International summary procedures: what, how and why

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International summary procedures what how and why

Summary procedures in international arbitration have started to gain popularity in recent years, finding their way into the arbitration rules of major arbitration institutions including the HKIAC (Hong Kong), SIAC (Singapore), SCC (Stockholm), ICSID (International) and more recently, LCIA (London).

This article discusses what summary procedures are and how they work, as well as their pros and cons.

WHAT ARE SUMMARY PROCEDURES?

Summary procedures, or “early determination procedures” as they are known in some arbitration rules, empower arbitral tribunals to swiftly dispose of an unmeritorious claim or claims at an early stage of an arbitration. In a way, these are akin to summary judgment or striking-out procedures familiar to common law lawyers.

But of course, as with other arbitration procedures, the precise grounds for invoking summary procedures in international arbitration – and the requisite procedural steps – vary from one set of arbitration rules to another.

GROUNDS FOR INVOKING

As their entire purpose is to allow frivolous claims to be dealt with at an early stage, it is unsurprising that under most, if not all, major arbitration rules providing for such procedures, a party may invoke them where a point raised, whether point of law or fact, is manifestly without merit – or where a point is manifestly outside the arbitral tribunal’s jurisdiction.

Some arbitration rules, however, go a bit further to include situations where a claim is inadmissible, such as article 22.1(viii) of the LCIA Arbitration Rules (effective 1 October 2020); or where even if a point raised by a party may be assumed to be correct, no award could be rendered in favour of that party, such as article 43.1(c) of the 2018 HKIAC Administered Arbitration Rules. Examples of the latter include cases where an otherwise meritorious claim is time-barred.

PROCEDURAL STEPS

Summary procedures under major arbitration rules typically involve two stages – a preliminary stage where the arbitral tribunal decides whether to grant leave for the application for summary procedure to go ahead; and, if the application is allowed to proceed, a second stage in which the arbitral tribunal makes a ruling on the relevant points of law or fact.

In the first stage, while the arbitral tribunal generally has discretion to decide whether to grant leave, some arbitration rules expressly set out factors to consider when exercising such power. Article 39(5) of the 2017 SCC Rules, for instance, provides that in determining whether to grant a request for summary procedure, the arbitral tribunal shall take into account the extent to which it contributes to a more efficient and expeditious resolution of the dispute.

Similarly, according to the Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration Under the ICC Rules of Arbitration, published by the ICC on 1 January 2019, in exercising its discretion to decide whether to allow an application for the expeditious determination of manifestly unmeritorious claims or defences to proceed under the scope of article 22 of the 2017 ICC Rules of Arbitration, the arbitral tribunal shall factor in “the stage of the proceedings and the need to ensure time and cost efficiency”.

If an application for summary procedure is given the green light to go ahead, the arbitral tribunal will then move to the second stage and rule on the application. This will involve evaluating the ground(s) invoked by the applicant. In doing so, the arbitral tribunal is typically given the flexibility to fix the summary procedure in a form it deems appropriate. A hearing, for instance, may be ordered for this purpose.

An important point to note is that summary procedures under major arbitration rules commonly feature the parties’ reasonable opportunity to be heard – which helps minimise the risk of any subsequent challenge to an award, especially in light of the summary nature of these procedures.

While some arbitration rules provide for a reasonable opportunity to be heard at the preliminary leave stage, others provide that such opportunity must be given once leave to proceed is granted by the arbitral tribunal.

PROS AND CONS

Plainly, summary procedures come with the benefit of saving time and costs for the parties from arbitrating unmeritorious points, or any other issues with outcome that hinge on whether those unmeritorious points ultimately fail.

While tribunals already enjoy the power to arrange proceedings to deal with claims in early and discrete phases, these procedures in rules may result in tribunals being more robust in using such powers when requested – and will also give comfort to unsophisticated courts when enforcing awards.

Some commentators argue that the other side of the coin is that use of summary procedures may potentially raise enforceability issues, on the basis that, for instance, a party is not given a reasonable opportunity to present its case. Given that summary procedures have only been incorporated into major arbitration rules in recent years, there appears to be little case law on this particular point.

However, these concerns are largely assuaged by the above-mentioned express provisions that emphasise the parties’ right to be heard – as well as the fact they have explicitly agreed to use of such procedures through their choice of arbitration rules.

Summary procedures also raise another concern: What if an application for summary procedure is itself without merit, intended as a delaying tactic to derail the proceedings? This is where procedural safeguards built into the relevant arbitration rules can come into play.

Take the 2018 HKIAC Administered Arbitration Rules, for example. First, article 43.7 of the rules stipulates that, pending determination of the summary procedure application, the arbitral tribunal may decide whether and to what extent the arbitration shall proceed. This enables the summary procedure application to move forward in parallel with the main proceedings in appropriate circumstances.

Second, articles 43.5 and 43.6 provide for strict time limits for the procedure, which may only be extended by the parties’ agreement, or by the HKIAC. Under these time limits, the parties may expect that, under normal circumstances, the arbitral tribunal will make an order or award on the summary procedure application within 90 days from the date of the application.

Finally, the existence of a preliminary leave stage also offers the arbitral tribunal an efficient option to deal with applications that clearly cannot succeed.


Vincent Cheung is deputy counsel at the HKIAC