The 2021 ICC Rules: Presentation and commentary
On 8 October 2020, the International Chamber of Commerce in Paris (ICC), unveiled its revised Rules of Arbitration due to enter into force in January 2021 (the 2021 Rules). Notably, this is the third amendment of the ICC Arbitration Rules in a decade, the two previous taking place in 2012 (the 2012 Rules) and 2017 (the 2017 Rules).
Even though the 2021 Rules do not significantly depart from the 2017 Rules, they have introduced a number of changes to meet recent demands and developments in international arbitration. In particular, the changes pertain to issues of joinder and consolidation, remote hearings and electronic submissions, the disclosure of information on third-party funding and the composition of the arbitral tribunal. The 2021 Rules also introduce a number of ancillary and administrative provisions1.
As a general comment, although the changes do not have the same scope as the ones implemented in the 2012 or 2017 Rules, the apparent intention of the drafters is to provide tribunals with more extensive powers to conduct the proceedings in more complex cases. While this could facilitate and expedite proceedings, it may also be considered as an infringement of party autonomy, which is a key element and advantage of arbitration.
Presentation and commentary on the main amendments of the 2021 Rules
Consolidation / joinder
1. Relevant provisions
After the addition of ground-breaking provisions regarding the consolidation of arbitrations and joinder of new parties in 2012, the 2021 Rules further clarify certain heretofore ambiguous issues. In particular, with respect to consolidation, Article 10(c) of the 2021 Rules now confirms that consolidation may happen where “all of the claims in the arbitrations are made under the same arbitration agreement or agreements”, thereby allowing consolidation in cases of arbitrations arising out of either one clause or several mirroring or similar clauses.
More importantly, Article 7(5) of the 2021 Rules introduces a new paragraph that significantly alters the requirements for joinder of new parties after the constitution of the tribunal. By way of background, both the 2012 and the 2017 Rules forbade the joinder of new parties after the constitution of the tribunal without the permission of all parties involved. Article 7(5) has changed this, by stipulating that the tribunal may allow the joinder of a party after the confirmation or appointment of an arbitrator, provided that all relevant circumstances are taken into account. Such circumstances may include “whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the request for joinder, possible conflicts of interests and the impact of the joinder on the arbitral procedure. Any decision to join an additional party is without prejudice to the arbitral tribunal’s decision as to its jurisdiction with respect to that party”. This essentially allows tribunals to bypass the lack of consent of one party and to decide whether a party can be joined in the arbitral proceedings.
The 2021 Rules attempt to further expand the arbitrators’ ability to consolidate multiple proceedings and join numerous parties to a single arbitration. This largely corresponds to the parties’ intent to simplify and expedite the proceedings in order to achieve a higher degree of efficiency in complex disputes2. However, this measure could potentially be considered a violation of the principle of party autonomy since it replaces the parties’ consent with an order of the tribunal. However, the factors a tribunal is to consider when ruling on a joinder application pursuant to Article 7(5) of the 2021 Rules seem to be sufficient to ensure procedural fairness.
Electronic hearings / submissions
1. Relevant provisions
The 2021 Rules adopt a much more permissive approach to hearings conducted by videoconference. Article 26.1 has undergone a rewrite and now states that “the arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication”. The changes in the 2021 Rules have also affected party submissions, which can now be submitted electronically3, as opposed to the 2017 Rules, which required paper copies to be sent to the parties4.
These changes simply follow the new reality triggered by COVID-19, which now necessitates that hearings be conducted remotely and that submissions be exchanged electronically. The discretion seems to lie with the tribunal and the parties to decide on how the proceedings will be conducted, which can include a physical hearing, hearing by videoconference, telephone “or other appropriate means of communication”. This amendment is similar to the 2020 Arbitration Rules of the London Court of International Arbitration, Article 19, and more arbitral institutions are expected to follow suit.
Constitution of the tribunal
1. Relevant provisions
Article 12.9 of the 2021 Rules gives the opportunity to the ICC Court to appoint all three members of the tribunal “in exceptional circumstances” and “to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”. This constitutes an exception to the general rule according to which the parties appoint the members of the tribunal and the ICC Court intervenes only in cases of inability to appoint them5.
