PRIME Finance releases new arbitration rules

In this post we take a short look at the key features of PRIME Finance’s recent revision of its arbitration rules; their third iteration since PRIME Finance opened for business in early 2012.

Introduction – what is PRIME Finance?

The Panel of Recognised International Market Experts in Finance (“PRIME Finance”) first launched its arbitration rules in 2012. The general idea was that they might provide an attractive alternative for financial markets participants if interested in choosing arbitration. At the heart of this offering was a panel of associated experts (from both the legal and finance world), with distinct market expertise, from which arbitrators could be chosen.

PRIME Finance’s revised arbitration rules

The first version of PRIME Finance’s arbitration rules were released in early 2012. Taking the UNICTRAL rules as their starting point, they incorporated a number of adaptations to enable PRIME Finance to act as an administering institution, and to assist in the resolution of finance disputes. The rules were then revised in 2016, and PRIME Finance has now announced the release of a new version (the “2022 Rules”).

The 2022 Rules will come into effect on 1 January 2022 and apply to any PRIME Finance arbitration commenced on or after that date (unless the parties have agreed that an earlier version should apply (see Articles 1.2 and 1.3(k)). Some of the key changes introduced include the following:

Role of the Permanent Court of Arbitration (“PCA”) and composition of the tribunal

Over time, links between PRIME Finance and the PCA (both based at the Peace Palace in The Hague) have grown (including a 2015 co-operation agreement) - with the PCA now administering arbitrations under the PRIME Finance rules. The 2022 Rules entrench this relationship with the PCA (specifically, its International Bureau - see Article 1.3(g)) solely designated throughout as the body that performs administrative functions; including oversight of the appointment and confirmation of arbitrators (previous versions of the rules, in a feature retained from UNICTRAL arbitration, had accommodated the possibility of a separate appointing authority).

In that field, it is also notable that the 2022 Rules, albeit somewhat cosmetically given the terms of Articles 8-10(a) of the 2016 Rules, further loosens the tie to PRIME Finance’s panel of experts (see Articles 8-11), from what, in the original version of the rules, was a requirement that arbitrators be exclusively drawn from that panel.

Streamlining of proceedings

In common with recent revisions of other institutional rules, the 2022 Rules contain provisions designed to bring greater speed and efficiency to proceedings. For example, an expedited procedure (Articles 1.4 and 17) exists which (subject to the parties agreeing otherwise) will apply where the amount in dispute does not exceed EUR 4 million. Aspects of that procedure include a default rule of a sole arbitrator and a time limit of 180 days for the rendering of a final award from constitution of the tribunal. Under Article 35 provisions for early determination of claims/defences are also included, and the 2022 Rules also (like many institutional rules, but not the UNCITRAL rules) now contain a waiver of rights of recourse against the award (Article 39(2)).

Provisions on consolidation of arbitrations have also been added which, again, cover similar ground to the types of provisions in other institutional rules being based around situations where the parties agree or claims arise under the same or compatible arbitration agreements (Article 32).

Transparency

Measures are added to help improve this, including a requirement to disclose details of any third parties with an interest in the case (including funders); Articles 5.3(g), 6.2(b) and 12.2. There is also a greater push to the publication of anonymised awards than before (understandably given the prevalence of standard forms in finance transactions), with Article 39.10 providing a default rule that, unless a party objects within 30 days of receipt of an award or decision, the PCA shall provide an anonymised version to PRIME Finance which it may then make public.

Other amendments

Also of note is a change to the basis upon which the tribunal calculates its fees. Under the 2016 Rules, this was left to the tribunal to propose. Under the 2022 Rules (Article 49) the parties can agree that the basis will be either an hourly rate, or by reference to a fee schedule in the rules (in the absence of agreement it will be by the former). Finally, the 2022 Rules no longer contain any provisions concerning, where the seat/legal place is in the Netherlands, referee arbitral proceedings under the Dutch Civil Code.

Comment and conclusion

The revisions made by the 2022 Rules move PRIME Finance’s arbitration procedures even further in the direction of a contemporary arbitration institution. Since its inception, it has also done well to carve out a distinct market presence and has been recognised in, for example, the ISDA Arbitration Guide. That being said, however, its relative lack of an established track-record means that PRIME Finance continues, for now, to be something of an untested option. It will therefore be interesting to see whether the 2022 Rules contribute to a greater uptick in its use in future.

Click here for a copy of the rules.