A Chairman's Perspective

"This was the chance to prove that civil procedure reformers would do well to take a look at what arbitration readily achieves."

When I was first approached about a possible appointment as chairman of the tribunal in the two cases that pioneered this form of fast-track arbitration, around the middle of December 1991, I had plans to spend some time relaxing on one of the beaches of the Caribbean. As appeared later, one of my co-arbitrators had planned to take his family on a skiing trip to Colorado. As it turned out, we spent all our contemplated vacations, including Christmas and the New Year, conducting this high-speed arbitration in New York City. This development illustrates the first requirement for successful completion of a fast­track arbitration: The arbitrators must be prepared and able to devote most of their time during a brief period to the case.

When I first received the files in the two cases in which dispositions in the fast-track mode were requested, the Tribunal had eighteen days to deal with preliminary procedural questions, to obtain completed Terms of Reference, to provide for further submissions, to hear the case, to formulate the award, and to submit it for approval to the ICC Court. This posed a challenge that I, as a long-time teacher of civil procedure and an outspoken critic of the long delays and excessive expense that characterize civil litigation in the United States, welcomed with enthusiasm. This was the chance to prove that civil procedure reformers would do well to take a look at what arbitration readily achieves.

The task of the Tribunal was to decide a case involving hundreds of millions of dollars that posed substantial procedural and substantive problems within little more than two weeks. It was really a case of dreams come true. I believe we not only managed to do this quite well, but, in fact, did this as well as we could have done it in more protracted proceedings. Because my co­ arbitrators, with whom I stayed in continuous contact and who proved models to whom all arbitrators should aspire, were in Canada and Washington D.C., it fell naturally to me to get the case unto the right track.

The first thing we did was to submit to the parties draft Terms of Reference. These did three things: they consolidated the two cases, they provided that the parties accepted the arbitrators, and they described the issues in flexible open-ended terms.

Since the same Tribunal had been appointed in the two cases and these cases raised the same issues, the parties, after some prodding, consented to consolidation. They also accepted the arbitrators, thus avoiding what might have been a problem. Since the ICC Rules permit a challenge to be made within thirty days after appointment, if the parties had not accepted the arbitrators, they might have tried to challenge the arbitrators after the award had already been rendered. I was prepared to deal with this problem by requiring challenges to be made within twenty-four hours. If the parties had argued that this was against the ICC Rules, the Tribunal would have been likely to rule that the ICC Rules did not contemplate the situation presented and that the Tribunal was therefore free to formulate complementary rules.

One of the parties made an initial effort to pre­determine an important issue in the case by excluding it from the Terms of Reference. That issue was whether the Tribunal had the competence to arbitrate certain claims of which fast-track determination was sought even though these were not specifically mentioned in the contractual provisions that prescribed fa track treatment. The Claimants sought redetermination of the price paid for the commodity involved by reference to contractually stipulated criteria that would have resulted in a drastic reduction in price; in addition, they sought, alternatively, reduction of the price or termination of the contract by invoking frustration of contract. The Respondents argued that the Tribunal was competent to deal only with redetermination of the price by reference to the contractually stipulated criteria, but lacked the authority to deal with any other, including the frustration, claims. It therefore sought to put these other claims beyond the reach of the Terms of Reference. The Tribunal took the position that the function of the Terms of Reference was to define the issues, not to decide them, and that the Respondent could urge its views on the Tribunal in the fast-track proceeding. The Tribunal was prepared to submit the Terms of Reference for approval to the ICC Court, if the Respondent had not acceded. However, this was unnecessary because all parties eventually accepted the Terms of Reference. By this time, there were about eleven days left to D-day.¹ We therefore proceeded to set a very tight schedule for hearing the case.

First, the Tribunal permitted the parties to present further submissions on the issue of its competence to hear issues not contractually preserved for fast-track treatment. These would supplement the submissions already made to the ICC Court. Immediately upon completion of these submissions, the Tribunal informed the parties that it would deal with this issue in its award. Several considerations prompted this step. First, the Tribunal's disposition was to rule itself competent to hear both the fast-track and the other claims. While the contract provided for price redetermination by reference to contractually prescribed criteria in the fast-track mode, it also contained a broad arbitration clause that appeared to cover the frustration claims. Consequently, the Tribunal would have to address the frustration claims in any event, be it in the contractually specified fast-track mode or in a mode to be prescribed by the Tribunal.² Second, the Tribunal preferred to obtain the broadest possible picture on the redetermination claims, regardless of their legal basis. All of these claims were clearly related. Third, and perhaps most importantly, the Tribunal did not wish to render any interim award that might propel an attack in court which would frustrate the fast-track scheme. It wanted to ensure that the arbitral process would go forward without any disrupting manoeuvre in court. Indeed, the Respondent's argument that the Tribunal had no authority to hear these claims, since the contractually stipulated time for arbitrating them in a new arbitration had expired, would, if accepted, have left only the courts for pursuing these claims. Respondent had also shown its lack of enthusiasm for the fast-track mode by taking the full thirty days prescribed by the ICC Rules for answering the Claimants' requests for arbitration.³

