ICC Releases New Rules to Govern Arbitration

The International Court of Arbitration of the International Chamber of Commerce has released revised rules updating the procedural rules that govern arbitration at the ICC. The rules are meant to define and regulate the conduct of cases submitted to the Court of arbitration and aims to provide a ‘neutral framework for resolution of cross-border disputes’. 

These rules of arbitration regulate the filing of claims, the constitution of arbitral tribunals, the conduct of proceedings, choice of arbitrators, the language of arbitration, etc. The revised rules have incorporated changes to bring the system more into the digital era with provisions to regulate virtual courts, e-filings, etc. The rules have been revised in a bid to make the procedures more flexible and digital, especially in light of the pandemic. These new rules have come into force effective as of January 1st 2021.

Key Highlights of the New Rules: Here are some of the major highlights from the revised rules

Consolidating arbitration proceedings: The 2017 ICC arbitration rules allowed consolidating arbitration proceedings for same and different parties. The rules had allowed for certain factors to be considered in that situation, and this list has now been expanded in the 2021 rules. Under article 10, the court may consider consolidating arbitration proceedings in the following cases:

• When parties have agreed to consolidation, or
• The claims in the arbitration are made under the same arbitration agreement or agreements, or
• The arbitration is between the same parties, it arises in connection with the same legal relationship, and the arbitration agreements are not the same but they are compatible.
• Any other circumstances that the Court may consider such as whether the arbitrators have been confirmed or appointed.

The rules have expanded the scope of consolidating arbitrations. Now under article 10, the arbitrations can be consolidated if they arise from the same arbitration agreement or ‘agreements’ allowing even minor arbitration agreements to be considered. The rules have also expanded to include multiple factors to consider in the case where the arbitration does not arise from the same agreement, such as the legal relationship, whether the arbitration agreements are compatible, etc.

A new provision under article 7 has been added to allow the joinder of third parties even after the constitution of the arbitration tribunal.

Disclosing third party funding: According to the new rules, parties have to mandatorily disclose third party funding arrangements. This provision has been added to try and increase transparency and impartiality during the arbitration proceedings. Under this rule, parties have to disclose the existence or identity of any third party that has entered into an arrangement for the funding and which has an ‘economic interest in the outcome of the arbitration’.

Expedited Arbitration: In the 2017 rules, provisions were introduced for an expedited procedure of arbitration proceedings under Article 30. It provided for a streamlined procedure and reduced fees, to promote efficiency. The 2021 rules have now extended the scope of application of these provisions to disputes of arbitration agreements with values not exceeding $ 3 million. The expedited arbitration provisions will not apply if the parties have categorically chosen not to opt-in.

Change in Party Representation: The 2021 rules under Article 17 have now provided for rules mandating parties to notify the arbitral tribunal about changes in party representation. According to the provision, the parties will have to inform the secretariat about any changes in party representation. The tribunal may then take any measures as required in case of any conflicts of interest.

Arbitration for International Investment Treaties: In a bid to promote transparency and fairness in arbitration proceedings, provisions related to ensuring neutrality for arbitrations arising from international investment treaties have been introduced. According to these rules, arbitrators appointed cannot have the same nationality as the parties in such arbitrations, unless the parties have agreed otherwise. Emergency arbitration provisions will also not be applicable for cases where the arbitration agreement arises out of a treaty.

Additional Awards: Under the new rules, the parties to an arbitration may request that the tribunal issue an additional award to rule on the claims that were raised (but unaddressed) during the award itself. Previously, parties were allowed to file asking for corrections to be made in the award issued by the tribunal. The parties may file such a claim under Article 36 of the 2021 rules.

Renewed access to the reasoning of the Court: The new rules allow (under Article 5) that parties can file a request with the ICC Court for the reasoning behind the decisions in the following issues:

• Existence and scope of an arbitration agreement
• Appointment of arbitrators
• Consolidation of arbitrations
• Replacement of arbitrators

The parties should file this request in advance along with the reasons for which the communication is sought.

A Move towards the Digital Era:

To move towards creating more digital and efficient arbitration proceedings, the 2021 rules have finally incorporated provisions to regulate remote hearings and e-filings. Previously, virtual or remote hearings were not allowed under the 2017 rules. With the onset of the pandemic, there was a greater need to enforce new rules that would allow for contactless proceedings.

Article 26 of the rules govern the provisions relating to hearings by the tribunal. According to the 2017 rules, a hearing is held based on the request of the parties or if the tribunal decides on its motion to hear the parties. The tribunal may summon the parties to appear before it as per the date and time they provide.

The new rules allow that the tribunal can decide after consulting the parties to hold hearings via video conference, telephone or other means of communication i.e., through remote communication means over a physical hearing. The provision allows parties to request such a remote hearing and the tribunal may consider it after referring to the relevant facts and circumstances. These rules have incorporated the changes that were introduced via a guidance note released by the ICC in 2020 to make accommodations for the burdens caused by the pandemic.

The guidance note has also introduced rules encouraging electronic means of communication and submissions by the parties, and this has been crystallized in the 2021 rules.  Article 3 of the rules previously mentioned that all notifications, submissions, and communications had to be supplied in several copies, implying that the physical copies were the presumptive standard. This has now been changed to “shall be sent” implying that all such communication is to be sent electronically. The move not only helps make the process more efficient but it is also a move by the ICC to promote sustainability by reducing needless paper wastage.

ICC awards and procedural orders will be published online as a default rule, after providing the notice of such publication to parties in advance.

Conclusion:

While many of the rules have been adopted out of the Guidance note issued by the International Chamber of Commerce during the onset of the global pandemic, it is clear that the ICC is committed to ensuring a fairer, transparent, and more efficient system of redressal. The measures that have been incorporated under the new rules will help parties, particularly the new systems of e-filings, virtual hearings, and the introduction of measures to make proceedings less biased.