A common challenge defying the global Arbitration regime is not how to resolve multimillion-dollar cases, but rather how to settle disputes for less than $1 million USD in a timely and cost-effective manner. Recently, the Singapore International Arbitration Centre ("SIAC") published the Draft of the 7th Edition of Arbitration Rules of the SIAC ("Draft Rules") for public consultation, intending to "raise the bar on efficiency, expedition, and cost-effectiveness".

One of the modifications among many is the proposal for a Streamlined Procedure for time-effective adjudication of claims under $1 million SGD (approx. $740,000 USD or ₹.6 Crores INR).

I. UNIQUE FEATURES OF THE STREAMLINED PROCEDURE UNDER THE DRAFT RULES:

The unique features of the Streamlined procedure under the Draft Rules are discussed in detail. Under Rule 13.1 of the Draft Rules, a party willing to apply for arbitration to be conducted in the Streamlined Procedure has to make an application before the constitution of the Tribunal arising out of any of the below-stated three situations -

  1. The parties have consented to the application of the Streamlined Procedure; or
  2. The amount in dispute does not exceed the equivalent amount of $1,000,000 SGD at the time of the application; or
  3. The circumstances of the case warrant the application of the Streamlined Procedure.

According to the Draft Rules, the Streamlined Arbitration is to be conducted in accordance with the procedure set out in Schedule 2, which is explained below in detail.

A. APPOINTMENT OF SOLE ARBITRATOR

The streamlined procedure provides for the appointment of a sole arbitrator. Such sole arbitrator has to be jointly nominated by the parties within three (3) days from the date of the President's decision1 to grant the application for the Streamlined Procedure or, if this is not possible, then the appointment shall be done by the President within the next three (3) days.

The duties of the Arbitrator for disclosure will be as mentioned under Rule 20 of the Draft Rules. [See, Schedule 2, Sub-rule (1) to (4)]

B. CHALLENGE TO THE APPOINTMENT OF THE SOLE ARBITRATOR

The Streamlined Procedure, a provision for challenges to the appointment of sole arbitrator is also provided. Such challenge can be initiated by filing a notice of challenge with the Registrar within three (3) days from the date of receipt of the notice of appointment of the Tribunal. The challenge can also be made when circumstances specified in Rule 26.1 becomes known or should have reasonably been known to the parties within three (3) days from the date such knowledge. These circumstances are as follows-

  1. Circumstances exist that give rise to justifiable doubts as to the arbitrator's impartiality or independence.
  2. The arbitrator does not possess any requisite qualification on which the parties have agreed;
  3. The arbitrator becomes de jure or de facto unable to perform their functions; or
  4. The arbitrator fails to act or perform their functions in accordance with the Rules or within prescribed time limits. [See, Schedule 2, Sub-rule (5) to (7)]

C. CONDUCT OF STREAMLINED PROCEEDINGS

  1. Within three (3) days from the date of the constitution of the Tribunal, the Tribunal has to conduct a case management conference with the parties to discuss the timetable for the conduct of the proceedings. [See, Schedule 2, Sub-rule (8)]
  2. The arbitration will be resolved on the basis of written submissions and any supporting documentary evidence unless the Tribunal decides differently after taking the parties' positions into account. [See, Schedule 2, Sub-rule (11)]
  3. Here, no party shall be entitled to make requests for document production and no party shall be entitled to file any fact or expert witness evidence. [See, Schedule 2, Sub-rule (11)]
  4. The Draft Rules also mentions that any application under Expedited Procedure, Joinder, Preliminary Determination and Early Dismissal of Claims and Defences shall not be allowed in an arbitration conducted under the Streamlined Procedure. [See, Schedule 2, Sub-rule (16)]
  5. However, the Registrar may extend or abridge any time limits. [See, Schedule 2, Sub-rule (17)]

D. AWARD

For time-effective adjudication, the final award has to be made within three (3) months from the date of the constitution of the Tribunal unless an extension of time has been granted by the Registrar to extension.

The Tribunal is also required to state the reasons on a summary basis upon which the award is based unless the Parties have agreed that no reasons are to be given. Herein, the Tribunal's decision as to such matters is final and not subject to appeal, review or recourse. [See, Schedule 2, Sub-rule (12), (13) & (19)]

E. COSTS

Additionally, the Streamlined Procedure efficiently provides a 50% reduction on the maximum SIAC administrative charge levels determined in compliance with the Schedule of fees. [See, Schedule 2, Sub-rule (14)]

II. LIMITATIONS/CHALLENGES OF STREAMLINED PROCEDURE

Streamlined Procedure is indeed likely to be attractive to small-scale enterprises and parties involved in short-term contracts that would prefer a fast adjudication within three months. It may also be a viable option for disputes currently conducted under the rules of various trade associations, which typically involve lower amounts in dispute and shortened timelines.2

Nonetheless, there are few challenges and limitation that can be comprehended by analysing the rules.

