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Profiling the proactive arbitrator ...............................................................7 i.
‘A stitch in time saves nine’, or how to achieve greater efficiency in arbitration through advance preparation ............................................. 41 i.
President, Delos Dispute Resolution; Solicitor (England & Wales). Thanks are due to Greg Falkof, Thomas Granier, Florian Grisel, Véronique Moutot and Luis Miguel Velarde Saffer for their comments on this paper. My thanks as well to my interns, past and present, who assisted me with research for this article. This article represents the personal views of the author and should not be interpreted as binding upon Delos Dispute Resolution or to represent the views of Dechert LLP, where the author is presently a Senior Associate.
Queen Mary University of London and White & Case LLP, 2015 International Arbitration Survey: Improvements and Innovations in International Arbitration (“Queen Mary Survey 2015”), p. 5.
Queen Mary University of London and PricewaterhouseCoopers LLP, International arbitration: Corporate attitudes and practices – 2006 (“Queen Mary Survey 2006”), p. 6 and Queen Mary Survey 2015, p. 6.
See, e.g., Florian Grisel, Emmanuel Jolivet, Eduardo Silva Romero, Aux origines de l’arbitrage commercial contemporain : l’émergence de l’arbitrage CCI (1920-1958), (2016) 2 Revue de l’arbitrage, 403, paras. 15, 44-45.
See in this regard the provocative title of Mauro Rubino-Sammartano’s article: Is Arbitration to be Just a Luxury Clinic?, (1990) 7:3 Kluwer Law International 25. Twenty years later, Peter Morton was raising the same issue in Can a World Exist Where Expedited Arbitration Becomes the Default Procedure, (2010) 26:1 Arbitration International 103. According to Queen Mary University of London and Pinsent Masons, Pre-empting and Resolving Technology, Media and Telecoms Disputes, International Dispute Resolution Survey (2016), the most significant factor for the survey respondents in deciding whether or not to initiate formal proceedings is the likely legal cost that will be incurred (Chart 19, p. 23).
See, e.g., Sophie Nappert, Escaping from freedom? The dilemma of an improved ISDS mechanism, EFILA Annual Lecture 2015, Section VI; Jacomijn van Haersoltevan Hof, Challenges and Responsibilities of Arbitral Institutions, para. 62 in Carlevaris et al. (eds.), International Arbitration Under Review – Essays in Honour of John Beechey (ICC, 2015); Gary Born, as reported by Jesse Kennedy in The Threat of Winter Lingers Over Sydney Arbitration Week, CIArb Australia News, December 2016, pp. 3-4.
their significantly more experienced mentors to initiate such a solution.7 Starting in early 2013, the first step involved consideration of how disputes were resolved in international arbitration, to what extent the theory and practice were consistent, and to what extent incentives were aligned. These discussions eventually crystallised into the rules of arbitration of a new arbitration centre that was established in early 2014 under the name of Delos Dispute Resolution (“Delos”).8 The Delos Rules of Arbitration (the “Delos Rules”) open at Article 1(2) with a restatement of the principal purpose of rules of arbitration, which are designed to support arbitration as a fair, just and effective binding dispute resolution mechanism: 2.
The principal purpose of the Rules is to enable the Tribunal, the parties to the dispute and DELOS to deal with cases fairly, expeditiously and at proportionate cost. This includes: a.
dealing with the dispute efficiently and in a manner proportionate to: (i) the value of the dispute; (ii) the complexity of the issues in dispute; and (iii) the importance of the dispute to any ongoing relationships between the parties.
In furtherance of this principal purpose, the Delos Rules provide the formal framework for giving effect to best practices, recent developments and accepted wisdom in international arbitration, which have been presented below as a set of four related principles (the “Delos Principles”) comprising (1) the active engagement of arbitral tribunals in the resolution of disputes, supported by (2) an ex ante focus on the choice of safe seats, (3) pragmatism in the formation of arbitral tribunals and (4) a heavy emphasis placed on early case preparation in order to achieve a more accessible and streamlined dispute resolution process that offers greater predictability.
The members of the Delos Founding Committee were Greg Falkof, Thomas Granier (after leaving his role as Counsel at the ICC), Dr Florian Grisel, Iain McKenny, Rachael O’Grady, Véronique Moutot and Hafez R Virjee. The first members of the Delos Board of Advisors are Professors Pierre Mayer and David D Caron.
See, e.g., Toby Landau, The Day Before Tomorrow: Future Developments in International Arbitration, 2009 Clayton Utz / University of Sidney International Arbitration Lecture; Michael E Schneider, Chapter 25: The Uncertain Future of the Interactive Arbitrator: Proposals, Good Intentions and the Effect of Conflicting Views on the Role of the Arbitrator, in Brekoulakis et al. (eds.), The Evolution and Future of International Arbitration, (Kluwer Law International, 2016), paras. 25.3225.34.
See, e.g., Kap-You (Kevin) Kim, The Gangnam Principles: A Blueprint for Efficiency in Arbitration, in Carlevaris et al. (eds.), International Arbitration Under Review – Essays in Honour of John Beechey (ICC, 2015), p. 231.
See, e.g., Sundaresh Menon, as reported by Kyriaki Karadelis in Singapore hears pleas for procedural variety, Global Arbitration Review (“GAR”), dated 3 December 2013.
As described by Sundaresh Menon, “[f]or our clients, arbitration has become a onestrike proposition leading to escalation of costs”; see his keynote address “International Arbitration: The Coming of a New Age for Asia (and Elsewhere), (2012) 17 ICCA Congress Series 6, para. 25. Two additional factors may contribute to increased time and cost being spent on developing a party’s case: ethical duties of counsel to act as their client’s zealous advocates, and any mismatch between the benefit to the party of ‘going the extra mile’ and the financial rewards that accrue from this additional work to that party’s counsel; on this last point, see, e.g., the remarks by in-house counsel and arbitrators reported in The dynamic of time and cost, GAR dated 1 May 2009.
See, e.g., ICC Commission Report, Decisions on Costs in International Arbitration, (2015) 2 ICC Dispute Resolution Bulletin, para. 13.
See, e.g., ICC Commission Report, Decisions on Costs in International Arbitration, (2015) 2 ICC Dispute Resolution Bulletin, para. 2.
See, e.g., Neil Kaplan, Role of the Judge in Civil Litigation, 2 Judges’ Forum Newsletter 6 (March 1994), as quoted in Howard M Holtzmann, Chapter 9: Streamlining Arbitral Proceedings: Some Techniques of the Iran-United States Claims Tribunal, in Lew, Mistelis (eds.), Arbitration Insights (Kluwer Law International, 2007), p. 156; Michael E Schneider, The Uncertain Future of the Interactive Arbitrator, supra fn. 9, paras. 25.49-25.50.
Howard M Holtzmann, supra fn. 15, p. 154.
The third technique he recommended (in fact the first, in terms of order in which he introduced them) was for arbitral tribunals, in appropriate cases, to indicate in advance the evidence they would require to establish prima facie proof of certain complex facts. Id. p. 155.
See, e.g., Queen Mary University of London and White & Case LLP, 2012 International Arbitration Survey: Current and Preferred Practices in the Arbitral Process (“Queen Mary Survey 2012”), p. 13; L. Yves Fortier, The Minimum Requirements of Due Process in Taking Measures Against Dilatory Tactics: Arbitral Discretion in International Commercial Arbitration – A Few Plain Rules and a Few Strong Instincts, in A.J. van den Berg (ed.), Improving the Efficiency of Arbitration Agreements and Awards: 40 Years of Application of the New York Convention, ICCA Congress Series No. 9 (The Hague: Kluwer Law International, 1999) 396; Michael McIlwrath et al., supra fn. 4; remarks by Serge Lazareff reported in The dynamic of time and cost, GAR dated 1 May 2009.
Since the start of the Queen Mary Surveys ten years ago, flexibility has consistently been ranked as one of the most valuable characteristics of international arbitration; see in 2006, p. 6, and in 2015, p. 6.
