Austria: Efficient Arbitration - Part 5: The Prague Rules: An Inquisitorial Alternative

In this article, we continue to add tools to our efficiency box by considering a new set of procedural rules that will soon become available: The Prague Rules on the Efficient Conduct of Proceedings in International Arbitration ("Prague Rules").

Launched this week, the Prague Rules are an alternative to the existing IBA Rules on the Taking of Evidence in International Arbitration ("IBA Rules"). If used appropriately, they could improve the efficiency of arbitration proceedings. We highlight the rationale and key features of the rules.

The efficiency rationale

To address the demand for greater efficiency, the primary purpose of the Prague Rules is to reduce the time and cost of arbitration through a civil law inquisitorial approach.

While the existing IBA Rules also aim to improve efficiency, they have been criticised for being too counsel-driven and too heavily rooted in common law tradition.

The Prague Rules have thus emerged as a civil law counterpart to the IBA Rules. While the latter focuses on the agreement between the parties, the former features an inquisitorial method, where arbitrators assume a more proactive role in the conduct of proceedings. 

Key features – a proactive tribunal

The Prague Rules Working Group identified three contributing factors to the length and cost of arbitration proceedings: 1) expansive document production; 2) number of fact and expert witnesses; and 3) length of cross-examination.

Unsurprisingly, most of the key features of the Prague Rules equip tribunals to actively manage these factors:  

• Case management conference ("CMC") – Art. 2.1 obliges the tribunal to hold a CMC after it receives the case file. At the CMC (or any time thereafter), the tribunal "shall clarify" the parties' respective positions. This contrasts with the IBA Rules (Art. 2(3)), which only encourage the tribunal to identify early issues, and only upon consultation with the parties. The active involvement of the tribunal from the outset may help narrow the issues in dispute, reducing unnecessary evidence and pleadings.
   
• Limited document production – Under Art. 4.3, parties can only request the production of "specific documents". This is narrower than the IBA Rules (which allow requests for a "category" of documents under Art. 3(3)), and may help avoid expansive documentary evidence and fishing expeditions.
   
• Number of witnesses – The tribunal can decide which witnesses will testify at the hearing (Arts. 5.2–5.3). Importantly, the tribunal may give authoritative value to a written witness statement without requiring the witness to testify at the hearing (Art. 5.6). This could cut down the length of hearings and reduce unnecessary witnesses or duplication of witnesses.
   
• Jura Novit Cura – Art. 7.2 allows the tribunal to investigate points of law of its own motion, without being restricted to what has been pleaded by the parties. However, the tribunal must first consult the parties. Art. 7.2 is arguably the most controversial feature, and has no parallel provision in the IBA Rules.
   
• Settlement facilitation – Under Art. 9.1 the tribunal is required, at all stages of the proceedings, to assist the parties in reaching an amicable settlement. In doing so, the tribunal may also act as a mediator (Art. 9.3).

An alternative, not a substitute

The Prague Rules are not a substitute for the IBA Rules, but a complementary alternative. While the rules have been met with varying levels of enthusiasm, what remains true is that they provide more options.

Parties can choose, from the outset, the type of legal culture they want the tribunal to adopt. They can select the Prague Rules or the IBA Rules, or a combination of both, depending on their strategy and the case at hand. The Prague Rules are thus a reminder that there are alternative tools available for the efficient conduct of arbitral proceedings.

And more options can only mean one thing: more chances to get it right. Efficiently.

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Further reading:

Efficient Arbitration – Part 1: Metrics
Efficient Arbitration – Part 2: Launching an Efficient Arbitration
Efficient Arbitration – Part 3: Winning an Efficient Arbitration
Efficient Arbitration – Part 4: Document Production in International Arbitration