Choosing the right arbitral rules

The right arbitral rules to choose for any given dispute will depend on a number of factors, including how confidential the parties wish the proceedings to be, how quickly the parties would like the dispute to be resolved, their appetite for cost savings, the importance of being able to scrutinize the award and the importance of geographical neutrality. This article outlines the key differences between the rules of some of the leading arbitral institutions: the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Centre (HKIAC), the Istanbul Arbitration Center (ISTAC) and the Istanbul Chamber of Commerce Arbitration Center Rules (ITOTAM).

Key differences

Confidentiality

Confidentiality is seen as a key benefit to arbitration over litigation, and many might expect all arbitral rules to contain a stringent obligation of confidentiality. However, this is not the case.

• No express duty of confidentiality is imposed on the parties under ICC Rules, but the disputing parties may agree to keep proceedings confidential, or any one party may request the Tribunal to make an order to the same effect.
• This is very different to the general undertaking that automatically applies under LCIA Rules, where parties undertake to keep all awards, materials and documents confidential.
• There is a requirement for confidentiality under the Rule 39 of the SIAC Rules, but it only extends to the proceedings and the award, rather than to the materials and documents deployed during the proceedings.
• Similarly, under the HKIAC Rules, under Article 45, no party may publish, disclose or communicate any information relating to the arbitration or any award made in the arbitration, unless the parties agree otherwise.
• There is a requirement for confidentiality under the Article 21 of the ISTAC Rules. According to the Article 21, arbitral proceedings are confidential, unless the parties agree otherwise. Arbitrators may give any order concerning the confidentiality of the arbitration and the proceedings.
• According to the ITOTAM Rules, the hearings shall be confidential, unless the parties agree otherwise, and also there is a requirement for the arbitrators to take appropriate measures to ensure the protection of trade secrets and confidential information disclosed during the arbitral proceedings.

It is also worth noting that arbitral proceedings are generally private even if not confidential. In court proceedings, members of the public often have a right to view proceedings and have access to some materials, such as statements of case, under the principles of 'open justice'. But in arbitration, as it is a contractual process, generally only the parties to the arbitration can attend hearings and view documents filed in the proceedings.

Expedited procedures

In an attempt to become more streamlined and offer a viable alternative to summary judgment procedures, several of the leading institutions have adopted procedures designed to offer expedited proceedings in suitable cases.

For example:

• Under Rule 5 of the SIAC Rules 2016, there is an expedited procedure available where the parties agree to its use, where the value of the claim does not exceed S$6m, or in cases of exceptional urgency.
• The expedited procedure under the HKIAC Rules is available in identical circumstances, save that the value of the claim must be below HK$25m.
• There is no 'exceptional urgency' provision in the ICC Rules, and the expedited procedure can only be invoked where the value of the dispute is less than US$2m (where the arbitration agreement under the ICC Rules was concluded after March 1, 2017 but before January 1, 2021), or US$3m (where the arbitration agreement under the ICC Rules was concluded after January 1, 2021), or where the parties agree.
• There is no separate expedited procedure under the LCIA Rules, and instead the LCIA Rules integrate powers of early determination, expedited formation of the tribunal, and the appointment of emergency arbitrators into its standard procedure, which leaves relatively more up to the appointed arbitrator's discretion. This is also the case with consolidation and joinder of claims, where the LCIA rules are less prescriptive than those of other institutions.
• ISTAC Rules provide "Fast Track Arbitration Rules" which will automatically apply to disputes where the total amount of the claim and counterclaim (if any) does not exceed TRY 300,000 (on the date that the arbitration is deemed to have commenced), unless parties agree otherwise. The parties can choose the Fast Track Arbitration Rules even if the amount of the total claim exceeds the said amount. The ISTAC Rules also allow the parties to apply for an emergency arbitrator in cases where there is urgent need for an interim measure to be taken before the arbitrators start their work.
• Similarly, under Article 38 of the ITOTAM Rules, there is an expedited procedure, where the total value of claim and counterclaim (if any) does not exceed TRY 500,000 (on the date that the arbitration is deemed to have commenced), save for cases where the arbitration agreement under the ITOTAM Rules was concluded before 14 April 2016 (the entry into force of the Expedited Arbitration Rules in Annex 4 of the ITOTAM Rules).