See, e.g., ICC Commission on Arbitration, Techniques for Controlling Time and Costs in Arbitration (2007) 18:1 ICC International Court of Arbitration Bulletin 23, paras. 15, 32-33; Queen Mary University of London and White & Case LLP, 2010 International Arbitration Survey: Choices in International Arbitration (“Queen Mary Survey 2010”), p. 25; the College of Commercial Arbitrators (CCA), Protocols for Expeditious, Cost-effective Commercial Arbitration: Key Action Steps for Business Users, Counsel, Arbitrators and Arbitration Provider Institutions (Stipanowich et al. (eds.), 2010), pp. 69-70; ICC Commission Report, Controlling Time and Costs in Arbitration (2012), paras. 13 and 28.
See, e.g., Lucy Reed, More on Corporate Criticism of International Arbitration, Kluwer Arbitration Blog, dated 16 July 2010; David W Rivkin, A New Contract Between Arbitrators and Parties, HKIAC Arbitration Week Keynote Address, 27 October 2015; Michael E Schneider, The Uncertain Future of the Interactive Arbitrator, supra fn. 9.
Principles regarding the choice of safe seats and pragmatism in the formation of arbitral tribunals.24 (a) Profiling the proactive arbitrator Over the years, much wisdom has been shared and many proposals have been made, challenged and implemented to improve arbitral tribunal efficiency in the sense of greater engagement by arbitrators in the process of resolving disputes.25 In addition to savings in time and cost, such greater engagement is also likely to improve arbitrators’ understanding of the dispute and knowledge of the case at the earlier stages of the proceeding, thus enhancing the overall quality of the arbitration. Certain potential areas of improvement have attracted particular attention, and five of these are discussed below in order to profile the actively engaged arbitral tribunal through some of the techniques it might use in seeking to conduct efficient proceedings. Arranged according to the general course of proceedings, these techniques are: (i) undertaking early efforts in identifying the key issues in dispute and tailoring the procedure for their determination; (ii) disposing of issues early, where appropriate; (iii) reviewing the status of the proceeding between the first round of submissions and the substantive hearing; (iv) anticipating the post-hearing phase; and (v) allocating costs during the proceeding for greater efficiency.
The developments that follow do not discuss the emergency arbitrator mechanism, as it provides interim rather than final relief.
the Korean domestic arbitration approach described by Kap-You (Kevin) Kim as the ‘Gangnam Principles’. See, e.g., Kap-You (Kevin), supra fn. 10, pp. 233-234.
See, e.g., in addition to the references at fn. 25 above: Klaus Sachs, Time and Money: Cost Control and Effective Case Management, in Mistelis, Lew (eds.), Pervasive Problems in International Arbitration (Kluwer Law International, 2006); remarks by Georgios Petrochilos as reported in The dynamic of time and cost – the sequel, GAR dated 15 July 2009; Toby Landau, supra fn. 9; Peter Ashford, The IBA Rules on the Taking of Evidence in International Arbitration, A Guide (Cambridge, 2013), Discussion of Article 2; Joerg Risse, Ten Drastic Proposals for Saving Time and Costs in Arbitral Proceedings, (2013) 29:3 Arbitration International 453, Proposal 2; Yves Derains as reported in The dynamic of time and cost, GAR dated 1 May 2009 and in Due process must trump efficiency, says Derains, GAR dated 23 September 2014. See also the IBA Rules on the Taking of Evidence in International Arbitration (2010), Art. 2; the College of Commercial Arbitrators (CCA), supra fn. 22, pp. 70-71; and ICC Commission on Arbitration, Controlling Time and Costs in Arbitration (2012), para. 28.
See, e.g., AAA Rules (2013): Art. R-21(a); ICDR Rules (2014): Art. 20.2; LCIA Rules (2014): Art. 14.1.
See, e.g., DIAC Rules (2007): Art. 22; ICC Rules (2012 / 2017): Art. 24; SIAC Rules (2013): Art. 16.3, now SIAC Rules (2016): Art. 19.3; SCC draft Rules (2017): Art. 28.1.
Jason Fry, Simon Greenberg and Francesca Mazza, The Secretariat’s Guide to ICC Arbitration (ICC, 2012), para. 3-912.
ICC Rules (1998): Art. 18(1)(d), now ICC Rules (2017): Art. 23(1)(d).
The Secretariat’s Guide to ICC Arbitration, supra fn. 29, para. 3-849.
See, e.g., Michael E Schneider, The Terms of Reference, in The New 1998 ICC Rules of Arbitration, (1997) ICC Court Bulletin – Special Supplement 26, pp. 28-29.
Ibid. This is known as the ‘Goldman formula’.
Queen Mary Survey 2012, p. 13. In contrast, the question of the effectiveness of the parties submitting lists of issues early in the proceedings has attracted a more ambivalent response: see Queen Mary Survey 2015, p. 25.
Howard M Holtzmann, supra fn. 15, p. 155 et seq.
See, e.g., the IBA Rules on the Taking of Evidence in International Arbitration (2010), Art. 2.3; Michael McIlwrath et al., supra fn. 4.
See, e.g., ICC, Guide for In-House Counsel and Other Party Representatives on Effective Management of Arbitration (2014), p. 11; Michael McIlwrath et al., supra fn. 4.
See, e.g., David W Rivkin, The Town Elder Model Revisited, supra fn. 25, pp. 380381; Judith Gill, Applications for the Early Disposition of Claims in Arbitration Proceedings, (2009) 14 ICCA Congress Series 513, pp. 513-514 and 521-523; Redfern and Hunter, supra fn. 38, paras. 6.38-6.40.
Judith Gill, supra fn. 38, p. 516; see also Redfern and Hunter, supra fn. 38, para. 6.38 fn. 35.
premised on abridged submissions and evidence, which arguably falls short of parties’ right for a reasonable opportunity to be heard.40 While certain arbitral institutions are answering the call for the provision of summary judgment procedures,41 other institutions, including the ICDR in its Rules and the ICC in its guidance notes, have maintained their established approach of expressly drawing the attention of arbitrators and parties to the tools already at their disposal.42 Finally, the early consideration of certain issues does not entail that the resolution of the remainder of the dispute must be placed on hold until the arbitral tribunal has rendered its decision. The proceeding may be organised into parallel tracks to avoid any delay to the overall schedule of the proceedings. iii.
Judith Gill, supra fn. 38, p. 516.
See, e.g., SIAC Rules (2016): Art. 29; and SCC draft Rules (2017): Art. 39; see also Mark Friedman and Steven Michaels, Is it summary judgment time?, Global Arbitration Review dated 1 April 2006; Peter Rees as reported by Kyriaki Karadelis in Striking out an unmeritorious case, Global Arbitration Review dated 9 November 2012.
See, e.g., ICDR Rules (2009): Art. 16.3, now ICDR Rules (2014): Art. 20.3; ICC, Guide for In-House Counsel and Other Party Representatives on Effective Management of Arbitration (2014), Topic Sheet 4.
See, e.g., DIS Supplementary Rules for Expedited Proceedings (2008): Art. 5.3; Klaus Reichert as reported by Kyriaki Karadelis in Smart-arbitrating, GAR dated 27 October 2014; Doug Jones as reported by Kyriaki Karadelis in Lessons on efficiency from Australia, GAR dated 11 November 2014.
Lucy Reed, The HKIAC Kaplan Lecture 2013 – Arbitral Decision-making: Art, Science or Sport?, (2013) Journal of International Arbitration 85, p. 96; see also: Neil Kaplan, supra fn. 44, proposing at p. 174 that the Reed Retreat could take place at the time of the Kaplan Opening; and David W Rivkin, A New Contract, supra fn. 23, p. 8, who also recommends that arbitrators schedule time from the start for pre-hearing deliberations.
See, e.g., Joerg Risse, supra fn. 26, Proposal 6; but see Michael E Schneider, The Uncertain Future of the Interactive Arbitrator, supra fn. 9, paras. 25.22-25.23.
Lucy Reed, Arbitral Decision-making, supra fn. 45, p. 95 (original emphasis). See also Karl-Heinz Böckstiegel’s technique of progressively elaborating a Tribunal Working Paper (TWP) over the course of the proceedings in order to support tribunal deliberations and the drafting of the award (Karl-Heinz Böckstiegel, Party Autonomy and Case Management – Experiences and Suggestions of an Arbitrator, 11 Schieds (2013, no. 1), p. 9).
