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LCIA Arbitration Rules 2020

Client Updates

 

The LCIA has recently announced a significant update to its Arbitration Rules (and its Mediation Rules), set to come into force on 1 October 2020 and to apply to all LCIA arbitrations commenced on or after that date (unless agreed otherwise).  This represents the first major update to the LCIA Arbitration Rules since 2014.  The stated aim is to “make the arbitral and mediation process even more streamlined and clear for arbitrators, mediators and parties alike”.

The updated Arbitration Rules represent an evolution rather than a revolution in the LCIA’s rules and procedures.  However, there are a number of notable changes.  In particular, the updated Arbitration Rules: (a) empower and encourage arbitral tribunals to expedite cases where appropriate and to make greater use of their procedural powers to promote the efficient conduct of proceedings; (b) take account of changes to working practices as a result of technological developments and the “new normal” of COVID-19 restrictions, including the increased use of virtual hearings and the primacy of electronic communications; and (c) clarify for the first time the permitted role of tribunal secretaries in LCIA arbitrations.

The key amendments to the Arbitration Rules include:

  • Adding a summary judgment procedure. Tribunals are given the express power to issue an “Early Determination” dismissing any claims, defences or counterclaims that are: (a) inadmissible; (b) “manifestly outside the jurisdiction of the Arbitral Tribunal”; or (c) “manifestly without merit” (Article 22.1(viii)).  Such a provision mirrors existing summary judgment procedures under other arbitration rules, including the ICC Rules of Arbitration, the SCC Arbitration Rules and the SIAC Arbitration Rules.  While it remains to be seen how strictly LCIA tribunals will interpret the “manifestly” requirement, existing practice under other arbitration rules may serve as a useful guide.
  • Confirming arbitrators’ procedural powers to expedite proceedings.  The updated rules expressly confirm the powers of a tribunal to “make any procedural order it considers appropriate with regard to the fair, efficient and expeditious conduct of the arbitration” (Article 14.5) and to “decide the stage of the arbitration at which any issue or issues shall be determined, in what order, and the procedure to be adopted at each stage” (Article 22.1(vii)).  The updated rules further confirm that a tribunal may, with a view to expediting the proceedings, issue procedural orders:
  • limiting the length of (or even dispensing with) any written statement to be filed in the proceedings;
  • limiting the written and oral testimony of any witness;
  • dispensing with a hearing (subject to any party’s right to insist on a hearing prior to a ruling by the tribunal on its jurisdiction or the merits of the dispute);
  • setting an appropriate time for any stage of or step to be taken in the arbitration, including with regard to the conduct of any hearing; and/or
  • abridging any relevant procedural time limit, whether set by the arbitration agreement, the agreement of the parties or a prior order of the tribunal. (Article 14.6)

While many or all of these powers could already be exercised by tribunals (at least implicitly) under the previous rules, the consolidation of these procedural powers in Article 14.6 is clearly intended to encourage tribunals to make greater use of them in the interests of promoting procedural efficiency.

