UNCITRAL Adopts Expedited Arbitration Rules

July 29, 2021July 29, 2021 / CPR Staff / Leave a comment

By Mylene Chan

This is the third part of a series of CPR Speaks posts reporting on the United Nations Commission on International Trade Law’s 54th session where the commission adopted legislative and non-legislative texts relating to alternative dispute resolution.

At the three-week session concluding July 16, the commission adopted the UNCITRAL Expedited Arbitration Rules and the Explanatory Notes to the UNCITRAL Expedited Rules. These rules and notes complement and are intended to be read together with UNCITRAL’s well-known arbitration rules, which are for resolving international disputes and applicable both in administered arbitrations under the auspices of an arbitral institution, as well as in ad hoc arbitrations.

The UNCITRAL Arbitration Rules were originally developed as an alternative to other major rule systems. UNCITRAL’s innovative rules were initially viewed with skepticism, but over time, they have been frequently used in investment arbitrations, commercial arbitrations, arbitrations between states, and between states and individuals, such as for the Iran-U.S. Claims Tribunals and several bilateral investment treaties. Latham & Watkins Guide to International Arbitration (2019) (available at https://bit.ly/2VeZKU8).

The UNCITRAL Arbitration Rules have gone through three versions, in 1976, 2010 (revised to meet the needs of modern business including improvements to procedural efficiency, inclusion of provisions on multi-party arbitration and the development of rules on interim measures; available at https://bit.ly/3i7UrPq), and 2013 (incorporated rules on transparency for investment arbitrations based on treaties; available at https://bit.ly/2UZMEKH). See general background on the rules from UNCITRAL at https://bit.ly/3l6RyjD.

In 2018, UNCITRAL mandated Working Group II to explore ways to improve the efficiency of the arbitral proceedings through streamlining and simplifying procedures, resulting in the drafting of the UNCITRAL Expedited Arbitration Rules. The goal is to reach a final dispute resolution in a cost- and time-effective manner while ensuring due process and fair treatment for the disputants. (See https://undocs.org/en/A/CN.9/934 for the 2018 statement on expedited rules.)

For coverage of the early drafting process of the UNCITRAL Expedited Arbitration Rules, see Piotr Wójtowicz & Franco Gevaerd, “How UNCITRAL’s Working Group II on Arbitration Is Analyzing the Field to Help Expedited Processes” 37 Alternatives 90 (June 2019) (available at https://bit.ly/377Nfwg), and Piotr Wójtowicz & Franco Gevaerd, “The Framework: The U.N.’s Working Group II Debates New Expedited Arbitration Rules,” 37 Alternatives 99 (July/August 2019) (available at https://bit.ly/3l5OLqS).

Special features in the UNCITRAL expedited arbitration rules include the following:

Disputes under the expedited procedures shall be settled in accordance with the UNCITRAL Arbitration Rules as modified by the expedited rules.
The expedited rules shall apply only with express consent by the disputants.
To facilitate speedy constitution of the tribunal, the claimant must include, with its notice of arbitration, the proposal of an appointment authority and the arbitrator. The notice of arbitration constitutes the claimant’s statement of claim. The respondent then has 15 days to file a response to the notice of arbitration. By contrast, under UNCITRAL Arbitration Rules, the time to respond is 30 days from the receipt of the notice of arbitration.
When the disputants cannot agree on an appointing authority, any disputant can request that the Permanent Court of Arbitration Secretary-General designate the appointing authority or serve as appointing authority. The PCA Secretary-General has discretion to decline serving as appointing authority and designate another authority if it deems it more appropriate. In this way, the UNCITRAL Expedited Rules have deviated from the default two-step designation/appointment procedure found in the non-expedited UNCITRAL Arbitration Rules.
The tribunal has discretion in shaping the proceedings, including extending or abridging timeframes (except for award issuance, as discussed in the bullet below) and determining whether hearings will be held or evidence taken. This discretion represents an expansion of the discretion contained in the UNCITRAL Arbitration Rules.
The time period for rendering the award employs a bifurcated approach. If the tribunal considers that it is at risk of not rendering an award within nine months, it shall propose a final extended time limit. If all disputants agree, the extension is considered adopted. If a party objects to the extension, however, any party may make a request that the UNCITRAL Expedited Rules no longer apply to the arbitration. After hearing the disputants, the tribunal may then decide that it will instead conduct the proceedings in accordance with the UNCITRAL Arbitration Rules, which do not contain the time limits.

