The P.R.I.M.E Finance arbitration rules: A practical guide

Proceedings are commenced under the Rules by submitting a Notice of Arbitration (including information such as the relevant parties, arbitration agreement, relevant contracts, description of claim and quantum and remedies sought) to the PCA and the Respondent. The PCA will then invite the Respondent to submit a response (within 30 days of receipt of the Notice of Arbitration).

The Rules promote early procedural engagement, requiring the tribunal to hold a case management conference within 30 days of constitution.

Tribunals may consist of a sole arbitrator or three arbitrators, depending on party agreement. In the absence of agreement within 30 days of commencement of the arbitration, the default is a sole arbitrator unless the PCA determines that it is more appropriate to appoint three or more arbitrators.

For a sole arbitrator, the parties shall seek to agree on the nomination and failure to reach agreement within 30 days of receipt by the respondent of the notice of arbitration shall result in the PCA appointing the arbitrator.

For three arbitrators, each party shall nominate one arbitrator and the nominated arbitrators shall then nominate a president. Failure by the arbitrators to agree on a president shall result in the PCA appointing the presiding arbitrator.

The parties, arbitrators and the PCA are obliged to consider factors that are likely to secure the appointment of a qualified, independent and impartial arbitrator, including by reference, as appropriate, to the P.R.I.M.E. Finance Panel of Experts and any of the specialised panels that P.R.I.M.E. Finance may form.

The PCA:

• Confirms all appointments

• Acts as appointing authority where parties cannot agree

• Determines any challenges to arbitrators

This institutional oversight and approach to nominations, helps prevent tactical delay and ensures continuity even if one party refuses to cooperate. It also simplifies the arbitration clause required when relying on the Rules as the procedure is clearly and comprehensively laid out. We note that P.R.I.M.E helpfully provides model arbitration clauses as part of the Rules, which parties can revise and incorporate as needed in relevant contracts.

A distinguishing feature of the Rules is the Panel of Experts from which arbitrators may be selected. This panel of legal and financial experts includes central bankers, regulators, judges, academics lawyers and derivatives market participants. A retired UK Supreme Court Justice, the Founder-Chairman of the International Swaps and Derivatives Association and the Chairman of the Board of a European bank are part of the Panel’s almost 300 experts.

The P.R.I.M.E. Finance Selection Committee is responsible for Panel appointments and gives particular consideration to ensuring that there is suitable diversity reflected in the Panel based on (i) geographical representation, (ii) relevant market experience, (iii) jurisdictional and jurisprudential orientation (iv) language skills and (v) nationality. According to P.R.I.M.E., many of the experts have “first-hand experience structuring and executing transactions, as well as with the laws, regulations and standard documentation of the structured finance market.”

Parties may appoint arbitrators from within the panel or from outside it, but the availability of market‑specific expertise is one of the major attractions of the P.R.I.M.E. system. The Panel will be of particular interest for parties with complex financial structures or contracts, those facing disputes that require significant market expertise and who need arbitrators that can approach financial disputes from a “hands on” perspective, who will understand the intricacies of the factual and contractual matrix while also maintaining arbitration expertise.

The Rules confer broad procedural discretion on tribunals, who must conduct proceedings efficiently and avoid unnecessary delay. Key powers include:

• The authority to grant any interim measures that it deems appropriate, upon request by a party and subject to the party satisfying the tribunal that relevant requirements are met. The parties do not waive any right that they may have under applicable law to submit a request for interim measures to a judicial authority, therefore have multiple options to pursue interim measure

• To determine applications for security for costs

• To rule on its own jurisdiction

• Flexible evidentiary powers, including how witness and expert evidence is presented and to appoint their own experts

• Authority to encourage and facilitate settlement discussions, where appropriate. This express authority to take steps to facilitate settlement discussions reflects the commercial approach of the Rules and will be welcome for those who use them in encouraging settlement and reducing costs to the parties

• To decide which written submissions may be presented and fix the timetable. There is a presumption of no more than 45 days for the submission periods, which is particularly expeditious and reflects the intention for arbitration under the Rules to be conducted efficiently. However, this period can be extended and may be needed if the case is particularly complex or where, for example, extensive expert evidence is needed. Given the presumption, parties will need to argue for this and should bear this in mind for complex contracts where longer periods may be needed to present submissions (particularly if witness evidence is required and those witnesses are in busy roles at financial institutions or large companies)

• To determine the currency of the award (with sufficient flexibility to account for sanctions issues), award interest and to consider the tax consequences of the award

The revised 2022 Rules introduce or refine several accelerated mechanisms that address the finance sector’s need for urgent, predictable and cost effective outcomes.

