On 9 July 2021, the United Nations Commission on International Trade Law, commonly known as UNCITRAL, adopted the UNCITRAL Expedited Arbitration Rules, which came into force on 19 September 2021 (the “(UNCITRAL) Expedited Rules”).
UNCITRAL has also published a Draft Explanatory Note to the Expedited Rules (the “Explanatory Note”), containing useful comments on the application and interpretation of the Expedited Rules.
Interaction with the UNCITRAL Arbitration Rules
The Expedited Rules contain 16 Articles which are incorporated as an Appendix to the 2013 UNCITRAL Arbitration Rules currently in force and shall be read in conjunction with them.
In this respect, a new paragraph 5 is added to Article 1 of the UNCITRAL Arbitration Rules, which provides that “[t]he 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, listing the provisions of the UNCITRAL Arbitration Rules that do not apply to expedited arbitrations, unless the parties agree otherwise (i.e., Article 3(4)(a) and (b) (Notice of Arbitration); Article 6(2) (Designating and Appointing Authorities); Article 7 (Number of Arbitrators); Article 8(1) (Appointment of Arbitrators); first sentence of Article 20(1) (Statement of Claim); Article 21(1) and (3) (Statement of Defence); Article 22 (Amendments to the Claim or Defence); and second sentence of Article 27(2) (Evidence) of the UNCITRAL Arbitration Rules).
Scope of Application of the Expedited Rules
Article 1 of the UNCITRAL Expedited Rules provides that the Expedited Rules only apply where the parties expressly so 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. For instance, the ICC Expedited Procedure Provisions are applicable in cases where the amount in dispute does not exceed USD 2 million or USD 3 million (depending on the date of the arbitration agreement).
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”.
For instance, should the parties decide to switch to expedited arbitration after a three-member tribunal has already been constituted pursuant to the UNCITRAL Arbitration Rules, the parties would have to agree on whether to preserve the three-member tribunal (which is possible under Article 7 of the Expedited Rules) or to appoint a sole arbitrator, and then also consider the status of statements and evidence submitted to the former tribunal, as noted in paragraph 6 of the Explanatory Note.
Factors to Consider 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, i.e.:
– The urgency of resolving the dispute;
– The complexity of the transactions and the number of parties involved;
– The anticipated complexity of the dispute;
– The anticipated amount of the dispute;
– The financial resources available to the party in proportion to the expected cost of the arbitration;
– The possibility of joinder or consolidation; and
– The likelihood of an award being rendered within the timeframes provided in Article 16 of the Expedited Rules (i.e., normally 6-9 months).
Occasions Where the Expedited Rules Cease to Apply
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.
Notice of Arbitration and Statement of Claim Shall Be Filed Together
Article 4(2) of the Expedited Rules provides that the claimant shall communicate to the respondent its notice of arbitration together with its statement of claim, which may be combined in a single document. This provision modifies Article 20(1) of the UNCITRAL Arbitration Rules, which provides that the statement of claim shall be communicated within a period of time to be determined by the arbitral tribunal.
Article 4(1) of the Expedited Rules then provides that the notice of arbitration shall include (a) a proposal for the designation of an appointing authority, if one has not already been agreed upon, as well as (b) a proposal for the appointment of an arbitrator.
To compare, in order to facilitate the speedy constitution of the arbitral tribunal in expedited arbitrations, these two elements, i.e., a proposal for an appointing authority and an arbitrator, which are only optional, i.e., “may” be included in the notice of arbitration under Article 3(4) of the UNCITRAL Arbitration Rules, are now made compulsory, i.e., “shall” be included in the notice of arbitration under Article 4(1) of the Expedited Rules.
As clarified in paragraph 27 of the Explanatory Note, a proposal for the appointment of an arbitrator does not mean that a party needs to put forward the name of the arbitrator; rather, a party may suggest a list of suitable candidates or required qualifications, or a mechanism to be used by the parties for agreeing on an arbitrator.
As further explained in paragraph 31 of the Explanatory Note, the claimant does not necessarily have to produce all documents and other evidence upon which it relies with its notice of arbitration and statement of claim, which may be burdensome and counterproductive; instead, it may simply make reference to some of them.
This is possible pursuant to Article 20(4) of the UNCITRAL Arbitration Rules, which was not modified by the Expedited Rules, and is thus still in force, which provides that the statement of claim should, “as far as possible”, be accompanied by all documents and other evidence relied upon by the claimant, or contain references to them. The phrase “as far as possible” provides some leeway to the claimant not to produce all documents upfront, which could also be a strategic move, if it does not wish to lay all its cards on the table at an early stage, before the respondent has had a chance to respond.
Response to Notice of Arbitration and Statement of Defence (and Counterclaim)
Under Article 5(1) of the Expedited Rules, the respondent shall then communicate its response to the notice of arbitration within 15 days from receipt of the notice of arbitration, including its responses to the claimant’s proposals for the designation of an appointing authority and an arbitrator.
