UK: The New ICC Rules Of Arbitration

Last Updated: 10 October 2011
Article by George Burn and Louise Woods

Introduction

The ICC is the world's leading centre for international commercial arbitration – it has supervised 17,000 cases over the course of the last 90 years – and it has published its new Rules of Arbitration. This is the first time the Rules have been revised since 1998. The new Rules, which come into force on 1 January 2012, contain a number of significant modifications.

Arbitration and the ICC

Arbitration is the preferred method for the resolution of cross-border commercial disputes, and has a long history in a wide range of business sectors. Many businesses opt for arbitration over litigation because they are not familiar or comfortable with domestic court systems. Others like the confidential nature of arbitration, which helps avoid dirty linen being washed in public. And some like the lack of formality and the procedural flexibility available in arbitration.

ICC arbitration represents the gold-standard, and as a result ICC awards are known for their reliability. That means the winning party finds it easier to enforce the award and translate the award into money. However, ICC arbitration also has a reputation in some quarters for being slower and more expensive than some other systems of arbitration, such as at the London Court of International Arbitration and the Stockholm Chamber of Commerce. The reforms that the ICC has introduced are welcome, but there are fundamental facets of ICC arbitration that have not been reviewed and therefore, to a certain extent, the reforms do not answer the complaints on time and cost.

Background to the consultation and objectives of the new Rules

The new Rules are intended to bring ICC arbitration into the 21st Century and, in the case of several changes, represent a codification of established practices.

One of the Task Force's main aims in revising the Rules was to make ICC arbitration a faster and cheaper process. To this end, the new Rules contain an express obligation on the tribunal and the parties to a dispute to "make every effort to conduct the arbitration in an expeditious and cost-effective manner". However, the more bureaucratic nature of the ICC process is untouched, as is the often unpopular system of calculating the fees of the arbitrators and the ICC's administrators by reference to the amount in dispute.

On matters of procedure, the new Rules are intended to promote a modern and flexible approach, adapting the arbitration process to accommodate the increasingly complex and potentially urgent nature of international business disputes, whilst maintaining a structured and reliable institutional framework.

Main changes to the Rules

Multi-party and multi-contract arbitrations (Articles 7, 8, 9 & 10)

The new Rules provide for more complex disputes, involving multiple parties or which arise out of more than one contract:

  • Claims arising from more than one contract may be brought in one arbitration;
  • Claims can be consolidated if all parties agree and when claims are made under the same arbitration agreement or under different but compatible arbitration agreements; and
  • The parties can ask that an additional party be joined to the arbitration. These new provisions are particularly interesting, as they allow either the claimant or the respondent to join additional parties to the arbitration process, which represents a significant modernisation of previous practice. The private and consensual basis of arbitration has usually made the process a little inflexible on bringing in third parties, but the new Rules set out a more relaxed regime

Emergency arbitrator procedure (Article 29)

Sometimes, urgent issues arise that cannot wait to be dealt with once an arbitration tribunal has been put in place by the parties and the ICC, a process that can take weeks or even months. Until now, the only way to do that in the context of ICC arbitration has been to go to the national courts in the jurisdiction where the arbitration is taking place. But going to court is precisely what the parties wanted to avoid doing when they agreed to have their disputes dealt with in arbitration. The ICC has now fixed that problem.

Similar to those of the Stockholm Chamber of Commerce and the Singapore International Arbitration Centre, the new Rules include provisions for the appointment of an emergency arbitrator to hear applications for urgent interim or conservatory measures, before a tribunal has been constituted. Under the new Rules, the emergency arbitrator may make an order, with which the parties agree to comply. Once the tribunal has been constituted, it may modify or annul any order made by the emergency arbitrator.

Tribunal to rule on questions of jurisdiction (Article 6)

In some disputes, there is an argument as to whether the ICC tribunal has jurisdiction to hear the case (e.g., when there is an argument over whether a party really did consent to arbitration). Under the 1998 Rules, the ICC Court (the ICC's central body) could rule on such questions of jurisdiction. However, the new Rules stipulate that the arbitration tribunal should usually be the only entity to rule on jurisdiction. This represents a welcome simplification and streamlining of the procedures.

Appointment of Arbitrators (Articles 11 & 13)

The new Rules explicitly require arbitrators to remain "impartial and independent" from the parties, as opposed to just "independent". This change brings the ICC Rules into line with the UNCITRAL Arbitration Rules, the LCIA Rules and the IBA Guidelines on Conflicts of Interest in International Arbitration, where arbitrators are required to be both impartial and independent of the parties. Impartiality and independence have long represented the required standard for the appointment of arbitrators, but it is helpful that the standard has now been incorporated into the Rules themselves.

The new Rules also set out in detail the requirement for arbitrators to sign a statement confirming their availability. This procedure was introduced into ICC arbitration in August 2009, due to repeated experiences of the most popular arbitrators taking on too many cases, resulting in delay. Incorporating the procedure into the Rules will help in ensuring that the efficiency of ICC arbitration is encouraged.

Efficient case management (Articles 22, 24, 27 & 37)

One of the overarching aims of the Task Force and drafting committee was to improve the efficiency of ICC arbitration, which is often seen as one of the slower forms of arbitration. The result is a suite of minor changes to the 1998 Rules which, taken together, allow for a more streamlined and efficient arbitral procedure.

In addition to the express duty requiring parties and the tribunal to try to conduct the arbitration in an expeditious and cost-effective manner, the parties are required to attend a mandatory case management conference at the outset. The tribunal is also empowered to take appropriate case management measures in consultation with the parties and it can take into account the parties' conduct in the arbitration when making decisions on costs.

Another change aimed at improving the efficiency of the arbitration process is the requirement that the tribunal communicate to the Secretariat the date (as opposed to an approximate date under the 1998 Rules) by which it expects to be in a position to submit its award to the ICC Court for scrutiny.

Conclusion

On the whole, the new Rules offer a modern, flexible framework for ICC arbitration with a particular focus on improving efficiency and cost-effectiveness. The major changes are aimed at better accommodating the more complex international business disputes, whilst at the same time preserving the distinctive characteristics of ICC arbitration, such as scrutiny of the award by the ICC Court.

Somewhat disappointingly, however, the new Rules fail to address certain areas which have been the subject of criticism, in particular in relation to the costs payable to the ICC by the parties at the outset of the process and the bureaucratic nature of ICC arbitration. Whether or not the new Rules will make ICC arbitration cheaper and more efficient remains to be seen, but the fact that no review was undertaken of some fundamental features of ICC arbitration will disappoint some.

The Rules are available for download from the ICC website (www.iccwbo.org).

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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