Faster is not always better


Faster is not always better

Tuesday, 27 March, 2018

The International Chamber of Commerce (in the following “ICC”) is a platform for companies to settle international disputes.

The ICC provides rules in order to handle disputes in front of a non-governmental tribunal. This system is used by companies that collaborate internationally. These arbitration awards have the advantage that they are enforceable in all member states of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) whereas a national verdict is often not enforceable in other countries due to the principle that one state cannot rule over another state (“par in parem non habet imperium”).

Therefore, many countries agreed on the New York Convention that entered into force on June 7, 1959. This Convention is allows internationally recognized dispute channels like the ICC to issue arbitrational awards that are enforceable in other member countries. This possibility of fast and effective dispute resolution raised the amount of collaborations between internationally operating companies significantly. The ICC is by far the biggest institution of many courts of arbitration to settle international disputes.

In March 2017, the ICC changed its procedural law. It is now mandatory for the parties to use a different sort of procedures for minor cases. This can only be avoided if the parties agree on a legal provision in their contract that this procedure shall not be applied in the case of a dispute.

The main difference to the previous procedural law of ICC arbitration proceedings that is still in force for cases where the amount in dispute does exceed two million US-Dollar and if agreed on for any case that is brought to the ICC is:

  • a single judge has more power regarding a proceeding;
  • the judge can limit the presentation of evidence if the judge finds that a party intends to delay the process;
  • the court is able to rule within six months and without any court hearings;
  • a Case Management Conference takes place 15 days after filing the arbitration claim;
  • court hearings may be conducted over a telephone or video conference;
  • the fees of arbitrators are reduced by 20%.

The ICC intended to achieve shorter and more inexpensive trials in cases with minor complexity. This does not always apply on cases under two million US-Dollar, since the complexity of a case does not necessarily correlate to the amount in dispute. If the parties want to avoid such procedural consequences they can exclude this – otherwise mandatory – “express procedure” in their arbitration clauses. The parties can also agree to settle their disputes in such express proceedings in cases over two million US-Dollar, as well as set their own limit to apply those rules.

We highly recommend to consider these changes in the arbitration clauses of international contracts. Otherwise, these new procedural laws are applicable automatically and thus, the “express variant” of arbitration proceedings in front of the ICC will be applicable in every dispute under two million US-Dollars. We would be pleased to assist you with drafting such agreement and are available for all questions regarding this issue.