See, e.g., by implication from the remarks of Emmanuel Gaillard as reported in The dynamic of time and cost, GAR dated 1 May 2009; remarks by Georgios Petrochilos as reported in The dynamic of time and cost – the sequel, GAR dated 15 July 2009; David W Rivkin, A New Contract, supra fn. 23, p. 4.
Queen Mary Survey 2015, p. 25. See also Lucy Reed, Achievable Reforms (2013) 17 ICCA Congress Series 74-76, p. 75; David W Rivkin, A New Contract, supra fn. 23, pp. 5-6, 8-11; see further DIAC draft Rules (2016), Art. 35.4.
Fourth, while arbitral institutions previously took account of arbitrators’ efficiency in the conduct of proceedings, there is now more explicit emphasis on financial disincentives to delay in the rendering of the award,51 which in turn calls for greater anticipation by arbitrators of their work schedules. Finally, institutional rules providing for smaller claim expedited procedures typically define a fixed time-limit for arbitral tribunals to submit their draft award to the institution. Where this time-limit is expressed by reference to the date on which the arbitral tribunals began work on the case rather than with respect to the date of closure of proceedings, it focuses the attention of the proactive arbitrator and the parties on drawing up from the start and abiding by a provisional timetable that can accommodate the requisite speed,52 thus reinforcing the time and cost efficiency of the proceeding.53 v.
See, e.g., the Arbitration Rules of the Russian Arbitration Association (2014): Art. 10.9; ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, dated 1 March 2017, Section VIII; see also Joerg Risse, supra fn. 26, Proposal 10 for financial incentivising by the parties of arbitral tribunals to rapidly deliver their awards.
For the purposes of increasing efficiency in arbitration proceedings more generally, Gabrielle Kaufmann-Kohler recommends that arbitrators “set a realistic, nonextendable calendar for the entire arbitration at the outset.” (Beyond Gadgetry – Substantive New Concepts to Improve Arbitral Efficiency, Journal of World Investment & Trade 2004, pp. 69-72, at p. 69).
See, e.g., DIS Supplementary Rules for Expedited Proceedings (2008): Arts. 1.2 and 5.1; HKIAC Rules (2013): Art. 41.2(f); ICC Rules (2017): Appendix VI Art. 4.1; SCAI Rules (2012): Art. 42.1(d); SCC Rules for Expedited Arbitrations (2010): Art. 36; SIAC Rules (2016): Art. 5.2(d); see also David W Rivkin, A New Contract, supra fn. 23, p. 11.
Such costs may include the fees and expenses of the arbitrators, the administering cost of the arbitral institution, the parties’ legal and expert fees and expenses and parties’ internal management costs.
Queen Mary Survey 2012, pp. 3 and 41.
See, e.g., ICC Rules (2012): Art. 37.5, now ICC Rules (2017): Art. 38.5; LCIA Rules (2014): Art. 28.4; SCC draft Rules (2017): Art. 50(6); see also CIArb CostControlled Arbitration Rules (2014), Art. 10(b).
Joerg Risse, supra fn. 26, Proposal 9.
Queen Mary Survey 2015, pp. 7 and 10.
See, e.g., Queen Mary Survey 2015, p. 25; ICC Commission on Arbitration, Controlling Time and Costs in Arbitration (2012), para. 82; ICC Commission Report, Decisions on Costs in International Arbitration, (2015) ICC Dispute Resolution Bulletin, issue 2, Section IV; CIArb International Arbitration Guideline, Drafting Arbitral Awards Part III – Costs (2016); Doug Jones, Using Costs Orders to Control the Expense of International Commercial Arbitration, 2016 Roebuck Lecture.
See, e.g., ICC Guidelines for Arbitrating Small Claims under the ICC Rules of Arbitration (2003), Guideline No. 8; CIArb Cost-Controlled Arbitration Rules (2014), Art. 1(c), which aims to keep “the total cost of the arbitration, including the arbitrator’s fees and expenses, [at] no more than 20% of the amount in dispute”; CIArb International Arbitration Guideline, Drafting Arbitral Awards Part III – Costs (2016), pp. 4-5; see also the ICC Commission Report, Decisions on Costs in International Arbitration, (2015) ICC Dispute Resolution Bulletin, issue 2, Section IV; V.V. Veeder, Chapter 3: The Role of Users, in Mourre et al. (eds.), Players Interaction in International Arbitration, (2012) 9 Dossiers of the ICC Institute of World Business Law 35, pp. 38-39; Doug Jones, supra fn. 59, pp. 3-4.
Neil Kaplan, Role of the Judge in Civil Litigation, 2 Judges’ Forum Newsletter 6 (March 1994), as quoted in Howard M Holtzmann, supra fn. 15, p. 156.
It is apposite here to recall the words of John Uff, writing in 1993: “the arbitrator has a “positive duty to direct the arbitration in the right course, without the comfort of being able simply to leave the parties to get on with the case””; see John Uff, Costeffective arbitration, (1993) 59 Arbitration 31, p. 34.
See in this regard, e.g., Giuditta Cordero Moss, Is The Arbitral Tribunal Bound By The Parties’ Factual And Legal Pleadings?, (2006) 3 Stockholm International Arbitration Review 1-25; Report on Inherent and Implied Powers of Arbitral Tribunals by the Committee on International Commercial Arbitration submitted to and discussed at the 76th Conference of the International Law Association held in Washington D.C., United States of America, 7-12 April, 2014, adopted by the International Law Association in Resolution No. 4/2016, dated 11 August 2016.
See, e.g., HKIAC Rules (2013): Art. 13.1; LCIA Rules (2014): Art. 14.4(i); SCC Rules (2010): Art. 34; UNCITRAL Rules (2014): Art. 17.1; see also the English Arbitration Act 1996, s. 33.1(a).
See, e.g., Florian Grisel et al., supra fn. 3, para. 14.
said, the Delos Rules are neutral at this stage as to whether and to what extent arbitrators should become directly involved in assisting parties with settling their dispute (e.g. by providing a preliminary assessment of the case), provided that the parties’ due process rights are respected (Article 1.2(a)). Thirdly, in support of their guiding purpose, arbitral tribunals may rely on the usual powers of being able to determine their own jurisdiction (Article 7.1) and to decide on all procedural and evidentiary matters (Article 7.2), including through the non-exhaustive list of typical powers set out at Article 7.4.67 Article 7.2 further states that “[t]he parties are encouraged to agree on joint proposals on procedural and evidentiary matters for consideration by the Tribunal.”68 The parties are thus encouraged to collaborate and reach agreement among themselves; and arbitral tribunals are thus encouraged to invite parties to engage in such collaboration, while remaining ultimately responsible for the conduct of the proceeding taking account of the parties’ due process rights.69 Finally, the placement of the principle of active engagement in introduction to the Article 7.4 list of powers is designed to draw the attention of Delos arbitrators to the broad case management and evidentiary powers available to them for the purposes of engaging actively with the dispute. Fourthly, the Delos Rules provide a scheme of incentives to promote active engagement. These incentives are four-fold and relate to safe seats (discussed below under Delos Principle 2), a pragmatic approach to the constitution of arbitral tribunals (discussed below under Delos Principle 3), the fees of the arbitral tribunal and procedure.
These additional powers include at Art. 7.4(b) the power to render an award with or without holding an oral hearing. Such a power is less exceptional than may appear, being both routinely found in expedited arbitration rules (see e.g., CIArb CostControlled Arbitration Rules (2014): Art. 7(a); ICC Rules (2017): Appendix VI Art. 3.5; SIAC Rules (2016): Art. 5.2(c); SCC draft Rules for Expedited Arbitrations (2017): Art. 33(1)) and being subject to the arbitral tribunal’s duties to conduct proceedings fairly and make every effort to ensure that their awards are enforceable (Arts. 1.2 and 1.3). See also the SCAI Rules (2012): Art. 15.2, which, irrespective of whether or not proceedings are expedited, allows arbitral tribunals, “[a]fter consulting with the parties, […] [to] decide to conduct the proceedings on the basis of documents and other materials”.
