Author: Risteard de Paor, with thanks to Anna Maria Riemer for her contribution
The contract is drafted and agreed and institutional (as opposed to ad hoc) arbitration has been chosen. But when choosing between different arbitral institutions, how should one decide on the institution to administer the arbitration and the arbitral rules that will govern the proceedings?
In this article, we focus on the rules of three prominent Europe-centered institutions: the International Court of Arbitration of the ICC (“ICC”), the London Court of International Arbitration (“LCIA”), and the Madrid International Arbitration Centre (“MIAC”). We set out their main similarities and differences, given that each of their rules has recently been modified or, in the case of the third, created. In the interests of readability, we will not examine the separate question of the impact of choosing an arbitral seat in any of the associated countries.
The 2020 LCIA Rules, updating the 2014 Rules, became effective on October 1, 2020 (“LCIA Rules”) while the 2021 ICC Rules, updating the 2017 Rules, are expected to take effect on January 1, 2021, subject to possible editorial changes in advance of their official launch on December 1, 2020 (“2021 ICC Rules”). The 2020 MIAC Rules became effective on January 1, 2020 after the creation of the MIAC as the merged international branch of three longstanding Spanish arbitral institutions (“MIAC Rules”).
Each of these cutting-edge institution’s recently approved rules aim to streamline the arbitration procedure, formalize common arbitral practices and take account of the greater need for efficiency and use of technology in modern international arbitration. In the case of the ICC and LCIA Rules, the changes were largely a result of the pandemic, while the MIAC Rules were technology-driven by virtue of being conceived so recently. Needless to say, each of these institutions administers arbitrations in English – while the MIAC also offers services in French, Portuguese and Spanish, and the ICC offers each of these languages as well as other languages like Arabic and Chinese. They each mark a shift away from hard-copy-based proceedings.
The 2021 ICC Rules no longer contain a presumption of pleadings and other written communications being sent by hard copy, providing merely that these communications be “sent”. Article 3.2 expressly refers to “email, or any other means of telecommunication that provides a record of the sending” in respect of communications from the Secretariat and tribunal. Article 26.1 expressly provides for the possibility of conducting hearings via videoconference. Similarly, the LCIA Rules allow written communications relating to the arbitration agreement (including the Request and Response) to be submitted via email and parties may opt for a virtual hearing. Under the MIAC Rules, communications between the parties are required to be sent electronically (unless this is not possible or the Centre or tribunal requests a hard copy). Physical or virtual hearings are possible, and parties, counsel, arbitrators and secretaries can take advantage of MIAC’s virtual platform.
What follows is a list of the main features of the three sets of rules, and the differences, of which parties should be aware when proposing the arbitral rules to govern the arbitration.
Where a party needs interim or conservatory measures that cannot await the constitution of the tribunal, each of the Rules provide for the appointment of an emergency arbitrator.
Under the 2021 ICC Rules, the emergency arbitrator’s decision takes the form of an order and is made within 15 days of the date of transmission of the file to the emergency arbitrator where the arbitration agreement was concluded on or after January 1, 2012.
The time period for what is termed a “procedural order” of the emergency arbitrator is also 15 days under the MIAC Rules.
The LCIA Rules provide that within 14 days of appointment, the emergency arbitrator may make an order or award, but only where the arbitration agreement was concluded on or after October 1, 2014 or where parties agree to the procedure.
The relevance of the order/award distinction is the debated question of whether orders, not just awards, are enforceable under art. V of the New York Convention. The upshot is that the enforceability of an order by a judicial court will depend on the relevant arbitration law of the country where enforcement is sought.
Under the LCIA Rules, joinder is possible but is subject to the tribunal’s approval.
Under the 2021 ICC Rules, art. 7 allows for joinder of parties but, if the request for joinder is made after the confirmation or appointment of an arbitrator, the joinder is subject to the consent of the party sought to be joined, as to the constitution of the tribunal and to the terms of reference (“TOR”), and the approval of the tribunal once constituted.
Article 17 of the MIAC Rules provides that, before the tribunal is constituted, the Centre may allow joinder subject to the consent of all parties, including that of the additional party, or if joinder is permitted by the arbitration agreement, subject to an assessment of the additional party’s relationship to the proceedings. They also expressly provide that the additional party shall participate in the appointment of arbitrators. After the tribunal has been constituted, the Centre can still allow joinder subject to the consent of all parties, including the additional party (who by then is deemed to have waived its rights in respect of appointment of arbitrators).
