The 2021 ICC Arbitration Rules (2021 Rules) were officially launched on 1 December 2020 and came into force on 1 January 2021.
ICC Court President Alexis Mourre described the 2021 Rules as marking a further step towards "greater efficiency, flexibility and transparency". The amendments to the Rules (made after a gap of three years) are in sync with the developments in arbitration law and practice.
SALIENT FEATURES OF THE 2021 RULES
1. Applicability of these rules
The 2021 Rules will define and regulate the management of cases received by the International Court of Arbitration (the Court) on or after 1 January 2021. However, a previous version of the rules may apply if the relevant arbitration agreement (under which an arbitration is commenced) provides for such application.
2. Changes to the rule on joinder of parties
Under the 2017 ICC Arbitration Rules (2017 Rules), the joinder of an additional party after the constitution of the arbitral tribunal required the consent of all parties. The newly incorporated Article 7(5)1 in the 2021 Rules deviates from this. An arbitral tribunal may now entertain a joinder application even though the counter party may not agree with the request.
The additional party, however, must accept the constitution of the tribunal and agree to the terms of reference, where applicable. While determining a joinder application, the tribunal must consider "all relevant circumstances", including (i) whether the tribunal has prima facie jurisdiction over the additional party, (ii) the timing of the request, (iii) possible conflicts of interests, and (iv) the procedural impact of the joinder.
3. An expanded scope for consolidation
Under the 2017 Rules, the Court could consolidate two or more arbitrations where all of the claims in the arbitrations were made under the same arbitration agreement or the arbitrations were between the same parties. This naturally left open the question as to whether the term "same arbitration agreement" encompassed identical agreements contained in different contracts.
Article 10(b)2 of the 2021 Rules modifies the earlier provision to consider consolidation where "all of the claims in the arbitrations are made under the same arbitration agreement or agreements". As exemplified in the ICC Note to Parties and Arbitral Tribunals,3 let us say A, B, C and D are all parties to a share purchase agreement (SPA) and a shareholders agreement (SHA). A and D are parties to arbitration 1, while B and C are parties to arbitration 2. In such a scenario, consolidation of arbitrations 1 and 2 may be possible under Article 10(b).
Similarly, Article 10(c)4 allows the Court to consider consolidation where "the claims in the arbitrations are not made under the same arbitration agreement, or agreements but the parties involved are the same, the disputes are in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible." For instance, arbitration 1 is between parties A and B with claims under an SPA arbitration agreement, and arbitration 2 is between the same parties with claims under a SHA arbitration agreement. In that scenario, consolidation may be possible if the disputes in the arbitrations arise from the same legal relationship and the Court finds the arbitration agreements to be compatible.
4. Disclosure of third-party funding
Article 11(7)5 of the 2021 Rules makes it mandatory for parties to promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration. According to the ICC Note to Parties and Arbitral Tribunals,6 subject to any different determination that may be made by the arbitral tribunal in the circumstances of any given case, Article 11(7) would normally not include (i) inter-company funding within a group of companies, (ii) fee arrangements between a party and its counsel, or (iii) an indirect interest, such as that of a bank having granted a loan to the party in the ordinary course of its ongoing activities rather than specifically for the funding of the arbitration.
5. Increased threshold for expedited arbitrations
The 2021 Rules expand the scope of application of the Expedited Procedure provisions. The monetary limit has been increased to USD 3 million from the earlier sum of USD 2 million stipulated in the 2017 Rules. The amendment applies to arbitration agreements concluded on or after 1 January 2021. Arbitration agreements concluded on or after 1 March 2017 and up to the end of 2020 remain subject to the USD 2 million threshold.
6. Over-ruling arbitral appointment mechanisms
Article 12 of the 2017 Rules empowered the Court to appoint arbitrators in certain cases, e.g. where parties failed to make such an appointment or could not come to a consensus on the procedure for appointment.
The newly introduced Article 12(9)7 provides that, in exceptional circumstances, the Court may appoint each member of the arbitral tribunal, notwithstanding any agreement by the parties on the method for constituting the arbitral tribunal, when the provisions of the arbitration agreement are unconscionable and applying them would result in a significant risk of unequal treatment and unfairness that may affect the validity of the award.
It is likely that the Court will apply Article 12(9) when the arbitration agreement provides that one of the parties will have the right to constitute the arbitral tribunal unilaterally, especially when such unilateral right is not permitted under the law at the place of the arbitration, such as in India.
7. Virtual hearings and e-filings
Article 25(2) of the 2017 Rules that provided for parties to be heard "in person" has been deleted.
Article 26(1)8 of the 2021 Rules allows the tribunal to hold hearings remotely after full consideration of the facts and proper consultation with the parties. The revisions also provide for the request for arbitration and response to be served electronically and remove the requirement for paper copies to be served as a default [Ref: Articles 3(1), 4(4)(b) and 5(3)].
8. Additional awards
Under the 2017 Rules, awards rendered could be subject to correction or interpretation by arbitral tribunals under the supervision of the Court.
Article 36(3)9 of the 2021 Rules introduces the concept of additional awards. It provides that, within 30 days of receipt of the award, a party may request the arbitral tribunal to issue an additional award to rule upon claims raised during the proceedings but left unaddressed in the award.
