Construction Arbitration: Turkey
Stockholm Chamber of Commerce Launches New Express Dispute Resolution Mechanism
The prominent European arbitration institution, the Swiss Arbitration Centre, has refreshed its arbitration rules and codified its most recent arbitral practices. The revised Swiss Rules of International Arbitration (“Rules”) entered into force on 1 June 2021 and are intended to meet the latest needs of the arbitration community. While largely remaining the same, the revisions introduce several notable amendments that aim to boost case management effectiveness by “streamlining the proceedings, allowing for paperless filings and supporting remote hearings when needed”.
In this article we highlight the key changes.
The Swiss Chambers’ Arbitration Institution (“SCAI”) has reshaped its corporate structure and rebranded as a Swiss limited company with a new name, the Swiss Arbitration Centre Ltd (“Swiss Arbitration Centre”). The Swiss Arbitration Association (ASA), as the new majority shareholder, is expected to work closely with the Swiss Chambers of Commerce. This cooperation is likely to strengthen Switzerland’s enduring popularity as a premier global arbitration hub.
According to the revision of Article 3, a claimant can now submit a notice of arbitration electronically. No hard copies of the notice are required unless the Secretariat or claimant requests otherwise. The same rules apply to answers to notices of arbitration. However, if a claimant has an interest in the service of a physical copy to a respondent, they are free to submit a physical copy to the Secretariat
The admission of electronic submissions by parties is a significant step towards more environment-friendly arbitration procedures, negating the requirement to print large amounts of documents. It also simplifies and speeds up an already complicated process.
In line with the international digitalization trend, another revision is made in Article 27. Accordingly, the new Rules provide an alternative to in-person hearings and suggest that hearings may also be held remotely by videoconference or other appropriate means, as decided by the arbitral tribunal following consultation with the parties. The Rules use the broad terminology “other appropriate means” to incorporate any future technological developments that could assist remote hearings. The new amendment to hearings formalizes some of the processes that have already been followed in international arbitration as a result of the Covid-19 pandemic. Even post Covid-19, videoconferences can be chosen over in-person hearings to reduce arbitration costs and significant time spent traveling.
The Rules have introduced new clarifications for raising claims against another respondent (crossclaims), or an additional party (joinder), or where an additional party seeks to participate in the proceedings by bringing claims against an existing party (intervention). Accordingly, whoever asserts a crossclaim, requests a joinder or an intervention, may submit a notice of claim.
Following the constitution of an arbitral tribunal, any crossclaim, request for a joinder or for an intervention will be decided by the arbitral tribunal following consultation with all parties. This amendment allows an arbitral tribunal, once constituted and upon a party's request, to accept any crossclaim, joinder, or intervention request even if the existing parties do not consent.
The Swiss Arbitration Centre’s aim seems to be handling complex cases such as multi-party construction disputes by offering an extensive regulatory landscape for arbitration that may require the involvement of more than two parties.
The consolidation of proceedings is now regulated under Article 7 with slight changes from the previous rules. The revised version of Article 7 provides that the Arbitration Court (“Court”) may consolidate proceedings upon the request of a party. When rendering its decision, the Court will consider all relevant circumstances, including the links between the claims and the progress already made in the respective proceedings.
Article 4(1) of the 2012 Rules merely provided that “the Court may decide, after consulting with the parties and any confirmed arbitrator in all proceedings, that the new case shall be consolidated with the pending arbitral proceedings”, leaving room for interpretation as to whether a party could request the Court to do so. The updated Rules have clarified the issue.
To ensure certain procedural steps are time-efficient the Court can now set a reasonable time limit for claimants and respondents (or groups of parties) to designate an arbitrator, if the parties have not yet agreed upon a procedure for the constitution of an arbitral tribunal in multi-party proceedings.
The new Rules fortify the existing measures against possible conflicts of interest between the arbitrators, parties, and parties’ representatives. As per Article 16 of the Rules, the arbitral tribunal may at any time request proof of authority from representatives.
The arbitral tribunal may oppose a new appointment should it believe that the appointment jeopardizes the independence or/and the impartiality of the arbitral tribunal.
An arbitrator’s duty to remain impartial and independent has been re-regulated to provide a proactive duty to disclose circumstances that could give rise to justifiable doubts with respect to their impartiality and independence without the need for parties to inquire.
Arbitral tribunals will hold an initial case management conference with parties to discuss the organization of the arbitration proceedings and issues of data protection and cybersecurity. Further organizational conferences may be held throughout the proceedings if deemed appropriate.
Another new amendment to Article 19 expressly emphasizes that, at any time during the proceedings, the parties may agree to resolve the dispute by mediation, such as under the Swiss Rules of Mediation, or any other forms of alternative dispute resolution.
Cost projections, as generated by the cost calculator on the Swiss Arbitration Centre’s website display a general decrease in the costs of arbitration. The decrease is mostly based on a reduction to average arbitrators’ fees.
For instance, the costs related to an arbitration in which the amount in dispute is EUR 100,000,000 are now EUR 495,000 whereas they were previously EUR 695,000 under the 2012 Rules. The difference between costs exceeds 28% in this instance, whereas the ratio decreases to 15%, if the amount in dispute is EUR 10,000,000 by comparison to the Rules before amendments.
The Rules have clearly made headway in terms of efficiency and flexibility, swiftly and wisely responding to the problems that have arisen in recent times. In particular, given the amendments to multi-party proceedings and the considerable decrease in costs, the Swiss Arbitration Centre may become a more viable option for Turkish companies who are engaged in complex contractual projects (e.g., construction) and are willing to have their disputes resolved through arbitration.
For further information on this topic, please contact Orcun Cetinkaya (firstname.lastname@example.org), Ekinsu Cebi Elkei (email@example.com) or Berk Tuzuner (firstname.lastname@example.org) at Cetinkaya by e-mail.