Prague rules and iba rules: conflict or alternative?

2 Luglio 2019
On 14 December 2018, after four years of drafting, the so-called Prague Rules (namely, “Rules on the Efficient Conduct of Proceedings in International Arbitration”) were officially launched during an inaugural conference in Prague’s old city.

The Prague Rules, in the intention of those on the Working Group, are aimed at addressing the complaints raised by the users of arbitration services about the time and costs involved in arbitral proceedings, which are perceived as more and more overblown[1].

According to the Working Group (formed from mainly civil law representatives from around 30 countries) the best way to increase the efficiency, in terms of both time and costs, of such arbitral proceedings is to encourage tribunals to take a more active role in managing those proceedings.

This approach has been read as an attempt to create an inquisitorial model of procedure (widespread in many civil law countries) as opposed to a more adversarial approach – regarding document production, fact witnesses, party-appointed experts and cross-examination – typical of common law traditions, and broadly reflected in the “IBA Rules on the Taking of Evidence in International Arbitration” (in short, “IBA Rules”).

Consequently, a heated debate has been caused among the Prague Rules’ supporters and the IBA Rules’ fans, which runs the risk of resulting in a fruitless contrast between legal practitioners from civil law and common law countries.

Are the Prague Rules and the IBA Rules real enemies, however? Or, rather, should users look at them as allies in the struggle to achieve greater efficiency in every single arbitration?

Before answering such questions, we will consider the most significant differences between the two sets of rules.

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Article 2 of the Prague Rules expressly assigns a more “proactive role” to the arbitral tribunal. The latter is encouraged to hold an early case management conference, at which a procedural timetable is agreed, and the relief sought, the facts that are both disputed and undisputed, and the legal grounds supporting the parties’ positions are clarified. In addressing these topics, the arbitral tribunal may also share its preliminary views regarding the allocation of the burden of proof and the weight and relevance of evidence submitted by the parties. Furthermore, the arbitral tribunal may limit the number and length of the submissions and fix strict time limits for filing, the form, and the extent of document production. By way of comparison, Article 2 of the IBA Rules focuses more on evidenciary issues (preparation and submission of witness statements, oral testimonies at the evidentiary hearings, production of documents, confidentiality and efficiency in the taking of evidence), which the arbitral tribunal has the responsibility to discuss with the parties with a view to agreeing on an efficient, economical and fair process for the taking of evidence.

Regarding documentary evidence, Article 4.2 of the Prague Rules contains a distinguishing approach by stating that “Generally, the arbitral tribunal and the parties are encouraged to avoid any form of document production, including e-discovery”. This results in the severe limitation of document production, although, as specified in paragraphs 4.4, 4.5 and 4.6, it is not entirely excluded.

As to fact witnesses, Article 5 of the Prague Rules grants the arbitral tribunal the power to decide which witnesses are to be called for examination during the hearing, thus excluding those which the arbitral tribunal considers irrelevant, immaterial or unreasonably burdensome for the resolution of the dispute. In addition, the examination at the hearing is conducted under the direction and control of the arbitral tribunal, without any specific reference in the article to the cross-examination approach. On the contrary, under Article 4 of the IBA Rules, the fact witnesses indicated by the parties are required to appear to give testimony at the evidenciary hearings, failing which – unless a valid reason is provided – the arbitral tribunal will disregard their witness statements.

With respect to experts, while Article 6 of the Prague Rules refers exclusively to the tribunal-appointed expert (though allowing the parties to submit report by their respective party-appointed experts), Articles 5 and 6 of the IBA Rules refer respectively to tribunal-appointed and party-appointed experts, without expressing any preference between the two options.

A principle that is completely unknown in the IBA Rules – the principle of “iura novit curia” – can be found in Article 7 of the Prague Rules, under which the arbitral tribunal has the discretion to apply legal provisions and to rely on legal authorities who have neither pleaded nor been submitted by the parties, if it finds it necessary (however, the tribunal shall seek the parties’ views in relation to such provisions and authorities).

The comparison between the respective Articles 8 of the two sets of rules on the hearing shows very clearly how the Prague Rules encourage the arbitral tribunal and the parties involved to resolve the disputes on a documents-only basis, thus, as much as is possible, limiting the number and duration of the hearings, whereas the IBA Rules put much emphasis on the examination of witnesses.

Another innovative principle is stipulated in Article 9 of the Prague Rules, according to which the arbitral tribunal may, at any stage, assist the parties in reaching an amicable settlement of the dispute, by also acting as a mediator (upon the prior written consent of all parties). Such a possibility has raised some concern among common law practitioners, who fear that an active role by the arbitrators in reaching a settlement may conflict with their duty of neutrality.

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Having said that, in relation to the differences in the two set of rules and their legal background, it must be admitted that they also present many similarities and, more importantly, the parties do not need to be considered as opponents.

Over time, international arbitration has become more and more popular globally. Considering world trends, it goes without saying that not only will arbitration proceedings increase in number, but different kinds of arbitration will also – and have already – spread worldwide. In light of this, a different and more stimulating approach would be to consider the newly released Prague Rules to be an alternative and supplementary option, which allows the parties to structure their arbitration through a tailor-made process that takes into account the nature and characteristics of each arbitral case.

It seems reasonable to say that for high-value, complex, fact-heavy cases, the adversarial approach reflected in the IBA Rules remains more appropriate and is preferable. Conversely, in smaller cases, and those where the legal and procedural issues may have a primary role, opting for the inquisitorial approach provided by the Prague Rules may assure more time- and cost-effective arbitral proceedings.

In conclusion, the newly released Prague Rules do not necessarily constitute a threat to the already well established IBA Rules. As international arbitration is the realm of party autonomy, this new publication must be considered as what it really is: an additional choice that is to the parties’ benefit.

[1] The Note from the Working Group verbatim reads: “It has become almost commonplace these days for users of arbitration to be dissatisfied with the time and costs involved in arbitral proceedings. One of the ways to increase the efficiency of arbitral proceedings is to encourage tribunals to take a more active role managing the proceedings (as is traditionally done in many civil law countries)”.

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