4 October 2021

The modern arbitration practice recognises the need for a faster and simplified procedural framework for international disputes with fairly low amounts at stake.

This has driven several institutions to expand their offer of procedural guidelines with a simplified set of rules that would fit this purpose (see for example the  SCC Rules for Expedited Arbitration, the ICC Expedited Procedure Provisions, and the SIAC Rules for Expedited Procedure and Emergency Arbitration). The importance of developing rules for expedited dispute resolution has recently also been considered by the UNCITRAL Working Group II, in light of the "increasing demand to resolve simple, low value cases by arbitration" and "the lack of international mechanisms to cope with such disputes". As a result, the UNCITRAL 2021 Expedited Arbitration Rules ("UNCITRAL EAR") have taken effect on 19 September 2021. This blog entry briefly discusses the UNCITRAL EAR's key aspects.

SCOPE AND APPLICATION

According to the 2021 International Arbitration Survey conducted and published by the Queen Mary University of London, many interviewees expressed that arbitration was becoming increasingly formal, at the expense of the efficiency parties had hoped for when they agreed to arbitration. Expedited arbitration proceedings may therefore be a welcome alternative to 'traditional' arbitration. The expedited arbitration procedure under the UNCITRAL EAR is described as a streamlined, simplified and shorter arbitration procedure. As such, the UNCITRAL EAR have great potential to meet the apparent need for dispute resolution in a cost-effective and time-efficient manner.

The UNCITRAL EAR are included as an appendix in the 'general' 2021 UNCITRAL Arbitration Rules ("UAR"). Applicability of the UNCITRAL EAR does not exclude applicability of the UAR, except where the UNCITRAL EAR diverge. The rules in the UAR are therefore either supplemented or replaced by those in the UNCITRAL EAR and in case of conflict between both sets of rules, the UNCITRAL EAR prevail. Consequently, the UNCITRAL EAR must always be read in conjunction with the UAR.

Importantly, the UNCITRAL Working Group decided not to apply any objective threshold for the UNCITRAL EAR's applicability, for example, in the form of a certain financial value of the dispute. It was decided that the UNCITRAL EAR only apply when parties give their express consent to it. An arbitration agreement that merely refers to the 2021 version of the UNCITRAL Arbitration Rules does not constitute such express consent. A model clause is included in an annex to the UNCITRAL EAR.

THE PROCEDURAL FRAMEWORK OF THE UNCITRAL EAR

The UNCITRAL EAR provide for a simplified procedure with short timeframes that applies throughout the arbitration lifecycle. For example, the notice of arbitration – usually the very first submission in arbitration – must be accompanied by the statement of claim. Subsequently, the respondent has 15 days to submit a response to the notice of arbitration, and 15 days from the constitution of the tribunal to submit its statement of defence.

Another key characteristic of the expedited procedure is the process of the tribunal's constitution. The UNCITRAL EAR's default rule is that only one arbitrator will hear the case, unless otherwise agreed by parties. To prevent any delay at the outset, the UNCITRAL EAR require the claimant to propose the designation of an appointing authority and the appointment of an arbitrator in its notice of arbitration. Consequently, the response to the notice of arbitration must also include a response to the proposal for an appointing authority and arbitrator. If parties do not reach consensus on an arbitrator or an appointing authority within those 15 days, any party may request the Secretary-General of the Permanent Court of Arbitration to designate the appointing authority or serve as appointing authority.

Once the tribunal has been constituted, the respondent has 15 days to submit its statement of defence. This will usually mark the end of the exchange of written submissions, as the default is one round of submissions.

To optimise efficiency, the UNCITRAL EAR give considerable control over the proceedings to the tribunal. For instance – in the absence of any request to the contrary – it may decide that hearings shall not be held. Furthermore, the tribunal is authorised to extend or abridge any period of time prescribed under the UNCITRAL EAR – apart from the time frame for the rendering of the award. This explicit authorisation allows the tribunal to adapt the proceedings to the circumstances of the cases, without having to fear that the award could be set aside for a breach of due process.

At the same time, the UNCITRAL EAR require the tribunal to actively consult with the parties the way it conducts the proceedings at the arbitration's outset (within 15 days of its constitution). Additionally, the tribunal is expected to invite the parties to express their views before it undertakes several procedural decisions. For example, the parties are entitled to express their views concerning the decision of whether hearings should be held or any further written statements may be presented by the parties.

Finally, the UNCITRAL EAR provide a deadline for the award's rendering. According to these rules, an award must be rendered within six months from the constitution of the tribunal. However, the tribunal is authorised to extend this deadline up to nine months after it has invited the parties to express their views on this proposed extension. If the tribunal concludes that it will be at risk of not rendering an award within nine months from its constitution, it may propose a final extended time limit. This final extension will only be adopted if all parties agree. In the situation that a party disagrees with the final extension, any party may request the tribunal – after both parties have been heard – to declare that the UNCITRAL EAR no longer apply to the arbitration. The tribunal may then decide that it will conduct the rest of the proceedings in accordance with the UAR.

CONCLUDING REMARKS

Overall, the UNCITRAL EAR have great potential to meet the need for more flexible and efficient arbitration proceedings, largely because they provide the tribunal with strong managerial powers while still leaving room for consultation with the parties. However, parties must bear in mind that not all disputes may be suitable for expedited arbitration. Disputes that are complex in nature or that have the possibility of being joint or consolidated may not benefit from simplified procedures and tight deadlines.