Timely dispute resolution through international arbitration holds significant appeal for corporations globally. Conversely, persistent delays in arbitration challenge its efficacy. The 2008 Queen Mary International Arbitration Survey revealed that while an impressive 86% of corporations found arbitration to their liking, 5% of counsel expressed concerns over extended durations.
Fast forward to the 2010 survey, dissatisfaction seemed to grow. Half of the participants noted disappointment with arbitrators. Among them, 11% pinpointed undue delays as a major issue.
The 2021 survey, shaped by a pandemic-altered environment, echoed calls for efficiency. Respondents actively advocated for quicker procedures and, critically, penalties for arbitrators causing delays.
This consistent feedback underscores the pressing need for swift and efficient arbitration. In this piece, the 16th in our “Understanding Arbitration: A Guide for Businesses” series, we offer actionable solutions to address these delays, fortifying arbitration’s reputation as a reliable method for speedy dispute resolution.
The Causes of Delay in Arbitration
Delays in arbitration proceedings, while sometimes unavoidable, can pose significant challenges for both parties and arbitrators. Let’s break down the primary factors that contribute to these setbacks.
1. Case Complexity: Some cases demand additional time by their very nature. They may involve complicated arguments, a multitude of evidential documents, or cross-border legal considerations. The time required for thorough analysis and fair adjudication naturally extends in such situations.
2. Party Tactics: A notable concern arises when parties intentionally deploy tactics to stretch out the process. These strategies might involve introducing a barrage of documents at the last minute or making repeated adjournment requests. While these moves might serve a strategic purpose for one party, they can significantly lengthen the overall timeline.
3. Arbitrator Issues: The smooth progression of arbitration can be hampered by issues related to the arbitrators. Instances where arbitrators become unavailable or are replaced multiple times can disrupt the consistent flow of proceedings.
Further insights from the 2010 Queen Mary Survey pinpoint more specific stages where delays are most prominent. Document disclosure tops the list, consuming 24% of the delay time. Following closely are the phases involving written submissions, tribunal constitution, and actual hearings. The collective takeaway from these findings is that a significant portion of the delay comes from steps over which parties directly influence.
Corporate users also express concern over the considerable wait between the final hearing and the publication of the award. While they consider a wait of up to six months post-hearing reasonable, actual durations can often exceed a year. There’s a palpable demand for more decisive arbitrators and responsive institutions to enhance the efficiency of arbitration by establishing and maintaining tighter schedules, thus ensuring arbitration remains an attractive and effective dispute resolution method.
The Impact of Delays in Arbitration
Delays in arbitration cause several repercussions beyond the burden of a drawn-out timeline. It is vital for users to recognise and mitigate these impacts:
1. Financial Strain and Unexpected Costs: Additional expenses accrue with every clock tick. Direct costs, such as legal fees, and indirect expenditures relating to resource commitments escalate. These persistent financial pressures can strain budgets, especially for smaller entities or individuals who may not have deep pockets.
2. Extended Uncertainty Affecting Business Decisions: Arbitration delays put businesses into an unsettling state of limbo. Critical business decisions, from expansions to strategic partnerships, hang in the balance. Potential investors might hold back, apprehensive of unresolved disputes, leading to lost opportunities and stifled growth potential.
3. Risk of Evidence and Witness Testimony Degradation: As time advances, the accuracy and integrity of evidence can come under threat. Documents might get misplaced, recollections become less vivid, and witnesses become less accessible or their accounts less reliable.
Practical Steps to Expedite Arbitration
Addressing the prolonged duration of arbitration is essential for the parties involved. Here, we outline pragmatic steps that parties can adopt to ensure efficient and effective arbitration processes.
1. Drafting Precise Arbitration Clauses: Begin at the foundation. Crafting a detailed arbitration clause is the first step to ensuring efficient proceedings. It’s essential to outline explicit details, such as the method of appointing arbitrators, governing law, the arbitral seat, and the location of hearings. Setting clear expectations from the outset minimises room for procedural disagreements that can cause delays.
2. Implementing Firm Time Frames and Good Faith Commitment: Building upon a well-defined arbitration clause, it’s also crucial to integrate commitments concerning procedural timelines and responsibilities. Drawing from our previous discussions on handling recalcitrant parties, consider incorporating language such as:
“Both parties hereby commit to active participation, timely communication, cooperating fully and acting in good faith during the entire arbitration process. Any departure from these duties may result in penalties as detailed in Section X.”
This dual approach – defining the arbitration’s structural attributes and cementing expectations regarding time and conduct – addresses many concerns from the 2010 Queen Mary Survey, notably those arising from areas directly under the parties’ influence.
3. Designating Efficient Rules and Procedures: The choice of procedural rules significantly influences the speed of the arbitration. While many provisions inherently aim for expediency, it’s noteworthy that, except for mandatory requirements, most arbitration rules defer to the parties’ preferences — often indicated with phrases like ‘unless the parties otherwise agree.’ Accordingly, parties should opt for rules that naturally encourage swift proceedings and consider customising these rules, when permitted, to suit the specifics of their dispute further.