The most contentious issue was the last bullet point above regarding the time period for rendering the award. Working Group II spent more than six hours debating on this point during the 54th session, focusing on how to balance the policy interest of promoting a truly expedited process with the goal of ensuring that the result of that process would be enforceable through the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, better known as the New York Convention.

At one point, the U.S. delegation objected vehemently that “[u]sing this approach, as the default in the rules, creates a very concerning precedent for an uncontrolled instrument in our delegation’s experience. . . . That is why we have drafted the compromise language that . . . seeks to bridge the gap between delegations like ours, who are very concerned about adopting a system that will likely produce unknowable awards, and those delegations who primarily are concerned that without a hard stop at nine months, the rules will enable arbitrators who were not very diligent, or who simply procrastinated to continue to take extensions.”

There were more concerns about protecting those with lesser means and bargaining power:

The U.S. delegation noted, “We think that given that these rules may be used by unsophisticated parties because they are expedited, . . . one of the goals is to reach out to parties who might be otherwise deterred from pursuing arbitration because of the cost. . . .”
The Israel delegation point out that “[t]here could be concerns of parties with weaker bargaining powers that would have to be essentially compelled to agree to this. . . .”

While the debate was heated, ultimately the member states drafted an innovative approach to reach a consensus.

The UNCITRAL Expedited Arbitration Rules will appear together with the explanatory notes toward the end of the year as an appendix to the UNCITRAL Arbitration Rules. In the fall, Working Group II will deliberate on rules about early dismissal of frivolous claims that will require modifications to the UNCITRAL Arbitration Rules. Working Group II will post the final rules, and currently has the drafts, here.

In addition, UNCITRAL is contemplating developing a new framework for adjudication. commonly known as dispute resolution boards, to complement the UNCITRAL Arbitration Rules. There has been a recurring expression of interest within UNCITRAL member states in the principle of rapid decision common to adjudication in construction projects. The U.S. delegation noted that it hoped that this principle can be adapted to expedite the resolution of disputes in other long-term contracts, or at least to mitigate the impact of those disputes.

UNCITRAL expects to conduct colloquiums to discuss adjudication next spring. With the adoption of the expedited rules, UNCITRAL is taking steps to expand the use of arbitration as a method of dispute resolution available to a wider range of parties.

Thomas W. Walsh, special counsel based in the New York office of Freshfields, who in his arbitration work focuses on UNCITRAL matters and worked on an early draft of the UNCITRAL Expedited Rules, said that the rules “are a welcome example of the arbitration community responding to the needs of the businesses that use arbitration. If parties have a commercial need to expedite the resolution of their dispute, the rules offer a thoughtful, ready-made procedure that they can select to meet that commercial need.”

The UNCITRAL Expedited Rules eliminate many of the obstacles that made arbitration costly and overly time-consuming, and the role of UNCITRAL as a global trend-setter on arbitration means that these new provisions are likely to be used as models worldwide.

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The author, an LLM candidate at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, has covered UNCITRAL’s 54th Session proceedings for CPR Speaks as a 2021 CPR Summer Intern. Her articles can be found using the search box on the upper right of this page.

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UNCITRAL Completes a New Mediation Framework, Based on the Singapore Convention

July 27, 2021 / CPR Staff / Leave a comment

By Mylene Chan

Earlier this month, the United Nations Commission on International Trade Law adopted the UNCITRAL Mediation Rules, the UNCITRAL Notes on Mediation, and the Guide to Enactment and Use of the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation.

Judith Knieper, Legal Officer at the UNCITRAL Secretariat, at a side forum on investor-state mediation, commented that these texts complete UNCITRAL’s mediation framework, with the milestone 2018 Singapore Convention on international settlement agreements as a pillar.

