The (new) AIAC Arbitration Rules 2023: Flexibility and Efficiency

On 22 August 2023, the Asian International Arbitration Centre (Malaysia) (“AIAC”) announced the publication of the AIAC Arbitration Rules 2023 (“the 2023 Rules”). The 2023 Rules took effect from 24 August 2023 and incorporates significant changes as compared to the earlier AIAC Arbitration Rules 2021 (“the 2021 Rules”). This is of importance to parties and practitioners who have agreed to adopt the AIAC Arbitration Rules in their arbitration agreement(s), as the 2023 Rules applies to arbitrations commenced on or after 24 August 2023, unless otherwise agreed.1 
As often quoted, “Change is the only constant in life”. These words from Heraclitus are proven to be true over the years in many aspects of life. The realm of dispute resolution is no exception. In line with the “commitment to meet the growing expectations of the ADR community”2 the AIAC’s arbitration “rules are kept under constant revision to ensure relevance with commercial practicalities and expectations”.3
The present changes are designed to provide greater flexibility to parties in accordance with the globally recognised framework provided by the United Nations Commission on International Trade Law (“UNCITRAL”) Arbitration Rules.
A summary of the key proposed changes is set out below.           
(1)  Separation of UNCITRAL Arbitration Rules and AIAC Arbitration Rules
A marked departure from the 2021 Rules is the re-separation of the AIAC Arbitration Rules (now in Part I) and the UNCITRAL Arbitration Rules (now in Part II). References to Rules relate to Part I whereas references to Articles relate to Part II.4 In the event of a conflict between Part I and Part II, the provisions of Part I shall prevail.5
With the separation, the AIAC is reverting to a more straightforward set of rules, supplemented with the more detailed UNCITRAL Arbitration Rules, as was done in the AIAC Arbitration Rules 2018. This allows for the adoption of the UNCITRAL Arbitration Rules in its entirety as opposed to what was done in the 2021 Rules where only certain provisions of the UNCITRAL Arbitration Rules were incorporated by the AIAC.
(2)  New provisions introduced via the incorporation of the UNCITRAL Arbitration Rules

The adoption of the UNCITRAL Arbitration Rules in its entirety introduces several new Articles to the 2023 Rules. These new Articles are briefly explored below.
  1. Repetition of hearings in the event of replacement of an arbitrator  

    In the event of replacement of an arbitrator, Article 15 provides that the proceedings shall resume at the stage where the replaced arbitrator ceased to perform his or her functions, unless the arbitral tribunal decides otherwise.
    The new arbitrator would therefore be required to step in and continue with the proceedings at whatever stage it is taken over from the replaced arbitrator, even if the oral hearing has been part-heard. However, the arbitral tribunal’s discretion to decide otherwise is retained in the 2023 Rules.
    This change is welcome as it improves efficiency in arbitrations and minimises the duration and cost associated with lengthy proceedings.
  1. Periods of time    

    Article 25 crucially provides, among others, that the period of time fixed by the arbitral tribunal for the communication of written statements, including the statement of claim and statement of defence, should not exceed 45 days.
    This serves as guidance to the arbitral tribunal and parties as to the expected timeline for parties to communicate a written statement and aids in avoiding unduly lengthy periods of time being provided to parties to do so. However, the arbitral tribunal may extend the time limits if it concludes that an extension is justified.6
  1. Power of arbitrators to decide ex aequo et bono  

    Article 35 (1) mandates the arbitral tribunal to apply the rules of law designated by the parties as applicable to the substance of dispute. Failing such designation, the arbitral tribunal is empowered to apply the law which it determines to be appropriate. To this extent, the powers conferred on the arbitral tribunal are similar to those prescribed in Rule 13.5(a) of the 2021 Rules.
    Article 35(2) gives discretion to the arbitral tribunal to decide as “amiable compositeur” or “ex aequo et bono”, if the parties have expressly authorised the arbitral tribunal to do so. This is a clause in equity which allows the arbitral tribunal to decide based on the general fairness and justice of the case, provided the tribunal is expressly authorised to do so. This, to a certain extent, may allow the arbitral tribunal discretion to not be bound by the strict rules of law.
    Notwithstanding the above, Article 35(3) requires the arbitral tribunal to decide in accordance with the terms of the contract, if any, and take into account any usage of trade applicable to the transaction. This sub-provision ensures that the express terms of the contract are not overlooked in the face of the general fairness and justice of the case, especially when specific terms exist.
  1. Overlap between AIAC Arbitration Rules and UNCITRAL Arbitration Rules   

