REUTERS | Fadi Al-Assaad

Centres in the Middle East need to catch up when it comes to expedited procedures

We often tell clients about the best features of international arbitration: enforceability of awards, avoiding national courts, flexibility, and the ability of parties to select arbitrators. But what about the worst features? According to the 2018 Queen Mary/White & Case International Arbitration Survey, users of international arbitration complain most strongly about costs, lack of effective sanctions, lack of power relating to third parties, and speed.

The topic of this blog, expedited procedures in international arbitration, addresses two of the four worst features as experienced in the Middle East, namely, costs and speed, and prescribes the fix.

Expedited procedures

Let’s start with summarising expedited procedures (sometimes described as fast track arbitration). An expedited procedure refers to an arbitration in which the parties have agreed to have disputes of a certain type proceed at an accelerated pace (“accelerated procedure” can sometimes refer to a related but different concept, which is outside the scope of this blog; here, we simply mean a compact timetable). While some forms of expedited procedure have been around for a long time, arbitration centres around the world have realised in the past few years that a significant proportion of arbitrations involve claims that involve some combination of relatively low quantum and that are non-complex in terms of substantive issues. As a result, most major arbitration centres have adopted expedited procedures for certain types of disputes. The 2014 LCIA Rules and the 2016 DIFC-LCIA Rules are notable exceptions.

Expedited rules vary but in general they can be categorised into automatic application or opt-in camps. Under automatic application, a dispute involving claims under a certain threshold is automatically diverted to an expedited procedure. Under opt-in, however, the parties typically must agree on adopting the expedited procedure; if they do not agree, the procedure defaults to the standard rules of that institution. An alternative form of opt-in, such as the 2016 SIAC Rules, requires one party to file an application in order to proceed under the expedited procedure, but does not require agreement from the opposing party. Further permutations such as “opt-out” provisions can also be found.

As to the key features of expedited procedure, the following list, based on the 2017 ICC Rules, is fairly representative:

  • Appointment of a sole arbitrator notwithstanding any contrary provision of the arbitration agreement.
  • A case management conference within a few weeks of the case filing.
  • The tribunal may decide the case on the documents only.
  • The tribunal may limit the number, length, and scope of the written submissions and written witness evidence.
  • A final award issued within six months of the case management conference.

The table below indicates how certain major centres approach the quantum threshold and the automatic application/opt-in question.

Arbitration institutional rules Threshold amount for value of dispute Automatic application or opt-in
ICC Rules 2017 US $2 million (Article 30(2)) Automatic application. Opt-in available for higher value disputes.
ICDR Rules 2014 US $250,000 (Article 1(4)) Automatic application. Opt-in available for other disputes.
CIETAC RMB 5 million (Article 56.1, Chapter IV) Automatic application. Opt-in available for higher value disputes.
SIAC Rules 2016 SGD 6 million (Rule 5.1) Opt-in.
HKIAC Rules 2013 HK $25 million (Article 42) Opt-in.
SCC Expedited Arbitration Rules 2017 No threshold amount Opt-in.
Swiss Chambers’ (SCAI) Rules 2012 CHF1 million (Article 42(2)) Automatic application. Opt-in available for other disputes.

The Middle East dispute resolution landscape

As is evident from the table, arbitration centres around the world are starting to grapple with the problem of small or non-complex claims that would traditionally be dealt with under conventional arbitration procedures. However, so far, arbitration centres in the Middle East have resisted changing their rules. But before we delve further into the arbitration procedures of Middle East institutions, let’s start with considering the default landscape for resolving commercial disputes in the region: litigation in state courts.

By one measure, out of 12 jurisdictions in the Middle East, fewer than four have courts that can fast track (certain) commercial claims. Further, as these state courts generally consist of several tiers, the appeal process can result in decisions not being handed down for two to three years. Where there are exceptions, such as the small courts tribunal of the Emirate of Ras Al Khaimah, the claim amounts are often required to fall under US $10,000.

The upshot is that, in general, commercial litigants in the region do not have access to a reliable fast track court that can bring a debtor to justice efficiently. Thus, it is not uncommon for a creditor to write off a debt of several hundred thousand dollars. This fact about the region’s litigation landscape forms the backdrop to the international arbitration regime. Where efficient and proportionate litigation options are not available for certain commercial claims, there is that much more reason to implement options for fast-track arbitration.

Raising awareness in the region for expedited procedures

So, what do the Middle East centres offer in terms of expedited procedures? At the moment, most of the prominent centres, such as DIFC-LCIA and DIAC in Dubai, CRCICA in Cairo, QICCA in Doha, do not offer expedited procedures. There are exceptions, such as the BCDR-AAA in Bahrain, which does provide for fast track procedures. But there is an obvious gap between the needs of parties and options on the table. So far, the regional arbitration centres have failed to capitalise on this gap and seem to understand their mandate as a forum for resolving only high value disputes.

That said, this topic has been the subject of panel discussions this season in Dubai and elsewhere in the region. Anecdotally, I have experienced broad consensus among practitioners in the region who have echoed the following: no longer should the creditor of a relatively small claim feel that it has no avenue for collection; nor should a would-be respondent consider itself immune to a meritorious claim simply because the fixed costs of an arbitration far outweigh the prospect of a favourable award.

In fact, the upfront arbitration costs associated with the centre and the tribunal further discourage claimants from commencing proceedings where the claim quantum is small. In other words, in the mind of the typical arbitration claimant (even more than a litigation claimant facing somewhat nominal court fees), there is often a high critical claim value below which it is simply not worth embarking on proceedings.

The hope is that with enough awareness the regional arbitration centres will wake up to an entirely untapped market and revise their rules. A change in rules, particularly an automatic application of expedited procedure, would lead to an uptick in cases filed before regional centres where the relevant (underlying) arbitration clauses already refer to such centres. That in turn would result in regional parties updating arbitration clauses specifically to include a regional centre, in situations where previously a reference would have been made to a centre outside of the region.

Introducing revised rules would of course pose new challenges. For example, there is the common riposte that guerrilla tactics are all too common in the region and expedited procedure would worsen due process paranoia and imperil awards. However, evidence from other regions suggests that the fear that awards under a fast track procedure being set aside are largely unfounded.

That is not to say that such critiques do not warrant further discussion; they absolutely do, but the point for now is that we have to start the conversation and no longer ignore the reality that the Middle East needs expedited procedures.

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