Www.swissarbitration.org Workshop Swiss Rules of International Arbitration Expedited Procedure, Emergency Relief, Awards and Costs Prague, 5 October 2012

www.swissarbitration.org

Workshop

Swiss Rules of International Arbitration

Expedited Procedure, Emergency Relief, Awards and Costs

Prague, 5 October 2012

Dr. Philipp Habegger LL.M., Walder Wyss AGMember of the Arbitration Court of the Swiss Chambers’ Arbitration Institution


1. Expedited Procedure (I)

Applicable if:– Parties so agree (Art. 42(1))– Aggregate of claim, counterclaim (or any set-

off defence) does not exceed CHF 1 Mio. [and Court does not decide otherwise taking into account all relevant circumstances] (Art. 42(2))


1. Expedited Procedure (II)

Very popular due to cost efficiency and speed:

– 33% of all cases in 2011, 45% in 2010, 30% in 2009

– Award to be made within six months from the date of transmission of file to arbitral tribunal [usually a sole arbitrator under the regime of Art. 42(2); cf. Art. 42(2)(b) and (c)]


2. Emergency Relief (I)

Art. 43: availability of interim measures that cannot wait until the arbitral tribunal has been constituted:

– Available even before Notice of Arbitration is filed (Art. 43(1))

– Parallel competence with state courts (Art. 43(1) in conjunction with Art. 26(5))


2. Emergency Relief (II)- General transitional rule of Art. 1(3) applies:

applicable to proceedings in which Notice of Arbitration is submitted on or after 1 June 2012, unless the parties have agreed otherwise -> jurisdictional issue to be decided by the emergency arbitrator (>< ICC Rules)


2. Emergency Relief (III)

Application for emergency relief to include:– Particulars of Arts. 3(3)(b) to (e);– Advisable: when referring to arbitration

agreement address jurisdiction and applicability of Art. 43;

– Statement of interim measure(s) sought and reasons therefor, in particular the reason for the purported urgency;


2. Emergency Relief (IV)

Application for emergency relief to include:– Comments on language, seat of arbitration

(even if agreed between parties >< Art. 3(3)(g) only if not previously agreed);

– Comments on applicable law (>< Art. 3(3)(g) not needed);

– Confirmation of payment of Registration Fee of CHF 4,500 and Deposit of CHF 20,000 (Appendix B Section 1.6).


2. Emergency Relief (V)- If Notice of Arbitration not yet pending ->

to be filed at latest within 10 days after filing of application (Art. 43(3)) -> otherwise termination of proceedings (any decision on application already rendered ceases to be binding; Art. 43(10))


2. Emergency Relief (VI)

Art. 43(2): Court to appoint sole emergency arbitrator “as soon as possible after receipt of the Application”, unless:

– Manifestly no agreement to arbitrate under Swiss Rules (= Art. 3(12); test to be stricter (?)); or

– More appropriate to proceed with constitution of tribunal and refer application to it (cf. Art. 2(3) for acceleration of constitution).


2. Emergency Relief (VII)

Art. 43(4): Arts. 9 to 12 apply to challenge of emergency arbitrator, but time-limits reduced from fifteen to three days. If challenge successful: decision stands (>< ICC) -> may be modified by tribunal or replacement emergency arbitrator

Art. 43(5): Absent agreement by the parties, Court to fix seat of emergency relief proceedings without prejudice to later determination of seat of arbitration (Art. 16).


2. Emergency Relief (VIII)

Art. 43(6): wide discretion for conduct of proceedings.

– Proceedings should reflect inherent urgency;– Each party to be granted “reasonable

opportunity to be heard on the Application”;– Neither formal in person hearing, nor full

exchange of submissions necessarily required;


2. Emergency Relief (IX)- Decision to be rendered within fifteen days from

the date file was transmitted to emergency arbitrator (Art. 43(7); file will only be transmitted once Registration Fee and Deposit are paid, Appendix B Section 1.6). Extensions for rendering of decision may be agreed by the parties or granted by the Court.


2. Emergency Relief (X)

Art. 43(8) and (9): Decision has same effects as a decision pursuant to Art. 26, i.e.,

– Decision on application may be in form of an award (>< ICC);

– Emergency arbitrator may issue preliminary orders (>< ICC and others);

– Decision, if necessary, should rule on emergency arbitrator’s jurisdiction;


2. Emergency Relief (XI)

Art. 43(8) and (9): Decision has same effects as a decision pursuant to Art. 26, i.e.,

– Reasons may be stated in summary form (Art. 42(1)(e) by analogy);

– Decision is binding on parties (Art. 15(7)), but not on subsequent tribunal, which may modify, suspend or terminate it (Art. 43(8));


2. Emergency Relief (XII)- Decision to determine fees, costs and expenses

of emergency arbitrator subject to approval by the Court (Art. 43(9)), but not other cost items -> other cost items will be determined later by arbitral tribunal. If later no tribunal constituted -> separate cost award by emergency arbitrator (>< ICC) -> enforceability.


3. Awards (I): Few Changes– Former Art. 32(2): duty of parties to comply with award -

> now Art. 15(7)– Art. 35(1), 36(1), 37(1): Clarification: requests for

correction, interpretation or additional award to be addressed to Secretariat.

