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A Guide to the ICDR International Arbitration Rules, 2nd Edition by Gusy, Martin F; Hosking, James M (21st February 2019)

Part II Commentary on the International Expedited Rules, 41 Articles E-2 to E-5—Commencing a Case Under the Expedited Procedures

Martin F Gusy, James M Hosking

From: A Guide to the ICDR International Arbitration Rules (2nd Edition)

Martin F. Gusy, James M. Hosking

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 25 August 2019

Subject(s):
Arbitration — Counterclaims

(p. 335) 41  Articles E-2 to E-5—Commencing a Case Under the Expedited Procedures

Article E-2

Parties are to present detailed submissions on the facts, claims, counterclaims, setoffs and defenses, together with all of the evidence then available on which such party intends to rely, in the Notice of Arbitration and the Answer. The arbitrator, in consultation with the parties, shall establish a procedural order, including a timetable, for completion of any written submissions.

Article E-3

The Administrator may conduct an administrative conference with the parties and their representatives to discuss the application of these procedures, arbitrator selection, mediating the dispute, and any other administrative matters.

Article E-4

If an objection is submitted before the arbitrator is appointed, the Administrator may initially determine the applicability of these Expedited Procedures, subject to the power of the arbitrator to make a final determination. The arbitrator shall take into account the amount in dispute and any other relevant circumstances.

Article E-5

If, after filing of the initial claims and counterclaims, a party amends its claim or counterclaim to exceed USD $250,000.00 exclusive of interest and the costs of arbitration, the case will continue to be administered pursuant to these Expedited Procedures unless the parties agree otherwise, or the Administrator or the arbitrator determines otherwise. After the arbitrator is appointed, no new or different claim, counterclaim or setoff and no change in amount may be submitted except with the arbitrator’s consent.

(p. 336) I.  Introduction

41.01  Articles E-2 to E-5 contain provisions on how an arbitration should be commenced under the Expedited Procedures. Although these provisions preserve the arbitrator’s authority to resolve certain issues, Articles E-2 to E-5 generally address matters that will not yet involve the arbitrator. These include submission of the initiating document and answering document (Article E-2), the preliminary administrative conference call (Article E-3), objection to application of the Expedited Procedures (Article E-4), and amendment of claims and counterclaims (Article E-5).

41.02  The provisions in Articles E-2 to E-5, like those in analogous provisions of other institutions’ expedited procedures, are designed to facilitate an expedited resolution of the dispute by frontloading certain activities in the arbitration, including by filing detailed submissions with evidence at an early stage of the arbitration and by preliminarily resolving procedural matters, such as objections to the Expedited Procedures and case amendments, before the case is transferred to the arbitrator.

41.03  Parallel provisions on commencing the arbitration under the ICDR Rules are found in Articles 2 (Notice of Arbitrations), 3 (Answer and Counterclaim), 4 (Administrative Conference), and 9 (Amendment and Supplement of Claims, Counterclaims, or Defences). Article 1(4) of the ICDR Rules makes clear that the provisions of the main rules will apply to expedited arbitrations to the extent that they do not conflict with the Expedited Procedures.1 Consequently, Articles 2, 3, 4, and 9 can be used to fill any procedural ‘gaps’ that may arise in commencing an expedited arbitration, provided that such gap-filling is consistent with Articles E-2 to E-5.

II.  Textual commentary

A.  Detailed submission (Article E-2)

Article E-2

Parties are to present detailed submissions on the facts, claims, counterclaims, setoffs and defenses, together with all of the evidence then available on which such party intends to rely, in the Notice of Arbitration and the Answer. The arbitrator, in consultation with the parties, shall establish a procedural order, including a timetable, for completion of any written submissions.

41.04  Article E-2 requires parties proceeding under the Expedited Procedures to make ‘detailed submissions’ on their claims or counterclaims in each party’s first written submission to the ICDR. The requirement for ‘detailed submissions’ is in addition to the basic information required by Articles 2 and 3, which govern the Notice of Arbitration and Answer, respectively.2

(p. 337) 41.05  The ‘detailed submissions’ required by Article E-2 include elaboration ‘on the facts, claims, counterclaims, setoffs and defences’, as well as ‘all of the evidence then available on which such party intends to rely’. This type of detailed submission is more similar to the parties’ statements of claim or defence/counterclaim that are typically submitted after the case has been referred to the tribunal, where the arbitration proceeds under the main ICDR Rules. By requiring the early submission of a detailed case, however, Article E-2 seeks to streamline the proceeding, by limiting the number of necessary written submissions and by making the parties’ formulation of their claims and counterclaims known early.3

41.06  The ICDR is amongst the few institutions that have expedited procedures that require such detailed submissions at the outset of the case. Many, such as the HKIAC and Swiss Rules, also contemplate limited written submissions but expressly provide for the parties to submit additional written submissions (typically statements of claim and defence/counterclaim) after the initial filings.4 The SCC adopts an approach similar to the ICDR by requiring detailed submissions (along with the evidence relied upon) with the Request for Arbitration and Answer and expressly providing that each respectively ‘also constitutes the Statement of Claim’ and ‘Statement of Defence’.5

