Erosion of ‘Party Autonomy’ under the ‘Expedited Procedure’ Rule: An Institutional Arbitration perspective

by Soumyajit Saha*

‘Expedited Procedure’ Rules of SIAC, LCIA, ICC

In an attempt to reduce the time for adjudication of arbitral disputes, leading arbitral institutions like Singapore International Arbitration Centre (“SIAC”), ICC Court of International Arbitration (“ICC”) and London Court of International Arbitration (“LCIA”) have revised their respective rules and included the concept of ‘Expedited Procedure’ in their rules of procedure. Under the ‘Expedited Procedure’, arbitral institutions are given the liberty to reduce the time period in order to constitute the arbitral tribunal and a duty is cast upon the tribunal to render the award within six months mandatorily. Pursuant to Rule 5.1 of Singapore International Arbitration Centre Rules, 2016 (“SIAC Rules”), one of the parties may apply for the arbitral proceedings to be conducted in accordance with the ‘Expedited Procedure’. Similarly, Article 30 and Appendix VI of ICC Court of International Arbitration Rules (“ICC Rules”) deals with ‘Expedited Procedure’ rule. A close reading of Article 30 and Article II, Appendix VI of ICC Rules, Rule 5 of SIAC Rules and Article 9.3 of LCIA Arbitration Rules, 2014 indicates that scope of party autonomy has been given a limited view.

I. Limiting the scope of the arbitration agreement

Firstly, sub-rule 5.2(b) of SIAC rules, 2016 necessitates that the arbitral dispute must be referred to a sole arbitrator under the Expedited Procedure. The usage of the word ‘shall’ makes it binding upon the parties to argue the matter before a sole arbitrator even when they have agreed otherwise, with the arbitration agreement providing for three arbitrators in default.

SIAC Office
Image Courtesy: The Straits Times

According to Article 30(1) of ICC Rules, the scope of an arbitration agreement between the parties is subject to the procedure laid down under the Expedited Procedure Rules. In other words, although parties have agreed that the arbitral tribunal shall comprise of three arbitrators, instead the provisions on Expedited Procedure takes precedence over arbitration agreement. The expression court may, notwithstanding any contrary provision of the arbitration agreement, appoint a sole arbitratorsignifies that autonomy of the parties to decide upon the composition of arbitral tribunal is completely curtailed under the rules of Expedited Procedure thus, posing a serious threat to one of the governing principles of arbitration. To sum up, the ICC Rules achieve effectively the same result, although the provisions are worded differently when compared to SIAC Rules. However, under Article V(1)(d) of New York Convention, courts may refuse to enforce an award when the composition of the arbitral tribunal was contrary to the agreement of the parties.

II. Requirement of Documentary as well as Oral evidence

Secondly, under sub-rule 5.2(c) of SIAC Rules, 2016, the usage of the word ‘may’ provides the arbitral tribunal with a room for discretion to either consult the parties or determine the dispute on the basis of documentary evidence only. Furthermore, this wide discretion allows the tribunal to unilaterally decide on the requirement of oral hearing for examination of any witness as well as oral submissions, independent of the views expressed by the parties. Thus, the provisions of ‘Expedited Procedure’ in SIAC rules limit the scope of party autonomy with regard to the oral proceedings. Nevertheless, Article 24 of UNCITRAL Model Law on International Commercial Arbitration (“UNCITRAL Law”) gives preference to the agreement between the parties over the tribunal’s decision on the issue of oral hearings. Prima facie, the wordings “unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings in Article 24(1) of UNCITRAL Law indicate that arbitral tribunal should compulsory hold oral hearings at an appropriate stage of the arbitral proceedings whenever so requested by a party.

III. No fixed time period to adjudicate and make an Award

Thirdly, one of the fundamental reasons behind parties preferring arbitration over litigation is the freedom to choose the procedure for arbitral proceedings. Nevertheless, under 5.2(d) of SIAC Rules, 2016 the arbitral tribunal has to render the award within six months. Other than the Registrar of SIAC who can extend the time period in exceptional circumstances only, neither the parties nor the tribunal has the power to extend the time beyond six months. Similarly, under Article 9.3 of LCIA Arbitration Rules, 2014, the LCIA court can curtail the time period as provided under the arbitration agreement.

Article V(1)(d) of the New York Convention,1958 prima facie recognizes the principle of party autonomy as the enforcement of the award may be refused when the arbitral procedure is not in accordance with the agreement on the appropriate duration of the arbitral proceedings[1]. On the issue of the appropriate length of arbitral proceedings, extensive evidence might have to be led before the tribunal depending upon the complexity of the dispute, the need for discovery or disclosure, length of any hearing, thereby increasing the costs and time expended during the course of the proceedings[2]. Therefore, setting a fixed duration of six months as per SIAC Rules, 2016 and 14 days by virtue of Article 9.8 of LCIA Arbitration Rules, 2014, arbitral institutions have ignored the vast range of varied issues, facts and evidence, as well as the degree of complexity of the disputes that may arise before arbitral tribunals.

