The International Chamber of Commerce ("ICC") formally launched its amended Rules of Arbitration, 2021 ("2021 Rules"), by an online conference on 1 December 2020. It was stated that the main purpose for the changes was to regulate and modernize the long-standing practices of the Council and the Secretariat, and to increase efficiency, flexibility, and transparency. The new version of the rules entered into force on 1 January 2021 and applies to cases to be registered from this date onwards. In this study, changes brought by the 2021 Rules will be further evaluated below, based on the purpose that the amendments are planned to serve.
- Increasing Efficiency
Articles 7 and 10 of the 2017 ICC rules were amended by the new 2021 Rules, and changes were introduced on the joinder of parties and consolidation of arbitration proceedings. This change shows the willingness and commitment of the ICC to make the rules suitable for disputes involving multiple parties and multiple contracts.
- Consolidation: Previously, Article 10 of the 2017 rules was silent about whether consolidation of arbitration proceedings was allowed only in the circumstance where each of the claims in the arbitrations arise from the same arbitration agreement, or if the dispute was arising from different contracts that contain identical arbitration agreements. Now with the amended Article 10(b), the scope of the consolidation is expanded as it permits the consolidation of cases involving different parties but taking its roots from the arbitration agreements. In addition, Article 10(c) of the new rules expands the consolidation scope even further by allowing consolidation where same parties' claims arise from different arbitration agreements if the ICC court finds that those agreements are "compatible" and that the dispute arises in connection with the same legal relationship. Therefore, consolidation will be possible for two or more arbitration proceedings, if the conditions under Article 10(c) are met.
- Joinder: Pursuant to the 2017 Rules, it was a challenging task for the parties to adjoin an additional party after the consolidation of the tribunal. It was necessary for all parties to agree to the joinder if this request was made after the appointment of the tribunal. Now, with the implementation of the new Article 7(5), the tribunal is permitted to decide upon a joinder of additional parties after the appointment of the arbitrator, without obtaining consent of all relevant parties. Certainly, the additional party is still obliged to accept the constitution of the tribunal and agree to the terms of reference, but the consent of the other party is not required. Nevertheless, the ICC Court still has the discretion to consider relevant factors such as possible conflicts of interest, the timing, the prima facie jurisdiction of the arbitral tribunal on the joinder, the effect of the joinder on tribunal proceedings, cost and time efficiency. The tribunal will be able to decide on the joinder after considering these relevant circumstances surrounding the arbitral proceedings. It is expected that these amendments will bring flexibility to the proceedings especially with multi-party and complex multi- contract disputes.
- Green and Remote Arbitration: Even before the COVID-19 pandemic there have been talks regarding digitalization of the arbitration procedure due to the very high amounts of paper and ink used during the proceedings. In addition to this environmental issue, with the COVID-19 the ICC was faced to overcome the challenges brought by it such as social distancing rules. As consequence of these issues, new rules were implemented which provide for greater flexibility by increasing the use of technology. Pursuant to new Article 22(2), the tribunal "shall" have the duty to efficiently manage the proceedings, which gives an increased duty to the tribunal compared to the previous Rules. According to Article 26(1) "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." Previously, tribunals had the discretion to conduct hearings remotely but with the amendment of Article 26(1), it is now certain that the both type of hearings are deemed to be equivalent and the tribunals do not favor any type of hearing over another. Another amendment is also made regarding the method for submission of documents. Pursuant to Article 3(1) of the 2017 Rules, all petitions, correspondence, and attachments submitted by the parties were to be submitted in one copy for each party, each arbitrator, and the Secretariat. With the 2021 Rules, the statement "in one copy" has been removed from the paragraph and the amended Article 3(1) now provides that all these documents "shall be sent" to all parties, all arbitrators, and the Secretariat, and that the Secretariat shall be copied on communication from the tribunal. Thus, it is envisaged that all these documents will be sent electronically, in a shift away from paper filings.