  • Firstly, concerns are raised as the rules authorizes the SIAC President to decide whether or not to apply the Streamlined Procedure to a dispute even in cases when the parties consent to its use. This may be interpreted as diverging from the parties' consent and party autonomy, and the Draft Rules fail to clarify on the same.3
  • Another challenge for small claim arbitrations is that the Streamlined Procedure has no provision for document production or witness/expert evidence, further, the award is to be given based on written submissions. At times the requirement of documents and witness/expert reports becomes indispensable to corroborate the claim. Such evidence is often adduced in adjudications with even more compressed timelines.4

III. COMPARISON WITH OTHER ARBITRATION INSTITUTES ADOPTING SIMILAR PROCEDURE

i. INTERNATIONAL CHAMBER OF COMMERCE

The ICC Arbitration Rules, 2021 also provides an Expedited Procedure similar to that of Streamlined Procedure. ICC's Expedited Procedure applies to claims that do not exceed $ 2,000,000 USD for the arbitration agreement concluded between 1st March 2017 and 1st January 2021 or claims less than $ 3,000,000 USD for the arbitration agreement concluded on or after 1st January 2021. Parties who do not want the Expedited Procedure to apply, will need expressly to exclude the procedure in their arbitration agreement. The ICC has provided suggested wording for arbitration clauses where parties wish to opt-in or opt-out.5

ii. LONDON COURT OF INTERNATIONAL ARBITRATION AND LONDON MARITIME ARBITRATORS ASSOCIATION

Surprisingly, the London Court of International Arbitration ("LCIA") does not presently have a separate set of rules for the arbitration of small claims. Instead, LCIA Rules provide for a fast-track process. However, the London Maritime Arbitrators Association ("LMAA") has LMAA Small Claims Procedure Rules 2021. They apply to any dispute where parties have mutually agreed. In the absence of any such agreement that refers to a monetary limit for disputes that may be so referred, this Procedure applies where the total amount of the claimant's claims and the total amount of any counterclaims does not exceed $1 million USD.6

iii. DUBAI INTERNATIONAL ARBITRATION CENTRE AND DUBAI INTERNATIONAL FINANCIAL CENTRE

In Dubai there are three main dispute resolution forums, namely the Dubai Courts, the Courts of the Dubai International Financial Centre (DIFC Courts) and the Dubai International Arbitration Centre (DIAC). Whereas, DIFC Courts Small Claims Tribunal provides an efficient method for determining small claims valued up to AED 500,000 (or up to AED 1,000,000 if the parties have expressly agreed to that upper limit in their contract).7

IV. POSITION IN INDIA

When it comes to the conventional Indian arbitration centres, few of them have Expedited or Fast-track procedures but it appears that none of them provides for separate or special procedures for small claims.

For example, the Delhi International Arbitration Centre, also known as the Indian International Arbitration Centre, has rules for fast track procedure but no ceiling has been provided for dispute amount. Here, the Award is passed within six (6) months based on written pleadings, documents and submissions filed by the parties, whereas the oral hearing is discretionary based on the parties' request or tribunals' discretion.8

The Hyderabad Arbitration Centre Rules, 20199 and Mumbai Centre for International Arbitration Rules, 201710 provide similar rules for the expedited procedure where the aggregate of claim, counter-claim and any set-off amount in the dispute should not exceed the value of ₹.10,00,00,000/- INR. Here, the Parties or the Arbitral Tribunal are free to determine whether the dispute will be decided based on documentary evidence or not and the Arbitral Tribunal has to render an award within six (6) months from the date of its constitution.

Whereas, the statute, Arbitration and Conciliation Act, 1996 ("A&C Act") may call for an amendment in this regard. The statute doesn't provide for separate procedures based on the quantitative value of claims. The only incentive for the Arbitrator under the A&C Act is additional fees, which shall be granted if the award is made within six (6) months from the date the arbitral tribunal enters upon the reference.11

V. CONCLUSION

In summary, the Streamlined Procedure proposed in the Singapore International Arbitration Centre's 7th Edition Draft Rules is a notable effort to efficiently resolve disputes under $1 million USD. Its unique features, such as appointing a sole arbitrator and limiting document production, aim to expedite proceedings within three months. While appealing for small-scale disputes, challenges include concerns about the SIAC President's discretion and the absence of provisions for expert evidence. A comparative look at other institutions, like the ICC and Dubai International Arbitration Centre, shows a global trend toward expediting procedures for smaller claims. In the Indian context, there's room for improvement in accommodating small claims within existing arbitration frameworks. Overall, the success of such streamlined processes depends on global acceptance and ongoing refinements.

Footnotes

1. As per Rule 2, definition clause provided in the Draft Rules, the 'President' is referred to as "The President of the SIAC Court and includes any Vice President and the Registrar"

2. SIAC's new 'Streamlined Procedure': an innovative proposal for even faster-track arbitration by Julie Raneda and Alvin Tan (Schellenberg Wittmer), August 31, 2023 Link

3. Proposed new rules for the SIAC - improved procedures for small disputes, new preliminary determination rule and enhanced powers for the Registrar and President by Amanda Lees, Victoria Jones and Suraj Sajnani (King & Wood Mallesons), November 7, 2023 Link

4. Draft 7th Edition Of The Siac Rules: Embracing The Next Generation Of Disputes by Clifford Chance, September 2023 Link

5. Article 30 and Appendix VI, the ICC Arbitration Rules, 2021.

6. Rule 1(a), the LMAA Small Claims Procedure 2021.

7. Part 53, the Dubai International Financial Centre Courts Rules 2014.

8. Rule 12 & Rules 13, the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2023.

9. Rule 10, the Hyderabad Arbitration Centre Rules, 2019.

10. Rule 12, the Mumbai Centre for International Arbitration Rules, 2017.

11. Section 29A (2), the Arbitration & Conciliation Act, 1996.

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.