International Chamber of Commerce Updates Its Arbitration Rules for 2021
The International Court of Arbitration of the International Chamber of Commerce (ICC) published on Dec. 1, 2020, a new version of its Arbitration Rules (2021 Rules), which will apply to all cases registered as of Jan. 1, 2021.1
Compared to the changes to the Arbitration Rules made in 2017 (2017 Rules), the 2021 Rules do not make any major structural changes to the arbitration process. Rather, the additions and modifications are pragmatic in nature. The main changes revolve around the following issues: 1) providing the arbitration process with greater efficiency and flexibility; 2) improving the administration of complex arbitrations and 3) increasing the transparency of the proceedings.
Among the most relevant changes are the following:2
Efficiency and Flexibility
The development of arbitration proceedings is fostered through the use of digital mechanisms.
Since the beginning of the COVID-19 pandemic, the use of digital technology has been essential for the continuity of many arbitration proceedings. After demonstrating that the arbitration proceedings can be carried out through digital means, the 2021 Rules include modifications and clarifications that confirm and promote this practice for future proceedings.
First, the new content of Article 3(1) removes the obligation to file physical copies of communications and documents. This establishes, as a new general rule, that all communications now must be exclusively exchanged through electronic means. This change also impacts Article 4(4), which now states that the transmission of the arbitration request will be digital, unless the claimant chooses to present physical copies.
Second, the new wording of Article 26(1) expressly authorizes the arbitral tribunal to decide, after consulting with the parties, to carry out a virtual hearing (via videoconference, telephone or any other means) when the facts and circumstances of the case justify it. The language of the 2021 Rules will allow the tribunal to make this decision even if one or both parties do not agree to a virtual hearing.
The arbitral tribunal now has an obligation to efficiently handle the proceedings.
Article 22(2) has been modified in order to introduce an express obligation for the arbitral tribunal to adopt any procedural measures it deems appropriate (provided that these do not violate any agreement between the parties) in order to ensure the efficient execution of the proceedings. Previously, the arbitral tribunal had the possibility to do so but not the obligation. This change adopts and reinforces a recognized principle of efficiency in arbitral proceedings.3
The tribunal may now encourage the parties to resolve their dispute amicably.
Among the measures that a tribunal can adopt for the efficient execution of the proceedings, it is now allowed for arbitral tribunals to actively encourage the parties to resolve their dispute amicably (in whole or in part), through the negotiation or through any other amicable dispute resolution mechanism.4 Previously, the rules had only allowed the tribunal to inform the parties about alternative mechanisms.
The scope of expedited proceedings has been broadened.
In 2017, the ICC introduced the rules referring to expedited arbitration proceedings, the purpose of which was to offer a faster and lower-cost procedure. Expedited proceedings were designed to address cases with lower amounts in dispute or with straightforward facts.
As a further sign of self-confidence in the expedited procedure, Article 1(2)(b) of the 2021 Rules expands the threshold for access to the expedited rules from US$2 million to US$3 million. This new amount will apply to arbitrations initiated as of Jan. 1, 2021.
The arbitral tribunal may now issue additional awards.
The 2021 Rules modify Article 36(3) to allow the arbitral tribunal to issue an additional award within 30 days of the final award. Under the 2017 Rules, once the final award was issued, the parties could only request clarification of clerical mistakes or the interpretation of unclear concepts. This modification will allow the parties to request an additional award on claims that have not been resolved in the final award.
The 2021 Rules incorporate a series of modifications and clarifications that allow for a more efficient administration of certain problems that frequently appear in the execution of arbitration proceedings where multiple parties and/or contracts are involved.
Joinder of additional parties is now possible after the appointment of the tribunal.
Under the 2017 Rules, the joinder of additional parties to the proceedings could only be carried out prior to the appointment of the arbitral tribunal. Under the new text of Articles 7(1) and 7(5), joining additional parties to the proceedings is now possible even after the arbitral tribunal has been enforced. In such cases, the new party must accept the constitution of the tribunal. The tribunal also will have certain obligations, such as considering potential conflicts of interest or the impact that the new party will have on the proceedings.
The rules for the consolidation of cases are clarified.
Additionally, Article 10(b) and (c) were modified to clarify the possibility of consolidating arbitration proceedings enforced under separate arbitration agreements ("arbitration agreement or agreements"). The 2017 Rules were not clear on this, and appeared to indicate that only arbitrations executed under the same arbitration agreement could be consolidated.
Transparency and Conflicts of Interest
The parties now have an obligation to disclose the existence of third-party financing.
In response to the debate around the disclosure of financing by third parties, the 2021 Rules adopt a position of maximum transparency.
A new paragraph (7) to Article 11 states the obligation of the parties to reveal the existence and identity of any third party with whom they have an agreement to finance the arbitration and derived from which there is an economic interest in the result of the case. Paragraph (7) is aimed at assisting the arbitrators in their mandate to comply with their obligations of impartiality and independence when conducting a review of conflicts of interest.
The parties now have an obligation to inform of any changes in legal representation, and the tribunal has powers to limit conflicts of interest.
The 2021 Rules modify Article 17 to establish an obligation for the parties to provide notification of any change in their legal team or representation. For its part, the arbitral tribunal may take any necessary measure to avoid or eliminate a possible conflict of interest, including the exclusion of a new representative from the process.
The parties may now request the court to report the rationale for certain decisions.
Article 5 of Appendix II has been modified to establish the right of any party to request from the court, in advance, the rationale for certain decisions. This modification specifically regards the existence of prima facie jurisdiction and the scope of an arbitration agreement; the consolidation of arbitrations; or the appointment, challenge and replacement of arbitrators. Likewise, it is established that the court may deny the request in exceptional cases.
In general terms, the modifications and additions established in the 2021 Rules show the responsiveness that the ICC has had not only in the face of continuous challenges that have arisen in the execution of proceedings during the pandemic, but also by providing interesting solutions to address existing arbitration concerns at an international level. All of this helps to position the new 2021 Rules as a great option for dispute resolution in the business world.
Holland & Knight's Mexico City office has an experienced and sophisticated team to plan and conduct arbitration proceedings. For more information, feel free to contact the authors or another member of Holland & Knight's International Arbitration and Litigation Team.
1 The rules would not apply where the parties have agreed to a previous set of rules being applied.
2 The 2021 rules contain various other changes to the internal structure of the court.
3 This modification has been made by changing the word "may" to "shall" in the text of the rules.
4 In accordance with the language of the 2017 Rules, the tribunal could only inform the parties of the possibility of utilizing alternative dispute resolution mechanisms to solve their case.
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