4. Selection Criteria for Efficient Arbitrators: The choice of an arbitrator significantly influences the pace and effectiveness of the arbitration. It’s prudent to select individuals who have consistently managed cases with efficiency. During the selection process, always ask about their availability for the next 12 to 18 months, ensuring they can dedicate the necessary attention to your case. Their expertise becomes especially evident during stages such as document disclosure and the preparation of written submissions, offering practical solutions to avoid potential delays.
4. Encouraging Limited and Relevant Discovery: As document disclosure is a prominent factor contributing to delay, encourage parties to limit discovery to essential documents. This approach saves time and streamlines the issues in contention.
6. Streamlining Testimony: Focus on quality over quantity—Prioritise testimonies of key witnesses and experts to expedite hearings. By trimming down to what’s vital, you reduce hearing durations without compromising the quality of submissions.
7. Incorporating Technology: Use online platforms for hearings, evidence submissions, and collaborations. This can significantly reduce the need for physical presence, which can be a significant time saver, especially in international arbitrations.
The Role of Arbitral Institutions in Preventing Delays
Arbitral institutions carry a significant responsibility in shaping the efficiency of arbitration proceedings. Their role isn’t limited to mere administration; they set benchmarks that promote the prompt resolution of disputes.
Insights from the 2021 Queen Mary Arbitration survey point towards essential adaptations that can make the arbitration process more attractive and efficient:
Administrative support for virtual hearings emerged as a top priority, with 38% of respondents underscoring its significance. The ability to support virtual proceedings offers flexibility, removes logistical barriers, and can speed up the process substantially.
Another 29% of respondents stressed the need for greater transparency in administrative tasks, specifically regarding the appointment and challenge of arbitrators. A straightforward procedure can pre-empt potential disputes, ensuring the process advances without needless interruptions.
Furthermore, institutions can actively promote several strategies to enhance the efficiency of arbitration:
1. Expedited Procedure Rules: These rules offer parties an effective mechanism to resolve disputes without unnecessary delays. A notable example is the ICC Expedited Procedure Rules, which provide a streamlined process and impose shorter time limits for conducting the arbitration. Notably, they set a six-month deadline for issuing the final award after the initial case management conference.
2. Rigorous Case Management: Setting clear timelines and championing efficient case management can curtail prolonged proceedings. Empowering arbitrators to implement and uphold these efficient practices can deter dilatory tactics.
3. Consistent Monitoring: Regular updates and progress reports are indispensable. They ensure that the arbitration moves forward purposefully and that parties remain accountable.
Ultimately, while all parties in arbitration are responsible for ensuring its efficiency, the guidance and innovation of arbitral institutions remain crucial in maintaining momentum and preventing unnecessary delays.
Addressing and Countering Delay Tactics
Delay tactics, purposefully employed to stall or prolong arbitration proceedings, have always been a cause for concern. Recognising and tackling these strategies head-on ensures not only the efficiency of the arbitration but also upholds its integrity.
Recognising common stalling strategies is essential. Our prior article on Managing Recalcitrant Parties in Arbitration highlighted several uncooperative behaviours. These include persistent delays, evasive communication, and ignoring arbitral directives. Such behaviours extend the arbitration timeline and escalate costs. By being alert to these tactics, arbitrators and counsel can counter them immediately.
Sanctions or cost implications for deliberate delays can act as powerful deterrents. The prospect of a financial penalty or an adverse outcome can dissuade parties from resorting to needless stalling, promoting active and sincere participation.
Interim measures such as asset freezes, injunctions or security for costs can also play a significant role. By ensuring that parties cannot benefit from intentional delay, these measures safeguard the interests of all involved, providing a level playing field and preventing the misuse of the arbitral process.
When persistent delays threaten the efficiency of arbitration, it’s prudent to contemplate other resolution avenues, provided both parties agree. Mediation stands out as a cooperative approach, frequently serving as the catalyst to break deadlocks. With mutual consent to embrace such alternatives, parties can potentially find a swifter and more harmonious path to settling their differences.
The Way Forward
Swift and effective arbitration hinges on the collective action of all stakeholders. The entire process gains momentum when parties, arbitrators, and institutions collaborate with a singular focus on efficiency. Proactivity and commitment remain key. We must address delays head-on, prioritise open communication, and emphasise our shared objective: achieving fair resolutions without undue delay.
The insights presented in this blog post aim to furnish readers with a broad understanding of arbitration within the context of global business. This material does not purport to provide legal advice, but rather serves as an informative resource. Specific decisions concerning arbitration and its relevance should always be made in consultation with qualified legal experts. Given the intricate variations and legal implications of arbitration across different jurisdictions, it is paramount to collaborate with legal professionals well-acquainted with the precise legal framework pertinent to your circumstances.
If you find this content valuable and have further questions, or if you require guidance on the detailed aspects of arbitration, please feel free to reach out to our dedicated team at firstname.lastname@example.org. We stand ready to guide you through these processes and address any areas of concern.