International Court of Arbitration of the International Chamber of Commerce (‘’the ICC’’) set forwards its approach for the Alternative Dispute Resolution with new updated arbitration rules. The 2021 Rules were launched on 1st of December 2020, and will become effective and apply to cases that is filled from 1st of January 2021. Cases submitted to the ICC and registered before 1st of January 2021 will be ruled by 2017 ICC Rules, unless the parties stated otherwise. The new alterations intended to make a further efficiency, flexibility and transparency into the arbitral practices whilst anticipating the demands of both the arbitration community and arbitral tribunals.
I. Amendments and Features of the 2021 ICC Rules
Effective Case Management
Article 22(2) of 2017 ICC Rules stated that; “in order to ensure effective case management, the arbitral tribunal, after the consultation of parties, may adapt procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties.” Regarding the 2021 Rules, the replacement of “may” with “shall”, grants a complete duty on arbitrator to ensure an effective case administration.
New Scope for Consolidation
In line with the Article 10(b) of the 2017 ICC Arbitration Rule, the ICC may consent 2 or more arbitrational consolidations that are pending under the ICC Rules where “all the claims are made under the same arbitration agreement”. In this context, such phrasing unconfirmed the question as whether “the same arbitration agreement” comprised same arbitration agreements covered in different contract. The 2021 ICC rules clarifies that the ICC may present consolidation in where “all of the claims in the arbitrations are made under the same arbitration agreement or agreements”. Further, revision of Article 10(c) allows the ICC to order consolidation where a different arbitration agreement or agreements may be involved, specified that those agreements are compatible, in-which the arbitrational disputes rise in connection with the same legal relationship.
Consequently, new 2021 ICC Arbitration Rules embraces wider liberal account to consolidation, with compatibility of the related arbitration agreements becoming more essential.
Joinder of Additional Parties after the Arbitral Tribunals
Inclusion of additional parties permitted only in line with the consents of parties in the contract and before the construction of the arbitral tribunal6 through the 2017 Rules. Yet, the revised Article 7(5) permits an arbitral tribunal, when established and upon requests of parties, to join an additional party even when in the lack of complete consent. Besides, additional party is subject to accept the constitution of the arbitral tribunal and agree to the Terms of the Reference. Whilst deciding the joinder application, the arbitral tribunal is subject to determine all relevant circumstances such as the arbitral tribunals’ eligibility to have jurisdiction over the relevant party, the timing of the application, likely conflict of interest, and lastly, the effect of the joinder on arbitral actions.
Increased Expedited Procedure Rules
The monetary limit provided in the Expedited Procedure Rules have been changed by the 2021 Arbitration Rules and raised the opt-out threshold from 2 million to 3 million for arbitration agreements which are concluded on or after 1st of January 2021.
II. Compliance with Due Process Principles
Under the 2017 Rules, decisions already made may be subject to correction or interpretation by the arbitral tribunals under the ICC’s direction. Currently, the 2021 Arbitration Rules entrains a new rule for additional awards. Under Article 36 (3); within 30 days of receipt of the award, a party may apply the arbitral tribunal to issue an additional award to rule upon claims raised that been omitted during the proceedings.
III. Constitution of the Arbitral Tribunal
The new rules build on Article (12)8, which allows the ICC Court to nominate all three members of the arbitral tribunal is one of the major and controversial amendments constructed in the 2021 Arbitration Rules. Under the Article 12(9); "notwithstanding 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." The revision as described by the ICC is inspired by the Dutco decision of the French Court de Cassation and aiming to ensure compliance with public policy and preserve the enforceability of awards in exceptional circumstances. Although such provision object to fairness and equality, limitation on the right of the parties to nominate their own arbitrator will certainly have controversial aspect on the key rights in international arbitration. Regardless of the agreements by the parties on the method of constitution of arbitral tribunals, grating discretionary power to ICC Court is, at first glance, an instance of infringing freedom.
IV. Measures on Prevention of Conflict of Interest
Third Party Funding
In line with the overriding needs on the transparency of international arbitrations, the 2021 Arbitration Rules presents a new provision in regard to the third-party funding disclosures. New Article 11(7) highlights that; “in order to assist prospective arbitrators and arbitrators in complying with their duties under Articles 11(2) and 11(3), each party must promptly inform the Secretariat, the arbitral tribunal and the other parties, of the existence and 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.” In this respect, intention to increase transparency is evident for arbitrators to disclose their relationship with the funders to avoid any possible conflict of interest.
