PRIME Finance launches revised arbitrage rules


On November 15, 2021, PRIME Finance launched its revised PRIME Finance Arbitration Rules (on Rules). A launch event took place on December 6 during which Georges Affaki, Martin Doe of the Permanent Court of Arbitration (CPA) and PRIME Finance Secretary General Kasper Krzeminski gave an overview of the Settlement. A recording is available here. PRIME Finance is the acronym for “Panel of Recognized International Market Experts in Finance”.

The Rules provide arbitrators and users with a comprehensive, clear and simple set of procedural rules specially designed for the arbitration of a wide range of financial and banking disputes. Non-bank players and financial institutions carrying out ordinary commercial transactions, without a separate credit component, may also choose to submit their disputes to PRIME Finance.

The Regulations entered into force on January 1, 2022 and can be downloaded here.

Introduction to PRIME Finance

PRIME Finance was established in the wake of the 2008 global financial crisis to help resolve disputes over complex financial products. From the outset, PRIME Finance recognized the need for a specialized forum to hear such disputes. As a result, PRIME Finance’s arbitrage rules have been developed and designed to provide a framework containing characteristics of particular interest to the financial sector.

At the same time, PRIME Finance also continued to expand its Panel of Experts. This group of international experts in finance, law and regulation now numbers nearly 250 people. This coincides with the Needs financial institutions that have consistently classified the technical expertise in banking and finance of practicing arbitrators as key when considering an alternative dispute resolution mechanism.

In 2015, PCA joined forces with PRIME Finance. Arbitrations initiated under PRIME Finance’s Arbitration Rules (and mediations initiated under its Mediation Rules) would now be administered by the PCA. The PCA is the oldest arbitration institution in the world, with over a century of experience in the administration of complex international proceedings. The objective of the cooperation is to combine the efficiency of the PCA in the administration of arbitration proceedings with the subject matter expertise of the PRIME Finance expert panel.

Overview of the review process

the review of the Rules, which were last updated in 2016, began in 2020. The guiding objective was to ensure that the Rules were responsive to users’ needs, reflected current best practices in arbitration and contained features of particular interest to financial market participants. A two-tier rule structure for the review was established, comprising a drafting group and a focus group. The drafting group was chaired by Professor Georges Affaki. The advisory group was chaired by Carolyn Lamm, senior partner and co-chair of International Disputes Americas, White & Case LLP, and Heikki Cantell, general counsel of Nordic Investment Bank.

The following distinguished arbitrators and financial experts have all contributed their time and experience: Yas Banifatemi, Chiann Bao, Paula Costa e Silva, Whitney Debevoise, Felix Dasser, Martin Doe, Grant Hanessian, Bernard Hanotiau, Arthur Hartkamp, ​​Ulf Koping- Hoggard, Kasper Krzeminski, George Liakopoulos, Camilla Macpherson, Ali Malek QC, Romina Martinez, Wendy Miles QC, Loukas Mistelis, Philippe Pinsolle, Kathryn Sanger, Hon. Elizabeth Stong, Gaetan Verhoosel and Marcus van Bevern.

A full draft of the revised rules was released for public comment in January 2021. Three virtual public consultations were held, targeting audiences in Asia, the Americas and the EMEA region. Feedback has been received from many leading law firms and practitioners around the world, ensuring the geographic and industry representation that is essential to setting global rules.

Main features of the revised rules

  1. The PCA and the PRIME Finance Panel

The PCA plays a more important role throughout the arbitral process than in the previous version of the Rules. It enjoys all the usual prerogatives of an administering institution, with particular discretion with regard to the setting of deadlines. Among the innovations of particular interest is a confirmation procedure, under which, in exceptional situations, the PCA is granted the power to refuse confirmation of arbitrators appointed by the parties or of a presiding judge appointed by co- arbitrators, for example when the nominee and / or appointment process creates a risk of injustice and endangers the enforceability of the award. The PCA will now also conduct a limited review of grant proposals.

