Introduction
The International Court of Arbitration of the International Chamber of Commerce (ICC) has released a revised version of its Rules of Arbitration (ICC Rules 2021). Subject to further editorial corrections, the ICC Rules 2021 will enter into force on 1 January 2021, replacing the 2017 ICC Rules. The 2017 ICC Rules however, will continue to apply to cases submitted to the ICC prior to 1 January 2021. The ICC Rules 2021 is available on the ICC website.
Key features of ICC Rules 2021
The ICC Rules 2021 aim to enhance flexibility, transparency and efficiency of arbitral proceedings and respond to emerging trends in international arbitration. Key reforms relate to:
- Joinder of additional parties and consolidation of arbitrations in multi-party/multi-contract disputes;
- Disclosure of third-party funding agreements;
- ICC’s discretionary power to appoint the entire Tribunal (under exceptional circumstances);
- Tribunal’s right to disallow new solicitors or counsel from acting the arbitration, if a conflict would arise from the appointment.
- Investor-State/Treaty-based disputes;
- Use of modern technology in arbitrations – Virtual hearings and trend towards paperless arbitration; and
- Tribunal’s powers to make an additional award.
Joinder of Additional Parties
Under the current 2017 ICC Rules, any Request for Joinder of additional parties (Joinder Request) must be submitted before the confirmation/appointment of the Arbitral Tribunal, unless all parties (including the additional party) agree otherwise.
Article 7(5) of the ICC Rules 2021 now provides that a Joinder Request may be submitted after the confirmation/appointment of any arbitrator, provided that the additional party (i) accepts the constitution of the Arbitral Tribunal; and (ii) agrees to the Terms of Reference. In deciding the Joinder Request, the Arbitral Tribunal shall consider “all relevant circumstances”, which may include: (i) whether the Tribunal has a prima facie jurisdiction over the additional party; (ii) the timing of the Joinder Request; (iii) possible conflicts of interest; and (iv) the impact of joinder on the arbitral procedure.
Under the new joinder provision: (i) a Claimant may now submit a Joinder Request at any time during the proceedings; and (ii) there is a non-exhaustive list for the Arbitral Tribunal to consider when deciding a Joinder Request. However, a successful joinder application is still dependent on all parties (including the additional party) providing consent to participate in the proceedings. In other words, if the additional party (i.e. the co-respondent) refuses to be joined, it will not be forced into the proceedings.
Consolidation of Arbitrations
The new Article 10(b) provides greater flexibility in respect of the circumstances in which arbitrations may be consolidated. Claims commenced by different parties under different contracts may now be consolidated. This change is particularly useful to handle complex multi-contract and multi-party disputes.
For consolidation to be successful, it is important that all agreements in a multi-party transaction contain ICC arbitration clauses that are materially the same and mirror each other (e.g. the number of arbitrators, language, seat and venue of arbitration).
Disclosure of Third-Party Funding Agreement
The new Article 11(7) requires each party to promptly disclose to the Secretariat or Tribunal “the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences under which it has an economic interest in the outcome of the arbitration.” The new article is consistent with:
- The IBA Guidelines on Conflict of Interest which recognises “third-party funders and insurers in a relation to a dispute may have a direct economic interest in the award”; [1] and
- The 2019 Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration (Practice Note), which states that the ICC Court would consider “relationships with any entity having a direct economic interest in the dispute” in assessing an arbitrator’s independence. [2]
In effect, Article 11(7) allows for any conflict of interest (between the third-party funder and potential arbitrator) to be detected in early stages of the proceedings, hence enhancing the transparency of the proceedings and avoiding situations of which the independence and impartiality of the arbitrator is compromised.
ICC’s Discretionary Power to Appoint the Arbitral Tribunal
The new Article 12(9) grants the ICC Court superseding power in “exceptional circumstances” to “appoint each member of the arbitral tribunal to avoid significant risk of unequal treatment and unfairness that may affect the validity of the award.” Under the new rules, the ICC Court may exercise this power even if the parties have agreed on the method of constitution of the Arbitral Tribunal.
The ICC has introduced this provision so that the ICC Court may “disregard unconscionable arbitration agreements that may pose a risk to the validity of the award”.[3] The term “exceptional circumstances” remains undefined.