Timeline

The reality in any significant arbitration conducted outside of an expedited procedure is that the Tribunal can be expected to take time to render an award. The institutions take different approaches to this in their rules.

• Under Rule 32 of the SIAC Rules, the Tribunal must provide a draft award within 45 days following the closure of proceedings. However, the award must be approved by the registrar before it is handed down.
• Under Article 31 of the ICC Rules, the Tribunal must render its final award within six months,
• and this is three months in the case of the LCIA and HKIAC Rules. Notably however, the LCIA Rules provide at Article 15.10 that the Tribunal should make its award as soon as reasonably possible.
• According to Article 33 of the ISTAC Rules, the award must be rendered within 6 months following the date of the completion of the signatures of the terms of reference or the date of notification to the arbitrators of the approval of the terms of reference.
• Under Article 43 of the ITOTAM Rules, unless the parties agree otherwise, the final award must be rendered within one year following the date on which the minutes of its first meeting are kept.

In practice, these timelines should be regarded as a guideline rather than a deadline, as they will often be extended by the institution or upon an agreement of the parties.

Terms of reference

Terms of Reference (ToR) set out the scope of the arbitration by setting out the basic claims and defenses, the relief sought, and the issues to be determined.

• The ICC Rules require ToR to be produced for every dispute.
• Similarly the ISTAC Rules require ToR, unless otherwise agreed by the Parties.
• By contrast, the LCIA, SIAC, HKIAC and ITOTAM Rules do not require any formal ToR to be produced.

For many parties, ToR will help to narrow the issues in dispute early in the process and delimit the scope of the dispute, promoting settlement as well as more efficient proceedings. However, this additional administrative requirement can feel unnecessary and cause delay in prosecuting claims; in particular, it can lead to disputes over the scope of the ToR that distract parties from the arbitration itself and have the effect of prolonging proceedings further.

Institutional scrutiny of the award

• The ICC Rules provide for the scrutiny and approval of the draft award by the ICC Court before it is issued to the parties. The ICC Court may lay down modifications as to the form of the award and may also draw its attention to points of substance, albeit scrutiny does not usually extend to the substance of the decision.
• Like the ICC Rules, the SIAC Rules provide for scrutiny of the award on the same grounds, with the difference that the award is scrutinized by the Registrar.
• The LCIA, HKIAC Rules, ISTAC and ITOTAM Rules do not allow for any institutional scrutiny of the award, which has the effect of reducing the time taken for an award to be handed down, but the parties lose the benefit of two-stage scrutiny. Institutional scrutiny of the award will be of varying importance to the parties depending on the experience and background of the Tribunal, the value and complexity of the dispute, and the speed at which they wish the dispute to be settled.

Costs

In many arbitrations, costs are an important consideration when deciding whether to commence or to continue an arbitration. Different institutions offer different fee rates and structures, for example:

• the ICC's administrative fees are calculated on the basis of the amount in dispute and the number of arbitrators. Although this provides predictability, and parties can forecast their costs in advance using a cost calculator on the ICC website, the ICC's administrative fees are typically higher than those charged by other arbitral institutions.
• Fees charged by SIAC and HKIAC are also calculated on the basis of the amount in dispute, and parties can similarly forecast their administrative costs using the Schedule of Fees provided by each of these institutions.
• The LCIA administrative fees are, by contrast, charged at an hourly rate, regardless of the value or complexity of the dispute. The LCIA also caps its tribunal fees at £500 per hour. However, there is no cap or maximum to the costs, and as hourly rates are used, these fees can be less predictable, although for cases with a value of US$100m , the LCIA has suggested that its fees are, on average, more than 50 percent cheaper than alternative institutions.
• Pursuant to the ISTAC rules, arbitrators' fees and administrative costs are fixed and depend on the amount of the dispute. Scales of registration fees, administrative costs and arbitrator fees may be found in Appendix 3 of the Rules and ISTAC's provides a cost calculator in respect of anticipated fees.
• Fees charged as per the ITOTAM rules are also calculated on the basis of the amount in dispute. The costs of the arbitration shall include the fees and expenses of the arbitrators, and the administrative expenses fıxed by the Secretariat in accordance with the tariff which is in force at the time of the commencement of the arbitral proceedings.

Special thanks to trainee solicitor Rianna Gohil for assisting in the preparation of this article.