As it continues to enjoy record caseloads during the COVID-19 pandemic, the International Court of Arbitration of the International Chamber of Commerce (the "ICC" or "Court") sets out its vision for the future of dispute resolution with newly updated arbitration rules.1
Introduction
The 2021 ICC Arbitration Rules (the "2021 Rules") were officially launched on 1 December 20202 and will enter into force and apply to cases filed from 1 January 2021.3
The revision introduces changes intended to "mark a further step towards greater efficiency, flexibility and transparency."4 Mindful of the fast-changing world in which its Rules operate, the ICC refreshes its approach by codifying recent arbitral practices and anticipating the needs of the arbitration community.
The Salient Features of the 2021 ICC Rules
A Focused Approach to Efficiency and Flexibility
Effective case management
Under Article 22(2) of the 2017 ICC Arbitration Rules ("2017 Rules"), "to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate" (emphasis added). By replacing "may" with "shall", the 2021 Rules now confer upon arbitrators a positive duty to ensure effective case management.5
An extended scope for consolidations
Under Article 10(b) of the 2017 Rules, the Court may allow consolidation of two or more arbitrations pending under the ICC Rules where "all the claims are made under the same arbitration agreement." This wording left open the question as to whether the term "same arbitration agreement" encompassed identical arbitration agreements contained in different contracts. The revision clarifies that the Court may order the consolidation where "all of the claims in the arbitrations are made under the same arbitration agreement or agreements"6 (emphasis added).
In a similar fashion, the revised Article 10(c) now allows the Court to order consolidation when "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."
With this update, the 2021 Rules adopt a more liberal approach to consolidation, with the compatibility of the relevant arbitration agreements becoming even more important.
Joinder of additional parties after the constitution of arbitral tribunals
Under the 2017 Rules, joinder of additional parties was permitted only with the consent of all parties and before the constitution of the arbitral tribunal.7 The new Article 7(5) allows an arbitral tribunal, once constituted and upon a party's request, to join a third party even where there is no universal consent.
The provision applies "subject to the additional party accepting the constitution of the arbitral tribunal and agreeing to the Terms of Reference, where applicable."8 When deciding, the arbitral tribunal must also consider "all relevant circumstances", including (i) whether the arbitral 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.9 Further, under the new Article 7(5), "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." Accordingly, despite satisfying the prima facie jurisdiction test, a successful joinder application may be subject to further jurisdictional challenges before the arbitral tribunal, including from the joined party.
Increased opt-out threshold for expedited arbitrations
Introduced by the 2017 revision to promote efficiency, the Expedited Procedure provisions (Article 30 and Appendix VI) have encountered a notable success with 146 cases filed up to the end of 2019.10
The 2021 Rules expand the scope of application of the Expedited Procedure provisions by raising the opt-out threshold from USD 2 million to USD 3 million.11 The amendment concerns 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.
Emphasis on Compliance with Due Process Principles
Equal treatment of the parties in the constitution of arbitral tribunals
Absent any joint nomination or agreement between the parties regarding the constitution of a three-member tribunal, Article 12(8) of the 2017 Rules entitles the Court to appoint each arbitrator and designate the president.12
However, this provision applies only where the dispute involves multiple claimants or respondents or where an additional party has been joined.13
The 2021 Rules build on Article 12(8) by allowing the Court to disregard "unconscionable arbitration agreements" and appoint the arbitral tribunal in any arbitration.14 The new Article 12(9) provides that,"[n]otwithstanding 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."15
In line with the well-known and long-standing Dutco decision of the French Cour de Cassation, this provision aims at ensuring compliance with public policy and preserving the enforceability of awards.16 As a limitation on the right of the parties to nominate their own arbitrator, the scope of Article 12(9) will certainly be a topic of further discussion.
Additional awards as a remedy for omitted claims
Under the 2017 Rules, awards already rendered could be subject to correction or interpretation by arbitral tribunals under the supervision of the Court.17 Article 36(3) now 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.
The revised provision seeks to strike a balance between the finality of awards and preserving awards from infra petita challenges before state courts. New Article 36(3) also brings the Rules in line with a number of other arbitration rules already dealing with this issue.18
New Measures to Prevent Conflicts of Interests
Disclosure of third party funding
The growing demand for transparency in international arbitration has resulted in an increased scrutiny into disclosure obligations of arbitrators. For example, the ICC requires arbitrators to disclose any relationship that he/she could have with "any entity having a direct economic interest in the dispute."19
In this context, the new Article 11(7) requires the parties to communicate promptly to the arbitral tribunal, the other parties and the ICC Secretariat the 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." The rationale behind this provision is to assist prospective arbitrators in their disclosure duties, thus ensuring compliance with the paramount standards of impartiality and independence of the arbitral tribunal. The drafting of the new Article 11(7) does not target (only) professional third party funders in specific fashion, although they are clearly intended to be caught.20
Closer supervision of party representation
Article 17 of the 2017 Rules has undergone an overhaul to strike a balance between equal treatment and tactical counsel appointments. The new Article 17 mandates parties to notify the ICC Secretariat, the arbitral tribunal and other parties in a timely way of any change in their representation. In turn, the arbitral tribunal can decline the proposed change in counsel or limit their participation to part of the proceedings. The measure is chiefly aimed at preventing conflicts of interests between arbitrators and new party representatives.
