FAST-TRACK ARBITRATION: A CLAIMANTS PERSPECTIVE - Vol. 2 No. 2 Aria 1991
Peter J. Nickles - Partner, Covington & Burling. Other members of our arbitration team, including Bobby R. Burchfleld, Laird Hart, Glynn D. Key, and Allan B. Moore, contributed to the preparation of this article, as did Michael X. Imbroscio.
Originally from American Review of International Arbitration - ARIA
At Professor Smit’s suggestion, I am pleased to discuss the recent “fast-track” international arbitration in which I acted as counsel for the party seeking relief. In this era of widespread lawyer-bashing and discontent with legal process, it is especially important to consider novel dispute resolution techniques that “are cost-efficient, expeditious, and fair.
Arbitration itself, of course, was conceived as a simpler and faster alternative to litigation. Ironically, however, an international arbitration can all too easily turn into something very much like litigation, especially in terms of the protracted nature of the proceedings. This negates the very reasons that favor arbitration over litigation — simplicity and speed.
Based on our recent experience, I agree with Professor Smit that fast-track arbitration is a viable alternative to conventional arbitration even in the most factually complex case. Our recent International Chamber of Commerce (“ICC”) arbitration resulted in the issuance of an Award Sentence only 78 days after we filed the Request for Arbitration. This article discusses how that achievement was accomplished.
Two long-term commodity supply contracts were involved in the arbitration. Each had been the subject of numerous written amendments by the parties during the previous decade. As amended, these parallel contracts provided for an annual redetermination of the purchasing party’s price and volume obligations. The contracts provided that the redetermination should provide the seller with “a fair price and a reasonable level of sales” while enabling the buyer to resell such volumes in its own markets.
The redetermination process was to begin at least sixty days before November 1, the start of the new contract year. If the parties could not agree on a redetermination, the contracts provided for arbitration. The contracts further specified that, if elected, such arbitration was to be completed within sixty days after the start of the affected contract year.
Our client initiated the redetermination process in August 1991 and, when it became clear that the parties could not reach agreement on their own, filed a timely Request for Arbitration with the ICC on October 21, 1991. Each party nominated one person to sit on the three-member tribunal that would hear the arbitration, and the ICC appointed the tribunal’s chairman. Because of procedural delays, the tribunal was not in place until December 20, 1991, a mere ten days before a final judgment was due under the terms of the contracts. Under the circumstances, the deadline for an arbitral award was extended at the ICC’s request and with the consent of the parties — but only for a week, to January 8, 1992.
A process that often takes several years was then compressed into approximately three weeks. On December 23, 1991, the tribunal set a briefing and hearing schedule, and the tribunal’s chairman circulated a draft Terms of Reference. After negotiation, the parties signed the Terms of Reference four days later. The parties made simultaneous submissions of all briefs, affidavits, and other evidentiary materials to the tribunal on December 30. A six-hour hearing was held on January 2, 1992. The tribunal then reached a decision and transmitted its 33-page Award Sentence to the ICC Court, which confirmed the award and issued it to the parties on January 7. This expedited process was particularly impressive in light of its concurrence with the holiday period of late December and the New Year.
II. WHY THE FAST-TRACK ARBITRATION SUCCEEDED
“Fast-track” arbitration of this nature would have been impossible without the commitment of the ICC and extraordinary efforts by the individual members of the tribunal, particularly its chairman. Several additional factors were also important.