The London Court of International Arbitration (LCIA) released an update to
its arbitration rules (the “Rules”), with the changes set to take effect
from 1 October 2020 and the stated intention of making the arbitral process
more streamlined and clear for those involved.
Whilst the changes may not appear dramatic, their combined effect is
significant: not only are they evidence of the LCIA endeavouring to bring
London arbitration into the digital age, but they also seek to close
loopholes that lead to delays, thereby giving parties confidence that the
process will be efficient in terms of time and costs.
The LCIA was drawing up the Rules as the COVID-19 pandemic hit, so it was
able to review the successful shift toward more remote means of working and
integrate some of these good practices.
The most obvious step toward modernisation is in the shift to, and heavy
emphasis on, electronic communications. The Request for Arbitration, and
Response, must now be submitted in electronic form, and all communications
between the parties must be by email or other electronic means. Prior
approval must be obtained from the LCIA Registrar if any party wishes to
submit the Request or Response or communicate via an alternative method
which, it is to be imagined, is likely to be granted in cases where a party
has genuine difficulties in terms of its local digital infrastructure (but
may be difficult to obtain in other circumstances).
Awards now may be signed electronically. However, it remains to be seen how
this will be interpreted alongside the New York Convention, which is silent
as to whether electronic signature of awards is permitted. This uncertainty
will be an area of concern for parties that intend to enforce an award in
one of the 164 countries that are party to the New York Convention, as the
absence of an express provision in the New York Convention could well be
used as grounds for upholding a challenge to enforcement.
Also, following the widespread success in the increased usage of virtual
hearings due to the COVID-19 pandemic, the Rules update also permits
hearings to take place “virtually by conference call, videoconference or
using other communications technology with participants in one or more
geographical places (or in a combined form).” Indeed, in light of the
emphasis on electronic communications generally, the Rules might now be
read as encouraging virtual hearings, especially at the interim stage. In
light of these changes, tribunals are permitted to issue directions
regarding information security and data protection.
Each of these changes represents an important step by the LCIA to update
the arbitral process to factor in significant technological advances since
the last update in 2014, and the changing work practices as parties and
professionals continue to adapt to the ever-changing COVID-19 landscape.
The updated Rules also address (and remove) loopholes previously exploited
to create delays, in order to maintain confidence in the efficiency of the
arbitral process. The principal approach adopted has been to increase, and
make express, a tribunal’s discretion when it comes to case management, so
making it harder to raise challenges to matters of procedure, especially
where the motivation for doing so may be simply that a party does not like
the direction of travel in the decisions or makeup of a tribunal.
The new provisions granting such discretion cover a number of key aspects,
including the tribunal’s ability to make any procedural order it sees fit
(having considered the views of the parties, but not necessarily adopting
them); powers to expedite the procedure; the power to give additional
directions regarding any part of the written stage of the arbitration;
powers to direct at which stage certain issues will be determined and how;
and express authority to dismiss claims on grounds of jurisdiction or that
they lack merit.
Other key changes aimed at improving efficiency can be summarised as
- Parties now must inform the LCIA Registrar of their nationality, and the
Rule clarify which parties must have their nationality declared; this is
intended to limit the scope for challenges to arbitrator appointments.
- The powers and processes in the early stages of arbitration are
clarified. References to “Arbitral Tribunal” now expressly include
emergency arbitrators, and emergency arbitrators now have the power to
determine how the parties will bear the legal costs of emergency
- In the event of a challenge to an arbitrator, provided the parties and
arbitrator have a reasonable opportunity to comment on the challenge, the
LCIA Court has discretion as to the process for resolving the challenge,
including the ability to require information and materials from the
parties, their authorised representatives and the challenged arbitrator,
and to determine to what extent the previous proceedings will stand.
- Parties can now serve a composite Request to commence multiple
arbitrations, although each arbitration will be heard separately unless
otherwise ordered. In which respect, tribunals can now order the
consolidation of multiple arbitrations if commenced under the same
arbitration agreement or any compatible arbitration agreement, and either
between the same parties or arising out of the same transaction or series
of related transactions. In addition, tribunals can order concurrent
conduct of two or more arbitrations.
Additional updates and new provisions logically address a number of
underlying legal developments in recent years, such as the General Data
Protection Regulation, an overt undertaking in respect of duties on
witnesses and experts about confidentiality, and anti-corruption
The LCIA appears to have made a concerted effort to address our new
operating environment. A number of amendments and new provisions show the
LCIA has heeded criticism about delays and unnecessary cost arising out of
procedural aspects; and the more practical measures follow the recent
changes to standard working practices in the international arbitration
community, so modernising the Rules and promoting certainty and efficiency.
As ever, it needs to be seen how the updated Rules are implemented, but
parties, practitioners and arbitrators alike should welcome the changes as
not just improving the attractiveness of arbitration, but the
attractiveness of arbitration in London after a period when other
jurisdictions may have been stealing the reputational march for modernity
and value for money.
Please contact any of the authors of this article, any member of the
London dispute resolution team
or your regular McGuireWoods contact if you have questions about the
contents of this article.