Out with the old, in with the new: 2021 ACICA rules implemented - Arbitration & Dispute Resolution

The Australian Centre for International Commercial Arbitration (ACICA) has refreshed its ACICA Arbitration Rules (the Rules) with the aim of modernising the arbitration process and addressing contemporaneous concerns arising out of the COVID-19 pandemic, such as the use of technology and electronic communications.

Parties which have commenced (or intend to commence) an arbitration in respect of an agreement that refers to undefined ACICA Rules should be aware of the additions and differences between the 2016 and 2021 Rules, as the updated Rules will apply by default.

The revised Rules, which came into force on 1 April 2021, are a product of extensive consultation with practitioners and stakeholders. Practitioners (including Corrs) were provided the opportunity to participate and collaborate with the ACICA Rules Committee in the feedback process, which has resulted in taking into account practical considerations when revising the Rules.

The most notable amendments and additions to the Rules (and to a limited extent the Expedited Rules) relate to:

the process of consolidation, joinder and multi-party contracts;
rules facilitating virtual hearings and electronic communications;
disclosure of third-party funding agreements;
case management provisions; and
cost settling provisions.

Notwithstanding the implementation of the 2021 Rules, parties may still rely upon earlier iterations of the ACICA rules if specifically provided in an arbitration agreement.

Wider scope for consolidation, joinder and multi-contract proceedings

ACICA has streamlined the process for consolidating proceedings, joining additional parties and seeking to initiate proceedings relating to claims under multiple contacts. Practitioners and parties can now enjoy a more liberal approach to multi-party and multi-contract proceedings, unrestrained by the bounds of being limited to interacting solely with the express parties to an arbitral agreement.

These changes include:

The removal of the requirement for arbitral agreements to be between the ‘same parties' where common questions of law arise or relief is claimed in respect of the same transaction(s)
Joining additional parties to proceedings. Previously, the joinder of parties was limited to parties bound by the same arbitration agreement. Now, parties may be joined where all parties, including the additional party, expressly agree to the joinder.
Added a requirement for all parties (including the proposed party) to be afforded the opportunity to be heard. This broader approach to joinder facilities a more streamlined process and provides the parties with due process.

The story is the same for claims arising out of multiple contracts, with ACICA introducing new rules that allow parties to file a single notice of arbitration for claims arising out of, or in connection with, more than one contract.

While the separate claims are deemed to be multiple arbitrations, the rules provide for a quick and easy consolidation mechanism by allowing the parties to apply to ACICA for consolidation when submitting the Notice of Arbitration. Consolidation in these circumstances are also subject to the requirements of Article 16.

Embracing the electronic era: Procedural clarity

Virtual hearings

ACICA has embraced the way of the digital era, bringing arbitral procedures and process into the twenty-first century.

Arbitral hearings (as well as preliminary conferences) are now able to be run in a myriad of ways, with the arbitral tribunal having unfettered authority to establish the conduct of the hearing (in consultation with the parties). This smorgasbord of forums includes holding a hearing in person, virtually by conference call or videoconference, by any other form of communication, or any in a ‘hybrid' form. To note, any virtual hearing is deemed to be held at the seat of the arbitration.

Electronic communications

Gone are the days of relying on ‘snail mail' when filing, serving and delivering notices and awards. ACICA's new rules embrace instant communication by allowing for:

notices of Arbitration and Answer (as well as other notices) to be filed electronically, by email or through ACICA's dedicated online portal; and
the arbitral award may be signed electronically or in counterparts (and then assembled into a single instrument) and transmit the award electronically.

In the event of any inconsistency between an electronic or hard copy, the electronic shall prevail.

Third-party funding

Parties now have a positive obligation to disclose the existence and identity of any third-party funders. Further, the tribunal may also order a party to disclose at any time during the proceedings.

This rule goes some way in addressing the recent increase in litigation funding activity and should hopefully address concerns around confidentiality and seeking damages where third-party funders are involved.

Costs and fees

Previously, the 2016 Rules were silent on dealing with costs. ACICA has remedied this by adding provisions addressing:

fees and expenses of the arbitral tribunal;
ACICA's administration fee;
fees and expenses of any experts appointed by the tribunal; and
parties' legal and other costs, provided such costs were claimed during the proceedings and only to the extent that such costs are considered by the tribunal to be reasonable.

The new rules remove ambiguity and uncertainty previously experienced and provide comfort for both the arbitral tribunal and parties in securing costs.

Most notably, the Rules establish a security for costs mechanism. At the start of proceedings, ACICA can fix an amount that is payable by the parties by way of deposit (and can refuse to proceed until funds are received). During the course of the proceedings ACICA may change the quantum of this deposit and can apportion and distribute the secured amount at its own discretion.

In turn, the ‘costs of the arbitration' (including ACICA's fees and the fees and expenses of the arbitral tribunal the subject of the deposit) must be fixed by the tribunal by way of a final award or a consent award (or in an order for termination).

It is important to note that the position has not changed from the old rules in respect of the tribunal's power to make costs decisions at any point in time. Parties should be mindful of this power when conducting itself in the proceedings, having regard to delay, cooperation and other factors.

Case management

New case management rules have been introduced to address the timing for the final award, as well as procedures for alternative dispute resolution.

Unless a shorter time has been agreed upon between the parties (or by law), the Rules state that the final award must be delivered no later than:

nine months from the date the file is transmitted to the tribunal; or
three months from the date the tribunal declares the proceedings closed.

Key takeaway

Data collected for the 2020 ACICA Arbitration Report revealed that nowadays, more and more companies are choosing to include an ACICA arbitration clause in commercial contracts.¹

Despite the 2016 ACICA Rules having served arbitral parties well, ACICA successfully has taken into account the current climate and practitioner feedback in revamping the arbitration rules.

The ACICA Rules Committee have considered new streamlined processes, considered the utility of electronic communications and virtual hearings, and addressed confusion of areas such as costs. With the implementation of the 2021 Rules, a new era of arbitration has dawned upon us promoting efficiency, transparency and modernity.

Footnote

¹^{ACICA Arbitration Report (2020)}

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.