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New arbitration rules : Recent developments and convergences
Article | 10/01/14 | 9 min. | Marie Danis
Many arbitration rules have recently been modified and others have seen the light of day essentially in Europe and Asia. They illustrate (i) the desire of existing places of arbitration to draw lessons from their experience and (ii) the emergence of new places of arbitration.
This was thus the case of the revision of the rules of the arbitration institutions seating in Europe such as the rules of the ICC (ICC, January 1st, 2012), the new Swiss Chambers’ Arbitration Institution (SCAI, June 1st, 2012), the Vienna International Arbitral Centre (VIAC, July 1st, 2013), the Arbitration Institute of the Stockholm Chamber of Commerce (SCC, January 1st, 2010). It is also the case of the rules of the Hong Kong International Arbitration Centre (HKIAC, Nov. 1st, 2013), the Singapore International Arbitration Centre (SIAC, April 1st, 2013) and the China International Economic and Trade Arbitration Commission (CIETAC, May 1st, 2012), such rules being only the most representative of Asia. As for new rules, tribute was paid to the arbitration rules of Paris, the Home of International Arbitration, published on April 15, 2013, and the first rules of the Permanent Court of Arbitration in The Hague (PCA), passed in December 2012.
The study of the principal themes of these new rules reveals that there exists notable convergences. They can no doubt be explained by the necessity to take into consideration the growing complexity of international disputes, to control costs and timeframes of proceedings as well as to anticipate inconsistent rulings. Such rules show some uniformity in the solutions they bring to such issues; however, a detailed analysis shows interesting differences between them. The new rules relating to the conduct of complex arbitrations (I) and emergency procedures (II) seemed particularly pertinent to us and are analyzed thereafter.
I. The recent arbitration rules’ approach to complex arbitral proceedings
Disputes involving a multiplicity of parties and legal relationships have become frequent and can raise procedural difficulties. As such difficulties are rarely foreseen when drafting a contract, the arbitration rules chosen by the parties play a key role. Most of the new rules have therefore implemented or revisited provisions providing a framework for such proceedings in order to guarantee their efficiency as well as compliance with the principle of consensualism that governs arbitration.
a. Managing third-party interventions
The ICC rules, followed by the Swiss rules, were the first to regulate third-party interventions. The previous versions of their rules had already been adapted, which explains why the latest revisions on this issue were relatively basic. Therefore, Articles 7 and 6.4 (i) of the ICC rules sanction or clarify the institution’s practice.
As for the Swiss rules, the amendments made to Article 4 paragraph 2 essentially regard terminology. However a substantial change concerns the prima facie examination of the existence and validity of an arbitration agreement as it will no longer take place upon receipt of the arbitration notification but at a later stage, and only in the event of a lack of response to the notification or in the event of an objection by the defendant. It should be noted that these rules are one of the only rules that allow a third party to request intervention on its own initiative and the intervention of “real” third parties, that is to say third parties who are not bound by the arbitration agreement.
One of the rules having been the object of significant developments on this matter were the HKIAC rules. In their version of 2008 a brief provision subjected the intervention to the consent of all the parties, including of the intervening party. The new provision now requires that the third party be “prima facie” bound by the arbitration agreement. Another new development resides in the powers of the institution: like the ICC rules, the HKIAC has the power, prior to the constitution of the arbitral tribunal, to authorize the intervention of a third party on the occasion of the prima facie examination regarding the existence or validity of the arbitration agreement when objections have been raised. Lastly, similarly to the aforementioned Swiss rules on this point, the intervention can take place at the initiative of the third party itself.
As for the latest version of the SIAC rules, they maintain the provision contained in the former rules relating to the powers of the arbitral tribunal, subjecting the intervention of the third party to the condition that the latter be a party to the arbitration agreement and that it shows its consent in writing.
b. The joinder of the proceedings
Inspired by the amendments made to the ICC rules, provisions regulating the joinder of the proceedings were incorporated for the first time into the CIETAC and HKIAC rules. The new Article 10 of the ICC rules clarifies and confirms the practice of the Court on this matter. Therefore, joinder can be implemented if all parties concerned consent to it. Failing which, it may only be implemented:
- when the claims result from a same arbitration agreement or
- if they result from several agreements (i) when the parties are identified or (ii) when the claims relate to disputes arising from a same legal report and that the agreements are deemed compatible.
The latest version of the HKIAC rules contains these same terms and conditions. As for the CIETAC rules, they require the consent of all the parties, which renders the joinder impossible as soon as one of the parties is opposed thereto.
