Article New York Law Journal

Expedited Arbitration: When is Faster Better?

For all of its advantages as a means of dispute resolution, international commercial arbitration has a few drawbacks. It may, in some instances, be slow, depending on the complexity of the case, and may also be costly, although it is still typically faster and less expensive than litigation in the courts. While the pluses of arbitration often outweigh the negatives, these drawbacks have become increasingly concerning to parties, and a big source of criticism of international commercial arbitration.

Arbitral institutions have taken note of these criticisms, and responded to the need to control the increasing costs and time of arbitration proceedings by creating expedited arbitration procedures to give parties the option of a faster route towards the resolution of their disputes, and at a lower cost.1

These faster and lower-cost procedures have been greeted enthusiastically by users world-wide, and an increasing number of arbitral institutions have followed suit, amending or issuing new sets of expedited arbitration rules.

However, is expedited arbitration the best means of resolution for every dispute? Is faster always better? When is expedited arbitration really the fastest and most effective way of dispute resolution? The answer to these questions will invariably depend on the specific case at hand. However, we can derive certain guidelines to identify which types of disputes provide the perfect fit for expedited procedures.

What Is Expedited Arbitration?

Before diving into when to use expedited procedures, let's first determine what an expedited arbitration looks like. Registration and administration fees are lower than those conducted under standard arbitration rules. Additionally, unless otherwise agreed, the tribunal typically consists of a sole arbitrator, appointed by the institution, with reduced arbitrator fees.

Expedited arbitration procedures are condensed. The statement of claim and answer must include all facts, claims, counterclaims, and defenses, and be accompanied by all evidence that a party intends to rely on. If oral hearings are permitted, and they not always are, they are abbreviated, and typically do not exceed three days. Finally, the time limits applying to the various stages of the arbitral proceeding, including deadlines for submissions and the tribunal's orders and decisions, are shortened. In fact, the tribunal is to render the final award in a considerably short time-period, when compared to regular or non-expedited arbitration procedures, sometimes as fast as three months from the commencement of the proceedings.2 Most expedited arbitration rules require the award to be issued within six months of initial filing.

Pros and Cons

In practice, expedited arbitration may have considerable advantages. Where the number and complexity of issues are limited and well-defined, expedited arbitration may yield reduced costs to all parties. Further, because a single arbitrator typically presides over an expedited arbitration, arbitrator fees are typically significantly reduced. Attorney fees are also usually significantly less, although the intensity of the effort required to complete an expedited arbitration may mitigate the amount of cost reduction to some extent.

Expedited procedures also tend to facilitate a more efficient dispute resolution process. Because deadlines are substantially curtailed, parties do not have time to focus on irrelevant matters, and instead are forced to focus on key elements of their claims or defences.

Nonetheless, expedited proceedings present some challenges. While arbitrator availability is a hurdle even under traditional rules, it is even more acutely an issue in expedited proceedings. Preferred arbitrators with the necessary expertise may not be available on short notice to immediately immerse themselves and produce an expedited award.

Limited time and demanding deadlines for counsel and arbitrators may also impact the quality of legal representation and the final award. Furthermore, parties must also consider that while the final outcome may be faster, an expedited process will require an intensive time commitment for witnesses, in-house counsel, and executives. Therefore, parties should also consider the complexity of a dispute, and the demands associated with a substantially expedited schedule, when estimating fees and costs, being conscious that there is not an absolute correlation between shorter and cheaper. The parties should also consider that some disputes may be too complex for an expedited resolution, such as disputes that require significant expert witness investigation, analysis and testimony that sometimes cannot be rushed.

Targeting the Right Disputes, Procedures

Because of the idiosyncrasies an expedited process presents, the key for parties considering opting for such procedures is targeting the right disputes. To do so, they should bear in mind five main considerations.

First, parties should consider quantum and complexity. Some major arbitral institutions have a quantum threshold under which expedited procedures automatically apply. However, quantum and complexity do not always correlate; some high-dollar value claims turn on a relatively narrow issue that is suitable for expedited resolution, while some lower-dollar claims might present layered, complex issues that cannot be resolved quickly. Further, parties may want to resolve high-value disputes quickly for commercial reasons, such as a construction or joint venture dispute that arises in the midst of a project in which delay may be very costly to both parties and in which it is more important to get an answer quickly than it is to get the "right" answer (due to the limited time-frame, the evidentiary record will inevitably be more limited than it otherwise could be).

Second, parties should consider whether a sole arbitrator makes sense. Major institutions typically select sole arbitrators for expedited cases from prescribed lists. Parties must consider whether a single decision-maker would be able to manage an expedited dispute on his or her own, depending on the anticipated complexity of the dispute and underlying issues.

Third, parties should ponder how fast is too fast. In other words, can the types of disputes which the parties anticipate be resolved on a tight time-frame? If so, how much time will the parties and the tribunal need, given the likely issues, the volume of documents and numbers of witnesses that will be involved? Also, is management willing to commit the time that will be needed to complete the dispute resolution process on an expedited basis? And finally, are the parties willing to take the inevitable risk that an expedited process may yield an award with less reasoning and time for careful deliberation by the tribunal?

Fourth, if the parties want an expedited arbitration process, it is preferable to use an established institutional framework over an ad hoc expedited procedure. When parties try to craft their own expedited arbitration framework, it is easy to make mistakes in the procedure that can lead to an unenforceable outcome. It is far safer and preferable to utilize institutional expedited rules that have been tried and tested, and that also provide the administrative oversight that often can help to enhance the enforceability of expedited awards.

Finally, parties should be wary about requiring expedited arbitration for all disputes in a contract. It is difficult for a party to know ex ante whether expedited or traditional arbitration will be preferable—and this is precisely why major institutions usually set a quantum threshold. Instead, parties are better off limiting expedited arbitration agreements to specific types of disputes that they are comfortable having resolved on an expedited basis. Of course, even where a standard arbitration process has been agreed to, the parties can always agree after a dispute arises to submit the dispute to an expedited process where it makes sense.

When to Go With Expedited Arbitration

There is no simple formula for determining when an expedited arbitration process is the right solution. However, here is a short and non-exclusive list of the circumstances in which an expedited arbitration should be considered:

• Where the amount in controversy is likely to be sufficiently small that the parties will want to reduce the cost of the dispute resolution process and will also be willing to take the risk of a less carefully reasoned outcome;

• Where the anticipated disputes are likely to involve discrete factual and legal issues that can be resolved quickly, without the need for extensive discovery processes and extensive expert analysis and testimony;

• Where the anticipated disputes will need to be resolved quickly, perhaps for commercial reasons, such that the speed of a final outcome is more important to the parties than the result itself;

A faster and less expensive arbitration process may well be the right answer in many instances, thus making the expedited arbitration processes offered by many institutions an attractive option. However, faster is not always better, as some disputes unavoidably require a more extensive dispute resolution. There is no one-size-fits-all answer. The key is to ensure that the dispute resolution process is thoughtfully selected by the parties to meet their needs. Only the parties can make that determination for themselves.

Endnotes:
1. For example, the International Chamber of Commerce, the Stockholm Chamber of Commerce, the International Centre for Dispute Resolution Procedures, the Honk Kong International Arbitration Centre, and the Singapore International Arbitration Centre.
2. See, e.g., Arbitration Rules of the Chinese Arbitration Association, Taipei (CAA Arbitration Rules), Art. 50; China International Economic and Trade Arbitration Commission (CIETAC) Arbitration Rules, Art. 50; and International Centre for Dispute Resolution Procedures (ICDR Arbitration Rules), Art. E-10.

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