– Art. 35(2), 37(2): extensions of time for interpretation or additional award to be granted by Court (only)


3. Awards (II): what did not change– Art. 31(1): if no majority, president may make award

alone– Art. 32(1): tribunal may make final, interim, interlocutory,

or partial awards and may award costs in awards that are not final.

– Art. 32(1): obligation to state reasons, unless parties agree that no reasons are to be given


4. Determination of Costs (I)- Art. 38: „the arbitral tribunal shall determine the costs of

arbitration in its award“ -> „The award shall contain a determination of the costs of the arbitration“.

- Art. 32(1), 40(3), 40(5): Cost determinations may be made in final award, award by consent, termination order, interim or partial awards. Also in decisions on correction or interpretation of awards or additional awards.

- Art. 38(a): Determination of arbitrator’s fees and expenses by arbitral tribunal (Art. 38(b+c)).


4. Determination of Costs (II)- Appendix B Section 5: if arbitrator fees subject to VAT or

other fiscal charge, parties have a duty to pay such taxes or charges

- Art. 41(1): may tribunal request deposit in the amount of VAT likely to become payable?


4. Determination of Costs (III)- Art. 38(a), 38(b): new [expressly states]: fees of

secretary of tribunal falls under Art. 38(a) -> if added to fees of arbitrators still to be within range of scale of Appendix B Section 6 -> expression of principle that total of fees shall not be higher if secretary assists the tribunal.

- Costs of secretary may not be qualified as „cost of other assistance required by the arbitral tribunal“ according to Art. 38(c)!


4. Determination of Costs (IV)- Art. 39(1): both fees and (new) expenses of arbitrators

must be reasonable- Art. 39(2): fees are to be determined in accordance with

Appendix B. The scale for fees and administrative costs has remained unchanged compared to the Swiss Rules 2004.


5. Cost Control (I)- Swiss Rules 2004: mere consultation of the Chambers

by the tribunal regarding costs (only amendment to Art. 40 UNCITRAL 1976). Costs only subject to approval if amounts in scale exceeded

- Art. 41(3) and 41(4) UNCITRAL 2010 provide right to parties to have fee proposal and cost determination by tribunal checked, approved, and – if need be – adjusted by ‚appointing authority‘ -> increased cost control in ad-hoc proceedings


5. Cost Control (II)- Art. 40(4): new: Not only awards, but as well termination

orders and decisions re correction, interpretation and additional awards must be submitted to Court regarding the cost decision

- New: in all instances (not only if amounts in scale of Apppendix B exceeded) submitted for approval (not mere consultation) with competence of Court to adjust


5. Cost Control (III)- Art. 40(4): „Any such approval or adjustment by the

Swiss Chambers‘ Court shall be binding upon the arbitral tribunal“

- Court approves or adjusts; and fixes administrative costs (Appendix B Section 2.2, Art. 38(f)). No administrative costs if amount in dispute below CHF 2 Mio.

- No cost control regarding:- Costs items in Art. 38(d) to 38(e) (e.g. witness and legal costs)- Costs for Emergency Arbitrator (prior approval/adjustment

pursuant to Art. 43(9)) -> no review de novo- Allocation of costs between the parties


5. Cost Control (IV)- Art. 40(4): approval or adjustment binding on arbitral

tribunal- Issue of Federal Supreme Court decision 136 III 597,

602 cons. 5.2 not resolved! I.e., not binding on and enforceable against parties.

- Still responsibility of tribunals to timely request deposits pursuant to Art. 41(1) and to check that they are paid


5. Cost Control (V)- Appendix B Section 4 (‘Guidelines for the accounting of

expenses’) available on www.swissarbitration.org.- Core issues:

- Per diem allowances for days spent away from place of business

- Threshold amounts for advances on fees and expenses- No advances on fees and expenses in Expedited Proceedings

and Emergency Relief proceedings

- Striking balance between adequate control and efficiency/‘lean administration‘/avoiding delay in issuing awards


6. Deposit of Costs (I)- Art. 41(4): new: time-limit for payment of deposits

reduced to 15 days -> tribunals may suspend/terminate proceedings sooner

- Art. 41(1) and 41(3): duty to consult Court for deposits (approval if amounts in Appendix B Section 6 exceeded)


6. Deposit of Costs (II)- Art. 42(1)(a) and App. B Section 1.4 /1.5 [Art. 5(5)]:

Provisional Deposit of CHF 5‘000 in Expedited Procedures. Transfer of file subject to payment. Payment considered partial payment of deposit fixed by tribunal (Art. 41(1)).

- To cover initial efforts of sole arbitrator, such as:• Preparation of provisional timetable in consultation

with parties (Art. 15(3));• Issuing of initial procedural directions (Art. 15(1));• determination of language(s) of proceedings (Art.

17(1): “promptly after its appointment”)


6. Deposit of Costs (III)- Art. 43(1)(c) and (2): deposit for Emergency Arbitrator in

the amount of maximum fees (CHF 20‘000)- Appendix B Section 4.2: advances on fees for arbitrators

if substantial steps/mile-stones in proceedings are achieved. Subject to approval by Court -> Guidelines on Expenses


THANK YOU FOR YOUR ATTENTION !

Dr. Philipp Habegger LL.M.

[email protected]

Documents

Www.swissarbitration.org Workshop Swiss Rules of International Arbitration Expedited Procedure, Emergency Relief, Awards and Costs Prague, 5 October 2012