New amendments on ICC Rules of Arbitration expedites procedure

Dunya Executive - - BUSINESS BY LAW - EFE KINIKOĞLU / PARTNER , MORAL LAW FIRM efekinikoglu@moral.av.tr

Significant amendments, which will improve efficiency and expedite proceedings regulated under ICC Rules of Arbitration (“ICC Rules”) came into force on March 1, 2017.

In General

Although popularity of arbitration is rapidly increasing in Turkey especially following the establishment of ISTAC and ITOTAM, one could still easily question whether it is worth to choose arbitration despite its costs and doubtful enforcement proceedings before local courts.

Arbitration institution, especially in Turkey, did not introduce its advantages only as “Neutrality”, “Confidentiality” and “Expertise” but also as “Speed”. Quickly resolving a dispute is and should be one of the primary benefits of arbitration, of course while maintaining the former since neutrality, confidentiality and expertise are all essential reasons to advise arbitration to the clients. However, in many cases and especially in complex disputes, it is no doubt that arbitration proceedings last longer than expected and almost similar to local court proceedings which actually do not please the parties who are planning to swiftly resolve the dispute by not going to Turkish courts which are unfortunately famous with their colossal workloads. During local court proceedings, parties should be ready for various delays due to many reasons that are not attributable to them. Yet, they are not able to avoid such delays during arbitration also, this time mostly due to their legal counsels who are adamant to submit compre- hensive and lengthy submissions and/or produce extensive documents and materials or due to workload of arbitration tribunal who are obliged to review all diligently.

Therefore, it is already a necessity to expedite the arbitration process to live up the expectations as to its effective nature as much as possible by taking necessary precautions and making necessary amendments which was finally materialized by ICC. Article 30 of the ICC Rules of Arbitration and the “Expedited Procedure Provisions” stipulated under Annex VI are the most remarkable amendments on ICC Rules. This procedure will now automatically apply to all arbitration proceedings that are executed on or after March 1, 2017 with a subject matter for amount of USD 2 million at maximum. Parties will also be able to opt in even for the disputes for more than USD 2 million.

Expedited Procedure could be summarized as follows:

Disputes will be held by a sole arbitrator regardless of the arbitration agreement.

Terms of Reference will not be prepared.

Sole arbitrator now has the authority to limit the number, page counts and scope of written declarations and may bypass the document production; and resolve the dispute by solely examining the petitions, without requiring hearings, witnesses and experts.

Case Management Conference will take place within 15 days. The final award-rendering period is 6 months starting from the execution of Case Management Conference.

Although the administrative costs are the same as the regular arbitral procedure, sole arbitrator fees will be approximately 20% lower than the regular fee schedule.

In any case, the ICC Court has the authority to determine if the Expe- dited Procedure are applicable for a dispute on its own motion or upon one of the parties’ request.

Parties who wish to avoid Expedited Procedure may simply opt-out of these provisions by clearly stating such exclusion in their arbitration agreement.

Conclusion

In the big picture, to simply put, law is only a system of rules that helps maintaining the order and harmony in community and it shapes economics and politics and also inevitably shaped by them. Therefore, any legal institution, especially globally used mechanisms such as arbitration, should always remember the very basic needs that originated alternative dispute resolutions and arbitration in the first place and keep track of all sorts of developments and evolution that companies and economics are experiencing and evolve itself to adapt to the challenging world.

In that respect, new amendments on the ICC Rules are raising the expectations of both the parties and ICC Court for more fruitful and time-saving arbitral proceedings, especially for the claims with lower amounts.

Thanks to ICC’s responsiveness to the market, it is likely to be seen that the parties will now opt-in to Expedited Procedure, even for the disputes valued more than USD 2 Million in order to save time and money which will hopefully also be another reason that will incline parties to prefer arbitration in the future.

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