Revised ICC Rules of Arbitration
November 25, 2020
A copy of the revised ICC Rules 2021 can be accessed at the following link: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/rules-of-arbitration-2021/#article_7
The International Chamber of Commerce has recently announced revisions to its 2017 Rules of Arbitration. The revised Rules are under further review, and are expected to be effective from 1 January 2021.
The “soft launch” of the revised Rules reveals that some significant changes have been made. These are summarised below.
Joinder and consolidation
A new Article 7(5) has been added. This allows parties to apply for joinder of an additional party to the proceedings even after the confirmation or appointment of an arbitrator.
The previous position was that, after the confirmation or appointment of an arbitrator, parties could not request an additional party to be joined unless all the parties, including the additional party, agreed otherwise.
However, under the new Article 7(5), an exception has been introduced. After its constitution, the tribunal will decide any request for joinder which is made after the confirmation or appointment of any arbitrator. Such a request is subject to the additional party’s acceptance of the tribunal’s constitution and agreement to the Terms of Reference.
Article 7(5) also broadly sets out the factors to be considered by the tribunal when determining a request for joinder of an additional party. These include all the relevant circumstances of the case, including the tribunal’s prima facie jurisdiction over the additional party, the timing of the request, potential conflicts of interest and the impact on the arbitration proceedings.
This is an important development. In our view, Article 7(5) will permit a respondent to join a consenting co-respondent without the need for the claimant’s express agreement. However, if a co-respondent is not willing to participate in the arbitration, or does not accept the tribunal’s constitution or the Terms of Reference, the parties will face similar hurdles as they would under the previous Rules.
Moreover, the previous Rules did not permit consolidation of arbitration claims arising out of different arbitration agreements, even if they involved the same parties. The revised Rules, however, expand the ambit of Article 10 and provide that consolidation of two or more arbitrations is possible if “all of the claims in the arbitrations are made under the same arbitration agreement or agreements” or “the claims in the arbitrations are not made under the same arbitration agreement or agreements, but 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”.
Transparency of the proceedings
The revised Rules introduce a new Article 11(7). This requires parties to notify the Secretariat, the tribunal and other parties of the existence and identity of any third party which is funding the claim or defence, and has an economic interest in the outcome of the dispute. Such a requirement is consistent with paragraph 28 of the ICC’s Note to the Parties and Arbitral Tribunals on the Conduct of the Arbitration under the previous Rules.
Constitution of the tribunal
The revised Rules introduce a new Article 12(9), whereby the ICC Court has the authority to appoint each member of a tribunal “in exceptional circumstances”, regardless of the parties’ agreement as to the method of the tribunal’s constitution. The stated purpose of this authority is to “avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”. This is a significant departure from the previous regime. However, it remains to be seen how the ICC Court will interpret the “exceptional circumstances” in which it would be minded to exercise this power. Indeed, the extent to which the ICC Court exercises this power will directly affect parties’ inclination to resort to ICC arbitration, as the autonomy to nominate arbitrators is an important and attractive feature of arbitration.
The revised Rules introduce provisions which are similar to the rules of the London Court of International Arbitration. Further to Article 17(1) and (2), the parties are now obliged promptly to inform the ICC Secretariat, the tribunal and other parties if there is a change in their representation. If an arbitrator becomes conflicted as a result, the tribunal now has the authority to take any measures to avoid such a conflict, including the exclusion (wholly or partially) of the new party representatives from the proceedings. The tribunal can only exercise this power if the parties have first been given an opportunity to make written submissions on the matter.
This is a significant departure from the previous Rules, which did not address party representation in detail, let alone grant the tribunal power to exclude party representatives in these circumstances.
Article 26(1) has been revised to allow hearings to be conducted “remotely by videoconference, telephone or other appropriate means of communication”, provided that the tribunal has consulted the parties on the matter and has considered all the relevant facts and circumstances of the case. This revision is of particular assistance in light of the COVID-19 pandemic.
For arbitration agreements concluded on or after 1 January 2021, the revised Rules raise the claim threshold for applicability of the expedited procedure to US$ 3 million. This will enable more parties to resort to the expedited procedure, with concomitant time and cost savings.
Investment treaty disputes
The previous Rules did not address investor-state disputes. However, Article 13(6) of the revised Rules provides that, if an arbitration agreement arises out of a treaty, arbitrators cannot be of the same nationality as the parties, unless the parties agree otherwise. This revision helps to ensure that tribunal neutrality in such cases is not compromised.
Further, Article 29(6)(c) of the revised Rules provides that the emergency arbitrator provisions do not apply to treaty-based disputes.
It is clear that there have been some material amendments to the Rules. In the main, the revisions have been brought about to adapt to the current COVID-19 environment and to increase the transparency, fairness and efficiency of arbitration proceedings. It will be interesting to see how the revised Rules are applied in practice, particularly the ICC Court’s authority to appoint arbitrators in exceptional circumstances.