I. The 2020 LCIA Arbitration Rules
- Remote proceedings: The new rules contemplate that a hearing may take place in any remote communication format where parties are located in different geographic locations (Article 19(2)).
- Consolidation and composite requests: Unlike the LCIA rules issued in 2014, LCIA arbitrators are now empowered to consolidate multiple arbitrations under compatible arbitration agreements between the same parties or involving the same underlying transaction (even if involving different parties) (Articles 22(A), 22(7)(ii)-(iii), and 22(8)(ii)). Moreover, a party may commence separate arbitrations, involving multiple respondents and multiple arbitration agreements, by a composite request (Article 1(2)).
- Expedited procedures: To ensure a more efficient and streamlined arbitral process, the new rules provide arbitrators with the discretion to order any of a non-exhaustive list of eight expedited procedural measures (Article 14(6)). These include: (i) limiting the length of written submissions; (ii) the authority to determine at which juncture of the proceedings a particular issue should be determined; (iii) dispensing with a hearing (but the right to a hearing remains); and (iv) curtailing any period of time.
- Electronic communications: A long overdue update, the default method of all written communications in LCIA proceedings is now electronic throughout the entirety of the proceeding (Articles 4(1) and 4(2)).
- Summary disposition: The revisions provide the tribunal with the explicit authority to promptly dismiss claims or defenses that are unequivocally meritless, inadmissible, or beyond the tribunal’s jurisdiction, irrespective of whether the tribunal elects to institute the aforementioned expedited procedures (Article 22(1)(viii)).
- Data security protocols: In a timely innovation, the new rules obligate tribunals to consider, and empower them to issue, binding directives as to the propriety of instituting specific data protection and information security protocols to prevent cybersecurity breaches of confidential or sensitive information (Article 30(A)).
II. The 2021 ICC Arbitration Rules
- Remote proceedings: The tribunal may, after consultation with the parties, utilize remote technology (via teleconference, videoconference, or “other appropriate means of communication”) to hold any hearing, including the final merits hearing (Article 26(1)). There is also no longer a presumption that parties make written submissions in hard copy (Articles 3-5).
- Joinder: Joinder of a third party is now permissible after constituting the tribunal if: (i) the third party consents; and (ii) the tribunal considers the potential conflicts of interest created by joining a third party, whether it has jurisdiction over that party, and the impact of joinder given the timing and procedural posture of the proceeding (Article 7(5)).
- Consolidation of arbitration under multiple agreements: There was a lack of clarity under the 2017 ICC Rules whether consolidation “under the same arbitration agreement” meant that consolidation was only possible where all of the claims were made under a same contract containing the arbitration agreement, or whether consolidation under multiple contracts containing compatible arbitration agreements was also possible. The 2021 ICC Rules put this doubt to rest in favor of the broader scope of consolidation. Article 10(b) now provides that consolidation may occur when “all of the claims in the arbitrations are made under the same arbitration agreement or agreements.”
- Third-party funding: The revised rules require parties to disclose the identities of third-party funders with a pecuniary interest in the proceeding (Article 11(7)).
- Inequality of tribunal appointment: Article 12(9) grants the ICC Court a new power, in “exceptional circumstances,” to disregard the agreement of the parties on the method of constitution of the arbitral tribunal “to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.” In such exceptional circumstances, the ICC will itself appoint “each member of the arbitral tribunal.”
- Investment arbitration: To improve the perception of neutrality in cases involving the public interest, Article 13(6) provides that in investment arbitrations based on a treaty no arbitrator shall have the same nationality as that of any party and Article 29(6)(c) provides that the emergency arbitrator provisions do not apply in disputes arising from a treaty.
- Expedited procedures: The revised rules expand the scope and application of the 2014 rollout of the ICC Expedited Procedure Rules, as well as increasing the opt-out threshold from US$ 2 million to US$ 3 million (Article 30 and Annex IV).
- ICC governing law: Although international in nature, the 2021 ICC Rules now provide a governing law for disputes arising out of or in connection with the administration of the proceedings by the Court. Under Article 43, such disputes shall be governed by French law and settled by the Paris Judicial Tribunal in France, which shall have exclusive jurisdiction (Article 43).
- Exclusion of emergency arbitrator: The 2021 ICC Rules also expressly exclude the use of the emergency arbitrator if “the arbitration agreement upon which the application is based arises from a treaty” (Article 29(6).
III. Key takeaways from the new rules
The ICC and LCIA revisions promote flexibility by enabling the use of virtual hearings (undoubtedly in response to the travel and health challenges posed by COVID-19). The two sets of revisions further promote efficiency and provide the tribunals with more authority to adopt specific measures to further streamline proceedings, including through enhanced provisions for the consolidation of multi-party and multi-contract disputes.
While the amendments do not constitute a total overhaul to either institution’s rules, the LCIA’s rules now reflect the more modernized approaches taken by other major arbitration tribunals. For example, the parties’ express ability to seek dispositive motions under the LCIA rules is one of the biggest developments of the 2020 rules. The LCIA is the first established international arbitration institution to enable arbitrators to adopt procedures to address cybersecurity measures to protect parties’ confidential and sensitive personal data. It has also now expressly adopted a procedure requiring prompt disclosure of any third parties with an economic interest in the outcome of the proceeding.
Although the 2021 ICC Arbitration Rules are not considerably different from the 2017 ICC Arbitration Rules, they introduce some substantial changes, including provisions addressing third-party funding, joinder and consolidation, and the ICC Court’s powers with respect to tribunal appointments.
Both sets of revised rules provide arbitrators with additional authority and discretion to consider and implement specific procedural measures at earlier stages of the proceedings than previously allowed to ensure efficient and expeditious proceedings.
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Client Alert 2020-581
