As of 1^st January, the 2021 ICC Rules have officially come into force. Building on the recent revisions introduced in 2012 and 2017, the newly released provisions aim to reconsider established arbitral practices and are designed to be a further step towards greater efficiency, flexibility and transparency of ICC-administered arbitrations.

The revised 2021 ICC Rules include a number of noteworthy modifications, such as:

• Consolidation and joinder of claims;
• Increase of threshold for expedited arbitrations;
• Conflict of interest including party representation, equal treatment and disclosure of third party funding;
• Virtual hearings and electronic document submission.

The following will touch upon the most substantive changes of the new Rules and their implications for ICC users and practitioners.

Joinder

2017 ICC Rules – Article 7(1)

• Joinder of an additional party after appointment or confirmation of the arbitral tribunal used to be permitted only upon the agreement of all parties and additional parties.

2021 ICC Rules – Article 7(5)

• Additional parties may now be joined to the arbitration proceeding after appointment or confirmation of the arbitral tribunal upon request of one party, irrespective of universal consent.
• To this end, the arbitral tribunal is asked to consider the following:
  • Whether it has prima facie jurisdiction over the additional party;
  • The timing of request;
  • Possibility for conflicts of interest;
  • Any potential procedural effect that said joinder might have on the arbitral procedure.
• Joinder is conditional upon the additional party accepting the terms of reference of the arbitration as well as agreeing to the arbitral tribunal’s constitution.

Consolidation

2017 ICC Rules – Article 10(b)

• The former ICC Rules did not adequately address whether consolidation was permitted only with regards to claims that arose out of the ‘same arbitration agreement’ or whether consolidation was also possible in relation to disputes arising from a number of contracts with mirror arbitration clauses.

2021 ICC Rules – Article 10(b)-(c)

• The new 2021 Rules provide clarification as to the meaning of ‘same arbitration agreement’ for purposes of consolidation, confirming that consolidation is permissible where:
  • The parties have agreed to consolidation; or
  • All of the claims in the arbitrations are made under the same arbitration agreement or agreements; or
  • The claims in the arbitrations are not made under the same arbitration agreement or agreements, but the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible.
• This approach is similar to Art. 22.7 of the 2020 LCIA Rules, which allows for the consolidation of claims under compatible arbitration agreements and in relation to disputes between parties arising out of the same or a series of related transactions.

Threshold Increase for Expedited Arbitrations

2017 ICC Rules – Article 30 Appendix VI

• The expedited procedure provisions under the 2017 ICC Rules used to apply to arbitration agreements concluded after 01.03.2017 with a disputed amount not exceeding USD 2 million.

2021 ICC Rules – Article 30 Appendix VI

• The new 2021 ICC Rules expand upon the expedited procedure provisions, raising the opt-out threshold from USD 2 million to USD 3 million for all arbitration agreements concluded on or after 01.01.2021.

Conflict of Interest

Party Representation

2017 ICC Rules – Article 17

• Article 17 of the 2017 ICC Rules allowed the arbitral tribunal or the Secretariat to require proof of the authority of any party representatives, yet remained otherwise silent on the issue of party representation.

2021 ICC Rules – Article 17(1)-(2)

• Article 17(1) sets out disclosure obligations, pursuant to which parties are required to inform the ICC Secretariat, the tribunal as well as other parties of the identity of as well as any changes regarding their legal representation.
• Article 17(2) allows for greater transparency by affording the tribunal the right to refuse a change in party representation for purposes of avoiding circumstances that could give rise to a conflict of interest, i.e. by excluding counsel from whole/part of proceeding.

Equal Treatment

2017 ICC Rules – Article 12(8)

• The 2017 ICC Rules empower the ICC Court to appoint members of an arbitral tribunal (as well as to designate a member to act as president) in multi-party arbitrations ‘where all parties are unable to agree on a method for constitution of the arbitral tribunal’.

2021 ICC Rules – Article 12(9)

• The new provisions build upon Article 12(8) above by establishing that arbitral tribunal appointments may be made by a Court, irrespective of the parties’ agreement on the constitution of the arbitral tribunal, provided exceptional circumstances exist that would give rise to a ‘significant risk of unequal treatment and unfairness that may affect the validity of the award’.
• The meaning of ‘exceptional circumstances’ is to be considered on a case-by-case basis.

Third Party Funding

2021 ICC Rules – Article 11(7)

• Parties are instructed to disclose the ‘existence and identity of any non-party which has entered into an arrangement for the funding of claims or defences under which it has an economic interest in the outcome of the arbitration.’
• These measures are intended to further transparency as well as to preserve the principles of impartiality and independence. They also seek to undermine potential objections regarding the confirmation or challenge of arbitrators.
• This provision is in line with theICC’s Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, which addresses the risk of a conflict of interest arising between arbitrators and parties that have a direct economic interest in the arbitration at hand.