PRIME Finance’s panel of arbitrators must be referenced, where applicable, for the purposes of nominations or appointments. This recognizes that financial disputes are often complex and can benefit from specialized arbitrators. The combination of the efficiency of the PCA in the administration of arbitration proceedings and the subject matter expertise of the Panel brings significant benefits to users in the banking and financial sectors.

  1. Transparency

The emphasis is on transparency in all the rules. For example, the parties are required to disclose the identity of any third party having a significant interest in the outcome of the dispute. This is a new element of the Regulations.

The provisions on amicus curiae have also been updated, with arbitral tribunals sitting under the Rules having the power to invite or authorize an industrial body to appear before it as a amicus curiae and make submissions on relevant issues. This reflects the fact that banking is a very standardized industry, with syndicated loans generally following the model of organizations such as the Loan Market Association (LMA) or the Loan syndication and trade association (LSTA) and derivatives using the International Swaps and Derivatives Association (ISDA) Framework agreement. Such bodies may well have an interest in submitting comments in certain cases.

Finally, the rules for the publication of sentences have been clarified, with the publication of sentences in an anonymized form (subject to agreement between the parties), to allow the emergence of a case law close to the case law of the courts of major financial centers. . This will increase the predictability and transparency of the arbitration process and strengthen PRIME Finance’s mission to reduce legal uncertainty and systemic risk, and foster stability and confidence in global finance, as well as a stronger body of law. established and authoritative.

  1. Complex arbitrations

Complex financial transactions can involve many parties, sometimes with conflicting interests, and several contracts. One of the pitfalls of the arbitral process is that expediency often demands that all claimants, on the one hand, and all respondents, on the other hand, be treated the same, regardless of their interests. The previous version of the By-law dealt only with the passing of the junction. The new Rules include detailed provisions not only on consolidation but also on consolidation, as well as a provision allowing the coordination of separate arbitrations which are not eligible for consolidation in certain cases.

  1. Emergency and expedited rules

The Rules deal comprehensively with emergency situations before and after the constitution of the tribunal, with updated provisions on emergency arbitration and a new provision on interim measures. As for the expedited procedure, the previous version of the Rules simply indicated that the parties could agree to shorten the time limits. Now, in response to demands from financial institutions for sentencing efficiency, there is a very comprehensive expedited process. The new fast-track rules will automatically apply to arbitrations where the amount in dispute is equal to or less than 4 million euros, with a sole arbitrator having to render the final award within 180 days of the tribunal being set up.

  1. Efficiency

The rules introduce a series of new provisions designed to increase efficiency. For example, courts are expected to convene a case management conference with the parties within 30 days of being established. The calling of additional procedural conferences is encouraged throughout the proceedings. Courts also have time limits to ensure that final sentences are rendered in a timely manner. Courts of three or more members are required to render the final award within 90 days of the closing of the hearing (or receipt of the last observations authorized by the court); for sole arbitrators, the deadline is 60 days. Courts are also expressly empowered to assist parties in discussing a settlement, where appropriate.

A concern raised by financial institutions is the need for the courts to be decisive in rejecting clearly unfounded claims or defenses, without having to go through the entire process on the merits. Advance determination is a power expressly conferred on the courts in the Rules.

Finally, the parties can choose whether the fees are calculated according to a system based on time or in proportion to the value of the dispute. In the absence of an agreement, the rules are by default a time-based fee system.

Conclusion

The rules offer a very attractive arbitration mechanism to financial institutions, their customers and counterparties. It is hoped that all financial parties, and those advising them, will consider arbitration in accordance with the PRIME Finance arbitration rules and adopt the PRIME Finance rules. standard clause in their contracts accordingly.

This article first appeared on the Kluwer Arbitration Blog here. Written by Camille Macpherson of PREMIUM FUNDING solidify

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