See Maxi Scherer, Lisa Richman, Remy Gerbay, Arbitrating under the 2014 LCIA Rules – A User’s Guide (Kluwer Law International, 2015), pp. 205-207; and Peter Ashford, supra fn. 26, para. 2-2, commenting on the similar balance struck under the IBA Rules on the Taking of Evidence (2010).
By way of comparison, the expedited procedures of the HKIAC Rules (2013), the ICC Rules (2017), the SCAI Rules (2012) and the SIAC Rules (2016) provide for the resolution within six months of disputes with a value of up to, respectively: HKD 25 million (Art. 41), i.e. close to EUR 3 million; USD 2 million (Appendix VI Art. 1.2); S$ 6 million (Art. 5), i.e. close to EUR 4 million; and CHF 1 million (Art. 42), i.e.
Two, the above stated times are presented in the Delos Rules as being indicative, in order to avoid straitjacketing arbitral tribunals and Delos into having to meet a pre-set time-limit in the Rules that may exceptionally not be adapted to the dispute at hand. The objective is to ensure as far as possible that, once a time limit has been set by Delos, it will be respected by the arbitral tribunal and the parties. This is one of the reasons why, under Article 7.3 of the Delos Rules, the procedure and provisional timetable for the proceeding are to be defined only once the relevant time limit has been notified by Delos. Three, as explained at Article 9.5 of the Delos Rules, the time-limit given to arbitral tribunals is for the submission of their draft award, which may be interim, partial or final according to Article 8.1. This approach is designed (i) to provide arbitral tribunals with a further incentive to consider the suitability of phasing the resolution of the dispute from the start, which in turn requires them to become familiar with the case from the start, and (ii) to maintain flexibility and quality, notably as it allows arbitral tribunals and parties to reassess the suitability of the procedure and provisional timetable as the case unfolds and keep under review whether (a different) phasing may be appropriate. While as a result of this approach parties do not have as much certainty that their dispute will be finally resolved within the indicative time-limit as compared with fixed time-limits in expedited procedures, the above approach provides parties with the predictability of a decision within the indicative time and, in the case of a phased proceeding, the possibility of recovering their costs at the end of each phase as well as a milestone at which to (re)consider a settlement to their dispute without having incurred the cost of litigating the case in full. Delos has implemented its award time-limit mechanism through the concept of the ‘Delos Time Notice’ (Article 9.5), namely the notification by Delos to the arbitral tribunal and the parties of the time granted by Delos to the arbitral tribunal for submitting its draft award. The date on which this notice is given is referred to as the ‘Time Notification Date’. A Delos Time Notice will only be issued once (an instalment on) the arbitration costs have been paid by the parties (Articles 9.5-9.6).
close to EUR 1 million. Neither the DIS Supplementary Rules for Expedited Proceedings (2008) nor the SCC Rules for Expedited Arbitrations (2010) (including the 2017 draft) specify a dispute value threshold for their application. The DIS provides for a time period of six months (Art. 1.2), the SCC, of three months (Art. 36; and see Art. 44 in the 2017 draft).
Finally, following receipt of the Delos Time Notice, “the Tribunal shall conduct a case management meeting to consult the parties on the procedure and provisional timetable for the arbitration. During or as soon as practicable following such meeting, the Tribunal shall establish the procedure and provisional timetable for the arbitration and inform the parties and DELOS of the same.” (Article 7.3). In order to maximise the time available under the Delos Time Notice, arbitral tribunals are encouraged to schedule the case management meeting ahead of receiving the Delos Time Notice, in coordination with the parties and Delos. *** In his much discussed Ten Drastic Proposals for Saving Time and Cost in Arbitral Proceedings, Joerg Risse argued that the question of efficiency in international arbitration was ultimately one of party priorities within a triangle that had quality, time and cost as its three corners.72 He therefore concluded that “there exist[ed] a diminishing marginal utility between the time and costs invested in the arbitration and the quality of the final award.”73 Parties could either “maximise the quality of the award” through the standard procedure, described as “full-fledged arbitration”, or “accept certain limitations in order to ensure a swift and inexpensive dispute resolution process”.74 As shown above, however, standard procedure arbitration and the variety of its alternatives are not mutually exclusive on the quality scale. For the same aspirations in terms of quality, parties have at their disposal a spectrum of choices, which range from extensive party procedural autonomy before an arbitral tribunal acting as an impartial referee, together with the time and cost issues they presently bemoan, to more limited procedural autonomy in a proceeding conducted by a proactive arbitral tribunal seeking to achieve efficiency with fairness. This is not to say that ‘quality’ cannot be made into a variable as well, but it is to say that the widely recognised proactive arbitrator model establishes that this need not be so. In sum, time and cost issues are not a fatality in international arbitration, and efficiency can be enhanced without compromising on quality. The keystone to this equation is arbitrator proactivity, notably for lower value disputes, hence its identification as the first Delos Principle.
Joerg Risse, supra fn. 26, pp. 454-455. See also Jennifer Kirby, Efficiency in International Arbitration: Whose Duty Is It?, (2015) 32 Journal of International Arbitration 6.
Joerg Risse, supra fn. 26, p. 465.
The discussion so far has focused on two adjudicator models: the proactive arbitrator vs. the impartial referee. It does not follow in practice, however, that less engaged arbitrator conduct would necessarily evidence a leaning towards the impartial referee model over the actively engaged alternative. Indeed, the proper characterisation of arbitral tribunal conduct must take account of the constraints induced by the law of the seat. The less arbitrationfriendly the legal place of arbitration, the more due process conservatism and inefficient adjustments are likely to be required of an arbitral tribunal seeking to ensure as far as possible that its award would be upheld by the courts of the seat. Hence Delos Principle 2, which emphasises the use of safe seats in support of the active engagement of arbitral tribunals.
Queen Mary Survey 2015, pp. 2 and 10.
See Lucy Reed, Corporate Criticism, supra fn. 23.
The above findings echo the concerns voiced by leading members of the international arbitration community, who have referred to arbitrators being “afraid” of taking a “robust attitude” on case management out of “fear” of having their awards challenged;79 according to a leading international arbitration practitioner, this fear is “[o]ne of the plagues of arbitration”.80 Two related answers have typically been given in response to this issue, which focus on the excessiveness of the concern for due process: (i) that no judge would overturn an award on the sole basis that it was rendered in a proceeding conducted firmly by the arbitral tribunal;81 and (ii) that arbitrators must have ‘courage’, on the basis that there is no inherent incompatibility between active case management and a healthy concern for due process.82 Both views find significant support in the accumulated experience reflected in the arbitration rules and guidelines reviewed above, which promote the active engagement of arbitral tribunals, and in the numerous proposals discussed above to achieve greater efficiency in international arbitration.83 While both of these responses are helpful, they consider the issue as it arises once an arbitration is underway. As a result, they make no differentiation among arbitration seats and so obscure the importance of ‘safe seats’ (defined below) both to minimise the odds of the first answer and to support the active engagement required by the second answer.
Queen Mary Survey 2015, p. 10; see also p. 2. This issue is exacerbated by the increasing use of due process as a ‘sword’: see Lucy Reed, 2016 Freshfields Arbitration Lecture, as reported by Alison Ross in Reed condemns Trump approach to due process, GAR dated 1 November 2016; Bernardo Cremades, The use and abuse of “due process” in international arbitration, CIArb 2016 Alexander Lecture.
See, e.g., remarks by Wolfgang Peter as reported in The dynamic of time and cost, GAR dated 1 May 2009.
See, e.g., remarks by Yves Derains as quoted in Due process must trump efficiency, says Derains, GAR dated 23 September 2014.
See, e.g., L. Yves Fortier, supra fn. 20, section IV; remarks by Yves Derains as quoted in Due process must trump efficiency, says Derains, GAR dated 23 September 2014; remarks by Philippe Pinsolle, referring to a study he prepared for the ICCA 2016 Congress in Mauritius, as reported in Defending investment arbitration “a lost battle”, says Pinsolle, GAR dated 11 October 2016.
See, e.g., L. Yves Fortier, supra fn. 20; remarks by Emmanuel Gaillard and Serge Lazareff as reported in The dynamic of time and cost, GAR dated 1 May 2009; Ali Khan, “Pussyfooting around” or “cutting to the chase” – are tribunals playing it too safe?, GAR dated 23 June 2016.
