Dealing with issues and claims in arbitration

A report published earlier this year by the International Chamber of Commerce (the ICC) Commission on Arbitration and ADR, and a subsequent study by the School of International Arbitration at Queen Mary University of London (QMUL) in partnership with Pinsent Masons, have identified areas for improvement as to the management of issues and claims.

Maximising the efficiency of arbitration proceedings is a central theme in both the report and the study, and there is scope to improve efficiency across the whole process, from the selection of the arbitral tribunal, to the conduct of the arbitration itself – including how the tribunal manages issues and claims, evidence, and submissions and hearings – and the issuance of the arbitral award.

Here we explore how efficiencies can be maximised in the way issues and claims are managed by arbitral tribunals.

Once the arbitral tribunal has been appointed, there is an opportunity for it to guide the parties in adopting an approach to the proceedings that seeks to maximise efficiency. This process starts with the identification of issues and handling of claims.

Identification of issues

It is recommended in the ICC Commission's report that the arbitral tribunal draw up terms of reference as soon as it has received the case file. Among other details, such terms, the ICC Commission said, should include a summary of the parties' respective claims and the relief they are seeking. It could also include a list of the issues to be determined by the tribunal.

Indeed, this approach is required under the ICC Rules of Arbitration (2017), which require the terms of reference to include, among other contents and unless the arbitral tribunal considers it inappropriate, a list of issues to be determined. While not all procedural rules require the preparation of terms of reference or a similar document – the SIAC Rules of Arbitration (2016) and UNCITRAL Arbitration Rules (2013) both do not – it would be open to the parties to agree or for the arbitral tribunal to direct that such a document should in any event be prepared.

In its report, the ICC Commission offers additional guidance with respect to the process the arbitral tribunal should follow when drawing up terms of reference and, in particular, for including a list of the issues for determination. It is suggested that the arbitral tribunal could invite the parties to submit provisional lists of issues at the outset of the proceedings. It would then be for the arbitral tribunal to consider and include, to the extent it deems appropriate, those issues in the terms of reference and further refine such issues at the first case management conference.

More specifically, the report highlights two practices in relation to the identification of issues that may further improve the efficiency of the arbitral process. The first is the identification of issues that could be resolved by an agreement between the parties or their respective experts. The second is the identification of issues which should be decided on a documents-only basis, i.e. without the presentation of oral evidence or legal argument at a hearing.

Participants in arbitration proceedings also appear to appreciate the impact that the early identification of issues will likely have on the efficiency of international construction arbitration, according to the results of the QMUL study. However, while the ICC Commission's report contemplates the identification of issues in the first instance by the parties, QMUL survey respondents were asked to consider the identification of issues by the arbitral tribunal.

The number one factor that QMUL survey respondents felt would improve the efficiency of hearings and submissions in international construction arbitrations was the advance identification by arbitrators of the issues to be covered. Consistent with this view, some respondents suggested that arbitrators should take a more proactive approach to managing cases, for example by focusing the minds of counsel on core issues in advance of the evidentiary hearing. 

Among the characteristics of an efficient international construction arbitrator, however, the identification of issues for the parties was ranked eighth out of 12 characteristics by survey respondents, well behind case management skills and good availability.

The survey results suggest that, while participants view the tribunal's involvement in identifying issues early on as having a significant impact on efficiency, they do not appear to value the identification of issues by the arbitral tribunal in general quite as highly when considering the characteristics of an efficient international construction arbitrator. This may indicate that participants generally do not expect arbitral tribunals to identify issues for the parties and would instead expect them to facilitate the parties' efforts to do so themselves. 

Summary disposal of claims and defences

Once the parties' respective claims, defences and relief sought have been made known, whether in a summary of claims as set out in the terms of reference or otherwise, the parties often take issue with the opposition's claims or defences and wish to see them disposed of early on in the proceedings. 

While the ICC Commission did not specifically address the summary disposal of claims and defences in its report, this is a procedural tool which is readily available under many procedural rules. This tool is offered expressly in some rules, such as within the SIAC Rules of Arbitration, while it is implied within the broad powers of the arbitral tribunal in conducting the arbitral proceedings in other rules, including the ICC Rules of Arbitration (2017).

The QMUL survey reveals that participants value this tool and its perceived impact on efficiency. In fact, the summary disposal of unmeritorious claims or defences at an early stage was selected by survey respondents as the aspect of arbitral procedure offering the greatest potential to improve efficiency in international construction arbitrations.

Survey respondents also expressed their views on how unmeritorious claims or defences should be summarily disposed of at an early stage in international construction arbitrations.  The most popular approach was for the parties to encourage arbitrators to dismiss such claims or defences. This favoured approach outranked other options including the imposition of punitive costs against a party bringing an unmeritorious claim or defence, the mandating under institutional rules that arbitrators strike out unmeritorious claims and the encouragement of parties by the arbitral tribunal to apply to strike out such claims.

The survey results suggest that participants still prefer parties in arbitration to take the lead on summary disposal of claims and defences, and not the arbitral tribunal.

Agreed facts, chronologies and issues

Within its discussion of further working documents and schedules, the ICC Commission considers the preparation of documents to assist in the identification of agreed facts, chronologies and claims.

On this topic, the ICC Commission suggests that the arbitral tribunal could ask the parties to produce a "merged" document reflecting where the parties are in agreement on, for example, the persons involved in the dispute, a chronology of events and defined terms, and where disagreement exists.

The ICC Commission's report also includes a discussion regarding the use of a schedule, which is a working document which captures in brief form the essential elements of the parties' respective cases, as set out in exchanges between the parties. The report notes that such schedules are often used in construction industry arbitrations, especially those involving a large number of claims, as a tool for presenting the key issues in dispute more effectively. As explained in the report, such schedules can assist in identifying the extent to which certain claims may be agreed by the parties and it is suggested that such schedules should be prepared by the parties themselves, in cooperation.

For participants, the presentation of agreed statements of facts and chronologies appears to bear significant weight on the efficiency of proceedings. This was selected by respondents to the QMUL survey as the second most popular factor which would improve the efficiency of hearings and submissions in international construction arbitrations, behind the identification by the arbitrators of issues to be covered in advance. The admission of non-contentious issues also featured among the top four responses.

There appears therefore to be consensus among the ICC and participants as to the positive impact that the identification of agreed facts, chronologies and issues can have on the efficiency of international construction arbitrations.