UK: Modifications To ICC Practice Note On Conduct Of Arbitration And Update To The ICC Rules Of Arbitration

Alexis Mourre became president of the ICC International Court of Arbitration on 1 July 2015 and very soon after commencing his role it became apparent that he intended to address some of the problems with arbitration; most notably, the common perception that there is lack of transparency in the arbitration procedure and concerns about the length of arbitration proceedings, including the considerable time it often takes for arbitrators to provide their award.

Changes to the Practice Note on the Conduct of Arbitration that followed soon after Mr Mourre's appointment were:

  • Improved transparency of arbitrator details to assist parties when considering the availability and suitability of that arbitrator for the appointment.  This was implemented for all arbitration proceedings registered as of January 2016 and involves the ICC Court now publishing on its website details of the arbitrator's name, their nationality, date the Terms of Reference were established, whether the arbitrator is the chairperson, a co-arbitrator or a sole arbitrator, whether the appointment was made by the Court or the parties, and whether the arbitration is pending or closed.
  • Further guidance to prospective arbitrators on the possibility of a conflict of interest and the requirement to disclose circumstances which may, but do not necessarily, lead to a challenge.  The ICC has made clear that the conflict of interest obligation rests firmly with the arbitrator when considering his/her impartiality and independence.  

Changes to the arbitration procedure have continued in the later part of this year with additional modifications to the Practice Note on the Conduct of Arbitration provided in September 2016 and now an update to the ICC Rules of Arbitration announced in November 2016.

Modifications to the Practice Note on Conduct of Arbitration (September 2016)

The modifications announced on 22 September 2016 relate to the day-to-day administration of cases and the increase in services offered by the Secretariat.

Additional Services Offered by the Secretariat

The Practice Note includes a new section setting out additional services offered by the Secretariat to parties and arbitrators.  These services include acting as a depository of documents, providing precedents of documents such as Terms of Reference and timetables, providing information on hearing facilities, assisting in the proposal of and appointment of experts, providing information on court reporting and simultaneous interpretation, facilitating the obtaining of visas for individuals required to attend the hearings, and post-award services such as reminding parties of their obligation to comply with the award.  Parties may also request a service whereby the ICC acts as a depository for VAT due on arbitrators' fees, the expenses of a Tribunal appointed expert or for escrow purposes.  These changes demonstrate the efforts the ICC is going to in order to improve the services it provides to its users.

Signature of Terms of Reference and Awards

The previous requirement was for the signature of a number of originals of the Terms of Reference and Awards.  Originals had to be couriered sequentially to each party and the members of the Tribunal until each original (one for each party and the Tribunal) had been signed by everyone.  However, the Practice Note now provides that, on the condition that the parties agree, the Terms of Reference and Awards can be signed by the parties and the Tribunal members in counterpart and sent to the Secretariat by email.  The purpose of this change is to reduce the time to finalise the Terms of Reference.

Submission of Draft Awards

The ICC may decrease the arbitrator's fees based on the length of time it takes the arbitrator to produce his/her award.  Pursuant to Article 30(1) of the ICC Rules of Arbitration, the time limit in which the Tribunal has had to produce its final award has been six months (although on occasions it takes over a year for a decision).  However, under the new policy, three-member Tribunals are expected to submit their draft awards for scrutiny within three months of the hearing or the final written submissions.  Sole arbitrators are required to submit their draft awards within two months.  If these timeframes are missed, the ICC Court has the discretion to lower the fees of the arbitrator(s).  In the case of a three-member Tribunal, the reduction could be 5—10% for failure to reduce a draft award within 7 months, 10—20% for failure to produce the draft award within 7 to 10 months, and 20% or more if the delay exceeds 10 months.  Cleary, the aim is to speed up the ICC arbitration proceedings.

Timing for Scrutiny of Draft Awards by the ICC Court

Time limits have also been placed on the ICC Court for its scrutiny of awards.  Again, this is with the intention of speeding up proceedings.  Pursuant to the revised Practice Note, all draft awards are to be scrutinised at a Committee Session of the Court within three to four weeks of receipt of the draft award by the Secretariat.  Unjustifiable delays will result in a reduction of the Court's administrative expenses by up to 20%.

Update to the ICC Rules of Arbitration (November 2016)

In addition to modifications to the Practice Note on Conduct of Arbitrations, the ICC Commission on Arbitration and Alternative Dispute Resolution announced on 4 November 2016 the revision of the ICC Rules of Arbitration.  These amendments are to come into force on 1 March 2017.  The new Rules will be applicable to all ICC arbitrations following that date. 

Reasons for Decisions on Procedural Issues (Article 11)

Under Article 11(4) the Court is currently prevented from giving reasons for its decisions on the appointment, confirmation, challenge or replacement of arbitrators.  This provision is to be deleted, meaning that the Court will be able to communicate its reasons which to date has only been possible with the agreement of the parties.  This change is aimed at increasing transparency.

Terms of Reference (Article 23)

The time limit required for establishing the Terms of Reference will be reduced from two months to one month (Article 23(2)).  The objective is to shorten the period by which the arbitral Tribunal can commence its work of getting on and convening a case management conference and, in doing so, be in a position to consult the parties on procedural matters.  Again, the aim is to speed up the arbitration process.

Expedited (Fast Track) Procedure (Article 30)

The most significant update to the ICC Rules is the introduction of an expedited procedure for cases where the sum in dispute does not exceed US$2m (Article 30).  The aim is to ensure that cases of a relatively low value are run in a more cost-efficient manner both for the parties and the ICC Court.  The fast track procedure involves several important procedural modifications including: all cases to be heard by a single arbitrator, there will be no requirement for Terms of Reference, there will be the possibility of cases being decided on documents alone — therefore without the need of a hearing unless the Tribunal decides otherwise — and the final award will have to be provided within six months of the case management conference.  It should be noted that parties do have the opportunity of opting out and it is open to the ICC Court to determine whether the expedited procedure is inappropriate for a particular case. 

Conclusions

These changes demonstrate the efforts that are being made to provide ICC arbitration users with the best possible service.  By addressing the perceived lack of transparency, by addressing concerns over the length of arbitration proceedings, and by increasing the range of services provided by the Secretariat so as to exceed traditional case management services offered by other institutions, they are steps in the right direction to fulfilling Alexis Mourre's vision of making ICC arbitration a more efficient method of dispute resolution.


International Quarterly is produced quartely by Fenwick Elliott LLP, the leading specialist construction law firm in the UK, working with clients in the building, engineering and energy sectors throughout the world.


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