See also, e.g., James Allsop, The Authority of the Arbitrator, 2013 Clayton Utz / University of Sidney International Arbitration Lecture.
See the example given by Doug Jones, supra fn. 59, pp. 9-10.
CIArb London Centenary Principles 2015: Introduction.
by providing aA clear right to arbitrator immunity from civil liability for anything done or omitted to be done by the arbitrator in good faith in his or her capacity as an arbitrator.
2. Judiciary An independent Judiciary, competent, efficient, with expertise in International Commercial Arbitration and respectful of the parties’ choice of arbitration as their method for settlement of their disputes. 3. Legal Expertise An independent competent legal profession with expertise in International Arbitration and International Dispute Resolution providing significant choice for parties who seek representation in the Courts of the Seat or in the International Arbitration proceedings conducted at the Seat. 4. Education An implemented commitment to the education of counsel, arbitrators, the judiciary, experts, users and students of the character and autonomy of International Arbitration and to the further development of learning in the field of arbitration. 54. Right of Representation A clear right for parties to be represented at arbitration by party representatives (including but not limited to legal counsel) of their choice whether from inside or outside the Seat. 65. Accessibility and Safety Easy accessibility to the Seat, free from unreasonable constraints on entry, work and exit for parties, witnesses, and counsel and arbitrators in International Arbitration, and adequate safety and protection of the participants, their documentation and information.
7. Facilities Functional facilities for the provision of services to International Arbitration proceedings including transcription services, hearing rooms, document handling and management services, and translation services. 86. Ethics Professional and other norms which embrace a diversity of legal and cultural traditions, and the developing norms of international ethical principles governing the behaviour of arbitrators and counsel. 9. Enforceability Adherence to international treaties and agreements governing and impacting the ready recognition and enforcement of foreign arbitration agreements, orders and awards made at the Seat in other countries. 10. Immunity A clear right to arbitrator immunity from civil liability for anything done or omitted to be done by the arbitrator in good faith in his or her capacity as an arbitrator.
As the above makes clear – and unsurprisingly – there are large areas of agreement between the Delos approach to the notion of a ‘safe seat’ and the CIArb Centenary Principles. Where they diverge is in the recognition given to the increasingly globalised and technological environment in which international arbitration takes place, captured in the distinction between the legal place of arbitration and the physical or virtual place from where arbitrations may be conducted. This decoupling has three significant implications: First, a seat may be ‘Delos safe’ in spite of the fact that it does not possess all of the hallmarks of today’s all-round world-class most popular arbitration seats. It is necessary and sufficient for a seat to be ‘Delos safe’ that it meet the standards of the six revised CIArb principles above, which may be summarised as a pro-arbitration legal framework, practised with relevant expertise by an independent and competent judiciary and legal profession, in a manner that embraces the pluralistic nature of international arbitration.86 When these characteristics are found together, parties, arbitral tribunals and arbitral institutions can take comfort that their arbitrations will be seated in a modern, stable, predictable and supportive legal place where, notably, the threshold for annulment of awards will be high and the risk of court intervention low.
The deletion of the reference to confidentiality in Centenary Principle no. 1 is discussed under Delos Principle 4, below.
Queen Mary Survey 2006, p. 14.
Queen Mary Survey 2015, p. 14.
In a discussion on counsel fee arrangements, Christopher Newmark thus observes that in “a market for legal services that is truly international, where clients can choose which city they will go to for their arbitration counsel, it is surprising that the fee rates which arbitration lawyers charge for their services remain very much based on local market forces. As a general rule, arbitration lawyers in Paris and Geneva are cheaper by the hour than arbitration lawyers in London and New York. And yet, many of those lawyers do the same type of work (and even work in the same large international law firms).” (see supra fn. 25, pp. 93-94).
See, e.g., DIS Rules (1998): Art. 21.2; ICC Rules (2017): Art. 18(2)-(3); HKIAC Rules (2013): Art. 14(2); LCIA Rules (2014): Art. 16(3); SCAI Rules (2012): Art. 16(2)-(4); SCC Rules (2010): Art. 20(2)-(3); SIAC Rules (2016): Art. 21.2.
See, e.g., ICC Guidelines for Arbitrating Small Claims under the ICC Rules of Arbitration (2003), Guideline No. 11; ICC Commission on Arbitration, Techniques for Controlling Time and Costs in Arbitration (ICC Publication 843, August 2007), para. 73; ICC Commission on Arbitration, Controlling Time and Costs in Arbitration (2012), para. 70; ICC, Guide for In-House Counsel and Other Party Representatives on Effective Management of Arbitration (2014), p. 53.
one seat from among the seventeen recommended safe seats listed in Schedule 1 to the Delos Model Clauses. Should the parties nonetheless prefer to opt for another seat, Delos draws their attention to the fact that Delos may exercise its discretion to apply any time and costs scale to the parties’ dispute and/or to vary the dispute timetable, as necessary. This notice in the Model Clauses is premised on Article 9.3 of the Delos Rules, which provides that “DELOS will exercise its discretion, as informed by the principal purpose of the Rules, in fixing the arbitration costs where: […] the parties have agreed to arbitration under the Rules but have used a different arbitration clause from the DELOS model clause or have modified the same.” Finally, Article 5 of the Delos Rules provides for Paris as the default place of arbitration in the absence of any agreement by the parties or determination by the arbitral tribunal.92 *** To conclude, while due process paranoia is inimical to efficiency, a healthy, non-excessive, concern for due process is not only compatible with efficiency but also complementary. Furthermore, where parties have located their arbitration in a safe seat, it can reasonably be assumed that a firm arbitrator hand will not endanger the validity of any award, and that ‘courage’ is no more than a dramatic encouragement for ‘active engagement’. Finally, it was noted in discussing the first Delos Principle that the Delos Rules provide a four-fold scheme of incentives to promote the active engagement of arbitral tribunals. These incentives relate to arbitrators’ fees, arbitral procedure, safe seats and, as the third Delos Principle, pragmatism in the constitution of arbitral tribunals.
Paris is also the default seat of arbitrations conducted under the auspices of the Jerusalem Arbitration Centre (JAC), per JAC Rules (2013): Art. 15.1(ii).
See, e.g., Queen Mary Survey 2010, p. 32; David W Rivkin, The Town Elder Model Revisited, supra fn. 25, p. 379; remarks by Peter Rees as reported in “This parrot is not dead”, GAR dated 8 November 2012.
See, e.g., DIAC Rules (2007): Art. 12; LCIA Rules (2014): Art. 9A. This criterion of ‘exceptional urgency’ has been “interpreted and applied strictly”, with the result that there have been but few examples of the use of this feature; see Redfern and Hunter, supra fn. 38, para. 6.31. See also the remarks by Jacomijn van Haersolte-van Hof reported by Kyriaki Karadelis in Smart-arbitrating, GAR dated 27 October 2014, regarding the LCIA having “re-packaged some existing, underused measures”, including the one on expedited formation of arbitral tribunals, “to bring them into the limelight”. This provision, previously found at LCIA Rules (1998): Art. 9, is now at LCIA Rules (2014): Art. 9A and followed by Art. 9B on emergency arbitrators and Art. 9C on the expedited appointment of replacement arbitrators.
See, e.g., AAA Rules (2013): Art. R-38; ICC Rules (2012 / 2017): Art. 29; ICDR Rules (2014): Art. 6; LCIA Rules (2014): Art. 9B; SCAI Rules (2012): Art. 43; SCC Rules (2010): Art. 32.4 and App. II; SIAC Rules (2010): Art. 26.2 and Sch. 1 now SIAC Rules (2016): Art. 30.2 and Sch. 1. While the availability of the emergency arbitrator mechanism has become widespread, many still appear to be doubtful about its effectiveness; see Queen Mary Survey 2015, pp. 25 and 27-28.
See, e.g., David W Rivkin, The Town Elder Model Revisited, supra fn. 25, p. 379; remarks by Peter Rees as reported in “This parrot is not dead”, GAR dated 8 November 2012; Douglas Thomson, Not sick but curable, GAR dated 6 March 2015.
