REUTERS | Max Whittaker

Summary procedures in international arbitration: a case for flexibility

It should not be a controversial proposition that an international arbitration tribunal should have the power to dismiss hopeless claims and defences without having to incur the time and expense of a full-blown arbitration. There has been some doubt about the tribunals’ jurisdiction to adopt a summary procedure and calls have been made to clarify the position, for example by amending institutional rules. Indeed, some rules already contain express provisions for summary disposal of a case, such as the JAMS Comprehensive Rules or the procedure under rule 41.5 of the ICSID Arbitration Rules. The latest institution to consider including such a provision in its rules is the Arbitration Institute of the Stockholm Chamber of Commerce (Article 39 of the draft new rules).

One should be clear, however, as to what one means by a summary procedure. In English courts, the summary procedure under CPR 24.2 requires the applicant to establish that the other side has no realistic prospect of succeeding in its claims or defence (as the case may be) and that there is no other compelling reason why the case should proceed to trial. Therefore, the test in deciding an application for summary judgement is different to the test of the balance of probabilities that the court applies at trial. The court is not to conduct a mini-trial, but to assess whether the case is fit for trial in the first place (Three Rivers DC v Bank of England).

In this sense a summary procedure is a different exercise to bifurcation, that is, lopping off parts of a case that may be decided first, and which, if decided in a particular way, may dispose of the case as a whole. In the case of bifurcation, the relevant test (if English law applies) remains that of the balance of probabilities, and the issue is fully investigated and tried in the usual way. There is little doubt that most, if not all, major jurisdictions and institutional rules allow the tribunal to bifurcate proceedings as part of the overall broad power to conduct proceedings as it sees fit.

The question then is whether the tribunal may dispose of a case without hearing full evidence and argument? Ultimately, this is a question of procedure. In England, it is submitted that the better view is that, subject to the parties’ agreement, the tribunal may summarily dispose of a case or an issue by relying on the broad powers contained in section 34 of the English Arbitration Act 1996 (AA 1996):

“It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter”.

Major arbitration rules provide for similarly wide powers in relation to procedure and evidence: see Articles 14.5 and 22.1 of the London Court of International Arbitration (LCIA) Rules and Articles 19 and 22 of the International Chamber of Commerce (ICC) Rules.

It is true that this power is subject to the duty to allow each party “a reasonable opportunity of putting his case and dealing with that of his opponent” (section 33 of the 1996 Act). Moreover, enforcement of a summary award might potentially be refused on the basis of Article V(b) and (d) of the New York Convention 1958. However, these factors are not absolute bars to a summary procedure, as Blair J noted in Travis Coal Restructured Holdings v Essar Global Fund:

“In so far as [the defendant] submits that (at least in the absence of an express power) a summary process by arbitrators necessarily amounts to a denial of due process, I do not accept such a submission”.

With this in mind, is it necessary to amend institutional rules to include an express power to summarily decide a case? The principled answer must be that where the applicable rules and, in ad hoc arbitrations, the law of the seat, provide the tribunal with a broad power to decide all procedural and evidential matters, there is no need to spell out the power to decide a case on a summary basis. Doing so is duplicative and a surplusage that risks creating more confusion than it solves. If one sets out various instances of how the general power is to be exercised, does that mean that it is not so general after all, and if not, what else is not included in it and needs to be set out expressly?

An express provision for a summary procedure also introduces a rather binary distinction between a “normal” and a “summary” procedure, whereas the reality is that the tribunal has a sliding scale of options, of which a “summary” procedure is but an instance. Indeed, even the term “summary procedure” has no uniform meaning. Ultimately, as Blair J observed in Travis Coal, whether a particular procedure adopted by a tribunal is within its power and is otherwise fair is a:

“… question of substance, rather how it is labelled. It depends on the terms of the arbitration agreement and the procedure in fact adopted by the Tribunal.”

There is undoubtedly some benefit in clarifying that the tribunal has the power to decide a case or an issue on a summary basis. It creates certainty. However, there is also danger that in pursuit of certainty one loses flexibility. What if the procedure set out in Article 39 of the draft new SCC rules is not quite right for a particular case? Can the tribunal depart from it? If so, why set it out in the first place?

Finally, what would be the likely practical effect of expressly setting out a summary procedure in institutional rules? One of the issues in international arbitration is the perceived lack of robustness of tribunals and the deference they often show to the parties in order to avoid the risk of the award being set aside or refused recognition on the ground that a party was not afforded a (reasonable) opportunity to present its case. Would having an express power to adopt a summary procedure change that? The more likely answer is no.

Many tribunals are more likely to err on the side of caution and seek to please both parties by considering carefully an application for summary judgment but then deciding that the case should nevertheless go to full trial. This will only increase costs and lead to delay.

Moreover, the label “summary” in itself might suggest, at least optically, that the award based on a summary procedure is somehow less than a proper award. In practical terms it might shift the burden on the enforcing party to show that even though it has a “summary award”, the other side did have an opportunity to present its case.

Conversely, a robust tribunal would be able to adopt an appropriate procedure that saves time and cost without needing the cover of the label of a “summary” procedure. Provided the arbitration rules are drafted so as to give the tribunal the widest powers over procedure and evidence, the tribunal should have no difficulty in adopting an appropriate procedure where the case or defence are obviously hopeless.

If nevertheless it is felt that in the interest of clarity, an express provision should be included in the rules that already provide the tribunal with a very broad power to decide all procedural and evidentiary matters, then, in the interest of preserving flexibility, such power should be expressed in the most economical manner.

King & Spalding Grigori Lazarev

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