The parties were given four days to make simultaneously submissions on all aspects of the case, including all evidence including witness and expert statements, legal arguments, and allegations of fact. While this was an extremely short period, the parties had been given to understand, as soon as the files reached the Tribunal, that this sort of schedule was to be expected. No reliance could be placed on any material not contained in these submissions at the hearing, except for good cause shown. As it turned out, no recourse to this escape clause appeared necessary. At the hearing, the parties limited their submissions to those contained in the written ones.

The written submissions reached the arbitrators on December 30. The oral hearings were held on January 2. At the hearings, each party was given three hours (the third, largely nominal, party was given only a few minutes). The parties were left free as to how to use their allotted time. They could use it for argument or for examining or cross-examining witnesses. This procedure worked well. The parties used most of their time for argument, while the Tribunal used some of its own time for questioning some witnesses. The Tribunal had ordered that all persons whose statements had been submitted in writing had to be present at the hearing.

At the end of the day, on January 2, 1992, the hearings were closed. The award, comprising some thirty-six typewritten pages, was submitted to the ICC Court on January 4, 1992. In fa I delivered it personally to the courier service at Kennedy Airport, since I had to fly to Europe (although not to Paris) anyway. Of course, the complete version of the award had already been faxed to the ICC Court earlier. The deliberations of the arbitrators were greatly facilitated by a draft award that had been prepared earlier. This enabled the Tribunal to spend most of its time on deliberations rather than the writing of the award.

The award rendered by the Tribunal was not a final award. The Tribunal decided that, in the fast-track mode, it would rule only on issues preserved for fast-track treatment by contractual stipulations. Whether it had the authority to rule on the other issues, it ruled, should be decided in a sequel to the fast-track part of the proceedings. The Tribunal thus ensured that no attack could be made on its award on the ground that it had improperly asserted authority to deal with issues for which fast-track treatment had not been specifically prescribed by the contract. It also ensured that it would retain control of the case.

In the sequel to the fast-track segment, the parties were again afforded an opportunity to address the Tribunal's competence to arbitrate the non fast-track issues, including the frustration claims. Again, the Tribunal decided not to render an interim award on that question. Since it was inclined to the view that it had the necessary authority, its failure to render an interim award was unlikely to create the risk that the parties would be required to litigate issues that the Tribunal would ultimately find it had no authority to entertain. Furthermore, an attack in court on an interim award finding that the Tribunal was competent was not deemed improbable. I had published several articles advocating a more flexible approach to frustration problems and the Respondent might well have deemed recourse to the courts, and the inevitable long delays this might occasion, preferable to determination on the merits by the Tribunal.

The case proceeded to determination on the merits of the remaining claims on a slower paced track. Even this track, however, was very fast by comparison to the pace of ordinary court proceedings or even a run-of-the mill arbitration. Since, for economic reasons, it was essential that the determination of the final price be made as soon as possible, the Tribunal set a schedule of about two months for dealing with all remaining issues. Provision was made for sequential submissions, but the full-day hearing feature with each side being allowed three hours for oral argument and direct or cross­ examination was retained. The Friday before the Monday on which the final hearing was to take place, the Claimants informed the Tribunal that it would be unable to prove a factual premise on which the frustration claims were based. The Tribunal informed the parties that it would proceed with the hearing unless a settlement were reached. The next day it was informed that a settlement had come about.

Thus, a substantial arbitration, comprising many significant procedural and substantive problems (the Respondent submitted, among other things, an eighty page opinion by an English expert on frustration) and involving a two-stage procedure, was completed within three months after the files had been submitted to the Tribunal.

I have elsewhere detailed the changes in the ICC Rules I would recommend in order further to facilitate fast-track arbitration.⁴ As the above makes clear, I would be opposed to including a provision for a mandatory interim ruling on the scope of the fast-track segment. But I also believe that special fast-track rules are needed to render fast-track treatment possible when the Tribunal has to deal with less co-operative litigants or is a less harmonious body.

It is appropriate to stress, however, that even the non-fast-track segment of this case was dealt with most expeditiously under the general ICC Rules. The experience in this case thus demonstrates that, even under the usual rules, a complicated case can be adequately arbitrated in a very short time. It is up to the arbitral tribunals to ensure that what is possible in this respect is converted into reality.

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