The Swiss Association of Engineers and Architects (SIA) has issued new arbitration rules, replacing the predecessor rules from 1977. The new rules entered into force on 1 January 2018 and apply to all arbitration proceedings under the SIA Rules initiated after 1 January 2018, irrespective of when the parties entered into their arbitration agreement.
Although the SIA Rules are essentially meant to apply to Swiss domestic construction disputes, nothing prevents their application to other kinds of contractual disputes, whether domestic or international.
The SIA Rules have been adapted to take into account the significant changes to the Swiss arbitration legislation since 1977. The revised SIA Rules include a number of modern features, some of which have been inspired by prominent arbitration rules. The drafters of the new SIA Rules have also adopted innovative features, which are specific to the SIA Rules (and tailored to construction disputes). In particular, the new SIA Rules provide for a mandatory instruction hearing, allow the arbitral tribunal to appoint a technical expert and set out a so-called urgent determination procedure.
Modernised arbitral proceedings
As part of the revision of the SIA Rules, the SIA head office is required to play a greater role in the arbitral proceedings. For instance, the request for arbitration must be filed with the SIA head office. The SIA head office also plays a (limited) role in the constitution of the arbitral tribunal and retains a copy of the award. Although this amounts to an increased institutionalisation of the arbitral proceedings in comparison to the 1977 SIA Rules, the SIA head office still plays a very limited role in comparison to other arbitral institutions, thus providing for greater procedural flexibility.
Similarly to other arbitral rules, however, the revised SIA Rules try to foster procedural efficiency, and thus set strict time limits for the arbitral proceedings. By way of example, the respondent is required to submit its answer to the claimant’s request for arbitration within 30 days following its notification. The arbitral tribunal is also required to hold a case management conference within 30 days following its constitution in order to establish a procedural timetable. Surprisingly, however, the revised SIA Rules do not set any deadline for issuing the final award.
Following the general trend towards ADR, the new SIA Rules try to encourage the parties to solve their dispute amicably. Notably, they provide that the arbitral tribunal may try to facilitate a settlement between the parties at any time. The most remarkable feature, however, consists in the mandatory instruction hearing.
Mandatory instruction hearing
According to the new SIA Rules, the arbitral tribunal must invite the parties to an instruction hearing within 30 days after receiving the respondent’s statement of defence or the claimant’s reply to the respondent’s counterclaim (if any).
During this hearing, the arbitral tribunal provides the parties with a preliminary (oral) assessment of the case’s prospects and risks based on its study of the file. By doing so, the arbitral tribunal will allow the parties to reconsider their initial expectations, thus providing the parties with a basis for an amicable settlement of their dispute.
The main drawback of such an instruction hearing is that a party might challenge the award because it considers that the arbitrator has prejudged the case. This risk might lead arbitrators to exercise particular caution when providing their initial assessment of the case, even if this means that the parties will have less clarity as to the potential outcome of the dispute.
Appointment of a technical expert to assist the arbitral tribunal
Given the increased role played by experts in arbitral proceedings (not least in construction disputes), the SIA Rules include new provisions allowing the arbitral tribunal to appoint a so-called technical expert for the entirety of the arbitral proceedings.
The said technical expert acts solely as a consultant. They are neither an arbitrator nor a tribunal-appointed expert. Technical experts are, however, subject to the same standards of impartiality and independence as arbitrators. They can be challenged following the same procedure.
This new feature allows the arbitral tribunal to obtain the necessary expertise whilst avoiding the costs and delays generally associated with formal expert reports. In this sense, this feature might provide for more cost-efficient and swifter proceedings, thus taking into account the main concerns expressed by users (see our earlier blog).
Urgent determination procedure
Perhaps the most innovative element in the revised SIA Rules is the new urgent determination procedure. This feature must not be confused with the so-called emergency arbitrator proceedings for interim relief that have been adopted by a number of arbitral institutions in recent years.
This unique procedure allows a party to obtain a declaratory award on specific issues, which are exhaustively listed in the annex to the SIA Rules. These issues typically arise in construction disputes and require a swift solution in the interest of planning and legal certainty. They include the right to order a variation, violation of an obligation to cooperate, and non-performance.
Once the SIA head office transmits the case file to the arbitrator, the latter has 30 days to render his or her declaratory decision on any of these issues. Such an award will have the effect of a final award, unless one of the parties initiates a regular arbitration within 30 days of receipt of the written notification of the reasoning of the award.
This procedure should be well received by users, as certain types of disputes surrounding a construction project can be solved in a very efficient manner, with all the advantages that come with a final and binding arbitral award.
The revision by the SIA of its arbitration rules provides a welcome update, considering that arbitration is a popular dispute resolution mechanism in the construction industry. The SIA Rules focus on efficient, cost-effective dispute resolution, which will certainly make them attractive for users. However, it remains to be seen how the SIA Rules’ new features (in particular the urgent determination procedure and the preliminary assessment provided at the instruction hearing) will be received by practitioners.