New LCIA and ICC rule updates: increased flexibility and virtual hearings

Orrick, Herrington & Sutcliffe LLP
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Orrick, Herrington & Sutcliffe LLP

Despite one of the perceived advantages of arbitration being the absence of overly detailed rules and strictures, there is an increasing trend amongst the more well-known arbitration institutions to keep tweaking their rules with ever greater frequency. The ICC and LCIA are no exceptions and with a suspicious co-incidence of timing, both have recently announced updates. We summarise the key developments here.

The updates to the International Chamber of Commerce (ICC) and London Court of International Arbitration (LCIA) Arbitration Rules do not radically overhaul the existing framework but nevertheless contain some notable changes. Amongst other things, the new rules embrace greater flexibility around the use of electronic communications and remote hearings, codifying a shift in approach which has already been imposed through necessity by the Covid-19 pandemic.

LCIA Arbitration Rules 2020

The LCIA’s updated rules came into force on – and apply to arbitrations commenced under LCIA rules on or after - 1 October 2020.

Notable changes include:

  • Endorsement of email (and other electronic methods) as the default means of submission of arbitration requests and responses, and for general communication in the arbitration. Other welcome changes in view of the Covid-19 pandemic include facilitation of electronic signature of awards, and amendments to make express reference in the rules to remote hearings.
  • Greater emphasis on the tribunal’s ability to use its case management powers to expedite proceedings, including abridging time periods, limiting witness evidence and written statements, employing technology and dispensing with hearings. Technically, this does not add anything new, since the LCIA Arbitration Rules 2014 already gave tribunals the “widest discretion” to discharge their duties. However, the express inclusion of these powers makes it more likely that tribunals will have the confidence to use them, allowing for flexible, bespoke forms of expedited procedure with less fear of subsequent challenges via the courts.
  • Addition of an express provision for early preliminary determination where a claim or defence is manifestly outside the tribunal’s jurisdiction, inadmissible or without merit. This follows introduction of similar provisions by other arbitral institutions, e.g. in Singapore and Hong Kong, following a trend started by ICSID.
  • Introduction of a mechanism for claimants to commence more than one arbitration (including against more than one respondent or under more than one arbitration agreement) by way of a “composite request”.
  • Amendment and expansion of powers to consolidate or run concurrent arbitrations.
  • Inclusion of a new rule clarifying the role of tribunal secretaries.
  • Inclusion of an express requirement for tribunals to consider data protection and information security at an early stage.

The LCIA has also made updates to its Mediation Rules, which came into force on 1 October 2020 and can be found here.

ICC Arbitration Rules 2021

The ICC’s updated Arbitration Rules were released in draft form earlier this month. The new rules will come into force on 1 January 2021.

As with the LCIA rules, the ICC rule updates reflect the “new normal” of arbitration during a pandemic. The arbitrator is explicitly given the discretion, after consulting with the parties, to hold a hearing remotely by videoconference, telephone or other appropriate means. There has also been a shift away from filing of multiple hard copies.

Other changes include:

  • Some significant amendments targeted at increasing transparency and integrity (and so improving the chances that awards will be less vulnerable to challenge). These include a new requirement for parties to disclose certain third-party funding arrangements. The arbitral tribunal has been given broad powers to take measures to avoid conflicts of interest arising from changes in party representatives, including blocking appointing new lawyers who might give rise to a conflict for the existing tribunal. In “exceptional circumstances”, the ICC Court has the discretion to override the parties’ arbitration agreement and appoint each member of the arbitral tribunal itself, where this would avoid a significant risk of unequal treatment and unfairness that might affect the validity of the award. It remains to be seen how these provisions will be interpreted, but increasingly the choice of ICC arbitration is an election for an institution which has the power to override choices which the parties might otherwise have made for themselves.
  • Clarification of the rules in relation to investment treaty arbitrations (no arbitrator shall have the same nationality as that of any party and emergency arbitration will not be available).
  • Expansion of the scope of the expedited arbitration procedure introduced under the 2017 ICC rules (i.e. a fast track procedure before a sole arbitrator who may conclude that no hearings are required). Where the arbitration agreement is concluded on or after 1 January 2021, the threshold below which parties must “opt out” of expedited arbitration will increase to US$3 million, significantly increasing the number of cases which will now default onto this scheme.

The current draft rules may be subject to editorial changes prior to their formal launch in December 2020.

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