ICC Revised 2021 Arbitration Rules: Key amendments towards increased flexibility and transparency
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We have identified some of the key amendments introduced in the 2021 Rules, which are of particular interest to parties and arbitration practitioners alike.
1. More flexibility in complex arbitrations (Joinder, Consolidation)
The underlying framework of the provisions of the ICC Rules regarding complex arbitrations has not been fundamentally altered, but some important and welcome changes have been introduced, providing additional flexibility for complex cases.
For example, under the 2017 Rules, the joinder of a third party was possible only at the beginning of the arbitration and before the constitution of the tribunal, upon the agreement of all parties. The new paragraph 5 added to Article 7 of the 2021 Rules allows any request for joinder of a third party to be made after the confirmation or appointment of any arbitrator, subject to the additional party having accepted the constitution of the tribunal, and agreeing to the Terms of Reference.
Further, under the 2017 Rules, all parties (including the claimant) had to agree for the additional party to be joined – this is no longer necessary, as the new Articles 7(1) and 7(5) now allow a respondent to join a third party without the agreement of the claimant. However, as mentioned, if the third party is not willing to accept the constitution of the tribunal and the Terms of Reference, the joinder will not be possible. In taking a decision to join a third party, the tribunal will prima facie assess whether the joined party is bound by the arbitration agreement and will have discretion based on relevant factors that a tribunal should consider when deciding on a request for joinder. As provided for in the new Article 7(5), these factors may include whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the Request for Joinder, the nationality of the parties, possible conflicts of interests and the impact of the joinder on the arbitral procedure.
Article 10 of the Rules has also been modified to clarify an issue that arose under Article 10(b) in the 2017 Rules: indeed, it was not clear whether consolidation of two arbitrations was possible where all the claims were made under "the same arbitration agreement", i.e., the same contract or under an identical arbitration agreement in another contract. The revisions introduced in Article 10 clarify that it will now be possible to consolidate two arbitrations in cases where:
a) all parties have agreed;
b) all of the claims in the arbitrations are made under the same arbitration agreement or agreements, but the parties in the arbitrations are not the same;
c) the claims in the arbitrations are not made under the same arbitration agreement or agreements, but the parties in the arbitrations are the same, the disputes arise out of the same legal relationship and the ICC Court finds the arbitration agreements to be compatible.
This amendment introduces additional flexibility and reinforces the need for a certain amount of predictability in case of consolidation, so that parties can anticipate with more certainty when drafting arbitration clauses or when requesting consolidation.
2. Reinforced transparency
In the recent years, the ICC Court took steps towards ensuring greater transparency in ICC arbitrations. The latest changes introduced in Articles 11 and 17 reinforce transparency and further aim at safeguarding the integrity of arbitral proceedings.
Article 11(7) now imposes a duty on parties to promptly inform the ICC Secretariat, the tribunal and the other parties of any third-party funding arrangements. Such disclosure will include the name of the third party funder, who may have an economic interest in the outcome of the arbitration.
This provision aims at preventing conflicts of interest linked to third-party funding arrangements, and introduces additional transparency in ICC arbitrations.
Article 17 imposes a duty upon the parties to promptly inform the ICC Secretariat, the tribunal and the other parties of any changes in their representation and empowers the tribunal to take appropriate measures to avoid conflicts of interest in such circumstances, including the possibility to exclude new counsel from the whole or part of the proceedings (Article 17(2)).
This change will address issues of party representation that may lead to conflicts and, ultimately, challenges against arbitrators.
3. Equal party treatment in tribunal appointment
Article 12(9) grants the ICC Court the power in exceptional circumstances to appoint each member of a tribunal whenever it is necessary to avoid a serious risk of unfairness that might jeopardise the validity of the award. This provision follows the ICC Court's practice to ensure equal treatment of the parties in multi-party arbitrations and to avoid situations wherein awards are not enforceable due to the appointment of arbitrators in multi-party cases.
This amendment addresses the need to assess whether the enforceability of an award could be affected in the event that the constitution of the tribunal based on an arbitration agreement would not guarantee the equal participation of all parties in the process.
4. Specific provisions for investment treaty arbitrations
Article 13(6) provides that when the arbitration is based upon a treaty, and parties do not agree otherwise, no arbitrator (including party-appointed arbitrators) can have the same nationality as any of the parties.
