Revised ICDR 2021 Rules Are Now In Effect

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Like some other international arbitration institutions, the International Centre for Dispute Resolution (“ICDR”) recently adopted amendments to its International Dispute Resolution Procedures (the “2021 ICDR Rules”).  The ICDR’s amendment became effective on March 1, 2021. The amendments, according to the ICDR, aim to “promote greater efficiency and economy by addressing the early disposition of issues, emphasizing the use of mediation, and expanding the applicability of the expedited procedures. Importantly, the rules also place an increased emphasis on arbitrators’ ethical obligations.”  The 2021 ICDR Rules also address challenges and concerns related to the COVID-19 pandemic, including the use of video, audio, and other electronic means of communication.

Notable and significant revisions include:

Authority of International Administrative Council (“IARC”)

Article 5 of the 2021 ICDR Rules expressly authorizes IARC to (1) determine challenges to the appointment or continuing service of an arbitrator; (2) decide disputes regarding the number of arbitrators to be appointed; (3) determine whether a party has met the administrative requirements to initiate or file an arbitration; (4) in case of parties disagreement, determine the initial place of arbitration.

Joinder

            The joinder rules have been expanded in Article 8(1) as now the joinder is permitted after the constitution of the tribunal if the tribunal determines that the joinder is appropriate and the additional party consents to be joined.

As we have previously reported, International Court of Arbitration (“ICC”) also recently expanded its joinder rules.

Consolidation

            The consolidation rules were likewise expanded in Article 9(1) to permit consolidation when arbitrations involve “related” parties.  The previous rule only allowed consolidation when the “same” parties were involved.  Further, Article 9(1) now allows the case administrator, on its own initiative, to appoint a consolidation arbitrator.  Previously only parties could request consolidation.

The London Court of Arbitration (LCIA) also recently broadened its power to order consolidation.

Impartiality and Independence of Arbitrators

            The 2021 ICDR Rules further expanded arbitrators’ obligations to act impartially and independently. Arbitrators are now required to act in accordance with the ICDR’s Code of Ethics for Arbitrators in Commercial Disputes.  The Code includes ten canons requiring arbitrators to, among other things, only accept appointments if an arbitrator can act impartially and independently from the parties, potential witnesses and the other arbitrators; disclose all past and present financial, business and professional interests, which might reasonably affect impartiality or arbitrator’s independence; avoid ex parte communications; be patient and courteous with parties and witnesses and encourage others to act in the same manner; and not to delegate his or her decision to any other person.

Third Party Funding

            The 2021 ICDR Rules now include Article 14(7), which provides that upon a party’s application or on its own initiative, the tribunal has a discretionary power to require parties to disclose an existence of a third party funder.  This rule is less stringent than the ICC’s new Article 11(7), which requires each party to promptly inform the Secretariat, the tribunal and the other parties about existence and identity of a third party funder.

Arbitral Jurisdiction

            The 2021 ICDR Rules further strengthen in Article 21 the concept that the tribunal has full authority and jurisdiction to determine arbitrability objections without a court involvement.

Use of Technology

            Following recent trends in international arbitration created by the Covid-19 pandemic, Articles 22 and 26 recognize the parties’ ability to use electronic means, including video and audio, in conducting preliminary matters and arbitration hearings.  In fact, Article 26(2) specifically provides that a hearing or a portion of a hearing may be held by video, audio or other electronic means “when: (a) the parties so agree; or (b) the tribunal determines, after allowing the parties to comment, that doing so would be appropriate and would not compromise the rights of any party to a fair process.”  Further, “[t]he tribunal may at any hearing direct that witnesses be examined through means that do not require their physical presence.”

Article 32(4) expands the use of technology to tribunal’s signatures and permits a tribunal to electronically sign an order or an award unless (a) the applicable law requires a physical signature, (b) the parties agree that a physical signature is necessary, or (c) the arbitral tribunal or Administrator determines that a physical signature is appropriate.

The expanded use of technology increases cybersecurity concerns, which are addressed in Article 22 that requires a tribunal to address at the procedural hearing “cybersecurity, privacy, and data protection to provide for an appropriate level of security and compliance in connection with the proceeding.”

Early Disposition

In order to promote efficiency in arbitration proceedings, Article 23 permits early disposition of issues.  A party seeking an early disposition, must seek leave from the tribunal, which the tribunal shall allow if it determines that the application (a) has a reasonable possibility of succeeding, (b) will dispose of, or narrow, one or more issues in the case, and (c) that consideration of the application is likely to be more efficient or economical than leaving the issue to be determined with the merits.

Other amendments include:

  • Notice of Arbitration: recognizing the increasing use of mediation, Article 2(3)(g) now requires a claimant to indicate whether it is willing to mediate the dispute prior to or concurrently with the arbitration.
  • Answer and counterclaim: Article 3(4) requires a respondent to state in the Answer its willingness to mediate the dispute. Article 3(1) now provides that the 30 days for the filing of a counterclaim begins to run from the date the Administrator confirms receipt of the Notice of Arbitration.
  • Emergency Application: 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. The requesting party has to state in its application the injury or prejudice that it will suffer.
  • Procedural Hearing: in Article 22 the initial conference was renamed “procedural hearing” and includes discussion of various procedural issues, including deadlines, use of electronic means during the proceedings, data protection and other issues
  • Witnesses: Article 26 now provides that the witness statements “should” be used in discovery. Further, this article addresses the failure of a witness to appear without a valid excuse whose presence has been requested. In that case, the tribunal may reduce the weight to be given to the witness’ statement or disregard the statement completely.
  • Expedited Proceedings: The threshold for expedited procedures has been increased from $250,000 to $500,000.

Conclusion

Following recent international arbitration trends, including the increased use of technology created by the Covid-19 restraints, the 2021 ICDR Rules introduced new provisions and updated some of the old ones with the focus on efficiency, flexibility, and transparency of ICDR-administered arbitrations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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