Beginning of 2018 saw the release of the new arbitration rules of the German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit, DIS). The 2018 DIS-Rules (DIS-Rules) apply to all arbitrations commenced on or after 1 March 2018 (Articles 1.2 and 6.1).
The DIS is the most important arbitral institution in Germany with 116 arbitrations administered in 20181. The revision process started in 2016 and was organized in three different commissions taking 18 months to be completed. The process involved practitioners, in-house counsel, representatives from the institution and academics. The objective of the revision process was update the 1998 DIS-Rules to reflect the best practices in international arbitration of today without giving up the distinctive features of DIS arbitrations2.
This article summarizes the main revisions and the distinctive characteristics of the DIS-Rules as well as the powers of the newly created Arbitration Council within the DIS. Cited provisions refer to the DIS-Rules 2018 unless otherwise stated.
The time periods for the appointment of the arbitrator by the respondent as well as the appointment of the chairman by the party-appointed arbitrators have been reduced from 30 days to 21 days (Articles 7.1 and 12.2). Previously, the constitution of the arbitral tribunal took around two months.
Under the new rules, the respondent has 45 days from the date of transmission of the Request to file its Answer. This may be extended by 30 days upon request (Article 7.2). A further extension may only be granted in exceptional circumstances (Article 7.3). Under the old rules, the time until the constitution of the tribunal was unused..
The new rules provide for a mandatory case management conference within 21 days of the constitution of the tribunal (Article 27.2). Although a case management conference was not uncommon in international arbitrations under the old rules, it was not explicitly regulated. Now, the tribunal is also required to discuss with the parties certain measures to increase the efficiency of the proceedings as mentioned in Annex 3 of the DIS-Rules. These measures include, inter alia, limits on the number or on the length of submissions (including witness statements and expert reports), structuring the arbitration into different phases, rendering of partial awards, restricting document production and giving preliminary factual and legal indications. If the parties cannot agree on the applicability of certain measures, the arbitral tribunal has discretion to decide what the most appropriate procedure is for the case at hand. Concerning preliminary indications, the Annex 3 (F.) adds: "[…] provided all of the parties consent thereto", with a view to international parties from different legal traditions.
In addition, the tribunal shall also discuss with the parties whether the rules for Expedited Proceedings (Annex 4) shall be applied to the proceedings. Under these rules, among others, the final award must be rendered within six months after conclusion of the case management conference.
During the revision process, the users of the DIS expressed their concern of an automatic applicability of expedited procedures where the amount in dispute is under a certain threshold (see for example article 30 and Appendix VI ICC Arbitration Rules). The amount in dispute does not necessarily correlate with the complexity of the case or the importance of the dispute to the parties.
It is not uncommon that there are delays between the end of the hearing and the rendering of the award. The new rules seek to correct this. According to article 37, the tribunal shall send the award to the DIS for review no later than three months after the last oral hearing or alternatively after the last written submission.
Finally, the DIS reviews the formalities of the award and may also propose other amendments (Article 39.3). The proposed amendments are not binding on the tribunal or sole arbitrator and are described, in comparison to article 34 ICC Arbitration-Rules, as "Scrutiny light"3.
Implementing Efficient Proceedings
The rules on the efficient conduct of the proceedings are supplemented by a cost rule allowing the tribunal to also take into consideration the extent to which the parties have conducted the arbitration efficiently (Article 33.3). Similarly, the Arbitration Council also takes into account the diligence and efficiency with which the arbitrators have handled the dispute when fixing the fees in cases of an early termination of the proceedings or in cases of an award by consent.
Moreover, the Arbitration Council can reduce the arbitrators' fees in case the final award was not rendered within the time frame foreseen in article 37 (see above).
The new rules seek to increase the number of disputes decided by a sole arbitrator. In case the parties have not agreed on a specific number of arbitrators, any party can request the Arbitration Council to appoint a sole arbitrator. In case no such request is made or the request is denied, the tribunal will consist of three arbitrators (Article 10.2). In practice, the parties often do not specify the number of arbitrators in the arbitration clause and end up – by default – with a three-member tribunal even though the dispute might warrant a sole arbitrator. The possibility to apply for a sole arbitrator is comparable to developments of other arbitral institutions where the default is no longer a three member tribunal (see for example article 12(2) ICC Arbitration-Rules).
One of the distinct features of the 1998 Rules which was maintained and enhanced in the 2018 rules is the obligation of the arbitral tribunal to facilitate settlement or other resolution of the dispute unless any party objects (Article 26). In addition, the new rules provide in article 27.4 (III) that the possibility of using mediation or any other method of alternative dispute resolution shall be discussed already at the case management conference. In case the parties reach an amicable settlement, the tribunal will, at the request of the parties, record such settlement in an award by consent unless it considers that there are serious grounds not to do so (Article 41.1).
Multi-Contract Arbitration, Multi-Party Arbitration, Joinder
The new DIS rules contain for the first time rules on multi-party and multi-contract proceedings including the consolidation of arbitration proceedings and the joinder of additional parties. The 1998 DIS-Rules only dealt with the constitution of an arbitral tribunal in case of multiple claimants or respondents (Article 8 and articles 17 to 19). These changes are highly welcome as parallel or separate proceedings are the epitome of inefficient dispute resolution.
Competencies for the new DIS Arbitration Council
Under the 1998 DIS-Rules the arbitral tribunal or sole arbitrator was entrusted with tasks that were at times difficult to reconcile with their independence and impartiality. For example, arbitrator challenges were decided by the arbitral tribunal itself. The challenge decision is now entrusted to the newly created and independent Arbitration Council within the DIS. This is likely to increase the legitimacy of the challenge decision. Under the old rules, at least in theory, the challenged arbitrator could participate in the taking of that decision, albeit it was common practice that the challenged arbitrator in a three-member tribunal would not exercise his or her right (Article 15.4 DIS-Rules 1998).
Besides this, the Arbitration Council was given following competencies:
- Appointment of a sole arbitrator upon request of any party or if the parties did not agree on the number of arbitrators (Article 10.2) after having heard both parties.
- Requesting and administering deposits: under the 1998 DIS-Rules the arbitral tribunal or sole arbitrator would request and administer the deposits. The new revision is highly welcome as this is a task that is better performed by the arbitral institution.
- Determining the arbitrator's fees when the arbitration has been terminated prior to the final award or by way of consent award (Article 34.4). Previously, this decision was taken by the arbitral tribunal itself.
- Removal of the arbitrator from office if the arbitrator fails to fulfil its duties or he will be unable to fulfil his duties in the future (Article 16.2).
- Confirming or modifying the tribunal's determination of the amount in dispute upon a party's request. The arbitral tribunal has the primary task of determining the amount of dispute considering it is closest to the dispute. This new competence of the Arbitration Council also increases the legitimacy and acceptance of the costs determination.
The revision process of the DIS-Rules has successfully updated the 1998-Rules without simply following current trends in institutional arbitration. Rather it incrementally enhanced and combined the distinctive civil law features of DIS arbitrations with a asufficiently balanced approach for international parties from different legal traditions. For example, preliminary factual and legal indications are only to be given if all parties consent. The same applies to the facilitation of settlements (Article 26). Finally, the creation of the DIS Arbitration Council has increased the transparency and legitimacy of decisions previously entrusted to the tribunals or sole arbitrators.
- See www.disarb.org/upload/statistics.
- See Leitlinien zur Reform der DIS-Schiedsgerichtsordnung: http://ideasfordisrules.com/wp-content/uploads/2016/08/Leitlinien-Reform-DIS-Schiedsgerichtsordnung-1.pdf.
- Theune, in Schütze: Institutionelle Schiedsgerichtsbarkeit 2017, Kapitel III, Art. 39 Rn. 15.