Contact: Ezgi Babur von Schwander
The Expedited Procedure, which provides a more expeditious dispute resolution with regard to certain disputes, has been adopted with the amendments to the ICC Arbitration Rules (“Rules”), effective as of March, 2017. Provisions pertaining to the Expedited Procedure are laid down under Article 30 of the Rules, as well as Appendix VI to the Rules (collectively referred to as “Provisions”).
Additionally, very useful information pertaining to the application of the Provisions, and to the Expedited Procedure, in general, may be found under the ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (“Notes”), which shall be analyzed in this Newsletter article.
In General
The Rules set forth that the Provisions shall be applied if (i) the arbitration agreement was concluded after March 1, 2017, (ii) the amount in dispute does not exceed $2,000,000 USD, and (iii) the parties have not opted out of the Provisions.
The ICC Rules set forth that the parties may opt out of the Expedited Procedure Provisions[1]. According to the Note, this opt out provision should express, in specific terms, the parties’ intention not to subject themselves to the Provisions. To this end, it is not sufficient if the parties have agreed on provisions, such as different time limits, or on a three-member arbitral tribunal[2].
Determination of the Amount in Dispute in the Application of the Provisions
As the Rules set forth a monetary limit, the determination of the amount in dispute for the purpose of application of the Provisions is of great importance. When there is one monetary claim that is already quantified, or which may easily be quantified, the determination of the amount in dispute would not be susceptible to cause problems. On the other hand, the practice shows that in some disputes, the determination of the amount in dispute is not quite straightforward. Considering these issues that may arise, in practice, the Notes clarify that the amount in dispute shall include all quantified claims, counterclaims, cross-claims and claims pursuant to Article 7 (Joinder of Additional Parties) and Article 8 (Claims Between Multiple Parties)[3].
In the ICC arbitration, a quantification of the monetary value of the claims is requested, in order to determine the advance in costs. Similarly, in the Expedited Procedure, this estimation by the parties shall serve as basis for the Secretariat to decide whether the Provisions shall be applied.
If there are objections to the applicability of the Provisions, the Court shall decide on this matter, after giving an opportunity to the other parties to state their views. These submissions shall be made in the Request for Arbitration and in the Answer[4]. An important statement in the Notes is that the arbitral tribunal may take into account in assessing costs, whether a party has artificially inflated its claims in order to prevent the Provisions from applying[5].
Constitution of the Arbitral Tribunal and Conduct of Proceedings
Under the Expedited Procedure, the dispute shall be resolved by a sole arbitrator, which provides an expeditious and cost-effective dispute resolution. The Court may decide to appoint three arbitrators, taking the specific circumstances into consideration[6].
Appendix VI to the Rules sets forth that a sole arbitrator may be appointed, even though the parties have decided otherwise in the arbitration agreement[7]. Pursuant to the Notes, by submitting to arbitration under the Rules, the parties agree that any reference made to three arbitrators in their arbitration agreement is subject to the Court’s discretion to appoint a sole arbitrator, if the Provisions are applied[8].
In the Expedited Procedure, Article 23 of the Rules pertaining to the terms of reference shall not be applied[9]. However, a case management conference shall be held no later than 15 days after the date upon which the file was transmitted to the arbitral tribunal[10].
As per the conduct of the proceedings, the arbitral tribunal has discretion to adopt the necessary procedural measures to conduct the arbitration in accordance with the time limits. Accordingly, Appendix VI provides that the arbitral tribunal may decide not to allow requests for document production, to limit the number, length, and scope of written submissions and written witness evidence, and after consulting the parties, may decide the dispute solely on the basis of the documents submitted by the parties, which would mean that there would be no hearings or examination of witnesses or experts. The hearings may also be held through videoconference or similar means of communication[11].
The Final Award
Under the Provisions, the final award is to be rendered within six months from the case management conference. The Notes clarify that extensions may only be granted in limited and justified circumstances[12]. If the arbitral tribunal seeks an extension, it shall submit a reasoned application to the Court[13].
The Notes emphasize the importance of the expeditious conduct of the proceedings. To begin with, the Court may increase the arbitrators’ fees to greater than the amount that it would normally consider fixing, if the arbitral tribunal has conducted the arbitration expeditiously. Similarly, the fees may be lowered if the arbitral tribunal submits the award later than the six month period. The Notes set forth that the fees may be reduced at a scale of 5-10% (if the draft award is submitted for scrutiny up to 7 months after the deadline), to 20% or even more (if the draft award is submitted for scrutiny more than 10 months after the deadline)[14].
The Notes clarify that the awards rendered under the Provisions should also be reasoned. The arbitral tribunal may limit the factual and/or procedural sections of the award, under the condition that it provides enough clarification necessary in order to understand the award[15].
Conclusion
The Expedited Procedure under the Rules is a very practical dispute resolution mechanism concerning the disputes not exceeding a certain threshold. The Provisions provide that the final award should be rendered by a sole arbitrator within six months from the case management conference. Many disputes may be resolved pursuant to the Provisions, without the need to spend considerable time on the resolution of a dispute that is not very high in monetary value.
[1] Article 30(3)(b) of the Rules.
[2] Notes, §60.
[3] Notes, §63.
[4] Notes, §67, §68.
[5] Notes, §70.
[6] Notes, §78.
[7] Article 2(1) of Appendix VI of the Rules.
[8] Notes, §76.
[9] Article 3(1) of Appendix VI of the Rules.
[10] Article 3(3) of Appendix VI of the Rules.
[11] Article 3(4) and 3(5) of Appendix VI of the Rules.
[12] Notes, §90.
[13] Notes, §82.
[14] Notes, §93, §94.
[15] Notes, §83.
