First, there is the secrecy surrounding the arbitral process, often based on the inaccurate assumption that arbitration is always confidential. Secondly, because this is a bespoke method of dispute resolution, most rules of arbitration provide only the bare bones regarding how an arbitration is to be conducted. For example, the ICC Rules of Arbitration (2012) contain just 41 provisions and the LCIA Arbitration Rules (2014) only 32; these figures pale in comparison with the number of provisions in most codes of civil procedure around the globe, which normally comprise hundreds of different rules.
Most rules of arbitration do not provide guidance on the number of rounds of submissions to be filed, how witnesses are to be cross-examined, whether witnesses will have to be sworn in before giving evidence, how document production is to be conducted, and so on.
These are procedural aspects of international arbitration that are dealt with by resorting to what could be referred to as “customary” international arbitration practice. In the great majority of cases, international arbitration practitioners learn these customary rules by practising at a handful of law firms. Many arbitrators come from the same pool of law firms. Consequently, for some observers, the world of international arbitration resembles a closed club whose rules are only known to its members. To be fair, conscious of this perception, the arbitration community itself has attempted to shed light on the arbitral process - for example, by preparing the 1996 UNCITRAL Notes on Organizing Arbitral Proceedings.
The third issue is that there is a perception that international arbitration has not delivered on the perceived promise that it should be a time- and cost-effective method of dispute resolution.
The ICC’s Effective Management of Arbitration – A Guide for In-House Counsel and Other Party Representatives, published in June 2014, attempts not only to demystify international arbitration but also to give its users guidance to help ensure this method of dispute resolution is both time- and cost-effective. Although the guide focuses on the ICC Rules, it is designed to be used in respect of any type of arbitration.
Reducing costs
The guide begins with an explanation of what arbitration is and makes it clear that its emphasis is on reducing the costs incurred by the parties regarding the presentation of their cases (an issue inexorably linked to the legal fees incurred by the parties).
In terms of general case management, within reason, the parties and the arbitral tribunal should set out a detailed procedural framework at the outset of the proceedings, normally at the “first case management conference”. By so doing, the additional time and costs that arise from a piecemeal approach to case management, sometimes adopted by certain arbitral tribunals, are prevented.
As for the specific aspects of the conduct of an arbitration, these can be grouped in four categories: the evidentiary hearing and evidence, submissions, multi-party issues and early determination of discrete issues.
In general, there are advantages and disadvantages of dispensing with some procedural steps that are normal practice. The advantage is typically cost and time savings. The disadvanages, in most cases, are that the parties may have a more limited opportunity to put forward their case in full, investigate the other side’s case or test the other side’s evidence.
Evidentiary hearings and evidence
One of the issues is whether there should be evidentiary hearings. The question ultimately depends on the importance of testing the other side’s witness evidence. Not having an evidentiary hearing will reduce costs but in cases in which witness evidence is crucial, missing out on the opportunity to cross-examine the opposing side’s witnesses might be too risky. Following a similar approach, the guide discusses, among others things, the advantages and disadvantages of not having witness evidence at all, limited or no document production and limited use of expert evidence.
Submissions
Another issue is whether the parties should file short or lengthy initial submissions (that is, requests for arbitration and the answer to the request for arbitration and counterclaim). While short requests for arbitration and answers to the request are customary, there are advantages and disadvantages in filing fully-fledged submissions early in the proceedings. In short, as the guide suggests, filing comprehensive submissions early on may help reduce the number of subsequent submissions and thus expedite resolution of the dispute. The disadvantage is that this approach will give rise to additional costs.
On the rounds of submissions in an arbitration, there are a number of options open to the parties. These range from not having submissions in addition to the request for arbitration and the answer, to having three or more rounds of submissions (if post-hearing submissions are considered).
Multi-party arbitration
There are advantages and disadvantages of pursuing multi-party arbitration (an arbitration involving more than two parties). Multi-party arbitration may prevent multiple parallel proceedings but it can increase the complexity of an arbitration and therefore the time required and the costs incurred.
Early determination of discrete issues
In any given arbitration there can be a number of “threshold” issues that may dispose of a claim, or some issues of it, if resolved early in the proceedings. These might include whether the arbitral tribunal has jurisdiction, whether the parties have capacity to sue or whether the dispute can be submitted to arbitration.
The early determination of one or more issues may resolve the entire dispute, simplify the remainder of the arbitration or facilitate settlement. However, if none of these results are achieved, the early determination will simply add cost and delay the arbitration.
Winning the case
Although time- and cost-efficiency are significant concerns, it is crucial not to lose sight of the most important objective of the parties in an arbitration: this is an adversarial method of dispute resolution, and the aim ultimately is to win the case. Ensuring that a party puts forward its strongest possible case requires understanding the potential strategic ramifications of selecting one of the many choices presented by the arbitral process and this requires close work and a frank dialogue between arbitration users and their arbitration counsel.
Joe Tirado is a partner and Global Co-Chair of International Arbitration at Winston & Strawn, London and Alejandro I Garcia is a senior associate at the International Arbitration Group of Winston & Strawn, London. They are reviewing the ICC's ‘Effective Management Of arbitration: A Guide for In-House Counsel and Other Party Representatives’.
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