Under art. 10 of the 2021 ICC Rules, the Court may, at a party’s request, consolidate arbitrations into a single arbitration where:
- The parties have so agreed;
- The relevant arbitration agreements are the same; or
- The arbitration agreements are compatible, the arbitrations are between the same parties and the disputes arise in connection with the same legal relationship.
Note that, under art. 9, claims related to multiple contracts and involving multiple arbitration agreements can be made in a single arbitration, subject to the Court making a prima facie finding that the arbitration agreements may be compatible and that the parties may have agreed to have the claims determined together in a single arbitration.
Under art. 19 of the MIAC Rules, consolidation of arbitration proceedings is possible upon a request by a party but the Centre takes account of the other party’s view, the nature of the claims, the connection with the pending arbitration and the stage of proceedings. Note that, where there are multiple contracts, it is also possible to file a single request for arbitration in respect of all the invoked arbitration agreements, substantiating that the consolidation criteria are met (art. 18).
Under the LCIA Rules, where all the parties consent – or the arbitration agreements are compatible and the arbitrations either are between the same disputing parties or arise out of the same transaction or series of transactions – the tribunal can order consolidation with the approval of the LCIA Court. The LCIA Rules do not contain an express provision allowing claims relating to multiple contracts to be made in the same request for arbitration, unlike the ICC and MIAC Rules, but they do provide for a single (or “composite”) request to be made to commence a number of arbitrations (art. 1.2) .
Appointment of arbitrators
The default position under the LCIA Rules is that the LCIA Court will select the arbitrators unless the parties otherwise agree in their arbitration agreement or when the dispute arises. In any event, the tribunal is formally appointed by the Court under art. 5.
Under the 2021 ICC Rules, the default position is that the arbitrators are nominated by the parties and appointed by the Court. The Court will also appoint the President in a three-member tribunal, unless the parties have agreed on a different appointment procedure (art. 12). However, art. 12.9 allows the Court, in exceptional circumstances, to override the parties’ agreement and appoint each member of the arbitral tribunal to avoid a significant risk of party inequality and unfairness that may affect the validity of the award.
Under the MIAC Rules, the Centre formally appoints the tribunal further to nomination by the parties (or may do so directly where parties do not or cannot). In a three-member tribunal, the President is appointed by the two party-appointed arbitrators (art. 11.4).
Therefore, the default method of arbitrator and President selection, and the degree to which the institutions can intervene in the choice of arbitrators, differs substantially between the three institutions.
Confidentiality and transparency
Under the 2021 ICC Rules, the tribunal may, upon a party’s request, make orders concerning the confidentiality of the arbitration and the protection of trade secrets or other confidential information (art. 22.3). There is no express provision concerning confidentiality beyond this, apart from certain disclosure obligations. For example, there is an obligation to disclose the existence and identity of third-party funders of a claim or defence, where the funder has an economic interest in the outcome of the arbitration.
Although such disclosure was de facto a reality before the introduction of this requirement, it is nevertheless an important addition. It increases transparency and integrity (in like manner to the potential publication of anonymized or pseudonymized ICC awards two years after notification of the final award). It may also help avoid later challenges of the award based on conflict of interest concerns. For example, if there is any relationship between an arbitrator and a funder, the arbitrator may be unaware of the relevance of this relationship if the party does not disclose the funder’s identity. Parties must also disclose changes in their representation and the tribunal can “take any measure necessary to avoid a conflict of interest of an arbitrator” arising from such a change, including the exclusion of new party representatives from participating in the arbitration.
The LCIA Rules expressly provide that parties undertake to keep all deliberations of the tribunal and all awards confidential and the LCIA does not publish any award or part of any award without the prior written consent of all parties and of the tribunal (art. 30).
The MIAC Rules mark a middle ground between the ICC and LCIA Rules’ approaches by allowing the publication of awards only if they are redacted, and with the consent of all parties. There is an obligation for parties to disclose third-party funding.
Of the three sets of Rules, only the 2021 ICC and the MIAC Rules provide for an expedited procedure.
Under the 2021 ICC Rules, it shall apply where:
- The parties have not opted out of the provisions on Expedited Procedure;
- The Court has not determined for some reason not to apply it;
- The arbitration agreement was concluded on or after 1 March 2017; and
- Either the amount of the dispute does not exceed US$2 million (or US$3 million if the arbitration agreement is concluded on or after January 1, 2021) or the parties agree to apply the Expedited Procedure.
