On 1 March 2017, the new ICC Expedited Procedure Provisions came into force with the aim of reducing cost and improving efficiency for arbitration claims under US$2 million (or a higher amount, if the parties agree). With the ICC International Court of Arbitration having oversight of the new expedited procedure, and maintaining final scrutiny of the final award, this is a unique offering to the market. It seeks to meet demands for efficiency and cost-effectiveness while at the same time maintaining the essential hallmarks of ICC arbitration. The ICC has come relatively late to the idea of an expedited process when compared to certain other arbitral institutions. But its ambition here is a welcome one to deliver the sought-after outcome – speedy, cost-effective, quality private justice. However, judgment on that must lie in the future, once the new system has been tried and tested. For now, users must weigh up the potential advantages and disadvantages of this new offering and settle the dispute resolution provisions of new contracts accordingly.
Summary Of New Provisions
The Expedited Procedure Provisions are to found at article 30 of the ICC Rules and in the articles appearing in Appendix VI.
Core features of the new Expedited Procedure Provisions are that:
- They will only apply to arbitration agreements concluded on or after 1 March 2017 (article 30(3)(a));
- They will only apply to disputes (claim and counterclaim) that do not exceed US$2 million, or where the parties otherwise agree (article 30(2)); and
- the parties can agree to opt out (article 30(3)(b)).
Basic procedural features of the new rules include:
- the Court may override the parties’ choice of arbitrators and appoint a single arbitrator (article 2) and a sole arbitrator will normally be appointed;
- there will be no terms of reference (article 3(1));
- a case management conference must take place no later than 15 days after the file is transmitted to the tribunal (article 3(3)); and
iv. the final award must be rendered within six months of the case management conference (article 4(1)).
The new rules encourage and empower the tribunal to adopt procedural measures appropriate to the expedited process envisaged by the new rules:
- after constitution of the tribunal, no new claims may be may be made without the tribunal’s approval (article 3(2));
- the tribunal has expressly conferred discretion, inter alia, (a) to not allow document requests, (b) to limit submissions and evidence, including expert evidence (article 3(4)) and (c) to decide the dispute on documents alone, with no hearing or examination of witnesses (article 3(5)); and
- the tribunal (as well as the Court) must act in the spirit of the new rules where no express provision otherwise applies (article 5).
In addition to its power to constitute the tribunal, the Court is given a number of other powers to assist the tribunal and the parties in achieving the sought-after expedited outcome. At the same time, the new rules reserve a degree of flexibility for the Court, where necessary for the integrity of the process or to take account of the specifics of a matter:
- the Court can extend the 15 days allowed for the case management conference (article 3(3)) as well as the six months allowed for the final award (article 4(1));
- at the outset, the Court can determine that the Expedited Procedure Provisions should not apply (article 30(3)(c)); and
- at any time during the arbitral proceedings, the Court may decide that the Expedited Procedure
Provisions shall no longer apply to the case and, where appropriate, replace and/or reconstitute the tribunal (article 1(4)).
Finally, the Expedited Procedure Provisions provide for a reduced scale of administrative expenses and arbitrator fees.
In their pre-1 March 2017 and current form, the ICC Rules of Arbitration provided that a tribunal must render its final award within six months. This six-month period runs from the terms of reference. In practice, this deadline is often extended by the Court. And given the number of months that are not infrequently required to constitute the tribunal and settle the terms of reference, the standard six-month deadline not infrequently holds out false hope for users.
Under the Expedited Procedure Provisions, the intention is that the new six-month limit should normally apply, with extensions being truly the exception. And while the Court’s power to extend the new six-month deadline is expressed in the same language as for the standard procedure, parties should expect that the Court and the ICC Secretariat will strive to see the new six-month limit observed wherever practicable.
Perhaps most importantly, the success of the new procedure will require vigilance and a firm hand by the tribunal. As outlined above, the new rules procedurally empower the tribunal to expedite matters. The tribunal will also be financially incentivised to meet the six-month deadline. If a tribunal fails to meet the deadline, it risks being doubly penalised in that it will find itself spending more time than anticipated on a matter where a reduced scale of fees applies, and where the Court may well be invited to further reduce fees because of the delay. It will be interesting to follow what procedural measures are used by tribunals appointed under the Expedited Procedure Provisions to try to ensure that the new six-month deadline is met.
What is certain is that there will be an initial learning curve for all stakeholders in the implementation of the new Expedited Procedure Provisions. Their application to recalcitrant respondents will need to be carefully developed and a workable balance struck. The choice of arbitrators is likely to be critical to success. The Secretariat, the Court and users have recent experience of implementing significant new procedural measures, in the form of the emergency arbitrator provisions introduced in the ICC Rules of Arbitration in their 2012 form. But the new Expedited Procedure Provisions are likely to be of a different order of magnitude in terms of number of cases potentially affected. There is already anecdotal evidence that parties are voluntarily implementing the new provisions, because they are available and because they no doubt make sense for the claims in question.
When considering whether to take a matter to arbitration in any particular dispute, parties will analyse the anticipated costs and speed against the hoped-for final outcome. In the past, for smaller claims, ICC arbitration may simply have appeared prohibitive to decision makers when that analysis was done. The new Expedited Procedure Provisions offer a solution to this quandary for smaller claims, while still preserving the possibility of a ‘Rolls-Royce’ common-law inspired procedure with full documentary and oral process, where stakes are high. For the smaller claims, the new Expedited Procedure Provisions now hold out the prospect of a documents-only procedure, a procedure familiar to lawyers from civil law traditions as well as common-law lawyers for summary process, and where the final decision must be delivered promptly.
When drafting a contract, it is usually impossible to know whether disputes will arise and if so of what magnitude. The new Expedited Procedure Provisions address that unknown, making the choice of ICC arbitration a viable option for those settling dispute resolution clauses going forward. However, one important reservation that parties will no doubt take into consideration is the potential loss of ability to nominate one’s arbitrator. This is a potentially significant loss for those accustomed to ICC arbitration, but it is an inevitable part of the price for an expedited process. The practice of the Secretariat and the Court in this area will no doubt be followed with interest by users.
How Reed Smith Can Help
Reed Smith lawyers can help clients evaluate appropriate dispute resolution provisions for their contracts and assist clients in disputes that may arise under such provisions, be they under the ICC Rules of Arbitration or under any other arbitral rules or process.
Client Alert 2017-070