SIAC's Proposal on Cross Institutional Consolidation

Consider a complex set of transactions where a party proposes to invest in a country by entering into a joint venture with another company registered and functioning in that country. The investor enters into a series of transactions with its joint venture partner. One of such transactions could probably be a Shareholders Agreement,  which could provide for arbitration under the Rules of Arbitration of the International Chamber of Commerce (ICC). Another possible agreement that the parties could agree upon could be a technology licensing agreement. Consider that the parties agree, unwittingly, for arbitration under a different arbitral institution, say, the Singapore International Centre's (SIAC) arbitration rules. Assume that at a later point of time, a dispute arises between the parties and that the dispute relates to obligations under the shareholders agrement as well as the technology licensing agreement. 

Will the arbitration take place under the SIAC or the ICC Rules? Who decides the issue? What if one party takes a stance that the arbitration should be under the ICC Rules and the other party thinks SIAC Rules should govern? What happends if the tribunal under the ICC Rules comes up with a finding inconsisent with the tribunal under the SIAC Rules? The parties will spend thousands, if not millions, of dollars in deciding these questions, that too in various jurisdictions.

In order to save the trouble for the parties, the Singapore International Arbitration Centre has come up with a radically innovative proposal for consolidation of related arbitral proceedings but under different institutional rules. The proposal seeks adoption by international arbitration institutions of a protocol for this purpose. Acceptance of the proposal would entail amendment of the institutions' arbitration rules. 

The SIAC proposal for Cross-Institutional Consolidation is in effect two proposals: the first proposal is for a stand-alone mechanism for addressing the timing, the decision-making authority and the standards for such consolidation. Specifically, the SIAC recommends that a joint committee consisting of the representatives of the arbitral institutions whose proceedings are to be consolidated to decide on the applications for consolidation. The second, alternative, proposal calls for arbitral institutions to adopt objective criteria on the basis of which consolidations applications would be decided. 

SIAC thinks that the first proposal would be objective. But given that arbitral institutions which are very protective about their turf (see, for instance Article 1(2) of the ICC Rules), acceptance of the SIAC proposal would not be an easy task. Even otherwise, the SIAC proposal is a significant signal to the international arbitration market that the institution means business in making international arbitration efficient. 

SIAC's proposal can be accessed from this link. A summary of the proposal is available here.