Article 12.9 seems to complement Articles 12.6-12.7 of the 2021 Rules, which regulate the appointment for arbitrators in multi-party arbitrations and according to which all claimants or all respondents may jointly appoint an arbitrator. This amendment therefore aims to ensure procedural fairness in case the multi-party appointment procedure leads to inequitable results. On the other hand, it could also create concerns with respect to a party’s right to appoint its own arbitrator, which is one of the basic elements of party autonomy, the pillar of international arbitration6.
Avoidance of partiality and conflict of interest
1. Relevant provisions
In an attempt to ensure independence and impartiality on the part of the arbitral tribunal, the 2021 Rules contain a number of provisions aimed at avoiding conflicts of interest. In particular, Article 11(7) obliges parties to “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 the same vein, the tribunal, in accordance with Article 17(2) of the 2021 Rules, now has the power to “take any measure necessary to avoid a conflict of interest of an arbitrator arising from a change in party representation, including the exclusion of new party representatives from participating in whole or in part in the arbitral proceedings”.
Article 11(7) of the 2021 Rules is largely compliant with Article 7 of the IBA Guidelines on Conflicts of Interest in International Arbitration, which extends disclosure obligations to entities “with a direct economic interest in, or a duty to indemnify a party for, the award to be rendered in the arbitration”. Its inclusion in the 2021 Rules turns this guideline into a positive obligation on the part of the parties. In addition, Article 17(2) of the 2021 Rules expands the powers of the tribunal to exclude a party representation in order to avoid a conflict of interest from arising. This may raise concerns regarding the parties’ rights to counsel of their choice in international arbitral proceedings7. As a result, a balance needs to be found in order to ensure that this right is not infringed.
Even though the 2021 Rules have not been amended significantly, they include a number of provisions that allow for the promotion of arbitration in a new environment. In particular, the provisions regarding virtual hearings and electronic submissions seem necessary under the current circumstances, while the provisions on joinder and consolidation aim to facilitate the proceedings in complex, multi-party arbitrations. However, certain amendments, especially regarding the constitution of the tribunal and the exclusion of counsel may put party autonomy at risk. This is why both tribunals and the ICC Court need to exercise their expanded powers with caution to balance efficiency in handling more complex arbitrations with procedural fairness. It remains to be seen how tribunals and the ICC Court will apply the new provisions and whether similar rules will be adopted by other arbitral institutions.
1. See 2021 Rules, Articles 5, 29, 30, 36, 43, Annex I.
2. Gary B. Borne, International Commercial Arbitration (Kluwer Law International, 2014), p. 2567 (Permitting consolidation of separate international arbitrations, and joinder or intervention of additional parties into an international arbitration, can provide some obvious advantages. First, as with litigations, a single arbitration can in some circumstances be more efficient than two or more separate arbitrations. A single proceeding permits the same savings of overall legal fees, witnesses’ time, preparation efforts and other expenses that exist in litigation). See also, Thomson, Arbitration Theory & Practice: A Survey of AAA Construction Arbitrators, Hofstra Law Review, Vol. 23 (1994), p. 137, pp. 165-67. International Arbitration Survey: The Evolution of International Arbitration (2018), p. 10 (This finding is indicative of the fact that, as cross-border commercial transactions are becoming increasingly complex, international arbitration as a system is expected to respond to what its users want; this also means developing new mechanisms to better deal with disputes involving multiple contracts, jurisdictions, parties and third parties).
3. See 2021 Rules, Article 3(1).
4. See 2017 Rules, Article 3(1).
5. 2021 Rules, paras 12(6)-(8).
6. Nigel Blackaby, Constantine Partasides et al, Redfern and Hunter on International Arbitration (Oxford University Press, 2015), para. 1.100.
7. Gary B. Born, International Arbitration: Cases and Materials (Kluwer Law International 2015), pp. 1023-1055.