The German Institute for Arbitration (Deutsche Institut für Schiedgerichtsbarkeit “DIS”) has completely revised its old 1998 Rules. The result is a contemporary set of new rules (“Rules”) which came into force on 1 March 2018.
The new Rules reflect the current best practice in arbitration, with a focus on efficiency and transparency. Some of the new Rules are reminiscent of those used by the LCIA, ICC and other leading arbitration institutions, while others maintain procedures manifested in civil law.
Serving the growing international use of the DIS, the Rules are available in German and English and apply to national and international proceedings (Article 1.1), commencing on or after 1 March 2018 (Article 1.2). It is important to note that this is irrespective of when the arbitration agreement was concluded and solely looks to the date of the commencement of the proceedings.
In recent years, the DIS has administered an increasing number of non-German disputes and in around a quarter of the proceedings the language is English. The Rules will attract international attention and are likely to further the use of the DIS by non-German parties.
Efficiency of the Arbitration Proceedings
Case management conference
Multi-party and multi-contract arbitrations
Similar to the old Rules, and in line with civil law approach in Germany, the tribunal shall seek to encourage the parties to reach an amicable agreement (Article 26). The tribunal shall do so at every stage in the proceedings; not only at the outset. However, a party can object to the tribunal’s intervention in this respect.
Efficiency of the arbitration proceedings
The Rules focus on making the proceedings as efficient and effective as possible.
The DIS is in favour of electronic communication (Article 4.1), but hard copies are still required for substantial filings of pleadings, other submissions and the final award.
Number of Arbitrators
Previously, the tribunal automatically comprised of three arbitrators, if the parties had not agreed otherwise. Under the new Rules, the parties must expressly agree to a three-member tribunal. In any event, each party can make a request to the DIS that the tribunal will be composed of only one arbitrator (Article 10.2).
Constitution of the Tribunal
The time for the respondent to nominate its arbitrator has reduced from 30 days to 21 days (Article 7.1) after receipt of the request for arbitration.
Similarly, for a three-member tribunal, the arbitrators’ time to jointly nominate the president after being requested to do so by the DIS is reduced from 30 to 21 days (Article 12.2). The complete tribunal needs to be constituted within six weeks after receipt of the request for arbitration.
Shortened deadline for filings
Answers to the reqwuest for arbitration shall now be filed within 45 days after receipt of the request (Article 7.2). In essence, the deadline for filing the answer is fixed on the receipt of the request; not on the constitution of the tribunal, as under the previous Rules.
The respondent may request an extension from the DIS (not the tribunal) of a further 30 days (Article 7.2). If the respondent is of the opinion it requires more than 75 days to file its response, the tribunal will grant this only in “exceptional circumstances” (Article 7.3).
Previously, general initial short submissions (like the request for arbitration and the answer) were not required, so there were only two rounds of submissions. Now, the Rules refer to “Request for Arbitration” and “Answer to Request for Arbitration”. This could imply that the new Rules envisage a three-round arbitration, like the ICC and other commonly used rules. In some ways this would be more efficient than the previous system, as it would give the parties a first impression of each other’s case, before submitting lengthy pleadings.
The Rules contain a cost incentive for the parties to conduct the arbitration efficiently. The arbitral tribunal shall make decisions concerning the costs of the arbitration in its discretion. In so doing, it shall take into account the extent to which the parties have conducted the arbitration efficiently (Article 33.3).
If the arbitral tribunal does not send the final award to the DIS for review within three months after the last hearing (or the last authorised submission, whichever is later), the Arbitration Council may reduce the fee. This would be for one or more arbitrators, based on the time taken by the arbitral tribunal to issue its final award. In deciding whether to reduce the fee, the Arbitration Council shall consult the arbitral tribunal and take into consideration the circumstances of the case (Article 37).
Case management conference
The now mandatory case management conference is arguably one of the main factors for greater efficiency in the Rules. The case management conference is regulated in Article 27 of the Rules, headed “Efficient Conduct of the Proceedings”. Article 27 includes the general provision that “[t]he arbitral tribunal and the parties shall conduct the proceedings in a time – and cost – efficient manner, taking into account the complexity and economic importance of the dispute” (Article 27.1)
The Rules not only constitute a narrow timeframe to hold the case management conference, they also set out a list of measures and additional points. These ought to be discussed at the case management conference in order to avoid lengthy discussions afterwards and interim applications in the course of the following proceedings. To reach that goal, the Rules expressly encourage the parties themselves, in addition to their outside-counsel (where applicable), to attend the case management conference in person, or with an in-house party representative (Article 27.3).
The case management conference shall be held as soon as possible after the constitution of the arbitral tribunal, “in principle within 21 days” (Article 21.2).
Certain specific items ought to be discussed (Article 27.4):
- Each of the measures for Increasing Procedural Efficiency (Annex3). These measures include, among other things:
- Limiting the length and number of submissions, witness statements or expert reports.
- Regulating whether a party that does not bear the burden of proof can be requested to produce documents, and the possibility to limit document production requests generally.
[This feature reflects the more stringent civil law approach to document production. In light of the recent criticism that use of extensive document production in arbitration proceedings makes the process lengthy and costly this approach seems to be a promising deviation from the usual approach.]
- The arbitral tribunal shall provide the parties with a preliminary non-binding assessment of the factual and legal issues in the case.
[This provision is dependent on the consent of the parties. Again, this mechanism will be more familiar to civil law practitioners and might seem odd for common law lawyers. However, the provision is in line with the general aim to settle the dispute at an early stage and might encourage the parties to (re-)consider their position carefully.]
