The distinction and its consequences

Under Article 32 (1) of the Arbitration Rules of the Swiss Chambers’ Arbitration Institution (hereinafter Swiss Rules), the arbitral tribunal may “make interim, interlocutory, or partial awards. If appropriate, the arbitral tribunal may also award costs in awards that are not final.”

An interim award is a final decision on a preliminary legal issue of substance or a procedural issue. Partial awards on the other hand adjudicate part of the claim or the counterclaims in dispute. An interim award will deal with a legal issue, whereas a partial award will deal with part of the claim or counterclaim which are the object of the dispute.

The distinction is also important with respect to their judicial review, whereas grounds to review a partial award are not limited, grounds to review an interim award are limited under Art 190 (3) of the Swiss Private International Law Act (PILA) to a) if the sole arbitrator was not properly appointed or if the arbitral tribunal was not properly constituted; or b) if the arbitral tribunal wrongly accepted or declined jurisdiction.

This means that for the other criterion listed under Article 190 (2) PILA, an interim award can only be challenged at the end of the arbitration proceedings. Partial awards on the other hand can be challenged immediately for all the grounds listed under Article 190 (2) PILA.

Example of interim awards

With the above definition in mind, what issues fall under the scope of a preliminary legal issue of substance or procedural issue? The examples can be many. However, the most common ones are statute of limitation, legal standing, and principal of liability. For procedural issue, one can think of admissibility of a prayer for relief.

Advantages of interim awards

Legal issues which can be dealt with by means of an interim award can result in a simplification of the proceedings. For example, a party may be involved in an arbitration although it has not signed the arbitration clause. In this case, deciding if the party is bound or not by the arbitration agreement is an essential issue, which can be dealt with by means of an interim award. If the party is not bound, then the proceedings stop at the stage of the interim award for that party. By not attracting the party through the entire arbitration proceeding, the arbitrator or arbitral tribunal ends up saving that party significant costs. Similarly, other parties will save time and legal fees as they do not have to argue a case against that party anymore.

Example of partial awards

Partial awards are easier to grasp than interim awards as they deal with part of the claim or the counterclaim which are the objects of the dispute. It may be the case that out of a single set of facts, the claimant is requesting relief on many different grounds. For example, in a construction dispute it may be that there is a claim for penalty due to delay, a claim for damages due to improper construction and a claim for damages due to libel. It may very well be that for one of the three claims, all the evidence is documentary in nature. If all the evidence is documentary in nature, and all the pleadings have been submitted, there is nothing that stands in the way of the arbitrator or the tribunal to make a ruling on that particular issue.

Advantages of Partial Awards

The advantages of partial awards are evident. If a point of contention is sufficiently clear and does not require the arbitrator or the tribunal to hold extensive hearings, then it can be immediately judged. This means that for the party requesting a partial award, it may lead to a speedy win of at least one issue. This win may be enough to fuel the legal costs necessary for continuing the proceedings.

A right to a partial award or interim award?

The key question is when to ask for a partial or interim award, which often will be dictated by the circumstances. Practitioners should bear in mind that there is no right to an interim or partial award. The arbitrator or the tribunal will have full discretion to make such an order and may decide that the issue raised by means of application under an interim or partial award is better suited in the final award. Practitioners should also be wary of the fact that applying for an interim or partial award may result in extra costs and delays in the proceedings. As such, an application for a partial or interim award should be carefully considered as part of the global strategy of the case.

Conclusion

In summary, as detailed above, interim and partial awards are tools in the arbitration practitioner’s tool-box. They can be very useful in order to simplify the proceedings and provide a quick resolution on a simple issue. Similarly, they do not come without procedural risk and hassle. In matters of jurisdiction one should almost consider whether an interim award would enhance efficiency, because if the arbitrator of the tribunal lacks jurisdiction then the matter will not proceed forward and in this case a final award on jurisdiction would be rendered. In other cases, the decision to resort to an interim award may not be as clear cut, but should always be a tool to consider in the overall procedural strategy.