Between the years 1973 and 2017, the world’s consumption of energy has more than doubled. This shows the mounting need for energy sources. As a result, there has been a higher demand for the construction of energy facilities. In close relation with this, construction arbitration has come to be the go-to when it comes to settling disputes that arise from contracts for the construction of these facilities.
In this article, we’re going to be considering key issues of risk that come up in contract drafting and how they can be addressed, as well as issues of legal and contractual.
Increasing Access To International Arbitration: The Way To Go
There are lots of challenges when it comes to access to international arbitration. In this article, we’ll be considering the factors that affect accessibility to international arbitration, how arbitral institutions can assist, how the parties involved can help themselves and the different tools available and the innovative solutions that can be employed to aid and simplify the process.
Factors affecting access to international arbitration
Various factors affect access to international arbitration. These are;
- Cost: This is a very prominent factor that affects access to arbitration, internationally. Besides legal fees (which, when added to expert fees, make up the majority of the costs of arbitration), other required costs include administrative costs of the arbitral institution, tribunal fees and the various operational costs involved in arbitrating including, for example, hiring the hearing venue.
Various reports have shown the high-cost requirements of the arbitral process.
- Duration: The arbitrary process has been known to take an unnecessarily long time to be completed, usually under the guise of formalization or standardization. These delays usually start at the beginning, when the procedural timetable is fixed. Arbitral institutions generally do not give specific timelines in their rules. The whole standardisation/formalisation of the arbitration process is becoming a source of concern, despite the inherent flexibility, because this flexibility is a major reason why parties opt for arbitration in the first place.
Different things cause delays. Some are; multiple and lengthy pleadings, with a couple of months in between. Interlocutory applications and procedural challenges. Wide-ranging document production exercises to name a few.
How arbitral institutions can help
As technology evolves and times change, arbitration users look for ways to reduce cost and delay and also to increase efficiency. Arbitral institutions must stay cognizant and ahead of the game. Innovative solutions have been provided to this end. Some of which are, expedited procedures or “fast-track” rules, provisions for the expedited formation of the tribunal, emergency arbitrator mechanisms, and procedures for summary dismissal.
In recent years, several institutions have adopted these methods. But, even though not all institutions have adopted this approach, parties still have the option to request expedited proceedings. While this may be a good approach, parties should note that it may not be suitable in every case, especially in those of complex, document-heavy claims which require experts and multiple witnesses.
Also, there is a tendency for increased costs because of the expedited process (the increased pressure on everyone’s time and the intensive period of activity). This is because shorter doesn’t necessarily mean cheaper.
The value and nature of the case also play a role in determining whether it will be expedited or not, because some cases require more than just a sole arbitrator, and value does not equal complexity.
Various institutions have also introduced emergency arbitrator mechanisms, whereby a temporary arbitrator is appointed to conduct emergency proceedings pending the formation of the tribunal. This allows the parties to obtain prompt relief in urgent interim applications without the need to apply to the court, especially in cases where a party has no real prospect of winning and there is no other valid reason to decide the case at a full trial.
How the parties can help themselves
There is a range of different tools aimed at saving the parties’ time and costs. These include:
Tiered dispute resolution clauses
This should be included within the contract at the earliest drafting stages, to prevent any complications later on.
The clause could provide for a specified initial period during which the parties would attempt to settle, after which the period is extended by agreement.
Agreement on a timetable and a suitable procedure
Parties should also agree on a suitable timetable and procedure for the arbitration, which could include limiting or cutting out certain stages (including the use of express expedited rules or a bespoke agreement). This could help to avoid ambiguity and reduce the tendency for disputes later on. This depends on the type of dispute.
Proactive planning and early specialist legal advice
Once a dispute has come up, proactive planning and obtaining early specialist legal is the way to go. Parties should consider whether third party funding (in a situation where a third party, unconnected to the proceedings agrees to cover a party’s legal costs for a return based on the success of the arbitration) or other forms of financing might be appropriate. Choosing the right arbitrator with a relevant skill-set, and availability is very important in terms of potential time and cost savings as the arbitration progresses.
The right use of technology
Technology is very important when it comes to increasing efficiencies, especially with document review and production, and with hearings.
Digital case management systems can be a great help in the efficient management of an arbitration case and they can also provide a secure platform for the storage of electronic data, especially with cybersecurity being a particularly hot topic in the arbitration community.
There is little doubt that arbitration, in recent times, remains a popular alternative for the resolution of cross-border disputes.
Due to increased competition and procedural reform across the dispute resolution spectrum, arbitral institutions are increasingly offering parties a wide range of flexible options including faster and cheaper routes to pursue expedited determinations (where appropriate), in a bid to improve access to arbitration across borders.
There are indeed a lot of interconnected factors affecting a party’s access to international arbitration and an assortment of tools that can be used to improve accessibility. Even so, technology plays an important role in increasing efficiency. There is no “one-size-fits-all” approach though, as every dispute has its own set of circumstances for the tribunal and the parties involved to take into account. Expedited procedures are great, but they are not necessarily the answer in every case. Parties should be conscious of the inherent flexibility of the arbitration process and seek to use it to their best advantage in the efficient resolution of well-managed disputes.