The new 2021 Arbitration Rules presents new provisions that purposes to strike a balance between fair treatment and arbitrators’ independency. Under the Article 17; parties are mandates to inform any changes in their representation to the ICC Secretariat, the arbitral tribunal and other parties. In return, the Article 17(2) gives a right to arbitral tribunal to decline the proposed amendment or limit the participation of new party representative from the proceedings. Overall, measure of new provision, gradually, aims to prevent the conflict of interest amongst the new party representative and arbitrators.
V. Innovative ICC Rules
Arbitration of Treaty-based Disputes
About 20 percent of cases registered by the Court involved a state or state entity, with a 67 percent upsurge over the past 5 years. In an attempt to adapt to the particularities of this growing portfolio, the provisions of the Rules on investor-state dispute resolution ('ISDS') have been strengthened with a few tweaks.
The 2021 Arbitration rules provides two new rules on the treaty disputes under the Article13(6) and Article26(9) c. Resembling to ICSID Convention Article 39, Article13(6) asserts that none of arbitrator can have the same nationality as a party, unless the parties agree otherwise. Thereby, introducing a new neutrality feature or requirement in treaty-based disputes. Moreover, Article26(9)c implicitly specifies that Emergency Arbitration Provision are not offered when “the arbitration agreement upon which the application is based arises from a treaty." And such provision is in compliance with the UNCITRAL Arbitrational Rules and ISCID which do not provide the emergency arbitration provision. In sum, given provisions on treaty-based disputes are indication of the Court’s eagerness to attract parties’ attentions on the consideration of the 2021 Arbitration Rules.
Settlement of Disputes
The significant techniques recommended by the 2021 Arbitration Rules on the settlement of disputes stresses is that the importance of “encouraging the parties to consider settlements of all part of the dispute”, rather than narrowly informing parties about this option.
VI. Digitalisation of Arbitration
With the encroachment of COVID-19, it has become evident that to carry on with the proceedings, all parties to the arbitration should be eager to conduct some adjustments to the conventional ways. On 9 April 2020, the ICC announced its, the most significant guidelines on virtual hearings, Guidance Note on Possible Measures Aimed at Mitigating the Mitigating the Effects of the COVID-19. In the light of the ICC Guidelines, the 2021 Arbitration Rules introduced virtual hearing into its arbitral tribunal proceedings.
The 2021 Arbitration Rules depart from the conventional way of submitting document in terms of pleadings and communications and allow practitioners to electronic fillings from the beginning of the Covid-19. As Article 3(1) states that; “all pleadings and other written communications submitted by any party, as well as all documents annexed thereto, shall be supplied in a number of copies sufficient to provide one copy for each party, plus one for each arbitrator, and one for the Secretariat. A copy of any notification or communication from the arbitral tribunal to the parties shall be sent to the Secretariat.” However, with the new amendments, the requirement of hard copy documents is optional both to the parties and the arbitral tribunals. Further, in the light of the amendments completed on Article 4 and Article 5; it is left to parties to determine whether they opt delivery against receipt, registered post or courier and subsequently submission of hard copies to relevant parties, the arbitrator and finally, the Secretariat. Obviously, whilst such amendments are environmentally friendly, the cost-effectiveness of this approach is self-evident.
The new 2021 ICC arbitration rules present significant features to further modernise and encourage efficiency, flexibility and transparency, predominantly demonstrated by the new provisions on complex arbitration such as joinder and consolidation, party representation and disclosure of third-party funding. Taking into account, the changes in international arbitration and encroachment of Covid-19 to law’s paradigm, alterations on the arbitration rules appears to be vital. Though, the provision on the nomination of all three members of arbitral tribunal and arbitral tribunal’s right to exclude counsel is likely to encounter some concerns. Ultimately, although given amendments objects to rise efficiency, flexibility and transparency, the Court and arbitrators should put the latest hard work whilst invoking such provision for any degree of dispute resolution. For more detailed information, you can contact us via the following information.
By Ali Guden, Founding Partner, Guden