Worldwide: The ICC's New Expedited Procedure: An Answer To Lengthy (And Costly) Arbitration?

Arbitration is too costly and takes far too much time... This is the increasingly uniform view from the users of the popular alternative forum for resolving disputes.

There is nothing particularly novel in this statement; the 2015 Queen Mary University of London International Arbitration Survey: Improvements and Innovations in International Arbitration found that, of the hundreds of respondents, "Cost" was seen as the worst feature of arbitration, followed closely by "lack of effective sanctions during the arbitral process", "lack of insight into arbitrators' efficiency" and, importantly, "lack of speed".

These issues can be particularly acute in situations where either the amount in dispute is relatively small and/or the issues to be determined are relatively straightforward (for example, a claim for an unpaid debt for which the debtor has no defence). Calls for more streamlined procedures have not gone unnoticed by arbitral institutions. The American Arbitration Association, Stockholm Chamber of Commerce, and the Singapore International Arbitration Centre have already instituted measures designed to provide for a more time and cost efficient arbitral experience.

In response to these concerns (and perhaps the changes already made by other institutions), one of the world's most utilised arbitral institutions, the International Chamber of Commerce (ICC) has recently announced amendments to its most recent Arbitration Rules to incorporate a new Expedited Procedure applicable to claims not in excess of USD 2 million.

The Expedited Procedure will only apply to disputes under arbitration agreements concluded post-1 March 2017. In summary, the main changes with respect to the Expedited Procedure are as follows:

• The ICC Court may appoint a sole-arbitrator, irrespective of what the parties' arbitration agreement provides. That appointment will be made on an expedited basis;
• The Expedited Procedure will dispense with the requirement for Terms of Reference to be agreed (in the authors' respective views, an often unnecessarily costly stage of an arbitration under the ICC Rules);
• The Case Management Conference (CMC) will take place 15 days of the transmission of the case file to the sole arbitrator, whom must then render a final award within six months of the conclusion of the CMC. This period may only be extended by the ICC Court in "limited and justified" circumstances and upon a "reasoned request" from the sole arbitrator;
• No party may make a new claim once the sole arbitrator has been appointed, unless specifically authorised to do so;
• The sole arbitrator will have discretion to decide the dispute exclusively on the basis of the documents submitted by the parties, dispensing with the need for oral hearings and/or the examination of witnesses.
• The fees associated with the Expedited Procedure will be calculated on a new scale which is likely to reduce the institutional costs associated with arbitration under the ICC Rules.

Ultimately, while a reasonably helpful indicator, the value of a claim will not always be indicative of the complexity of the issues to be determined. For instance, it does not take too great a leap of faith to envisage a "bet the company" dispute, requiring extensive witness evidence falling under the USD 2 million threshold that will be provided for in the revised ICC Rules. Would such a dispute be suitable for the Expedited Procedure? Would both parties be happy for a sole arbitrator to determine those issues where the arbitration agreement provides for a panel of three? Possibly not (at least in the view of one of the parties).

It will be open for parties to opt-out of the Expedited Procedure, although this will likely need to be set out explicitly in the arbitration agreement. This necessarily requires a degree of foresight in the drafting of arbitration agreements that can, on occasion, be lacking in circumstances where some contract draftsman may still consider dispute resolution clauses to be an afterthought to be addressed at the last minute. While the revised ICC Rules do provide for the ICC Court to determine on its own motion that the Expedited Procedure ought to be dis-applied, in practice this is likely to be determined at a very early stage in proceedings (i.e. shortly after the submission of the Answer to the Request). Absent such a determination, or an expressly stated opt-out in the (post 1 March 2017) arbitration agreement, the party who does not wish to follow the Expedited Procedure will have to move with some alacrity to convince the ICC Court to dispense with this mandatory provision. Doing so once the Expedited Procedure has been initiated as opposed to in either the Request for Arbitration or Answer to the Request (i.e. relying on Article 1(4) of Appendix VI to the ICC Rules) is likely to be a highly risky strategy as (i) by this point the clock will be running on the six month time-limit and (ii) neither party will have the ability to raise "new" claims absent the sole arbitrator's authorisation that might be relied upon in order to justify disregarding the Expedited Procedure.

The above being said, the changes to the ICC Rules also provide for parties to a dispute exceeding USD 2 million to opt-in to the Expedited Procedure if they so choose. No one dispute is likely to be identical to another and, for every dispute under the monetary threshold that is unsuited to the Expedited Procedure, there is likely to be another of greater value that will be.

Overall, there is likely to be a degree of "wait and see" with regards to both the uptake and success of the Expedited Procedure. It certainly represents an attempt by the ICC to recognise and respond to criticisms of the arbitral process and that is no bad thing. Of particular interest will be the number of (successful) applications to the ICC Court by parties wishing to dis-apply the mandatory Expedited Procedure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.