On 15 February 2024, the Netherlands Arbitration Institute (NAI) published their new Arbitration Rules (2024 Rules), which came into force on 1 March 2024 and apply to arbitrations commenced on and after this date. There are many changes, when comparing the 2024 Rules to the 2015 NAI Arbitration Rules, that aim to make dispute resolution more efficient. Many of the updates follow similar changes made by other arbitral institutions around the world and aim to ensure that arbitration under the 2024 Rules will be managed efficiently, sustainably and follow leading practice from other jurisdictions. In this article we will take a look at the main amendments in the 2024 Rules in comparison with the 2015 NI Arbitration Rules, with a focus on practical implications for businesses.
Key changes
Firstly, the 2024 Arbitration Rules introduce an expedited arbitration procedure (Article 42). Using this option will be possible when three cumulative conditions are met:
(i) the arbitration agreement was entered into on or after 1 March 2024,
(ii) the total claimed amount does not exceed one million euros, and
(iii) the parties did not opt out of the expedited rules.
Whether expedited arbitration is appropriate to the particular dispute before the Tribunal is addressed in the newly required case management conference (Article 26), which takes place no later than three weeks after the arbitral Tribunal has received the arbitration file. The Tribunal may also address, among other things, the monetary interest of the claim/s, the need for witness evidence or document production, and the appropriate measures to ensure the security of information passing electronically between the parties and the Tribunal.
In addition, a party may request an early determination procedure (Article 45) if a party considers a claim, defence or counterclaim is manifestly inadmissible, or is outside the jurisdiction of the Tribunal, or is legally unfounded. The term ‘manifestly inadmissible’ remains rather abstract, so the Tribunal retains discretion for as to how they will assess such a threshold. The Tribunal, after hearing the counterparty, will rule on whether to consider the early determination request, and if it does, the parties are provided an opportunity to present their views either before the Tribunal in a hearing or in the form of a submission. The Tribunal’s decision must be delivered within 30 days of parties being notified that the request for an early determination will be considered.
Moreover, in the request for arbitration and response to the request, the claimant and respondent will be required to disclose the identity of any party that has agreed to fund the arbitration and has a beneficial interest in the results of the arbitration (Articles 8.2(k) and 9.2(f)). This obligation continues throughout the arbitration, as both parties must ensure to disclose any new funding arrangements. The disclosure of third-party funders in arbitration and litigation cases is not required otherwise in Dutch law, so it is the first disclosure rule of its kind in the Netherlands. In fact, this mimics a larger trend at the European level, as the European Parliament has recently proposed a directive for regulating third-party funding, which among other things establishes specific disclosure and transparency obligations on claimants and their lawyers to inform the respective judicial body of the existence of any funding arrangements.
Emphasis on efficiency
As efficiency is the primary goal of the amendments, it is promoted throughout the 2024 Rules. The abovementioned key changes, such as expedited arbitration and early determination, will likely contribute to a more efficient procedure in certain cases, but there are numerous other examples.
To begin, the new rules provide for the option to bring forward multiple claims, thus allowing claims from more than one contract to be dealt with in a single arbitration when they relate to disputes arising between the same parties, to the extent that the disputes are subject to arbitration under the NAI Rules (Article 11).
When deciding on the division of costs regarding the arbitration and for legal assistance, the arbitral Tribunal may consider whether the parties conducted the proceedings in an efficient and speedy manner, and may therefore also consider whether a party unreasonably delayed the proceedings (Article 59). The NAI employs numerous further mechanisms for effective costs management, such as charging administrative fees and an advance on costs including fees and disbursements of the arbitrators, which help to guarantee the proceedings will not face financial obstacles. Additionally, because the proceedings are designed under the 2024 Rules to be short in duration, parties will overall tend to save on fees.
Other efficiency improvements include the introduction of a ‘fixed’ pre-trial hearing (i.e., hearing agenda is pre-scheduled and unchanging) and a fixed interim pre-trial hearing, quicker and easier appointment procedures (i.e., the responsible member of the NAI Case Management Committee appoints the arbitrators who will collectively form the Tribunal directly and independently if parties cannot work it out themselves), and the option of conducting arbitration proceedings in English at the Netherlands Commercial Court.
Sustainability, diversity, and inclusivity
Finally, there is a significant focus on sustainability, diversity and inclusivity in the 2024 Rules. This is prescribed in obligations on the NAI Case Management Committee, the parties, and the arbitrators, such as the obligation to account for sustainability when conducting the proceedings (Article 25(5)) and to account for the benefits of diversity and inclusivity when nominating and appointing arbitrators (Article 15(5) and Article 13(1)). Sustainability is further promoted by requiring parties to communicate exclusively by electronic means, either via the NAI arbitration platform or by email, as it reduces the environmental impact of the arbitration process.
The rules do not explicitly mention any sanctions on parties if these requirements are not fulfilled, however it is possible that failure to follow any of these requirements could affect the validity, enforceability, or credibility of the arbitration award or Tribunal. As an example, a party could challenge the impartiality of the Tribunal or refuse to recognise the award on the basis of lack of diversity and inclusivity among the appointed arbitrators.
With thanks to Giorgia Loredan for her help with drafting this article.
For further information, please contact:
Evelyn Tjon-En-Fa, Partner, Bird & Bird
evelyn.tjon-en-fa@twobirds.com
