This article was first published in the Practical Law Arbitration Blog and can be found here.
A week before Christmas 2018, the Rules on the Efficient Conduct of Proceedings in International Arbitration (Prague Rules) were published. The title suggests that, without them, arbitral proceedings are condemned to be inefficient. The prefatory note from the working group reinforces that impression:
“It has become almost commonplace these days for users of arbitration to be dissatisfied with the time and costs involved in arbitral proceedings.
One of the ways to increase the efficiency of arbitral proceedings is to encourage tribunals to take a more active role in managing the proceedings (as is traditionally done in may civil law countries).
With this in mind a Working Group was formed with representative from around 30, mainly civil law, countries…”
The Prague Rules project is a (rather mild) backlash by those steeped in the civilian, inquisitorial tradition against the perceived dominance of the common law, adversarial approach in international arbitration. In that sense, they are the civilian response to the IBA Rules on the Taking of Evidence in International Arbitration 2010 (IBA Rules).
Do the Prague Rules offer a real alternative to a process which owes perhaps too much, for 21st century tastes, to the 19th century jury trial? Will it empower tribunals to cut through the Anglo-Saxon tendency to drown the process in documentation? Or is it, as one commentator has observed, just so much tilting at windmills?
The nature of the problem
The inquisitorial versus adversarial debate suffers from inevitable resort to stereotype and the fact is that there are very few who are sufficiently well-versed in both to offer a fully informed disquisition on their respective merits. It is not as if, for example, active case management is anathema to the common law litigator: it is over 20 years since it was introduced into the mainstream English courts, and it had been around for several years before that in the Commercial Court. Indeed, the previous version of the IBA Rules were published at much the same time as the Civil Procedure Rulestook effect in England.
It also remains common, even now, for cases not to be handled as efficiently as in retrospect they might have been, so the problem is not that tribunals lack the tools required for efficient case management. Rather, the challenges to efficiency lie in time and understanding, and the hard edge of the requirement for a fair hearing. To unpack that a little: in many if not most cases, a case management hearing (or equivalent) is the tribunal’s first real opportunity to grapple with the issues in the case. If a case is a mountain, then the tribunal is at this point still in the wooded foothills. Even the parties’ lawyers may barely have broken through the tree line; added to that, the good arbitrator is also a busy arbitrator and so may lack the time needed to get even as well on top of the issues as the parties’ lawyers. It should be no surprise, then, if tribunals are reluctant to make full use of the range of powers at their disposal, not least because to do so when their understanding of the case is undercooked is to invite challenge.
The Prague Rules address none of these problems. They expressly require the tribunal to “ensure fair and equal treatment of the parties and provide them with a reasonable opportunity to present their respective cases”. Whatever their strengths and weaknesses, therefore, they offer no case management silver bullet.
So what, then, do they offer? And how, if at all, do they differ from the IBA Rules?
Prague v IBA
The single biggest difference between the Prague and IBA Rules is the permission in Article 9 of the former for the tribunal to assist the parties in reaching an amicable settlement. Indeed, if the parties consent, one of the tribunal may act as mediator and, again with the parties’ consent, continue to act as arbitrator even if the mediation fails. Such provisions usually cause Anglo-Saxon lawyers to choke, but they are common enough in, for example, Chinese arbitration and German litigation. The IBA Rules contain no equivalent provision. There may be much to be said for Article 9: if the attempt to settle or the mediation succeeds, then the additional cost of the mediation phase ought to be rather lower than a separate process.
Beyond the eye-catching Article 9, the principal differentiation between the two is one of emphasis. For example, Article 4 of the Prague Rules deals with documentary evidence in far fewer words and with fewer teeth than Article 3 of the IBA Rules, “encourag[ing]” the tribunal and the parties “to avoid any form of document production, including e-discovery”. This “encouragement” is a watering-down of an earlier draft which required tribunals to avoid any e-discovery. In a similar vein, Article 8 of the Prague Rules encourages the resolution of the disputes on documents alone, although, in effect, either party can insist on a hearing (Article 8.2). The IBA Rules, by contrast, assume that there will be an “Evidentiary Hearing”.
The Prague Rules also encourage the tribunal (Article 2.4), from the case management hearing onwards, to offer provisional views on various matters such as undisputed facts; burden of proof; and “its understanding of the legal grounds on which the parties base their positions”. That, too, is not so very different from the experience of any robust tribunal, or one driven by institutional rules to nail down the nature of the dispute at a similarly early stage.
Possibly the two sets of rules could be seen as complementary, but it may be asking too much of parties to pay for their synthesis in any one case. Until experience of them is more widespread, the better approach, for Anglo-Saxon lawyers at least, may be to agree the Prague Rules’ application only in relatively simple, standard or low value disputes. Despite the self-confidence of their full title, they break no new ground in terms of efficiency.