While there is nothing in these rules prohibiting early determination of the whole claim, the half-way house of preliminary determination/assessment of certain issues arguably indicates to tribunals operating under these rules that they are not entitled to, or at least should not, adopt a more interventionist approach in the form of summary dismissal of an entire claim or defence.
We also observed that some of the regional centres are perhaps ahead of the curve compared with their global counterparts:
- The China International Economic and Trade Arbitration Commission (CIETAC) has included in its recently-updated 2024 rules the option for a party to request a claim or counterclaim be dismissed “in whole or in part” where it is manifestly without legal merit or is manifestly outside the tribunal’s jurisdiction.[4]
- The Judicial Arbitration and Mediation Services (JAMS),in its 2021 rules, provides that, after consultation with the parties, the Tribunal, in its discretion, may sua sponte determine that any claim or defence is outside its jurisdiction or manifestly without merit.[5]
Limited adoption of early determination procedures
Our analysis seems to fly in the face of our starting hypothesis. Whilst a few institutions – both international leading institutions and regional centres – have empowered their tribunals to dismiss entire claims that are manifestly lacking in merit, the majority of institutions have not yet taken such a step.
Tribunals operating under the rules of the majority without early determination rules are often only expressly empowered to decide specific issues forming part of the claim on a preliminary basis (assuming one of the parties makes such an application, as most rules do not provide for tribunals to identify such issues of their own volition), or they must take the step of deciding that their general duty (present in most arbitration rules) to conduct the arbitration in an efficient and expeditious manner empowers them to hear early determination applications or propose such a procedure themselves. Of course, that assumes that parties are even willing to attempt such an application in circumstances where the tribunal’s jurisdiction to hear it is somewhat unclear.
The problem of due process paranoia
The lack of express provisions exacerbates the problem of due process paranoia – the term to describe a tribunal being overly preoccupied with ensuring procedural safeguards and principles of fairness, often because of the spectre of a potential challenge to their award looming over them. Falling prey to that paranoia often comes at the expense of efficiency, expediency and flexibility and can result in parties wasting time and money that could otherwise have been avoided, ultimately defeating the purpose of choosing arbitration as a dispute resolution mechanism over other alternatives.
It is inconsistent with the goals of international arbitration for the parties to engage in a long back-and-forth of submissions, often spanning years, with the tribunal playing the role of a passive referee until engaging with the issues at the final hearing (or even only upon drafting the award). Even the most conscientious arbitrator may be inclined to postpone properly grappling with the disputed issues until the full merits hearing, rather than taking the opportunity to do so at the outset of proceedings, when they might be able to streamline the dispute, or even dispense with it entirely.
The Law Commission neatly summarises the issue as follows: “a reasonable opportunity to put one’s case should not entitle an arbitral party with a fatally weak case to draw out the procedure excessively, thereby generating wasted costs, and delaying the inevitable resolution of the dispute.”[6] In its proposals for reform of the Arbitration Act 1996 in England and Wales, the Law Commission recommended that the reformed Act should provide that, subject to the agreement of the parties, an arbitral tribunal may, on the application of a party, issue an award on a summary basis, where it considers that a party has no real prospect of succeeding on the claim, defence or issue in the case. The Law Commission hopes that enshrining this power in law will “reassure arbitrators” as to the “propriety” of using such a power and its compatibility with the duty to conduct the proceedings fairly. The Arbitration Bill has now passed the committee stage in Parliament and is expected to become law in late 2024.
The need for express and comprehensive early determination provisions in all arbitral rules
The Law Commission’s proposal is an important step in helping arbitrators (at least in arbitrations governed by the law of England and Wales) to overcome the cultural reluctance of arbitrators to make early determinations. In our view all institutions should mirror this step and include in their rules an express and comprehensive power for tribunals to decide, at an early stage, and upon hearing from all parties, that a party’s case is manifestly without merit, and to be able to do so of their own accord.
Making early determination provisions express, and more prevalent, should encourage arbitrators to feel confident that they can, and should, make early determinations, helping to tackle due process paranoia. This is consistent with the internationally agreed position that a tribunal’s general duty is to conduct the proceedings in an efficient and expeditious manner, and recognises that, whilst arbitration is a voluntary and party-led dispute resolution mechanism, it is for the tribunal – in consultation with the parties – to choose the procedure that will best serve the objectives of efficiency and expedition.
Encouraging tribunal take-up
Of course, simply including early determination provisions in institutional rules is not enough. Tribunals need to feel confident in using them. There are ways to encourage this:
- Provisions that are drafted clearly and unambiguously, with due regard for the tribunal’s duties of efficiency and fairness, should foster confidence in their use.
- Consistency across institutional rules in the scope of the power would also help, e.g. whether a tribunal can make a decision sua sponte or only on the application of a party, as would consistency in the legal standard to be applied (manifestly without merit; without reasonable prospect of success, etc). Tribunals are less likely to feel that they are ‘going out on a limb’ in exercising the power to determine a dispute summarily if they know the power is ‘industry standard’.
- Institutional guidance and practice notes should also be explicit in encouraging tribunals to make use of the provisions, explaining how doing so is consistent with their duties and the overall purpose of arbitration as a dispute resolution mechanism.
(More) transparency
Consistent with the theme of our last report, ensuring transparency of the relevant institutional data is also of paramount importance.
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