Introduction
The International Chamber of Commerce (ICC) Court of Arbitration (the ICC Court) is regarded as the leading international arbitral institution. Based in Paris, France and founded in 1923, it has supervised over 15 000 cases - many high profile. Awards made by the ICC Court are celebrated for their quality which are reportedly scrutinised multiple times before being released to the parties. These factors make the ICC Rules of Arbitration (ICC Rules) one of the most used in international commercial contracts. These rules maintain the effective functioning of the ICC Court and were updated on 1 January 2012 (the new rules).
The new rules
The new rules automatically apply to all ICC arbitrations commencing after 1 January 2012, unless the parties' arbitration agreement stipulates that the ICC rules in force at the time of contracting shall apply. The new rules were necessitated as the result of changes in both arbitration practice and technology over the years.
The new rules include mechanisms for dealing with:
1.The Appointment of Emergency Arbitrators.
This enables parties to claim urgent interim relief prior to the
constitution of the actual arbitral tribunal. The mechanism is
voluntary: parties may choose to opt out of the mechanism in favour
of an alternative (and possibly less expensive) mechanism of
obtaining interim relief or they may opt out of the procedure
completely. The current fee for an application for an ICC emergency
arbitrator is approximately US$40,000.00.
2.The Joinder of Parties and Claims. The
updated provisions are said to be more robust than the old rules as
they allow for several claims to be heard by the same ICC tribunal,
where these arise:
- from the same arbitration agreement; or
- between the same parties.
However, the implementation of these provisions may be hamstrung by the requirement that all the relevant parties agree to the joinder.
3.Time and Costs. The new rules notably include a duty to conduct the arbitration "...in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute." This binds the tribunal as well as the parties. Alongside this, provision has been made for consultations and/or meetings between parties. These will allow parties to separate issues that may be resolved by, amongst others:
- agreement between the parties;
- strict reliance on documentary evidence; and
- partial awards.
4.The Impartiality and Independence of Arbitrators. Previously, the sole requirement for arbitrators was independence. The new rules add the requirement of impartiality and arbitrators are required to sign a statement affirming their independence and impartiality along with their appointment acceptance.
5.Confidentiality. Express provision has been made in the new rules for making (by order of the tribunal) arbitration proceedings, and matters connected to them, confidential in order to protect trade secrets and sensitive information of parties.
6.Communications. The new rules make allowance for both older methods, as well as any conceivable future methods, of communication under the catch-all "and other forms of electronic communication." Presently, however, the rules indicate a preference for communication by means of email.
7.Jurisdiction. The new rules limit the
ICC's jurisdiction to cases specifically referred to it by the
ICC's secretary general. This is in contrast to the old rules
which gave the ICC the discretion to make a prima facie decision as
to its own jurisdiction.
Furthermore, the ICC Court has been given exclusive jurisdiction to
administer arbitrations under the new rules. The effect of
this is that parties can no longer conduct arbitrations through
(local) bodies, organisations or institutions – the ICC
Court itself must be used. Similarly, ad hoc arbitrations conducted
using the new rules will not be effective.
The mischief this amendment seeks to address is illustrated in the
case of Insigma Technology Co Ltd v Alstom Technology Ltd
[2009] SGCA 24 which appeared before the Singapore Court of Appeal.
In this case a "hybrid arbitration clause" (a
clause in which parties agree to the administration of an
arbitration by one institution, using the procedural rules of
another institution rather than the administering institution's
own in-house rules) was upheld. Noting that international
arbitration law is based upon a foundation of party autonomy, which
gives freedom to the parties to decide where and how their
arbitration is to be conducted, the Singapore court upheld the
enforceability of that hybrid arbitration clause.
However, this finding appears to have found disfavour with the ICC.
The amendment in the new rules is a quality control mechanism to
ensure that parties agreeing to an ICC-governed arbitration are
assured the full benefits of the ICC rules and the quality
standards associated with the ICC. In essence, the mechanism is
directed at avoiding the obstacles parties face when trying to
adapt ICC Rules to non-ICC institutions and the potential
degradation of the ICC brand.
Conclusion
The new rules are a mix of practical amendments as well as substantive amendments. Clients who prefer the ICC rules to other international rules should seek advice in relation to the impact of the new rules, particularly in relation to jurisdiction. At present a simple hybrid arbitration clause referring to the ICC Rules will now contain an inherent contradiction and will not be enforceable. This gives a party a ready-made defence to any claim under a contract where a hybrid arbitration clause was used. In addition, the costs of bringing a dispute before the ICC in Paris may not be affordable or sensible given the amount in dispute. These obstacles can be overcome by effective drafting which properly reflects the autonomy of the respective parties and their common intention. So, clients who have used the ICC rules in previous contracts need to consider (before they are faced with a dispute) if an amendment to those contracts is required as a result of the new rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
