The International Chamber of Commerce (ICC) new Rules of Arbitration took effect on 1 January 2021 (“the 2021 Rules”). The key modifications include changes to the expedited procedure, technology updates for electronic communications and remote hearings, new rules for joinder of additional parties to an arbitration, and disclosure of non-party funders and other rules to avoid conflict of interest. Our lawyers Mikal Brøndmo and Silje Dagsland present the main modifications below together with a link to a compared version of the 2017 and 2021 rules of arbitration.
ICC has a leading role among the arbitration institutions, illustrated by its 869 new cases in 2019 involving parties from 147 states. Last autumn ICC approved a revision of its 2017 arbitration rules. The changes aim at increasing the flexibility, efficiency and transparency of ICC Arbitrations. The revised rules will apply to cases that are registered as of 1 January 2021.
Changes to the expedited procedure
The use of expedited procedures is increasing, as many leading arbitration institutions have included rules for fast track arbitration. ICC introduced its expedited procedure in 2017, enabling dispute resolution in a short timeframe and at a reduced cost. For institutions that have had rules for expedited procedure for a longer time, this already constitutes a significant part of the cases handled. An illustrating example is the Arbitration Institute of the Stockholm Chamber of Commerce (SCC), where a total of 30% of the cases were handled under the SCC Expedited Rules in 2019.
In the 2021 Rules ICC has increased the amount in dispute for cases where the expedited procedure shall apply from US 2 million to US 3 million, if not otherwise agreed by the parties.
The expedited procedure will by default not apply for arbitration agreements entered into prior to 1 March 2017 (Article 30(3)(a)). For arbitration agreements concluded on or after 1 March 2017 and before 1 January 2021, the threshold is still US 2 million. The new threshold by US 3 million will only apply if the arbitration agreement under the ICC Rules was concluded on or after 1 January 2021.
There are no other significant changes regarding the Expedited Procedure Rules in the 2021 Rules, neither in Article 30 nor Appendix VI. The arbitral tribunal will inter alia still have to render its award within six months from the date of the case management conference (Appendix VI Article 4(1)).
Technology updates for electronic communications and remote hearings
One of the main changes to the 2021 Rules is the use of electronic communication as the default solution (Article 3(1), 4(4)(b), 5(3) and 1(2) of Appendix V). From now on, the parties will have to request transmission by delivery against receipt, registered post or courier.
The 2021 Rules further accommodate the increased use of virtual hearings. The 2021 Rules explicitly provide the tribunal with a possibility of conducting all hearings remotely (Article 26(1)). Remote hearings can be ordered by the arbitral tribunal irrespective of a party’s opposition, provided the parties have been consulted and all relevant circumstances have been considered by the tribunal.
Joinder of additional parties to an arbitration
A new provision allows for joinder of additional parties in the course of the arbitration (Article 7(5)). In the previous rules from 2017, no joinder was allowed after the confirmation or appointment of any arbitrator, unless all other parties agreed. Pursuant to the new paragraph, the arbitral tribunal may join additional parties at the request of any party. When deciding on a request for joinder, the tribunal shall consider “all relevant circumstances“, including whether the tribunal has prima facie jurisdiction over the additional party, the timing of the request, possible conflicts of interest, and the impact on the arbitral procedure.
Furthermore, the 2021 Rules confirm existing ICC practice allowing the consolidation of cases in presence of different parties (Article 10 (b)). As set out therein, a party may request the consolidation of two or more arbitrations where these are commenced under multiple back-to-back contracts which contain the same arbitration clause but are not necessarily between the same parties (“all of the claims in the arbitrations are made under the same arbitration agreement or agreements”).
Moreover, the 2021 Rules allow for consolidation where the claims in the arbitrations are not made under the “same” arbitration agreement(s) as long as 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)).
These two modifications for consolidation may inter alia be suitable in major construction projects with many parties involved and in complex transactions involving more than two parties and/or a larger suite of agreements.
Disclosure of non-party funders and conflict of interests
There is an increasing number of parties that are exploring the possibilities of having its case funded by third-party funders. In order to ensure impartiality and independence of the arbitral tribunal, ICC has introduced a requirement for the parties to disclose third-party funding arrangements (Article 11(7)).
The integrity of the proceedings will be further protected by the introduction of a provision empowering the arbitral tribunal to exclude a new counsel from the proceedings in presence of a conflict of interests (Article 17(2)). From time to time we have seen that parties have changed its legal representative(s), resulting in conflicts of interests for the arbitral tribunal. Under the 2021 Rules, such changes of legal representatives may be refused.
While the changes to the expedited procedure, the technology updates and joinder rules are steps towards more efficient and flexible arbitrations, the new disclosure rule is included to enhance transparency. Among the other changes made, several concerns Appendix I Statutes of the International Court of Arbitration and Appendix II Internal Rules of the International Court of Arbitration. These will not be commented upon here. The new Rules are available here.
Several of the changes introduced in the 2021 ICC Rules are corresponding with the recent revisions by the London Court of Arbitration (LCIA) applicable from 1 October 2020. (The latter was presented by Haavind here.) Rather than making any significant changes, the ICC revision aims to clarify and refine the arbitration practice by taking action on certain current concerns and developments within the arbitration community. Thus, the 2021 Rules are in many ways reflecting best practise within arbitration and contribute to making ICC Arbitration even more attractive for both large complex arbitrations and smaller cases.
Compared version of the 2017 and 2021 Arbitration Rules
The ICC has made a compared version of the 2017 and 2021 Arbitration Rules highlighting the amendments to the 2017 Arbitration Rules, which may be found here.