Austria: Addressing Time And Cost Concerns In International Arbitration Through Early Determination Procedure

Introduction

While arbitration has long been considered one of the most efficient ways of commercial dispute resolution, it also tends to be more costly than other ADR proceedings. Nevertheless, being one of the most flexible and adaptable dispute resolution mechanisms, arbitration continues to often be the preferred choice for entities and individuals deciding to forego traditional court practices to settle legal claims.

In serving the interests of flexibility, summary procedures, also known as early determination procedure ("EDP"), have found considerable application in commercial arbitration, while gaining renewed attention since their inclusion in the new LCIA Rules 2020.¹ In light of these new developments, this post will highlight the history, rationale and relevance of EDP in international arbitration.

Origin and evolution of EDP in international arbitration

Summary procedure or EDP has its origins in common law legal systems, whereby a determination is granted on a claim or defense about which there is no genuine issue of material fact and on which the movant is entitled to prevail as a matter of law.² In other words, if a claim or a defense is without merit, the Court can dismiss it summarily without a full trial.

In 2006, the International Centre for Settlement of Investment Disputes (ICSID) became the first institution to introduce EDP through the ICSID Rule 41(5). The provision sought to strike a balance between both saving time while also preserving the claimant's right of due process.

The second arbitral institution and the first commercial arbitral institution to adopt the EDP was the Singapore International Arbitration Centre (SIAC). Under Rule 29³ of the SIAC Rules 2016 a party may, no later than 30 days after the constitution of the arbitral tribunal, apply to the tribunal for the early dismissal of a case that is:

(a) manifestly without legal merits; or

(b) manifestly outside the jurisdiction of the tribunal.

Once an application under Rule 29 is filed, the tribunal must allow parties to be heard and issue a reasoned order or award within 60 days of the application.

The next institution to adopt the EDP was the Stockholm Chamber of Commerce (SCC) in the 2017 version of its Rules. Pursuant to Article 39 thereunder, the arbitral tribunal, at the request of either party, has the jurisdiction to rule on specific issues of fact or law summarily. The EDP under the SCC Rules does not provide for a detailed assessment of the facts of the case. Instead, the procedure aims to afford parties the opportunity to isolate and aggregate particular matters of fact or law and dispose of the case by bringing them before the arbitral tribunals separately at any time throughout the proceedings.

On 30 October 2017, the ICC released a practice note, which established that the existing Article 22 in the ICC Rules inherently addressed the EDP. The practice note stated that an EDP application must be made "as promptly as possible" and that the arbitral tribunal must consult with the parties on the appropriate procedure for determining the application.

More recently, the London Court of International Arbitration (LCIA) Rules, which came into effect on 1 October 2020 through Article 22.1(viii), have included the EDP in the LCIA administered arbitrations. However, unlike the SIAC Rules, the new provisions in the 2020 LCIA Rules are less detailed and merely afford the arbitral tribunals jurisdiction to consider each application.

The inherent power of the Tribunal to order EDP

The new addition to the LCIA Rules begs the question as to whether the provisions in any of the institutional rules are indeed necessary. For example, the ICC Rules to this day do not explicitly provide for anything along the lines of EDP within the institutional rules. Nevertheless, they recognise the inherent power of the tribunal to dismiss a case summarily in its practice note dated 30 October 2017, which was also confirmed by the English High Court in Travis Coal v. Essar Global.⁴

While tribunals may have the inherent authority to dismiss a meritless claim summarily, these powers are specified within the institutional rules due to the reluctance of tribunals to exercise them. This hesitation stems from due process objections another party may raise, which in turn would affect the enforceability of the award – a fact which was raised in Travis Coal above, yet rejected by the court.

By spelling out the powers of the tribunals to apply the EDP explicitly, the institutions attempt to forego this due process concern.

Conclusion

In addressing this issue of cost and time, EDP will go a long way in preserving the efficiency and relevance of arbitration. Having said that, since an EDP award is yet to be duly enforced, the impact of this new provision remains to be seen.

Footnotes

1 LCIA Rules 2020, art 22.1(viii).

2 SUMMARY DETERMINATION, Black's Law Dictionary (11th ed. 2019).

3 Rule 29 of the SIAC Rules provides - the basis for EDP (Rule 29.1), contents of the application (Rule 29.2), steps to be taken by the tribunal before deciding an EDP application (Rule 29.3), contents to the EDP decision and deadline for making such decision (Rule 29.4).

4 Docket Number [2014] EWHC 2510 (Comm).

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