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5 January 2021
Client Alert | France | International Arbitration
The 2021 ICC Arbitration Rules entered into force on 1st January 2021 and apply to all arbitrations registered on or after such date. While they are the continuation of the 2017 ICC Arbitration Rules, they also provide welcome changes. First, the changes clarify certain controversial provisions which have given rise to debate over the past few years, they also clearly enunciate powers granted to the arbitral tribunal or to the ICC court in order to avoid disrupting proceedings as well as to protect the enforceability of the award. Second, the changes are intended to promote the efficient conduct of proceedings. Finally, the changes reflect the increased use of technology in general and in the context of the Covid pandemic and associated lockdowns in particular.
Some changes are introduced to clarify certain provisions of the 2017 ICC Arbitration Rules that have given rise to debate or have caused issues in a number of cases.
Specificity of investment arbitration. Two new provisions clearly spell out the specificity of investment arbitration. In investor-state arbitration proceedings where the arbitration agreement upon which the application is based arises from a treaty, none of the arbitrators can have the same nationality as any of the parties (article 13(6)) and emergency arbitration is not available (article 29(6)(c)).
Expansion of the arbitral tribunal's power to avoid challenges on their independence and impartiality. Under new article 17(2), the arbitral tribunal has the power to take "any measure necessary" - including the exclusion of a late-added counsel - to avoid a conflict of interests of an arbitrator arising from a change in party representation. This new provision is intended to deter parties to change representation as a tool to derail the proceedings. Similarly, article 11(7) introduces a new obligation on the parties to disclose the existence and identity of a third-party funder to assist the arbitrators in complying with their duties of independence and impartiality.
Expansion of the ICC Court's power to protect the enforceability of the award. One of the most controversial change seems to be the addition of a new article 12(9). Notwithstanding the parties' agreement, the ICC Court may, in "exceptional circumstances", appoint each member of the arbitral tribunal to "avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award". This new provision could apply where the arbitration agreement gives one party the power to appoint the sole or presiding arbitrator, or where it violates the law of the seat.
Increased efficiency in complex cases. A fair number of cases administered by the ICC are complex disputes between multiple parties under multiple contracts and arbitration provisions. The 2021 ICC Arbitration Rules facilitates the joinder of third parties in the course of arbitration or the consolidation of multiple arbitrations.
Indeed, the new article 7(5) allows for the joinder of a third party after the confirmation or appointment of the arbitral tribunal. The additional party must be a party to the arbitration agreement, it must accept the constitution of the arbitral tribunal and agree on the terms of reference. Such joinder will be decided by the arbitral tribunal taking into account "all relevant circumstances" including its prima facie jurisdiction over the additional party, the timing of the request, possible conflicts of interests and the impact of such joinder on the arbitral procedure. This change is remarkable as the joinder of a third party is now permitted without the claimant's consent.
Similarly, the amended article 10(b) now permits the consolidation of arbitration proceedings started under different contracts with similar arbitration agreements. This is a welcome change as it will notably allow for the consolidation of proceedings based on back-to-back contracts containing the same arbitration agreements.
Increased threshold for expedited procedure. Expedited procedure has proven popular and is viewed by a large number of practitioners as good, fast and cheap. Under the 2017 ICC Arbitration Rules, the expedited procedure automatically applied where the amount in dispute was under USD 2 million. After much debate, the threshold has been reviewed at USD 3 million for arbitration agreements concluded on or after 1st January 2021 (article 1(2) of Appendix VI). The number of cases submitted to expedited arbitration on a default basis will most certainly rise in the coming years.
Case management technique. A very subtle change of wording that reflects the ICC's desire to promote alternative dispute resolution and settlement of part or all of the claim. While under the 2017 Arbitration Rules, the arbitral tribunal only had to inform the parties that they could settle their case at any time in the course of the proceedings, it now should encourage them to do so (article h)(i) of Appendix IV). One could however wonder the form this encouragement should take, including the description in the award of the steps taken by the tribunal, and what sanction would be imposed should the arbitral tribunal fail to do so.
Additional award. New articles 36(3)-(4) allow the arbitral tribunal to render an additional award in respect of a claim that was submitted before it but not decided in its first award. This addition is particularly useful where the law of the seat does not allow for additional awards as the party would otherwise have to start a new arbitration proceedings in respect of this omitted claim.
Increased use of electronic form. The revision of articles 3(1), 4(4)(b) and 5(3) removes the requirement for paper copies to be served on a default basis. Indeed, article 3(1) now merely provides for pleadings and written communications to be "sent" to each party, arbitrator and Secretariat. The parties now have to decide whether, depending on their domestic laws, they should request transmission of the request for arbitration and the response by "delivery against receipt, registered post or courier".
During a conference of 1st December 2020, the ICC announced that it was launching a new online case management platform and was setting up a share platform for each case, to encourage the parties and the arbitral tribunal to file subsequent pleadings and written communications electronically rather than in hard copy.
Finally, electronic signature of the terms of reference and of the award is encouraged. However, it is only specified in the Note to Parties and Arbitral Tribunals on the Conduct of Arbitration insofar as the enforceability of such signatures could be questioned under some domestic laws.
No presumption of hearings in person. The wording of article 25(2) of the 2017 ICC Rules has been deleted and a new article 26(1) introduced. Under such new provision, there is no longer a presumption that the hearings shall be conducted "in person". The arbitral tribunal may now decide "after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication".
This legal update is not intended to be and should not be construed as providing legal advice. The addressee is solely liable for any use of the information contained herein and the Law Firm shall not be held responsible for any damages, direct, indirect or otherwise, arising from the use of the information by the addressee.
