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Workshop Swiss Rules of International Arbitration

Workshop Swiss Rules of International Arbitration Expedited Procedure , Emergency Relief, Awards and Costs Prague , 5 October 2012 Dr. Philipp Habegger LL.M., Walder Wyss AG Member of the Arbitration Court of the Swiss Chambers’ Arbitration Institution. 1. Expedited Procedure (I)

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Workshop Swiss Rules of International Arbitration

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  1. Workshop Swiss Rules of International Arbitration ExpeditedProcedure, Emergency Relief, Awards andCosts Prague, 5 October 2012 Dr. Philipp HabeggerLL.M., Walder Wyss AG Member ofthe Arbitration Court ofthe Swiss Chambers’ Arbitration Institution

  2. 1. ExpeditedProcedure (I) Applicable if: • Parties so agree (Art. 42(1)) • Aggregate of claim, counterclaim (or any set-off defence) does not exceed CHF 1 Mio. [and Court does not decide otherwise taking into account all relevant circumstances] (Art. 42(2))

  3. 1. ExpeditedProcedure (II) Very popular due to cost efficiency and speed: • 33% of all cases in 2011, 45% in 2010, 30% in 2009 • Award to be made within six months from the date of transmission of file to arbitral tribunal [usually a sole arbitrator under the regime of Art. 42(2); cf. Art. 42(2)(b) and (c)]

  4. 2. Emergency Relief (I) Art. 43: availability of interim measures that cannot wait until the arbitral tribunal has been constituted: • Available even before Notice of Arbitration is filed (Art. 43(1)) • Parallel competence with state courts (Art. 43(1) in conjunction with Art. 26(5))

  5. 2. Emergency Relief (II) • General transitional rule of Art. 1(3)applies: applicable to proceedings in which Notice of Arbitration is submitted on or after 1 June 2012, unless the parties have agreed otherwise -> jurisdictional issue to be decided by the emergency arbitrator(>< ICC Rules)

  6. 2. Emergency Relief (III) Application for emergency relief to include: • Particulars of Arts. 3(3)(b) to (e); • Advisable: when referring to arbitration agreement address jurisdiction and applicability of Art. 43; • Statement of interim measure(s) sought and reasons therefor, in particular the reason for the purported urgency;

  7. 2. Emergency Relief (IV) Application for emergency relief to include: • Comments on language, seat of arbitration (even if agreed between parties >< Art. 3(3)(g) only if not previously agreed); • Comments on applicable law (>< Art. 3(3)(g) not needed); • Confirmation of payment of Registration Fee of CHF 4,500 and Deposit of CHF 20,000 (Appendix B Section 1.6).

  8. 2. Emergency Relief (V) • If Notice of Arbitration not yet pending -> to be filed at latest within 10 days after filing of application (Art. 43(3)) -> otherwise termination of proceedings (any decision on application already rendered ceases to be binding; Art. 43(10))

  9. 2. Emergency Relief (VI) Art. 43(2): Court to appoint sole emergency arbitrator “as soon as possible after receipt of the Application”, unless: • Manifestly no agreement to arbitrate under Swiss Rules (= Art. 3(12); test to be stricter (?)); or • More appropriate to proceed with constitution of tribunal and refer application to it (cf. Art. 2(3) for acceleration of constitution).

  10. 2. Emergency Relief (VII) Art. 43(4): Arts. 9 to 12 apply to challenge of emergency arbitrator, but time-limits reduced from fifteen to three days. If challenge successful: decision stands (>< ICC) -> may be modified by tribunal or replacement emergency arbitrator Art. 43(5): Absent agreement by the parties, Court to fix seat of emergency relief proceedings without prejudice to later determination of seat of arbitration (Art. 16).

  11. 2. Emergency Relief (VIII) Art. 43(6): wide discretion for conduct of proceedings. • Proceedings should reflect inherent urgency; • Each party to be granted “reasonable opportunity to be heard on the Application”; • Neither formal in person hearing, nor full exchange of submissions necessarily required;

  12. 2. Emergency Relief (IX) • Decision to be rendered within fifteen days from the date file was transmitted to emergency arbitrator (Art. 43(7); file will only be transmitted once Registration Fee and Deposit are paid, Appendix B Section 1.6). Extensions for rendering of decision may be agreed by the parties or granted by the Court.

  13. 2. Emergency Relief (X) Art. 43(8) and (9): Decision has same effects as a decision pursuant to Art. 26, i.e., • Decision on application may be in form of an award (>< ICC); • Emergency arbitrator may issue preliminary orders (>< ICC and others); • Decision, if necessary, should rule on emergency arbitrator’s jurisdiction;

  14. 2. Emergency Relief (XI) Art. 43(8) and (9): Decision has same effects as a decision pursuant to Art. 26, i.e., • Reasons may be stated in summary form (Art. 42(1)(e) by analogy); • Decision is binding on parties (Art. 15(7)), but not on subsequent tribunal, which may modify, suspend or terminate it (Art. 43(8));

  15. 2. Emergency Relief (XII) • Decision to determine fees, costs and expenses of emergency arbitrator subject to approval by the Court (Art. 43(9)), but not other cost items -> other cost items will be determined later by arbitral tribunal. If later no tribunal constituted -> separate cost award by emergency arbitrator (>< ICC) -> enforceability.

