Time is of the Essence – the Case for Fast Track Arbitration

In all maritime construction projects – be it shipbuilding or construction of components for the offshore oil and gas as well as wind industry – the factor of time plays a fundamental role: TIME IS OF THE ESSENCE. Penalties, liquidated damages and claims for damages safeguard the interest in the efficient realisation of a project and ideally motivate the parties involved in the project to work under pressure to assure and achieve completion of the project on schedule.

If disputes arise during or following the implementation of a project, the situation can be quite different. Even in the best case scenario where the disputing parties have a joint interest in a speedy conclusion of their dispute, they end up becoming dependent on third parties, namely state courts or arbitration tribunals. It is then often the case that time is no longer “OF THE ESSENCE” and court proceedings as well as proceedings before arbitration tribunals can drag on for years. Judges change, new judges have to familiarise themselves with proceedings, witnesses are no longer available and it is often the case that after having invested so much money, the parties eventually lose interest in the proceedings.

The solution is Fast Track Arbitration which means arbitration proceedings where the parties have agreed in advance the rules for the court of arbitration and for themselves, according to which a dispute must speedily and conclusively be decided on within a prescribed short period of time, mostly 6 or even less than 6 months. Several arbitration institutions provide for such proceedings, for example, the American Arbitration Association, the Arbitration Institute of the Stockholm Chamber of Commerce, the Deutsche Institution für Schiedsgerichtsbarkeit, the Schweizer Schiedsgerichtsbarkeit and also the German Maritime Arbitrators Association (GMAA), which recently introduced rules for Fast Track Arbitration.

The most important element of accelerated proceedings is a strict time schedule and obviously adherence to this by the parties and the court of arbitration. Even though the value of a claim is not necessarily indicative of the complexity of particular proceeding, there is (still) however a certain tendency to only implement Fast Track Arbitration Rules if the value of the claim does not exceed a certain value (1.000.000,00 SFR in the Swiss Rules, EUR 1.000.000,00 GMAA). The parties are free to fix other amounts. In addition, and this is a consideration which is also linked to the value of the claim, a Fast Track Arbitration according to some of the Rules takes place with just one arbitrator as opposed to three, although this is not compulsory.

Finally, the swift implementation of such proceedings depends upon the parties imposing limits on themselves regarding the length of their submissions. There is no room for long-winded statements and reiterations. Instead the parties have to concentrate on the essential matters and guidelines on the length of written pleading promote this. The GMAA has therefore limited the length of submissions in fast track arbitration proceedings and against the background of a strict time schedule, accelerated arbitration proceedings – as proven by positive experiences in Scandinavian countries in particular – can be over and done with in less than six months.