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New ICC Arbitration Rules
On 1 January 2012 the ICC's updated Arbitration Rules ("the 2012 Rules") came into force. All agreements made on or after 1 January 2012 which select ICC arbitration as the dispute resolution mechanism will be bound by the new version of these rules.
Overview
The ICC is keen to promote itself as a modern organisation, with rules and procedures to match. The 2012 Rules recast the arbitration process not just as one rigid regime, but rather as a modern flexible procedure within which parties can adopt measures uniquely suited to each dispute. The key examples of these changes are to be found in the measures promoting active case management and flexibility in procedure, including the new Appendix IV - Case Management Techniques. In addition, the ICC's ADR Rules are specifically included as a further supplement.
Despite these changes and additions to the rules, the essential character and structure of ICC arbitration remains the same. Some changes reflect practices already adopted by the Secretariat, and many of the new options will still depend on the agreement of the parties to vary the standard procedure. Nevertheless, this is a welcome and decisive step forward by the ICC to update its processes and keep in tune with the needs of the businesses its serves.
Set out below are some of the key changes in the 2012
Rules:
1. The role of the ICC Court (Article 1)
The 2012 Rules confirm that the ICC Court does not itself resolve disputes, but rather administers the resolution of disputes by arbitral tribunals. The 2012 Rules remove the reference to the international nature of disputes. This reflects industry practice that ICC arbitration is used for the resolution of disputes between nationals of same state, and also removes any bar to investment treaty claims being resolved under the 2012 Rules.
The 2012 Rules add that the ICC Court is the only body authorized to administer arbitrations under the rules, including the scrutiny and approval of awards. This is to avoid situations where parties seek to resolve a dispute under ICC Rules but under the administration of another body, or under an ad hoc arrangement.
2. Jurisdiction challenges screening process (Article 6)
The 2012 Rules set out that any question of jurisdiction to conduct the arbitration will be determined by the arbitral tribunal. The role of the ICC Court in this regard, which previously gave prima facie decisions on the existence of arbitration agreements, is now confined to only those cases referred by the Secretary General to the ICC Court for determination.
The ICC's own figures show that in the last five years about one third of cases faced a jurisdictional challenge but only 4% of these challenges were upheld. Irrespective of the outcome, all one third faced delay and this change seems designed to attempt to streamline the system by using the existing tribunal. The Secretary General will continue to refer a number of cases to the ICC Court in order to screen how the challenges are being dealt with.
3. Appointment of Arbitrators (Articles 11 & 13)
The 1998 Rules only required arbitrators to be independent of the parties (old Article 7). The 2012 Rules add the requirement that arbitrators also be impartial. This brings the ICC position in line with general practice (the UNCITRAL Model Law on Arbitration and IBA Guideline of Conflicts of Interest in International Arbitration) and the provision of most other arbitration institutions.
The 2012 Rules widen the scope of the ICC Court to directly appoint arbitrators in a variety of situations. The ICC Court will continue to seek the proposal of the appropriate National Committee of the ICC but if it does not accept the proposal, in addition to seeking a further proposal, it may also appoint directly a person it regards as suitable. The ICC Court may also directly appoint an arbitrator where one or more of the parties is a state or claims to be a state entity.
4. Active Case Management And Flexible Proceedings
The 2012 Rules contain several updates and additions to seek to produce efficient and cost-effective proceedings, including the following:
- Article 22 explicitly requires the tribunal and the parties to make every effort to conduct the proceedings in an efficient and cost-effective manner.
- The detail required in the Request for Arbitration has been increased to include not just the description of the claim but its basis, and an estimate of the value of the claims. The detail required in the Answer mirrors this (Articles 4 & 5).
- In consultation with the parties, the tribunal is encouraged to adopt appropriate procedural measures to achieve this - Appendix IV includes approved case management techniques and refers to the ICC's own publication "Techniques for Controlling Time and Costs in Arbitration".
- Case management conferences are encouraged, in order to regularly monitor and tailor the proceedings in the best way, and the tribunal is specifically authorised to take the parties' conduct into consideration when determining costs.
The 2012 Rules also contain new provisions to deal with multiple parties or contracts (Articles 7 to 10). The rules on consolidation are widened to allow the ICC Court to consolidate two or more arbitrations where all parties agree, and the claims arise under the same arbitration agreement or the different agreements are compatible. In addition, before the tribunal is formed, a party can apply to the Secretariat to join an additional party; after this point, this is only possible if all the parties (including the additional party) agree. Further provisions allow for any party to make a claim against any other party in the arbitration, and for claims arising out of more than one contract to be made in a single arbitration.
5. Timescale for award (Article 27)
The 2012 Rules maintain the basic time limit of six months for a tribunal to produce an award, although the tribunal must now give a "date" (not an "approximate date", as in the 1998 Rules) by which it expects to publish the award. This obligation on the tribunal should provide the parties with a more realistic estimate of when the award will be published.
6. Emergency Arbitrator (Article 29 & Appendix V)
An Emergency Arbitrator may by appointed at the request of a party seeking urgent interim or conservatory relief, where that party cannot await the constitution of the arbitral tribunal. However, any decision of the Emergency Arbitrator shall not bind the arbitration tribunal in respect of any question, issue or dispute, and the tribunal shall determine the effects of non-compliance with an order of the Emergency Arbitrator.
Appendix V of the 2012 Rules sets out the Emergency Arbitrator Rules. An application for "emergency measures" must be received before the transmission of the file to the tribunal and can be made before the Request is filed. The requesting party must pay an upfront amount of US$40,000 to the ICC Secretariat as a deposit on the ICC's administrative expenses and the fees and expenses of the Emergency Arbitrator. The Emergency Arbitrator Rules do not apply to arbitration agreements signed before the entry into force of the new Rules, or where the parties have agreed to opt out of them, or where the parties have agreed to another pre-arbitral procedure for such measures.
For further information on the above please contact James Lewis, Senior Associate, in the Dispute Resolution Law Group at Field Fisher Waterhouse LLP.