Increasing the Efficiency of International Arbitration to Respond to the Changing Needs of the International Business Community
The International Chamber of Commerce (ICC) was established in 1919 to promote international trade and the resolution of commercial disputes by way of international arbitration and alternative dispute resolution (ADR). Its arbitral body, the International Court of Arbitration of the ICC (‘the ICC Court’), was created in 1923 in Paris. It has since handled more than 16,000 cases and become a leading arbitral institution worldwide, with members originating from more than 90 different countries.
The New ICC Rules of Arbitration Will Come into Force on 1 January 2012
The ICC has released new Rules of Arbitration (‘the ICC 2012 Rules’), available here, which will replace the 1998 Rules currently in force, on 1 January 2012. They are the work of the ICC Commission on Arbitration (a group of arbitration practitioners from 90 countries), which has sought to codify established practices and make the arbitration process faster and less expensive.
Key Changes in the ICC 2012 Rules
In a nutshell, the main changes introduced by the ICC 2012 Rules concern the following:
- Efficient case management.
- Multiparty and multicontract arbitrations.
- Emergency arbitrator procedure.
- Other innovative steps relating to the appointment of arbitrators, the arbitral tribunal’s jurisdiction and the confidentiality of the arbitral process.
Efficiency of Case Management (Articles 22, 24, 27 and 37 of the ICC 2012 Rules)
One of the innovative aspects of the ICC 2012 Rules is its aim to speed up the arbitration process.
In this regard, the tribunal and the parties are required to conduct the arbitration in ‘an expeditious and cost-effective manner, having regard to the complexity and value of the dispute’ (article 22).
The parties are required to attend an early case management conference at the time the arbitration’s Terms of Reference are drawn up, or shortly afterwards (article 24). Examples of case management techniques are set forth in Appendix IV to the ICC 2012 Rules and in the ICC’s report on Techniques for Controlling Time and Costs in Arbitration, available here, and include:
- Bifurcating the proceedings or rendering one or more partial awards on key issues.
- Identifying issues that can be resolved by agreement between the parties or their experts.
- Identifying issues that can be resolved entirely on the basis of the production of documents, without the need for oral evidence.
- Establishing reasonable time limits for the production of evidence.
- Limiting the length and scope of written submissions and written and oral witness evidence.
The tribunal has the power to adopt suitable case management measures after consultation with the parties, and can take into account the expeditiousness and cost-effectiveness of the parties’ conduct in awarding costs (article 37).
Once arbitral proceedings are closed, the tribunal is required to inform the Secretariat of the ICC Court of the date by which it expects to send its draft award to the ICC Court for approval (article 27).
Multiparty and Multicontract Arbitrations (Articles 6, 7, 8, 9 and 10 of the ICC 2012 Rules)
The ICC 2012 Rules provide for arbitration of complex disputes, including those involving more than two parties and/or arising out of more than one contract or arbitration agreement:
- Joinder of additional parties: a party may join an additional party to the arbitration by submitting a ‘Request for Joinder’ of such party to the Secretariat prior to the confirmation or appointment of any arbitrator, or at any time after that date, provided that all parties to the arbitration, including the party to be joined, have consented to the joinder (article 7).
- Claims between multiple parties: in arbitrations involving multiple parties, any party may make a claim against any other party (article 8).
- Multiple contracts: claims arising out of more than one contract may be made in a single arbitration (article 9).
- Consolidation: the ICC Court may consolidate separate arbitrations, either with the consent of all parties or where all claims in the arbitrations are made under a single arbitration agreement, and even where the claims arise under multiple arbitration agreements, as long as the arbitrations are between the same parties and arise from the same legal relationship, and the arbitration agreements are compatible (article 10).
Arbitration is a consensual process, and the new rules do not alter this fundamental principle. The flexibility provided by the new rules remains subject to the ICC Court’s prima facie satisfaction that an arbitration agreement binding all parties may exist (article 6).
Emergency Arbitrator Procedure (Article 29 of the ICC 2012 Rules)
Recognising that a party may need urgent interim or conservatory measures that cannot await the constitution of an arbitral tribunal, the ICC 2012 Rules provide for the appointment of an ‘emergency arbitrator’ to deal with applications for such measures (article 29). The expedited timetable for the appointment of such an emergency arbitrator is set forth in Appendix V to the ICC 2012 Rules.
This procedure is similar to that implemented by the Stockholm Chamber of Commerce, available here; the Singapore International Arbitration Centre, available here; and the Netherlands Arbitration Institute (article 42 of the NAI Rules).
However, the emergency arbitrator procedure is only applicable to arbitration agreements concluded after 1 January 2012, and the parties may opt out of it or agree to substitute other procedures for such interim measures. Although orders issued by the emergency arbitrator bind the parties, such orders do not bind the tribunal, which, when constituted, may modify, terminate or annul the emergency arbitrator’s order. Moreover, the emergency arbitrator procedure does not prevent parties from making applications to national courts for interim measures.
Other Innovative Steps Provided by the ICC 2012 Rules (Articles 1, 11 and 13 of the ICC 2012 Rules)
Other notable changes in the ICC 2012 Rules include:
- The ICC Court claims exclusive authority to administer arbitration under the ICC 2012 Rules (article 1). This effectively prohibits the use of hybrid arbitration arrangements, such as ad hoc arbitrations administered by the ICC Court, or arbitrations conducted under the ICC Rules but administered by another institution.
- Arbitrators are required to be both ‘impartial and independent’ (article 11). These requirements correspond with the International Bar Association’s (IBA) Guidelines on Conflicts of Interest in International Arbitration, available here.
- Arbitrators are required to sign a statement of acceptance, availability, impartiality and independence (article 11).
- In arbitrations involving sovereign states or state entities, the ICC Court may appoint arbitrators directly instead of relying upon the proposal of the ICC’s National Committees (article 13).
The ICC 2012 Rules will introduce more flexibility and cost efficiency in the administration of ICC arbitrations and speed up this process. The changes codify several existing practices and expand the arbitral forum to resolve more complex arbitrations, whilst preserving the main features of ICC arbitration (the central role of Terms of Reference, the close supervision of arbitrations by the ICC Court and scrutiny and approval of arbitral awards by the ICC Court).
McGuireWoods’ lawyers have extensive experience serving as counsel and advisors in connection with international arbitrations, whether ad hoc or under the aegis of major international institutions such as the ICC, the LCIA and the AAA.