Under the MIAC Rules, the expedited procedure shall apply wherever the total quantum in dispute is equal to or less than €1,000,000 and the parties have not expressly agreed in their arbitration agreement that the procedure will not apply.
Terms of reference
Both the 2021 ICC Rules and the MIAC Rules provide for TOR to be drawn up and signed by the parties and the tribunal within 30 days of the tribunal receiving the file. Under both sets of rules, the effect is that, after the signing of the TOR, no party shall make new claims outside the scope of the TOR unless so authorized by the tribunal. When considering such an authorization, the tribunal shall consider the nature of the new claims or events, the stage of the proceedings and other relevant circumstances.
The LCIA Rules do not provide for TOR.
Early determination of claims
Both the LCIA and MIAC Rules expressly empower tribunals to determine unmeritorious claims at an early stage of proceedings.
The LCIA Rules set out a non-exhaustive list of powers of the tribunal to help ensure a fair and efficient proceeding. The most notable of these powers is that, on application by a party, the tribunal can exercise its power of early determination of claims (including counterclaims and cross-claims, the latter being claims between co-Respondents) and defences that are “manifestly without merit”. This will surely encourage tribunals to be less reluctant to dismiss unmeritorious claims, in the interest of time and cost in particular.
The MIAC Rules also helpfully set out a list of powers of arbitrators and one of them is similar to the early determination under the LCIA Rules. It allows the tribunal to resolve “as a preliminary matter and through an award, objections to the jurisdiction of arbitrators…as well as deciding on any claims or defenses with manifest lack of legal merit”. In another measure aimed at preserving the integrity of the arbitral process, art. 24.o) empowers the tribunal to adopt “measures to preserve the fairness and integrity of the proceedings, including written or verbal cautions or warnings to the lawyers.”
The 2021 ICC Rules do not contain a discrete provision on early determination of claims but Appendix IV sets out case management techniques that can be used by the arbitral tribunal to manage cost and time. These include the ability to identify issues that can be resolved by agreement between the parties or their experts.
Scrutiny of awards
Both the ICC Court and MIAC scrutinize and approve awards as to their form before they may be signed by the tribunal. The ICC Court can also draw attention to “points of substance”, and the MIAC Centre to “aspects relating to the reasoning of the award or the merits of the dispute”, but the tribunal maintains full discretion in this regard. The LCIA Court does not scrutinize awards.
Administrative expenses and arbitrator fees
In LCIA arbitration, administrative charges and fees of the tribunal are calculated on an hourly basis and take account of the complexity of the dispute and other circumstances.
Under the 2021 ICC and MIAC Rules, administrative expenses and tribunal fees are calculated based on a percentage on the amount in dispute, decreasing as the amount in dispute increases (and with minimum and maximum limits for arbitrator fees under the ICC Rules and for both administrative expenses and arbitrator fees under the MIAC Rules).
Note: a link to a more detailed analysis of the LCIA Rules is here.
- LCIA Rules, arts. 4.1-3 and 19.2.↩
- MIAC Rules, arts. 3.1 and 35. Note that there is no express provision on virtual hearings but the Rules do not prevent such hearings, which are anticipated by MIAC’s internal organization and technology.↩
- 2021 ICC Rules, art. 29 and Appendix V.↩
- MIAC Rules, art. 64.↩
- LCIA Rules, art. 9B.↩
- LCIA Rules, art. 22.1(x).↩
- LCIA Rules, art. 22.7(i)-(iii).↩
- 2021 ICC Rules, art. 11.7.↩
- See ICC Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, 2019.↩
- 2021 ICC Rules, art. 17.2.↩
- MIAC Rules, arts. 54.4 and 23.2, concerning publication and disclosure, respectively.↩
- 2021 ICC Rules, art. 30 and Appendix VI.↩
- MIAC Rules, art. 57.1.↩
- 2021 ICC Rules, art. 23 and MIAC Rules, art. 28.↩
- LCIA Rules, arts. 14.6 and 22.1(viii).↩
- MIAC Rules, arts. 24 and 24.2.g, respectively.↩
- 2021 ICC Rules, art. 34 and MIAC Rules, art. 47.↩
- Schedule of Costs, effective 1 October 2020, section 2.↩
- Annex 3 to the 2021 ICC Rules, Arbitration Costs and Fees and Annex 2 to the MIAC Rules, Rules on the costs of the arbitration.↩