The International Chamber of Commerce (ICC) has released revised arbitration rules, which are expected to become effective from 1 January 2021 and apply to arbitration proceedings commenced after that date. The Revised Rules can be found here. The previous two revisions to the ICC Rules were in 2017 (see our comments here) and 2012 (see our comments here).
The Revised Rules, which are intended to provide “further steps towards greater efficiency, flexibility and transparency,”1 cover a wide range of issues and include a number of new provisions. Among other changes, the Revised Rules address joinder and consolidation of multi-party arbitrations; remote hearings and the use of technology; equality in the constitution of a tribunal; disclosure in third-party funding arrangements; nationality and emergency arbitration for treaty-based arbitrations; powers of the tribunal where there is change in party counsel/representation; and the monetary threshold for expedited arbitrations.
Section I below discusses some of the more notable revisions in more detail, while Section II briefly summarizes other revisions.
I. NOTABLE REVISIONS TO THE ICC RULES
A. Multi-Party and Multi-Contract Arbitration
The revised rules amend and broaden the existing approach to joinder, the procedure by which additional parties can be added to an arbitration. Under the 2017 ICC Rules, joinder was not permitted after the constitution of the tribunal unless all the parties consented. New Article 7(5) provides that a request for joinder may be made by a party to the arbitration after the appointment or confirmation of an arbitrator. In deciding on such a request, the tribunal is to “take into account all relevant circumstances, which may include whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the Request for Joinder, possible conflicts of interests and the impact of the joinder on the arbitral procedure.” In addition, the additional party must consent to the joinder (although consent of the other parties is not required) and accept the constitution of the tribunal and any Terms of Reference that may have been agreed. In practice, this will allow a party to join a willing third party without the consent of the other parties, provided the tribunal allows it.
The Revised Rules reflect an incremental expansion of the joinder mechanism in ICC disputes, although they are still less permissive than some other leading institutions. Rule 7 of the 2016 SIAC Rules, for instance, permit joinder applications by both parties and non-parties to the arbitration and also expressly provide that the tribunal may decide to grant the joinder application in whole or in part, if joinder is only appropriate in relation to certain claims or certain parties that are sought to be joined.
Under the 2017 Rules, the limits to the consolidation of different claims in the same proceeding were not clear. Article 10(b) referred to consolidation of claims under the same arbitration agreement. The Revised Rules clarify and broaden the scope of consolidation. As revised, Article 10 now provides that consolidation is allowed where “all claims in the arbitration are made under the same arbitration agreement or agreements.”
In particular, revised Article 10 clarifies that consolidation is allowed where: (i) all parties to the arbitration agree to consolidation (Article 10(a)); (ii) where the parties are different but the claims are made under the same arbitration agreement or different agreements that are “identical” (Article 10(b)); or (iii) the claims are not made under the same arbitration agreement(s) but the claims are between the same parties, the arbitration agreements are compatible, and the claims are in connection with the same legal relationship (Article 10(c)).
3. Hearings and use of technology
The Revised Rules provide clarifications in order to support the remote conduct of hearings and to use technology to create greater efficiency in proceedings. Article 26(1) has been revised to expressly state that the tribunal has the authority to conduct hearings remotely by “teleconference, telephone or other appropriate means of communication,” at its own discretion after consulting the parties. In addition, to avoid any confusion as to the tribunal’s authority to conduct hearings remotely, the reference in Article 25(2) of the 2017 ICC Rules to the tribunal hearing “together the parties in person if any of them so requests” has been removed.
In addition, Articles 3(1), 4(4)(b) and 5(3) have been revised to make clearer that electronic forms of communication can be used for written notifications, requests for arbitration and responses to a request. The revised rules now refer to such notifications being “sent” and previous references in Article 3(1) to providing “copies” have been deleted. Similarly, Articles 4(4)(b) and 5(3) now only require a party to provide the ICC with a “sufficient number of copies” of requests for arbitration, responses, and counterclaims where the sending party requests that the ICC provides “delivery against receipt, registered post or courier” to the other parties.
These revisions follow similar changes to the LCIA Rules, which also made more express the in Articles 14.6(iii) and 19.2 the tribunal’s authority to use technology to enhance the efficiency and expeditious conduct of the arbitration and to and conduct hearings “virtually by conference call, videoconference, or using other communications technology,” as well making email or other electronic means the default approach for the transmission of submissions and accompanying documents.2
4. The ICC Court’s authority to appoint the entire tribunal
Article 12, which addresses the constitution of the tribunal, has been revised to add new Article 12(9), which empowers the ICC Court to appoint the entire tribunal. This broadens the authority previously provided for in Article 12(8), which grants the ICC Court the power to appoint each member of the tribunal in multi-party arbitrations where the parties are unable to agree on a method by which to appoint the entire tribunal. Article 12(9) applies to any arbitration, including bilateral and multi-party arbitrations.
Under the new provision, the ICC Court is empowered to appoint each member “in exceptional circumstances” where there is “a significant risk of unequal treatment and unfairness” with regard to the parties to the arbitration and may thereby disregard the agreement between the parties on the method by which the tribunal is to be constituted. The ICC has indicated that this provision is particularly targeted at arbitration agreements that are deemed to be “unconscionable” insofar as they “may pose a risk to the validity of the award,”3 and is intended to be consistent with Article 42, which provides that the ICC Court “shall make every effort to make sure that the award is enforceable at law.”
5. Disclosure of funding
As one of its transparency measures, the revised rules include new Article 11(7), which provides that parties are expressly required to inform the ICC Secretariat, the other parties and the tribunal of the existence and identity of any non-party to the arbitration that has entered into an agreement with a party for the “funding of claims or defences under which it has an economic interest in the outcome of the arbitration.”
