In February 2024, the Netherlands Arbitration Institute ("NAI") published its 2024 NAI Arbitration Rules, which superseded the previously applicable 2015 NAI Arbitration Rules, effective 1 March 2024.
The new rules aim to enhance the efficiency, speed and sustainability of arbitrations to better serve the involved parties. The key features of the 2024 NAI Arbitration Rules include, amongst others, the introduction of an expedited arbitration procedure, the possibility of early determination of unfounded disputes, an ongoing obligation to disclose third-party funding agreements, a mandatory initial case management conference, the ability to consolidate multiple contracts into a single arbitration and the arbitral tribunal's explicit power to impose cost sanctions, as discussed further below.
Structure of 2024 NAI Arbitration Rules
The 2024 NAI Arbitration Rules consist of 7 Sections, 65 Articles and 6 Appendices, structured as follows:
- Section One – General;
- Section Two – Commencement of the Arbitration;
- Section Three – The Arbitral Tribunal;
- Section Four – Procedure;
- Section Five – Award;
- Section Six – Costs;
- Section Seven – Final Provisions;
- Appendix A – The NAI Case Management Committee and the NAI Secretariat;
- Appendix B – Challenge Procedure;
- Appendix C – Emergency Arbitration;
- Appendix D – Expedited Arbitration;
- Appendix E – Consolidation of Arbitral Proceedings;
- Appendix F – Costs of the Arbitration.
Expedited Procedure
The 2015 NAI Arbitration Rules did not have separate provisions regarding expedited arbitration (2015 Rules, para. 9.6). The 2024 NAI Arbitration Rules now introduce a new set of provisions regulating expedited arbitrations (Article 42 and Appendix D, which, notably, differ from the emergency arbitration provisions, i.e., Article 41 and Appendix C).
The rules on expedited arbitration apply by default when:
- the relevant arbitration agreement was entered into on or after 1 March 2024;
- the total amount claimed by the claimant in the request for arbitration does not exceed EUR 1 million; and
- the parties have not ruled out the application of expedited rules (Article 42(1) and Article D1 of the 2024 Rules).
The parties may also agree to apply the expedited rules even if the above three conditions are not met, for instance, for claims exceeding EUR 1 million (Article 42(2) of the 2024 Rules).
In terms of procedure, the respondent has fourteen days from the Secretariat's invitation to respond to the request for arbitration (Article D3). A sole arbitrator is typically appointed instead of a three-member tribunal (Article D4(1)). A case management conference is held electronically no later than fourteen days from the constitution of the arbitral tribunal unless the parties have agreed otherwise (Article D5). The default procedure is one round of submissions (statement of claim and statement of defence) (Article D6(1)) and a final hearing held virtually (Article D8). The arbitral tribunal must issue its award within five months after the case management conference (Article D11(1)).
The costs of the expedited procedure do not appear to differ from those of the standard procedure (Article D10(1), which states that Section Six (Costs) of the Rules apply to an expedited arbitration). By contrast, the ICC, for instance, generally charges lower arbitrator fees for expedited arbitrations compared to standard ICC arbitrations, whilst the ICC administrative costs remain the same (2021 ICC Arbitration Rules, Appendix III, Article 3 (Scales of Administrative Expenses and Arbitrator's Fees), p. 64).
If a party fails to pay the administration fees after a "single reminder" from the NAI, it is deemed to have withdrawn its claim(s) or counterclaim(s) (Article D10(2)). In this case, the party is not prevented from bringing the same claim(s) or counterclaim(s) in new arbitration proceedings, however.
Early Determination of Unfounded Disputes
Following the trend of other leading arbitration rules, the 2024 NAI Arbitration Rules introduce a new provision regarding the early determination of unfounded disputes (Article 45).
Specifically, at the request of a party, the arbitral tribunal may, with respect to one or more issues of law and/or fact, decide by way of an early determination procedure that a claim, counterclaim or defence is: (1) manifestly inadmissible; (2) manifestly outside the jurisdiction of the arbitral tribunal; or (3) manifestly legally unfounded (Article 45(1)). The tribunal's decision must be rendered within 30 days after the arbitral tribunal has notified the parties that the request for an early determination will be considered (Article 45(2)). This provision aims to filter out unfounded and vexatious claims, thus saving time and costs.
Disclosure of Third-Party Funding
Moreover, parties are now under an ongoing obligation to disclose the identity of third-party funders in their request for arbitration (Article 8.2(k)) and answer (Article 9.2(f)) or as soon as possible thereafter, if any third-party funding arrangements are made after the initial submissions. The disclosure of third-party funders in arbitration (and litigation) cases is (at least currently) not required under Dutch law (see also our commentary on International Arbitration in the Netherlands).
Case Management Conference
The 2024 NAI Arbitration Rules also introduce a new provision requiring a case management conference to take place no later than three weeks after the arbitral tribunal has received the arbitration file from the NAI Secretariat (Article 26(1)). The topics expected to be addressed at the case management conference include, amongst others, the monetary interest of the claims, whether expedited arbitration is appropriate to be followed, the use of electronic means, the number of written submissions and the need for document production (Article 26(2)).
To compare, Article 22(2) of the 2015 NAI Arbitration Rules provided that "[a]s soon as possible after the receipt of the arbitration file, the arbitral tribunal shall determine the rules of procedure following consultation with the parties", without reference to a case management conference.
The explicit requirement for a case management conference is a welcome addition as it formalizes a practice commonly observed in arbitration proceedings. This requirement also ensures that the tribunal and parties convene at the outset of the arbitration to discuss the timetable and other procedural matters, aligning with established practices under leading arbitration rules, such as Article 24(1) of the 2021 ICC Arbitration Rules.
Multi-Contract Arbitrations
The 2024 NAI Arbitration Rules now explicitly allow claims from more than one contract to be dealt with in a single arbitration, provided that they concern the same parties and are subject to arbitration under the NAI Arbitration Rules (Article 11).
Cost Sanctions
Article 59(4) of the 2024 NAI Arbitration Rules explicitly empowers the arbitral tribunal to impose cost sanctions. This means that when allocating costs, the tribunal is encouraged to take into account the manner in which the parties conducted the proceedings and whether each of the parties promoted or unreasonably obstructed the speedy and efficient conduct of the proceedings.
Sustainability, Diversity and Inclusivity
A new provision to the 2024 NAI Arbitration Rules explicitly encourages parties, their legal representatives, the arbitral tribunal and NAI personnel to take aspects of sustainability into account when conducting the proceedings (Article 25(5)). Sustainability is also enhanced by requiring communications or other documents to "only be transmitted electronically", either by email or via the NAI arbitration platform (Article 4(2)). This approach reduces the environmental impact of the arbitration process.
Article 15(5) of the 2024 Arbitration Rules also encourages the parties, their legal representatives and the NAI to take "diversity and inclusivity" into account when nominating and appointing arbitrators.
Conclusion
The amendments introduced by the 2024 NAI Arbitration Rules align with similar reforms implemented by other leading arbitral institutions, aiming to enhance the efficiency of arbitrations and adhere to leading international arbitration practices and trends.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.