Conduct of the Proceedings

Figure 6.1 Initial written submissions (request for arbitration/notice of arbitration,a answer/response, and reply)

a ‘A request’ (in the United States, sometimes described as a ‘demand for arbitration’) is delivered to the institution in an institutional arbitration; a ‘notice’ is delivered to the opposing party in ad hoc arbitrations, e.g. under the UNCITRAL Rules.

[6.25] This chapter is concerned with the stages that take place after the arbitral tribunal has been established until the proceedings are closed by the arbitral tribunal following delivery of the parties’ last submissions. Starting the arbitration and establishing the arbitral tribunal have been covered earlier in this volume;18 the award, and proceedings after the award, are covered later.19

B. Expedited Procedures

(a) Introduction

[6.26] Before turning to the various procedural steps that are normally followed in an international arbitration, brief consideration is given to the procedural options available for expedited determinations. Expedited dispute resolution processes are not a recent development. Brief procedures were, for instance, known in Venice between the twelfth and sixteenth centuries, in which decisions were rendered within very short time frames.20

[6.27] Nevertheless, in recent years, there has been a growing sense of frustration among businessmen involved in international commerce, because of the lengthy delays involved in obtaining the hoped-for promised land of the arbitral tribunal’s award. A few solutions have emerged that deserve mention.21

(b) Expedited formation

(i) Emergency arbitrator procedures

[6.28] As described in more detail in Chapter 4, ‘emergency arbitrator’ procedures have become a common feature of the main institutional arbitration rules.22 These procedures provide parties with a means of obtaining interim relief from an emergency arbitrator appointed on an expedited basis (usually within one or two business days) prior to the constitution of the arbitral tribunal, providing an alternative to seeking relief before the national courts. Under some rules, an emergency arbitrator can be appointed before the notice of arbitration is filed23 and can hear applications ex parte.24

(ii) Expedited formation of the arbitral tribunal

[6.29] The LCIA Rules provide that, in cases of exceptional urgency, a party may apply to the LCIA Court for the expedited formation of an arbitral tribunal.25 The application must be made in writing to the LCIA Court, with copies sent to all other parties to the arbitration, and must set out the specific grounds for the exceptional urgency in the formation of the arbitral tribunal. For obvious reasons, it is usually the claimant who requests expedited formation.26

[6.30] The LCIA Court has discretion to shorten the time limits for the formation of the arbitral tribunal. There have been a few cases in which the time limit has been ‘significantly abridged’ and one case in which a sole arbitrator was appointed within 48 hours of receipt of the request for arbitration.27

[6.31] Amongst more recent entrants into the arbitration field, the Dubai International Arbitration Centre (DIAC) has adopted a similar approach to expedited formation of the arbitral tribunal.28 Nevertheless, examples of such expedited formation remain few and far between, with the criterion of ‘exceptional urgency’ interpreted and applied strictly.

(c) Fast-track procedures

[6.32] Following the constitution of the arbitral tribunal, expedition can be achieved by the adoption of ‘fast-track’ procedures, either by means of simplified procedures available under certain arbitral rules, or by the tribunal exercising its discretion to abridge time limits.

[6.33] Arbitrations can be put on a ‘fast track’ by adopting simplified procedures and avoiding some of the procedural excesses of modern arbitral practice. Several arbitral institutions have developed rules for the faster resolution of disputes by means of a simplified procedure.29 As might be expected, the rules differ from one institution to another, but the Swiss Rules serve as a good example of how the procedure can work significantly to reduce the duration of an average arbitration. Under these Rules:

•  a sole arbitrator is appointed, unless the arbitration agreement otherwise provides and the parties are unable to agree to the appointment of a sole arbitrator;

•  written pleadings are limited to a statement of case, a defence, and (if applicable) a counterclaim and reply;

•  unless the parties agree to a documents-only arbitration, a single hearing is held for the examination of witnesses and experts, and for oral argument; and

•  the award is made within six months of the date of the transmittal of the file to the arbitral tribunal, which states the arbitrator’s reasons in summary form (or does not give reasons at all if the parties so agree).

It is noteworthy that, while this procedure is mandatory for cases in which the total amount in dispute does not exceed CHF1 million,30 it is available for disputes of a greater amount if the parties so agree. Such processes offer hope for parties who wish to avoid the delay and cost involved in a traditional international arbitration process.31

[6.34] A notable example of a fast-track arbitration under standard arbitral rules involved the fast world of Formula One (F1) motor racing.32 At the time that the dispute arose, the first grand prix of the season was traditionally held in Melbourne in March. In preparation for the race, teams shipped their cars from Europe in mid-February. At the end of one season, in the mid-1990s, one team fell into dispute with the Federation Internationale de l’Automobile (FIA), headquartered in Paris, which regulates the F1 championship in accordance with a comprehensive set of rules. The team in question, which was sponsored by a tobacco company, wished to paint one of its cars in the colours of one of its brands of cigarettes and the other, in the livery of another of its brands. The FIA objected, on the grounds that the championship is a team event, and insisted that all cars from the same team must be painted in identical livery. The constitution of the FIA, to which every team must sign up when entering the championship, contained an ICC arbitration clause.

[6.35] By Christmas Eve in the year in question, it became apparent that a resolution of the dispute would not be achieved by negotiation. The team and the FIA agreed that they would submit to a ‘fast-track’ ICC arbitration with a view to obtaining a final decision by the end of January, so that the cars could be painted and shipped in time to reach Australia by the end of February.

