Expedite Arbitration under the Adoption of UNCITRAL Expedited Arbitration Rules

Expedite Arbitration under the Adoption of UNCITRAL Expedited Arbitration Rules

On 9 July 2021, the United Nations Commission on International Trade Law, better known as UNCITRAL, adopted the 2021 Expedited Arbitration Rules which came into force on 19 September 2021. It was one of the milestones of arbitration since the adoption of the first UNCITRAL Arbitration Rules in 1976.

          UNCITRAL is known for its pioneering work in the field of arbitration, leading to instruments such as the Model Law, the UNCITRAL Arbitration Rules, and the United Nations Convention on Transparency in Treaty-based Investor-State Arbitration. A number of commercial arbitration institutions have already adopted procedural rules on expedited or fast-track arbitration and gathered experience with that format.

Background and importance of UNCITRAL Arbitration Rules

          The UNCITRAL Arbitration Rules provide a comprehensive set of procedural rules upon which parties may agree for the conduct of arbitral proceedings arising out of their commercial relationship and are widely used in ad hoc arbitrations as well as administered arbitrations. The Rules cover all aspects of the arbitral process, providing a model arbitration clause, setting out procedural rules regarding the appointment of arbitrators and the conduct of arbitral proceedings, and establishing rules in relation to the form, effect and interpretation of the award. At present, there exist four different versions of the Arbitration Rules which are the 1976 version, the 2010 revised version, the 2013 version which incorporates the UNCITRAL Rules on Transparency for Treaty-based Investor-State Arbitration and the latest 2021 version which adopted Expedited Arbitration Rules.

          The UNCITRAL Arbitration Rules were initially adopted in 1976 and have been used for the settlement of a broad range of disputes, including disputes between private commercial parties where no arbitral institution is involved, investor-State disputes, State-to-State disputes and commercial disputes administered by arbitral institutions. In 2006, the Commission decided that the UNCITRAL Arbitration Rules should be revised in order to meet changes in arbitral practice over the last thirty years. The revision aimed at enhancing the efficiency of arbitration under the Rules without altering the original structure of the text, its spirit or drafting style. In 2010, they include provisions dealing with, amongst others, multiple-party arbitration and joinder, liability, and a procedure to object to experts appointed by the arbitral tribunal. Then in 2013, the adoption of the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration incorporated the Rules on Transparency for arbitration initiated pursuant to an investment treaty but in all other respects, the 2013 UNCITRAL Arbitration Rules remain unchanged from the 2010 revised version.

The Process of the Expedited Arbitration Rules Adoption

          The Commission’s membership consists of sixty Member States elected by the United Nations General Assembly. In addition, other States, international organizations, and non-governmental organizations may attend, and participate in, sessions of the Commission and its working groups. Delegations will often be composed of government officials and renowned experts in their field, both academics and practitioners. The result is a uniquely global, transparent, and inclusive process providing a high-quality product. The Expedited Arbitration Rules embody a broad consensus, in terms of geographic representation and stakeholder participation, including having benefited from the input of major arbitral institutions.

          Under the chairmanship of Andrés Jana from Chile, Working Group began to tackle the topic of expedited arbitration in February 2019, conducting its habitual bi-annual sessions in Vienna and New York until it was forced to adapt its working methods due to the COVID-19 pandemic. The nature of UNCITRAL’s deliberations and consensus-based decision-making process, the transition to a virtual or hybrid discussion format was not simple so the completion of the project within the originally envisaged timeframe is therefore an impressive testament to the commitment of, and the spirit of collaboration and collegiality shown by, delegations and the UNCITRAL Secretariat.

Scope of Application and Interaction with the UNCITRAL Arbitration Rules

          From the beginning, discussion centred on the question whether to develop a stand-alone set of rules or modify the UNCITRAL Arbitration Rules to mandate a more expeditious process. In the end, the Working Group decided to prepare an appendix to the UNCITRAL Arbitration Rules. The Expedited Rules contain 16 articles which are incorporated as an Appendix to the UNCITRAL Arbitration Rules currently in force and shall be read in conjunction with them.

          An expedited arbitration is a streamlined and simplified procedure with a shortened time frame, which makes it possible for the parties to reach a final resolution of the dispute in a cost and time effective manner. The Expedited Arbitration Rules provide a set of rules which parties may agree for expedited arbitration. The Expedited Rules balance on the one hand, the efficiency of the arbitral proceedings and on the other, the rights of the parties to due process and fair treatment.

