A RESPONSIVE AND DYNAMIC INSTITUTION
COMMENTARY ON THE RULES
Delos emphasises five features of its Rules, which are designed to promote time and cost efficiency in the resolution of disputes through arbitration, and which distinguish it from other arbitration institutions. These features – known as principles – interlink in order to align the interests of Delos, arbitrators and counsel with the business needs of its users.
DELOS PRINCIPLE 1 focuses on the active conduct of proceedings by arbitrators, as distinguished from a purely adversarial model. Arbitrators are encouraged to (i) make early efforts at identifying the key issues in dispute and anticipate the post-hearing phase of the case, (ii) tailor the procedure accordingly, (iii) be proactive during the arbitration and (iv) make use, where appropriate, of interim decisions on the allocation of costs.
In doing so, arbitrators must take account of (i) the value of the dispute, (ii) the complexity of the issues, (iii) the importance of the dispute to any ongoing relationship between the parties and (iv) the time-limit set by Delos for submitting a draft of their award (be it interim, partial or final) for scrutiny, known as a Time Notice.
The Rules provide indicative times for the Time Notice of 60 days for disputes with a value up to EUR 200,000, 120 days if the value is within EUR 5 million, 180 days if the value is between EUR 5 million and EUR 40 million, and 240 days otherwise for disputes with a value in excess of EUR 40 million (see Rules Appendix 7).
To support the active engagement of tribunals, and assist parties and counsel alike, DELOS PRINCIPLE 2 highlights the importance of the seat to address one of the contemporary issues in international arbitration described as 'due process paranoia'.
A detailed review of seats across the globe has been performed in Delos's peer-reviewed Guide to Arbitration Places (GAP) and summarised in its combined traffic lights table. This freely accessible tool has made it possible to identify objectively a list of safe seats or places of arbitration for the efficient and, if necessary, firm conduct of arbitrations, and which do not materially increase the cost of arbitrating disputes there.
Delos also takes account of the seat chosen by the parties when fixing the arbitration costs and determining the Time Notice.
DELOS PRINCIPLE 3 calls for pragmatism in the formation of tribunals. For disputes with a value below EUR 5 million, preference is given to the appointment of a sole arbitrator. Counting from the start of the arbitration, the parties are given about 21 days in disputes with a value below EUR 200,000 and about 28 days in disputes with a value of up to EUR 40 million to agree on a joint nomination, failing which Delos will make the appointment, possibly with the use of a list approach.
For disputes with a value greater than EUR 5 million, parties may select a three-member tribunal, with co-arbitrators to be designated within about 4-5 weeks from the start of the arbitration. If either party fails to nominate a co-arbitrator, Delos will designate the missing arbitrators and may designate the entire panel.
Delos maintains an open access database of potential arbitrators, but no closed list. Find out more here about how Delos approaches the appointment of arbitrators, and here about its commitment to diversity.
The Delos approach to the formation of tribunals aims at encouraging early cooperation between the parties, as part of setting the tone for the proactive resolution of their dispute. This philosophy also informs DELOS PRINCIPLE 4, which incentivises parties to anticipate disputes early.
At the contract formation stage, Delos provides model clauses, including language for the governing law of the contract and the confidentiality of any arbitration. Delos also encourages users to register their contracts with the institution by simply e-mailing them to Delos, (i) as a means to ensure contracts are finalised and not subsequently lost, and (ii) for the positive network effect of Delos being able to anticipate needs and ensure access to suitable arbitrators. In return, Delos offers parties a reduction on the arbitration costs in the event of arbitration.
In case of dispute, the Delos model clause provides for pre-arbitration negotiation. To ensure that parties invest the necessary resources into dialogue and preparing their cases, the Rules provide (i) that the costs incurred at this stage can be recovered in case of arbitration, and (ii) for a short time limit, once an arbitration has started, for the respondent to answer the claimant's notice of arbitration and for the parties to nominate the members of the tribunal.
Additionally, Appendices 1-3 of the Rules provide model notices of arbitration, of defence (and counterclaim) and of reply, with page and exhibit limits, and a requirement to indicate whether any witness and/or expert evidence is to be anticipated. In this manner, Delos seeks to streamline the initial steps of the arbitration while providing the tribunal with the key information required to take charge of the case efficiently from the start.
Finally, the Rules update in November 2021 introduced a new DELOS PRINCIPLE 5: to support parties in achieving a resolution to their dispute beyond the issuance of an award. Indeed, a party may fail to comply with an award, in whole or in part.
The new Compliance Reinforcement Mechanism allows an award creditor to obtain the publication on Delos's website of a Compliance Failure Notice once the time-limits for all forms of recourse against the award have expired at the seat of arbitration. The procedure provides the possibility for the award debtor to comment on the application, and for the parties to comment on the draft notice, and publication is not automatic but a question to be decided by Delos. This procedure creates a new opportunity after the end of proceedings for the parties to exchange and settle the execution of the award.
The mechanism has been designed so that it may be used by parties irrespective of their preferred form of arbitration in their contract (see here for a model clause).
The following publications offer a more detailed analysis of Delos arbitration:
- Hafez R Virjee, Activating Arbitration (Delos 2017), also available in a Spanish translation, under the title Activación de Arbitraje (Delos 2018)
- Mark Kantor, Four Parties and Four Sets of Counsel to Every Dispute, Keynote Address, Delos New York Inaugural Event, 11 December 2018 (Delos, 2021)
- Ank Santens and Hafez R Virjee, Review of Delos Dispute Resolution, in Horacio A. Grigera Naón and Paul E. Mason, International Commercial Arbitration Practice: 21st Century Perspectives (LexisNexis Matthew Bender, 10th edn., 2019, updated 2020)
- Hafez R Virjee, A Circle For A Triangle – Geometry In Aid Of Efficiency In International Arbitration (Delos 2021)
- Review of compatibility with local arbitration laws for jurisdictions covered in the Delos Guide to Arbitration Places (GAP)
- On the 2021 update to the Rules, see Rebecca Zard and Marina Mayer, Nudging Better Arbitrations? An Introduction to the Revised 2021 Delos Rules of Arbitration (Kluwer Arbitration Blog, 25 February 2022) and Marco de Sousa, Compliance Reinforcement Mechanism in 2021 Delos Rules of Arbitration: continuing a tradition of bold innovation (Thomson Reuters Arbitration Blog, 22 June 2022)