Key Changes To The New ICC Arbitration Rules: What’s Coming In 2021?

The International Chamber of Commerce (ICC) is one of the world’s leading dispute resolution institutions. In 2019 alone, the ICC registered a record-high 869 new cases involving parties from 147 different states. The ICC regularly revises and updates its Rules in order to respond to new trends in arbitration practice.

On 6 October 2020, the ICC Executive Committee approved the new version of ICC Arbitration Rules which will enter into force on January 1, 2021. The new Rules —whose text is subject to editorial changes until their official launch in December— will apply to cases registered with the ICC International Court of Arbitration after that date, unless otherwise provided for in the arbitration agreement.

As highlighted by the ICC President Alexis Mourre, this revision “marks a further step towards greater efficiency, flexibility and transparency of the Rules, making ICC Arbitration even more attractive, both for large, complex arbitrations and for smaller cases.” This same purpose has also guided the previous update of the Rules in 2017 and other important modifications introduced by ICC, such as publishing on its website the names and nationalities of the arbitrators appointed in the ICC arbitrations.     

Below, we summarize the main changes that will be introduced in the 2021 ICC Rules.

 

• Virtual Hearings. In response to modern arbitration practice (particularly during the COVID-19 pandemic), the 2021 Rules incorporated significant modifications on the use of technology, following the trend of other institutions such as the LCIA. Article 26(1) governing arbitral hearings has been almost completely revised, and now provides that the arbitral tribunal may decide that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication, after consulting the parties, and on the basis of the relevant facts and circumstances of the case.

 

• Electronic communications. The 2021 Rules removed the requirement that all pleadings and communications be submitted in paper form and in multiple copies for each party, arbitrator and the ICC Secretariat. Instead, the new wording of Article 3(1) provides that submissions and communications must be “sent” to each party, arbitrator and the Secretariat, and that any notice or communication from the tribunal must also be sent in copy to the Secretariat. As a result, Article 4 (Request for Arbitration), Article 5 (Answer to the Request for Arbitration), and Article 1 of the Emergency Arbitration Rules have also been amended. Thus, as of 2021, it will be up to the parties to decide whether to request the transmission of the Request for Arbitration, the Answer to the Request for Arbitration, or the Application for Emergency Measures by delivery against receipt, certified mail, or courier service, in which case they must submit a sufficient number of paper copies.

 

• Joinder of Additional Parties. In its 2012 version, the ICC Rules introduced innovative solutions for multi-contract and multi-party arbitrations. The 2021 Rules retained these provisions, although with important changes that —according to the ICC— will make the Rules “even more suitable for complex, high-value, multi-party and multi-contract arbitrations.” Under the previous version of the Rules, no additional party could be joined after the confirmation or appointment of any arbitrator, unless all parties, including the additional party, otherwise agree. The new Article 7(5) incorporated in the 2021 Rules provides greater flexibility in this regard by allowing the arbitral tribunal to admit a Request for Joinder of additional parties even after it is constituted, subject to the additional party accepting the constitution of the arbitral tribunal and agreeing to the Terms of Reference, where applicable. In its decision, the arbitral tribunal will take into account all relevant circumstances, including whether it has prima facie jurisdiction over the additional party and the timing of the Request for Joinder.

 

• Consolidation of Arbitrations. In addition, Article 10(b) of the 2021 Rules now expressly permits consolidation of arbitrations where one or more of those cases derives from different arbitration agreements, provided that the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the ICC Court finds the arbitration agreements to be compatible. Thus, the Rules appear to resolve an issue that was open in the 2017 version.

 

• Third party funding. Article 11(7) of the 2021 Rules inserts an important provision regarding conflicts of interest of the arbitral tribunal. In order to assist prospective arbitrators and current arbitrators in complying with their disclosure duties under Articles 11(2) and 11(3) of the Rules, each party 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 defenses and under which it has an economic interest in the outcome of the arbitration. Although this is a regulation that will be incorporated into the 2021 Rules, it reflects the position that the ICC had previously held in its Note to the Parties and the Arbitral Tribunal on the Conduct of the Arbitration, which provides that in their disclosures the arbitrators must consider the “relationships with any entity having a direct economic interest in the dispute” (paragraph 28).

 

• