- New ICC Arbitration Rules - A Commentary Highlighting The Key Changes
- September 21, 2011
- Law Firm: SNR Denton - Chicago Office
The International Chamber of Commerce (ICC) has launched new arbitration rules this week, which are effective from 1 January 2012. The new rules address a number of areas in the existing rules (introduced in 1998) that were seen as undeveloped or incomplete. They also introduce some new provisions that may set the ICC Rules apart from the other main institutional rules, such as the LCIA Rules. For example, the new rules go into more detail on the practicalities of having multiple parties and/or contracts and there is a requirement for arbitrators to be both impartial and independent. Innovations of particular interest include the requirement for a case management conference at the time the Terms of Reference are drawn up and the ability to use an emergency arbitrator for urgent interim relief. The key changes are dealt with in more detail below.
The existing rules dealt only cursorily with multiple parties, in the context of the joint nomination of arbitrators. The new rules expressly confirm that arbitrations with multiple parties and/or multiple arbitration agreements will proceed if the ICC Court is satisfied the parties are bound, the agreements are compatible and/or the claims can be consolidated.
Under new Article 7, a party to an existing arbitration may join a new party by submitting a request any time before an arbitrator is appointed (after, any request for an additional party to be joined requires the consent of all parties). This is a new provision that marks a significant change from the existing rules, where the addition of a new party required the consent of all parties, regardless of timing.
These provisions should make ICC arbitration more efficient and streamlined. However, in practice the scope for consolidated arbitrations under several arbitration agreements will still be limited, requiring the parties' consent or for existing arbitrations to be between the same parties. Therefore the classic example of a dispute in the construction industry involving claims under the same project arising out of separate contracts between (a) an employer and his contractor and (b) the contractor and his sub-contractor will, absent agreement by all three parties, remain unconsolidated.
Arbitrators' availability and impartiality
Although there has been some debate about the distinction between the independence and impartiality of arbitrators and how this is tested, it is generally recognised that arbitrators should be both independent and impartial. Independence is usually viewed as a question of the relationship between arbitrator and party; impartiality is a matter of whether an arbitrator can act without a real likelihood of bias (and therefore arguably more important). The existing ICC Rules referred principally to independence, in contrast to the LCIA Rules and the IBA Guidelines on Conflicts of Interest, which refer consistently to both. The new rules make express reference to both, and impartiality, along with independence, must be confirmed in a statement by the arbitrator before appointment.
The arbitrator must also confirm his or her availability in the same statement. ICC-appointed arbitrators must already sign such a statement, giving details of the number of cases they are currently involved in. This arguably makes ICC arbitration a more transparent process in which parties are provided with sufficient information to know whether an arbitrator has enough availability to deal adequately with their dispute.
The new rules stop short of stating that proceedings and materials submitted are confidential, in contrast to, for example, the LCIA Rules. However, the new rules state the tribunal may make an order to this effect upon the request of a party. In some jurisdictions such a request may not be necessary if the law of the seat of the arbitration provides (as in England) that proceedings are inherently confidential. Where this is not the case, however, this new provision will give some comfort to those wishing to ensure the proceedings remain private.
The most significant of the new rules is the introduction of a mechanism by which a party seeking urgent interim relief before a tribunal has been appointed may apply for the appointment of an emergency arbitrator. In England it is possible for an application to be made to the English courts where relief is required and no tribunal has been appointed, but the appointment of an emergency arbitrator will be a new concept to many. The new rules make it clear the court option remains unaffected by the new provision, although for many parties the appointment of an emergency arbitrator will be preferable in order to maintain the privacy of the proceedings.
The circumstances where a party requires an emergency arbitrator are most likely to be, for example, when the party requires an interim injunction to prevent a counterparty from doing something (or requiring them to do something) to maintain the status quo. Under the new rules, a party will apply to the ICC Secretariat and the ICC President will decide whether to appoint an emergency arbitrator. The decision to apply for the appointment of an emergency arbitrator should not be taken lightly. A party must file a Request for Arbitration within 10 days of the application and the fee is US$40,000 (though this may be recoverable). There is some doubt as to the enforceability of an order of an emergency arbitrator. Although under the new rules the parties undertake to comply with any such order, it is questionable whether the order could be enforced as an award under the New York Convention. It should also be noted that, under the new rules, an order of an emergency arbitrator will not bind a tribunal later appointed.
Date of award
Finally, under a new provision the tribunal is required to inform the parties of the expected date of its award once proceedings have closed. Although there can be no certainty this deadline will be met, this provision will be welcomed by many who have experienced long waits before receiving awards.