Starting in 1980, UNCITRAL began to develop a mediation framework, which now includes the following:

UNCITRAL Conciliation Rules (1980) (updated in 2021).
UNCITRAL Model Law on International Commercial Conciliation (2002) (amended in 2018).
UNCITRAL Guide to Enactment and Use of the 2002 Model Law (2002) (replaced in 2021).
UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2018) (amending the 2002 Model Law). See page 2 of UNCITRAL Working Document 1073 here.
The United Nations Convention on International Settlement Agreements Resulting from Mediation (2018), commonly known as the “Singapore Convention.”
UNCITRAL Mediation Rules (2021) (updating the 1980 Conciliation Rules)
UNCITRAL Notes on Mediation (2021).
Guide to Enactment and Use of the UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2021) (replacing the 2002 Guide) (available in the Working Document linked above).

These texts provide a means for the harmonization of laws, procedural rules, and enforcement mechanisms for international mediation. The most significant tool for international commercial dispute resolution is the Singapore Convention, which enables enforcement of mediated settlement agreements among its signatories.

As a result of the adoption of the Singapore Convention, international businesses now have an effective alternative to litigation and arbitration in resolving cross-border disputes. Judith Knieper said that 54 states had signed the Singapore Convention, and she said she hoped that more will join as many states are currently engaged in the ratification process.

The UNCITRAL Secretariat has invited CPR to participate as an observer delegation to its Working Group II deliberations, and solicited its comments on the drafts to facilitate finalizing the texts. The UNCITRAL Working Group II is composed of UNCITRAL’s 60-member states and has been developing work focused on mediation, arbitration, and dispute settlement.

During UNCITRAL’s recent 54th session, which ran from June 28 and concluded July 16, and was held in person in Vienna, Working Group II introduced a number of updated provisions aimed at taking into account recent mediation trends and developments, including court-ordered mediation. See page 2 UNCITRAL Working Document 1074 here. UNCITRAL incorporated Working Group II’s revisions as part of the newly adopted UNCITRAL Mediation Rules.

Major updates in the UNCITRAL Mediation Rules include the following:

Clarify that the rules apply to mediation regardless of the process’s origin, including an agreement between the parties, an investment treaty, a court order, or a mandatory statutory provision.
Introduce a definition of mediation.
Stipulate that in a case of conflict, mandatory provisions in the applicable international instrument, court order, or law will prevail.
Specify that mediation commences when the disputants agree to engage in the mediation.
Require disclosure of circumstances regarding impartiality or independence.
Permit use of alternative means of communication during the mediation and of remote consultations.
Provide that information shared by parties with the mediator is confidential unless parties express otherwise.
Update the provisions governing the preparation of settlement agreements to take into account UNCITRAL’s legal framework, including the recently adopted Singapore Convention.
Address the interaction between mediation and other proceedings.
Provide for exclusion of liability for mediators.
Encourage gender and geographical diversity in selection of mediators.
Specify that parties and the mediator should agree upfront on the methods of assessing mediation costs, with multiparty mediations shared on a pro rata basis.

UNCITRAL is expected to publish the UNCITRAL Mediation Rules and the UNCITRAL Notes on Mediation together later this year, according to a statement at the end of the session.

UNCITRAL’s work on mediation will continue with the drafting of rules and guidelines relating to investor-state mediation and with work exploring educational best practices, according to an official’s comments in a side forum, which is a lunch-hour roundtable in which UNCITRAL officials discussed topics related to UNCITRAL’s work.

Benjamin N. Cardozo School of Law Prof. Lela Love, who is chair of the International Advisory Board on Mediation for the Office of Ombudsman for the United Nations Funds and Programmes, commented about the developments reported here:

All this remarkable focus on mediation—and activity around it—heralds a new era for the dispute resolution process that ideally promotes enhanced understanding, dialogue and creative problem solving. This may be a renaissance time for mediation—one that is very welcome in the divided and polarized time we inhabit.