ICC'S Renewed Commitment to Accountability
Insight into the internal running of the ICC Court
The 2021 Rules provide valuable additional information on the internal operations of the Court. The Statutes of the Court (Appendix I) now include a revised appointment process for the President of the Court (Article 3(1)), two consecutive term limits for all members of the Court (Articles 3(5) and (6)), a clear work division between Committees, newly created Special Committees and Single-member Committees (Articles 4, 5, and 6). The Internal Rules of the ICC are also modified to provide detail on the constitution, quorum, and decision-making of the Court.21
Access to the reasoning of the ICC Court
The new Article 5 of Appendix II confirms that, 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)).22 The request must be made in advance of the decision in respect of which reasons are sought.13 In "exceptional circumstances", the Court retains discretion to decline disclosure of its reasons.24
Article 43 and Appendix I confirm that any claims arising out of or in connection with the administration of arbitration proceedings by the Court shall be governed by French law and resolved by the Tribunal Judiciaire de Paris. This clarification is not intended to apply to challenges to arbitral awards.
Keeping the ICC Rules Attractive and Innovative
A Focus on Growing Portfolios
Treaty-based arbitration
In 2019, around 20% of the arbitration cases registered by the ICC involved a state or a state entity, a 67% rise over the past five years.25 In an effort to respond to the particularities of this increasing portfolio, the investor-state dispute settlement ("ISDS") provisions of the Rules have been improved with a few tweaks.
Article 11(7) on disclosure of third party funding equally applies to ICC treaty-based arbitrations, in a measure adopted in advance of the proposed reform of the ICSID Arbitration Rules.26
Article 13(6) of the 2021 Rules introduces a neutrality requirement in treaty-based disputes by barring all arbitrators forming the arbitral tribunal from holding the same nationality as any of the parties, unless the parties agree otherwise. (In contrast, the 2017 Rules only concerned chairs and sole arbitrators and did not extend to the co-arbitrators). The amendment addresses impartiality and independence concerns stemming from the public interest character of ISDS, mirroring a similar rule governing ICSID arbitrations.27
Article 29(6)(c) expressly provides that emergency arbitration provisions are not available when "the arbitration agreement upon which the application is based arises from a treaty." In the ICC's view, the condition that all parties be signatories of the arbitration agreement is not satisfied, as the investor and the host state are not signatories of the arbitration agreement formed by the state's offer contained in a bilateral investment treaty and the investor's acceptance contained in its notice of claim or request for arbitration.28 However, emergency proceedings remain open to contract-based arbitrations involving a state or state entity.
Settlement of disputes
One of the case management techniques recommended by the 2021 Rules includes "encouraging the parties to consider settlement of all or part of the dispute", instead of merely "informing" them about that option as per the previous iteration.29 An express reference to the ICC Mediation Rules complements this provision in response to the growing number of settlements observed during the COVID-19 pandemic.30
Embracing the Digitalization of Arbitration
Virtual hearings
Under the 2017 Rules, Article 25(2) provided that "the arbitral tribunal shall hear the parties together in person" upon a party's request or on its own motion. Since the start of the COVID-19 pandemic, parties objecting to the conduct of virtual hearings have used this provision to argue the necessity of physical attendance, in particular where disputes involved an examination of fact witnesses and experts. In its Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic released in April 2020 (the "Guidance Note"), the ICC had confirmed that the paramount purpose of Article 25(2) was to ensure "live adversarial exchange", which was considered satisfied if the hearings were to be held "by virtual means."31
The 2021 Rules remove any remaining doubt through their new Article 26, by empowering arbitral tribunals in specific fashion to decide between conducting hearings in-person and remotely. The decision is subject to two requirements: (i) as a preliminary step, the parties must be consulted, and (ii) "the relevant facts and circumstances of the case" must be taken into account. In addition to video and telephone conferences, an evolution in technology is anticipated in this new article by the reference to "any appropriate means of communication."
In the face of the COVID-19 pandemic, virtual hearings are becoming an increasing option for parties, with the laudable aim of reducing delays and costs. However, this format may not be the best answer to the circumstances of every case, and, despite the 2021 Rules allowing so, arbitral tribunals may not always be entitled to order a full virtual hearing under the lex arbitri. Time will tell as to how this provision will play out in a post COVID-19 world.
A call for green arbitration
Integral to the fight against climate change, dispensation of hard copies has for a number of reasons largely increased during the COVID-19 pandemic. In its Guidance Note, the ICC prompted all parties and arbitral tribunals to resort to electronic submissions.32
Following suit with the 2020 LCIA Arbitration Rules, the 2021 Rules confirm this trend by removing the presumption of paper filings. Article 3(1) now provides that all submissions, notifications and communications "shall be sent" electronically, instead of "supplied in a number of copies." Several provisions confirm that the parties must expressly request transmission by hard copy (Articles 3(2), 4(4)(b), 5(3)), and 1 of Appendix V).
