The benefits of efficiency, cost and speed, which were once the hallmarks of international arbitration, are currently in question. On many occasions, the time and cost spent in order to reach a solution are not proportionate to the dispute being resolved.
This is a serious concern affecting the arbitration community, which has led to a number of proposals aimed at maintaining the traditional effectiveness of arbitration. The report from the International Chamber of Commerce (ICC) on “Techniques for Controlling Time and Costs in Arbitration” is a good example of the kind of changes that need to be implemented.
One of the most important techniques for reducing the length and costs of proceedings is fast-track procedures. ‘Fast-track’ refers to a set of different measures aimed at a more efficient procedure, which can vary from reducing the time limits of the procedural stages and shortening (or omitting) the oral hearing, to more sophisticated tools such as the ‘baseball’ arbitration, where the arbitrators choose between two final offers submitted by the parties after the exchange of their memorials.
The reduction in costs comes about mainly due to the fact that fast-track arbitrations generally require a sole arbitrator. As a result of having only one arbitrator, the fees are lower and scheduling problems are minimised. Time is money, and speeding up the arbitration can also save on costs for the parties involved, as well as potentially reducing attorney fees. Moreover, expedited procedures generate other, less quantifiable benefits, such as forcing the parties to focus on the essence of the dispute and to be more efficient, as well as reducing the potential for dilatory tactics and ancillary disputes.
Parties can opt for a fast-track procedure by submitting themselves to the expedited procedure of a specific arbitral institution, for example the American Arbitration Association (AAA); or by making a tailormade procedure, either under an ad hoc arbitration, or under the administration of an institution which enables the parties to shorten the time periods set in the rules by mutual agreement with the approval of the arbitral tribunal, e.g. the ICC Rules.
Fast-track arbitration is especially suitable for cases where time is of the essence and in which both parties are committed to achieving a resolution as quickly as possible. Fast-track arbitration is also ideal for matters where the dispute is not overly complex. In addition, the rules of certain arbitral institutions such as the AAA, the Swiss Chamber of Commerce (SCC), and the Court of Arbitration of Madrid (CAM) establish the applicability of fast-track proceedings by setting certain monetary limits with regard to the amount in dispute.
In any dispute over an amount below this limit, fast-track proceedings would automatically apply in order to minimise costs. There are two moments where the parties can agree to a fast-track procedure: when drafting the arbitration agreement, by expressing their intention of having an expedited arbitration; or at the outset of the dispute, if both parties agree that the dispute is suitable for expedited proceedings.
This second scenario, although ideal, is rather unusual, because the interest of the parties, once the dispute has commenced, is usually completely opposed. One party would surely want to end the proceedings as fast as possible, while the other would usually want to wait as long as possible for the award to be rendered.
As a consequence, when drafting the arbitration agreement, it is strongly advisable to consider the possibility of making fast-track procedures the general rule, making specific carve-outs such as the agreement of the parties, or granting the arbitral tribunal the power to extend time limits under exceptional circumstances. Otherwise, the arbitral tribunal might find its hands tied in the case of unexpected situations, which would not benefit any of the parties.
An expedited procedure does not necessarily mean inflexibility. Fast-track procedures have been a recurrent topic for arbitration experts in the last two decades but there have not been any real changes made in this area. This must change, and fast-track procedures should be taken into account more often when drafting an arbitral agreement. It would certainly be more taxing for counsel and arbitrators, but far better for the clients who simply want a brief and fair decision on their disputes.
Current trends shows a hyper-inflation of the length and costs of the proceedings: thousands of pages for the memorials, tons of documents (not to mention e-documents resulting from e-discovery) filed in innumerable bundles as written evidence, hearings lasting several weeks and, after copious posthearing briefs, deliberations of the arbitral tribunal which can last for over a year. This is not a desirable outcome and it is not what clients want.
Arbitration needs to return to its original foundations of speed and cost efficiency. As litigation around the world is on the increase, and consequently cost and time-savings become top priorities for clients, arbitration should focus on its fundamental competitive advantage, i.e. its flexibility to streamline the arbitration process. Fast-track techniques are great tools for these purposes.