Agreeing to summary judgement demands ‘painful decisions’ from all parties involved
Horace Walpole once said that “the world is a tragedy to those who feel, but a comedy to those who think”.
Judges and arbitrators are certainly an exception to that paradigm, as they feel the tragedy of the world precisely because they think. Often when thinking over a case, in particular in order to decide over a specific application, they suffer the tragedy of having to choose between two equally harmful courses of action. Whatever the final decision, something will be lost.
Few situations expose this tragedy as starkly as an application for summary judgement. For those not versed in legal jargon, summary judgement is the decision taken by an arbitrator or judge over a dispute on the basis of documentary evidence alone, without the need for a full hearing. Summary judgement can obviate the high costs of a hearing, as well as the painful expenses of a lengthy discovery or examination of witnesses. An early decision can save a considerable amount of time and money, as the hearing is inevitably the most expensive part of any adjudication.
It demands painful decisions from all the parties involved, however. The party applying for summary judgement needs to have full confidence in the strength of the documentary evidence of his or her case, because in the event that the decision is rendered against him or her, it will be more difficult to revert it without the extra amount of evidence to be given at the hearing. For the party opposing it, in case his or her case is weaker on the documentary evidence, summary judgement poses the tricky question of whether to accept it, avoiding the extra costs, or to resist it, gaining time and the possibility of changing the course of the adjudication.
The tougher conundrum, nevertheless, is borne by the judge or arbitrator.
Faced with an application for summary judgement, a dilemma imposes itself to the adjudicator. Should he or she grant it and be prepared for a challenge to the recognition and enforcement of the award on the grounds of public policy (Art. 5, 2(b) of the New York Convention 1958)? Or should he or she refuse it and force the case through a lengthy and costly hearing, at the expenses of the innocent party, giving, in turn, time to the recalcitrant party to dissipate its assets? This is by no means an easy decision.
Sure enough, if summary judgement is conceded against a party at fault, he or she will certainly try to avoid enforcement of the award on the grounds of procedural fairness, as the production of evidence was restricted. No adjudicator refuses production of evidence lightly. The court of enforcement of the award, moreover, will have plenty of scope to adjudicate on the question of procedural fairness, which, even if the documentary evidence was so strong as to fully justify summary judgement. In other words, it would be almost impossible to a court not to evaluate the strength of the documentary evidence on the face of the summary judgment application. And that takes time. The party at fault would have plenty of time to dissipate its assets, even more so, perhaps, than if the summary judgement application had been refused.
The default position for the arbitrator, under normal circumstances, is to refuse the application for summary judgment and let the arbitration proceed to a full hearing. This solution would certainly produce a sounder award and preserve the tribunal from questioning. The risk, however, is to turn the arbitration into a lengthy and expensive farce. A pantomime in which the characters’ role is simply to tell bit by bit a secret of Polichinelle.
For arbitration in general, as an institution, the most pressing question involving summary judgment touches its very effectiveness as a method for dispute resolution. As Lord Denning once remarked: “When I was young, a sandwich-man wearing a top-hat used to parade outside these courts with his boards back and front, proclaiming ‘Arbitrate, don’t litigate.’ It was very good advice so long as arbitrations were conducted speedily: as many still are in the City of London. But it is not so good when arbitrations drag on for ever.”
Paulo Fernando Pinheiro Machado, FCIArb is a diplomat, advocate and arbitrator, partner (on leave) of Pinheiro Machado Advocates. The opinions expressed in this article do not necessarily reflect that of the Brazilian government or of any institution to which its author is affiliated.
 Bremer Vulkan v South Indian Shipping  AC 909