The amended International Dispute Resolution Procedures (the Rules) of the International Centre for Dispute Resolution (ICDR), the international division of the American Arbitration Association (AAA), entered into effect on March 1, 2021, and will apply to any arbitration that is commenced after said date, unless agreed otherwise.
The ICDR is one of the leading arbitration institutions worldwide. The changes to the Rules are in line with the publication of new rules by various other institutions, including the London Court of International Arbitration (LCIA) and International Chamber of Commerce (ICC), which also sought to adapt to the continually changing landscape of international arbitration. (Please see Holland & Knight's previous alerts, "London Court of International Arbitration (LCIA) Issues New Arbitration Rules," Oct. 27, 2020, and "International Chamber of Commerce Updates Its Arbitration Rules for 2021," Dec. 23, 2020.)
The following are some of the most significant changes to the Rules:
International Administrative Review Council (IARC)
Arbitration institutions are ordinarily tasked with making administrative decisions, for example, regarding challenges to arbitrators. As per a new Article 5 of the Rules, the ICDR designates IARC as the decision-making authority of the institution for issues related to 1) arbitrator challenges; 2) the continued services of arbitrators; 3) issues regarding the number of arbitrators and 4) whether the administrative requirements for filing an arbitration have been complied with.
The IARC is constituted by at least three current or former ICDR executives or other individuals with significant arbitration experience that the ICDR may determine. The ICDR has published the procedures to be followed when submitting an issue to the IARC in the Council Overview and Guidelines that touch upon these topics.
Although IARC had already been operating prior to the new Rules, by expressly including it under its Article 5, the ICDR reaffirms its commitment to further transparency of institutional decision-making in international arbitration.
The previous version of the Rules allowed for joinder of an additional party after the tribunal's constitution only with all the parties' agreements, including the other party. The amended Rules expand on this in Article 8(1) and establish that a joinder also may be ordered if the tribunal determines that it is appropriate and the other party agrees.
Under the previous rules, only the parties could request the consolidation of two or more arbitrations. To decide over the consolidation, the case administrator must appoint a consolidation arbitrator. Article 9(1) of the new Rules now allows the case administrator, through its initiative, to appoint the consolidation arbitrator.
In addition, although the standards for consolidation remain mostly unchanged, they now allow for consolidation where the arbitrations involve the same or "related" parties in Article 9(1)(c). Under the prior version of the rules, consolidation was only possible where the arbitrations involved the same parties.
Impartiality and Independence of Arbitrators
The Rules maintain the general obligation of arbitrators to be independent and impartial and act according to the terms of their Notice of Appointment. The Rules, however, now also include a new mandate to act in accordance with the AAA-ICDR's Code of Ethics for Arbitrators in Commercial Disputes.
The Code of Ethics contains 10 canons that further expand on an arbitrator's mandate, including to act fairly, to avoid entering into business relations with a party to the arbitration, to disclose personal or financial interests and not to discuss proceedings with a party in the absence of the other party, amongst many others.
A new addition very much in line with modern trends in international arbitration refers to third-party funders. Article 14(7) now provides that, upon the application by a party or on its initiative, the tribunal has the express, albeit discretional, power to require a party to disclose the existence and identity of a third-party funder and to confirm if the funder has undertaken to cover the costs of the arbitration. The Rules also provide that arbitrators may require a party to disclose the existence of a non-party (not necessarily a third-party funder) that has an economic interest in the outcome of the arbitration.
The issues raised by third-party funders, such as potential issues of arbitrator independence and impartiality, are not new. However, the addition to the Rules of an express power of the arbitrators to order disclosure will undoubtedly increase transparency and further the system's stability.
Technology and Data Protection
The Rules make slight alterations to Articles 22 and 26 in order to further expand the possibility of utilizing technology as part of the proceedings by including an express reference to audio, video or any other electronic means. However, Article 20(3) requires the tribunal to discuss cybersecurity, privacy and data protection issues during the procedural hearing.
Article 26 expands on the use of electronic means for hearings. A portion or all of the hearing may be held by video, audio, or another means if the parties agree or the tribunal finds that doing so would be appropriate and due process will not be affected, even if one party objects. The Rules also state that video or audio technology may be used for expedited procedures and mediations.
Finally, Article 32 now allows the tribunal to sign an order or award electronically, except where the applicable law mandates a physical signature, the parties disagree, or the tribunal finds that one is necessary.
The Rules introduce a new Article 23, which provides the tribunal's standard to dispose of any issue prior to the hearing. The party must request an application, and the arbitrator may allow if it finds that there is a reasonable possibility of success that will dispose of or narrow down one or more issues. The tribunal must give all of the parties a right to be heard, and the decision on early determination may take the form of an order or award.
The ICDR introduced the expedited procedures into its rules in 2014. As a sign of confidence in this type of procedure, the new Rules increase the maximum amount allowed to access the Expedited Arbitration Rules to $500,000 from $250,000.
Emergency Measures of Protection
Article 7(1) provides that a party may request an emergency arbitrator's appointment to obtain emergency measures of protection prior to the constitution of the tribunal that will decide the dispute. The article adds as a requirement that the requesting party state the injury or prejudice that it will suffer.
The ICDR has a long history of inviting parties to resort to mediation and administering mediations. Thus, in addition to the various changes to the arbitration procedures, the Rules also modify the mediation rules' multiple articles.
Particularly important is the new Article M-9, which sets a more comprehensive roadmap on how mediation is to be held, including a preliminary conference, holding the mediation through electronic means and exchanging documents electronically.
Another critical aspect of the changes is reflected in the new Article M-14(e). This article allows the parties to request from the ICDR or mediator an attestation that a settlement was reached in order to assist the execution in accordance with the Singapore Convention (United Nations Convention on International Settlement Agreements Resulting from Mediation).
The Rules modify the previous text in various important aspects, introducing new provisions in accordance with the modern international practice, specifically through the use of technology, third-party funding and an increased focus on efficiency.