Imagine being involved in a legal dispute for years, draining time, money, and energy. Imagine a system in which disputes are addressed quickly, assuring justice without unnecessary delays. This is the power of fast track arbitration.
What is Fast Track Arbitration?
Fast track arbitration, known as the expedited procedure, is a streamlined arbitration process where disputes must be resolved within a specific timeframe as per the law. Parties often choose arbitration over litigation due to its efficiency and flexibility. However, in recent years, even traditional arbitration has become time-consuming, leading to delays in justice delivery. This inefficiency has caused frustration among stakeholders, necessitating the need for a faster dispute resolution mechanism. As a response, fast track arbitration has emerged as an effective tool to ensure decisions are rendered within a set time range, addressing concerns of delays and improving confidence in arbitration. Several international institutions throughout the world are introducing fast track arbitration to ensure that disputes are resolved quickly, reliably, and in a timely way. This method has become an absolute requirement in today’s environment.
The procedure of fast track arbitration was first introduced by the Geneva Chamber of Commerce’s Arbitration Rules in 1992. Later, renowned arbitration institutions such as the American Arbitration Association (AAA), the Stockholm Chamber of Commerce (SCC), the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC), and most recently, the International Chamber of Commerce (ICC) adopted the practice. These developments reflect the growing global recognition of the need for expedited arbitration processes.Nepal has now recognised the need of fast track arbitration and has included it in its legal structure through new legislation.
Why is Fast Track Arbitration Important?
Fast track arbitration is a most essential component of modern dispute resolution, offering a quick, cost-effective, and efficient alternative to traditional arbitration. The structure of an arbitration proceeding directly impacts legal certainty, fairness, and enforceability. A well-designed arbitration procedure upholds due process and ensures impartiality, strengthening its credibility.
- Fixed Timelines and Business Efficiency
One of the fundamental benefits of fast track arbitration is its fixed timeline for resolving disputes. This prevents excessive delays and ensures quick justice, which is particularly valuable for businesses that rely on timely dispute resolution. If the time set under the fast track arbitration clause is not met, the arbitration process may be declared void, emphasizing the necessity of efficiency. Additionally, the preference for written submissions over oral procedures enhances clarity and reduces costs.
- Adaptability Across Jurisdictions
Fast track arbitration is generally completed within six months in many jurisdictions, although specific timeframes vary. Some legal frameworks allow parties to select between a tribunal and a sole arbitrator, while others mandate the appointment of a single arbitrator. Furthermore, some jurisdictions impose financial penalties for delays and link arbitration fees to the timely issuance of an award. These measures incentivize compliance with expedited timelines, ensuring minimal disruption to business operations.
- Sector-Specific Importance
Fast track arbitration is particularly effective in industries such as construction, infrastructure, and international trade, where disputes can lead to significant financial losses. The efficiency of this process helps companies to mitigate risks and continue operations without prolonged legal battles. Moreover, arbitral awards granted through fast track arbitration hold the same legal validity and enforceability as those issued through traditional arbitration, ensuring compliance with national and international arbitration laws.
Benefits of Fast Track Arbitration
Fast track arbitration provides numerous advantages, benefiting businesses, investors, and judicial systems alike. Key benefits include:
i. Ensuring Justice for Contracting Parties
Fast track arbitration ensures that contracting parties receive justice without unnecessary delays. By imposing strict deadlines, it prevents unnecessary postponements, allowing parties to enforce their contractual rights effectively. The expedited process also reduces legal expenses, making arbitration accessible to businesses of all sizes.
ii. Encouraging Global Dispute Resolution
As globalization increases, cross-border disputes have become more common. Fast-track arbitration enhances international business confidence by expediting the resolution of global disputes. The reliability of this process encourages parties across different jurisdictions to prefer arbitration over litigation, thereby strengthening global commercial relationships and dispute resolution mechanisms.
iii. Attracting Foreign Direct Investment (FDI)
A robust arbitration framework, particularly one that includes fast-track arbitration, is essential for attracting FDI. Investors seek jurisdictions with efficient dispute resolution mechanisms to protect their investments. By offering a reliable and swift arbitration process, countries can create a favorable investment climate, encouraging foreign businesses to invest with greater security.
iv. Formalizing Domestic Arbitration Practices
Fast track arbitration contributes to the strengthening of domestic arbitration by establishing clear procedural rules and deadlines. This structured approach fosters trust in arbitration as an effective alternative to litigation, making it the preferred method for dispute resolution within a country.
v. Reducing the Burden on Courts
One of the most significant benefits of fast-track arbitration is its ability to alleviate the overwhelming backlog of cases in national courts. By diverting commercial and contractual disputes to arbitration, courts can focus on more complex legal matters requiring judicial intervention, thereby improving overall judicial efficiency.
Fast Track Arbitration in Nepal
Nepal had long awaited the introduction of fast track arbitration, recognizing its necessity for efficient dispute resolution. This need was formally addressed during Nepal ADR Week 2024, marking a significant step toward strengthening the country’s arbitration framework. The Nepal International ADR Center (NIAC) organized an international conference from December 12–15, 2024, where distinguished speakers from 17 countries, representing 21 ADR institutions, shared insights and recommendations on fast-track arbitration.
Rt. Honorable Prime Minister Mr. K. P. Sharma Oli addressed the conference, emphasizing Nepal’s commitment to implementing these recommendations to establish itself as an arbitration-preferred venue. The conference culminated in the adoption of the 13-point Kathmandu Declaration, one of the key resolutions was the introduction and institutionalization of fast-track arbitration in Nepal. Following this, three conference participants were appointed to draft an ordinance to amend Nepal’s Arbitration Act, 1998 (2055 BS).
This ordinance, recently introduced by the Government of Nepal, incorporates provisions for fast-track arbitration. This amendment aligns Nepal’s arbitration framework with global best practices, positioning the country as a more competitive arbitration venue. However, since fast track arbitration is a relatively new concept in Nepal, further clarity on procedural details is required to ensure smooth implementation.
The adoption of fast track arbitration is particularly relevant for resolving construction disputes, where unresolved conflicts lead to financial losses, project delays, and increased costs. If disputes proceed to litigation before arbitration, the resolution process becomes even more prolonged, exacerbating financial burdens on stakeholders.
Conclusion
Fast track arbitration is a transformative tool that enhances efficiency, minimizes delays, and improves the overall arbitration process. Leading global institutions like the ICC, SCC, and SIAC have already embraced this model, and Nepal is now following suit. Nepal’s adoption of fast-track arbitration after Nepal ADR Week 2024, organized by Nepal International ADR Center(NIAC) in Nepal which has been significant shift in its legal framework. The introduction of an ordinance amending the Arbitration Act demonstrates the country’s commitment to modernizing its dispute resolution system.
The success of fast track arbitration in Nepal is dependent on a number of essential efforts. The government must establish clear procedural rules, support capacity-building initiatives for legal professionals, boost judicial and legislative support, and raise awareness among businesses and investors. Furthermore, increasing the function of organisations will be essential for effectively facilitating fast-track arbitration. While the legislation represents progress, more changes and alignment with international best practices will be important for enhancing Nepal’s arbitration framework. By following these measures, Nepal can be a preferred arbitration venue, attract foreign investment, and build a sustainable economy.
(Sadikchhya Bhusal is a B.A.LL.B graduate from Kathmandu School of Law.)
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