Expedited Arbitration

One of the key trends in arbitration has been, and continues to be, the need to increase arbitration efficiency. Due to this aspiration and the (mostly) high costs and long duration of arbitration processes, expedited or "fast-track" procedures were developed, with effectiveness being a crucial factor in the success of any arbitral institution. Expedited procedures are particular procedures based on compressed time frames and less onerous procedural steps, guaranteeing that arbitral awards are rendered more quickly and at a lesser cost. It is a shortened, simplified process with a condensed time frame that allows the parties to finally resolve their dispute at a low cost and in a timely manner.

Expedited procedure provisions are issued under many institutional arbitration rules. Many arbitration institutions have their own particular choice of EPP. For instance, expedited procedures under the arbitration rules of SIAC, ICC, HKIAC, SCAI, DIS, SCC, LCIA, ISTAC, etc. Expedited procedure provisions are applied in various methods, expressly (opt-in clause, separate agreement, etc.) and by default (under a prescribed monetary threshold limit).

Some regulations of the institutions, such as the International Chamber of Commerce (ICC), the Swiss Chambers' Arbitration Institution (SCAI), the Hong Kong International Arbitration Center (HKIAC), the Singapore International Arbitration Center (SIAC), and the Istanbul Arbitration Center (ISTAC), include an opt-out mechanism that outlines accelerated processes for claims that fall below a specific monetary threshold. The parties must opt out of the expedited procedure regulations in order for them to be disregarded under the opt-out method.  In this regard, I will further elaborate on the ICC's provisions because it is the most preferred global institution regarding international dispute settlement.

ICC ARBITRATION RULES

The tendency can be observed in the revised norms of arbitral institutions all over the world. Through their 2017 Arbitration Rules (hereafter "ICC 2017 Rules"), the International Chamber of Commerce introduced the Expedited Procedure Rules, providing EPP application by default.

Hence, the application of these rules was dependent upon one of the following criteria (Art. 30 (2) of the ICC 2017 Rules in conjunction with Article 1 (2) Appendix VI):

• Agreement between the parties to apply the EPP (express application); or
• Amount in a dispute does not exceed a monetary threshold of USD 2,000,000 (default application).

It has been proven in the previous years that, even with an option to tailor-make the procedure in terms of its efficiency, parties rarely opted to do so and decided to apply boilerplate solutions instead (ICC Guide, 2014), since the opt-in possibility was found as “one of the most challenging and innovative provisions” (Arroyo 2018, 2433). Because of this, some people were sympathetic to the accelerated arbitration's default application.

Ever since the EPP were introduced, the number of expedited proceedings before the ICC was increasing each year. According to statistics published by the ICC, in 2019 17% of all ICC arbitration proceedings (146 out of 869 cases) were conducted under the EPP (Matamoros, 2021), while in 2020, 28% of all ICC registered cases (261 out of 929 cases) were conducted under the EPP (ICC Statistics, 2020).

A stronger shift to the expedited procedure is mirrored in amendments to the previous ICC rules in 2021 (hereinafter “ICC 2021 Rules”). These amendments widen the scope of EPP in terms of monetary threshold from USD 2,000,000 to USD 3,000,000 (Article 1 (2) Appendix VI of the ICC 2021 Rules; Vega-Gonzalez, Gonzalez 2020; Lingard et al. 2022, 17). This shift is crucial considering that in 2020, 38% of registered cases involved an amount of dispute below USD 3,000,000. As a result, EPP would automatically apply to approximately 353 cases (ICC Statistics, 2020). Nevertheless, as indicated by the ICC officials, there was never a question of whether or not to increase the monetary threshold, but rather how much it should be increased (Stan, Petrescu 2021, 36). The response from the ICC to the growing trend of awards taking longer and arbitrations costing more should be welcomed, but the community also needs to recognize that one size will not always fit all (Bell 2016; Welser, Klausagger 2015, 274).

The updated current expedited procedure provisions with the amendment to the ICC rules in 2021 stipulate: "This procedure is applicable in cases where the amount in dispute does not exceed US$2 million or US$3 million, depending on the date of the arbitration agreement, unless the parties decide to opt-out or the ICC Court of Arbitration considers it inappropriate in given circumstances."

