The International Chamber of Commerce ("ICC") revised and introduced new Rules of Arbitration that will enter into force on 1 January 2021 ("2021 Arbitration Rules"). The 2021 Arbitration Rules were launched by the ICC through a webinar held on 1 December 2021 ("ICC Webinar"). During the ICC Webinar, it was stated that the main aim for the revisions is to crystallize established practices of the Court and Secretariat, modernize and increase transparency. The 2021 Arbitration Rules will apply to cases registered from 1 January 2021, and any case registered before will be governed by the 2017 Arbitration Rules. This Article will focus on the main changes and clarifications brought by the 2021 Arbitration Rules.
Main Amendments and Clarifications
Joinder of Additional Parties (Article 7)
In the 2012 and 2017 Arbitration Rules an additional party could not have joined after the confirmation and appointment of the arbitral tribunal unless all parties including the additional party agree otherwise. The 2021 Arbitration Rules maintain the main understanding of joinder under the 2017 Arbitration Rules and have kept the previous framework while allowing for joinder after the arbitral tribunal is confirmed or appointed.
However, with the new Article 7(5) an arbitral tribunal may decide upon any request for joinder made after its confirmation and appointment once it is constituted. The additional party has to accept the constitution of the arbitral tribunal and agree to the Terms of Reference.
The 2021 Arbitration Rules also list the considerations that the arbitral tribunal may take into account while making its decision on the request for joinder. These considerations are whether the arbitral tribunal has jurisdiction on the additional party, the timing of the request for joinder, any conflict of interest issues and the effect of the joinder on the arbitral proceedings.
Consolidation (Article 10)
The amendment made to Article 10 aims to create foreseeability and certainty as to when the ICC Court may order consolidation. This revision is not regarded as controversial but rather tries to ease out some of the practical issues raised in the ICC Court.
One of the issues that has been previously discussed in terms of consolidation is the interpretation of the "same arbitration agreement," which is now clarified with the amendment brought under the 2021 Arbitration Rules. In terms of the 2017 Arbitration Rules it has been questioned by practitioners whether consolidation is possible for disputes arising under different agreements that have similar arbitration agreements.
Article 10(b) clarifies that the ICC Court may, when a request is made, consolidate two or more arbitrations into a single arbitration where all of the claims in the arbitrations are made under the same arbitration agreement or agreements.
If the claims in the arbitrations are not made under the same arbitration agreement or agreements, but the arbitrations are between the same parties and the disputes have arisen in connection with the same legal relationship and the ICC Court finds the arbitration agreements to be compatible two or more arbitrations may also be consolidated under Article 10(c).
Constitution of the Arbitral Tribunal (Article 12)
Article 12 has a new provision that allows the ICC Court to appoint all three members of the arbitral tribunal. This provision is one of the most significant and controversial amendments in 2021 Arbitration Rules. This revision as put forth by the ICC was inspired by the Dutco case1 a landmark decision rendered with respect to the constitution of the arbitral tribunal in multiparty arbitration.
The discretion to appoint all three arbitrators is provided for exceptional circumstances and aims to avoid an important risk of inequality and unfairness that may affect the validity of the award. Even though this additional provision is brought to ensure procedural fairness it may raise some concerns. Freedom of the parties in appointing arbitrators or choosing the procedure that will be followed in appointing the arbitrators is one of the key rights in international arbitration. This provision on its face disregards this freedom as the provision grants such discretion to the ICC Court notwithstanding any agreement by the parties as to the method of constitution of the arbitral tribunal. We will see in practice which "exceptional circumstances" the ICC Court will invoke this provision and whether it will be considered as an interference to one of the fundamental rights of arbitration. If the ICC Court does not use its discretion in very limited extreme cases it could create grounds for the parties to set aside or oppose the award's recognition and enforcement.
The 2021 Arbitration Rules introduces new provisions that aim to avoid conflict of interest issues questioning arbitrators' impartiality and independence. Article 17(1) provides that each party must promptly inform the Secretariat, the arbitral tribunal and the other parties of any change in its representation. Article 17(2) grants the arbitral tribunal the right to exclude the new party representative from the proceedings in whole or in part. This is another important addition to the 2021 Arbitration Rules mirroring the 2014 LCIA Arbitration Rules.
The IBA Guidelines on Conflicts of Interest in International Arbitration provides that parties should inform any change of legal representation, however, there was no regulation allowing the arbitral tribunals to exclude counsel in order to avoid conflict of interest concerns. The only provision that the parties could have relied upon before is Article 22 of the 2017 ICC Arbitration Rules which allows arbitral tribunals to adopt procedural measures it considers appropriate. This issue has been subject to some ICSID decisions as well. Arbitral tribunals took differing positions in terms of excluding a legal representative and were reluctant to take such measures considering that there are no clear rules granting the arbitral tribunal to do so2.
There is no question that a party is, and should be free to appoint its legal representatives; however, introducing new representation at later stages of the proceedings, which creates conflict of interest issues are sometimes used as guerilla tactics in arbitration. In such cases the other party facing the guerilla tactic turns to the arbitral tribunal for proper measures to be taken, but as there are no provisions under the 2017 Arbitration Rules arbitral tribunals abstained to exclude the legal representative in question. This new addition is generally considered to be a positive change and aims to limit tactics used to disrupt proceedings.