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The author, an LLM candidate at Yeshiva University’s Benjamin N. Cardozo School of Law in New York, has covered UNCITRAL’s 54th Session proceedings as a 2021 CPR Summer Intern.

Modeling for the World: Five UN Agencies Pledge to Accept Mediation Requests

April 28, 2021 / CPR Staff / Leave a comment

By Russ Bleemer

The United Nations this week took a big step in modeling conflict resolution for resolving workplace disputes. A new report says that, upon request, mediation will be the go-to method of resolving employment disputes for several high-profile UN agencies.

This effort not only serves the UN’s internal purposes but also provides an example for the governments world-wide that support UN efforts.

The Annual Report issued this morning by the Office of the Ombudsman for United Nations Funds and Programmes reveals that in 2021, its five associated UN agencies have elevated mediation’s role in their operations via a new Mediation Pledge in which the organizations each pledge to use third-party neutrals to address internal conflict.

The Ombudsman for United Nations Funds and Programmes works to resolve employment disputes within the United Nations Development Programme; the United Nations Population Fund; the United Nations International Children’s Emergency Fund, better known as UNICEF; the UN Office for Project Services, and the United Nations Entity for Gender Equality and the Empowerment of Women, known as UN-Women.

Management and staff at the organizations have long been able to opt into the Ombudsman system, which, according to the Ombudsman’s website at fpombudsman.org, provides informal grievance procedures with which the Ombudsman “may consider conflicts of any nature arising from employment“ within the organizations “and related funds and programmes.”

UN employees at the organizations can contact the Ombudsman “at any stage, for help on any work-related problem where a perspective outside of formal channels would be helpful.”

The new pledge, adopted this year by the five agencies, seeks to increase mediation use as part of the Ombudsman’s system of conflict resolution, with the signing agencies acknowledging that a mediated settlement addresses all parties’ interests and can lead to a more harmonious and less stressful workplace. The texts of the pledges commit to increase mediation use backed by “statements of principles.” Other than the references to the adopting agencies, the pledges include the following:

In the event of a workplace conflict between [the signing agency] and a member of its personnel, the organization is prepared to discuss the possibility of resolving the conflict through Mediation.
At the request of the member of personnel or of [the signing agency], an initial discussion on the suitability of Mediation will be hosted by the Mediation Unit of the Office of the Ombudsman for United Nations Funds and Programmes.
At any time during the mediation process after the initial discussion, if one or both parties believe that Mediation is not viable in their case, either party may withdraw and proceed with formal options to resolve the matter.

The report further notes that the Ombudsman Office has been beefing up its mediation resources over the past year, in time for the pledge rollouts. It has developed a new web page offering its materials at https://fpombudsman.org/what-we-do/mediation/. These include, among other items, a mediation guide (available in Arabic, English, French, and Spanish); a mediation training flyer; a guide for lawyers and parties in mediation; and a copy of the Ombudsman Office’s agreement to mediate.

The Ombudsman Office has also increased its outreach and training to promote the use and understanding of mediation services, including 14 specialized training sessions for human resources professionals worldwide that involved more than 450 UNICEF human resources staffers.

According to the new Annual Report, even in the face of the pandemic, this increase in mediation services led to record numbers of mediation cases in 2020, with a 97% settlement rate. Mediation now accounts for a greater proportion—almost double that of previous years—of cases brought to the Ombudsman office’s attention. Full details on the case breakdowns and the Ombudsman Office’s activities can be found in the report, just posted at the website link above.

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The author edits Alternatives to the High Cost of Litigation for CPR.

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Ready to Sign: The Singapore Convention, An International Mediation Treaty, Opens for Ratification

August 13, 2019August 13, 2019 / CPR Staff / Leave a comment

By Hew Zhan Tze

After years of negotiations, the Singapore Convention on Mediation last week reached the signature phase.

That means that countries around the globe can sign on, and ratify, a treaty designed to boost the use and support for mediation in cross-border transactions.

The convention is officially known as the United Nations Convention on International Settlement Agreements Resulting from Mediation, and is available at https://bit.ly/2YWbHKN.

