary-General designates the appointment authority.

4.4. Hearings

Article 11 EAR empowers the arbitral tribunal, after inviting the parties to express their views and in the absence of a request from a party to hold hearings, to decide not to hold hearings.

4.5. Evidence

Article 15 EAR grants the tribunal a large degree of discretion regarding the taking of evidence. The tribunal may decide which documents, exhibits, or other evidence the parties should produce and may reject any request to establish a document production procedure unless all parties make such a request.

4.6. Discretion of the Tribunal

In addition to what has been mentioned above regarding hearings and evidence, the tribunal is granted further discretion in shaping the proceedings by Article 10 EAR, which allows it, at any point in time, to extend or abridge any period of time prescribed by the UAR, the EAR, or agreed by the parties, after inviting the parties to express their views. Notably, the period for rendering the award set by Article 16 EAR is an exception to this rule (see question 5 below).

5. What is the time limit for rendering an award under the Expedited Arbitration Rules?

The time period for rendering an award was the most controversial issue during the drafting process of the EAR.⁸

Article 16 EAR sets the period of time for making the award as follows:

• The award shall be made within six months from the date of constitution of the arbitral tribunal, unless otherwise agreed by the parties.
• In exceptional circumstances and after inviting the parties to express their views, the arbitral tribunal may extend the period of time to a maximum of nine months from the date of constitution of the arbitral tribunal.
• In case the arbitral tribunal is at risk of not rendering an award within nine months from the date of the constitution arbitral tribunal, it shall propose a final extended time limit with reasons and invite the parties to express their views within a fixed period of time. The extension shall be adopted only if all parties agree.
• If there is no agreement to the aforementioned extension, any party may request that the EAR shall no longer apply to the arbitration. After inviting the parties to express their views, the arbitral tribunal may determine to continue to conduct the arbitral proceedings in accordance with the UAR.

6. Is there a model arbitration clause that includes the Expedited Arbitration Rules?

Yes, a model arbitration clause that parties can make use of is annexed to the EAR. It reads as follows:

The applicability of the EAR to a dispute can thus reliably be ensured by the parties already when concluding a particular contract. The appointing authority, place of arbitration, and language of the arbitration can be modified to the parties' preferences by including sections (a) to (c) in the arbitration clause.

Comments

The EAR are unique because their drafting is based on the broad consensus of UN Member States, international organizations, non-governmental organizations, government officials, arbitration institutions, experts, academics, practitioners, and other stakeholders.⁹ They represent an international instrument that appears to strike an appropriate balance between the speedy and efficient resolution of disputes on the one hand, and the protection of procedural integrity and due process on the other.

Judging by the success of UNICTRAL's prior instruments in the field of international arbitration, it should be expected that the EAR will be adopted widely in practice. This is certainly a positive development, as it may lead to the unification of expedited procedures and thus greater legal certainty. In addition, the streamlining and simplification of procedures is a response to many parties' commercial needs and will contribute to the strengthening of arbitration's reputation as a cost- and time-effective method of dispute resolution.

Footnotes

1. United Nations Information Service, "Entry into force of the UNCITRAL Expedited Arbitration Rules" (16 September 2021) https://unis.unvienna.org/unis/en/pressrels/2021/unisl321.html.

2. Draft Explanatory Note to the UNCITRAL Expedited Arbitration Rules, Note by the Secretariat (A/CN.9/1082/Add.1, V.21-02556) s A(5) https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/acn9-1082-add1-e.pdf. 

3. ICC Rules of Arbitration, Art. 30 and Appendix VI.

4. Art. 56(1) CIETAC Arbitration Rules 2015.

5. Art. 42(1)(b) Swiss Rules 2021.

6. Art. 1(4) ICDR Rules 2021.

7. Draft UNCITRAL Expedited Arbitration Rules, Note by the Secretariat (A/CN.9/1082, V.21-02404) s I(4) https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/acn9-1082-e.pdf.

8. Mylene Chan, "UNCITRAL Adopts Expedited Arbitration Rules" (The CPR Institute, 29 July 2021) https://blog.cpradr.org/2021/07/29/uncitral-adopts-expedited-arbitration-rules/.

9. Julián Bordacahar and Dirk Pulkowski, "UNCITRAL, Expedited!" (Kluwer Arbitration Blog, 14 July 2021) http://arbitrationblog.kluwerarbitration.com/2021/07/14/uncitral-expedited/.

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.