Queen Mary Survey 2012, p. 13.
See, e.g., Redfern and Hunter, supra fn. 38, para. 4.25; ICC Guidelines for Arbitrating Small Claims under the ICC Rules of Arbitration (2003), Guideline No. 5.
Jennifer Kirby, With Arbitrators, Less Can be More: Why the Conventional Wisdom on the Benefits of having Three Arbitrators may be Overrated, (2009) 26:3 Journal of International Arbitration 337, p. 337; see also, e.g., Jan Paulsson, The Idea of Arbitration (OUP, 2013), p. 164.
Pursuant to Appendix 4 of the Delos Rules, the arbitration costs may be increased by up to double in case of a three-member arbitral tribunal – without impact, however, on the indicative time, as discussed below. Should parties have opted for a three-member arbitral tribunal, Delos will invite them as appropriate to consider agreeing instead on referring the dispute to a sole arbitrator. Certain arbitral institutions expressly draw parties’ attention to this consultative practice for smaller value claims in their rules; see, e.g., HKIAC Rules (2013): Art. 41.2(b); SCAI Rules (2012): Art. 42.2(c). The ICC has gone further by expressly allowing in its expedited procedure for the appointment of a sole arbitrator “notwithstanding any contrary provision of the arbitration agreement”; see ICC Rules (2017): Appendix VI Art. 2.1.
See, e.g., AAA Rules (2013): Art. R-16; DIAC Rules (2007): Art. 8.2; ICC Rules (2012 / 2017): Art. 12.2; ICDR Rules (2014): Art. 11; LCIA Rules (2014): Art. 5.8; SCAI Rules (2012): Art. 6.2; SIAC Rules (2016): Arts. 5.2(b) and 9.1.
See, e.g., HKIAC Rules (2013): Art. 41.2(a); SCAI Rules (2012): Art. 42(b); SCC Rules for Expedited Arbitrations (2010): Art. 12; SCC draft Rules for Expedited Arbitrations (2017): Art. 17.
See, e.g., Queen Mary Survey 2010, p. 25.
While Claimant may submit a Notice of Response to Counterclaim in answer to a Notice of Defence and Counterclaim (Art. 4.3 of the Delos Rules), it has been considered that this further submission would not have any material impact on the parties’ ability to determine whether the dispute warrants the constitution of a threemember arbitral tribunal and, therefore, that it should not delay the constitution of the arbitral tribunal (whether composed of one or three members).
The seven-day time-period allows parties to raise any areas of concern with the prospective arbitrator(s) prior to having to submit a formal challenge; this process typically allows potential issues to be clarified in a consensual manner.
See, e.g., the ICC Dispute Resolution Statistics for 2012, 2013, 2014 and 2015, which show that in 2012 the ICC selected 82.8% of the sole arbitrators appointed under its rules; this figure was 78.3% in 2013, 70.9% in 2014 and 75.7% in 2015.
Queen Mary Survey 2012, p. 6.
First, in order to be in a position to fulfil its role effectively in selecting sole arbitrators, Delos needs to be able to anticipate user needs and to have access to a strong network of potential arbitrators. As regards anticipating needs, Delos has implemented a system for users to register their contracts with Delos following their signature, by simply e-mailing a copy thereof to Delos (as further discussed below in relation to Delos Principle 4). Delos also requests parties in their Notice of Arbitration and Notice of Defence to indicate any proposals they may have regarding the profile and qualifications of the sole arbitrator,109 in line with established – although apparently not widespread – practice.110 As regards developing a network of potential Delos arbitrators (rather than an exclusive list111), this is a work in progress which will notably involve building relationships with under-40 arbitration groups globally, in due course. Indeed, and secondly, Delos’s concern for smaller claims will require the selection of younger arbitrators, thereby likely expanding the pool of international arbitration practitioners with experience in serving as arbitrators, which in turn benefits the international arbitration community as a whole. While arbitrator fees for smaller disputes are necessarily limited to keep the arbitration costs proportionate to the amounts in dispute, there is not an arbitration practitioner in the younger age range who would not be excited, dedicated and energetic about serving as an arbitrator regardless of compensation, to paraphrase a leading international arbitration practitioner.112 With the continued growth of the arbitration market, there are, furthermore, an increasing number of such younger practitioners potentially available to serve as arbitrators. Finally, for arbitrators wishing to secure repeat appointments by Delos as sole arbitrators, they have by that very fact a further incentive to engage actively in the resolution of Delos arbitrations in line with the first Delos Principle, and more broadly to deal with their cases in accordance with the principal purpose of the Delos Rules.
See Appendices 1 and 2 to the Delos Rules.
See, e.g., DIAC Rules (2007): Arts. 4.1(f) and 5.1(e); ICC Rules (2012 / 2017): Arts. 4.3(g) and 5.1(e); LCIA Rules (2014): Arts. 1.1(iv) and 2.1(iv).
Regarding the pitfalls of an exclusive list of arbitrators, see, e.g., the remarks of Alexis Mourre as reported by Alison Ross in London: Party-appointed arbitrators – love them or loathe them?, (2011) 6:1 GAR dated 19 January 2011; Charles N Brower and Charles B Rosenberg, The Death of the Two-Headed Nightingale: Why the Paulsson-van den Berg Presumption that Party-Appointed Arbitrators are Untrustworthy is Wrongheaded, (2013) 29:1 Arbitration International 7.
See remarks by Jennifer Kirby, The dynamic of time and cost – the sequel, GAR dated 15 July 2009.
In catering for the possibility of three-member arbitral tribunals, it seemed preferable not to emulate the LCIA model of an arbitral institution nominating the full panel unless the parties have expressly stipulated that there are to be unilateral appointments (see LCIA Rules (2014): Arts. 5.7 and 7.1; see also Jan Paulsson, e.g. Must We Live with Unilaterals?, (2013) 1:1 ABA Section of International Law 5), notably in light of the choice made to present the reference to sole arbitrators as the default position in the model Delos arbitration clauses (therefore, unlike the model LCIA arbitration clause, the model Delos arbitration clauses do not alert parties to the possibility of providing for party nomination of arbitrators).
The Secretariat’s Guide to ICC Arbitration, supra fn. 29, para. 3-440; compare with the earlier practice of the ICC Court as discussed by Yves Derains and Eric Schwartz in A Guide to the ICC Rules of Arbitration (Kluwer Law International, 2nd ed., 2005), p. 148. For other factors taken into account in setting this threshold, see, e.g., V.V. Veeder, supra fn. 61, who noted at 38 that in London in the early 2000s, City law firms tended to advise clients not to pursue a claim by means of international arbitration under the aegis of the ICC or LCIA Rules if the amount in dispute was lower than a figure in the range of USD 3-5 million. More recently, Matthew Gearing put the threshold at USD 10 million, as reported by Kyriaki Karadelis in Singapore hears pleas for procedural variety, (2013) 9:1 Global Arbitration Review.
This view may be related to statements by well-known in-house counsel that “there is no denying the gap that exists today between the time generally taken in arbitration to reach decisions and the needs and objectives of businesses to assess exposure quickly and resolve disputes expeditiously”; see Michael McIlwrath et al., supra fn. 4, p. 3.
As noted above, the remuneration of Delos arbitrators takes account at the discretion of Delos of arbitrators’ diligence and efficiency and the volume of work performed. This is intended to help address the issue of co-arbitrators ‘free riding’ on the presiding arbitrator’s work, raised for example by Jennifer Kirby, supra fn. 99, p. 352.
See, e.g., Queen Mary Survey 2012, p. 5, in which a significant majority of respondents indicated their preference for party-nomination of the co-arbitrators; see also, e.g., Jennifer Kirby, supra fn. 99, referring at 353 to parties being “viscerally attached to having “their” co-arbitrator”; Alexis Mourre, Are unilateral appointments defensible? On Jan Paulsson’s Moral Hazard in International Arbitration, Kluwer arbitration blog, dated 5 October 2010; Charles N Brower et al., supra fn. 111. See further Florian Grisel et al., supra fn. 3, para. 42.
