This article originally appeared in the September 14, 2012, issue of The Lawyers Weekly published by LexisNexis Canada Inc.
by Barry Leon & John Siwiec
A distinguishing feature of arbitration is that the procedural rules, whether legislated or set out in arbitral institutions’ rules, only provide a general framework for arbitral proceedings. Unlike court procedural rules, arbitration rules seldom include detailed provisions on such things as exchanging briefs, producing documents, conducting hearings, and whether and how witnesses should be heard.
This absence of detailed provisions may be due in large part to a desire to preserve “party autonomy”, a cornerstone of arbitration that enables parties to tailor their proceedings to fit their dispute. International arbitration organizations have complemented this freedom by issuing soft rules and guidelines to assist arbitrators, counsel and parties to conduct arbitrations efficiently and cost effectively. Examples include the “Rules on the Taking of Evidence in International Arbitration” of the International Bar Association (“IBA Rules”; www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/IBA_Rules_Evidence/Overview.aspx), “Notes on Organizing Arbitral Proceedings” of the United Nations Commission on International Trade Law (UNCITRAL; www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1996Notes_proceedings.html) and “Techniques for Controlling Time and Costs in Arbitration” of the International Chamber of Commerce (ICC; www.iccdrl.com).
Domestic commercial arbitration in Canada, however, is often conducted as if it was taking place in court. Counsel simply agree to apply local rules of court and many arbitrators do not encourage greater procedural flexibility. By taking this approach, parties negate many of arbitration’s advantages.
The good news is that users of arbitration in Canada are increasingly aware of procedures to achieve greater time and cost efficiencies that are available in international arbitration rules and guidelines and in the rules of Canada’s arbitral institutions, such as ADR Institute of Canada and ADR Chambers, and are increasingly taking advantage of them in domestic arbitration.
Seven Tips for Faster, More Cost-Effective Arbitration
There are seven procedural approaches used in international arbitration that can lead to more efficient and cost-effective domestic arbitration in Canada.
1. Early Procedural Hearing: An early procedural hearing is regularly used in international arbitration to identify the primary disputed issues and the procedural steps required for their resolution. Holding an early procedural hearing means that procedures for the arbitration can be settled from the outset, whether by agreement or tribunal order. A preliminary timetable with the shortest and most realistic timing should be established at the procedural hearing. There can be significant saving by simply avoiding time gaps as considerable costs can be incurred each time counsel and arbitrators need to be “re-familiarized” with the dispute.
2. Empowering and Trusting Arbitrators: Parties should encourage their tribunal to be proactive and trust their tribunal to consider the parties’ procedural submissions and that they will act fairly and sensibly. This includes enabling the tribunal to proactively manage the procedure throughout the arbitration by hearing the parties’ positions and then specifying the form, timing, content and length of written submissions, the number of exchanges of briefs, and the conduct of any hearings. A cost-effective approach with a 3-member tribunal can be to empower the presiding arbitrator to determine all or most procedural matters.
3. Limiting Document Production: The IBA Rules provide a helpful guide to document production. The Rules bridge the gap between procedural rules in common law and civil law jurisdictions (where production is often limited to documents relied upon). The Rules require that the requesting party not only be specific in its requests but also demonstrate why a requested document is “material to the outcome” of the dispute. This contrasts with court rules that often require the production of all documents that are “relevant to any matter in issue”.
4. Limiting Oral Discovery: Oral discovery is generally not available in international arbitration and pre-hearing examinations of non-parties are rarely used. In order to promote efficiencies in domestic arbitration, consider limiting oral discoveries to what is really needed and utilizing alternatives such as written interrogatories.
5. Limiting Hearings: Minimizing the length of hearings is valuable in reducing time and costs. Consider approaches such as evenly splitting the hearing time (sometimes called the “chess clock” method). For procedural hearings and motions, consider telephone and video conferencing. Many motions can be argued in writing where email communications directly with the tribunal can save time and reduce costs.
6. Use of Witnesses: Hearing fact and expert witnesses quickly adds to costs, particularly with oral evidence. Techniques used in international arbitration include using witness statements instead of direct examination, and witness conferencing. Minimize the number of experts and reports and consider using a single tribunal appointed expert.
7. Specifications for Awards: Consider agreeing to realistic timing for a tribunal to render an award, the length of the award, and whether written reasons are even required. Institutional arbitration rules and legislation often provide that the parties are free to determine whether the tribunal needs to render a reasoned award.
These seven procedural approaches, commonly used in international arbitration, can lead to faster, more cost-effective domestic arbitration. Users of domestic arbitration should consider these approaches in their next arbitration.
Barry Leon, firstname.lastname@example.org, is a Mediator and Arbitrator at ADR Chambers and Partner and Head of the International Arbitration Group and John Siwiec, email@example.com, is an Associate in the International Arbitration Group at Perley-Robertson, Hill & McDougall LLP/s.r.l. in Ottawa. The firm’s website is www.perlaw.ca.