41.07  Whether the ICDR’s Expedited Procedures apply to a dispute will not always be known at the time a party files the Notice of Arbitration to commence the arbitration, however, meaning that a Claimant may file a Notice of Arbitration that is less detailed than Article E-2 contemplates. For example, even if a Claimant’s claim falls below the US$250,000 threshold, the arbitration will proceed under the normal ICDR Rules if the Respondent’s counterclaim exceeds this threshold. And a Claimant anticipating such a counterclaim may not wish to pre-emptively file details of its claims and evidence if not required. Alternatively, the parties may simply be unaware that their case is to proceed under the Expedited Procedures and therefore not recognize that additional initial filing requirements apply.

41.08  In such cases, where the initial case filings do not comply with Article E-2, the ICDR will work with the parties to supplement their Notice of Arbitration and Answer with the required detailed information and evidence before the case is transferred to the arbitrator. As discussed in Chapter 2, failure to comply with a request by the ICDR to correct a deficiency in the Notice of Arbitration, in particular, can subject a party to a ‘deficient filing fee’.6

(p. 338) 41.09  Notwithstanding Article E-2’s requirement for early filing of detailed submissions and evidence, the provision makes clear that additional written submissions are allowed where required. Once the case is transferred to the arbitrator, the ‘arbitrator, in consultation with the parties, shall establish a procedural order, including a timetable, for completion of any written submissions’. Such procedures for additional written submissions will need to be limited in time and scope, however, to comply with the requirement in Article E-8 that all written submissions be filed within sixty days of the arbitrator’s procedural order.

B.  Administrative conference (Article E-3)

Article E-3

The Administrator may conduct an administrative conference with the parties and their representatives to discuss the application of these procedures, arbitrator selection, mediating the dispute, and any other administrative matters.

41.10  As with Article 4, Article E-3 incorporates longstanding ICDR practice according to which the ICDR regularly conducts an administrative conference before the tribunal is constituted to facilitate party discussion and agreement on organizational issues such as arbitrator selection, mediating the dispute, and other administrative matters.7 In addition to the matters typically discussed at an administrative conference under Article 4, an administrative conference held under Article E-3 may also discuss application of the Expedited Procedures where disputed. No other major international institution with expedited rules provides for such a conference.8

C.  Objection to the applicability of the Expedited Procedures (Article E-4)

Article E-4

If an objection is submitted before the arbitrator is appointed, the Administrator may initially determine the applicability of these Expedited Procedures, subject to the power of the arbitrator to make a final determination. The arbitrator shall take into account the amount in dispute and any other relevant circumstances.

41.11  Article E-4 provides that the ICDR can make an initial determination as the applicability of the Expedited Procedures if a party raises an objection before the case is transferred to the arbitrator. Once the arbitrator is appointed, however, the arbitrator has the authority to finally determine whether the arbitration should proceed under the standard ICDR procedures or Expedited Procedures. SIAC’s expedited procedures allow for a similar allocation of authority, whereby the institute makes the initial determination on the applicability of the expedited procedures and the tribunal retains the authority to determine ‘that the arbitral proceedings shall no longer be conducted in accordance with the Expedited Procedure’.9 The (p. 339) ICC, on the other hand, takes a different approach, whereby the ICC Court (but in consultation with the tribunal and parties) retains ultimate authority to determine applicability of the expedited procedures.10

41.12  Article E-4 is unique amongst the ICDR Rules in that it is one of the few provisions in which the ICDR is granted authority to perform a judicial-type function. Except the preliminary determination under Article E-4 and decisions on time extensions under Article 3(5) and on challenges to arbitrators under Article 14, the ICDR Rules largely allocate all authority to determine legal issues to the tribunal. Even though the ICDR has the initial authority to make a legal determination, the tribunal has the ultimate authority to resolve the issue as discussed.

41.13  Unlike for the arbitrator’s decision, Article E-4 does not provide the factors that the ICDR should consider in making its preliminary assessment on the applicability of the Expedited Procedures. Nonetheless, the ICDR will consider the same factors that the arbitrator is directed to consider—‘the amount in dispute and any other relevant circumstances’. The ICDR is particularly alert to parties that may be inflating the value of their claims or counterclaims to attempt to fall outside the scope of the Expedited Procedures.

D.  Changes of claim or counterclaim (Article E-5)

Article E-5

If, after filing of the initial claims and counterclaims, a party amends its claim or counterclaim to exceed USD $250,000.00 exclusive of interest and the costs of arbitration, the case will continue to be administered pursuant to these Expedited Procedures unless the parties agree otherwise, or the Administrator or the arbitrator determines otherwise. After the arbitrator is appointed, no new or different claim, counterclaim or setoff and no change in amount may be submitted except with the arbitrator’s consent.