9. Governing law and settlement of disputes
Article 4310 of the 2021 Rules clearly stipulates that any claims arising out of or in connection with the administration of the arbitration proceedings by the Court under the rules shall be governed by French law and settled by the Paris Judicial Tribunal in France, which shall have exclusive jurisdiction.
10. Access to the reasoning of the Court
Under the newly introduced Article 5 of Appendix II of the 2021 Rules, upon any party's request, the Court may communicate its reasoning behind its decisions on the existence and scope of a prima facie arbitration agreement (Article 6(4)), consolidation of arbitrations (Article 10), appointment of arbitrators (Article 12), challenges to arbitrators (Article 14) and replacement of arbitrators on the Court's own motion (Article 15(2)). The request must be made in advance of the decision in respect of which reasons are sought. However, it is important to note that in exceptional circumstances, the Court may decide not to communicate the reasons for any of the above decisions.
11. Treaty-based arbitration
Keeping in mind the increasing portfolio of treaty-based arbitrations being filed before the ICC, the 2021 Rules have sought to add certain provisions dedicated to investor-state disputes.
Article 13(6)11 specifies that where the arbitration is based upon an agreement arising from a treaty, and unless the parties agree otherwise, no arbitrator shall have the same nationality as any party to the arbitration.
Article 29(6)12 has been amended by inserting clause (c) that excludes treaty-based arbitrations from the scope of the Emergency Arbitrator provisions.
The 2021 Rules comprise several noteworthy improvements to the 2017 Rules. Primary among them is the provision pertaining to the disclosure of third-party funding. Considering the increasing role of third-party financing in international arbitrations, the above change regulating such participation, was long awaited.
The modifications introduced to the rules on joinder and consolidation serve to increase the efficiency of proceedings by empowering the Court and Tribunal with greater flexibility and discretion. Complex multiparty and multi-contract disputes can be better resolved with tools such as these. An express provision for remote hearings is crucial in light of the ongoing pandemic and follows the LCIA Rules, 2020 in this respect. Finally, access to reasoned orders of the Court under certain circumstances, is a laudable addition which will increase transparency and weed out the possibility of arbitrariness in decision making.
On the whole, given the increasing importance and popularity of institutional arbitration, the amendments to the ICC Arbitration Rules are a welcome move.
1. Article 7(5) of the 2021 Rules states "Any Request for Joinder made after the confirmation or appointment of any arbitrator shall be decided by the arbitral tribunal once constituted and shall be subject to the additional party accepting the constitution of the arbitral tribunal and agreeing to the Terms of Reference, where applicable. In deciding on such a Request for Joinder, the arbitral tribunal shall take into account all relevant circumstances, which may include whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the Request for Joinder, possible conflicts of interests and the impact of the joinder on the arbitral procedure. Any decision to join an additional party is without prejudice to the arbitral tribunal's decision as to its jurisdiction with respect to that party."
2. Article 10(b) states "The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, where all of the claims in the arbitrations are made under the same arbitration agreement or agreements".
3. Note to Parties and Arbitral Tribunals on the conduct of the arbitration under the ICC Rules of Arbitration, 2019 available at https://iccwbo.org/content/uploads/sites/3/2017/03/icc-note-to-parties-and-arbitral-tribunals-on-the-conduct-of arbitration.pdf.
4. Article 10(c) states "The Court may, at the request of a party, consolidate two or more arbitrations pending under the Rules into a single arbitration, where the claims in the arbitrations are not made under the same arbitration agreement or agreements, but the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible."
5. Article 11(7) states "In order to assist prospective arbitrators and arbitrators in complying with their duties under Articles 11(2) and 11(3), each party must promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration."
6. Note to Parties and Arbitral Tribunals on the conduct of the arbitration under the ICC Rules of Arbitration, 2019 available at https://iccwbo.org/content/uploads/sites/3/2017/03/icc-note-to-parties-and-arbitral-tribunals-on-the-conduct-of arbitration.pdf.
7. Article 12(9) states "Notwithstanding any agreement by the parties on the method of constitution of the arbitral tribunal, in exceptional circumstances the Court may appoint each member of the arbitral tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award."
8. Article 26(1) states "A hearing shall be held if any of the parties so requests or, failing such a request, if the arbitral tribunal on its own motion decides to hear the parties. When a hearing is to be held, the arbitral tribunal, giving reasonable notice, shall summon the parties to appear before it on the day and at the place fixed by it. The arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication."
9. Article 36(3) states "Any application of a party for an additional award as to claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide must be made to the Secretariat within 30 days from receipt of the award by such party."
10. Article 43 states "Any claims arising out of or in connection with the administration of the arbitration proceedings by the Court under the Rules shall be governed by French law and settled by the Paris Judicial Tribunal (Tribunal Judiciaire de Paris) in France, which shall have exclusive jurisdiction."
11. Article 13(6) states "Whenever the arbitration agreement upon which the arbitration is based arises from a treaty, and unless the parties agree otherwise, no arbitrator shall have the same nationality of any party to the arbitration."
12. Article 29(6)(c) states "The Emergency Arbitrator Provisions shall not apply if the arbitration agreement upon which the application is based arises from a treaty."
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