Electronic Submissions and Virtual Hearings

2021 ICC Rules – Article 26

• The 2021 ICC Rules follow the recently published ICC’s Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 pandemic, which offers recommendations for organising conferences and hearings to prevent potential delays due to the effects of the COVID-19 pandemic.
• The new provisions afford tribunals the power to decide whether to conduct virtual or in-person hearings, provided however:
  • The parties are first consulted;
  • The facts and circumstances of the case at hand are taken into consideration.
• Remote hearings may be held by video or telephone conferencing or any other appropriate means of communication.

2017 ICC Rules – Article 3(1)

• The former 2017 ICC Rules required ‘all pleadings and other written communications [to] be sent to each party, each arbitrator and the Secretariat.’ Additionally, it stipulated that ‘[a]ny notification or communication from the arbitral tribunal to the parties shall also be sent in copy to the Secretariat.’

2021 ICC Rules – Article 3(1), 4(4)(b), 5(3)

• The 2021 ICC Rules remove the presumption of paper filings and allow for all submissions, notifications and other communications to be sent electronically.
• Parties are given the opportunity to agree in advance on the format in which said pleadings are to be sent.
• Physical submission in multiple sets is to occur only if a party explicitly requests the transmission of such pleadings ‘by delivery against receipt, registered post or courier’.
• The new provisions specifically acknowledge that due to the COVID-19 pandemic, most communication tends to occur electronically and thus allows for electronic submission where any hard copy filing may prove impossible or pose a detrimental health risk.

Additional Changes

Case Management

2021 ICC Rules – Art. 22(2)

• Replacement of ‘may’ with the mandatory term ‘shall’ imposes on arbitrators the duty of ensuring effective case management;
• Practitioners are encouraged not merely to inform but to encourage parties to settle all or part of their dispute.

Omitted Claims

2021 ICC Rules – Article 36(3)

• Within 30 days of award receipt a party may submit a request to the tribunal to issue an additional award as a remedy for omitted claims that were left unaddressed in the award.

Internal ICC Operations

2021 ICC Rules – Appendix I

• Appendix I sets out important information centring on the internal operations of the ICC, including:
  • A revised appointment process for the position of President of the Court (Article 3(1));
  • Two consecutive term limits on all Court members (Articles 3(5) and (6));
  • Work division between committees (Articles 4-6).

2021 ICC Rules – Appendix II

• Parties may submit a request to obtain the reasoning behind a tribunal’s decision on:
  • The existence and scope of a prima facie arbitration agreement (Article 6(4));
  • Consolidation of arbitrations (Article 10);
  • Arbitrator appointments (Article 12);
  • Challenges to arbitrators (Article 14);
  • Arbitrator replacement upon the Court’s own motion (Article 15(2)).
• Only in exceptional circumstances may the tribunal at its own discretion decline disclosing their reasoning as to the above (Article 15(3)).

Investment Arbitrations

2021 ICC Rules – Article 13(6)

• The 2021 ICC Rules stipulate that arbitrators of the tribunal may not hold the same nationality as any of the parties to an arbitration, unless otherwise agreed to by the parties. Unlike the 2017 Rules, this provision does not merely apply to chairs and sole arbitrators but also to co-arbitrators.

2021 ICC Rules – Article 29(6)

• The 2021 ICC Rules prohibit emergency arbitration to be conducted in treaty-based investment arbitrations.

Additional Award

2021 ICC Rules – Article 36(3)

• According to the new rules, parties will be given the opportunity to submit an application within 30 days of receipt of the award for any additional award on the claims that the tribunal failed to address in the original award.

Comment

The newly introduced provisions reinforce the ICC’s intention to modernise established practices and its ambition to enhance the flexibility and transparency of ICC-administered arbitrations. This is demonstrated inter alia by the amendments concerning the disclosure requirement of third-party funding arrangements or the rules on joinder and consolidation, aimed at improving the efficiency and management of complex arbitral processes.

In addition, by affording the tribunal greater discretionary authority when making procedural decisions, the 2021 ICC Rules seek to mitigate COVID-19 related disruptions to the operation of arbitral proceedings. Nevertheless, it remains to be seen how the additional limitations placed on party autonomy (i.e. tribunal appointment mechanism) will be received by users and competing arbitral institutions.

Other material changes include the provisions on virtual proceedings that are instrumental not only in responding to the restrictions arising from COVID-19 related measures but also in accommodating future innovations in remote hearing technology.

Lastly, it is with the introduction of provisions centring on treaty-based disputes, that the ICC undoubtedly strengthens its role as a leading arbitral institution and attractive dispute resolution forum for commercial parties and sovereign actors alike.

Originally Published by OBLIN Attorneys at Law LLP, February 2021

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