June 23, 2017
LEXOLOGY - The Kuala Lumpur Regional Centre for Arbitration refreshes its rules; keeps pace with other arbitral institutions
KUALA LUMPUR (JUNE 1, 2017) - On 1 June 2017, the Kuala Lumpur Regional Centre for Arbitration (KLRCA) published the 2017 version of the KLRCA Arbitration Rules (the Rules), making them more user-friendly, and in many ways bringing the Rules up-to-date with the arbitration rules of other institutions such as the International Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), and the Stockholm Chamber of Commerce (SCC).
The new Rules should improve the quality of awards and the procedural conduct of arbitral proceedings.
The 2017 Rules will apply to all arbitrations and emergency arbitrations under the KLRCA Rules that are commenced on or after 1 June 2017, unless the parties agree otherwise.
The main amendments are as follows.
Challenge to arbitrators (Rule 5): The Director of the KLRCA is now required to state reasons for his decisions on challenges to arbitrators. Parties and arbitrators will welcome the increased transparency.
Powers of the arbitral tribunal (Rule 6): The 2017 Rules facilitate arbitral tribunals’ fact-finding by introducing a list of steps that the arbitral tribunal may take in the conduct of the proceedings, for example: (a) taking the initiative to identify relevant issues applicable to the dispute; (b) ordering inspection of relevant property, goods or sites; (c) ordering production of relevant documents; and (d) deciding whether to apply rules of evidence as to admissibility, relevance or weight.
Joinder of additional parties (Rule 9): The 2017 Rules allow for third parties to be joined to arbitral proceedings, provided that all parties (including the third party) agree, or the third party is prima facie bound by the arbitration agreement. A request for joinder can be made before or after the arbitral tribunal has been constituted. In the latter situation, the Director of the KLRCA will decide on the request. The arbitral tribunal is entitled to revisit that decision.
Consolidation of proceedings (Rule 10): The 2017 Rules allow the Director of the KLRCA to consolidate two or more arbitrations into one arbitration if the Director deems it appropriate, even if the parties have not agreed to consolidation or made a request to consolidate. Previously, it was the arbitral tribunal that would have the power to order consolidation, and only if the parties agreed to confer such power on the arbitral tribunal. The 2017 Rules provide guidance on the circumstances in which the Director may order consolidation, and set out some considerations that the Director is to have regard to in deciding whether to consolidate. The 2017 Rules also provide for the manner in which consolidation would be effected, including in relation to the appointment of the arbitral tribunal for the consolidated arbitration. Other than in its heading (“Consolidation of Proceedings and Concurrent Hearings”), Rule 10 is curiously silent on whether the Director may order concurrent hearings of multiple arbitrations and in what circumstances.
Technical review of awards (Rule 12): The 2017 Rules introduce a new process by which the Director of the KLRCA will review draft awards and draw to the attention of the arbitral tribunals “any perceived irregularity as to the form of the award and any errors in the calculation of interest and costs”, before the awards are issued to the parties as final awards.
Fees (Schedules): For domestic arbitrations, arbitrators’ fees and administrative fees have increased by about 20 percent. For emergency arbitration (both international and domestic), the application fee for the appointment of an emergency arbitrator and the emergency arbitrators’ fees have increased by about 6 percent. There is no change to the fees for international arbitrations, however, which indicates that the KLRCA seeks to remain a competitive option for international arbitrating parties.
Language amendments throughout the Rules also simplify and streamline them, making them more user-friendly. For example, all the definitions are now consolidated in the new succinct Guide to the KLRCA Rules.
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The introduction of more detailed provisions on joinder of additional parties and consolidation, as well as the requirement that decisions on challenges to arbitrators be reasoned, is consistent with the latest revisions to the SIAC, ICC and SCC arbitration rules.
However, the KLRCA has yet to follow suit in introducing expedited procedures and procedures for early dismissal or summary determination of claims and defences. Such procedures may assist in improving the speed at which arbitrations are concluded, especially when there is urgency or the matter is straightforward enough to be disposed of swiftly.