Italy: The new ICC rules on “small” claims - drawback or opportunity?
Starting from March 1, 2017, the new rules on the simplified and accelerated arbitration procedure concerning “small” claims (Small Claims – Expedited Procedures Rules) of the ICC (International Court of Arbitration of the International Chamber of Commerce) came into force.
The new procedure is designed for disputes with a value equal to or less than USD 2 million, which the ICC wished to submit to a more streamlined arbitration procedure than the ordinary one.
The new Expedited Procedure may also be applied to disputes for higher amounts by using an opt-insystem, and, similarly, the ordinary procedure may be applied to disputes for lower amounts by using an opt-out system.
The Expedited Procedure’s real innovation is the creation of a system of rules intended to speed up arbitration proceedings and, consequently, curtail costs.
Therefore, following what other international arbitration courts had already envisaged, the ICC has set up a more efficient and speedy procedure to enable reaching a settlement even within six months from filing the claim, and at a reasonable cost.
Consider that, under the Expedited Procedure a dispute amounting to USD 1.5 million may cost a total of about USD 67,000, while the cost for same dispute, under the ordinary procedure, may be more than doubled. This is also because, automatically, the Expedited Procedure provides for the appointment of a single arbitrator, in lieu of the panel of three arbitrators under the ordinary procedure, as well as the possibility for the ICC to appoint a single arbitrator even when the parties already provided for establishing an arbitration panel.
Furthermore, expediency is met by the evidence-finding procedure, which is purely documentary, by the prospect that the hearings may also be carried out via video conference, telephone, or even not held at all (even where the parties had requested such), and by the lack of Terms of Reference (the act that defines the subject matter of the arbitration and makes the parties’ claims inalterable), resulting in fixing the parties’ claims at the stage of the initial application.
In order not to adversely affect a thorough evidence-finding, the new Rules entitle the ICC to decide not to apply the Expedited Procedure to the specific case, after consulting the parties and the Arbitration Tribunal: this means that, on the one hand, the dispute would be decided on the basis of evidence-finding adequate to the case in question but, on the other hand, the costs would significantly increase as the ordinary procedure would in fact be applied.
In addition to the abovementioned risk that a single arbitrator is appointed, despite the parties having provided for and agreed to an arbitration panel, the mentioned limits to the evidence-finding stage are among the critical issues that may be found with the new procedure. However, this risk seems to be counterbalanced by the clear advantages that the Expedited Procedure offers compared to the ordinary procedure, in terms of time-efficiency and cost-savings.
The possibility to include the ICC’s simplified and fast-track arbitration procedure in contracts, also for disputes worth more than USD 2 million, is consequently very advantageous for companies that, within the context of business relations with foreign parties, wish to use a quick and inexpensive procedure to settle potential disputes. At the same time, where it is not expedient for the parties to opt for such a procedure, for example because the contractual relationship itself may be undermined by a simplified and mere documentary evidence-finding, the parties may exclude the automatic application of the Expedited Procedure Rules, even for disputes worth less than USD 2 million.
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