It may be said that Delos addresses to the extent of this default position the ‘moral hazard’ raised by Jan Paulsson in regard of the formation of three-member arbitral tribunals through party-nomination of two unilaterals; see Jan Paulsson, Moral Hazard in International Dispute Resolution, (2010) 25:2 ICSID Review 339. This is especially true in the case of a non-participating respondent in proceedings initiated on the basis of an arbitration agreement calling for the constitution of a three-member arbitral tribunal: in such circumstances, the claimant would, in effect, be deprived of the possibility of naming a co-arbitrator, contrary to the position found in the rules of leading arbitral institutions.
The model Notice of Arbitration at Appendix 1 of the Rules thus requests the claimant to indicate the details of its nominated co-arbitrator and, otherwise, the claimant’s proposals regarding the profile and/or qualifications of the member(s) of the Arbitral Tribunal. The model Notice of Defence at Appendix 2 sets out the same requests for the respondent.
*** In sum, the Delos Rules recognise the sole arbitrator as the default adjudicator of smaller claims, which may only be displaced by agreement of the parties. While additional flexibility has been provided for the constitution of threemember arbitral tribunals in Tier 3 disputes, this flexibility is contingent on party proactivity. More generally, the Delos Rules emphasise anticipation and cooperation by the parties in the exercise of their autonomy in nominating the members of their arbitral tribunal. This has the twin benefits of ensuring efficiency in the formation of the arbitral tribunal and setting the tone for further efficiency in the proceedings to follow. In practice, it may be anticipated that the dynamics of party nomination of sole arbitrators will largely result in Delos nominating most of the sole arbitrators appointed under its Rules. This role of the arbitral institution in turn creates an incentive for arbitrators seeking repeat appointments to engage actively in the resolution of Delos arbitrations in accordance with the first Delos Principle, which adds to the financial, procedural and seat-related incentives discussed above. Finally, while the first three Delos Principles have focused on the contributions that arbitrators and arbitral institutions may make to enhance the efficiency of international arbitration without compromising on fairness or quality, the fourth Delos Principle addresses the role of parties and their counsel in this regard, which may be captured in the well-known mantra ‘preparation, preparation, preparation’.
See, e.g., V.V. Veeder, supra fn. 61, p. 35; for another perspective, see, e.g., V.V. Veeder, Chapter 15: Whose arbitration is it anyway—the parties’ or the arbitration tribunal’s?: an interesting question?, in Newman, Hill (eds.), The Leading Arbitrators’ Guide to International Arbitration (JurisNet, 2008, 2nd ed.).
Queen Mary Survey 2010, p. 32.
Ibid.; see also Karl Hennessee, Chapter 4: In-House Counsel: Why they should be more Involved in the Arbitral Process, Mourre et al. (eds.), Players Interaction in International Arbitration, (2012) 9 Dossiers of the ICC Institute of World Business Law 42, p. 44.
See the remarks by Andrew Clarke, echoed by Wolfgang Peter, both as reported in The dynamic of time and cost, GAR dated 1 May 2009.
See the remarks by David Brynmor Thomas, as reported in The dynamic of time and cost, GAR dated 1 May 2009. Another illustration of interest-based analysis may be found in the debate over partynominated arbitrators or unilaterals – see, e.g., Jan Paulsson, supra fn. 118; Albert Jan van den Berg, Dissenting Opinion by Party-Appointed Arbitrators in Investment Arbitration, in Arsanjani et al. (eds.), Looking to the Future: Essays on International Law in Honor of W. Michael Reisman (2011), p. 834; Alexis Mourre, supra fn. 117; Charles N Brower et al., supra fn. 111.
Debevoise & Plimpton LLP Protocol to Promote Efficiency in International Arbitration (2010); see also Arbitration 2.0: A Manifesto for Efficiency in International Dispute Resolution, by Perkins Coie (2014).
See, e.g., Queen Mary Survey 2015, p. 7.
deployed to help parties either settle the dispute or otherwise prepare to engage efficiently in an arbitration (ii). i.
Delos also makes a recommendation as to the language of the arbitration, namely English and French at present, based on the languages for which it is best equipped today to administer arbitrations; further languages will be added in due course.
See, e.g., the AAA (2013) and ICDR (2014) mediation clauses and the ICC mediation (2014) and dispute board (2004) model clauses.
See, e.g., the DIS (1998), LCIA (2014), SCC (2010) and SIAC (2016) model arbitration clauses.
See, e.g., the ICC model arbitration clause (2012). The HKIAC’s model arbitration clause (2013) suggests language for the law applicable to the arbitration agreement (but not for the governing law of the contract). While this provides greater clarity, it also reduces the flexibility for an arbitral tribunal or a court at the seat of arbitration to decide in favour of a law that could uphold the reference to arbitration (comp. with the approach taken under the Swiss Federal Statute of Private International Law, section 178(2)).
Thirdly, it is also advisable for parties to consider in their contract whether to provide for the confidentiality of any future dispute, given the varying positions on this question found in arbitration laws, including those of the Delos safe seats.132 Certain institutions have addressed this uncertainty by providing for the confidentiality of arbitrations conducted under their rules.133 To the extent that the confidentiality of any arbitration (and the confidentiality of their work and relationship more broadly) is important to users, it is something that they should be anticipating at the time of entering into their arbitration agreement rather than taking a chance on the lex arbitri or the designated institutional arbitration rules. Delos has accordingly made available the following model clause for parties who wish to keep their arbitration and its outcome confidential: The parties agree to keep confidential the existence and contents of the arbitration and the written and oral pleadings and all documents produced for or arising from the arbitration, save as may be required by legal duty or to protect or pursue a legal right.
E.g., contrary to the general confidentiality obligations found under English, Hong Kong, New Zealand, Portuguese and Singaporean law, the default position under Australian, French, Korean and Swedish law is the absence of confidentiality of international arbitrations seated in those jurisdictions; see Global Arbitration Review, Commercial Arbitration 2016.
See, e.g., DIAC Rules (2007): Art. 41; DIS Rules (1998): Art. 43; LCIA Rules (2014): Art. 30; HKIAC Rules (2013): Art. 42; SCAI Rules (2012): Art. 44; SIAC Rules (2016): Art. 39.
This registration system is referenced at para. 5 of Appendix 4 of the Delos Rules.
See Art. 5 of Appendix 4 to the Delos Rules.
companies, which not infrequently misplace important documents, including contracts; and (iv) in case of dispute, parties benefit from a lower cost schedule, as set out at Appendix 4 of the Delos Rules. ii.
See, e.g., the remarks by Andrew Clarke, Anne-Véronique Schlaepfer and Laurent Gouiffès as reported in The dynamic of time and cost – the sequel, GAR dated 15 July 2009; Jean-Claude Najar, How to Mitigate Legal and Arbitration Costs: Considerations by a User, (2013) 17 ICCA Congress Series 305-320; remarks by Isabelle Hautot as reported by Kyriaki Karadelis in Singapore hears pleas for procedural variety, GAR dated 3 December 2013: “preparation at the outset is the most important tactic for controlling the proceedings”.
These developments do not address the situation where it would not be advisable for a party to wait for the expiry of the negotiation phase to commence proceedings, e.g., if the claims are about to become time-barred.
See, e.g., Jean-Claude Najar, Inside Out: A User’s Perspective on Challenges in International Arbitration, (2009) 25:4 Arbitration International 515, p. 518.
The following provides a helpful checklist for anticipating the start of formal proceedings: Michael McIlwrath, Anti-Arbitration: 10 Things To Do Before The Arbitration Gets Underway, Kluwer Arbitration Blog, dated 12 November 2011.
See, e.g., Klaus Sachs, supra fn. 26, paras. 5-7 to 5-17. While the various fee schedules referenced in the article have since been updated, the principles have remained the same for present purposes.
model set out at Appendix 1 of the Delos Rules (see Article 3.2(a)); and the respondent will respond through a Notice of Defence (and Counterclaim), prepared in accordance with the model set out at Appendix 2 of the Delos Rules (see Article 4.1). While such models are in one sense no more than an alternative presentation of the numbered lists found in the rules of leading arbitral institutions, they differ in two specific respects: First, for users and counsel unaccustomed to international arbitration, such templates help to make the process more accessible. At the same time, the use of templates makes it easier for Delos to process new cases rapidly, notably for the purposes of forming the arbitral tribunal and setting the arbitration costs. Secondly, these templates are prescriptive in terms of how parties are to present their positions and supporting evidence. The claimant is thus required to provide: a statement of up to a maximum of ten pages, setting out the background and nature of the dispute, and the issues in dispute. As part of this statement, please indicate whether, and for which issues and to what extent, you expect to require witness and/or expert evidence. In addition to the contract(s) to be provided under section 4 below, you may enclose with your Notice of Arbitration up to ten documents to support your claim(s).
