The International Chamber of Commerce (hereinafter referred to as “ICC”) has launched its amended Rules of Arbitration, 2021 (hereinafter referred to as “2021 Rules”) on 1 December 2020. The 2021 Rules came into force on 1 January 2021 and will now apply to all cases registered from 1st January, 2021. The 2021 Rules are introduced to combat the lacunas and maintain greater efficiency, flexibility and transparency. This article will dive into the amendments introduced by the 2021 Rules and will help reader to apply 2021 Rules effectively.
Efficiency in Arbitration Proceedings
The Article 22(2) of the 2017 ICC Arbitration Rules (hereinafter referred to as “2017 Rules”) states “to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate”. However, 2021 Rules has replaced “may” with “shall” which had placed a binding duty on the arbitrator to measure and place such appropriate procedure after consultation with the parties. This said governance will overcome the procedural difficulties faced by the arbitral tribunal from time to time and will certainly help the arbitrator to wind up the arbitration proceedings smoothly and without any hassles.
The Article 26(1) of 2021 Rules now categorically provides that arbitral tribunals shall after consultation with the parties and on keeping in mind the facts and circumstances of each individual case, may decide that any hearing can be conducted either by physical attendance or remotely/virtually by videoconference, telephone or other appropriate means of communication.
The 2021 Rules also brought amendments to Article 3.1 regarding written notifications. This article now categorically states that written pleadings and communications has to be “sent” to each party, arbitrator and the Secretariat, and the Secretariat shall be copied on communications from the arbitral tribunal which excludes the need for paper filling.
Flexibility in the joinder of additional parties in the arbitral proceedings and consolidation of arbitrations
The 2017 Rules were stringent on joining the additional parties as it had put the embargo on joining of the additional parties after the appointment of the arbitral tribunal. However, additional parties could only be joined only if the parties and additional parties agreed for the joinder of the additional parties. Pertinently, the 2021 Rules brought a much needed amendment and placed the decision of joining of the additional parties to the arbitral tribunal. The 2021 Rules has inserted new Article 7(5) which permits the arbitral tribunal to solely decide upon joining of additional parties without even obtaining consent of all relevant parties.
The 2017 Rules were rigid with respect to the consolidation of different arbitrations by virtue of Article 10(b). The Article 10 (b) only permitted consolidation if all claims were made under the same arbitration agreement. Further, The consolidation of arbitrations, however, under more than one arbitration agreement was only allowed in situations if the arbitration is pending between the same parties.
The 2021 Rules now brought a change to this old concept and allowed the consolidation of arbitration cases even when non-identical parties or parties to related multiple common contracts are involved.
Emphasis on Compliance with Due Process Principles
Implementation of safeguards against unequal treatment and unfairness
Article 12(8) of the 2017 Rules puts the burden on the Court to appoint each arbitrator and designate the president between them if the parties failed to agree on joint nomination or agreement regarding the constitution of a three-member arbitral tribunal. However, Article 12(8) of the 2017 Rules applies only where the dispute between the parties involves multiple claimants or respondents or where an additional party has been joined in the arbitral proceedings.13
The 2021 Rules took a step forward from Article 12(8) which allowed the Court to disregard “unconscionable arbitration agreements” and appoint the arbitral tribunal in any arbitration referred to it. The Article 12(9) introduced by the 2021 Rules, provides that,”[n]otwithstanding any agreement by the parties on the method of constitution of the arbitral tribunal, in exceptional circumstances the 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.”
Article 12(9) introduced by the 2021 Rules is n line with the well-known and long-standing Dutco decision of the French Court de Cassation, the said provision aims to ensure compliance with the public policy and preserving the enforceability of awards.
Additional awards as a remedy for omitted claims
Under the 2017 Rules, if awards are already passed by the arbitral tribunal then the same can be corrected or interpretated at the request of any party by the arbitral tribunal under the supervision of the Court. However, Article 36(3) under the 2021 Rules now provides that within 30 days of receipt of the arbitral award by the arbitral tribunal, any party may request the arbitral tribunal to issue an additional award or to rule upon claims raised during the proceedings but were not adjudicated in the award.
It is pertinent to mention that the revised provision seeks to strike a balance between the finality of awards and preserving awards from infra petita challenges before state courts on erroneous grounds. New Article 36(3) under the 2021 Rules also brings the Rules in line with a number of other arbitration rules already dealing with this issue.
New Measures to Prevent Conflicts of Interests
Disclosure of third party funding
The international arbitration require transparency which has resulted in increase in scrutiny into disclosure obligations of arbitrators. For example, the ICC requires arbitrators to disclose any relationship that he/she could have with “any entity having a direct economic interest in the dispute.”
Therefore, the 2021 Rules brought the new Article 11(7) which requires the parties to communicate promptly to the arbitral tribunal, the other parties and the ICC Secretariat for 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.” The reason for introduction behind this provision is to assist prospective arbitrators to disclose which thus ensures compliance with the paramount standards of impartiality and independence of the arbitral tribunal. The drafting of the new Article 11(7) does not target (only) professional third party funders specifically, however, it is clear by reading the said article that actual intention is to catch the third party funders.
Closer supervision of party representation
The Article 17 of the 2017 Rules did undergo an overhaul when it was introduced to strike a balance between equal treatment and tactical counsel appointments. However, The new Article 17 under the 2021 Rules mandates parties to notify the ICC Secretariat, the arbitral tribunal and other parties in a timely manner for any change in their representation in the arbitral tribunal. At the same time, the new Article 17 has given autonomy to the arbitral tribunal to even decline the proposed change in counsel or limit their participation in the proceedings. The said measure is targeted to prevent any conflicts of interests between arbitrators and new party representatives.
Takeaways for 2021
The 2021 Rules aims to bring in positive changes for both parties and practitioners alike. The 2021 Rules has tried to address the needs of parties in the wake of COVID-19 pandemic., The 2021 Rules introduce amendments that streamline and provides for greater flexibility within the arbitral process while also safeguarding the principles of impartiality and transparency between all the facets of arbitration proceedings. It has also addressed the need for Increasing digitalisation which in turn will help further flexibility in complex multi-party disputes and greater discretion afforded to the Court in certain cases. Pertinently, the shift to fully remote hearings was much needed and becomes more essential due COVID 19 pandemic. Now with the help of virtual hearing, parties can attend the arbitration proceedings within the comfort of their homes or offices.
The 2021 Rules are introduced to ensure ICC arbitrations remain efficient, competitive and cost-effective for all participants in the years to come even when the world is facing the disruption caused by the pandemic.