News / 01.10.2020

Updates to the LCIA rules

Author(s) Mikal Brøndmo

The updated rules of London Court of International Arbitration (LCIA) shall apply to any LCIA arbitrations commenced from 1 October 2020. The LCIA Arbitration Rules 2020 (the 2020 Rules) are replacing the LCIA Arbitration Rules 2014 (the 2014 Rules). Our partner Mikal Brøndmo presents the main changes, including the four new articles, with some comparative views to other leading arbitration institutions.

Introduction

The 2020 Rules are updated to take into account the development in the use of technology and best practice in arbitration. LCIA experienced its highest number of cases in 2019, and the 2020 Rules do not represent a radical redraft from the familiar set of rules. Several of the changes are in line with similar changes already incorporated at other leading arbitration institutions. As described below, LCIA has not, however, implemented some specific rules that have been successfully implemented at other leading arbitration institutions.

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Main changes

Technology updates – electronic communication and virtual hearings

One of the main changes to the 2020 Rules is the technology updates throughout the rules. As an example, the use of electronic communication has become the default solution in the 2020 Rules (Article 4.1 and 4.2). Users will need prior written approval to file in paper form.

The LCIA online filing system allows users to electronically file documents in LCIA arbitrations. While some leading arbitration institutions, such as LCIA and Stockholm Chamber of Commerce (SCC), use online platforms for electronic communications, others, like the International Chamber of Commerce (ICC), are still working on developing such platforms.

The 2020 Rules further accommodates the increased use of virtual hearings. While the 2014 Rules mentioned the opportunity for a hearing to take place by “video or telephone conference” (2014-Article 19.2), the 2020 Rules thoroughly opens up the possibility of conducting all hearings virtually (Article 9.7, 14.3, 16.3 and 19.2).

Enhancing efficient and expedited conduct of the arbitration

The 2020 Rules introduce an explicit reference to the possibility of early dismissal determination (Article 22.1 (viii)). Although the 2014 Rules were deemed to contain such implicit power, the 2020 Rules follows other leading institutions, such as Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC) and SCC, that have already provided for summary dismissal or early determination expressly in their rules.

Procedural timings have been refined. LCIA Court’s appointment of the arbitral tribunal shall now take place within 28 days (Article 5.6), and the tribunal shall endeavour to make the final award no later than three months following the last submission of the parties (Article 15.10). Moreover, the tribunal and the parties are now required – and not just encouraged as under the 2014 Rules – to make contact within 21 days of the tribunal’s appointment (Article 14.3).

Furthermore, the tribunal may make any procedural order it considers appropriate with regard to the fair, efficient and expeditious conduct of the arbitration (Article 14.5). As one of the new amendments to the 2020 Rules, Article 14.6 includes an option list of procedural techniques for the tribunal in this regard.

Role of tribunal secretary

After updating its Guidance Notes for Arbitrators in 2017 regarding the role of secretaries to tribunals, LCIA is now formalising the role of the tribunal secretary with a new Article 14A. The role has been widely discussed in the recent years, including in some extraordinarily high profile-cases. The new Article 14A inter alia confirms that the decision-making function can under no circumstances be delegated to a tribunal secretary (14.8). Furthermore, appointment is conditional on party approval of the tribunal secretary’s role, the particular person filling that role, their written declaration, and any hourly rate or reimbursement of expenses (14.10).

LCIA follows SCC to be among the first leading arbitration institutions to govern the role of the tribunal secretary in its rules rather than in separate guidelines.

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Broadening power to order consolidation and concurrent conduct of arbitrations

The new Article 22A expands the power to order consolidation and concurrent conduct of arbitration to the LCIA Court and the Tribunal, compared with the 2014 Rules. The tribunal has inter alia been supplemented with a new power to conduct, with the approval of the LCIA Court, two or more arbitrations concurrently if all are subject to the LCIA Rules and were commenced under the same or any compatible arbitration agreement(s) (Article 22.7(iii)). This amendment should not only reduce duplication of work, and hence achieve cost savings for parties, but also prevent inconsistent arbitral awards. This amendment is in line with similar broadening powers at the HKIAC, SCC and SIAC.

Data protection, cybersecurity and regulatory issues

The new Article 30A handles the increasing need to ensure information security measures and compliance with personal data protection legislation. When electronic communication is the new normal, everyone involved in arbitration should consider how to deal with these issues. The new Article 30A requires tribunals to consult these issues with the parties at an early stage and provide for tribunals and the LCIA to issue binding directions.

LCIA seems to be among the first leading arbitration institutions to govern these issues in its rules rather than in separate guidance notes. The same applies to the new Article 24, that sets out compliance measures relating to bribery, corruption, terrorist financing, fraud, tax evasion, money laundering and economic or trade sanctions.

Strengthened confidentiality

The confidentiality obligations for the parties and the tribunal have been further strengthened in the 2020 Rules (Article 30). It provides safeguards where the parties’ arbitration agreement or the law at the seat do not impose the same duty of confidentiality. While LCIA, HKIAC and SIAC regulate confidentiality in its rules, other leading arbitration institutions, such as ICC and SCC, require certain actions from the parties to ensure confidentiality for the parties involved.

LCIA hourly rates updated

As the users of LCIA are familiar with, arbitrators and the LCIA’s secretariat are compensated by hourly rates. This distinguishes LCIA from many of the other leading arbitration institutions, such as ICC, SCC, and SIAC, where compensation to arbitrators and the institution’s secretariat is determined by the disputed amount (ad valorem). LCIA has increased the maximum hourly rate for arbitrators from £450 to £500 in its updated Schedule of Costs.

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Closing remarks

The 2020 Rules are widely welcomed by the arbitration community. Some users may however ask why LCIA have not included any provisions for fast track arbitrations in the new rules. The use of expedited rules is increasing, as more and more leading arbitration institutes are including rules for fast track arbitration. As an example, 30% of the SCC cases where handled under the SCC Expedited Rules in 2019. In general, we expect the use to increase in the upcoming years. ICC has e.g. announced on its web page that the threshold for the opt-out application of ICC Expedited Rules will increase to US 4 million in 2021. However, no expedited rules provisions are included in the LCIA 2020 Rules.

While this presentation only concerns the LCIA Arbitration Rules and the Schedule of Arbitration Costs, please note that the LCIA Mediation Rules and its corresponding Schedule of Mediation costs have also been updated to take effect on 1 October 2020.

The LCIA Arbitration Rules, effective 1 October 2020
The LCIA Arbitration Rules – Schedule of Costs, effective 1 October 2020