Online publication of ICC awards and procedural orders
While not expressly provided in the 2021 Rules, another change scheduled for 2021 concerns the online publication of all ICC awards and procedural orders as a default rule.33 For data privacy concerns, the parties will be provided notice in advance, with the opportunity to object or decide the modalities of publication, including anonymisation.34
Conclusion
The 2021 Rules introduce key features to further modernize and bolster "efficiency, flexibility and transparency", demonstrated notably by the new provisions pertaining to consolidation and joinder, party representation and disclosure of third party funding.
Tailored in real-time to ensure that arbitral proceedings move seamlessly during the COVID-19 pandemic and beyond, the 2021 ICC Rules also widen the authority of arbitral tribunals and the Court to decide on procedural matters. As a nuance, practice will tell if additional limitations on party autonomy for the sake of efficiency will be welcomed by users and followed by competing arbitral institutions.
1 See, ICC Dispute Resolution 2019 Statistics (available at https://iccwbo.org/publication/icc-dispute-resolution-statistics/), p. 9. In 2019, the ICC registered its 25,000th case and 869 newly filed cases, its second highest record after 2016; 2018 Queen Mary University of London (QMUL) White & Case International Arbitration Survey (available at http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey---The-Evolution-of-International-Arbitration-(2).PDF), p. 13. The ICC stands out as the most preferred arbitral institution by a significant margin (77%).
2 2021 ICC Arbitration Rules (available at https://iccwbo.org/publication/2021-arbitration-rules-and-2014-mediation-rules-english-version/).
3 Any cases submitted to the ICC and registered prior to 1 January 2021 will be governed by the 2017 ICC Rules, unless the parties have specified otherwise.
4 As described by the ICC Court of Arbitration President Alexis Mourre (https://iccwbo.org/media-wall/news-speeches/icc-unveils-revised-rules-of-arbitration/).
5 2021 ICC Arbitration Rules, Article 22(2).
6 2021 ICC Arbitration Rules, Article 10(b).
7 2017 ICC Arbitration Rules, Article 7(1).
8 2021 ICC Arbitration Rules, Article 7(5).
9 2021 ICC Arbitration Rules, Article 7(5).
10 ICC Dispute Resolution 2019 Statistics, p. 16.
11 In comparison, the 2018 HKIAC Arbitration Rules provide for a USD 3.2 million threshold, the SIAC Rules for a USD 4 million threshold, and the SCC 2017 Expedited Procedure Rules apply regardless of the value of the dispute if both parties consent.
12 2017 ICC Arbitration Rules, Article 12(8).
13 2017 ICC Arbitration Rules, Articles 12(6) and 12(7).
14 As described by the ICC
15 2021 ICC Arbitration Rules, Article 7(5).
16 French Cour de Cassation, BKMI Industrienlagen GmbH et Siemens AG v. Dutco, 7 January 1992. ("[E]quality of the parties in the appointment of arbitrators is a matter of public policy which can be waived only after the disputes has arisen.")
17 2017 ICC Arbitration Rules, Article 36.
18 See, e.g., Article 40 of the 2013 HKIAC Arbitration Rules, Article 27 of the 2014 LCIA Arbitration Rules, Article 33 of the 2016 SIAC Arbitration Rules, and Article 48 of the 2017 SCC Arbitration Rules.
19 2019 ICC Note to Parties and Tribunals on the Conduct of Arbitration, para. 28.
20 2014 IBA Rules on Conflict of Interest in International Arbitration, General Standard 7 ibanet.org/Publications/publications_IBA_guides_and_free_materials.aspx
21 2021 ICC Arbitration Rules, Appendix II.
22 2021 ICC Rules, Article 5(1) of Appendix II.
23 2021 ICC Arbitration Rules, Article 5(2) of Appendix II.
24 2021 ICC Arbitration Rules, Article 5(3) of Appendix II.
25 2019 ICC Dispute Resolution Statistics, p. 9. In 2019, 212 of the 869 new cases filed with the ICC involved states or state-owned enterprises.
26 ICSID Working Paper #4, Proposals for Amendment of the ICSID Rules, Proposed Rule 14
27 See, ICSID Convention, Article 39, and ICSID Arbitration Rules, Article 1(3).
28 ICC Report on Arbitration involving States and State Entities, para. 52 (last revised in June 2017).
29 2021 ICC Arbitration Rules, Article 1(h) of Appendix IV.
30 2021 ICC Arbitration Rules, Article 1(h) of Appendix IV.
31 ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic, Section III, para. 23.
32 ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic, Section II–B.
33 ICC Data Privacy Notice for ICC Dispute Resolution Proceedings, Section III-B, Section III-B.
34 Ibid, Section III-B.
35 As described by the ICC Court of Arbitration President Alexis Mourre
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