2021 ICC Rules of Arbitration
On 6 October 2020, the Executive Board of the International Chamber of Commerce (the “ICC”) approved an updated version of the ICC Rules of Arbitration (the “Rules”) to come into effect on 1 January 2021, with the text subject to editorial corrections until that time. The Rules were last updated in 2017. The Rules govern arbitration proceedings submitted to the ICC’s International Court of Arbitration (the “ICC Court”).
The updated Rules respond to a number of current trends in international arbitration, including: (i) the increasing popularity of multi-party proceedings, (ii) higher transparency standards in arbitration proceedings, and (iii) the use of virtual hearings. The President of the ICC Court, Alexis Mourre, has described the update as “a further step towards greater efficiency, flexibility and transparency”.
The key amendments to the Rules include:
- Joinder of Additional Parties in the Course of Arbitration Proceedings. The updated Rules allow a party to submit a Request for Joinder of an additional party after one or more arbitrators have been appointed, subject to the additional party “accepting the constitution of the arbitral tribunal” and agreeing to the Terms of Reference, where applicable (Article 7(5)).In deciding whether to grant a Request for Joinder, the tribunal must consider “all relevant circumstances”, which may include: (i) the tribunal’s prima facie jurisdiction over the additional party, (ii) the timing of the Request for Joinder, (iii) possible conflicts of interest, and (iv) the impact of the joinder on the arbitral procedure.Both the 2012 and 2017 iterations of the Rules provided that additional parties could be joined to the proceedings after the arbitrator appointment only if all parties (including the additional party) agreed.Since that time, however, the ICC has acquired a reputation for its experience in handling complex, multi-party arbitrations.This amendment makes the Rules even more accommodating to multi-party proceedings.
- Consolidation of Arbitrations Arising Under Different Arbitration Agreements. The updated Rules expressly allow for the consolidation of arbitrations where one or more of those arbitrations arises under different arbitration agreements, provided that the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible (Article 10(c)).The previous iterations of the Rules left this question open, which was liable to cause some uncertainty.
- Transparency Obligations for Third-Party Funding. Every party to arbitral proceedings constituted under the updated Rules is obligated to disclose the “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” (Article 11(7)).The drafters of the updated Rules have used more expansive language than, for example, the latest HKIAC Rules, which merely require disclosure of a “funding agreement”.This amendment, which reflects the ICC’s longstanding concern to protect tribunals’ independence, is unsurprising: the ICC’s latest practice note had already confirmed that it would consider “relationships with any entity having a direct economic interest in the dispute” in assessing an arbitrator’s independence (see the ICC Note to Parties and Arbitral Tribunals on the Conduct of Arbitration 2019).This new rule also reflects growing calls from national regulators and courts for greater regulation of third-party funding in litigation and arbitration proceedings. (The English courts, for example, have held that they have the power to order parties to reveal the identity of any third-party funder.)
- Power to Deviate from an Arbitration Agreement.The updated Rules grant the ICC Court the power to deviate from an agreement by the parties regarding the method of constitution of the arbitral tribunal and to appoint the tribunal itself in “exceptional circumstances” (Article 12(9)).This is in addition to the ICC Court’s power to appoint all arbitrators where there are multiple parties.The ICC Court may do so to “avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”.
- Power to Exclude Counsel with a Conflict of Interest From the Proceedings. Tribunals are expressly granted the power to “take any measure necessary to avoid a conflict of interest of an arbitrator arising from a change in party representation, including the exclusion of new party representatives from participating in whole or in part in the arbitral proceedings” (Article 17(2)).The new provision is reminiscent of a similar provision in the LCIA Rules, under which tribunals “may withhold approval of any intended change or addition to a party’s authorised representatives where such change or addition could compromise the composition of the Arbitral Tribunal or the finality of any award (on the grounds of possible conflict of interest or other like impediment)” (Article 18.4).
The intention behind this provision is to address tactical changes to party representation. However, it also represents a significant incursion on parties’ right to counsel of their choosing. This issue was considered in an ICSID Convention arbitration, where the tribunal held that it had the inherent power to make orders preserving the integrity of its proceedings, including orders barring lawyers from participating in the proceedings where their participation would create the appearance of impropriety.
- Virtual Hearings.The updated Rules expressly confirm that tribunals may hold hearings “by physical attendance or remotely by videoconference, telephone or other appropriate means of communication” (Article 26(1)).Users will appreciate this statement of tribunals’ powers, particularly in light of the changing arbitration landscape.
- Investor-State disputes.The updated Rules include, for the first time, specific provisions concerning investor-State disputes, reflecting the fact that the Rules are increasingly being used in investor-State arbitration.
- Conflict of Interest. The updated Rules provide that “no arbitrator shall have the same nationality of any party to the arbitration” where “the arbitration agreement upon which the arbitration is based arises from a treaty”, unless the parties agree otherwise (Article 13(6)).This provision builds upon the provisions of the ICSID Arbitration Rules, which restrict the appointment by a party, and exclude appointment by the Chairman of the ICSID Administrative Council, of arbitrators of the same nationality as one of the parties (see Articles 38 and 39 of the ICSID Convention).
- Emergency Arbitrator. The updated Rules expressly exclude the use of the emergency arbitrator procedure if “the arbitration agreement upon which the application is based arises from a treaty” (Article 29(6)(c)).In this respect, the updated Rules are consistent with the arbitration rules used in most other investment treaty arbitrations; the appointment of emergency arbitrators is similarly unavailable under both the ICSID Arbitration Rules and the UNCITRAL Arbitration Rules.
- Additional Awards.Under the updated Rules, provision is made for a party to apply for an additional award regarding “claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide” (“claim” being defined broadly under the Rules as “any claim by any party against any other party” (Article 2(iv)). The applicant must request an additional award within 30 days of receipt of the award (Article 36(3)).This provision goes beyond the previous iterations of the Rules, which provided only for the correction and interpretation of existing awards.
Other minor amendments to the Rules include:
- Deadline for filing Answer and Reply to Counterclaim. The deadline for the respondent to file its Answer to the Request for Arbitration is increased by one day (the updated Rules specify a deadline of 30 days from the day following the date of receipt of the Request) (Article 5(1)). The deadline for the claimant to file its Reply to Counterclaim, if any, is similarly increased (Article 5(6)).
- Expedited Procedure Threshold.The threshold for automatic application of the Expedited Procedure Rules is increased from US$ 2 million to US$ 3 million (Article 30 and Annex VI).The Expedited Procedure Rules, first introduced in the 2017 iteration of the Rules, have met with considerable success.
- Governing Law.The updated Rules now confirm that all disputes “arising out of or in connection with the administration of the arbitration proceedings by the Court under the Rules shall be governed by French law and settled by the Paris Judicial Tribunal (Tribunal Judiciaire de Paris) in France, which shall have exclusive jurisdiction” (Article 43).
The ICC formally adopted the updated Rules at a meeting of the ICC Executive Board, which took place virtually on 6 October 2020. The ICC Court also plans to release an updated version of its Note to Parties and Arbitral Tribunals on the Conduct of Arbitration, last amended in January 2019, before the updated Rules enter into force. The Rules’ flagship launch is planned for 1 December 2020, to be preceded by a series of ICC events.
As noted above, parties with arbitration agreements referring to the ICC Rules should be aware that any arbitral proceedings registered on or after 1 January 2021 will be subject to the 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 the rule changes – please get in touch if you would like to know more.
A copy of the updated ICC Rules 2021 can be accessed at the following link: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/rules-of-arbitration-2021/#article_7
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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