That being said, it should also be kept in mind that with this provision it could be argued that the basic right of a party to freely appoint its legal representative is limited. Therefore, arbitral tribunals should act with diligence in exercising their discretion and limit it to cases with clear conflict of interest issues and consider which approach will serve the best interests of the case at hand.
Third Party Funding (Article 11 (7))
The 2021 Arbitration Rules introduces a new provision with respect to third party funding disclosures. According to Article 11 (7):
"Each party must promptly inform the Secretariat, the arbitral tribunal and 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."
This provision aims to increase transparency and allows arbitrators to disclose their relation with the funders to avoid any conflict of interest issues that could arise from third party funding arrangements which have become highly popular in international arbitration practice.
Virtual Hearings (Article 26(1))
During the COVID-19 pandemic, it has become apparent that in order to carry on with the proceedings, all participants to the arbitration should be willing to make some adjustments to traditional ways. In this respect on 09 April 2020, the ICC released its Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic ("ICC Guidelines).3 One of the important guidelines was related to virtual hearings.
The 2021 Arbitration Rules, parallel to the ICC Guidelines, rightfully introduce virtual hearings into its text similar to the LCIA 2020 Arbitration Rules. In an era in which most engagements are conducted virtually it is without doubt necessary for arbitral tribunals to decide after consulting with the parties whether the hearing will be conducted by physical attendance or remotely.
The ICC has showed its willingness to help practitioners by allowing electronic fillings from the start of the COVID-19 pandemic. It is needless to say that this approach and additions to the 2021 Arbitration Rules are environmentally friendly, and cost and time effective.
The 2021 Arbitration Rules move away from the traditional way of submitting pleadings and communications in hard copy. As Article 3(1) provides the documents to be "sent," eliminating the previous wording of "shall be supplied in a number of copies sufficient to provide one copy for each party, plus one for each arbitrator, and one for the Secretariat," it is now up to the parties and the arbitral tribunals whether they will require any documents in hard copy.
According to amendments made to Article 4 and Article 5, it is now left to the parties to decide whether they choose delivery against receipt, registered post or courier and thereafter submit necessary copies for each party, each arbitrator and the Secretariat. While making these amendments, the ICC wanted to make sure that the awards will be enforceable and therefore left the choice to the parties. It was also highlighted that even though the ICC encourages electronic signature, and signature in counterparts, these provisions were not included in the amendments to avoid enforceability issues.
Investment Arbitration (Article 13(6))
The 2021 Arbitration Rules introduce two new rules under Article 13(6) and Article 29(6)(c) for treaty disputes. Article 13(6) is a similar regulation to ICSID Convention Article 39 providing that no arbitrator can have the same nationality as a party, unless the parties agree otherwise. Article 29(6)(c) provides a carve out for Emergency Arbitrator Provisions if the arbitration agreement upon which the application is based arises from a treaty. This provision is also in line with the ICSID and UNCITRAL Arbitration Rules that do not provide for emergency arbitration. These two new specific provisions for investment treaty disputes show ICC's willingness to attract parties to consider its 2021 Arbitration Rules for their disputes.
Additional Awards (Article 36(3))
The 2021 Arbitration Rules bring a new rule for additional awards under Article 36(3). An arbitral tribunal upon an application by a party, may decide upon claims made during the proceedings that it has omitted. The other party will have the opportunity to comment within 30 days. The arbitral tribunal will submit its decision on the application in draft form to the ICC Court no later than 30 days following the expiry of the time limit for the receipt of any comments from the other party or within a time decided by the ICC Court.
Expedited Procedure Rules
The 2021 Arbitration Rules alters the monetary limit provided for in the Expedited Procedure Rules, and increased the threshold from USD 2 million to USD 3 million for arbitration agreements concluded on or after 1 January 2021.
The 2021 Arbitration Rules bring changes and clarifications to party representation, complex arbitrations (joinder and consolidation), third party funding, constitution of arbitral tribunals, treaty based arbitrations, virtual hearings, electronic submissions, additional awards and monetary limit for Expedited Procedure Rules. Most of these alterations are not surprising considering the changing practices in international arbitration and the current environment in light of the COVID-19 pandemic. However, two provisions that allow the ICC Court to appoint all three members of an arbitral tribunal and the arbitral tribunals' right to exclude counsel in light of conflict of interest issues may face some concerns. Even though these provisions aim to create transparency and address some practical issues, the ICC Court and arbitrators need to act with the utmost diligence when invoking these new provisions by bearing in mind possible enforcement problems and the best interests of the case at hand.
1 Siemens AG and BKMI Industrienlagen GmbH v. Dutco Consortium Construction Company Ltd., French Court of Cassation, Ch. Civ. 1, 7 January 1992.
2 Hrvatska Elektroprivreda v. Slovenia ICSID Case No. ARB/05/24, The Rompetrol Group N.V. v. Romania ICSID Case No. ARB/06/3, Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines ICSID Case No. ARB/03/25, Annulment Proceedings. Sakr, Marwan; Keyrouz, Jennifer: Disqualifying Counsel for Conflict of Interest in International Arbitration: Tribunals' Powers and Limits, Doutrina Internacional, 2015.
3 Erdem, Mehves: "Impact of COVID-19 on Arbitration", Erdem&Erdem Newsletter, April 2020, http://www.erdem-erdem.av.tr/publications/newsletter/impact-of-covid-19-on-arbitration/
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