- New threshold for Expedited Procedure and Emergency Arbitration: The Expedited Procedure was included in the ICC Rules for the first time in 2017. According to the ICC's statistics for 2019, the serial arbitration procedure is an important jurisdiction procedure that has been implemented 146 times by the end of 2019 since it was added to the ICC Arbitration Rules in March 2017. The aim of this procedure was to achieve fast, efficient, and low-cost trials in cases where the claim amount was under USD 2 million. As this procedure was highly successful and popular among the ICC practitioners, the 2021 Rules increased the automatic threshold from USD 2 million to USD 3 million with Article 1(2) of Appendix VI. This newly introduced threshold shall apply to cases with an arbitration agreement date of on or after January 1, 2021, in the same vein with all the other 2021 Rules.
As the threshold for expedited procedure is increased, this will inevitably improve efficiency as the number of cases that reach this threshold would be higher, and therefore a greater number of cases would be solved in a faster and cost-efficient manner.
- Transparency and Due Process
The 2021 Rules introduce numerous significant new provisions regarding the independence, impartiality, and conflicts of interests of the Arbitral Tribunal.
- Disclosure of Third Party Funding: The absence of detailed regulations regarding third-party financing had been an issue that brought criticism to the ICC. The 2021 ICC Rules aimed at making the arbitration proceedings more transparent, by introducing an Article that would put an end to the arguments regarding especially the issue of disclosure of the third party funding. Article 11.7 states that "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 defenses and under which it has an economic interest in the outcome of the arbitration." The future will show whether other funding agreements, such as insurance coverage, will also be deemed to fall under this obligation.
- Limiting Changes to Party Representation: Another change that seeks to increase the transparency of the proceedings appears in Article 17. With the first paragraph of this Article, now each party is required to rapidly inform the Secretariat, the tribunal, and other parties of any changes in its representation. Moreover, in the second paragraph it is stated that the tribunal has the authority to "take any measure necessary to avoid a conflict of interest of an arbitrator arising from a change in party representation, including the exclusion of new party representatives from participating in whole or in part in the arbitral proceedings." This change aims to prevent any disruption that may occur in the proceedings by a change of counsel.
- Arbitral Appointments: Another significant change with the 2021 Rules is the new authority granted to the ICC Court in terms of the establishment of the arbitral tribunal, with the Article 12(9). According to this Article, in exceptional cases, the Court will be able to determine all members of the arbitral tribunal, even if a different arbitrator appointment procedure is prescribed in the arbitration agreement, in order to avoid the risk of a party being treated unequally or unfairly, that may affect the validity of the arbitral award. This provision aims to further ensure fairness and equality, and to prevent a challenge that may arise in a later stage in regard of the enforcement of the award. It can be argued that this change may also bring controversy, as it is not clear how the court will use its discretion regarding matter and as it may seem that the court has given a power that may limit the right of the parties to nominate their arbitrator. A further addition was also made to strengthen party equality: According to Article 13(6) where the arbitration agreement arises from an international agreement, the arbitrators cannot be of the same nationality as any of the parties, unless otherwise agreed by the parties.
- Additional Changes
Numerous other significant amendments were also made, which can be listed as follows.
- The 2021 Rules incorporated a new concept called "Additional Award" concept in the third paragraph of Article 36. According to the article, the parties may submit a request to the Secretariat for an additional award regarding the claims that the arbitral tribunal did not address in the final award, within 30 days from the day they received the notification of the final award. In this context, the definition of "arbitration award" in Article 2 has been expanded to include this new concept of additional decision.
- Amendments to Article 5(1) brought clarity on the time limit given for submission of documents. Article 5(1) states that "Within 30 days from receipt of the Request from the Secretariat, the respondent shall submit an Answer".
- New Article 43 confirms that any claims arising out of or in connection with the ICC Court's administration of arbitration shall be governed by French law and resolved by the Tribunal Judiciaire de Paris.
- According to Article 29(6)(c), emergency arbitration shall not apply if the arbitration is based on an arbitration agreement that under a treaty.
The 2021 ICC Rules has reached its aims to achieve transparency and efficiency by introducing numerous new articles and amendments which were stated above. This is not unexpected given the flexibility of arbitration and its continuous evolution over the historical process. Considering the effect of ICC Rules on other institutional arbitration rules, it can be foreseen that similar innovations and approaches may be adapted by other institutional arbitration rules in the future.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2021. A link to the full Legal Insight Quarterly may be found here
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.