Party Autonomy v. Institutional Rules

Arbitral institutions namely SIAC, LCIA, ICC have failed to ensure a balance between upholding party autonomy and institutional control of arbitral proceedings for expedient disposal of arbitral disputes. Under the garb of expedient disposal of disputes, the principle of ‘party autonomy’ has been completely diminished to a mere spectator as can be seen from what has been set out in Article 5. 3 of the SIAC Rules, 2016 which states that “the rules and procedures set forth in Rule 5.2 shall apply even in cases where the arbitration agreement contains contrary terms. Although, one can argue that opting for Expedited Procedure indicates that the party’s intention is to be bound by rules of the arbitral institutions even when the provisions are contrary to the arbitration agreement, this argument loses significance in the light of conflicting decisions and ‘party autonomy’ principle.

In Noble International Pte. Ltd. v. Shanghai Good Credit International Trade Co., Ltd., Shanghai No.1 Intermediate Court (“Shanghai Court”) refused to enforce a SIAC award under Article V(1)(d) of the New York Convention, 1958. Article (V)(1)(d) allows the court to refuse to enforce an arbitral award when the constitution of the arbitral tribunal or the procedure governing arbitration proceedings was not in accordance with the agreement of the parties. The Shanghai Court observed that the parties agreed for three arbitrators and the Respondent had objected when SIAC appointed a sole arbitrator under the expedited procedure. The Shanghai Court held that the appointment of the sole arbitrator violated the parties’ arbitration agreement. Pertinently, parties’ approach for arbitration (institutional/ad-hoc) keeping in mind that their agreement (arbitration clause) would be given priority over institutional rules and even the UNICTRAL Model Law was drafted based on the principles of party autonomy.

Harmonious construction of party autonomy and institutional rules

Notable arbitral institutions specifically SIAC, ICC, LCIA and other arbitral institutions should take a leaf out of the arbitration rules of Hong Kong International Arbitration Centre (“HKIAC Rules”) and Swiss Rules of International Arbitration (“Swiss Rules”). HKIAC, as well as Swiss Chambers’ Arbitration Institution (“SCAI”), have opted for a persuasive approach rather than a mandatory approach, whereby a fine balance is maintained between party autonomy and institutional rules. Under Article 42.2(a) of HKIAC Administered Arbitration Rules, 2018, the arbitral claim is referred to a sole arbitrator unless the agreement provides for a three-member tribunal. Furthermore, when the agreement provides for a three-member tribunal, HKIAC has to persuade the parties to refer the dispute to a sole arbitrator by virtue of Article 42.2(b) of HKIAC Administered Arbitration Rules, 2018. Consequently, it is the decision of the parties on the composition of the arbitral tribunal which prevails, i.e. either a sole arbitrator or a panel three arbitrators is ultimately appointed under the ‘Expedited Procedure’ of HKIAC Rules if the parties agree to it.

HKIAC Expedited Procedure
Image Courtesy: Kobe University Graduate School of Law & Faculty of Law

Under the Swiss Rules, similar provisions are laid down with respect to Expedited Procedure. On perusal of Article 42.2(b) of Swiss Rules, it permits the parties to have a say in the composition of the arbitral tribunal by deciding as to the number of arbitrators (more than one arbitrator) in the arbitration agreement. Moreover, Article 42.2(c) of Swiss Rules mandates the Secretariat of SCAI to persuade the parties to modify their arbitration agreement on a three-member tribunal and refer their dispute to a sole arbitrator but if the parties do not change their mind then the arbitral tribunal comprising three arbitrators is set up under the Expedited Procedure.

Unlike SIAC or ICC, HKIAC and SCAI have drafted ‘Expedited Procedure’ to include a persuasive approach. Arbitral institutions should avoid inclusion of mandatory words like ‘shall’ and non-obstante clause under Expedited Procedure. A harmonious construction of party autonomy and institutional rules through a persuasive approach of giving priority to parties’ decision(s) will help in upholding the principles of party autonomy while also ensuring institutional control to limit the potential delay in arbitration proceedings.

* Soumyajit is pursuing B.A.LLB at National University of Study and Research in Law, Ranchi. He is currently in his 3rd year.

[1] Gary B. Born, International Commercial Arbitration 2238, N. 645 (2d Ed. 2014).

[2] Tishta Tandon, Section 29A: Time Bound Arbitration – Have Arbitral Tribunals become organs of the Court?, IJAL, Volume 7, Issue 2 (2019)

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