Article 5(1) of the Expedited Rules essentially modifies Article 4(1) of the UNCITRAL Arbitration Rules, which provides for a 30-day timeframe for the submission of a response to the notice of arbitration, cutting the time limit in half for the sake of expeditiousness.
Under Article 5(2) of the Expedited Rules, the respondent’s statement of defence is then due within 15 days of the constitution of the arbitral tribunal. To compare, Article 21(1) of the UNCITRAL Arbitration Rules does not impose a specific timeframe, but instead provides that the statement of defence shall be communicated “within a period of time to be determined by the arbitral tribunal.”
For the sake of expeditiousness, a 15-day time frame is, thus, introduced for fast-track arbitrations, which may be, nevertheless, extended under Article 10 of the Expedited Rules, which empowers the tribunal to “extend or abridge any period of time prescribed under the UNCITRAL Arbitration Rules and the Expedited Rules”, if it considers it appropriate to do so.
Also, Article 12 of the Expedited Rules preserves the right of the parties to make counterclaims and claims for the purpose of set-off (together herein referred to as “counterclaims”), yet it introduces a higher threshold, by requiring the respondent to introduce its counterclaims at the latest in its statement of defence, unless the arbitral tribunal considers it appropriate to allow such counterclaims at a later stage “having regard to the delay in making it or prejudice to other parties or any other circumstances.”
To compare, Article 21(3) of the UNCITRAL Arbitration Rules is slightly more lenient, providing that the respondent may make counterclaims “[i]n its statement of defence, or at a later stage in the arbitral proceedings if the arbitral tribunal decides that the delay was justified under the circumstances”.
Amendments to Claims
The default rule under Article 13 of the Expedited Rules is that a party may not amend or supplement its claims, defences or counterclaims during the course of the arbitral proceedings, unless the arbitral tribunal considers it appropriate.
In comparison, the default rule under Article 22 of the UNCITRAL Arbitration Rules is that a party may amend or supplement its claims, defences or counterclaims, during the course of the arbitral proceedings, unless the arbitral tribunal considers it inappropriate.
To prevent potential delays, the threshold for making amendments is, thus, set slightly higher in Article 13 of the Expedited Rules, as compared to Article 22 of the UNCITRAL Arbitration Rules.
As also aptly observed in paragraph 80 of the Explanatory Note, if counterclaims and amendments are introduced, the Expedited Rules might no longer be appropriate for resolving the dispute, in which case the parties may agree, or a party may request the arbitral tribunal to determine, that the Expedited Rules shall no longer apply to the arbitration pursuant to Article 2 of the Expedited Rules.
Article 14 of the Expedited Rules reinforces the discretionary power of the tribunal to decide, “after inviting the parties to express their views”, whether any further written statements shall be made by the parties, after the Statement of Claim and Statement of Defence.
The same discretionary power is entrusted to the tribunal under Article 24 of the UNCITRAL Arbitration Rules; yet, under the Expedited Rules, one round of submissions might be more appropriate, compared to non-expedited arbitrations, where more submissions might be necessary, especially where multiple parties and complex factual or legal issues are involved.
Number of Arbitrators, Constitution of the Tribunal and Appointing Authorities
Under Article 7 of the Expedited Rules, unless otherwise agreed, the default number of arbitrators shall be one arbitrator who, as envisaged in Article 8(1) of the Expedited Rules, shall be appointed jointly by the parties. In comparison, the default number of arbitrators under Article 7(1) of the UNCITRAL Arbitration Rules is three arbitrators. Having one arbitrator reduces costs.
If the parties fail to reach an agreement on the sole arbitrator within 15 days after a proposal has been received by all other parties, which often happens in practice, any party may request the intervention of the appointing authority (Article 8(2) of the Expedited Rules).
When the parties have not agreed on an appointing authority within 15 days after a proposal for the designation of an appointing authority has been received by all other parties, Article 6 of the Expedited Rules authorizes any party to request the Secretary-General of the Permanent Court of Arbitration to either designate the appointing authority or itself serve as the appointing authority, if it considers it appropriate to do so.
Expedited Conduct of the Proceedings
Article 3 of the Expedited Rules imposes a general obligation on the parties and the arbitral tribunal to act “expeditiously”, while encouraging the use of “any technological means”, including remote hearings, to facilitate the conduct of the proceedings. The adoption of a fast-track procedure should not come to the expense of due process, however, to avoid jeopardizing the enforceability of the resulting arbitral award.
Article 9 of the Expedited Rules introduces the short timeframe of 15 days from its constitution within which the tribunal “shall consult the parties, through a case management conference or otherwise”, which is not found in the corresponding Article 17(2) of the UNCITRAL Arbitration Rules.