A new paragraph 5 is added to Article 1 of the UNCITRAL Arbitration Rules, which provides that the Expedited Arbitration Rules in the appendix shall apply to the arbitration where the parties so agree. To make the interaction between the two sets of rules more apparent to its users, Article 1 of the Expedited Rules contains a useful explanatory footnote[1], listing the provisions of the UNCITRAL Arbitration Rules that do not apply to expedited arbitrations, unless the parties agree otherwise and provides that Where parties have agreed that disputes between them in respect of a defined legal relationship, whether contractual or not, shall be referred to arbitration under the UNCITRAL Expedited Arbitration Rules (“Expedited Rules”), such disputes shall be settled in accordance with the UNCITRAL Arbitration Rules as modified by these Expedited Rules and subject to such modification as the parties may agree. The express consent of the parties should serve as a shield of protection for less experienced or less powerful parties which would otherwise be found tied to the expedited procedure by agreeing to the UNCITRAL Arbitration Rules. It is also generally prudent to require the express consent of the parties when stringent rules of procedure are to be applied to expedite an arbitration, in order to prevent, or at least to minimize, due process concerns, which could potentially jeopardize the enforceability of resulting arbitral awards.

It is noteworthy that the application of the Expedited Rules does not depend on the amount in dispute or on other criteria, as is the case in leading institutional rules. Draft Explanatory Note to the Expedited Rules[2] or The Explanatory Note further clarifies, in paragraph 6, that parties are free to agree on the application of the Expedited Rules at any time, even after arbitration proceedings have begun under the UNCITRAL Arbitration Rules, yet they “should be mindful of the consequences when changing from non-expedited to expedited arbitration”.

Factors to Consider and Occasions Where the Expedited Rules Cease to Apply When Agreeing to Expedited Arbitration

Paragraph 93 of the Explanatory Note provides a non-exhaustive list of factors that parties may wish to consider when determining whether to agree on the application of the Expedited Rules. For instance,

1. The urgency of resolving the dispute.
2. The complexity of the transactions and the number of parties involved.
3. The anticipated complexity of the dispute.
4. The anticipated amount of the dispute.
5. The financial resources available to the party in proportion to the expected cost of the arbitration.
6. The possibility of joinder or consolidation.
7. The likelihood of an award being rendered within the timeframes provided in Article 16 of the Expedited Rules.[3]

Article 2(1) of the UNCITRAL Expedited Rules allows the parties to agree, at any time during the arbitration proceedings, that the Expedited Rules will no longer apply. Upon the request of a party, the arbitral tribunal may, “in exceptional circumstances”, also decide, “after inviting the parties to express their views”, that the Expedited Rules will no longer apply, as envisaged in Article 2(2) of the Expedited Rules.

Paragraph 13 of the Explanatory Note clarifies in this respect that, when making such a determination, the arbitral tribunal may wish to take into account all relevant factors, such as the urgency of resolving the dispute, the stage of the proceedings, the complexity of the dispute, the amount in dispute, as well as the consequences of such a determination on the proceedings, among others. Article 2(3) of the Expedited Rules then stipulates that where the Expedited Rules no longer apply, the arbitral tribunal remains intact and the arbitration may continue unhindered under the UNCITRAL Arbitration Rules.

The terms and conditions of the Expedited Arbitration Rules still contain much more detail, such as Notice of Arbitration and Statement of Claim, Response to Notice of Arbitration and Statement of Defence, and Initial Steps of an Arbitration etc. which will be discussed in detail in the next article.

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[1] The exemption of using the expedited arbitration such as Article 3(4)(a) and (b) (Notice of Arbitration), Article 7 (Number of Arbitrators).

[2] The UNCITRAL’s publishing which containing useful comments on the application and interpretation of the Expedited Rules.

[3] The arbitral tribunal’s timeframe for awarding an award is 6 months, but it may be postponed up to 9 months, or if an arbitral award cannot be reached within 9 months, the arbitral tribunal will determine the exact time for which the award is granted by the consent of the party.

Sources
– International Arbitration Information by Aceris Law LLC, UNCITRAL Expedited Arbitration Rules.
– Kluwer Arbitration Blog, UNCITRAL, Expedited!
– Legal 500, UNCITRAL EXPEDITED ARBITRATION RULES.
– Maxime Berlingin, Louis Atyeo, Marily Paralika, Ady Nieuwenhuizen & Daniel Hayward, Fieldfisher.
Adoption of the 2021 UNCITRAL Expedited Arbitration Rules.
– United Nations Commission on International Trade Law, Draft Explanatory Note to the
UNCITRAL Expedited Arbitration Rules. United Nations.
– United Nations Commission on International Trade Law, UNCITRAL Arbitration Rules. United Nations.
– United Nations Commission on International Trade Law, UNCITRAL Expedited Arbitration Rules. United Nations.

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