Arbitration, as an alternative dispute resolution mechanism, has gained broad acceptance due to its flexibility, efficiency, and ability to provide a simplified method for resolving disputes. Time management is crucial to the efficiency of arbitration, as prolonged disputes can result in higher costs and reduce its advantages. The question of whether fixed deadlines in arbitration agreements should be included is a matter of discussion and hinges on various factors.
Flexible and Fixed Deadlines in Arbitration Agreements
Fixed deadlines in arbitration agreements represent predetermined timeframes during which certain actions are to be completed during the arbitration proceedings. For instance, the parties may agree that a final arbitration award must be rendered within four months from the constitution of the arbitral tribunal in their arbitration agreement. These deadlines, however, may encompass various aspects of arbitration, such as selecting arbitrators, submitting evidence, exchanging pleadings, and issuing awards.
Some contemporary arbitration laws explicitly include provisions which allow parties to set a specific timeframe for delivering the award, such as the Swiss Code of Civil Procedure.[1] For instance, Article 366 permits parties to establish a deadline for the actions of the arbitral tribunal.[2] However, this limit is a flexible one, as it does not constrain the tribunal’s decision-making authority.
A similar provision is found in Article 31 of the 2021 ICC Rules.[3] As per this provision, the ICC Court has the authority to prolong the six-month timeframe to render a final award either upon a reasoned request from the arbitral tribunal or at its own discretion if it deems this necessary.[4]
Other institutions, like the LCIA, provide an additional requirement in their arbitration rules for the tribunal to seek to render its final award promptly and, in any event, within three months of receiving the last party’s submission.[5]
On the other hand, in certain jurisdictions, such as Italy, failing to meet a predetermined fixed deadline for the award renders it liable to being annulled.[6]
Italy is not the sole country enforcing fixed deadlines. In Alphamix Ltd v The District Council of Rivière du Rempart (Mauritius) [2023] UKPC 20, the Mauritian lower court annulled the arbitral award solely because it was issued three days beyond the specified date. Nevertheless, upon appeal, the Privy Council upheld the arbitrator’s award.[7]
Advantages of Fixed Deadlines in Arbitration Agreements
The main advantages in favour of fixed deadlines in arbitration agreements are the following:
- Efficiency and time advantage represent the main objectives for setting a fixed deadline in arbitration agreements. Fixed deadlines may ensure a smooth proceeding while minimizing delays. If deadlines are short, then an arbitration award should be rendered more swiftly. A swift arbitration may be crucial for time-sensitive disputes.
- Certainty and predictability are ensured through fixed deadlines in arbitration, providing a clear understanding of the procedural timeline. Having clarity on when certain actions are required allows parties to better plan their strategies.
- Allocation of resources is more foreseeable, given the predictability of the timeline.
- Reducing delays and consequently minimizing costs incurred due to delays.
Disadvantages of Fixed Deadlines in Arbitration Agreements
On the contrary, fixed deadlines in arbitration agreements have a negative side as well, such as:
- Insufficient time in certain cases can lead to rendering an award without granting both parties a fair opportunity to present their arguments. Additionally, there might not be enough time for thorough deliberation and the issuance of a properly reasoned award.[8]
- Vulnerability of the final award represents the primary drawback, which can arise in instances of procedural shortcomings or a lack of due process due to the fixed deadlines. If this occurs, then the arbitration award rendered may be unenforceable or at risk of annulment.
- The rigid nature of fixed deadlines might not accommodate unforeseen circumstances or unexpected delays.
- Pressure to expedite proceedings may potentially compromise thoroughness in favour of expediency. Consequently, it conceivably leads to a decline in the quality of decision-making.
- Limited Flexibility as the proceedings cannot be easily adapted to arising circumstances.
Conclusion
To summarize, while fixed deadlines in arbitration agreements can serve to enhance efficiency and timeliness, they also pose risks. Parties should assess the pros and cons of fixed deadlines. This is particularly important for setting deadlines for the issuance of an award, ensuring they are realistic and cannot be abused to obstruct the proceedings or challenge the award after it is rendered. It is fundamental to maintain a balance between flexibility and fairness with the need for efficiency.
[1] W. Buchwitz, Should Arbitration Agreements Contain Fixed Deadlines?, 19 January 2024, https://arbitrationblog.kluwerarbitration.com/2024/01/19/should-arbitration-agreements-contain-fixed-deadlines/.
[2] Swiss Code of Civil Procedure, Article 366.
[3] ICC Rules, Article 31.
[4] ICC Rules, Article 31(2).
[5] LCIA Rules, Article 15.10.
[6] Italian Code of Civil Procedure, Article 820(2).
[7] Alphamix Ltd v The District Council of Rivière du Rempart (Mauritius) [2023] UKPC 20.
[8] V. Clark, Time Limits for Awards: The Danger of Deadlines, 5 July 2023, https://www.bclplaw.com/en-US/events-insights-news/time-limits-for-awards-the-danger-of-deadlines.html.