A Contribution for the Improvement of Efficiency in IDR
(A work in progress)
International Arbitration has become too costly, time consuming and, therefore, inefficient. Parties from different parts of the world insist in bringing their own legal practices and traditions to arbitration. More undesirably than not, some bring their own guerrilla apparatus, ranging from raising challenges against one or more arbitrators to request lengthy and costly evidentiary production like discovery or full-fledged cross-examination of witnesses.
It is true that there is significant and fundamental progress in International Arbitration. For instance, the use of technology now allows tribunals to hold hearings remotely from virtually anywhere in the globe, and the electronic filing of motions can dispense with the telefax. However, the technological revolution has not been accompanied by procedural efficiency and swiftness in the decision-making process. Instead of a streamlined mechanism, arbitration proceedings are increasingly subject to regulation and to an undesired level of standardisation that doesn’t necessarily bring more predictability. It may also be said that, to some extent, some pieces of soft law have allowed parties to replicate in arbitration the procedures they are familiar with in state courts. The use of evidence production, and more particularly discovery (combined with “e-discovery”), by US law firms elicits this idea.
Definitely, arbitration is not what it used to be.
International Arbitration is not what it used to be
So why not take a step back whilst also keeping the positive improvements?
To do that, one needs to look at the early days of arbitration and ask what was it that made it become so popular in the first place. Why did parties started resorting to arbitration instead of going to state courts?
There are a few reasons related to the legal framework that contributed to such popularity, in particular the New York Convention on the Recognition and Enforcement of Arbitral Awards of 1958, and the UNCITRAL Model Law that made arbitration national laws seemingly similar among themselves.
However, the main reasons that led parties to opt for arbitration can be summarised in a few features:
- Swiftness, thus reduced time and costs;
- Flexibility of the proceedings;
- Neutrality of the seat;
- Neutrality and / or expertise of the decision-makers appointed by the parties;
- Finality of the award.
The proceedings must of course comply with a few indispensable principles, namely:
- The right to properly present the case;
- Equality of arms;
- Independence and impartiality of the decision maker.
Therefore, my notion of reshaping arbitration is to go back to a proceeding where those basic principles are observed, and where there is extensive use of new technologies, but limited similarities to state court litigation. At the same time, arbitrators must be granted – and indeed exercise – more power in managing the proceedings. And be free from any paranoia on due process.
Accordingly, the arbitral proceeding should follow a “less is more” policy:
- less time to file submissions and strict compliance to a timetable agreed between the parties and the tribunal;
- less (and less lengthy) written submissions;
- immediate production of evidence and limited requests for production of evidence;
- first Case Management Conference as soon as possible and covering as many aspects as possible; desirably, the aim of this Case Management Conference is to produce a combination of a “terms of reference” and a “procedural order Nr. 1”;
- use of technological protocols to exchange submissions, make decisions, and produce notices;
- streamlined procedures in the making of procedural orders;
- use of technology to hold hearings and other conferences.
In any event, an efficient arbitration needs to have more of:
- control of costs;
- background on the decision-makers;
- control on ethical conduct.
There are already a handful of profiling and procedural tools that help tribunals and parties to accomplish those results and provide the necessary information to select the best possible decision maker for each case.