The fast-changing world, complexities in arbitration and the growing needs of arbitration community across the globe, stimulated the International Chamber of Commerce ("ICC") to codify certain arbitral practices and refresh its approach in the form of a new set of Rules called the ICC Arbitration Rules,2021 ("New Rules"). Proposed in December 2020 by the ICC, New Rules have come into force from January 1, 2021, and shall apply to arbitrations commencing on or after January 1, 2021, regardless of when the underlying arbitration agreement was concluded whereas prior ICC Arbitration Rules, 2017 ("Rules") shall continue to apply by default to cases registered prior to January 1, 2021.
These New Rules include some noteworthy amendments regarding multi-party arbitrations, third-party funders and appointment of Arbitral Tribunal. The New Rules not only see a contemporary change with the facilitation of virtual hearings and electronic submissions but also expand the scope of expedited procedure and allow issuance of additional awards.
Some of the cogent and substantive amendments in the ICC Rules discussed below are a step towards greater efficiency, flexibility and transparency.
- Joinder and consolidation
Under the Rules, joinder was permitted only with the consent of all parties and the additional parties, post the appointment or constitution of the arbitral tribunal. There is now a slight change under the New Rules. The insertion of Article 7(5) allows the Arbitral Tribunal to decide on the issue of joinder of an additional party. This is subject to only the additional party accepting the constitution of the Arbitral Tribunal and agreeing to the Terms of Reference.
Article 10(b) and Article 10(c) dealing with consolidation of proceedings has been simplified and the puzzle around which claims can be consolidated has been solved under the New Rules. Prior to the amendment the ICC Rules, 2017 empowered the Tribunals to consolidate two or more arbitrations pending under the ICC Rules where "all the claims are made under the same arbitration agreement". This expression left open the question as to whether the term "same arbitration agreement" encompassed identical arbitration agreements contained in different contracts.
The revision now clarifies that the Tribunal may order consolidation where:
- all parties agree to consolidation;
- all claims are made under the same arbitration agreement or agreements between different parties;
- claims involving different parties and may not be under same arbitration agreement, provided that the dispute arises in connection with the same legal relationship and the arbitration agreements are compatible.
This shift will provide more practical solutions to parties involved in complex projects or transactions. Empowering the tribunal to join a third party to proceedings, provides a simple procedural solution to what may be needed for certainty in the proceedings. This trend is even gaining momentum under the other international rules for arbitration, for instance the recent amendments made to the London Court of International Arbitration Rules ("LCIA Rules").
- Third-party funding agreements and conflicts of interests
New Rules acknowledge the growing needs of transparency inserted a significant new provision regarding disclosure of third-party funding. Article 11 (7) of the ICC Rules 2021, provides a party's obligation to disclose "the existence and 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 the Arbitral Tribunal in complying with its disclosure obligations, thereby limiting the risk of conflicts of interests with paramount standards of impartiality and independence.
The flipside to this is the misuse by parties to create expensive and time-consuming frolics and detours. For instance, this may lead to an increase in frivolous applications. The Tribunals to curb this situation may become more inclined under Article 38(5) to consider such applications in making decisions on costs against the parties.
- "Green Arbitration"
Arbitration has inexorably been shifting from paper filing to electronic filing over the past few years. The New Rules, witnessing this trend has now formally acknowledged the need for a "greener" arbitration process. Considering the global pandemic, ICC amended Article 26 (1) to include allowing Arbitration Tribunal the discretion to decide on the modus operandi for hearings, after consultation with the parties. The transition in filings has also been interesting. We have travelled from paper only filings, to simultaneous filing on paper and email, to filing by email followed up by a hardcopy and now to only electronic filing. New Rules have also introduced amendments to written communications exchanged between parties, aligning to a more technology-oriented and environment-friendly form.
Whilst not expressly provided for in the New Rules, another significant change scheduled for 2021 concerns the online publication of all ICC awards and procedural orders as a default rule. Due to data privacy and confidentiality concerns, the parties to an arbitration will be provided notice in advance, with the opportunity to object or decide the modalities of publication, including anonymization.
- Additional awards
Article 36 (3) of the New Rules provides that a party may request an additional award "as to claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide", within 30 days from receipt of the award by such party. The new provision on additional awards is in line with developments in other international arbitration rules and laws like Article 189(a) of the revised Chapter 12 of the Swiss International Private Law Act.
- Appointment of arbitrators & Investment Treaty Arbitration
Under Article 12 (9) of the New Rules the ICC 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".
Reflecting the increasing number of investment treaty arbitrations conducted, the New Rules now include two provisions introducing 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. This provision mirrors Article 39 of the International Centre for Settlement of Investment Disputes (ICSID) Convention, which restricts the appointment of arbitrators that share the nationality of any of the parties.
In addition, Article 29(6)(c) of the New Rules provides that the ICC Emergency Arbitrator Provisions are not available in treaty-based arbitrations. Article 29(6)(c) reflects the ICC's view that emergency arbitrator proceedings are not suitable for investment treaty arbitration because states and state-owned companies do not have the ability to comply with their short time limits. Emergency proceedings, however, remain open to contract-based arbitrations involving a state or state entity.
These provisions aim at preventing risks of unequal treatment of parties, unfair conditions in arbitrations and, ultimately, challenges against awards for these reasons.
- Increased threshold for Expedited Procedure Rules
The New Rules have increased the value threshold for the Expedited Procedure Rules to apply (under Appendix VI and Article 30(2) from US $2 million to US $3 million where the arbitration agreement was concluded on or after 1 January 2021. Arbitration agreements concluded on or after 1st March 2017 and up to 31st December 2020 remain subject to the US $2 million threshold under the Rules.
The modifications introduced to the rules on joinder and consolidation serve to increase the efficiency of proceedings by empowering the Court and Tribunal with greater flexibility and discretion. Complex multiparty and multi-contract disputes can be better resolved with tools such as these. An express provision for remote hearings is crucial in the light of the ongoing pandemic and follows the LCIA Rules, 2020 in this respect. Finally, access to reasoned orders of the Court under certain circumstances is a laudable addition that will increase transparency and weed out the possibility of arbitrariness in decision making.
Even though there is no seismic shift, the amendments in the Rules are a welcome step towards modernizing and easing the international arbitration proceedings. The Rules have adapted to the current global scenario and are matching the pace with the 'new normal'. The impact of the New Rules will become apparent over the coming days as and when these are used in new matters.
Snidha Mehra is a Senior Associate with Century Maxim India. Views are personal.