    The 2023 Rules contain elements of overlap between certain provisions of the AIAC Arbitration Rules and the UNCITRAL Arbitration Rules. In relation to this, parties are reminded that should there be a conflict between Part 1 and Part 2, the provisions of Part 1 shall prevail.
    Among the Articles (UNCITRAL Arbitration Rules) which overlap with the Rules (AIAC Arbitration Rules) are Article 6:Designating and appointing authorities (overlap with Rule 3: Appointment), Article 7: Number of arbitrators (overlap with Rule 3: Appointment), Articles 8 – 10: Appointment of arbitrators (overlap with Rule 3: Appointment), Articles 12 – 13: Challenge of arbitrators (overlap with Rule 4: Challenge of arbitrator), Article 16: Exclusion of liability (overlap with Rule 22: No liability) and Article 42: Allocation of Costs (overlap with Rule 6(h) Additional Powers of the Arbitral Tribunal on award of costs).
(3) New provisions introduced under the AIAC Arbitration Rules
  1. Additional powers of the Arbitral Tribunal 

    Previously, the arbitral tribunal’s powers were exhaustively set out in Rule 13 of the 2021 Rules. The 2023 Rules have departed from this approach by only setting out the additional powers of the arbitral tribunal in Rule 6.
    This is presumably because the 2023 Rules, which adopts the UNCITRAL Arbitration Rules, has prescribed the specific powers of the tribunal in the numerous provisions therein.
    The present approach ensures that the powers granted under the UNCITRAL Arbitration Rules and its original intent, are preserved.
    Notwithstanding the above, there does not appear to be any additional powers granted to the arbitral tribunal which had not been granted in the 2021 Rules. However, there seem to be minor changes to some provisions. For instance, the power on award of costs in the 2023 Rules has been simplified (as compared to the 2021 Rules) for better assimilation with Article 42 of the UNCITRAL Arbitration Rules, on Allocation of Costs.
  1. Third-party funding  - Requirement for disclosure  

    Rule 12, for the first time in AIAC’s arbitration rules, imposes a positive obligation on a party that is funded by a third party to disclose the existence of the funding and the identity of the funder. This obligation is a continuous one until the conclusion of the proceedings, where supervening facts so require or upon the request of the Arbitral Tribunal or the AIAC.
    This is a welcome departure from the 2021 Rules which merely empowers the arbitral tribunal to make necessary enquiries on the existence of third-party funding arrangements. In the event the arbitrator does not enquire, the existence of the third party funder may not surface at all.
    This amendment helps in avoiding situations of conflict of interest (for example, if the funder has an interest in any manner whatsoever with the arbitrator or the other disputing party) and is consistent with disclosure requirements from other international arbitration centres.
  1. Vacancy of position of the Director  

    This is one of the most interesting provisions introduced under the 2023 Rules. Rule 24 stipulates the order of precedence of officers who shall assume the powers of the Director of AIAC under the Rules, in the event the position of the Director of the AIAC becomes vacant. This order of precedence starts with the Deputy Director, followed by the Assistant Director and finally the Head of Legal Services.
    Understandably, this provision is crafted to cater for specific circumstances such as the two previous instances, when the position of the Director of the AIAC became vacant. This provision would certainly be helpful to ensure a seamless and uninterrupted arbitration proceeding.
  1. Facilitating settlement  

    Rule 14 empowers the arbitrator to facilitate the settlement of the dispute before him/her, with the agreement of parties. If a party has agreed to the same, the said party is deemed to have waived its right to challenge the impartiality of the arbitrator based on the arbitrator’s participation and knowledge acquired in taking the agreed steps.
    Therefore, if settlement fails to materialise and parties wish to proceed with the arbitration, parties will be unable to challenge the arbitrator’s impartiality, although the said arbitrator may be privy to information shared or concessions made by the parties while attempting settlement.
(4)  Other key changes
  1. UNCITRAL Rules on Transparency in Treaty based Investor-State Arbitration  