Article 10 of the Expedited Rules reinforces the discretionary power of the tribunal “to extend or abridge any period of time”, as is the case under Article 17(2) of the UNCITRAL Arbitration Rules, with the exception of the timeframe for the issuance of the award, which shall be, in principle, six months from its constitution, pursuant to Article 16(1) of the Expedited Rules.
Article 11 of the Expedited Rules then emphasizes the discretionary power of the tribunal to decide that no hearings shall be held, in the absence of a request from a party to hold hearings, in which case, the arbitration is to be conducted on the basis of documentary evidence only. Tribunals in non-expedited UNCITRAL arbitrations have the same discretion to decide that no hearings shall be held, yet the norm, at least for non-expedited arbitrations, is that oral hearings are normally held.
Article 15 of the Expedited Rules reinforces the discretionary power of the tribunal to “decide which documents, exhibits or other evidence the parties should produce”, as well as to reject, unless a request is made by all parties, a document production phase, which has the potential of causing delays.
Time Period for Rendering the Final Award
Pursuant to Article 16(1) of the Expedited Rules, the default position is that the award must be rendered within six months from the date of the constitution of the tribunal, unless the parties agree otherwise. To compare, the UNCITRAL Arbitration Rules are silent on the timeframe within which a tribunal shall render its award.
The remaining three paragraphs of Article 16 then provide a mechanism to accommodate extensions of time which, although unpleasant to the parties, are sometimes warranted.
In particular, Article 16(2) of the Expedited Rules empowers the tribunal, “in exceptional circumstances and after inviting the parties to express their views”, to extend the time period for rendering its award for three more months, i.e., no more than “a total of nine months from the date of the constitution of the arbitral tribunal.”
Article 16(3) of the Expedited Rules then provides that, if the tribunal considers that it is at risk of not rendering an award within nine months, it shall propose a final extended time limit, which shall be adopted only if all parties so agree.
Finally, Article 16(4) of the Expedited Rules stipulates that if a party objects to the extension in paragraph 3, any party may make a request that the Expedited Rules no longer apply to the arbitration. After hearing the parties’ views, the tribunal may then make a determination that the Expedited Rules will no longer apply and continue to conduct the arbitration under the UNCITRAL Arbitration Rules.
Moreover, as clarified in paragraph 90 of the Explanatory Note, unless otherwise agreed, an arbitral tribunal in an expedited arbitration shall state in its award the reasons upon which the award is based, as required under Article 34(3) of the UNCITRAL Arbitration Rules, which continues to apply in expedited arbitrations.
The rationale of this is that “[r]equiring the arbitral tribunal to provide a reasoned award can assist its decision-making and ensure fairness as the parties will find that their arguments have been duly considered and would be aware of the basis upon which the award was rendered”, as paragraph 90 of the Explanatory Note further explains.
Applicability of Expedited Rules to Investment Arbitrations
The Explanatory Note envisages, in paragraph 94, that the suitability of the Expedited Rules for investment arbitrations is a question left to the disputing parties, who may apply the Expedited Rules if they explicitly so agree.
Paragraph 94 of the Explanatory Note clarifies, in this respect, that, given that express consent is needed for the Expedited Rules to apply, a reference to the UNCITRAL Arbitration Rules in investment treaties (regardless of whether the reference was included prior to or after the effective date of the Expedited Rules) would not be construed as consent by the State Parties to the Expedited Rules.
Model Arbitration Clause for Contracts
UNCITRAL has enclosed as an Annex to the Expedited Rules a proposed model arbitration clause to be adopted by interested parties who wish to provide for arbitration under the Expedited Rules in their contracts, which reads as follows:
Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Expedited Arbitration Rules.
UNCITRAL also notes that the parties “should consider” specifying the appointing authority, as well as the place and language of arbitration by proposing the following additions to its model arbitration clause:
(a) The appointing authority shall be … [name of institution or person]; (b) The place of the arbitration shall be … [town and country];(c) The language to be used in the arbitral proceedings shall be …[.]
Model Statement for Arbitrators
UNCITRAL has also annexed to the Expedited Rules a model statement, noting that parties should consider requesting from the arbitrator that the following addition be made to its statement of independence, pursuant to Article 11 of the UNCITRAL Arbitration Rules:
I confirm, on the basis of the information presently available to me, that I can devote the time necessary to conduct this arbitration diligently, efficiently, expeditiously and in accordance with the time limits in the UNCITRAL Arbitration Rules and the UNCITRAL Expedited Arbitration Rules.
In summary, the UNCITRAL Expedited Rules, which took effect on 19 September 2021, are a welcome addition to the UNCITRAL Arbitration Rules, especially during a time where, as a result of the disruptions caused by the COVID-19 pandemic, there is an increased need for expedited dispute resolution mechanisms. Following the example of leading arbitral institutions, which have already adopted fast-track procedures into their rules, UNCITRAL now also offers to interested parties a set of balanced and efficient ad hoc rules, enabling them to settle their disputes in a more expeditious and cost-effective manner.