South Africa: The New ICC Rules Of Arbitration

Last Updated: 4 October 2011
Article by Des Williams

The International Chamber of Commerce (ICC) Court of Arbitration (Court) is the world's leading institution for the resolution of international business disputes. The ICC Court is comprised of members from almost 90 countries (including South Africa) and the Court administers and supervises more than 1500 pending arbitrations. The role of the Court is to oversee the ICC arbitration process. However, the task of deciding matters submitted to arbitration remains the task of the arbitrators appointed under the ICC rules.

The current ICC rules of arbitration were last revised in 1998. The rules have now been updated to take account of developments in arbitration practice and procedure since 1998, and the new rules will become effective on 1 January 2012.

The new rules are the product of two years of work within the ICC Commission on Arbitration, (Commission) which is a think-tank of 620 dispute resolution specialists from 90 countries. A core group comprising Commission members and representatives of the Secretariat of the Court have drawn on their own experience and feedback from a 200 member task force to draft the new rules.

The new rules were unveiled at an ICC conference in Paris from 12 to 13 September 2011, and are widely being acclaimed for taking into account the issues and concerns of the arbitration community and the users of the Court's services, and for dealing with those concerns and issues in a comprehensive and innovative manner.

The revisions are extensive and far-reaching. This article will not track all the changes which have been made, but will focus on the revisions which are particularly innovative and important.

Case management

Article 24 of the new rules provides for a Case Management Conference and Procedural Timetable. This new rule requires the arbitral tribunal to convene a case management conference to consult the parties on procedural measures. Such measures may include one or more of the case management techniques described in appendix IV to the rules.

The appendix gives examples of techniques that can be used, and reminds the arbitral tribunal and the parties that "Appropriate control of time and cost is important in all cases. In cases of low complexity and low value, it is particularly important to ensure that time and costs are proportionate to what is at stake in the dispute".

Examples of case management techniques referred to in the appendix include:

  • Bifurcating the proceedings or rendering one or more partial awards on key issues, when doing so may genuinely be expected to result in a more efficient resolution of the case.
  • Identifying issues that can be resolved by agreement between the parties or their experts.
  • Identifying issues to be decided solely on the basis of documents rather than through oral evidence or legal argument at a hearing.
  • Identifying various methods for dealing with the production of documentary evidence.
  • Limiting the length and scope of written submissions and written and oral witness evidence so as to avoid repetition and to maintain a focus on key issues.
  • Using telephone or video conferencing for procedural and other hearings.
  • Organising pre-hearing conferences.
  • Informing the parties (in relation to the settlement of disputes) that they are free to settle either by negotiation or through any form of amicable dispute resolution (ADR) methods such as, for example, mediation under the ICC ADR rules.

Multiple parties, multiple contracts and consolidation

The new rules include new provisions regarding multiple parties, multiple contracts and consolidation. These new rules recognise that in complex commercial disputes there are often more than two parties involved. Similarly, there are often a number of contracts involved and relevant arbitration clauses are not always found in only one of these contracts. Increasingly, too, the need arises for a new party to be joined in arbitration proceedings which have already commenced. The new rules accordingly provide for:

  • The joinder of additional parties (article 7).
  • Claims between multiple parties (article 8).
  • Claims arising out of or in connection with more than one contract to be made in a single arbitration, irrespective of whether such claims are made under one or more than one arbitration agreement (article 9).
  • The consolidation of two or more arbitrations pending under the rules into a single arbitration (article 10).

It has always been a fundamental principle of arbitration law that any submission to arbitration must be based on the agreement of the parties. The new rules do not, and clearly could not, change that principle. The agreement to submit to arbitration remains the foundation upon which arbitration is built. The new rules relating to joinder, claims between multiple parties, multiple contracts and consolidation of arbitrations are therefore all stated to be subject to the provisions of articles 6(3) to 6(7), which require the Court to be satisfied that the parties are party to an arbitration agreement.

Emergency arbitrator

Article 29 is a new rule which introduces the concept of the "Emergency Arbitrator".

The rule provides that a party "that needs urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal ("emergency measures") may make an application for such measures pursuant to the Emergency Arbitrator rules in appendix V".

The Emergency Arbitrator rules in appendix V provide for a detailed timetable. The Emergency Arbitrator should be appointed within two days of the application. Any challenge against the Emergency Arbitrator must be made within three days from receipt by the party making the challenge of the notification of the appointment of the Emergency Arbitrator. The Emergency Arbitrator's order is required to be made no later than 15 days from the date on which the file is transmitted to him or her. It is therefore possible for an order to be obtained within 18 days from the date of the Secretariat's receipt of the application for emergency measures.

The provisions of article 29 are far reaching, and it should be noted that:

  • The order made by the Emergency Arbitrator does not bind the arbitral tribunal with respect to any question, issue or dispute determined in the order.
  • The Emergency Arbitrator provisions in article 29 are in addition to the conservatory and interim measures provisions in article 28, and do not replace article 28. Article 28 will still be used where conservatory and interim relief is sought after an arbitral tribunal has been appointed. Article 29 may only be used where the urgent interim or conservatory measures sought cannot await the constitution of an arbitral tribunal.
  • The Emergency Arbitrator provisions do not apply if:
  • the arbitration agreement was concluded before the date on which the rules came into force;
  • the parties have agreed to opt out of the Emergency Arbitrator provisions; or
  • the parties have agreed to another pre-arbitral procedure that provides for the granting of conservatory, interim or similar measures.

Comments and conclusion

It is important that all lawyers involved in arbitration work and commercial lawyers involved in drafting arbitration clauses in commercial agreements are familiar with the revised rules so that they can advise their clients properly, particularly in relation to those rules where they may have the option of "opting out".

The best example is the "Emergency Arbitrator" rule. Clients should understand that the effect of any order made by an Emergency Arbitrator could, in practice, be final, particularly if it takes years for the dispute to be determined by the arbitral tribunal.

For example, in a dispute relating to the use of intellectual property, the commercial effect of an interim interdict granted by an Emergency Arbitrator could be final if the dispute is only finally determined by the arbitral tribunal after three or four years.

The Emergency Arbitrator procedure is a powerful weapon in the hands of a party seeking relief, but will not be as enthusiastically accepted by the party resisting relief. Careful consideration should therefore be given, in each case, to the question whether the parties should expressly "opt out" of the Emergency Arbitrator provisions.

Generally, it is expected that the new rules have gone a long way to make international arbitration more user friendly, efficient and cost effective. The rules recognise that appropriate control of time and cost is important in all cases, and the revisions undoubtedly facilitate the achievement of this objective.

Much will continue to depend on the arbitrator, but the emphasis in the rules on the control of time and cost should assist in focusing the minds of the arbitral tribunal and the parties on the techniques that may be employed to ensure that arbitration continues to consolidate its position as the leading method for the resolution of international commercial disputes.

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.

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