The 2021 Rules, bolstered by new practices arising from the global lockdowns, provide welcome additions that crystallise set practices to an already efficient set of rules. Announcing the amendments in October 2020, ICC President Alexis Mourre said that they mark a further step towards greater efficiency, flexibility and transparency, making ICC arbitration even more attractive, both for large, complex arbitrations and for smaller cases. We focus in this article on the first point raised by President Mourre: efficiency.
Maximising the efficiency of arbitration proceedings was a central theme when we published our arbitration survey with Queen Mary University of London (QMUL) in November 2019 (the “Survey”). Here, we examine where the 2021 Rules have sought to promote efficiency of ICC arbitration, comparing these developments with the findings of the Survey.
The Survey showed parties' concerns over lower value disputes: a staggering 43% of in-house counsel considered that the minimum value in dispute to make claims commercially worth pursuing through arbitration was between US$11m and $25m. This highlighted the need for greater efficiency if arbitration is to be more accessible for low value disputes.
The 2021 Rules expand the scope of application of expedited arbitration provisions in light of the success encountered by the ICC with this accelerated procedure. The monetary threshold allowing parties to opt out from the procedure has been raised from US$2m to US$3m. This brings the ICC's threshold more in line with that of the Hong Kong International Arbitration Centre (HKIAC) (US$3m) and the Singapore International Arbitration Centre (SIAC) (US$4m).
However, in light of the Survey results, it is worth querying whether the ICC should have been bolder and pushed this figure up to US$10m. After all, the ICC Rules provide an important safeguard in case the expedited procedure no longer appears to be appropriate: the ICC Court may intervene at any time during the proceedings to reinstate the default ICC Rules (Article 30(3)(c) of the Rules and Article 1(4) of Appendix VI).
With this safeguard in mind, another option would have been to create a stricter regime for expedited proceedings, excluding the possibility of document production and/or hearings. It is indeed worth querying whether the cost of a full-blown document production phase can ever be justified in an arbitration with less than US$3m in dispute.
Of course, arbitral tribunals and parties have a role to play in promoting efficiency. In a recent low value arbitration, we successfully requested that if a document production were to take place, this should be based on a 'limited' Redfern schedule with only three columns: (i) the documents requested; (ii) objections; and (iii) the arbitrator's decision. This allowed us to streamline what turned out to be a very short document production phase.
Recognising the increasing use of technology
In the Survey (carried out prior to the global lockdowns), the topic of embracing technology to make arbitration more efficient was, at the time, a secondary topic. While many respondents to the Survey considered that the organisation of hearings was one of the areas which offered the greatest potential for improvement of the arbitral process, and despite the increasing calls for 'greener' arbitrations, the conduct of remote hearings was not central to the discussion of how hearings could be made more efficient. The debate on the impact of technology was very much centred on what artificial intelligence and technological automation could bring to the management of evidence.
The ICC issued prompt guidance on possible measures aimed at mitigating the effects of the Covid-19 pandemic in April 2020. However, there remained aspects of the 2017 Rules which arguably required hearings to be held in person. Article 26.1 of the 2021 Rules now expressly provides 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".
It is now clear that any hearing may be held remotely, even if one party objects to this. As the new provision makes clear, the tribunal will exercise its discretion after consulting and carefully considering any party's objections to ensure that all parties have the opportunity to properly present their case.
It is now clear that any hearing may be held remotely, even if one party objects to this. As the new provision makes clear, the tribunal will exercise its discretion after consulting and carefully considering any party's objections to ensure that all parties have the opportunity to properly present their case.
The 2021 Rules also shift away from the presumption that pleadings and other written communications should be submitted in multiple hardcopy sets for each party, arbitrator and the ICC Secretariat. Article 3.1 of the 2021 Rules provides for pleadings and written communications to be "sent" to each party, arbitrator and the ICC Secretariat, with all communications from the tribunal to the parties also "sent in copy" to the Secretariat. Drafted in broader and more permissive terms than the 2017 edition of the Rules, the 2021 Rules make clear that it is no longer necessary to provide hard copies unless the submitting party expressly requests it. This change brings the Rules into line with ICC practice which, due to the Covid-19 pandemic, has meant that Requests for Arbitration and applications for Emergency Arbitrations could only be filed by email since March 2020.
In our experience since the March lockdowns, there can be no doubt that remote hearings represent a substantive increase in efficiency of proceedings. In a large ICC arbitration, the parties and tribunal agreed to hold no less than three hearings in just as many months to discuss preliminary issues of jurisdiction, case management etc. Even though this was Covid-induced, it was clear that in the pre-Covid world it would have been much more difficult, if not impossible to organise these hearings - and the cost would have been much higher.
When asked to identify possible cases leading to inefficiencies in the arbitral process, 26% of respondents to the Survey attributed inefficiency to cases involving multiple parties - for example, where there was a disagreement between a joint venture as to arbitral strategy.
The 2021 Rules facilitate efficiency in complex proceedings from the very outset through additional provisions that streamline the commencement of arbitration proceedings. A new article 7(5) no longer requires all parties to provide their consent to joinder. A request for joinder of a third party can now be made after the confirmation or appointment of the tribunal, provided the additional party accepts the constitution of the tribunal and agrees to the Terms of Reference. In short, a respondent can now join a willing co-respondent without the consent of the claimant. The management of the joinder of third parties during the course of proceedings is likely to result in reduced costs and minimise the delay usually associated with joinders.
During a global launch event on 1 December 2020, ICC president Alexis Mourre said that this provision is likely to be particularly useful in the context of multi-party and complex multi-contract disputes, where a party who should have been included in the arbitration at the outset was excluded for whatever reason. The amendment gives the tribunal the power to efficiently address this scenario. In light of the increasing complexity of cases submitted to the ICC, the ICC predicts that this new power is likely to be frequently used in international construction disputes.
New articles 36(2) and 36(3) introduce the power of the tribunal to issue additional awards on claims that were raised during the course of the arbitration but which the tribunal failed to decide. The applicant must request an additional award within 30 days of receipt of the award. This provision goes beyond previous iterations of the Rules, which only provided for corrections and interpretation of existing awards.
The impact on efficiency is clear. First, this will help avoid the filing of a new arbitration to decide such claims. Second, instead of turning to the courts to challenge an award on the basis of 'infra petita' – where the tribunal rendered an award which omitted to decide over certain issues – the aggrieved party can simply request the same tribunal to issue an additional award.
This change to the ICC Rules is a welcome addition. This is especially so as the main reason given by respondents to our survey for choosing international arbitration over litigation was to avoid national courts.
Ahead of their entry into force, the ICC will release an updated version of its Note to Parties and Arbitral Tribunals on the Conduct of Arbitration, last amended in January 2019. A welcome next step would be an updated version of the ICC Secretariat's Guide to ICC Arbitration, as this provided extremely useful guidance on the 2012 ICC Rules.
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