The Expedited Procedure Provisions of ICC 2021 Rules shall apply if:

• the amount in dispute does not exceed US$2,000,000, if the arbitration agreement was concluded on or after 1 March 2017 and before 1 January 2021;

OR

• the amount in dispute does not exceed US$3,000,000, if the arbitration agreement was concluded on or after 1 January 2021;

AND

• the parties have not opted out of the Expedited Procedure Rules in the arbitration agreement or at any time thereafter.
• The Expedited Procedure Provisions shall also apply, irrespective of the date of conclusion of the arbitration agreement or the amount in dispute, if the parties have agreed to opt-in. Such opt-in agreements can be concluded at any time.

The Expedited Procedure Provisions of ICC 2021 Rules shall not apply if:

• the arbitration agreement under the Rules was concluded before 1 March 2017;
• the parties have agreed to opt out of the Expedited Procedure Provisions;

The ICC Arbitration Rules provide for use of an expedited procedure in lower-value cases. If parties wish to exclude the application of the Expedited Procedure Provisions, they must expressly opt out by adding the following wording to the clause:

“The Expedited Procedure Provisions shall not apply.”

• the Court, upon the request of a party before the constitution of the arbitral tribunal or on its own motion, determines that it is inappropriate in the circumstances to apply the Expedited Procedure Provisions.

Contracting parties should also consider Article 30 (1) (b) of the ICC 2021 Rules which stipulates that a reference to ICC Arbitration Rules is interpreted as an agreement to arbitrate under the ICC Rules, including EPP, which shall take precedence over any contrary terms set in the arbitration agreement. Even though it is discussed that the ICC 2021 EPP (in Article 30 of the Rules) contrasts with the rules of party autonomy and creates conflict provisions of the parties' arbitration agreement (because the dispute will be resolved by a sole arbitrator, irrespective of the arbitration agreement of the parties), if the Court finds that a pre-selected number of arbitrators is adequate for the given proceedings, it will simply comply with the parties’ choice. For instance, in the case of ISMT, Ltd. v. Fremak Industries, Inc., the parties to the dispute reached identical arbitration agreements for each of the four purchase contracts, which provided that any disputes or claims arising from or related to this contract must be resolved through arbitration in accordance with the ICC Rules and before a single arbitrator. Similarly, in the case of Arcelor Mittal USA, LLC v. Essar Steel Ltd., the parties agreed that the arbitration panel shall consist of three independent arbitrators. Due to the fact that both of these choices were deemed appropriate in the circumstances, the ICC Court followed suit and selected the preferred number of arbitrators.

CONCLUSION

The ICC has updated its regulations to adopt the expedited arbitration method, following the lead of some other arbitration institutions. In light of the ongoing tendency towards widening the default application of the ICC EPP, it stands apparent that the ICC strongly intends to have more arbitration cases be subject to the EPP since it presents eligible and time-effective rules for resolving disputes before the ICC.

Ezgi Bahar

REFERENCES

1- Born, Gary B. 2021. The International Commercial Arbitration (Third edition) Chapter 15: Procedures in International Arbitration

2- Arroyo, Manuel Arroyo. 2018. Chapter 17, Part II: Commentary on the ICC Rules, Appendix VI. 2433 in the Arbitration in Switzerland: The practitioner’s Guide (Second Edition)

3- Vega-Gonzalez, Martha E, Gonzalez Katie. New York Arbitration Week Revisited: The Challenges of Multi-Party and Multi-Contract Issues in International Arbitration and the Anticipated ICC Rules Changes. Kluwer Arbitration Blog

4- Bell, Adrian. 2016. ICC modifies rules to try to save time and costs in arbitrations. CMS

5- ICC 2021 EPP [Article 30 of the Rules and Appendix VI] & ICC 2017 EPP

6- ICC Statistics, 2020. ICC Dispute Resolution 2020 Statistics: 9,17-18

7- Matamoros, Sophie C. 2021. ICC Expands Automatic Application of Expedited Procedure

8- ICC, Case no. 1:15-cv-03652-AKH, ISMT, Ltd. v. Fremak Industries, Inc (final award), 26.01.2015 2 in the Arbitration Intelligence materials and ICC, Case no. 0:18-cv-0083-DWF-LIB, 3-6 in Arbitration Intelligence materials