Legal Briefing - Leading arbitration institutions introduce significant changes in their arbitration rules
The 2021 ICC Arbitration Rules (the “2021 ICC Rules”), which were published by the International Chamber of Commerce (“ICC”) in December 2020, have entered into force as of 1 January 2021.
The London Court of International Arbitration (“LCIA”), another prominent arbitral institution, also introduced updates to its arbitration rules (the “2020 LCIA Rules”), which came into force as of 1 October 2020.
The 2021 ICC Rules and the 2020 LCIA Rules are intended, in general, to increase transparency, impartiality and efficiency of arbitration proceedings and to provide alternatives to physical hearings by paving the way for a broader use of technology.
Significant changes introduced with the 2021 ICC Rules
- Pursuant to Article 7 of the 2021 ICC Rules, a joinder of any additional parties will be decided by the arbitral tribunal following its appointment and constitution. Prior to the 2021 ICC Rules, a joinder of additional parties was allowed only with the consent of all parties. Although the arbitral tribunal will need to abide by certain criteria when deciding on a joinder, this amendment is criticised for diminishing party autonomy in arbitration proceedings.
- Article 10 of 2021 ICC Rules authorises the ICC Court to consolidate multiple disputes arising from different arbitration agreements into a single arbitration provided that the relevant conditions set out in the same article are met.
- Pursuant to the recent addition to Article 11 of the 2021 ICC Rules, parties are now obliged to inform the ICC Secretariat and the other parties of the existence and identity of a non-party which has entered into an arrangement for the funding of claims or defences under which it has an economic interest in the outcome of the arbitration.
- Pursuant to Article 12 of the 2021 ICC Rules, the ICC Court will now be authorised to appoint each member of the arbitral tribunal if necessary, even if the parties agreed on a different method of appointment, in order to ensure the impartiality of the arbitration and to avoid a substantial risk of unequal treatment or unfairness. This power, which constitutes an exception to party autonomy, will only be used in exceptional circumstances.
- Pursuant to Article 17 of the 2021 ICC Rules, the parties are now obliged to promptly inform the ICC Secretariat, the arbitral tribunal and other parties of any changes in respect of their representatives. Further to this amendment, the arbitral tribunal is now authorised to take necessary measures, such as excluding new representatives from participating in the proceedings in whole or in part, in order to avoid any conflict of interest that may arise between the representative(s) and any of the arbitrators following a change in representation.
- Taking into consideration the impact of the Covid-19 pandemic, Article 26 of the 2021 ICC Rules now allows for virtual arbitration hearings upon agreement of the parties or an ex-officio decision by the arbitral tribunal. In addition to this, considering the challenges of delivering physical copies of communication, physical copies of pleadings, submissions and other documents will no longer be required to be delivered unless a party specifically requests transmission by delivery against receipt, registered post or courier.
- Article 29 of the 2021 ICC Rules clarifies that emergency arbitrator provisions will not apply if the arbitration agreement is based on an international treaty.
- Pursuant to Article 36 of the 2021 ICC Rules, the parties will now be able to apply for an additional award if the arbitral tribunal fails to address any section of the claim in its award. Additionally, the parties may request the ICC Court to communicate the reasoning of its decision provided that this was raised prior to the issuance of the relevant decision.
- Lastly, the opt-out threshold for expedited procedure is increased from USD 2 million to USD 3 million, expanding the scope of its application.
Significant changes introduced with the 2020 LCIA Rules
- Pursuant to the changes made to Article 15.10 of the 2020 LCIA Rules, the arbitral tribunal is required to issue its final award within three months following the parties’ last submissions. Prior to these changes, the arbitral tribunal was required to issue its final award as soon as reasonably possible but there was no specific deadline in this respect.
- Similar to the 2021 ICC Rules, the 2020 LCIA Rules provide for virtual hearings and electronic communication. Article 19 of the 2020 LCIA Rules clarifies that hearings may be conducted virtually by conference calls, videoconference or using any other communication technology. Moreover, pursuant to Article 4, any written communication pertaining to the arbitration proceedings will be made electronically, unless the parties agree or the arbitral tribunal directs otherwise.
- Article 22 of the 2020 LCIA Rules now authorises the arbitral tribunal to make an “early determination” to expedite the proceedings. Accordingly, the arbitrators will now have the authority to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the tribunal or is inadmissible or manifestly without merit. This amendment aims to increase the speed and efficiency of arbitral proceedings.
- Article 22A of the 2020 LCIA Rules now allows for the commencement of consolidated arbitration and the submission of a composite request provided that the relevant conditions set out in the same article are met. Accordingly, it will now be possible to carry out disputes arising from different arbitration agreements in consolidated or simultaneous proceedings. The power to consolidate separate arbitrations lies with the arbitral tribunal and the LCIA Court.
The dates of applicability
It is worth mentioning that the 2021 ICC rules will be applicable to any arbitral proceedings on or after 1 January 2021. Hence, the 2017 ICC Arbitration Rules (i.e. the previous rules of the ICC) will continue to apply to any arbitral proceedings which have commenced prior to such date. However, the parties are free to agree on the application of the ICC rules that were in effect when the arbitration agreement was formed instead of the rules that were in place at the time of the commencement of the proceedings.
The 2020 LCIA Rules, which came into effect as of 1 October 2020, will apply to any arbitration proceedings commencing on or after 1 October 2020, unless the parties have expressly agreed on the application of the previous rules.
These recent changes aim to address the challenges encountered in practice and to regulate recent developments. Furthermore, the changes introduce certain measures intended to increase the speed, efficiency and transparency of arbitration proceedings.
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