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DIS kicks off rules overhaul

44196786_xlHendrik Puschmann, senior associate at K&L Gates LLP, reports on a review of the arbitration rules of Germany’s pre-eminent institution.

Background

The German Arbitration Institution (Deutsche Institution für Schiedsgerichtsbarkeit, or DIS) has initiated a wholesale revision of its rules. DIS will consult widely among the German and international arbitration community before publishing draft rules. The new rules are expected to come into force in the second half of 2017.

DIS is Germany’s principal arbitral institution. With its heritage going back to the 1920s, it was set up in its current form in 1992. In 2015, it handled 140 cases, with a total value in dispute in excess of €2bn. Just under a third of current DIS proceedings are international in nature.

In early May 2016, DIS announced a complete revision of its rules. The existing rules have been in force since 1998—though the institution adopted supplementary rules for expedited proceedings in 2008—and are therefore among the oldest of any major arbitral institution. Amid the recent wave of new arbitral rules, DIS has made a deliberate decision to proceed slowly. It is better, the thinking went, to wait and see what other institutions do. That way, DIS could evaluate evolving international best practice and take a considered view on which changes to adopt (and which not to).

Dr Francesca Mazza, the secretary-general of DIS, is a major driving force of the revision process. She joined DIS from the ICC, where she was closely involved in the recent revision of the ICC Rules. She described the institution’s reform as part of a larger effort of modernising the DIS. Recent modernisation projects include the reform of the sports arbitration rules, including a system to provide legal aid to athletes in anti-doping disputes, IT and infrastructure modernisation. Currently, the institution is working on a project which will lead to a new website and branding for the institution and the publication of a collection of awards collected in post-M&A disputes.

A wide-ranging consultation process

DIS wishes to consult with as broad an audience of stakeholders as possible. To do so, it has issued an open invitation to arbitration experts—practitioners and academics—both in Germany and internationally to participate in an ‘expert commission’. This is envisaged to be a kind of plenary body that will generate a large number of diverse proposals for rule changes.

These proposals are then put through a two-tier review process. A ‘consolidation commission’—membership by appointment only—sifts through the proposals to (it’s in the name) consolidate them, distilling a set of desirable (and feasible) changes. A drafting commission then formulates the new rules. Membership of the drafting body will be made up of work horses—or, as a DIS strategy paper rather endearingly terms them, ‘work monsters’—who are expected to devote a significant amount of time to the task. The process is not sequential, however—all three commissions will be working in parallel.

The shape of the new rules

The DIS board and secretariat do not wish to pre-judge the outcome of the consultative process, and so have been careful not to speculate publically about the shape of the new rules. DIS has, however, adopted a set of ten principles that will guide the revision exercise. The new rules should:

  • facilitate the un-bureaucratic and flexible resolution of disputes, being mindful of party autonomy
  • contain only reasonable and necessary changes
  • be suitable for both domestic and international arbitration
  • reflect the needs of users
  • ensure that the institution is run transparently and with a high degree of predictability
  • reflect the evolution of case management practices at DIS over the years
  • increase efficiency and quality assurance
  • incentivise parties and (this author hopes) tribunals to act time and cost efficiently
  • be available in authoritative German and English versions (and may be informally translated into other languages), and
  • be concise

Judging by the relative success and failure of changes other institutions have made to their rules in recent years, it would seem likely—although this is purely speculative—that DIS will adopt, among other things, the following:

  • an emergency arbitrator provision or conceivably (but this is less likely) a mechanism for expedited tribunal formation, but probably not both
  • a comprehensive consolidation and joinder provision
  • electronic filing of submissions
  • tribunal powers to make awards ordering payments of shares of deposits

This author personally hopes that the new rules will also include a robust mechanism for ensuring that tribunals render awards in a timely fashion. The current rules merely require awards to be made ‘within a reasonable period of time’.

Professor Stefan Kröll, member of the DIS advisory board, said on the desired outcome of the revision exercise that he hopes that a ‘number of the recent developments in other rules are adopted, perhaps in a modified way, without giving up some of the features which make the DIS-Arbitration Rules distinct’.

Institutional reform

DIS plans to embed the revision of its rules within a wider reform of the institution. DIS is throwing considerable resources at this exercise, with some staff dealing with rules revision and institutional reform full-time. As with the revamped rules, it is as yet hard to gauge the thrust and extent of institutional reform. It is imaginable, at least, that DIS will look at its statutes—specifically the appointments procedure for positions on boards and committees—and staffing structure.

Hendrik Puschmann is a senior associate with the arbitration group of K&L Gates LLP in London and Frankfurt, a fellow of Clare Hall in the University of Cambridge and visiting lecturer in international law and commerce at Johannes Kepler Universität Linz (Austria). He publishes regularly with LexisNexis Butterworth.

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