41.14  Article E-5 contains two key provisions to ensure that the expedited nature of Expedited Procedures is not undermined by a recalcitrant party: (1) an amendment to the amount in dispute will not negate application of the Expedited Procedures; and (2) a party generally may not amend its case after the arbitrator is appointed. The ICDR provisions are unique in expressly addressing both of these situations.

41.15  With respect to a change in the monetary amount in dispute, Article E-5 makes clear that such changes alone will not take a case outside of the scope of the Expedited Procedures. Instead, whether the Expedited Procedures should continue to apply is left to the discretion of the parties, the ICDR, and ultimately the arbitrator. As mentioned, the ICDR is particularly alert to parties that try to improperly circumvent the Expedited Procedures by artificially inflating the value of claims or counterclaims, and Article E-5 attempts to thwart such behaviour.

41.16  The expedited procedures at other arbitral institutions do not specifically address continued applicability of the expedited rules where the amounts in dispute change. Although institutions such as the ICC and SIAC allow for reconsideration of the applicability of expedited (p. 340) procedures where circumstances in the case may change, which presumably would include a change in the amount in dispute, even though not expressly mentioned. On the other hand, the ICC determines application of its expedited procedures after receipt of the Answer to the Request for Arbitration, which also suggests that subsequent changes to the amount in dispute do not automatically negate application of the expedited procedures.11

41.17  With respect to case amendments more generally, Article E-5 directs that a ‘new or different claim, counterclaim or setoff [or] change in amount’ may only be submitted before the arbitrator is appointed. After the arbitrator’s appointment, such amendments will only be permitted with leave of the arbitrator. Article E-5 does not elaborate on how an arbitrator should assess such a request to amend, but Article 9 (Amendments or Supplements of Claim, Counterclaim, or Defense) in the main Rules provides some guidance. Article 9 provides that the tribunal, when presented with a request to amend, should consider a ‘party’s delay in making [the request], prejudice to the other parties, or any other circumstances’.12 These factors are consistent with the objective of Article E-5 of preventing a party from undermining the efficiency objectives of the Expedited Procedures.

41.18  The majority of expedited procedures at other arbitral institutions do not deal with the issue of case amendments. The ICC and ACICA are two exceptions, however, and similarly appear focused on not allowing an amended claim to undermine the efficiency objectives of expedited procedures. The ICC adopts an approach similar to the ICDR’s and provides that ‘no party shall make new claims’ after the tribunal is constituted, absent the tribunal’s permission.13 ACICA, on the other hand, does not allow amendments ‘[d]uring the course of the arbitral proceeding’ unless the arbitrator ‘considers it appropriate’ and such amendment does not make the ‘amended claim fall outside the scope of the arbitration clause or separate arbitration agreement’.14

Footnotes:

1  See discussion of Art 1(4) and Art E-1 at para 1.56.

2  See discussion of what needs to be included in the Notice of Arbitration and Answer at paras 2.19–2.34 and 3.04–3.06.

3  The Debevoise & Plimpton LLP Protocol to Promote Efficiency in International Arbitration advocates for detailed submissions in the parties’ initial filings as a means to promote efficiency in arbitration. See Debevoise & Plimpton LLP Protocol to Promote Efficiency in International Arbitration, Point 5 (2010) (‘When possible, we will include a detailed statement of claim with the request for arbitration, so that briefing can proceed promptly once the procedural calendar is established’).

4  See HKIAC Rules, Rule 41.2(d) (providing that, after the Answer, ‘the parties shall in principle be entitled to submit one Statement of Claim and one Statement of Defence (and Counterclaim) and, where applicable, a Statement of Defence in reply to the Counterclaim’); Swiss Rules, Rule 42 (providing that, after the Answer, ‘the parties shall, as a rule, be entitled to submit only a Statement of Claim, a Statement of Defence (and counterclaim) and, where applicable, a Statement of Defence in reply to the counterclaim’).

5  See SCC Expedited Rules, Arts 6, 9.

6  See discussion of deficient filing fees at para 2.35; see also ICDR International Arbitration Fee Schedule (1 October 2017) (‘Parties that file Demands for Arbitration that are incomplete or otherwise do not meet the filing requirements contained in the rules shall also be charged the amount specified for deficient filings if they fail or are unable to respond to the AAA’s request to correct the deficiency’).

7  See discussion of administrative conferences under Art 4 at para 4.02.

8  Neither the ACICA, DIS, HKIAC, ICC, SCC, SIAC, or Swiss Rules contain such a provision.

9  See SIAC Rules, Rule 5.4, see also ibid, Rule 5.1 (granting the SIAC president initial authority to determine applicability of the Expedited Procedures).

10  See ICC Rules, App VI, Art 1(4).

11  See ICC Rules, App V1, Art 1(3).

12  See discussion of case amendments at paras 9.12–9.14.

13  See ICC Rules, App VI, Art 3(2).

14  ACICA Expedited Rules, Art 19.