  16. 3. Awards (I): FewChanges • Former Art. 32(2): dutyofpartiestocomplywithaward-> nowArt. 15(7) • Art. 35(1), 36(1), 37(1): Clarification: requestsforcorrection, interpretationor additional awardtobeaddressedtoSecretariat. • Art. 35(2), 37(2): extensionsof time forinterpretationor additional awardtobegrantedby Court (only)

  17. 3. Awards (II): whatdid not change • Art. 31(1): ifnomajority, presidentmaymakeawardalone • Art. 32(1): tribunalmaymake final, interim, interlocutory, or partial awardsandmayawardcosts in awardsthatare not final. • Art. 32(1): obligationtostatereasons, unlesspartiesagreethatnoreasonsaretobegiven

  18. 4. Determination ofCosts (I) • Art. 38: „thearbitraltribunalshalldeterminethecostsofarbitration in itsaward“ -> „The awardshallcontain a determinationofthecostsofthearbitration“. • Art. 32(1), 40(3), 40(5): Costdeterminationsmaybemade in final award, awardbyconsent, terminationorder, interimor partial awards. Also in decisions on correctionorinterpretationofawardsor additional awards. • Art. 38(a): Determination ofarbitrator’sfeesandexpensesbyarbitraltribunal (Art. 38(b+c)).

  19. 4. Determination ofCosts (II) • Appendix B Section5: ifarbitratorfeessubjectto VAT orotherfiscalcharge, partieshave a dutytopay such taxesorcharges • Art. 41(1): maytribunalrequestdeposit in theamountof VAT likelytobecomepayable?

  20. 4. Determination ofCosts (III) • Art. 38(a), 38(b): new [expresslystates]: feesofsecretaryoftribunal falls underArt. 38(a) -> ifaddedtofeesofarbitrators still tobewithinrangeofscaleofAppendix B Section 6-> expressionofprinciplethat total offeesshall not behigherifsecretaryassiststhetribunal. • Costsofsecretarymay not bequalifiedas„costofotherassistancerequiredbythearbitraltribunal“accordingtoArt. 38(c)!

  21. 4. Determination ofCosts (IV) • Art. 39(1): bothfeesand (new) expensesofarbitrators must bereasonable • Art. 39(2): feesaretobedetermined in accordancewithAppendix B. The scaleforfeesand administrative costshasremainedunchangedcomparedtothe Swiss Rules 2004.

  22. 5. CostControl (I) • Swiss Rules 2004: mereconsultationofthe Chambers bythetribunalregardingcosts (onlyamendmentto Art. 40 UNCITRAL 1976). Costsonlysubjecttoapprovalifamounts in scaleexceeded • Art. 41(3) and41(4) UNCITRAL 2010providerighttopartiestohavefeeproposalandcostdeterminationbytribunalchecked, approved, and – ifneedbe – adjustedby‚appointingauthority‘ -> increasedcostcontrol in ad-hoc proceedings

  23. 5. CostControl (II) • Art. 40(4): new: Not onlyawards, but aswellterminationordersanddecisionsrecorrection, interpretationand additional awards must besubmittedto Court regardingthecostdecision • New: in all instances (not onlyifamounts in scaleofApppendix B exceeded) submittedforapproval (not mereconsultation) withcompetenceof Court toadjust

  24. 5. CostControl (III) • Art. 40(4): „Any such approvaloradjustmentbythe Swiss Chambers‘ Court shallbebinding upon thearbitraltribunal“ • Court approvesoradjusts; and fixes administrative costs(Appendix B Section2.2, Art. 38(f)). No administrative costsifamount in disputebelow CHF 2 Mio. • Nocostcontrolregarding: • Costsitems in Art. 38(d) to38(e) (e.g. witnessand legal costs) • CostsforEmergency Arbitrator(priorapproval/adjustmentpursuanttoArt. 43(9)) -> noreviewde novo • Allocationofcostsbetweentheparties

  25. 5. CostControl (IV) • Art. 40(4): approvaloradjustmentbinding on arbitraltribunal • Issueof Federal Supreme Court decision 136 III 597, 602 cons. 5.2 not resolved! I.e., not binding on andenforceableagainstparties. • Still responsibilityoftribunalstotimelyrequestdepositspursuanttoArt. 41(1) andto check thattheyarepaid

  26. 5. CostControl (V) • Appendix B Section 4 (‘Guidelines fortheaccountingofexpenses’)available on www.swissarbitration.org. • Core issues: • Per diemallowancesfordaysspentawayfromplaceofbusiness • Thresholdamountsforadvances on feesandexpenses • Noadvances on feesandexpenses in ExpeditedProceedingsand Emergency Relief proceedings • Strikingbalancebetweenadequatecontrolandefficiency/‘leanadministration‘/avoidingdelay in issuingawards

  27. 6. DepositofCosts (I) • Art. 41(4): new:time-limit forpaymentofdepositsreducedto 15 days-> tribunalsmaysuspend/terminateproceedingssooner • Art. 41(1) and41(3): dutytoconsult Court fordeposits (approvalifamounts in Appendix B Section 6exceeded)

  28. 6. DepositofCosts (II) • Art. 42(1)(a) andApp. B Section1.4 /1.5 [Art. 5(5)]: ProvisionalDepositof CHF 5‘000 in ExpeditedProcedures. Transfer offilesubjecttopayment. Payment considered partial paymentofdepositfixedbytribunal(Art. 41(1)). • To cover initial efforts of sole arbitrator, such as: • Preparation of provisional timetable in consultation with parties (Art. 15(3)); • Issuing of initial procedural directions (Art. 15(1)); • determination of language(s) of proceedings (Art. 17(1): “promptly after its appointment”)

  29. 6. DepositofCosts (III) • Art. 43(1)(c) and(2): depositfor Emergency Arbitratorin theamountofmaximumfees (CHF 20‘000) • Appendix B Section 4.2: advances on feesforarbitratorsif substantial steps/mile-stones in proceedingsareachieved. Subjecttoapprovalby Court -> Guidelines on Expenses

  30. THANK YOU FOR YOUR ATTENTION ! Dr. Philipp Habegger LL.M. philipp.habegger@walderwyss.com

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