This revision is consistent with the ICC’s “Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration,” as revised for 2019, which state at paragraph 28 that “relationships with any entity having a direct economic interest in the dispute or an obligation to indemnify a party for the award” should be taken into account by arbitrators when considering disclosing a conflict of interest. The Revised Rules use even broader language, referring to “an economic interest” rather than “a direct economic interest.”
This new disclosure requirement follows an increasing trend regarding transparency with regard to funding arrangements. In 2017, the SIAC added Article 24(1) to its rules, which provides the tribunal with the power to order disclosure of the existence of a third-party funding arrangement. In 2018, the HKIAC went further by adding new Article 44, which requires disclosure of any “funding agreement.” Similarly, the current proposed amendments to the ICSID Rules add a requirement that parties provide notice of funding from non-parties “through a donation or grant, or in return for remuneration dependent on the outcome of the proceeding.” The ICC’s new mandatory requirement is consistent with this trend of making disclosure of funding arrangements mandatory.
6. Treaty-based arbitrations
There have been two significant modifications in the Revised Rules relating to treaty-based arbitrations:
a. Article 13(6), on nationality of arbitrators, has been revised to provide that, in treaty-based arbitration agreements, absent agreement of the parties, no arbitrator to the proceedings may have the same nationality as any of the parties. This provision is consistent with the approach taken by Article 39 of the ICSID Convention.
b. Article 29(6)(c) now makes clear that the ICC’s emergency arbitrator provisions do not not apply to treaty-based arbitrations. This is consistent with the approach taken by ICSID Rules, and UNCITRAL Rules which do not provide for emergency arbitration and contrasts to the 2017 SCC Rules as set out in Appendix II and 2017 SIAC Investment Rules, which do provide for emergency arbitration for treaty-based arbitrations.
7. Party Representation
Article 17(1) of the Revised Rules provides that parties to an arbitration have a duty to immediately notify the tribunal, other parties, and the ICC Secretariat of a change in their representation. Moreover, new Article 17(2) clarifies that the tribunal has the discretionary authority to take “any measure necessary to avoid a conflict of interest” arising from a change in party counsel/representation including “exclusion of new party representatives from participating in whole or in part in the arbitral proceedings” if their participation would create a conflict of interest between an arbitrator and the newly appointed counsel/representatives of a party. These changes are similar to the approach taken under the Article 18 of the LCIA Rules.
II. OTHER REVISIONS TO THE ICC RULES
There are a number of other revisions to the ICC Rules, which are briefly summarized below.
- Expedited Procedure Rules: The Revised Rules provide that the the Expedited Procedure Rules in Article 30 and Annex VI will automatically apply to cases where the amount in dispute is less than US$ 3 million (the limit was US$ 2 million undre the 2017 ICC Rules). As with the 2017 ICC Rules, parties may opt out of the procedure or thay may agree to apply the Expedited Procedure Rules where the amount in dispute exceeds the monetary threshold in Article 30(2)(b). By increasing the monetary threshold, it means that more cases are likely to fall within the Expedited Procedure Rules, bringing the ICC closer to the broader approach that some other leading institutions have taken to applying expedited procedure rules. The expedited procedure rules under the 2016 SIAC Rules, for instance, apply where the amount in dispute does not exceed S$6 million (approximately US$ 4.5 million).
- Case Management (Articles 22(2) and 24(2)): Article 22(2) has been amended so that the previous language that a tribunal “may adopt” procedural measures so as to ensure effective case management has been replaced and now provides that the tribunal “shall adopt such procedural measures as it considers appropriate.” As set out in Appendix IV of the ICC Rules, this may include the different case management techniques in (a)-(h) such as bifurcating the proceedings, identifying issues which can be resolved by agreement between the parties or their experts or solely on the basis of documents. Article 24(2) of the Revised Rules also requires that a tribunal is to establish the procedural timetable for the proceedings “as soon as possible” after the first case management conference as opposed to “following” the first case management conference as provided by the 2017 ICC Rules.
- Additional Awards (Article 36): Article 36 has been revised to provide a procedurefor the tribunal to consider a request by a party for it to issue an additional award on claims that it “omitted to decide.” Article 2(v) has also been revised to include “additional award” to the definition of “award.”
- Governing law for disputes relating to ICC Administration (Article 43): New Article 43 addresses the governing law for disputes relating to the ICC’s administration of a case. It provides that any and all claims “arising out of or in connection with the administration of the arbitration proceedings by the Court under the Rules” shall be governed by French Law and settled by the Paris Judicial Tribunal in France, which will have exclusive jurisdiction. The addition of a governing law and dispute resolution provision with regard to disputes about the administration of an arbitration is similar to the approach taken by the 2020 LCIA Rules. The ICC and LCIA have taken different approaches, however, in their provisions on limitation of liability. Under Article 41 of the ICC Rules, there is no liability for the ICC, arbitrators and other identified individuals except where such limitation is prohibited by applicable law, whereas under Article 31.1 of the LCIA Rules, liability is not excluded where the “the act or omission is shown by that party to constitute conscious and deliberate wrongdoing.”
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In many ways, the Revised Rules reflect incremental change and clarifications, rather than significant innovation. Nonetheless, several changes reflects changing approaches in international arbitration to certain key issues, including the parties’ freedom to choose the tribunal and their own representatives, as well as transparency, and may be more controversial. The Revised Rules also reflect the increasing pace at which the ICC and other leading institutions are revising and updating their rules to address new issues, and to reflect current best practices in international arbitration. Finally, the ICC’s announcement on 21 December that it is opening a fifth case management office – in Abu Dhabi Global Market –also reflects a recent trend of leading institutions increasing their physical presence globally.