Party Representation
Under the new Article 17, a party must notify the Arbitral Tribunal and other parties of any changes in its representation. The Arbitral Tribunal may then take any measure necessary to avoid conflicts of interest arising from the change. This may involve excluding the new representatives from participating in the arbitration.
In effect, the new rules give the Arbitral Tribunal the power to disallow new solicitors or counsel from acting in the arbitration, if a conflict would arise from the appointment. The purpose of the rules is to protect the “integrity of the proceedings”.[4] The rules may, for example, prevent a party from derailing an arbitration by appointing new lawyers that have a conflict of interest with the arbitrator.
Virtual Hearings and Trend towards Paperless Arbitration
The new Article 26(1) states that the Arbitral Tribunal may decide to hold a hearing in-person or by remotely via videoconference, telephone or other means of communication. This is particularly relevant now that virtual hearings have become more commonplace due to Covid-related travel restrictions and social distancing.
To ensure procedural fairness and smooth running of a virtual hearing, parties should agree on virtual hearing protocols prior to the hearing, and plan for contingencies that may arise during the hearing. For example, parties should agree on: location and integrity of the location where witnesses will be testifying; arrangements to provide assurance that there will be no interference/improper communication between the witness with his lawyers during testimony; what to do when there is breakdown in video connection, etc.
The ICC Rules 2021 also embrace electronic filing of pleadings and electronic communication between parties and Tribunal. This is a move away from the traditional requirement to serve paper copies of arbitration documents. Under the new Article 3(1), it is no longer mandatory for parties to file multiple paper copies. Instead, there is only a requirement that the documents be “sent” – signalling a move towards paperless arbitration.
However, the Request for Arbitration and Answer still need to be submitted in hard copy. Articles 4 and 5(3) have been revised to make this clear.
Investor-State Disputes
The ICC Rules 2021 include new provisions for investment arbitrations based on a treaty. Article 13(6) states that an arbitrator must not have the same nationality as any party to the arbitration, unless agreed by the parties. The purpose of this rule is to ensure the Arbitral Tribunal is neutral in cases involving the public interest.[5] Article 29(6)(c) confirms that emergency arbitration is not available in investor-State disputes.
Additional Awards
Article 36(3) allows a party to apply for an additional award as to claims made in the arbitration but omitted from the award. The application must be made within 30 days after publication of the award. A decision to grant the award will take the form of an additional award. This is a new avenue for challenging an award that was not expressly provided for in the 2017 ICC Rules. The new rule is similar to the existing Article 40 of the 2018 HKIAC Rules.
Other Changes
Other changes relate to:
- Filing deadlines: The time for Respondents to file an Answer to Request for Arbitration and for Claimants to file a Reply to any Counterclaim has been extended by 1 day. The new deadline for filing is “within 30 days from the day following the date of receipt” of the Request/Counterclaims.[6]
- Expedited arbitration: The Expedited Procedure Rules can now apply to claims up to US$3 million (for arbitration agreements concluded on or after 1 January 2021).[7]
Conclusion
To provide practical guidance on the conduct of arbitrations under the new rules, it is hoped that ICC will issue an updated version of its Practice Notes in due course.
The revised rules align with the intention of ICC to: (i) adjust the existing rules to cater for the ever-changing environment in the international arbitration arena; and (ii) improve flexibility, transparency and efficiency of arbitrations administered by ICC. The revised rules offer improvement by:
- Providing more flexibility in joining additional parties to an arbitration and in consolidating arbitrations;
- Ensuring greater transparency when third-party funders are involved in arbitrations;
- Allowing the Arbitral Tribunal to intervene to prevent conflicts of interest when a party wishes to change solicitors or counsel;
- Expressly providing for virtual hearings and electronic filing; and
- Allowing parties to apply for an additional award where the Arbitral Tribunal has failed to address claims in its award.
Overall, the revisions to the ICC Rules 2021 introduce incremental changes and improvements without substantially altering the rules.
[1] See Explanation to General Standard 6 of IBA Guidelines on Conflict of Interest, issued on 23 October 2014.
[2] See paragraph 28 of the ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, issued on 1 January 2019.
[3] ICC, “ICC unveils revised Rules of Arbitration”, 8 October 2020.
[4] Ibid.
[5] Ibid.
[6] See Article 5(1) and (6) of ICC Rules 2021.
[7] See Appendix VI to Article 30 of ICC Rules 2021.
