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Applying for summary procedures in international arbitration: striking the balance

The scope of arbitrators’ powers to order summary procedures is open to debate. Any application for summary measures requires careful consideration of the possible benefits to be gained from a successful application on the one hand, and the uncertainty associated with doing so on the other.

Do arbitrators have the power to grant summary procedures?

Whether or not arbitrators have the power to grant summary procedures in a particular case will depend, at least in the first instance, on what the parties have agreed. In some (unusual) cases, parties may have included specific provisions in the arbitration agreement itself. Notably, the arbitration clause in Travis Coal Restructured Holdings LLC v Essar Global Fund Limited (which was found to authorise summary procedures) provided:

“The arbitrators shall have the discretion to hear and determine at any stage of the arbitration any issue asserted by any party to be dispositive of any claim or counterclaim, in whole or part…”

This sort of express language is, however, the exception rather than the rule. Absent this degree of specificity in the arbitration clause, the question shifts to the arbitral rules the parties have selected. A few sets of rules deal with this issue explicitly, notably the Stockholm Chamber of Commerce (SCC) Rules (Article 39(1)), the International Centre for Settlement of Investment Disputes (ICSID) Arbitration Rules (Rule 41(5)), and the Singapore International Arbitration Centre (SIAC) Rules (Rule 29.1). There are some differences in wording and approach: the SCC Rules give tribunals the specific power to decide issues summarily and without taking every procedural step that would otherwise have been undertaken; whereas the ICSID and SIAC Rules allow a party to apply for the early dismissal of a claim (or, under the SIAC Rules, a defence) on the basis that it is manifestly without legal merit, or alternatively (under the SIAC Rules) that it is manifestly outside the jurisdiction of the tribunal.

Other rules, while not addressing summary procedures explicitly, extend broad case management powers to arbitrators, which may be sufficient authority for a tribunal to order summary procedures. These include the International Chamber of Commerce (ICC) Rules (Article 22.2), the London Court of International Arbitration (LCIA) Rules (Article 14), the UNCITRAL Arbitration Rules (Article 17), and the International Centre for Dispute Resolution (ICDR) Rules (Article 20.3). However, in the absence of express provisions there is room for significant debate as to what procedures a tribunal can, and should, order. Arbitrators may associate summary procedures with litigation and instinctively feel uncomfortable with ordering any procedure in the arbitral context if it may create scope for the losing party to argue that it did not have a reasonable opportunity to put its case, or otherwise to challenge the award.

Will awards granted following a summary procedure be upheld by the courts?

There is little English case law on this point, and Travis Coal is the high water mark to date. The case concerned an ICC arbitration in New York. Summary judgment was granted and the unsuccessful party applied to a New York court to vacate the award, alleging failure of due process. At the same time, the successful party sought to enforce the award in England. Blair J in the English Commercial Court observed that summary judgment does not “necessarily amount to a denial of due process” (paragraph 44), that the arbitration was conducted “in an expeditious and cost-effective manner,” that “each party [had] a fair opportunity to present its case,” and that “the procedure fell within [the arbitration clause]” (paragraph 50). He therefore concluded that, on the facts of this case, the tribunal had not exceeded its powers. However, he did not enter into the broader debate on the availability of summary procedures in international arbitration.

In the case of Global International Reinsurance Co. Ltd v TIG Insurance Company 640 F.Supp.2d 519 (2009), a New York court was asked to vacate an arbitration award following a grant of partial summary judgment. The parties’ arbitration agreement provided that “[t]he arbitrator shall be relieved of all judicial formality and shall not be bound by the strict rules of law.” Following a dispositive motion, the arbitrator received written submissions and heard two days of oral argument from the parties. The arbitrator granted summary judgment without discovery or an evidentiary hearing, and the losing party objected. The New York court refused to vacate the award, ruling that the arbitration agreement had been explicit in relieving the arbitrator from the strict rules of law, and that the arbitrator had acted within his powers: “the losing party got all that it bargained for when it elected arbitration” (paragraph 1).

Striking the balance

Even if an application for summary procedures has a real prospect of success, due to the inherent uncertainty in this area, the time, cost and risk that it can add to proceedings may outweigh its intended benefits. A party considering making such an application should therefore consider the following points:

  • Arbitration agreement: Is there any relevant language in the parties’ arbitration agreement? Which rules apply and what do they provide? The more explicitly that summary procedures are authorised, the safer the application.
  • Nature of the application: What is the tribunal being asked to determine on a summary basis? Is it a limited issue or substantially the whole dispute? How straightforward is the underlying subject of the application? Some matters might be easier for a tribunal to determine summarily than others.
  • Procedure: What is the proposed procedure for dealing with the issue and is it appropriate in the circumstances of the case? There is a spectrum of potential procedures that can be ordered. In Travis Coal, the procedure that was adopted was described by Blair J as a “hybrid procedure” – it included an oral hearing and limited cross-examination of witnesses.
Hogan Lovells Nick Kling

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