Arbitration has continued to be one of the groundbreaking dispute resolution methods among international disputing parties and by far the most influential resolution system in charge of International commerce, energy, and other related sectors. Even for critics, arbitration is a very effective mechanism that gives disputing parties equal rights and chances to submit their cases and get a fair ruling.
However, while international arbitration is a trusted resolution mechanism, one of its biggest drawbacks is its issue of arbitral awards delay. Despite the many talks about it, the challenge of issuing arbitral awards on time has continued to be one of the biggest banes of international arbitration, and critics have continued to capitalize on it.
Causes of Arbitral Awards Delay
Generally, after an arbitration ruling, the average expected time of an award being issued is one to three months. However, the reality does not support this trend as some award takes as much as four years before being issued. When this happens, the consequences can be incredibly significant on the favored party as it will not be able to implement its victory until the award is issued.
This situation has continued to make arbitration less desirable to disputing parties, and institutions such as the ICC have tried to put standards in place to help curb the perceived delay in arbitration. However, while it is true that arbitral awards delay may be partly associated with the inefficiency of the tribunal, it is important to note that the challenge of issuing arbitral awards cut deeper than efficiency. Going deeper, the causes of arbitral awards delay are actually procedural and highly depend on the case complexity.
While the ICC already has stated the standard and timeline for which an arbitration award must be issued to tackle unnecessary delays and inefficiency, the bigger question on how arbitral awards delay is caused by case complexity, especially in the energy sector, is still unanswered.
The Outlined Solutions
Different solutions for arbitral award delay on the ground of inefficiency have been proposed, and some, to an extent, have been able to guide arbitrators to issue an award in the shortest possible time. The challenge of issuing arbitral awards and the subsequent delay encountered from the point of reference was discussed in Section 68 of the Arbitration Act 1996.
The International Chamber of Commerce (ICC) in a move to curb the delay of issuing award, drafted standard guidelines that obliged arbitrators to issue/publish awards on time. The guideline, which became law on the 1st of January 2016, states that arbitration awards must be published within the time frame of three (3) months to six (6) months. The 3-6 months’ timeframe is for a multi-tribunal resolved dispute. For a sole tribunal, awards are expected to be published between two months.
The ICC, on the ground to establish the rule as stringent, also set up reductions that are applicable in the following situations:
• Arbitrators fees are to be reduced within the range of 5% to 10% if a draft award submitted after the last hearing or after a written submission elapse six months.
• fees are to be reduced within the range of 10% to 20% if a draft award submitted after the last hearing or after a written submission remains unpublished for up to ten months
• fees are to be reduced within the range of 10% to 20% if a draft award submitted after the last hearing or after a written submission remains unpublished after ten months.
To promote fast award publication, the ICC also outlines guidance in which arbitrators get an increased fee in a situation where awards are published faster than the expected timeframe.
However, despite ICC’s imposed time frames, the institution also leaves room for flexibility such that arbitrators will not be at the receiving end of delayed awards not caused by inefficiency. The institution notes that it was possible for certain cases to linger and award go past 6 months before publication due to the complexity of the case. The institution states that in a case with average complexity or high complexity, especially in the energy sector, the outline 6-month time frame will be clearly insufficient and will not apply at such reductions.
Delays in issuing arbitration awards have always been one of the biggest criticism of the system. However, while a few of these criticisms are justified, delays and challenges of issuing arbitral awards are not always due to inefficiency. Certain cases with average complexity could linger for long and span into years until a convincing ruling is reached and the award issued. Hence, delay in issuing arbitral awards from the position of case complexity may not necessarily have any solution on the ground as it is.
However, the good news is that arbitral tribunals will never delay an award unless necessary, and arbitration still remains the only enforceable and binding international dispute resolution system. All a party really needs to do before going into any contract is to seek expert counsel and advice on an arbitration clause and how it can get the best out of a dispute, supposing it arises.
Rattsakuten is one of the top arbitral firms with some of the top professional arbitrators in the system. The firm is made up of extremely skillful and experienced arbitrators with a top understanding of how arbitration contracts and the award works. You can reach the firm for all your inquiries about its processes and counsel for clients.
Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.