    For any investor-State arbitrations conducted pursuant to international treaties, the 2023 Rules have specifically included the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (“Rules on Transparency”).7
    The incorporation of the Rules on Transparency, known for their robust framework for transparency, is welcome given the public interest element in investor-State arbitrations.
  1. Appointment - Default number of arbitrators (international and domestic)   

    In the event that parties have not agreed on the number of arbitrators to be appointed, the Director of the AIAC shall after consultation with the parties decide whether the arbitral tribunal shall consist of a sole arbitrator or three arbitrators, having regard to the complexity of the case, the amount in dispute and any other relevant circumstance.8
    This is a departure from the 2021 Rules which pre-determined that if parties have not agreed on the number of arbitrators, the arbitral tribunal shall consist of three arbitrators for international arbitrations and a sole arbitrator for domestic arbitrations.9
    This departure allows the Director to decide on the number of arbitrators on a case-by-case basis taking into account the complexity of the case and the amount in dispute. This avoids situations where parties are required to incur significant cost on the fees for three arbitrators when the amount in dispute does not justify the appointment of the same.
  1. Manner of transmission – ‘deliver’ to ‘communicate’  

    As a result of the adoption of the UNCITRAL Arbitration Rules, the transmission of documents such as pleadings have been changed from a requirement to ‘deliver’ the said documents (under the 2021 Rules) to a requirement to ‘communicate’ the same. This is evident in the provisions under the UNCITRAL Arbitration Rules such as Articles 3, 4, 20 and 21 of the same.
    The effect of this change is likely limited to the transmission of documents by electronic means as pursuant to Article 2(5) of the UNCITRAL Arbitration Rules, any document transmitted by electronic means is deemed to have been received on the day it is sent.10 Reading this together with the change from ‘deliver’ to ‘communicate’, it is clear that the transmission of documents under the 2023 Rules is effected on the day on the which it is sent (with respect to transmissions by electronic means).
  1. Fast-track Procedure  

    Unlike the 2021 Rules which incorporated the Fast Track Procedure under Rule 811, the Fast Track Procedure in the 2023 Rules has been relocated to Schedule 4. This appears to be a stand-alone set of rules, with minimal reference to the AIAC or the UNCITRAL Arbitration Rules. This clearly distinguishes the usual arbitration procedure from the Fast Track Procedure while preserving the seamless transition for parties to opt in and out of the Fast Track Procedure.
    There appears to be significant updates to the 2023 Rules’ Fast Track Procedure, which now comprises 16 clauses with clear headings for the various provisions. Amongst others, the Fast Track Procedure in the 2023 Rules mandates that the award be made within six months from the date of the constitution of the arbitral tribunal, unless otherwise agreed by parties.12 It also provides that any extension to this shall not exceed nine months, unless agreed by parties.
    In contrast, the Fast Track Procedure13 in the 2021 Rules only requires the arbitral tribunal to submit its draft final award to the AIAC for technical review within 90 days from the date the proceedings are declared close, which is another 90 days from the delivery of the first procedural order. However, it is uncertain as to when the final award will be issued to the parties.
    This move provides certainty as to the duration of the proceeding under the Fast Track Procedure and also better promotes the use of this procedure for its intended purpose. Ultimately, the 2023 Rules provide better clarity and efficiency and caters for the growing need for expedited procedures.
    Further, the 2021 Rules provided three scenarios in which parties were allowed to request to adopt the Fast Track Procedure14, i.e. (i) when parties had agreed to adopt the Fast Track Procedure; (ii) when the amount in dispute is less than USD500,000 for an international arbitration or less than RM2,000,000 for a domestic arbitration; or (iii) when there is an exceptional urgency. However, it is pertinent to note that the third scenario, for when there is an exceptional urgency, has been excluded from the 2023 Rules.15
    It is also significant to mention that under the 2023 Rules, parties are no longer required to obtain confirmation from the AIAC regarding the operation of the Fast Track Procedure for their dispute. Instead, as long as either of the two criteria specified in the paragraph above is satisfied and a Commencement Request for the same has been submitted, any dispute arising shall be settled in accordance with the Fast Track Procedure.
    Apart from this, the 2023 Rules has also reduced the quantum threshold to less than USD300,000 for an international arbitration and less than RM1,000,000 for a domestic arbitration. This ensures that more complex disputes are not bulldozed through an expedited process.            
  1. Commencement of arbitration 