  • New provisions to promote the use of virtual/online procedures.  The updated rules expressly encourage tribunals to use “technology to enhance the efficiency and expeditious conduct of the arbitration (including any hearing)” (Article 14.6(iii)) and confirm that all hearings “may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places” (Article 19.2).  The updated rules also provide that an arbitral award may be signed by the tribunal members electronically and/or in counterparts, unless the parties agree otherwise or the tribunal or the LCIA Court directs otherwise (Article 26.2).
  • Establishing the primacy of electronic communications.  The updated rules provide that, except with the prior written approval or direction of the tribunal, “any written communication in relation to the arbitration shall be delivered by email or any other electronic means of communication that provides a record of its transmission” (Article 4.2).  The previous rules provided that written communications could be delivered personally, by postal or courier service, or by fax or email.
  • Express restrictions on the role of tribunal secretaries.  The updated rules expressly limit the role of tribunal secretaries for the first time, confirming that “[u]nder no circumstances may an Arbitral Tribunal delegate its decision-making function to a tribunal secretary” and that “[a]ll tasks carried out by a tribunal secretary shall be carried out on behalf of, and under the supervision of, the Arbitral Tribunal which shall retain its responsibility to ensure that all tasks are performed to the standard required by the LCIA Rules” (Article 14.8).  These provisions, which mirror those contained in the LCIA’s 2017 Guidance Notes for Arbitrators, respond to the increasing number of challenges brought against tribunals on the basis that tribunal secretaries have allegedly been permitted to usurp a tribunal’s decision-making functions (see, e.g., P v Q [2017] EWHC 194 (Comm)).The updated rules further require the parties to agree prior to the tribunal secretary’s appointment on the tasks that he or she may undertake (Article 14.10) and to agree in advance on any expansion to this list of approved tasks (Article 14.11).
  • Composite requests for arbitration.  A claimant wishing to commence more than one arbitration under the LCIA Arbitration Rules may file a composite request for arbitration, provided that each claim and its estimated value is separately identified (Article 1.2).  This potentially useful change was no doubt triggered by the decision in A v B [2017] EWHC 3417 (Comm), in which the English High Court held that a separate request was required to initiate each arbitration under the previous rules.  Under the updated rules, separate requests are no longer required, but each arbitration commenced by a composite request will proceed separately, rather than in a single, consolidated arbitration (subject to the LCIA Court or the tribunal determining otherwise).
  • Broader standards for consolidation.  The updated rules provide that arbitrations may be consolidated not only where they arise between the same disputing parties (as under the previous rules), but also where they arise out of “the same transaction or series of related transactions” (Article 22.7).  This significant rule change should obviate the requirement for a strict identity of parties between the arbitrations sought to be consolidated, although it remains to be seen how tribunals will interpret the meaning of “same transaction” or “related transactions” in practice.
  • Power to order that proceedings be heard concurrently.  In addition to the powers of tribunals and the LCIA Court to consolidate arbitral proceedings (see above), the updated rules permit tribunals, with the approval of the LCIA Court, to order that two or more arbitrations under the LCIA Rules may be heard concurrently (i.e., without formal consolidation) where the arbitrations have been commenced under the same arbitration agreement or compatible arbitration agreements and are either between the same disputing parties or arise out of the same transaction or series of related transactions (Article 22.7(iii)).  This revision confirms existing LCIA practice (see LCIA Notes for Arbitrators, Section 6.3).
  • Law applicable to the interpretation of the LCIA Rules.  The updated rules provide that they “shall be interpreted in accordance with the laws of England” (Article 16.5), notwithstanding that both the procedural law of the arbitration (the lex arbitri) and the law applicable to interpreting the parties’ arbitration agreement continue to be the law of the arbitral seat, unless the parties have agreed otherwise (Article 16.4).  This provision has the potential to create more problems than it solves – if the seat of an arbitration is outside England, the tribunal (and/or the relevant foreign courts) may encounter difficulties in reconciling the new requirement to interpret the LCIA Rules in accordance with English law with their obligation to apply the mandatory procedural law of the arbitral seat.
  • Information security and data protection.  The updated rules directly address information security and data protection issues for the first time.  Tribunals must now consider “at an early stage of the arbitration”, in consultation with the parties, whether it is appropriate to adopt specific information security or data protection measures (Article 30.5).The rules also confirm that the LCIA will process personal data in accordance with applicable data protection legislation (Article 30.4) and that the LCIA Court and the tribunal may issue binding directions concerning information security and data protection (including directions from the LCIA Court binding the tribunal) (Article 30.6).
  • Raising arbitrators’ maximum hourly rate.  The maximum hourly rate for arbitrators has been increased from £450 to £500, “better to reflect the demands of users in certain cases involving complex and significant disputes” (Schedule of Costs, Article 2).Recent reports in the arbitration media indicate that this increase represents a compromise, with certain arbitrators pushing for higher maximum fees to reflect the hourly rates charged by counsel and the hourly rates charged by arbitrators in some ad hoc arbitrations.  The actual fees charged by a tribunal in a particular case remains a matter of negotiation between the LCIA and the tribunal members prior to their appointment.

Further information

As noted above, parties with arbitration agreements referring to the LCIA Arbitration Rules should be aware that any arbitral proceedings commenced on or after 1 October 2020 will be subject to these updated rules unless the arbitration agreement states otherwise.  It is therefore important to be aware of the above changes and how they may affect the resolution of your disputes.  We would be pleased to advise you in more detail on the effect of these rule changes – please get in touch if you would like to know more:

Dr. Johannes Koepp             [email protected]

David Turner                        [email protected]

A copy of the updated LCIA Arbitration Rules 2020 can be accessed here: https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx

Disclaimer

This update does not constitute legal advice, nor can it be used as evidence of the commencement, existence or continuance of any lawyer/attorney–client relationship.  This update is provided for informational purposes only.

 

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