On Aug. 7, more than 1,500 international delegates from 70 countries attended a Singapore signing ceremony.

A total of 46 countries–including the United States and China–signed the convention on the first day. (The full list is available from the United Nations at http://bit.ly/2ZPFGFl.)

The convention is a product of the efforts of the United Nations Commission on International Trade Law Working Group II to alleviate the difficulties of enforcing a cross-border settlement agreement reached from mediation. It can only come into effect after six months, and after three signatory countries ratify the treaty. See Article 14(1) of the Singapore Convention at the first link above.

Ratification is a signatory country’s domestic procedure where treaty approval is sought, and necessary legislation is enacted to give effect to the convention.

Generally, in the United States, a treaty can only be ratified by the president after receiving the advice and consent of the U.S. Senate. The Senate must pass a ratification resolution, requiring a two-thirds approval. See U. S. Const. Art. II, § 2 (available at https://bit.ly/2zBgoge).

The Singapore Convention’s goals have been likened to a mediation version of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, best known as the New York Convention. (Available at http://bit.ly/2KHaa5W.)

The large number of initial signatories to the Singapore Convention appears to show a positive reception toward easing enforcement of a settlement agreement obtained from other similarly bound jurisdictions. This is in comparison to the 10 signatures received at the launch of the New York Convention six decades ago. The increase in numbers likely reflects an increased recognition of the effectiveness of ADR methods.

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More analysis on the Singapore Convention on Mediation will appear in the September Alternatives to the High Cost of Litigation, available soon at altnewsletter.com.

The author was a CPR Institute Summer 2019 intern.

CPR Delegation Participates in the 69th Session of the UNCITRAL Working Group II on Expedited Arbitration

February 20, 2019February 20, 2019 / CPR Staff / Leave a comment

In the picture (from left to right): Franco Gevaerd, Olivier P. André, and Piotr S. Wójtowicz.

By Franco Gevaerd

From Feb. 4-8, 2019, the United Nations Commission on International Trade Law Working Group II held its 69^th session at the United Nations headquarters in New York. At this session, as set forth by the UNCITRAL during its 51^st session, Working Group II commenced its deliberations on issues relating to expedited arbitration (see the Report of the UNCITRAL on the 51^st session).

Given the CPR Institute’s international experience and expertise in international arbitration, the UNCITRAL Secretariat invited CPR to participate in the session as an observer delegation representing its views on expedited arbitration to facilitate Working Group II’s deliberations.

CPR sent a five-member delegation: Noah J. Hanft, President & CEO; Olivier P. André, Senior Vice President, International; Anna M. Hershenberg, Vice President, Programs and Public Policy & Corporate Counsel; Franco Gevaerd, International Consultant/Legal Intern; and Piotr S. Wójtowicz, Legal Intern.

Established in 1966 by the U.N. General Assembly, UNCITRAL plays an important role in developing an improved legal framework for international trade and investment, and in harmonizing and modernizing the law of these fields. The substantive preparatory work involved in doing that is typically assigned to UNCITRAL’s working groups (see the U.N.’s “A Guide to UNCITRAL”).

The UNCITRAL Working Group II is composed of UNCITRAL’s 60 member States and has been developing work focused on arbitration, conciliation and mediation, and dispute settlement. The group’s most recent project is the Singapore Convention. A signing ceremony for the convention is scheduled for Aug. 7, 2019. Now, as mentioned above, the group’s attention has turned to the topic of expedited arbitration.

Expedited arbitration aims to streamline the process to reduce its time and cost. This topic has long been discussed by the international arbitration community and explored by arbitration institutions, mostly due to concerns with the length, cost and undue formality in the process, especially in less complex cases.

At the beginning of the group’s deliberations, it was generally agreed that this session’s work should “focus on establishing an international framework on expedited arbitration, without prejudice to the form that such work might take.” After that, the work should then proceed to analyze aspects relating to emergency arbitrators, adjudication, early dismissal of claims, and preliminary determinations by arbitral tribunals.

