Ukrainian institution goes against the grain with time extensions
In the first changes to be made to the rules of the institution since their debut in 2007, tribunals have been given five extra days to communicate an award to the parties, with scope to extend that period by the ICAC president still further in “exceptional circumstances”. Other provisions on the general duration of a case, set at six months, remained unchanged.
Under the old ICAC rules, arbitration hearings ended with the tribunal “rendering the award”, that is, declaring the operative part of the award orally, after which it had to prepare a reasoned, written version to be forwarded to the parties by the secretariat.
The secretariat had to issue the award to the parties within 15 days of it being rendered –which could be extended to a maximum of 20 days by the ICAC president if “exceptional circumstances” were present.
Under the new rules, adopted by ICAC on 25 October, the institution’s secretariat has 20 days to issue the award, with no limit on the extension that can be granted.
In rare, complex cases, the tribunal can also dispense with the oral declaration of the operative of the award and simply direct the forwarding of the award to the parties within 20 to 30 days of the end of the hearing, again with the possibility of an extension.
The rules do not define the “exceptional circumstances” in which extensions can be granted but it is understood that in the past the ICAC president has exercised his discretion only rarely – in cases that are complicated factually or include counterclaims or applications for set-off.
Partner at Ukraine arbitration boutique Arbitrade Attorneys at Law, Yuliya Chernykh, says that while any possibility for extending the time to obtain an award “will undoubtedly find its critics”, the revised rules reflect the fact that the centre is receiving more complex cases: not just the sale of goods cases that have been its staple in the past, but disputes over service and investment agreements, bank guarantees and leases.
ICAC has also not been plagued with delays as other institutions have. According to the centre’s 2011 report, 74 per cent of its proceedings were completed within two to six months, and only two per cent took more than 12 months.
Markiyan Kliuchkovskyi, partner at Egorov Puginsky Afanasiev & Partners in Kiev, says that five or 10-day increases to the time for the issuance of an award “are not dramatic”.
Indeed, he says the changes will be welcomed “as the very strict time limits under the old rules and the practice whereby the operative part of the decision was announced immediately upon the conclusion of the hearing was sufficient for the smaller cases, but may not be fit for the bigger, or more complex cases on ICAC's docket.”
Kliuchkovskyi acknowledges that the revisions to the rules may seem anomalous given the international arbitration community’s emphasis on cutting delay. While “speed of issuance of awards is essential, and unnecessary delays are generally quite harmful to arbitration and its perception by the parties,” he says the extensions in the new rules are justified by the need for flexibility
In practice, institutional time limits “often have no or little real meaning for the tribunals working on the awards – arbitrators are not going to issue an award before it is ready in any event,” he says. For example, in one case he is working on, the institution has extended its own deadlines at least six times.