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The new ICC 2021 arbitration rules en

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The International Court of Arbitration of the International Chamber of Commerce (ICC) has revised the ICC arbitration rules that dated back to 2012 and were amended in 2017 (“the 2017 Rules”).

The new arbitration rules (“the 2021 Rules”) have been changed to reflect recent developments in the international arbitration sphere and include the International Court of Arbitration practices.

The 2021 Rules apply to any ICC arbitration commencing from 1 January 2021 unless the parties agree otherwise. For ICC arbitrations registered before 1 January 2021, the 2017 Rules will continue to apply.

Rules

One of the most significant changes, in the 2021 Rules relates to the focus on third-party funding, incorporating earlier practices addressed a.o. in the different versions of the ICC “Note to the Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration.”

This confirms a consistent trend in national legislations (Hong Kong, Singapore), international trade agreements (CETA), soft law (2014 IBA Guidelines on Conflicts of Interest in International Arbitration), and rules of arbitration institutions acknowledging the existence of third party funding and the need for transparency surrounding its use. With the 2021 Rules, the ICC joins other renowned arbitration institutions such as CIETAC, HKIAC, CAM-CCBC and the Milan Chamber of Arbitration. It has also been included in the proposals for Amendment of the ICSID Rules (see Working paper #4 dated February 2020).

The transparency trend regarding third-party funding is expressed in article 11 (7) of the 2021 ICC Rules that now provides that:

“parties must promptly 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.”

This provision prevents a conflict of interest between the arbitral tribunals, the parties to the dispute, and non-parties such as third-party funders. Situations where an arbitrator has connections to an entity providing third party funding, e.g. he or she is a member of the funder’s investment committee, advises funders on their investments or owns shares of the funder, should now be more easily identified, thus avoiding challenges and possible follow-on proceedings.

The transparency requirement in the 2021 Rules (likely to set a standard) benefits all parties to the arbitral proceedings, including the funders. It is indeed a way to safeguard the funder’s investment against delays in the proceedings and possible post-award challenges jeopardizing the enforceability of the award, which also benefits the parties and the arbitral tribunal.

Arbitration

In recent discussions (especially in the ISDS sphere), some stakeholders (often respondent states) called for enhanced disclosure obligations, e.g., of the terms of the Litigation Funding Agreement. Such broad disclosure obligation could give insight into strategic considerations to fund a case (including its strengths and weaknesses as evaluated by the funder which can be expressed throughout the Litigation Funding Agreement). This can result in unfair and unreasonable advantages to the opposing party and should, therefore, be avoided.

Article 11 (7) of the new ICC rules takes a balanced approach reflecting the existing common practice by only requiring disclosure of the existence and identity of the funder. This reasonable approach combines the need for transparency with confidentiality and due process requirements. It should be well accepted amongst funders.

Other significant changes in the 2021 Rules can be summarized as follows:

Changes

Comment

Electronic communication and remote hearings
  • Obligation to supply hard copies of written submissions and other communications has been deleted from the 2021 Rules.
  • "In person" hearings can still be organized by the arbitral tribunal if (a) part(y)ies require so or on its own motion.
  • After consultation with the parties, the arbitral tribunal may decide to conduct remote hearings by appropriate means of communication.
Joinder and consolidation
  • The tribunal may decide on a joinder request even if the parties are not all in agreement.
  • Consolidation of arbitration proceedings stemming from more than one arbitration agreement is now possible.
Conflicts of interest
  • Disclosure of the identity and involvement of third-party funder.
  • The arbitral tribunal can exclude new party representatives from participating to the proceedings to avoid delaying tactics by parties which create a conflict of interest for an arbitrator by changing counsel.
Expanded scope of Expedite Procedure Expedited Procedure provisions apply if the amount in dispute does not exceed USD 3 mio and unless the parties have opted out. The previous threshold of USD 2 mio continues to apply if the arbitration agreement is entered into before 1 January 2021 (but on or after 1 March 2017).
Additional awards A party may apply for an additional award in the event that the arbitral tribunal omitted to decide on a certain claim raised during the proceedings

The updated rules show that the ICC International Court of Arbitration is effectively recognizing and implementing recent evolutions in the conduct of arbitral proceedings. The 2021 Rules will undoubtedly also be useful in inspiring further developments in other arbitration rules.

 

Mehdi Mellah

Written on January 13, 2021 by

Mehdi Mellah

Senior Legal Counsel

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