PRIME Finance Arbitration: What is it and how does it work?

In 2016, PRIME adopted its own set of arbitration rules having partnered with the Permanent Court of Arbitration to administer cases. The arbitration rules adopted were devised to assist parties in financial disputes including those arising from derivatives, sovereign lending, investment and advisory banking, financing, private equity, asset management, fintech and sustainable finance. 

PRIME adopted new arbitration rules which came into force on 1 January 2022 (the “rules”). Whilst the rules are focused to those that are involved in financial services, the rules largely adopt the processes many arbitration users will be familiar with from other arbitral institutional rules (such as LCIA or ICC). However, the following rules may be of interest to those considering whether PRIME arbitration could assist them:

• Arbitral expertise: PRIME maintains a panel of over 200 international specialists who are well versed in adjudicating financial services disputes. Accordingly, parties can be confident that any tribunal appointed will have expertise and knowledge of the products and subject area in dispute.
• Summary judgment: One point which has detracted financial institutions from using arbitration historically has been the difficulty in obtaining summary judgment where a respondent raises an argument which has little prospect of success.  This is common in the context of facility agreements where a borrower has defaulted and what is at issue is a simple debt claim. To overcome this, the rules provide that a party can apply for an early determination of a dispute within 30 days of a claim or defence being raised. This will represent a welcome relief to arbitral users that are concerned to ensure there is an effective mechanism to summarily dismiss meritless claims and defences (especially in respect of debt claims). 
• Expedited Arbitration: Unless the parties agree otherwise, any dispute worth <EUR 4m will be determined by PRIME’s expedited arbitration rules which means that the tribunal should issue an award within 180 days of the first procedural hearing. The first procedural hearing is to be convened within 15 days of the tribunal being formed. The parties are free to agree that any dispute regardless of its value be subject to PRIME’s expedited arbitration rules if they so wish.
• Emergency Arbitration: The rules also provide a mechanism to allow parties to seek emergency relief from a tribunal even before arbitration proceedings have been commenced. However, like with the amendments made in the 2020 LCIA Rules, the rules do not clarify around the uncertainty caused by the English Commercial Court decision of Gerald Metals v Timis [2016] EWHC 2327 (Ch) and whether parties who have agreements containing a PRIME arbitration clause are still able to seek interim relief from the English courts if urgency permits (for more information about this and seeking interim relief from the English courts in support of arbitration, please see here).
• Third parties behind claims: The rules provide that any party must disclose at the outset the identity of any third party who has a significant interest in the outcome of the dispute. This is of interest as it means that parties are obligated under the rules to disclose the identity of parties such as third-party funders. 
• Consolidation and joinder: Adopting amendments made by other arbitral institutional centres, the rules also provide clear mechanisms of how arbitrations can be consolidated or where other parties to other agreements containing a PRIME arbitration clause can be joined to the proceedings.
• Tax, interest and currency: The rules also provide dedicated provisions focusing on any tax, interest and currency implications which result from an Award which can be of particular importance to financial institutions.

If you would like to discuss the contents of this article further, please do not hesitate to contact the authors of this article. 

For more information about our arbitration practice, please see here. Head of Mills & Reeve’s International Arbitration practice, Mark Davison, is recognised by Legal 500 as a “banking disputes expert” having acted in disputes concerning facility agreements, complex structured investment products, foreign exchange, derivatives and index regulatory investigations.

For information about what arbitration is and how it may assist you, please see here.