Ruling in summary arbitral proceedings: Skipper must be allowed to return to the helm in the Volvo Ocean Race

Last october, a drama occurred involving Akzo Nobel’s participation in the Volvo Ocean Race. Shortly before the start of the race, Skipper Simeon Tienpont was suddenly dismissed on account of a conflict between his company and Akzo Nobel. He then successfully instituted summary arbitral proceedings in which he demanded to be allowed to return to the helm. Litigation Lawyer Onno Hennis discusses the Ruling, which makes it clear that even in very urgent cases, arbitration can be a valid alternative to the government judicial system (and why that is quite special).

Arbitral proceedings as interim relief proceedings

It appears from various media reports that Tienpont requested arbitration last Wednesday, October 18th, 2017. The oral hearing of the case took place just two days later, and the arbitral award was made the following day. Clarity was therefore provided just in time: Tienpont could still fly to Alicante to join the start of the race on Sunday. For a long time, arbitration as an alternative means of settling disputes was not suitable for urgent cases. This was particularly due to the fact that the appointment of arbitrators usually takes some time. There are several reasons for this.

One or three arbitrators: the tribunal

In many arbitrations, the parties each choose an arbitrator who will then jointly appoint a third arbitrator. Together they form the tribunal. In arbitration cases in which one arbitrator is appointed, this is often done by using the so-called ‘list procedure.’ In that case, the competent arbitration institute draws up a list of potential candidate arbitrators, to whom the parties may then give their preference. If none of the candidate arbitrators is acceptable to both parties, the arbitration institute will appoint the arbitrator. This means that it will take some time before the appointment is arranged.

Arbitrators must be impartial and independent

Also, the appointed arbitrators must be impartial and independent. To this end, in confirming their appointment, the arbitrators must make a statement of any links with the parties or involvement in the dispute, if this could be a ground for objection. This may give rise to discussions about whether the arbitrator in question should be appointed. In short, this can lead to further delays.

Arbitration in urgent cases (interim relief proceedings)

However, some cases do not permit any delay. The Dutch legislator, therefore, introduced the so-called “summary arbitral proceedings” during its amendment of the Arbitration Act – which took effect on January 1st, 2015. Some years previously, the Netherlands Arbitration Institute (NAI) had already made urgent procedures possible in its arbitration regulations. This made the NAI the world’s first arbitration institute to have such procedures. By now, the authoritative ICC has also made “emergency arbitrator proceedings” possible in its amended regulations.

Agreeing to arbitration: the arbitration agreement

The condition for summary arbitral proceedings is that the parties have a valid arbitration agreement that refers to the NAI. It should be noted that if the parties have agreed to arbitration, they are no longer free to refer the matter to the court. Until recently, however, it was always possible to take interim relief proceedings to court. However, since the amendment of the Arbitration Act, this is only possible if summary arbitral proceedings are not possible.

Interim relief proceedings require that the case is urgent and not too complicated

Furthermore, the case should be suitable for settlement by way of interim relief proceedings. For example, the case must be urgent and not too complicated so that a decision cannot be made in accelerated proceedings. These conditions also apply to interim relief proceedings before the regular courts. Upon receipt of the request for interim relief proceedings, the NAI will appoint an arbitrator in the shortest time possible. The NAI guarantees on its website that the arbitrator will be appointed in less than 24 hours. The arbitrator will then decide – depending on the urgency – when the oral hearing of the application will take place (and when the award will be made). As the Tienpont case shows, this is possible in the very short term.

Summary arbitral proceedings: interim relief

As in the case of interim relief proceedings before regular courts, only interim relief can be awarded in summary arbitral proceedings. Interim relief is a mandatory measure of a temporary nature. The interim relief will be awarded if the situation justifies it. In the proceedings as to the merits, one is not bound by the interim relief. However, as appears from the Tienpont case, some interim measures, in fact, have an almost definitive effect.

Requiring an order or prohibition with penalty

In principle, the arbitrator in interim relief proceedings is free to issue interim measures. However, the arbitrator may not pass so-called constitutive or declaratory judgments which establish the legal relationship between the parties or alter it by the judgment (such as the dissolution of an agreement). The measure must be temporary in nature. An order or prohibition is therefore customary. Such an order or prohibition may be increased by a penalty payment as an incentive for voluntary compliance.

Arbitration: confidentiality and secrecy

Although the judgment is known, it remains as yet unclear what the dispute between Tienpont and Akzo Nobel was all about. This has to do with the fact that in principle, arbitration is confidential in nature. The NAI regulations even specifically stipulate that all parties directly and indirectly involved in the arbitration are bound by confidentiality (Article 6). Furthermore, the parties can prevent publication of the (anonymized) judgment (Article 51). This confidentiality is generally seen as a significant advantage of arbitration over the government judicial system. In the Tienpont case, however, you might wonder whether the requirement of confidentiality has done much good. It was foreseeable that Akzo Nobel (and Tienpont) would suffer damage, perhaps all the more so because it remains unclear what was at stake in the conflict.

Arbitration: appropriate alternative to the government judicial system

Be that as it may, it follows from the Tienpont case that arbitration is an excellent alternative to the government judicial system, even in urgent cases. The NAI is in a position to appoint a capable arbiter in the very short term, who can issue an arbitral award with full legal force in an efficient and sound manner. AMS Advocaten has a great deal of experience with summary arbitral proceedings. Do you want to take an interim measure using arbitration or are you a defendant in summary arbitral proceedings?