Other rules have been more timid and have only made their provisions on the question more legible. This is the case of the VIAC rules which maintain the possibility of implementing the joinder when the parties agree thereto, or when the arbitrator(s) and the seat of arbitration are the same and that the agreements have been deemed compatible. As for the SCC rules, they subject the joinder to the existence between the parties of an arbitration proceeding relating to a same legal issue. Such rules, as well as the Swiss rules, distinguish themselves by granting the Court authority to rule on the joinder after consultation of the parties and the arbitrators. Furthermore, such two sets of rules require neither the consent nor the identity of the parties to the arbitration.
Lastly, regarding the question of appointing arbitrators in cases of multipartite proceedings, the majority of the new rules, including those which advocate that the parties benefit from a high degree of autonomy when conducting the proceedings, have favored the guarantee of the equality of the parties and the protection of the ruling by granting powers to the bodies of the institution in order to offset possible blockages. Regarding that aspect, the new Swiss, VIAC and HKIAC rules even sanction the possibility for the Court to remove the arbitrators appointed by the parties.
II. Emergency procedures
The implementation by certain rules of emergency procedures upstream of the formation of the arbitral tribunal constitutes a major novelty. The purpose of such procedures is to offer practitioners an alternative to emergency procedures before State courts.
The rules that implemented these procedures for the first time are the SCC, ICC, HKIAC and Swiss rules. The SIAC rules, which had already introduced such procedures in 2010, have brought no further change thereto. It should be noted that the CPA rules, exclusively intended for investment arbitrations, do not make provision for an emergency arbitrator; in that same spirit, the wording of the ICC rules seems to exclude it in cases where a State is involved.
The appointment of the emergency arbitrator is attributed to the arbitration institution or to one of its bodies (Court, President, etc.). As it is an ad’hoc arbitration, the Paris rules attribute such function to the General Secretary of the CPA.
The timeframes provided for its implementation are very short. In all the rules, the timeframe provided to obtain a ruling is 15 days as of the submission of the claim to the arbitrator, with the exception of the SCC rules which make provision for a 5-day timeframe.
Such emergency procedure can be initiated at any time prior to the formation of the arbitral tribunal. The Paris rules specify that the parties may seek emergency procedures even if an arbitration claim has already been filed whereas the SCC rules fix the submission of the case to the arbitral tribunal as the limit.
Although urgency is evidently sought to obtain such measures, the majority of the rules refrain from fixing specific criteria for their granting. By adding that the arbitrator may take into account the urgency, the lack of serious opposition or lastly the
necessity of the measure, the Paris rules are similar to emergency procedures under French law.
It should be noted that the Swiss rules and the Paris rules distinguish themselves with the possibility to request ex parte measures. The submission of the request to the adverse party must be carried out at the latest with the preliminary injunction and such party shall be granted the possibility to be heard, allowing the debate in the presence of both parties to be restored. Such rules also make provision for the possibility for the emergency arbitrator and for the arbitral tribunal to which the matter was referred at a later stage to revoke or amend the measure.
By affirming the provisional and urgent aspect of such procedure, the Swiss and the ICC rules provide for the close of the procedure should the claimant fail to initiate the proceedings on the merits within 10 days following the submission of the claim, timeframe that may be extended by the emergency arbitrator. Furthermore, in the event the close is decided any measure granted by the emergency arbitrator shall cease to bind the parties. Along the same lines, all the rules, with the exception of the Paris rules, provide that the ruling shall cease to be enforceable in the event where the arbitration proceedings on the merits have not been initiated following the emergency decision within a fixed timeframe.
For the sake of impartiality, most of the rules pose as a principle the impossibility for the emergency arbitrator to sit as arbitrator in the proceedings on the merits, unless otherwise decided by the parties (SCC, SIAC, HKIAC and Swiss rules).
Lastly, the provisions relating to emergency procedures, with the exception of the SCAI rules, do not apply immediately. They shall apply when arbitrations have been initiated on the grounds of arbitration agreements concluded after their entry into force.
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International arbitration must, to remain successful, adapt itself to practitioners’ needs. The institutions understand this and the rules which provide a framework for arbitration proceedings are constantly changing.
Therefore, today, companies as well as practitioners have many options to choose from. However, even though the different rules converge when taking certain issues into consideration, their approaches remain significantly different, due to different legal traditions and foreign influences. The choice must be made by foreseeing potential difficulties and disputes in order to choose the best available “tool”.
Marie Danis, Partner
Carine Dupeyron, Partner