Highlights of the revised Stockholm arbitration rules

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The Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) are among the most widely used in commercial and investment arbitration globally. On 1 January 2017, the SCC launched revised versions of its arbitration rules as well as rules for expedited arbitrations.

iStock-669257198The process of revising the rules began in September 2014, when the SCC board appointed a rules revision committee. The committee included Swedish and international arbitration practitioners and academics, members of the SCC board, and members of the SCC secretariat. After two years, the committee released drafts of the proposed revised rules, in June 2016. The public was invited to submit written comments, and a public hearing was held in Stockholm.

The aim of the revision committee was not to overhaul SCC arbitration procedure, but rather to streamline certain procedures, codify existing practices, and respond to users’ demands. Since the previous version of the SCC rules went into effect in 2010, there has been a significant increase in complex multi-contract and multi-party disputes, which tend to place particular demands on the arbitration procedure. Other developments have included the hotly debated issue of the role of tribunal secretaries, new transparency rules for investor-state disputes, and calls from users for yet more time- and cost-efficient arbitral proceedings. Accommodating these developments was a central concern for the revision committee.

Efficiency as a guiding principle. Efficiency served as an important guiding principle throughout the revision process, and resulted in several new and revised provisions. Notably, article 2 of SCC’s 2017 arbitration rules now stipulates that the SCC, the tribunal and the parties “shall act in an efficient and expeditious manner” throughout the proceedings. Article 23 has been revised to include a specific instruction that arbitrators “must conduct the arbitration in an … efficient and expeditious manner”, and article 28 now requests the tribunal and the parties to “adopt procedures enhancing the efficiency and expeditiousness of the proceedings”. The standard of efficiency and expeditiousness is also found in several other provisions in the revised SCC rules – such as those pertaining to joinder, multiple contracts, consolidation, the case management conference, and summary procedure.

To give these references to “efficiency and expeditiousness” teeth, corresponding cost provisions have been added. Articles 49 and 50 now state that the tribunal must apportion, between the parties, arbitration costs as well as party costs, having regard to each party’s contribution to the efficiency and expeditiousness of the arbitration. Similarly, the SCC board must determine the costs of the arbitration, having regard to the extent to which the tribunal has acted in an efficient and expeditious manner.

Summary procedure. Also in the spirit of efficiency, the revised rules include a new summary procedure provision. Under article 39, a party can request the tribunal to decide on one or more issues of fact or law by way of summary procedure, without necessarily undertaking every procedural step that might otherwise be adopted for the arbitration. The request can be made at any point during the arbitration; this differs from similar provisions in other arbitration rules, which typically only allow for early dismissal of claims.

SCC’s summary procedure is a case-management tool intended to permit the quick dismissal of frivolous claims or untenable allegations concerning jurisdiction, admissibility or merit. It may be appropriate where an allegation of fact or law material to the dispute is manifestly unsustainable, or in situations where no award could be rendered in favour of a party under the applicable law, even if the facts alleged by that party are assumed to be true.

In its request for summary procedure, a party should indicate the grounds for its request, and demonstrate that it is efficient and appropriate to proceed summarily. The opposing party is given an opportunity to submit comments on the request. If the tribunal grants the request, it also determines how to proceed; the provision does not specify what summary procedure should look like, but rather instructs the tribunal to “make its order or award on the issues under consideration in an efficient and expeditious manner, having regard to the circumstances of the case, while giving each party a reasonable opportunity to present its case”.

The role of secretaries. Issues related to the involvement of tribunal secretaries in arbitral proceedings have been in the spotlight in recent years. Increasingly, institutional arbitration rules regulate how secretaries are to be appointed, and what tasks they may perform. Article 24 of the revised SCC arbitration rules codify existing SCC practice in this regard. Tribunals may submit to the SCC a proposal for the appointment of an administrative secretary, and the SCC will formally appoint that secretary only if the parties approve.

The provision requires the secretary to sign a statement of impartiality and independence, and allows for the challenge and removal of secretaries on the same grounds as those applicable to arbitrators. It does not specify the role of the secretary, nor does it prescribe what tasks are appropriate or not for the secretary to undertake. Instead, rule 24 is flexible, instructing that “the tribunal must consult the parties regarding the tasks of the administrative secretary”.

Multiparty and multi-contract disputes. The new SCC rules include provisions designed for more efficient resolution of complex disputes, in particular those that involve multiple parties, or where claims arise under more than one contract. Article 14 codifies existing SCC practice in multi-contract disputes by allowing parties to make claims arising out of more than one contract in a single arbitration. Article 15 allows for the consolidation of a newly commenced arbitration with a pending one, and article 13 provides for joinder of additional parties under certain circumstances.

In deciding whether to allow multi-contract claims, consolidation of arbitrations, or joinder of additional parties, the SCC board will take into account whether the arbitration agreements are compatible, and the efficiency and expeditiousness of the proceedings. Decisions by the SCC board on joinder, consolidation and multi-contract issues would be preliminary; this means that the tribunal’s power to decide on its jurisdiction over parties and claims remains unchanged under the new rules.

Amicus curiae in investment arbitrations. The SCC rules are the third-most frequently used set of arbitration rules in investment disputes – after the ICSID (International Centre for Settlement of Investment Disputes) and UNCITRAL (United Nations Commission on International Trade Law) rules. Recognizing that such disputes raise different issues and involve different interests than commercial disputes, the revision committee found it appropriate to include an appendix that applies only in treaty-based disputes between an investor and a state. Most notably, the provisions in appendix III allow third persons and non-disputing treaty parties to apply to an arbitral tribunal for permission to make a written submission in the arbitration. After consulting the parties, the tribunal may also, on its own initiative, invite third persons and non-disputing treaty parties to make a submission on material issues in the arbitration.

In addition to what has been discussed above, several other significant adjustments were made to the SCC rules: the presumption in favour of a three-member tribunal was abandoned in favour of a more flexible approach; a new provision empowers tribunals to order a claimant or counterclaimant to pay security for costs; and the fee schedules were revised to reflect a balance between cost-efficient proceedings and the fair compensation of arbitrators.

The revised SCC rules went into effect on 1 January 2017, in connection with the SCC’s centennial anniversary. The rules are available in several different languages on the SCC website (sccinstitute.com).

Anja Havedal Ipp is legal counsel at the Arbitration Institute of the Stockholm Chamber of Commerce