Ercüment Erdem Att. Melissa Balıkci Sezen

UNCITRAL Expedited Arbitration Rules

August 2021

Introduction

At its fifty-first session in 2018, the United Nations Commission on International Trade Law (“UNCITRAL”) agreed that Working Group II should be mandated to take up issues relating to expedited arbitration.[1] As seen in many arbitral institutions, expedited arbitration rules set out simplified procedures which are aimed at reducing the time of proceedings as well as costs. The work aimed “at improving the efficiency of the arbitral proceedings and expedited arbitration was described as a streamlined and simplified procedure with a shortened time frame, which made it possible to reach a final resolution of the dispute in a cost- and time-effective manner.”[2] The work also aimed to increase the efficiency of the proceedings while ensuring due process and fair treatment of the parties.

On 9 July 2021, the UNCITRAL adopted its expedited arbitration rules (the “Expedited Arbitration Rules”), during its fifty-fourth session.[3] The Expedited Arbitration Rules are due to come into effect on 19 September 2021, when they will be officially published in the six official languages of the United Nations.

The draft Expedited Arbitration Rules are published with draft Explanatory Notes to the UNCITRAL Expedited Arbitration Rules (which are planned to be finalized in the second half of 2021), and shall be used together with the UNCITRAL Arbitration Rules and will form an appendix of the latter.

The Rules

According to Article 1 of the Expedited Arbitration Rules, disputes under the expedited procedures shall be settled in accordance with the UNCITRAL Arbitration Rules as modified by the expedited rules. The Expedited Arbitration Rules only apply where the parties agree. This is enshrined in the new Article 1(5) of the UNCITRAL Arbitration Rules.

Correspondingly, a model arbitration clause for contracts has also been drafted (which is included as an annex to the draft Expedited Arbitration Rules) and reads as follows:

Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Expedited Arbitration Rules.

There are other matters that the parties may wish to determine such as the appointing authority, the place of arbitration and the language of arbitration which they may include in their arbitration agreements. In addition, parties may wish to exclude the application of Article 16(3) of the Expedited Arbitration Rules, which deals with the time limit set for the proceedings, and is explained below.

Unlike other institutions, the UNCITRAL has not stipulated a monetary threshold that would trigger the application of the Expedited Arbitration Rules. For example, according to Article 30 of the ICC Arbitration Rules and Appendix VI, expedited arbitration rules apply if the amount in dispute does not exceed US$2,000,000, in case the arbitration agreement was concluded on or after 1 March 2017 and before 1 January 2021 or US$3,000,000, if the arbitration agreement was concluded on or after 1 January 2021.[4]

The Expedited Arbitration Rules may be amended according to the parties’ needs and requests, and thus are subject to any modifications as agreed by the parties. Unless otherwise agreed by the parties, the following articles in the UNCITRAL Arbitration Rules do not apply to expedited arbitration: Article 3(4)(a) and (b), Article 6(2), Article 7, Article 8(1), the first sentence of Article 20(1), the first sentence of Article 21(1), Article 21(3), Article 22, and the second sentence of Article 27(2).

In line with this, according to Article 2 of the Expedited Arbitration Rules, at any time during the proceedings the parties may agree that the Expedited Arbitration Rules shall no longer apply to the arbitration. This may also be the case where, in exceptional circumstances, the arbitral tribunal finds the case not to be fit for expedited proceedings and determines that the Expedited Arbitration Rules shall no longer apply. In either of these cases, the arbitral tribunal remains in place and conducts the arbitration in accordance with the UNCITRAL Arbitration Rules.

The Expedited Arbitration Rules expressly allow the utilization of any technological means as the arbitral tribunal considers appropriate to the conduct of the proceedings, including communication with the parties and holding consultations and hearings remotely. This provision is a reflection the digitalization of arbitration.

In order to simplify the procedure, the Expedited Arbitration Rules provide that a notice of arbitration should also include: (a) a proposal for the designation of an appointing authority, unless the parties have previously agreed thereon; and (b) a proposal for the appointment of an arbitrator. When communicating its notice of arbitration to the respondent, the claimant shall also communicate its statement of claim. The notice of arbitration and the statement of claim shall be communicated to the arbitral tribunal as soon as it is constituted by the claimant. According to Article 5, the respondent is granted 15 days communicate to the claimant a response to the notice of arbitration, following the receipt of the notice of arbitration. The respondent’s response to the notice of arbitration should include its responses regarding the proposal for the designation of an appointing authority and the proposal for the appointment of an arbitrator.

The default rule relating to the number of arbitrators is set in Article 7 of the Expedited Arbitration Rules, which states that there shall be one arbitrator, who shall be appointed jointly by the parties. However, the Expedited Arbitration Rules also envisage the possibility of the parties failing to come to an agreement. In such case, if the parties have not reached agreement on the appointment of a sole arbitrator 15 days after a proposal has been received by all other parties, a sole arbitrator shall, at the request of a party, be appointed by the appointing authority in accordance with Article 8(2) of the UNCITRAL Arbitration Rules.

The rules also introduce a time limit within which the award should be rendered by the arbitral tribunal. According to Article 16, the award shall be made within six months from the date of the constitution of the arbitral tribunal. The arbitral tribunal is granted the right to extend this period in exceptional circumstances and after inviting the parties to express their views. As mentioned above, parties may also wish to exclude the application of Article 16(3) of the Expedited Arbitration Rules which states that in any case, the overall extended period of time shall not exceed nine months from the date of the constitution of the arbitral tribunal, unless otherwise agreed by the parties. In case the parties wish to exclude the application of Article 16(3) of the Expedited Arbitration Rules, this should be stated in the arbitration agreement.

Conclusion

The introduction of the Expedited Arbitration Rules is a welcome development which shall inevitably contribute to the efficiency of arbitrations. Certain steps have been removed from the proceedings and procedure has been simplified, which should result in the mitigation of costs and expedite the resolution of disputes. Additionally, the option of an expedited arbitration may also increase the use of arbitration as concerns relating to costs and duration may be eliminated and thus parties may be convinced to resort to arbitration for the resolution of their disputes.


[1] For the draft UNCITRAL Expedited Arbitration Rules please see: https://undocs.org/A/CN.9/1082

[2] Paragraph two of the draft UNCITRAL Expedited Arbitration Rules please see: https://undocs.org/A/CN.9/1082

[3] Supra note 1

[4] https://iccwbo.org/dispute-resolution-services/arbitration/expedited-procedure-provisions/