In the final months of 2020 there has been a flurry of revisions to Arbitration and Mediation Rules, including the rules of the London Court of International Arbitration (“LCIA”) and more recently the International Court of Arbitration of the International Chamber of Commerce ("ICC").
The new ICC Rules will come into force on 01 January 2021 and allow for the seismic changes to the world brought about as a result of Covid-19. The 2021 ICC Rules of Arbitration remain subject to editorial corrections until their official launch in December 2020 and will apply to cases submitted from 1 January 2021 onwards. The ICC published figures earlier this year which show a preference by states and state-owned enterprises to favour the ICC Rules of Arbitration.
Over the summer, focus on Covid-19’s impact and its interplay with dispute resolution saw a succession of helpful initiatives such as ‘The Seoul Protocol’, ‘The African Protocol’ and ‘The Hogan & Lovell Protocol’. Those new protocols primarily addressed issues relating to video-conferencing and the LCIA and ICC are now mindful of changes in the way arbitrations are being conducted as necessitated by the recent pandemic.
The ICC Court President Alexis Mourre noted "The amendments to the Rules mark a further step towards greater efficiency, flexibility and transparency of the Rules, making ICC Arbitration even more attractive, both for large, complex arbitrations and for smaller cases" .
Key developments with the new ICC Rules of Arbitration
(a) Article 3.1 (Written Notifications for Communication; Time Limits) now provides for pleadings “and other written communications submitted by any party to be sent to each party, arbitrator and the Secretariat. Any notification or communication from the arbitral tribunal to the parties shall also be sent in copy to the Secretariat.”
(b) Article 7(5) (Joinder of additional parties) - . “Any request for Joinder made by after the conformation or appointment of any arbitrator shall be decided by the arbitral tribunal once constituted and shall be subject to the additional party accepting the constitution of the arbitral tribunal and agreeing to the Terms of Reference, where applicable.” The new 2021 ICC Rules of Arbitration allow Parties to submit requests seeking the joinder of additional parties once any arbitrator is appointed or confirmed. In contrast with the previous framework of 2012/2017, no additional parties could be joined after the confirmation or appointment of the Tribunal unless all parties, including the additional party, agreed. The arbitral tribunal will take all relevant circumstances into consideration when deciding such a request to joinder and in particular:
(i) Whether the arbitral tribunal has prima facie jurisdiction over the additional party;
(ii) the timing of the Request for Joinder;
(iii) possible conflicts of interest; and
(iv) the impact of joinder on the arbitral procedure.
(c) Article 10(b) – (Consolidation of Arbitrations)- The 2017 ICC Rules of Arbitration allowed for consolidation whereas the 2021 Rules allow consolidation in circumstances where "all of the claims in the arbitrations are made under the same arbitration agreement or agreements". In Article 10, the 2021 Rules now clear the open question under Article 10(b) as to whether consolidation was only possible where all the claims in the arbitration were made under “the same arbitration agreement” (i.e. the same contract), or also allowed for consolidation under multiple agreements with mirror arbitration clauses. The 2021 Rules now confirm that consolidation may happen where “all of the claims in the arbitrations are made under the same arbitration agreement or agreements”. Article 10(c) now confirms that it relates to claims that are “not made under the same arbitration agreement or agreements”. These changes provide helpful clarity on the ever-relevant issue of consolidation.
(d) Article 11(7) – (General Provisions) - of new 2021 Article 11)7) ICC Rules of Arbitration is a significant and relevant addition to the Rules regarding the independence, impartiality and conflict of interest of the Arbitral Tribunal. It requires the Parties to promptly communicate to the arbitral tribunal, the other parties and the ICC Secretariat the identity of "any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration". This is a welcome step, especially at a time where litigation/arbitration funding is generally on the rise around the world. It is clear that in light of the current pandemic, more companies will find themselves in a difficult financial position and may have to resort to third-party funding and such an issue needs to be made clear to the Tribunal at the outset.
(e) Article 12(9) – (Constitution of the Arbitral Tribunal) –- The new ICC Rules state that “in exceptional circumstances the Court may appoint each member of the arbitral tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.” The ICC Court’s powers have been widened as a result of this to allow the Court to disregard the arbitration agreement as a method for the constitution of the arbitral tribunal and appoint each member of the tribunal itself. This provision will only be used in “exceptional circumstances” however it will be of concern to many unless a prescriptive view is taken of its application as one of the often-quoted advantages of arbitration is the ability of the parties to nominate their own arbitrator. The ability to ‘choose your own judge’ is valued by many parties who fall into a dispute.