1. Emergency Arbitration
   
   Parties may apply for urgent interim relief before the tribunal is constituted. This allows for the appointment of an emergency arbitrator (typically within two days of receipt of the request) and significantly shortened timelines for submissions, with a decision to be rendered within 15 days of appointment of the emergency arbitrator. This reflects the increasing need for rapid measures in fast moving financial markets and is a useful alternative to court proceedings
   

2. Expedited Procedure

   
   Where the amount in dispute is EUR 4 million or less, the Expedited Procedure applies automatically and the parties may also agree to use the Expedited Procedure. The arbitration shall be presided over by a sole arbitrator unless the PCA determines otherwise. The procedure requires significantly compressed timelines (typically reduced by half compared to the standard requirements) with a final award rendered within 180 days from the constitution of the tribunal

The Rules include detailed consequences of non participation or failure to comply with procedural orders, allowing the tribunal to proceed and issue an award notwithstanding a party’s absence. This is particularly useful in the context of not only uncooperative counterparties but also where counterparties are proving difficult to locate or in the context of insolvency, where a party may refuse to engage in proceedings. These provisions lower the risk of enforcement issues.

Transparency is a central theme of the 2022 Rules, starting with the full Panel list being made available on the P.R.I.M.E Finance website and fully searchable. Indeed, P.R.I.M.E have made it very easy for any party, whether using the Rules or another arbitral institution, to find potential arbitrators for financial disputes. This transparency reflects one of P.R.I.M.E.’s key aims, which is to allow those in the finance industry the best access to experts to resolve their disputes and to best advance the law around financial issues.

In addition, the Rules:

• Require mandatory disclosure of any third party with a significant interest in the outcome of the dispute, including but not limited to third persons funding any claim or defence, as well as the nature of their respective interest in the outcome of the dispute

• Allow for amicus curiae submissions, allowing relevant industry bodies to participate on issues of wider market significance by inviting or granting leave to a person or entity that is not a party to the proceedings to appear before it and make submissions on any issues relevant for the proceedings

• Dictate the publication of anonymised awards, unless a party objects within 30 days. This unique feature aims to improve predictability and build a publicly accessible body of jurisprudence in financial arbitration

These transparency measures help address concerns about lack of precedent and legal certainty in arbitration generally but for financial disputes in particular (which have historically been heard in court litigation and therefore parties have not had the benefit of input in the chosen arbiter in their case).

The Rules expressly permit joinder, consolidation, and coordination of related proceedings. This is particularly important for multi‑layered financial structures involving multiple contracts and participants, such as syndicated lending, structured finance transactions or multi‑party derivatives disputes.

Hearings may be conducted in person, virtually, or in hybrid form. The tribunal have flexibility to dictate the form of the hearing. This means that they may, for example, adopt time‑limited oral submissions, tribunal‑led examination of witnesses, expert witness conferencing and fully remote procedures where appropriate.

This flexibility mirrors developments in global arbitration practice following the pandemic and supports efficient dispute resolution across time zones and jurisdictions.

Tribunals must issue a reasoned award unless the parties agree otherwise. Parties should note that:

• Three‑member tribunals must deliver their final award within 90 days of the close of the hearing or final submissions and a sole arbitrator must deliver the final award within 60 days

• The PCA does not conduct a full scrutiny of awards (as the ICC does), which supports speed but places greater responsibility on tribunals to ensure clarity and completeness and can lead to less consistency in awards. However, the PCA will carry out a limited review for format, clerical, typographical or computational errors, or any errors of a similar nature. The PCA, without affecting the arbitral tribunal’s liberty of decision, may also draw its attention to points of substance, allowing for greater scrutiny than a number of institutions that do not scrutinize the award at all

• Awards are final and binding, with correction and interpretation mechanisms available for clerical or ambiguity‑related issues

The tribunal has broad discretion to determine costs, beginning with the general principle that costs follow the event, unless the circumstances justify a different approach. Recoverable costs may include: legal fees, expert fees, tribunal fees and PCA administrative costs.

Interest may be awarded on sums due, with flexibility to align the rate and calculation method to financial market norms.

P.R.I.M.E. Finance is seated in The Hague, but the parties are free to choose the seat of arbitration in their arbitration clause; otherwise, the legal place of the arbitration will be determined by the tribunal. Although the Rules do not prescribe any particular seat or legal place, financial market participants typically prefer established arbitration-friendly jurisdictions such as London, Paris, Zurich, New York, Hong Kong or Singapore, given the importance of reliable procedural laws, court support and predictable enforcement. Given the importance of the seat of the arbitration, we recommend agreeing this in the relevant arbitration clause to allow for certainty of how procedural and other key administrative decisions will be made.

Awards issued under the Rules are enforceable under the New York Convention, which covers over 170 jurisdictions. The combination of PCA administration, specialist arbitrators and global enforceability makes P.R.I.M.E. well suited to the resolution of high value cross border finance disputes.