New Arbitration Rules Published By the London Court Of International Arbitration (LCIA) and International Chamber Of Commerce (ICC) The changes to the LCIA Rules, and the pending changes to the ICC Rules, reflect the desire of arbitral institutions to keep their processes current and relevant to commercial parties, even as the demands on the arbitral process change For users...
New Arbitration Rules Published By the London Court Of International Arbitration (LCIA) and International Chamber Of Commerce (ICC)
The changes to the LCIA Rules, and the pending changes to the ICC Rules, reflect the desire of arbitral institutions to keep their processes current and relevant to commercial parties, even as the demands on the arbitral process change
For users of international arbitration, two important recent developments have been the revised sets of institutional arbitration rules for both (1) the London Court of International Arbitration (LCIA) which came into force for all LCIA arbitrations commenced on or after 1 October 2020, and (2) the International Chamber of Commerce (ICC) whose new 2021 Rules have received a 'soft launch' prior to them being finalized and brought into force on 1 January 2021.
This article considers the main changes in both sets of rules relevant to commercial users of arbitration and their counsel.
THE 2020 LCIA RULES
The 2020 LCIA Rules aim to enhance the efficiency and flexibility of the LCIA process while staying true to the LCIA's traditional light-touch approach.
The new Rules allow for multiple arbitrations to be commenced in one "Composite Request" and expand the circumstances in which consolidation may be available. They confirm the tribunal's wide discretion in relation to all aspects of arbitral procedure, including an express power to order early determination of claims or counterclaims which are manifestly without legal merit. There is also a move to electronic submissions and communications as the default, and an express power for tribunals to order virtual hearings. As a further efficiency-focused measure, the LCIA's existing approach to tribunal secretaries (previously contained within a Guidance Note to arbitrators) has been codified into the Rules.
Tribunal's procedural discretion: There have been some fairly substantial changes to Articles 14 (Conduct of Proceedings) and 22 (Additional Powers) of the Rules. In emphasizing the wide discretion available to an LCIA tribunal in fulfilling its general duty to provide "a fair, efficient and expeditious means for the final resolution of the parties' dispute", Articles 14.5 and 14.6 spell out that this includes shortening timescales, limiting evidence, restricting pleadings, and adopting technology. Article 22 goes even further in providing for the first time an express power of early determination. A tribunal may determine that any claim, defense, counterclaim, cross-claim, defense to counterclaim or defense to cross-claim is manifestly outside the jurisdiction of the tribunal, or is inadmissible, or manifestly without merit.
Composite Requests and Responses: The English court had interpreted the previous 2014 LCIA Rules not to permit a party to commence a single arbitration in respect of disputes under multiple contracts. Changes to Article 1.2 allow for composite Requests for Arbitration to be issued to commence multiple arbitrations at once, with Article 2.2 allowing a Respondent to file a composite Response. Whether those multiple claims are then consolidated will be determined by the tribunal and/or the LCIA.
Consolidation of disputes: The powers to consolidate disputes under the Rules have been subtly expanded to include arbitrations under compatible arbitration agreements between "the same disputing parties or arising out of the same transaction or series of related transactions". A tribunal may also conduct arbitrations concurrently in similar circumstances and where the same arbitral tribunal is constituted in respect of each arbitration.
Tribunal Secretaries: The detailed guidance to arbitrators in the LCIA's 2017 Guidance Note has now been included as a new Article 14A which confirms that parties have to agree to the use of tribunal secretaries and that the tribunal must not delegate decision-making powers. They also confirm that tribunal secretaries must disclose any conflicts of interest and are bound by obligations of confidentiality.
THE 2021 ICC RULES
The ICC Rules were revised last in 2017, so the changes this time are fairly limited. The main changes of relevance for parties and counsel are amendments to the consolidation and joinder provisions to allow for joinder after the confirmation or appointment of a tribunal in limited circumstances, a provision for virtual hearings and a shift away from paper filings, allowing the tribunal to limit changes to party representation where it causes conflicts of interest, a requirement that parties disclose certain third-party funding agreements, and a power in "exceptional circumstances" for the ICC Court to appoint the entire tribunal to avoid unequal treatment even where this deviates from the parties' agreement.
Consolidation and Joinder: The new Rules confirm that consolidated disputes do not all have to fall under the same contract, and thus consolidation may happen where "all of the claims in the arbitrations are made under the same arbitration agreement or agreements". Under the previous Rules, no additional party could be joined after the confirmation or appointment of the Tribunal unless all parties, including the additional party, agreed. The new Rules allow a respondent to join a willing co-respondent even without the express agreement of the claimant (providing the tribunal considers it appropriate in the circumstances).
Virtual and paperless process: Like the 2020 LCIA Rules, the 2021 ICC Rules acknowledge the reality of modern (pandemic) practice. Article 26.1 (Hearings) now allows the tribunal to decide, after consulting the parties, that "any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication". The new Rules also remove the presumption that pleadings and written communications will be submitted in hard copy in multiple sets (parties, arbitrators and the ICC Secretariat). Instead, pleadings and written communications must be "sent" to each party, arbitrator and the Secretariat, and that the Secretariat be copied into communications to or from the tribunal.
Third-party funding: In the interests of ensuring the independence and impartiality of the tribunal, Article 11.7 now requires each party to inform the Secretariat, the tribunal and the other parties, of the existence and identity of any non-party which has an arrangement for the funding of claims or defenses and an economic interest in the outcome of the arbitration. With a similar eye to avoiding tribunal conflicts, where a party changes representation during an arbitration, new Article 17.2 allows a 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".
Inequality of tribunal appointment: A new Article 12.9 grants the ICC Court a fall-back discretion "in exceptional circumstances" to deviate from any agreement by the parties on the method of constitution of the tribunal, and for the ICC Court to appoint the entire tribunal. This power may be invoked "to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award". While the intention to ensure the validity of the award is to be supported, the removal of the agreed right for the parties to nominate their tribunal is such a significant step, that it is likely this discretion will be rarely used.
Comment
The changes to the LCIA Rules, and the pending changes to the ICC Rules, reflect the desire of arbitral institutions to keep their processes current and relevant to commercial parties, even as the demands on the arbitral process change. The step changes in procedure brought about by the pandemic are obvious prompts for change, but other changes which reflect the growth of third-party funding in arbitration, the use of tribunal secretaries, and the use of arbitration in multi-party/multi-contract situations are also to be welcomed. Well advised parties should find that these new Rules give added efficiency and certainty to the arbitral process, and should help in facing the resolution of the commercial disputes which will arise in the months and years ahead.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.