On 21 July 2022, The Hague Court of Arbitration for Aviation (Hague CAA) officially launched. This highly specialized dispute resolution forum offers impartial and flexible dispute resolution alternatives for the aviation industry. A broad range of aviation related disputes are covered within its remit, and it is looking to expand the scope of disputes it covers.
Key Features of the Hague CAA:
Neutrality
- The Hague CAA can be distinguished by its lack of affiliation to particular industry bodies. In contrast to the Shanghai International Aviation Court of Arbitration (SIACA), which has significant airline industry associations closely involved in its institution, the Hague CAA aims to offer an independent and neutral venue for the resolution of disputes.
- Disputes referred to the Hague CAA will be administered by the Netherlands Arbitration Institute (NAI), an existing and well regarded dispute resolution forum independently servicing a broad range of industries.
Aviation-Specialisation
- The Hague CAA will provide parties with access to many aviation law and technology specialists to act as arbitrators, mediators and experts.
- The procedural rules of the Hague CAA are designed to promote efficiency and are framed by the particular needs of the aviation industry, which demands speed and flexibility in resolving disputes.
Expedited Procedures
- The Hague CAA contains an expedited procedure, which requires the award to be given within 7 months and 10 days of a party’s request. This applies by default to disputes valued at €10m or less, unless a party opts out.
- The Hague CAA’s default standard of €10m is broader than that of other institutions. For instance, the ICC’s expedited procedure only applies by default where the dispute is valued at less than US$2m or US$3m (depending on the date of the arbitration agreement). Other institutions have lower default standards: ICDR-AAA at US$500,000; CEPANI at €100,000; and SIACA at RMB 1,000,000. Many other institutions do not by default use an expedited procedure, leaving the onus on the parties to request it.
- The Hague CAA’s higher default standard reflects the particular need of airlines to resolve disputes as quickly as possible. Imagine the costs and delays if airplanes were grounded for months awaiting a final award!
- In non-expedited proceedings, the arbitral tribunal has discretion over when it renders the award, provided its does so “expeditiously”. This is in contrast to the ICC rules, which require non-expedited proceeding awards to be issued within six months (subject to ad-hoc extensions), and which penalize tardy decision-making when calculating tribunal fees.
Emergency Arbitrators
- The Hague CAA allows a party to appoint an emergency arbitrator to decide on urgent measures that cannot wait until the arbitral tribunal is selected. Within two days of a party’s request, the emergency arbitrator must be appointed, and then make their decision within 15 further days. These time periods match those in the ICC rules. However, the Hague CAA makes emergency arbitration, in principle, available in all cases whereas the ICC does not permit its use in investment treaty claims.
Flexibility and Efficiency
- Coming in the wake of the COVID-19 pandemic, the rules allow for flexibility with regard to the location of hearings and virtual attendance. Hearings can be held at any place, and participants are allowed to attend virtually, barring opposition of the arbitral tribunal.
- The Hague CAA provides straight-forward mechanisms for third parties to join proceedings, either at their own request, or at the request of a party to the arbitration. Connected arbitral proceedings can also be consolidated in the interests of efficiency and the administration of justice.
- Given the need for efficiency, the Hague CAA does not contain pre-issuance review mechanisms for its awards (unlike the ICC for example).
Costs
- Like other arbitral institutions, the Hague CAA sets tribunal fees by reference to the value and complexity of a claim, and hours spent by the arbitrators. It provides cost schedules with guideline hourly rates based on claim-value for both tribunal and administration fees. By contrast, the ICC provides total cost figures rather than hourly rates, and factors in the diligence and efficiency of the arbitrator.
The Future
- The Hague CAA is now one in an increasing list of industry-specific arbitration centers that seek to offer more specialized dispute resolution services. Other examples include the Court of Arbitration for Art (CAfA) specializing in art related disputes, and the Chambre Arbitrage Maritime de Paris (CAMP) which specializes in maritime disputes.
- The Hague CAA is already looking at expanding the scope of disputes it covers. It has appointed drone industry experts to its aviation advisory board, reflective of its intention to provide dispute resolution services to the global aerospace industry more broadly, including advance air mobility (AAM) as well as space.
At Freshfields, we can assist and advise on any questions regarding the Hague CAA. Our Aviation and Arbitration practitioners would be happy to address any inquiries. Amna Arshad, Head of US Aviation and Special Counsel at Freshfields, currently serves on the Advisory Board of the Hague CAA.
