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Updated P.R.I.M.E. Finance Arbitration Rules launched for 2022

09 December 2021. Published by Jonathan Cary, Partner and Jonathan Wood, Head of International Arbitration and Olivia Dhein, Professional Support Lawyer

P.R.I.M.E Finance, the Hague-based Panel of Recognised International Market Experts in Finance, has launched updated P.R.I.M.E Finance Arbitration Rules (the Rules), which come into force from 1 January 2022.

P.R.I.M.E Finance was established in 2012 to help resolves disputes concerning complex financial transactions and products. 

The Rules will replace P.R.I.M.E Finance previous rules introduced in 2016.  A number of the updates are designed to reflect developments in arbitral practice and mirror amendments made to the administrative rules of the leading arbitral institutions over recent years. However, a notable feature of the Rules is the increased role of the Permanent Court of Arbitration. 

Rules for a broad category of financial and banking disputes
Drafted by banking experts and dispute resolution practitioners from the world's major legal systems, the Rules are intended to be an arbitration mechanism for financial institutions, their customers and counterparties.  According to P.R.I.M.E Finance, they have been formulated with a wide variety of financial and banking disputes in mind, including disputes concerning 

  • derivatives 
  • sovereign lending
  • investment and advisory banking
  • financing
  • private equity
  • asset management
  • fintech
  • sustainable finance

A model arbitration clause to be included in contracts is available. 

Key changes in the Rules


PCA administration 
While there were already previous links with the Permanent Court of Arbitration (PCA), the PCA will now administer any arbitration under the Rules, and all nominations of arbitrators are subject to confirmation by the PCA.  

Transparency

There is an emphasis on greater transparency in the Rules: parties need to disclose the identity of any third party with a significant interest in the outcome of the dispute. 

Addressing complex disputes
The Rules aim to address complex disputes involving multiple parties and multiple contracts. There are detailed joinder and consolidation provisions, and a provision enabling separate arbitrations not eligible for consolidation to be coordinated in some cases.

Time and cost efficiency
The Rules also focus on time and cost efficiency. For example, tribunals with three or more members must give the final award within 90 days, and sole arbitrators within 60 days. Case management conferences are expected to be convened within 30 days of constitution of the tribunal.  Further, the provisions on expedited proceedings now apply automatically where the disputed amount is EUR 4 million or less. There are also options for the tribunal to proceed with expeditious resolution of manifestly unmeritorious claims or defences. In addition, the tribunal is explicitly empowered to assist with settlement when appropriate. 

Fees
As for fees, parties can elect fees to be calculated on a time-based system or in proportion to the value of the dispute. If there is no agreement, the default is a time-based fee system.

Commentary
Arbitration initiatives in the financial markets sphere have continued to develop in recent years.  A prime example is the Hong Kong International Arbitration Centre (HKIAC), which formed a specialist panel of arbitrators for financial services disputes in 2018. The panel currently comprises around 40 arbitrators who have been selected for their experience and expertise in resolving financial services disputes. 

A number of these initiatives are to some extent interlinked. In 2013, the International Swaps and Derivatives Association (ISDA) published the ISDA Arbitration Guide, which was then updated and replaced by the 2018 ISDA Arbitration Guide. This includes a number of model arbitration clauses for many of the main arbitral institutions, which may be used with the 1992 and 2002 ISDA Master Agreements (ICC, LCIA, AAA-ICDR, SIAC, Swiss Arbitration Rules, DIS Rules, SCC, DIFC-LCIA and VIAC). They also provide for P.R.I.M.E. Rules, and for HKIAC arbitration. 

It is clear from the 2022 changes that the Rules aim to provide a practical and more agile arbitration mechanism.  However, time will tell how parties will respond to the updated Rules, and whether they will find favour compared to traditional litigation forums for financial disputes, such as the courts of New York and London or, indeed, arbitration administered by the main arbitral institutions.

The guarantee of speedy delivery of awards is a promising start. As P.R.I.M.E Finance may make anonymised awards public (unless any party objects), it will also be interesting to see how the anticipated body of P.R.I.M.E jurisprudence develops.