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Summary Procedure in International Commercial Arbitration: A Short Note



Provisions for the summary judgment/adjudication on some or all claims are a common feature of judicial proceedings in a various jurisdictions around the globe. Similarly, in international arbitration, summary procedure allow an arbitral tribunal to dispose of an unmeritorious case without going through the time and expense of an entire arbitration proceeding.


Though the arbitral tribunals have the power to order summary disposal even without express authority (see blog post on Summary Disposal in Arbitration and Tribunals’ Ability To Order Summary Procedure Without Express Authority), this has not stopped the arbitral institutions to introduce express provisions for the same.


Last year, the early determination provision was introduced by Hong Kong International Arbitration Centre (HKIAC) under Article 43[1] of the 2018 HKIAC Administered Arbitration Rules (see blog post on HKIAC Introduces New Rules). This introduction of Article 43 signifies the importance of express incorporation of such procedure under the institutional arbitration rules. Singapore International Arbitration Centre (SIAC) was the first arbitral institution which introduced the concept of Early Dismissal in 2016 under Rule 29. This was followed by introduction of summary procedure in 2017 by Stockholm Chamber of Commerce under Article 39 (SCC). The ICC also in October 2017 published a guidance note[2] wherein it provides greater clarity on the scope for “immediate dismissal of manifestly unmeritorious claims or defences” under Article 22 of the 2017 ICC Rules.


However, institutions like LCIA, MCIA and AIAC have refrained from making any express reference of such provisions in their updated arbitration rules. Such procedures introduced by the arbitral institutions are majorly the same but differ on various aspects. The author in this post has discussed these provisions and how these are different in terms of their applicability and scope.


Grounds


The grounds on which a party may apply for an early dismissal under SIAC Rules 2016 are either the claim/defense is manifestly without legal merit or manifestly outside the jurisdiction of the Tribunal. The term ‘manifest’ occurs in the ICSID convention and has been interpreted by various ad-hoc committees as ‘self-evident’ or ‘obvious’.[3] The ICSID Tribunals have applied a high standard for finding a claim to be manifestly without legal merit.[4]


The grounds stated under Article 39 (2) of the SCC Rules 2017 for the summary procedure are as follows: (a) an allegation of fact/law material to the outcome of the case is manifestly unsustainable or; (b) even if the facts alleged by the other party are assumed to be true, no award could be rendered in favour of that party; (c) any issue of fact or law material to the outcome of the case is, for any other reason, suitable to determination by way of summary procedure. The first ground will cover the manifest test as envisaged under the SIAC Rules. However, the other two grounds for the summary procedure are additional when compared with the grounds mentioned for Early Dismissal under the SIAC Rules.


Article 43.1 of the HKIAC Rules contains the combination of the grounds stated under the rules of SIAC and SCC. A party claiming early determination under HKIAC Rules has to establish the manifest test as stated under the SIAC Rules or has to prove that even if the facts or laws submitted by the other party are considered as correct then also no favorable award can be rendered. HKIAC Rules provides for a balanced approach as they are not as wide as the SCC Rules wherein the discretion for allowing summary determination lies on tribunal and they are not as restrictive as SIAC Rules in terms of the scope of its application as they provide for an additional ground.


One additional aspect is there in the HKIAC rules which provides that the tribunal has the discretion to decide whether and to what extent to proceed with the arbitration, pending the request of early determination under Article 43.7 of the HKIAC rules. There is no mention of such discretion given to the arbitral tribunal under the SIAC and the SCC rules.


Time limits


The SIAC Rules are silent on the time limit within which the tribunal has to determine whether to allow the early dismissal application or reject the same. However, under Rule 29.4 a 60 days’ time period is provided for making the award. This period will run from the date of filing of application under Rule 29.

The SCC Rules are silent when it comes to imposition of any time line under the summary procedure. Article 39 (6) of the SCC Rules mentions that the Tribunal shall make the award in an efficient and expeditious manner.


The HKIAC Rules provide for required time limits under Articles 43.5 and 43.6, the former mentions a time limit of 30 days from the date of filing of application wherein the tribunal has to decide that whether the application of the party for early determination is accepted or not whereas latter mentions a time limit of 60 days from the date when then the tribunal decides to proceeds with the application of early determination. Therefore, HKIAC provides for total 90 days from the day of filing of early determination to make the award on the early determination whereas SIAC Rules restrict it to 60 days. It shall be noted that both the rules provide for extension of time limits in exceptional circumstances.

The rationale behind HKIAC provisions providing separate timelines for decision on allowing the application and for making the award can be better transparency and giving more timelines to the tribunal.


Comments


The benefits of summary decision in international arbitration are obvious as they provide an avenue for unmeritorious proceedings to be disposed of at an early stage; it further represents significant costs savings to parties who would otherwise have to put in their precious time and resources defending baseless claims.


There are various reasons as to which these summary determination are not gaining much popularity. Out of which, due process remains to be an important criticism of it which ultimately results in challenge of the arbitral award. Further, as there is no right to appeal against the determination made by the tribunal and this poses a risk of making determinations that cannot be reconsidered when the fuller picture of the facts and law emerges in the full record. Therefore, the threshold remains higher and the tribunals have to be very cautious while making any decision under the summary procedure. The ground of manifest lack of jurisdiction is common in the summary procedure provisions under HKIAC and the SIAC rules. On analysis, it can be seen that this ground allows a party to raise the challenge to jurisdiction of arbitral tribunal twice. First, under the head of Early Dismissal or Early Determination under SIAC Rules or HKIAC Rules respectively stating that the tribunal has manifestly no jurisdiction and second, during the course of arbitration proceedings.


The conclusion as to which rules provide better framework for summary procedure is upon the parties to decide as the grounds are comparable. In terms of summary procedure, an arbitration lawyer should prefer those arbitral institution rules which provide for expedited arbitration and is objective. Coming to the expedited aspect, SIAC Rules provide the time line of 60 days for the decision on early dismissal which is less than the time limit of 90 days provided under the HKIAC rules. However, the decision whether to allow the application for early dismissal or not has to be made within 30 days under the HKIAC rules. Therefore, in case of rejection of early dismissal the HKIAC rules are more transparent when compared with SIAC rules.


Objectivity of the grounds for claiming summary procedure is essential as it provides more clarity to the tribunal as well as the parties. The SCC rules places a wide discretion on the tribunal in relation to the issue whether summary procedure shall be allowed or not. The phrase “any other reason” as used in Article 39 (2) (iii) warrants the same. The SIAC and HKIAC rules do not provide wide discretion to the tribunal and only allow summary procedure on limited grounds. However, HKIAC rules have an additional ground for early determination when compared to the SIAC rules therefore HKIAC rules are preferable in this aspect.


Footnotes:

[1] http://www.hkiac.org/sites/default/files/ckfilebrowser/PDF/arbitration/2018hkiac_rules.pdf


[2] https://cdn.iccwbo.org/content/uploads/sites/3/2017/03/icc-note-to-parties-and-arbitral-tribunals-on-the-conduct-of-arbitration.pdf


[3] Kateryna Bondar, Annulment of ICSID and Non-ICSID Investment Awards: Differences in the Extent of Review, Journal of International Arbitration.


[4] http://arbitrationblog.kluwerarbitration.com/2014/06/27/rule-415-of-the-icsid-arbitration-rules-the-sleeping-beauty-of-the-icsid-system/

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