During the session, Working Group II participants discussed in depth many issues related to key aspects of expedited arbitration, including how to foster efficiency while preserving quality, due process and fairness; enforcement of awards resulting from expedited arbitration; application of the expedited procedure, and management of the proceedings.

CPR’s contributed substantially to the discussion throughout the week. In the Working Group II session’s first day, Anna Hershenberg pointed out that since its foundation, CPR has focused on creating rules that aim at efficient dispute resolution and users’ autonomy. She noted that in order to foster efficiency, CPR has built into its domestic and international arbitration rules quick time frames. Consequently, CPR’s international and domestic arbitration cases historically take an average of slightly more than 11 months from commencement of the proceedings to the arbitral award.

Anna M. Hershenberg making her remarks during the session.

Later in the week, addressing the Working Group’s request to arbitral institutions to provide input on their experiences handling expedited arbitration proceedings, Olivier André pointed out:

CPR administered and non-administered arbitration rules already provide for time requirements which limit the length of proceedings. Users of CPR arbitration often customize their arbitration clauses to further limit these time requirements. In 2006, CPR also promulgated a fast-track procedure to supplement the non-administered arbitration rules. Parties can agree to this procedure to shorten the time requirements provided for under the rules and limit certain other procedural aspects, such as disclosure and the number of arbitrators, to expedite their proceeding.

Olivier P. André making his remarks during the session.

Besides the CPR’s Fast Track Arbitration Rules, CPR also offers to users two other set of rules that provide for expedited arbitration procedures: The CPR Rules for Expedited Arbitration of Construction Disputes, and the CPR’s Global Rules for Accelerated Commercial Arbitration. In addition, CPR’s committees, which are composed of representatives from different stakeholders involved in the arbitration process, often discuss ways to improve the arbitration process in general and in specific industries.

By the end of the week’s discussion, Working Group II was able to find a consensus in many of the key aspects of expedited arbitration discussed, such as reasoned vs. unreasoned awards, monetary thresholds, and number of arbitrators for expedited arbitration.

Several questions, however, are still open to discussion for the next Working Group II session. For example, what will be the form of the group’s work? And will this international framework be applied to arbitration in general, or specific to international commercial arbitration?

The next session of the UNCITRAL Working Group II is preliminarily scheduled to take place from Sept. 30 to Oct. 4, 2019, at the United Nations in Vienna. CPR is looking forward to continuing to contribute to the efforts.

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The author is CPR’s International Consultant/Legal Intern. He holds a LL.B. from Pontifical Catholic University of Paraná (Brazil) and a LL.M. in International Commercial Law and Dispute Resolution from Pepperdine Law/Straus Institute for Dispute Resolution.

UN Commission on Int’l Trade Law Adopts Text on Online Dispute Resolution (ODR)

July 11, 2016January 9, 2018 / CPR Staff / Leave a comment

Today, the United Nations Commission on International Trade Law (UNCITRAL) announced its adoption of Technical Notes on Online Dispute Resolution (ODR). The Technical Notes, which were formally adopted at UNCITRAL’s meeting in New York on July 5, 2016, are the first formal international text recognizing and supporting the use of ODR as a new method of dispute resolution. The formal press release from the United Nations Information Service can be accessed here.

The CPR Institute has been actively involved in the development and drafting of this innovative UNCITRAL text. In response to the need to develop more cost-effective approach to resolving B2B and B2C disputes in the Internet age, CPR became an official NGO Observer to UNCITRAL in the Spring of 2011.

Beth Trent, CPR’s Senior Vice President, Public Policy, Programs and Resources, was invited to serve as a member of the U.S. Delegation to UNCITRAL Working Group III (ODR) and provided an expert perspective on how to best achieve the objective of designing a system that enables parties to resolve disputes in a fast, flexible and secure manner, without the need for physical presence at a meeting or hearing.

The Technical Notes are expected to contribute significantly to development of systems that will enable this objective. Following UNCITRAL’s approach of issuing texts of universal application, the Technical Notes are designed to ensure that ODR systems are accessible to buyers and sellers in both developed and developing countries.