    According to Rule 2(2) of the 2023 Rules, an arbitration is only commenced on the date which the AIAC receives the complete notice of arbitration with all the accompanying documents referred to in the said rule. This differs from Rule 5.1 of the 2021 Rules which envisaged that an arbitration is commenced when the claimant delivers the notice of arbitration to the respondent.
    The determining factor of the commencement date in the 2023 Rules seems to be when the AIAC receives the notice of arbitration, not when it is delivered to the respondent.
    Unlike the 2021 Rules, Rule 2(2) of the 2023 Rules requires the notice of arbitration to be accompanied by: (i) a copy of the written arbitration clause/agreement; (ii) confirmation that all pre-conditions to the arbitration have been satisfied; and (iii) proof of payment of the non-refundable registration fee.
(5)  Simplification of procedures - Joinder of parties, Consolidation of proceedings and Summary Determination 
The 2023 Rules have simplified applications for joinder of parties16, consolidation of proceedings17 and summary determination18. Under the 2021 Rules parties were required to adhere to detailed procedures and timelines in pursuing these applications. These timelines and procedures have now been done away with. For completeness, we set out the present requirements for pursuing these applications below:
  1. In respect of the joinder of parties, the arbitral tribunal may, at the request of any party, allow one or more third persons to be joined in the arbitration as a party provided such person is a party to the arbitration agreement, unless the arbitral tribunal finds, after giving all parties, including the person or persons to be joined, the opportunity to be heard, that joinder should not be permitted because of prejudice to any of those parties.19

  2. As for consolidation of proceedings, the Director may decide to consolidate a newly commenced arbitration with a pending arbitration if: (i) the parties agree to consolidate; (ii) all the claims are made under the same arbitration agreement; or (iii) where the claims are made under more than one arbitration agreement, the relief sought arises out of the same transaction or series of transactions and the Director considers the arbitration agreements to be compatible.20 In deciding whether to consolidate, the Director is required to consult with the parties and the arbitral tribunal and shall have regard to: (i) the stage of the pending arbitration; (ii) the efficiency and expeditiousness of the proceedings; and (iii) any other relevant circumstances.21

  3. In relation to summary determination, the arbitral tribunal is empowered, at the request of any party and after hearing from all other parties, to decide one or more points of law or fact by way of summary determination, on the basis that a claim or counterclaim is manifestly without legal merit or is manifestly outside the jurisdiction of the arbitral tribunal. 
The removal of strict procedures and timelines gives parties and the arbitral tribunal greater flexibility to agree on procedure on a case-by-case basis. They will now be free to consider the complexities of individual cases (from amount in dispute to volume of documents, etc.) before procedures and timelines for these applications are determined.
In essence, the 2023 Rules provides parties and the arbitral tribunal with greater flexibility in arbitration without impacting a party’s right to a fair hearing. With the adoption of the UNCITRAL Arbitration Rules, a time-tested mechanism, it is hoped that the AIAC’s endeavour to have a stronger international presence and to cater for the needs of different users from around the world, is achieved.
Article by Tatvaruban Subramaniam (Partner) and Kalaiarasan Rasadurai (Senior Associate) of the Construction Litigation, Arbitration and Adjudication Practice of Skrine.

1 Preamble and Rule 1(2) of the 2023 Rules.
2 Director’s Message for the 2023 Rules.
3 About AIAC at
4 Introductory Provision (2) of the 2023 Rules.
5 Rule 1 (3) of the 2023 Rules.
6 Article 25 of the 2023 Rules.
7 Rule 1(5) of the 2023 Rules.
8 Rule 3 (3) of the 2023 Rules.
9 Rule 9(3) of the 2021 Rules.
10 Except notices of arbitration which are deemed to be received when it reaches the addressee’s electronic address.
11 Rule 8 of the 2021 Rules.
12 Clause 15 of Schedule 4, of the 2023 Rules.
13 Rule 8 of the 2021 Rules.
14 Rule 8.2 of the 2021 Rules.
15 Clause 1(2) of Schedule 4 of the 2023 Rules.
16 Rule 9 of the 2023 Rules.
17 Rule 10 of the 2023 Rules.
18 Rule 11 of the 2023 Rules.
19 Article 17 (5) of the UNCITRAL Arbitration Rules.
20 Rule 10 (1) of the 2023 Rules.
21 Rule 10 (2) of the 2023 Rules.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact