Highlights of AIAC Arbitration Rules 2023

9 October 2023

Recently, the Asian International Arbitration Centre (“AIAC”) issued its Arbitration Rules 2023 (“2023 Rules”), which took effect on 24 August 2023.

This article sets out the key changes introduced by the 2023 Rules.

Key points

The 2023 Rules introduces certain amendments, including:

• Structural changes
• Disclosure of third party funding
• Flexibility and autonomy in summary determination
• Settlement negotiation
• Technical review of arbitrator’s award

Background

The 2023 Rules replace the AIAC Arbitration Rules 2021 (“2021 Rules”) and apply to all AIAC arbitrations commencing on or after 24 August 2023 unless parties have agreed otherwise. The new 2023 Rules also generally apply to parties whose agreements contain an arbitration clause referring to the AIAC Arbitration Rules for the time being in force.

Based on the Director’s Message in the preamble of the 2023 Rules, the new rules aim to, among other things, “offer clear guidance for arbitrators, lawyers, and disputing parties” and “streamline the process in order to provide efficiency and minimise the duration or the costs associated with lengthy legal proceedings.”

1. Structural changes

The predecessor to the 2021 Rules, the AIAC Arbitration Rules 2018 (“2018 Rules”), was comprised of three parts: the AIAC Arbitration Rules in Part I, the UNCITRAL Arbitration Rules (2013 revised edition) in Part II and Schedules in Part III. The 2018 Rules provided that where there is a conflict between the AIAC Arbitration Rules in Part I and the UNCITRAL Arbitration Rules in Part II, the provisions in Part I would prevail. The 2021 Rules amalgamated the UNCITRAL Arbitration Rules and the AIAC Arbitration Rules into a single set of rules. The 2023 Rules has now reverted to the structure of the 2018 Rules.

The 2023 Rules consist of the AIAC Arbitration Rules in Part I, the UNCITRAL Arbitration Rules (2021 revised edition) in Part II, and Schedules in Part III. Under the 2023 Rules, references to “Rules” relate to Part I and references to “Articles” relate to Part II. As with the 2018 Rules, the provisions in Part I shall prevail if there is a conflict between Part I and Part II of the 2023 Rules.

2. Disclosure of third party funding

Rule 12 of the 2023 Rules introduces the requirement for a party that is funded by a third party in relation to the proceedings and/or its outcome to disclose the existence of the funding and the identity of the funder. The requirement for disclosure is not limited to the period immediately preceding commencement of proceedings, but must be made for the duration of the proceedings up to its conclusion, where supervening facts so require or upon request by the arbitral tribunal or the AIAC. The introduction of this requirement is a pivotal stride towards greater transparency, allowing parties and arbitrators to identify potential conflicts of interest that might compromise the impartiality and independence of the proceedings.

3. Flexibility and autonomy in summary determination

The lengthy procedure for summary determination set out in the 2021 Rules has been replaced in the 2023 Rules with the latter providing that:

“ … the Arbitral Tribunal shall have the power, at the request of any Party and after hearing from all other parties, to decide one or more points of law or fact by way of summary determination, on the basis that a claim or a counterclaim is manifestly without legal merit or is manifestly outside the jurisdiction of the Arbitral Tribunal.”

This appears to be a step towards promoting flexibility and increasing the autonomy of the arbitrator as arbitrators can now adapt the summary determination process to align with the complexity and nature of the dispute, potentially expediting dispute resolution where appropriate.

4. Settlement negotiation

The 2023 Rules now expressly provides in Rule 14 that an arbitral tribunal is able to take steps to facilitate the settlement of the dispute before it, with the agreement of the parties. Such an agreement shall constitute a waiver of the parties’ right to challenge an arbitrator’s impartiality based on the arbitrator’s participation in, and knowledge acquired during, the agreed steps to facilitate a settlement.

This reflects a growing trend in arbitration towards proactiveness and the active involvement of arbitrators in the dispute resolution process, which may lead to increased efficiency, all while remaining subject to the parties’ agreement.

5. Technical review of arbitrator’s award

Under both the 2021 Rules and 2023 Rules, the arbitral tribunal is required to submit its draft final award to the AIAC for a technical review. However, under the 2023 Rules, there is a new provision which states that the Director of the AIAC has the discretion to waive the technical review of any award. This change seems to indicate an intention to strike a balance between preserving the autonomy of arbitrators and maintaining an oversight mechanism.

This article has been prepared with the assistance of Principal Abd Azim bin Razak and Associate Phua Syuen Yue.