In International Chamber of Commerce ("ICC") arbitrations, new claims that are subsequent to the terms of reference are subject to the arbitral tribunal's authorization. Article 23(4) of the ICC Arbitration Rules ("Rules") give discretion to the arbitral tribunal by setting forth that the arbitral tribunal shall consider the nature of new claims, the stage of the arbitration, and other relevant circumstances.
The issue of new claims in ICC arbitrations and the application of Article 23(4) in these matters are analyzed in this article.
In ICC arbitrations, the terms of reference play an important role. One of the purposes of the terms of reference is to establish the parties' claims. The terms of reference contain, among other things, the relief sought by the parties. If the parties make claims that fall outside of the scope of the terms of reference, the provisions to be applied to these new claims shall be determined.
In ICC arbitrations, Article 23(4) of the Rules sets forth under which conditions new claims may be advanced in ICC arbitrations. Pursuant to this provision, after the terms of reference have been signed or approved by the court, no party shall make new claims that fall outside the limits of the terms of reference, unless it has been authorized to do so by the arbitral tribunal. The arbitral tribunal shall consider the nature of such new claims, the stage of the arbitration, and other relevant circumstances.
This provision intends to assist the arbitral tribunal in managing the proceedings smoothly and efficiently, as well as providing enough flexibility to permit new claims, where appropriate.
Under Article 23(4) of the Rules, the arbitral tribunal is required to conduct a two-step analysis. Firstly, the arbitral tribunal should decide whether the new elements introduced are new claims, and as a second step, whether these new claims should be authorized.
The Definition of "New Claim"
Within this context, the limits of what may constitute a new claim must be analyzed. The Rules do not provide a definition for the term of "new claim". On the other hand, the scope of the terms of reference should be examined with reference to the request for relief, and if a new claim leads to the modification of the relief sought, or to an additional request for relief, there may well be an issue as to whether it is within the scope of the terms of reference. Within this framework, there would be a difference if the claim is based on new facts or new legal arguments, or if there is a change in the nature of the relief sought.
It should be emphasized that only a change in the argument is insufficient to be considered as a new claim, and a new claim will imply that the relief requested is based on entirely new grounds. Therefore, a new characterization of a relief within the scope of the terms of reference will not be considered as a new claim under this provision.
The timing of the decision of the arbitral tribunal may depend on whether the party specifically requests permission to make a new claim, or whether the other party opposes the new claims introduced. If there is an objection to the new claims, or where the new element is obviously a new claim, the arbitral tribunal shall decide whether Article 23(4) applies, and consequently, whether the new claim shall be authorized.
On the other hand, it may be the case that the other party does not object to the new claims. Whether this lack of objection could be considered as a waiver under Article 39 of the Rules shall be analyzed. The relevant article sets forth that a party which proceeds with the arbitration, without raising any objection to a failure to comply with any provision of the Rules, or any other rules applicable to the proceedings, any direction given by the arbitral tribunal shall be deemed to have waived its right to object. However, to err on the side of safety, it is preferable that the arbitral tribunal makes a decision on whether the new elements as introduced fall within the scope of the terms of reference, and if so, whether they should be admitted.
The Factors to be Considered by the Arbitral Tribunal
Article 23(4) of the Rules gives a broad discretion to the arbitral tribunal in considering whether the new claims shall be admitted. The relevant article provides that the tribunal may consider all relevant circumstances, other than the ones given as examples in the relevant provision.
If the initial claims as recorded in the terms of reference, and the new claims arise out of the same facts and the same agreement, there is a higher chance that these new claims would be admitted by the arbitral tribunal.
Again, the timing of new claims may be of significance, as well. If the proceedings are in an early stage, such as right after the signature of the terms of reference, and prior to the statements of the parties being submitted, it is more likely that they will be admitted by the arbitral tribunal. In this case, the new claims would not have a major negative impact on slowing down the proceedings. On the other hand, if the new claims have been introduced after all the evidence has been submitted, and prior to the rendering of the award, this may affect the proceedings, and may be considered as a factor not to authorize the new claims by the arbitral tribunal.
At this point, if the new claims are withheld based on purely tactical reasons, the arbitral tribunal may take a restrictive attitude. Especially if there are factors to be weighed against the belated introduction of new claims, such as the parties submitting new evidence and arguments respecting the new claims, they are more likely to be rejected by the arbitral tribunal. These issues may later cause due process concerns, which would, in turn, cause obstacles in enforcement proceedings.
If the new claims are not authorized by the arbitral tribunal, the party who intends to introduce these claims, should initiate separate arbitration proceedings.
The requirement of the arbitral tribunal's authorization for new claims under Article 23(4) is important, since it imposes on the parties to make every effort to concrete their claims in the terms of reference, in order to draw the lines of the arbitration proceedings. If the parties wish to introduce new claims after the terms of reference are established, whether these claims shall be authorized or not would be subject to Article 23(4) of the Rules. The arbitral tribunal has extensive discretion on this matter, and would consider many factors, such as the nature of such new claims, and the stage of the arbitration. The arbitral tribunal may also consider other relevant circumstances, such as whether the claims could have been introduced earlier in the proceedings, and whether they impose an additional burden on the other party.
1 Jason Fry, Simon Greenberg, Francesca Mazza, The Secretariat's Guide to ICC Arbitration, ICC Publication 729 (Paris 2012), p. 255 ("Secretariat's Guide").
Thomas H. Webster, Michael W. Bühler, Handbook of ICC Arbitration, Commentary, Precedents, Materials, 3rd Edition, p. 364 ("Webster/Bühler").
3 Secretariat's Guide, p.257.
4 Secretariat's Guide, p.256.
5 Webster/Bühler, p. 366.
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.