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) 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))

1. Expedited Procedure (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)]

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))

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)

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;

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).

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))

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).

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 (> 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 ).

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;

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.

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;

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));

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 (> enforceability.

3. Awards (I): Few Changes –Former Art. 32(2): duty of parties to comply with award - > now Art. 15(7) –Art. 35(1), 36(1), 37(1): Clarification: requests for correction, interpretation or additional award to be addressed to Secretariat. –Art. 35(2), 37(2): extensions of time for interpretation or additional award to be granted by Court (only)

3. Awards (II): what did not change –Art. 31(1): if no majority, president may make award alone –Art. 32(1): tribunal may make final, interim, interlocutory, or partial awards and may award costs in awards that are not final. –Art. 32(1): obligation to state reasons, unless parties agree that no reasons are to be given

4. Determination of Costs (I)  Art. 38: „the arbitral tribunal shall determine the costs of arbitration in its award“ -> „The award shall contain a determination of the costs of the arbitration“.  Art. 32(1), 40(3), 40(5): Cost determinations may be made in final award, award by consent, termination order, interim or partial awards. Also in decisions on correction or interpretation of awards or additional awards.  Art. 38(a): Determination of arbitrator’s fees and expenses by arbitral tribunal (Art. 38(b+c)).

4. Determination of Costs (II)  Appendix B Section 5: if arbitrator fees subject to VAT or other fiscal charge, parties have a duty to pay such taxes or charges  Art. 41(1): may tribunal request deposit in the amount of VAT likely to become payable?

4. Determination of Costs (III)  Art. 38(a), 38(b): new [expressly states]: fees of secretary of tribunal falls under Art. 38(a) -> if added to fees of arbitrators still to be within range of scale of Appendix B Section 6 -> expression of principle that total of fees shall not be higher if secretary assists the tribunal.  Costs of secretary may not be qualified as „cost of other assistance required by the arbitral tribunal“ according to Art. 38(c)!

4. Determination of Costs (IV)  Art. 39(1): both fees and (new) expenses of arbitrators must be reasonable  Art. 39(2): fees are to be determined in accordance with Appendix B. The scale for fees and administrative costs has remained unchanged compared to the Swiss Rules 2004.

5. Cost Control (I)  Swiss Rules 2004: mere consultation of the Chambers by the tribunal regarding costs (only amendment to Art. 40 UNCITRAL 1976). Costs only subject to approval if amounts in scale exceeded  Art. 41(3) and 41(4) UNCITRAL 2010 provide right to parties to have fee proposal and cost determination by tribunal checked, approved, and – if need be – adjusted by ‚appointing authority‘ -> increased cost control in ad- hoc proceedings

5. Cost Control (II)  Art. 40(4): new: Not only awards, but as well termination orders and decisions re correction, interpretation and additional awards must be submitted to Court regarding the cost decision  New: in all instances (not only if amounts in scale of Apppendix B exceeded) submitted for approval (not mere consultation) with competence of Court to adjust

5. Cost Control (III)  Art. 40(4): „Any such approval or adjustment by the Swiss Chambers‘ Court shall be binding upon the arbitral tribunal“  Court approves or adjusts; and fixes administrative costs (Appendix B Section 2.2, Art. 38(f)). No administrative costs if amount in dispute below CHF 2 Mio.  No cost control regarding:  Costs items in Art. 38(d) to 38(e) (e.g. witness and legal costs)  Costs for Emergency Arbitrator (prior approval/adjustment pursuant to Art. 43(9)) -> no review de novo  Allocation of costs between the parties

5. Cost Control (IV)  Art. 40(4): approval or adjustment binding on arbitral tribunal  Issue of Federal Supreme Court decision 136 III 597, 602 cons. 5.2 not resolved! I.e., not binding on and enforceable against parties.  Still responsibility of tribunals to timely request deposits pursuant to Art. 41(1) and to check that they are paid

5. Cost Control (V)  Appendix B Section 4 (‘Guidelines for the accounting of expenses’) available on  Core issues:  Per diem allowances for days spent away from place of business  Threshold amounts for advances on fees and expenses  No advances on fees and expenses in Expedited Proceedings and Emergency Relief proceedings  Striking balance between adequate control and efficiency/‘lean administration‘/avoiding delay in issuing awards

6. Deposit of Costs (I)  Art. 41(4): new: time-limit for payment of deposits reduced to 15 days -> tribunals may suspend/terminate proceedings sooner  Art. 41(1) and 41(3): duty to consult Court for deposits (approval if amounts in Appendix B Section 6 exceeded)

6. Deposit of Costs (II)  Art. 42(1)(a) and App. B Section 1.4 /1.5 [Art. 5(5)]: Provisional Deposit of CHF 5‘000 in Expedited Procedures. Transfer of file subject to payment. Payment considered partial payment of deposit fixed by tribunal (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”)

6. Deposit of Costs (III)  Art. 43(1)(c) and (2): deposit for Emergency Arbitrator in the amount of maximum fees (CHF 20‘000)  Appendix B Section 4.2: advances on fees for arbitrators if substantial steps/mile-stones in proceedings are achieved. Subject to approval by Court -> Guidelines on Expenses

THANK YOU FOR YOUR ATTENTION ! Dr. Philipp Habegger LL.M.