Introduction

The Asian International Arbitration Centre (“AIAC”) has recently published their new AIAC Arbitration Rules 2021 (“2021 Rules”) which is aimed to be an upgrade to its previous predecessor the AIAC Arbitration Rules 2018 (“2018 Rules”).

The 2021 Rules which is a product of an extensive study and public consultation comes into effect from 1.8.2021 applying to arbitration commencing thereafter (unless parties otherwise agree).

This article highlights some of the welcomed changes by the 2021 Rules.

What are arbitration rules?

Arbitration rules are essentially a comprehensive set of procedural rules upon which parties may agree for the conduct of their arbitral proceedings. The arbitration rules commons cover all aspects of an arbitral process, providing model arbitration clause, setting out procedural rules regarding the commencement of arbitration, appointment of arbitral tribunal, conduct of the arbitration up to the delivery of an arbitral award. It is important to note that the 2021 Rules are only applicable if the parties expressly agreed to adopt the same.

What are changes in the 2021 Rules?

A summary of the notable amendments to the 2021 Rules is set out below:

1. Consolidation of RulesUnder the previous 2018 Rules, the rules are separated into two parts (i.e. the AIAC Arbitration Rules and the UNCITRAL Arbitration Rules 2013). Further, under the previous regime, should party intend to adopt fast-track arbitration, the parties will have to expressly agree to adopt the AIAC Fast Track Arbitration Rules[1]. These rules often overlap with one and another, making it difficult for parties to comprehend and may not be user friendly.This issue is now resolved with the 2021 Rules where the AIAC Arbitration Rules, UNCITRAL Arbitration Rules 2013 and Fast Track Arbitration Rules have now been consolidated into one single rule. This change is definitely welcome as it provides for a more coherent and comprehensive rules making it more user friendly for parties who opt for arbitration.
2. Fast Track ProcedureUnder the previous versions of the AIAC rules, the option for Fast-Track Arbitration is only available to parties if they expressly agree to adopt the separate Fast Track Arbitration Rules which is rules separate and distinct from the 2018 Rules. However, with the new 2021 Rules, the Fast Track Arbitration is included as part of the rules and are available to parties if:
   1. the amount in dispute[1] is quantified at less than USD500,000.00 for an international arbitration or less than RM2,000,000.00 for a domestic arbitration[2]; or
   2. there is exceptional urgency[3]; or
   3. the parties have agreed to adopt the Fast Track Procedure. The parties can agree to this either by expressly including this in the arbitration clause or by subsequent agreement by way of a submission agreement[4].

The 2021 Rules further provides that in the event of any dispute on whether the requirement under item (i) and/or (ii) above have been established, such dispute is to be determined by the Director of the AIAC[5], decision of which are binding on the parties[6].

In the event that arbitration is conducted via the Fast-Track Procedure, amongst others, the following will apply:

1. the determination of disputes will be by a sole arbitrator unless parties otherwise agree[7];
2. the arbitration will proceed on a documents-only basis, with there being no oral hearing[8]. Whilst the tribunal may convene an oral hearing upon consulting the parties, such hearing cannot exceed five days[9];
3. the arbitration is to be concluded (including any oral hearing[10]) within 90 days from the date on which the Arbitral Tribunal first issued its procedural order[11]. Thereafter, the tribunal is required to submit its draft Final Award for the AIAC’s technical review within 90 days from the closure of the proceedings;

This change is definitely welcomed as it provides parties the option to have their dispute resolved at a quicker and cheaper rate. It is also important to note that, unlike the previous AIAC Fast Track Arbitration Rules[12], there is no express provision in the 2021 Rules to extend the timeline stipulated under Rule 8.8 of the 2021 Rules leaving it a moot point on whether the stringent timeline under Rule 8 can be extended.

3. Summary determination procedureAnother important change by the 2021 Rules is the introduction of a summary determination mechanism aimed for the early dismissal of claims (i.e. Rule 19 of the 2021 Rules). This provides another option for cost and time savings to the parties.The new Rule 19 allows arbitrators to dismiss a claim, counterclaim or defence that is manifestly without merit or that manifestly falls outside the jurisdiction of the Arbitral Tribunal.Under Rule 19, a claim can be dismissed, in whole or in part, within 30 + 15 + 45 days, as follows:
   1. 30 days within filing of statement of defence and counterclaim, the party intending for summary determination is to submit a request to the Arbitral Tribunal (copied to AIAC and other Parties) for summary determination.
   2. 15 days thereafter, the other party is to respond to the application for summary determination.
   3. 45 days from Arbitral Tribunal’s receipt of final submission, the Arbitral Tribunal is to decide whether to allow or dismiss the request.