(f) Article 13(6) - (Appointments and Confirmation of the Arbitrators) - The new Rules state “Whenever the arbitration agreement upon which the arbitration is based arises from a treaty, and unless the parties agree otherwise, no arbitrator shall have the same nationality of any party to the arbitration”. This is a sensible and welcome addition as it emphasises that only with the party’s agreement can an arbitrator be of the same nationality as any party to the arbitration.
(g) Article 17(2) - (Party Representation)- Article 17’s title has changed to “Party Representation” and incorporates a number of new revisions. Each party is now required to promptly inform the Secretariat, tribunal and other parties of any changes in its representation. Th new Article 17.2 follows the approach taken in the LCIA Rules 2014 in allowing an arbitral tribunal to “take any measure necessary to avoid a conflict of interest of an arbitrator arising from a change in party representation, including the exclusion of new party representatives from participating in whole or in part in the arbitral proceedings”. This will be a provision that will not sit comfortably with all – even though the tribunal must have regard to all the circumstances, the tribunal is nonetheless expressly empowered to limit a party’s ability to appoint legal representatives of its choice. This is a power which, if exercised, is unlikely to be well received by the instructing party and may be regarded as an interference with the freedom to select counsel of the party’s choice. However, the intention behind the provision – namely, to address obstructive appointments, as seen when ‘guerrilla tactics’ are deployed, which is designed to derail proceedings through introducing conflicts of interest is necessary and appropriate.
(h) Article 26(1) - (Remote hearings) - With current travel and health-related restrictions, the new ICC Rules of Arbitration have granted the arbitral tribunal the authority to decide - following adequate consultation with the Parties – whether to hold a hearing in person, by videoconference, telephone or through any other appropriate means of communication. Similar measures reflecting the current situation concerning travel restrictions and possible change of approach into the future have been included in the new LCIA Arbitration Rules under Article 19, the Tribunal has the discretion to order a virtual hearing or a combination of in person and remote attendance. Article 26.1 (Hearings) has undergone a rewrite and now provides that “the arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication”.
This provision gives the Tribunal the discretion to order a virtual or remote hearing if appropriate, and, like the 2020 LCIA Rules, “future-proofs” the drafting with the phrase “other appropriate means of communication” to allow for remote hearing technology to continue to evolve over time.
(i) Article 29(6)(c) - (Emergency Arbitrator) In addition to the unavailability of the emergency arbitrator where the arbitration agreement was concluded prior to 1 January 2012 and where the parties have expressly excluded such a possibility, the 2021 ICC Rules of Arbitration now prevent the emergency arbitrator provisions application in treaty-based arbitrations.
(j) Article 36(3) - (Correction and Interpretation of the Award; Additional Award; Remission of Awards) - The 2021 ICC Rules allows for the possibility for the Parties to apply for an additional award where the arbitral tribunal has omitted to rule on a claim raised during the proceedings. The moving party has 30 days to apply to the Secretariat following receipt of the award. Once the application is transmitted to the arbitral tribunal, the arbitral tribunal will provide the other party with no more that 30 days to respond. Unless the ICC Court decides otherwise, the arbitral tribunal will then have 30 days to render a draft of the additional award to the ICC Court.
The 2021 update of Rules are significant in respect to third-party funding, joinder and remote hearings, which had not been previously addressed. With Covid-19, the world has had to adjust to ‘a new normal’ and these additions to the Rules will provide useful guidance to the worldwide arbitration community when dealing with arbitrations before the ICC. As already noted Article 12.9 confers a discretion to the ICC to disapply an agreed tribunal appointment mechanism so as to avoid inequality between the parties. Party appointment has always been a fundamental principle of arbitration and one of the main proponents to arbitrate. It is evident that there will serious concerns within the arbitration community as to how the ICC will interpret the requirement of “exceptional circumstances” in the future. Time will tell as to how parties overcome this hurdle whether by potentially drafting express provisions to limit or disapply the powers of the arbitral tribunal in this regard. Many of the other changes have been minor relating to interpretation and clarification but helpful, nevertheless.
DR TARIQ MAHMOOD AND ARRAN DOWLING-HUSSEY © 2020
BARRISTERS, ARBITRATORS & MEDIATORS
33 BEDFORD ROW
Dr Tariq Mahmood is a Barrister, Arbitrator and Mediator practising from 33 Bedford Row where he is Head of Arbitration & Alternative Dispute Resolution. He can be contacted at email@example.com
Arran Dowling-Hussey is a Barrister, Arbitrator and Mediator working from 33 Bedford Row, London; he can be contacted at firstname.lastname@example.org.
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