UK: ICC Produces New Arbitration Rules

Last Updated: 3 October 2011
Article by Nigel Brook

On 12 September, the International Chamber of Commerce published its revised Rules ofArbitration. These will come into force on 1 January 2012. The aim has been to make theICC a more attractive dispute resolution forum for international businesses andgovernments.

Which Arbitrations Will the new Rules Apply to?

It appears to be the case that they will apply to ICC arbitrations commenced on or after 1January 2012 (although there is a carve-out for the emergency arbitrator provision – seefurther below). There is no express provision to that effect in the Rules (the same was thecase under the current rules), but in relation to the Scales of Administrative Expenses andArbitrator's Fees, it is stated that the Scales in the revised version apply to all arbitrationscommenced on or after that date. Article 4 of the Rules provides that arbitration commenceson the date on which a Request for Arbitration is received by the Secretariat of the ICC.

Moves to make ICC arbitrations more cost-effective

A common complaint about arbitrations in general (and the ICC in particular) is that it is tooexpensive. The ICC (unlike, for example the LCIA) fixes its costs as a percentage of theamount claimed, so in large-scale, complex arbitrations, the costs to the parties are high. Inreturn, the ICC Secretariat keeps the arbitration moving along and the ICC Court scrutinisesall awards before they are handed down by the arbitral tribunals. However, critics complainthat this simply adds a layer of bureaucracy and that the Court does little more than checkfor grammatical and typographical errors, since it does not review evidence or heararguments first-hand.

It is worth noting that the Administrative Expenses under the new Rules have beenincreased. For example, the expenses for a dispute worth between USD 1 million and USD2 million have been increased from 0.70% to 0.95% of the sum in dispute. Arbitrators' fees,too, have generally increased. Under the old rules, for a dispute worth between USD 1million and USD 2 million, arbitrators could charge between a minimum of 0.50% and amaximum of 2.75% of the disputed sum. Under the new Rules, the minimum for the samedisputed sum is now 0.689% and the maximum is 3.604%.

More generally, a new provision has been introduced, specifying that both the tribunal andthe parties "shall make every effort to conduct the arbitration in an expeditious and costeffectivemanner, having regard to the complexity and value of the dispute". The tribunal isalso given power to adopt appropriate procedural measures to meet this objective (providedthe parties have not agreed otherwise).

Procedural Changes

The new Rules introduce some significant procedural changes. The main ones are listedbelow:

  1. Whereas under the old rules and arbitrator need only provide a statement ofindependence, under the new Rules, a statement of acceptance and availability isrequired. This will be of particular importance where a popular arbitrator is likely toreceive a request to act in another arbitration after agreeing to act during a particulartimeframe.Arbitrators must now also confirm their impartiality as well as their independence. Thisbrings the ICC rules into line with other major arbitral institutions, such as the LCIA(and, the English Arbitration Act 1996 also requires arbitrators to be impartial).
  2. Emergency Arbitrators: A common problem is that emergency interim relief may berequired by a potential party to an arbitration in order to preserve the status quo incircumstances where the tribunal has not yet been constituted. In appropriate cases, itis possible in a case of urgency for a party to apply to the English court (wherever theseat of the arbitration is likely to be) for an order to preserve assets or evidence.The new rules now provide that a party which needs urgent interim relief before thetribunal has been constituted can apply to an "emergency arbitrator", who isempowered to make an order which the parties agree to observe. The duly constitutedtribunal can subsequently modify or annul the emergency arbitrator's order.However, the emergency arbitrator rule applies only where parties have entered intoan arbitration agreement after 1 January 2012 (and the parties can also agree to optout of this provision or can agree another form of pre-arbitral procedure for interimrelief). It may be that parties will, in any event, prefer the perceived "force" of a courtorder over an emergency arbitrator's order.
  3. Multi-party and multi-contract arbitrations: The new rules recognise the complexity ofinternational arbitrations. The inability to join third parties to an arbitration is a difficultywhich parties to litigation do not face. Multiple arbitrations to resolve a dispute whichinvolves many different parties also push up the overall cost of the arbitration process.The ICC seeks to address this issue by widening its consolidation procedures. Underthe old rules, parties could only request that multiple claims arising out of a legalrelationship be heard together in an arbitration between the same parties.The new Rules provide that: (a) additional parties can be joined to an arbitration beforethe arbitrators have been appointed (and there is no requirement that such additionalparty be a party to the arbitration agreement); (b) claims can be made betweenmultiple parties to an arbitration; (c) claims arising out of multiple contracts can beheard in a single arbitration, even where more than one arbitration agreement applies;and (d) the ICC Court can consolidate two or more arbitrations into a single arbitrationif the parties agree or all the claims are made under the same arbitration agreement orthe disputes arise in connection with the same legal relationship and the ICC Courtfinds that the arbitration agreements are "compatible".
  4. Case management: As mentioned above, the new Rules aim to speed up ICCarbitrations. As a result, it is now compulsory for the tribunal to convene a casemanagement conference to consult the parties on measures to ensure that thearbitration is expeditious. Appendix IV of the new Rules provides examples of casemanagement techniques which the tribunal might adopt. These include requiring theparties to produce with their submissions the documents on which they rely, avoidingrequests for document production (if appropriate) to control time and costs and limitingdisclosure requests to documents which are relevant and material to the outcome ofthe case.

    So far as disclosure is concerned, these new provisions do not represent a shift in theICC's stance. As before, there is only very limited provision for documentary disclosureit is up to the parties to agree on the scope of this or ask the tribunal for an order. Thisdefault position is also adopted by, for example, the LCIA and UNCITRAL, whichprovide that parties need only disclose the documents on which they rely.
  5. Challenging jurisdiction: Under the old rules, the ICC Court itself heard anyjurisdictional challenges. Under the new rules, the decision is made by the arbitratorsthemselves, unless the Secretary General of the ICC refers the matter to the ICCCourt. This is intended to speed up the hearing of such challenges.

    Finally, it should be noted that the new Rules provide that the ICC Court is the onlybody authorised to administer arbitrations – accordingly, clauses providing for an adhoc arbitration under ICC Rules will be ineffective (although the parties could agree torefer to the ICC Rules for guidance).

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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Nigel Brook
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