In light of the new provision for summary determination of dispute, this will encourage parties to ensure that sufficient particulars are pleaded by the parties in their pleading so as to avoid their claims being dismissed summarily under Rule 19 of the 2021 Rules.

4. Publication of AwardsThe new Rule 44.6 of the 2021 Rules allows the AIAC to publish the entire, excerpts or summaries of arbitration awards provided always that the parties have given their written consent and all reference to the parties’ names and other identifying information are redacted. This is a significant step taken to promote the arbitration in Malaysia as it facilitates the development of commercial jurisprudence and enables arbitration practitioners to refer to some of these past rulings as a guidance to their arbitration proceeding. Such option also promotes transparency in arbitration.
5. Multi-party appointments of arbitratorsThe Rules 9.6 and 9.7 of the 2021 Rules introduce new and welcomed provisions dealing with the default mode of appointment of arbitrators in the case where:
   • The parties have agreed to an even number of arbitrators to be appointed; and
   • There are multiple parties as claimant or respondent involved.

In brief, where an even-numbered tribunal is used, under Rule 9.6, each party will nominate half the required number of arbitrators. If any party fails to nominate, the entire Arbitral Tribunal shall be constituted by the Director upon request by any party[1]. On the other hand, in the event of multiple parties as claimant or respondent, under Rule 9.7, the appointment will depend on the number of arbitrators agreed by the parties to be appointed. In the event of an even-numbered tribunal, all claimants and respondents will nominate half the required number of arbitrators. For odd-numbered tribunals, all claimants and respondents will nominate an equal number of arbitrators who shall thereafter nominate a presiding arbitrator. If joint nomination fails, the entire Arbitral Tribunal shall be constituted by the Director of AIAC.

Whilst these changes are very much welcomed since it deals with the two scenarios which were previously absent in the 2018 Rules, the effectiveness / relevancy of these provisions remain to be seen considering the fact that it may be rare for parties to agree to an even number of arbitrators.

6. Clarification in commencement date for arbitrationUnder the previous 2018 Rules, an arbitration is only deemed to be commenced when a request to commence arbitration is submitted to the Director of the AIAC (Rule 2(2)). This is not ideal and is not in line with the international practice as more often than note, arbitration is deemed commenced upon service of notice of arbitration by the claimant to the respondent. This position has now been rectified in the Rule 7.5 of the 2021 Rules which makes clear that the date of commencement of arbitration is the date on which the notice of arbitration was delivered to the Respondent.
7. Consolidating multi-contract disputesUnder the previous 2018 Rules, in the event that there are disputes arising out of various contracts between the same parties, a party intending for these disputes to be heard together can only do so by commencing different arbitrations under the respective contracts and request to have these arbitrations be consolidated.However, with the introduction of Rule 5.3, a party can now refer claims arising out of multiple contracts in a single notice of arbitration further reducing the costs and time for parties involve in disputes of various contracts. Be that as it may, the parties seeking to refer these disputes under single notice of arbitration may still have to satisfy the requirements set out in Rule 22.1 of the 2021 Rules for consolidations of proceedings.

Conclusion

The above are only some of the many amendments brought by the 2021 Rules. Overall, the amendments are very much welcomed and will no doubt only further increase the popularity of the AIAC rules amongst the industry players. The common theme of the amendments appears to be the provision of more cost and time efficient manner in which the parties dispose of their disputes by way of arbitration which is in line with the international best practices. It will be interesting to see how the 2021 Rules will be implemented in practice.

[1] https://www.aiac.world/wp-content/arbitration/AIAC-Fast-Track-Arbitration-Rules-v3.pdf

[2] The amount in dispute is to be calculated at the time of the registration of the arbitration pursuant to Rule 7 of the 2021 Rules

[3] Rule 8.2(b) of the 2021 Rules

[4] Rule 8.2(c) of the 2021 Rules

[5] Rule 8.2(a) of the 2021 Rules

[6] Rule 8.3 of the 2021 Rules

[7] Rule 47.1 of the 2021 Rules

[8] Rule 8.5(a) of the 2021 Rules

[9] Rule 8.5(b) of the 2021 Rules

[10] Rule 8.8(m) of the 2021 Rules

[11] Rule 8.8(m) of the 2021 Rules

[12] Rule 8.8(l) of the 2021 Rules.

[13] Rule 22 of the Fast Track Arbitration Rules 2018.

[14] Rule 9.6(b) of the 2021 Rules