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New ICC Arbitration Rules Aimed at Promoting Efficiency, Flexibility and Transparency

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Introduction

It has been said by no lesser authority than Boris Johnson himself that history teaches us that a world wide event such as the Covid-19 pandemic cannot pass without leaving some lasting change.

We have all seen that it has opened our eyes and eased a wide spread reticence about remote working we are now more ready to accept it and do not feel that working from home is akin to “skiving off” school.

The pandemic has also shown us that virtual meetings can be on most occasions be more flexible and more efficient than face to face meetings. They also tend to be shorter.

It is most encouraging that the ICC has incorporated the above “lessons of the pandemic” into its revision of the ICC Arbitration rules. This is however by no means the only step forward that the ICC has made in the context of its arbitration rules. There are further and perhaps more significant changes, these are analyzed below: 

The Objectives and Salient Features of the New 2021 ICC Rules

The ICC lists the following objectives of the new rules:

  • Effective case management.
  • An extended scope for consolidations.
  • Joinder of additional parties after the constitution of arbitral tribunals.
  • Increased opt-out threshold for expedited arbitrations.
  • Closer supervision of party representation

The New ICC Arbitration Rules in Summary

On 1 December 2020, the ICC launched its updated ICC Arbitration Rules 2021.

These rules will apply to cases filed from 1 January 2021.

I have attempted to group the changes into various general headings showing which areas of the arbitral process are affected by the new rules and what each amendment is seeking to achieve.

Jurisdiction

Expedited Arbitrations

It is clear that the introduction of “expedited arbitrations” by the ICC has been a success. Since 2017 when the procedure was introduced the ICC has administered close to 150 “expedited arbitrations”.  Under the previous rules the financial opt-out threshold was US$2 million. In an effort to build on the success of this procedure the threshold has now been raised to US$3 million for arbitration agreements concluded on or after 1 January 2021.

The Arbitration Agreement

Article 12(8): The new rule allows the Court to disregard “unconscionable arbitration agreements”, in disputes involving multiple claimants or multiple respondents, where necessary to avoid “significant risk of unequal treatment and unfairness that may affect the validity of the award”.

Funding of Parties

Article 11(7): The new rule requires party to communicate promptly to the 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”.

The Arbitral Tribunal

Article 13(6): The new rule introduces a requirement for neutrality in ICC treaty-based arbitrations by disallowing all arbitrators on the tribunal from holding the same nationality of any of the parties (unless the parties agree otherwise).

Article 29(6)(c): The new rule provides that the ICC “emergency arbitrator” provisions are unavailable for ICC treaty-based arbitrations.

Procedural Measures

Article 10(b): The new rule clarifies that consolidation may be ordered where “all of the claims in the arbitrations are made under the same arbitration agreement or agreements”.

Article 10(c): The new rule supplements the amendment to Article 10 (b) in that it allows consolidation to also be ordered when “the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible”.

Article 17: The new rule requires parties to give the tribunal, the other parties and the ICC Secretariat timely notice of any change in their legal representation. The tribunal is also given the power to refuse a request for a change in representation or to limit the participation new legal representatives. This rule is clearly aimed at minimizing and even avoiding delays to the arbitral process arising from “tactical” changes of representation. Watch this space for challenges to awards where arbitrators have refused changes in representation and have not given sound reasons for doing so.

Article 22(2): The amendment to this rule places a positive duty on the tribunal to adopt such procedural measures it considers appropriate. The amendment contains mandatory language using the words “shall adopt” rather than the former optional or permissive language “may adopt”. The duty for the tribunal to adopt and impose “appropriate procedural measures” rather than permission to do so under the old rule is, in short, an imposition of efficiency. Arbitrators must therefore be wary of the exposure that a failure to act in accordance with this duty will entail.

Article 26: The new rule empowers tribunals to decide “after consultation with the parties and consideration of the relevant circumstances of the particular case” whether to hearings should be conducted physically or virtually. The wording is important. It speaks of consultation with the parties and consideration of relevant circumstances. The tribunal does not require the consent or agreement of the parties but must act judicially when reaching a decision as to whether to hold a virtual or a physical / viva voce hearing.

The Award

Article 36(3): The new rule allows a party to request, within 30 days of receipt of an award, the tribunal to issue an additional award to rule on claims raised in the proceedings but not addressed in the award.

Conclusion

The 2021 revision to the ICC Rules have taken concrete steps both to empower and oblige arbitrators to conduct arbitrations having in mind the requirement for “efficiency, flexibility and transparency”.

It is good to see that the ICC is in touch with not only the times but also the urgent need to make arbitrations as efficient and as transparent as possible in terms of procedure, the conduct of the ICC arbitration and the issue and completion of a valid and meaningful award.

It is also important to note that the ICC has also address concerns raised in the specific field of investment treaty arbitration which were valid. In doing so the ICC can move forward in this increasingly important sector of business with confidence and decisiveness and to establish itself as the major investment treaty arbitral forum.

For the purposes of reading the full text of the 2021 ICC Arbitration Rules see the official ICC link below:
https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/rules-of-arbitration-2021/

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