The proposed addition is similar to that of Rule 1(3) of the ICSID Arbitration Rules and aims to ensure the neutrality of the tribunal in Investor-State Dispute Settlement (ISDS) cases.
Article 29(6)(c) provides that the Emergency Arbitrator Provisions shall not apply to ISDS proceedings.
5. Increased threshold for the application of the Expedited Procedure Provisions
Following the success of the Expedited Procedure Provisions (EPP) since their introduction in 2017, Article 1(2) of Appendix VI has increased the threshold for their application. The 2017 Rules provide that disputes of up to USD 2 million in value fall under the scope of the Expedited Procedure Provisions (the 2021 Rules increase this threshold to USD 3 million for disputes arising out of arbitration agreements concluded after 1 January 2021. For disputes arising out of arbitration agreements concluded after 1 March 2017 and before 1 January 2021, the threshold of USD 2 million will continue to apply.
This increase of the threshold for the application of the EPP is set to improve the time and cost efficiency of ICC proceedings, through its application to a larger number of ICC cases, but risks potentially also clashing with party autonomy and disappointing parties that wish to see their USD 3 million value dispute submitted to a three-member tribunal, and not a sole arbitrator, with the possibility to appoint a co-arbitrator.
6. Express provisions for remote hearings and electronic communications
In light of the increase of remote hearings in arbitration proceedings due to the Covid-19 pandemic, the ICC has decided to include an express reference to the tribunal's powers to order that a hearing will take place remotely. Article 26(1) allows a tribunal to decide, after consultation with the parties, that a hearing will be conducted by video conference, telephone or other appropriate means of communications.
In the same context, Article 3(1) now provides that submissions and annexes shall be sent to each party, each arbitrator and to the ICC Secretariat. This modifies the previous version of Article 3(1) which provided that parties would supply to the ICC Secretariat pleadings and written communications in hard copy and in multiple sets for each party, arbitrator and the ICC Secretariat.
This amendment should encourage parties to use electronic communications rather than paper form.
7. Requests for additional awards
Article 36 deals with the correction and interpretation of the award, and remission of awards, and is now expanded to include a new paragraph, which allows parties to make an application for an additional award in case the tribunal omitted to decide on certain claims.
Pursuant to Article 36(3), an application for an additional award as to claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide must be submitted to the ICC Secretariat within 30 days of the receipt of the award and is then transmitted to the tribunal. An additional time limit will be granted by the tribunal to the other party or parties to the proceedings to comment on the application. Within 30 days from the expiry of this time limit, the tribunal will submit its decision on the application in draft form to the ICC Court. The tribunal's decision to grant the application shall be in the form of an additional award.
8. Claims relating to the administration of arbitrations by the ICC Court
Article 43 provides that any claims arising out of or in connection with the administration of the proceedings by the ICC Court, are governed by French law and the Paris Judicial Tribunal has exclusive jurisdiction over such claims.
This new article concerns potential disputes linked to case management by the ICC Court, and does not affect any potential recourse against arbitral awards.
Conclusion
Although not ground-breaking, the new additions and the revisions to the ICC Rules confirm the ICC's quest for more flexibility, transparency and time and cost efficiency in ICC arbitration proceedings, in response to the users' needs and expectations, and keep in line with the recent trends in international arbitration. More significant are the changes regarding the joinder of third parties, party representation and notification of third-party funding arrangements, whereas the threshold increase in the EPP proceedings, and appointment of the tribunal by the ICC Court in order to avoid inequality between the parties, are welcome changes that may, however, potentially clash with party autonomy regarding the constitution of the tribunal.
Finally, the ICC Court is 'going green', adopting specific provisions on remote hearings and electronic submissions, a welcome change which keeps with the need to overcome hurdles imposed by the recent pandemic around the world.
This article was authored by Marily Paralika, International Arbitration Partner at Fieldfisher in Paris; Joshua Fellenbaum, Dispute Resolution Director at Fieldfisher in London; and Joost van Dam, Dispute Resolution Associate at Fieldfisher Amsterdam.
Fieldfisher regularly advises clients on international commercial arbitration and international investment treaty disputes, under many arbitration rules, including the LCIA, ICC, ICSID, SCC and UNCITRAL Arbitration Rules. For more information on our expertise in this area, please visit our Arbitration page >>>