- The Expedited Procedure provisions of Annex 4.
- The possibility of settling the dispute, or individual disputed issues, amicably.
- Whether to employ experts and how to conduct the procedure efficiently (Article 27.7). This issue can also be discussed at an additional case management conference if necessary.
The Arbitration Council is a newly-introduced additional institution. It consists of at least fifteen members from at least five different countries (Annex 1) and shall be responsible for administrative tasks but also for making decisions on various procedural issues. These include but are not limited to:
- Number of Arbitrators: Generally, the parties shall agree whether the tribunal shall be composed of one, three, or any other odd number of arbitrators (Article 10.1). If the parties cannot agree, each party can request a sole arbitrator. The Arbitration Council will decide on such request but only after consultation with the other party (Article 10.2).
- Challenge: A very new feature of the DIS Rules – the Arbitration Council will decide upon the challenge of an arbitrator (Article 15.4). This unique procedure will solve issues around a potential lack of independence, arising when the tribunal itself (with or without the challenged arbitrator) decides on the challenge.
- Removal from Office: The Arbitration Council can, of its own volition, remove an arbitrator if it is of the opinion that the arbitrator is not fulfilling his or her duties at present or in the future (Article 16.2).
- Replacement of Arbitrators: The Arbitration Council can also decide that an arbitrator, whose mandate has been terminated, shall not be replaced (Article 16.4), and may determine that a different process may apply to replace an arbitrator, than initially used (Article 16.5).
- Arbitrator’s fees: The Arbitration Council is responsible for the fees payable to the arbitrator. The amount payable is in the discretion of the Arbitration Council, which has to consult the parties and the arbitral tribunal before fixing the fees (Article 34.4). The arbitrator can also be granted an advance in fees in an amount the Arbitration Council considers appropriate (Article 34.3).
- Deposit: After the tribunal determined the amount in dispute, any party can apply to the Arbitration Council to reconsider the amount in dispute for the purposes of calculating the amount for the initial deposit, the final deposit and the administrative fees (Article 36.3).
- Reduction of Arbitrator’s fees: Another, to be expected very effective measure, is that the Arbitration Council can, after consultation with the arbitral tribunal, reduce the fees of an arbitrator (Article 37).#
Multi-party and multi-contract arbitrations
It was about time that the DIS Rules acknowledged the ever increasing number of multi-party and multi-contract disputes. Whereas the old Rules contained just a very limited number of provisions concerning these aspects, the Rules now provide more detailed guidance.
The onus is on the parties to agree to multi-contract, multi-party and consolidated arbitration proceedings. Any dispute as to whether all of the parties have agreed, in particular when there is no express agreement, shall be decided by the arbitral tribunal (Article 17.1 and 18.1). The tribunal does not decide on a prima facie basis but solely on the basis of the parties’ consent whether manifested in the arbitration agreement or given in the course of the proceedings.
In the event all parties have agreed, claims arising out of more than one contract may be decided in a single arbitration (Article 17.1). Under the same condition, claims arising out of more than one arbitration agreement may be decided in a single arbitration, if those agreements are compatible (Article 17.2).
It may be difficult for both parties to agree to such a procedure. Therefore, to avoid a decision by the tribunal, parties should consider including multi-contract provisions in their contracts, where this seems appropriate, to make sure the arbitration agreements with the same party are identical.
As with multi-contract arbitrations, the Rules allow for multi-party arbitrations, if the arbitration agreement binds all of the parties to have their claims decided in a single arbitration (Article 18.1). The parties can also agree this procedure ad hoc.
If there is no written agreement and the parties dispute a single arbitration, the tribunal has to decide. Here, again, to avoid conflicts, the parties should consider if they wish to allow for multi-party arbitrations at the drafting stage.
Following the above Rules of multi-contract and multi-party arbitration, it is a logical consequence that the new DIS Rules now expressly allow for the consolidation of parallel proceedings, if all parties agree (Article 8).
It is now possible for each party to file a request for arbitration against an additional party, but only prior to the appointment of any arbitrator (Article 19.1). The decision whether the dispute with the joining party shall be decided in the pending arbitration is with the tribunal and, where applicable, shall be decided applying the provisions for multi-party and multi-contract provisions (Article 19.5)
Annex 4 of the Rules deals with expedited proceedings. As mentioned above, the decision whether expedited proceedings might be an option shall be discussed at the case management conference.
It seems appropriate that the decision whether to agree to an expedited procedure is made at a case management conference, where the main facts of the case are already known to both parties. This will make it easier for the parties to decide whether they wish to opt-in.
If the parties agree to the expedited procedure, the final award shall be made within six months after conclusion of the case management conference (Annex 4, Article 1). Further, each party shall only file one further written submission in addition to the request and answer, and the tribunal shall only hold one oral hearing.
The Rules do not provide for an emergency arbitrator. The parties can, after the constitution of the tribunal, request the tribunal to order interim relief or conservatory measures (Article 25.1). In exceptional circumstances, the tribunal can order such relief or measures without giving prior notice to the other party (Article 25.2).
The Rules reflect recent good practices in arbitration and provide for efficient proceedings. They incorporate and promote the attractiveness of some legal concepts stemming from the civil law approach. Given the recent discussions in England to reform the disclosure process, the Rules may provide a welcomed alternative for practitioners from around the world. It remains to be seen whether the new Rules catapult the DIS Rules onto the same playing field as the ICC or the LCIA rules, and whether they will be more widely used by civil and common law practitioners.