[6.36] The F1 team filed a request for arbitration with the ICC between Christmas Day and New Year’s Eve. A three-member arbitral tribunal was appointed on New Year’s Day. This tribunal circulated draft terms of reference on the same day, which all concerned signed within two more days. A sequential exchange of ‘memoranda’, to which the parties attached the documents on which they relied, then took place at seven-day intervals, followed by a simultaneous exchange of written witness statements within a few more days. A handful of disputed document requests were resolved by prompt procedural orders from the tribunal and an eight-hour witness hearing took place on the last Saturday of January. The tribunal deliberated on the Sunday, and sent its final award to the ICC Court for scrutiny by fax and courier at lunchtime the next day (Monday), together with separate signed, but undated, signature pages.

[6.37] The award was approved at an emergency session of the ICC Court the same afternoon, and the decision was notified to the parties by fax and overnight courier on the same day. The parties received the fully reasoned award on the last day of January, one month precisely from the day on which the tribunal was appointed, and the cars were painted and shipped to Australia in good time for the first grand prix race of the season.33 This case demonstrates what speed can be achieved (even before a grand prix begins) when the parties have a joint will to obtain early resolution, and the arbitral tribunal is disposed and available to act on that will.34

(d) Early, or summary, determinations

[6.38] An alternative to ‘fast-track’ procedures is early, or summary, determination. This involves the early determination of one or more claims or defences, upon application by a party or on the tribunal’s own initiative, on the basis that the claim or defence in question has no prospect of success.35

[6.39] Such procedures remain uncommon in international arbitration and very few arbitration rules provide for them expressly. Rule 41(5) of the ICSID Arbitration Rules is one such exception, and permits a party to raise a preliminary objection that a claim is ‘manifestly without legal merit’.36

[6.40] In the absence of specific provisions contemplating early disposition or the agreement of the parties, the use of summary procedures are believed by some to introduce ‘due process’ risk at the enforcement stage of proceedings.37 How consistent are such procedures, so the question goes, with the requirement to provide a party with a ‘reasonable’ opportunity to be heard? While such a question is perhaps understandable (particularly when considering the approach to enforcement taken by some national courts), a summary procedure need not prejudice the ‘reasonable’ opportunity to be heard. Moreover, approached with prudence, such procedures can, in the right circumstances, be entirely consistent with an arbitral tribunal’s duty to adopt procedures that avoid unnecessary delay or expense.

C. Preliminary Steps

(a) Introduction

(i) Preliminary meetings

[6.41] Preliminary meetings at a very early stage of a dispute process are not customary in some countries. Nevertheless, especially where the parties and their representatives come from different legal systems or different cultural backgrounds, it is sensible for the tribunal to convene a meeting with the parties as early as possible in the proceedings. This ensures that the arbitral tribunal and the parties have a common understanding of how the arbitration is to be conducted, and enables a carefully designed framework for the conduct of the arbitration to be established.38 In modern times, it is common practice for preliminary meetings to be conducted by teleconference or video conference. This saves the costs inevitably incurred when one (or more) of the arbitrators or counsel has to travel across national boundaries, even across oceans, in order to be present in person. However, there is no real substitute for all of the players coming together in one room as soon as possible after the arbitration has started.

[6.42] Some institutional rules now provide expressly for the convening of a ‘preliminary meeting’,39 or ‘case management conference’,40 whilst others provide for such a meeting to be convened at the discretion of the tribunal.41

[6.43] In practice, a preliminary meeting proceeds through various stages. The members of the arbitral tribunal usually arrange to meet privately, before meeting the parties. This is partly to effect introductions and partly to discuss provisional views as to the organisation of the arbitration.

[6.44] Similarly, substantial benefits may be gained if the representatives of the parties have an opportunity to interact before attending the preliminary meeting with the arbitral tribunal. This is particularly important in ad hoc arbitrations, since matters such as the fees and expenses of the arbitrators are normally dealt with at this stage. To avoid embarrassment, in ad hoc arbitrations, it is important that the representatives of the parties should be able to present an agreed position to the arbitral tribunal on the question of the arbitrators’ fees and expenses.

(ii) Representation at preliminary meetings

[6.45] In order to obtain the maximum benefit from a preliminary meeting with the arbitral tribunal, each party should be represented by persons with sufficient authority and knowledge of the case to take ‘on the spot’ decisions, both in discussion with the other party’s representatives and during the course of the meeting with the arbitral tribunal itself. This means that it is usually necessary for the leader of each party’s team of lawyers, as well as a person with appropriate executive authority from the client itself, to attend. It is common practice, particularly where a government is involved, for an ‘agent’ to be nominated.42 The agent is the person to whom both the arbitral tribunal and the other party are entitled to address communications, and from whom they may seek an authoritative statement on behalf of the government concerned.

(iii) Items to be covered at preliminary meetings

[6.46] The agenda items to be addressed at a preliminary meeting depend partly on the law governing the arbitration (for example, in some jurisdictions, it may be necessary to establish a submission agreement)43 and partly on whether the parties have already subjected the arbitration to a set of international or institutional rules, either for administered or for non-administered arbitration. If the arbitration is subject to the rules of one of the major international arbitration institutions, it will not be necessary, for example, for the parties to deal directly with the arbitrators in connection with the tribunal’s fees, which will be handled by the institution concerned.