Similarly, the respondent is required to provide: a statement of up to a maximum of ten pages, setting out your position on the dispute and the claims […]. If you have any comments on section 4 of the Notice of Arbitration [regarding the arbitration agreement], please provide these in a further statement of up to a maximum of ten pages. As part of the above, please indicate whether, and for which issues and to what extent, you expect to require witness and/or expert evidence. You may enclose with your Notice of Defence up to ten documents to support each of the two statements above. For the avoidance of doubt, where a document has already been provided by Claimant, it is not necessary to provide it again. […] If you have a counterclaim, please set it out in a statement of up to a maximum of ten pages. You may enclose with your Notice of Defence and Counterclaim up to ten documents to support your counterclaim.
See, e.g., Constantine Partasides, A Few Words on Prolixity in International Arbitration, in Carlevaris et al. (eds.), International Arbitration Under Review – Essays in Honour of John Beechey (ICC, 2015), pp. 301-305.
See, e.g., Eric Robine, What Companies Expect of International Commercial Arbitration, (1992) 9:2 Journal of International Arbitration 31, at I.2(a): “[…] avoid introducing questions contrived to meet the needs of the case. […] Not only is such a strategy illusory, since the arbitrators are unlikely to be taken in, but it is also dangerous [and inefficient]”; Michael E Schneider, Lean Arbitration, supra fn. 25, p. 127.
As pointed out by Lucy Reed, brevity is not a substitute for quality and, paraphrasing her lecture, a focused introduction in this initial round of submissions does not preclude the later submission of detailed pleadings with extensive support, once the appropriate procedure and timetable has been discussed with and confirmed by the arbitral tribunal. See Lucy Reed, Arbitral Decision-making, supra fn. 45, pp. 97-98.
Following the due date for receipt of the Notice of Defence (and Counterclaim), Delos assesses the value of the dispute and fixes the arbitration costs (Art. 9.2). Once these have been paid, Delos issues the Time Notice, which takes into account the value of the dispute by reference to the time and cost schedules at Appendix 4.
In seeking to achieve the same purpose, certain leading arbitral institutions provide the possibility for parties to submit from the start full statements of claim and of defence (see, e.g., DIAC Rules (2007): Arts. 4.2 and 5.2; DIS Rules (1998): Arts. 6.1 and 9; HKIAC Rules (2013): Arts. 4.6 and 5.3; SCAI Rules (2012): Arts. 3.4(a) and 3.8(b); SIAC Rules (2016): Arts. 3.2 and 4.2). In line with the approach taken in other leading arbitration rules (see, e.g., LCIA Rules (2014): Arts 1.1(iii) and 2.1(iii); UNCITRAL Rules (2013): Arts. 3.3(d)-(e) and 4.2(e); SCC Rules (2010): Arts. 2(ii) and 5.1(iii)), it seemed preferable in the interest of starting proceedings rapidly (both pre- and post-filing of the Notice of Arbitration), that arbitral tribunals receive a limited amount of information that may not all be focused rather than a significant volume of potentially loosely organised submissions and supporting documents of varying levels of immediate relevance.
With reference to the duty to act in good faith, see, similarly, LCIA Rules (2014): Art. 14.5 and 32.2; SCAI Rules (2012): Art. 15.7. See also the IBA Guidelines on Party Representation in International Arbitration (2013) and ICC, Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, dated 1 March 2017, para. 32.
At this critical juncture, users concerned about time and cost should participate actively with their counsel in shaping the process149 and, indeed, it is considered better practice for clients to attend the case management meeting;150 such active user participation is furthermore beneficial throughout the proceeding, including to assist counsel in gaining access to key documents and people in support of the client’s position.151 Finally, through such active participation, users avoid any risk of procedural or calendar misalignment with their external counsel and achieve a greater sense of ownership of the dispute resolution process, as reflected by their input as to their preferred form of award152 and the possibility under the Delos Rules for the parties jointly to request the arbitral tribunal to provide them with “a non-binding indication of its likely decision on all or part of the issues in dispute”, at any time prior to the arbitral tribunal delivering its draft award to Delos (Article 8.7). *** In sum, while arbitrators and arbitral institutions inevitably have their share of responsibility in achieving greater efficiency in international arbitration, users and their counsel have an important part to play as well through anticipating risks at every stage and working closely together both prior to and during arbitration proceedings. Not only can the time and cost invested in early preparation assist with settlement discussions and otherwise save time during the proceeding, that cost is also recoverable under the Delos Rules. Conversely, where parties are not sufficiently prepared prior to the start of an arbitration, such may result in compounding time and cost inefficiencies once proceedings have begun.
See, e.g., ICC, Guide for In-House Counsel and Other Party Representatives on Effective Management of Arbitration (2014), p. 5; see also Jean-Claude Najar, supra fn. 139, p. 525; Karl Hennessee, supra fn. 122, p. 44.
See, e.g., AAA Rules (2013): Art. R-21(a); ICC Rules (2012 / 2017): Art. 24.4; ICC Commission Report, Controlling Time and Costs in Arbitration (2012), para. 30; see also Klaus Sachs, supra fn. 26, para. 5-38.
See, e.g., in addition to the references at fn. 149 above: Douglas Thomson, “A Tale of Two Clients” – how parties can best assist their case, GAR dated 26 February 2016, notably the remarks of Peter Wolrich.
See the discussion above under Delos Principle 1—section (a)(iv). Art. 8.2 of the Delos Rules allows parties to agree to vary the requirement for arbitral tribunals to provide reasons for their award, the default position being that arbitral tribunals must provide reasons for their decisions, albeit in a manner proportionate inter alia to the value and complexity of the dispute, the importance of given issues to the parties and the parties’ need for a roadmap for the future of their relationship and/or the future use of similar contracts.
Conclusion In the early days of international commercial arbitration, the ICC considered arbitration as an effective means of dispute prevention.153 It is unclear that arbitration as it is generally practised today is still able to fulfil such an original promise, save perhaps through the time and cost disincentive to arbitrate, especially for smaller disputes. It is further unclear that arbitration today provides users with sufficient time and cost predictability to allow for adequate risk mitigation and business planning. While various user voices have accordingly suggested enhancing speed at the cost of other considerations,154 many in the international arbitration community have expressed the hope and proposed solutions to enhance efficiency without compromising on fairness or the quality of the decisionmaking process. To the founders of Delos, it appeared that there was a certain systematic combination of incentives and innovations, known or new, that could make a positive contribution to the fair and efficient resolution of disputes through arbitration. Such a combination, presented in this paper by reference to four principles, could not be implemented within the framework of existing structures and thus led to the creation of a new arbitral institution. Looking ahead, there are many possibilities for the development of this institution, including consideration of joinder and consolidation issues, emergency arbitration, cross-claims among claimants or respondents, the role of arbitrators in settling disputes, the cost allocation implications of unsuccessful settlement negotiations, arbitrator and expert track record transparency and the availability of additional safe seats. For now, however, it is enough to note that a number of (smaller) companies have inserted Delos arbitration clauses into their contracts and become ambassadors of an approach to arbitration that leverages its efficiency as an incentive to settle disputes rapidly.
Florian Grisel et al., supra fn. 3, para. 14.
See, e.g., remarks by Lara Levitan as reported in Alternatives to the High Cost of Litigation, (2006) 24:11 CPR International Institute for Conflict Prevention & Resolution 182, pp. 182-183; remarks by Alberto Ravell as reported by Kyriaki Karadelis in Smart-arbitrating, GAR dated 27 October 2014; remarks by Tim Williams as reported by Lacey Young in Corporate counsel swap views in London, GAR dated 1 June 2016.
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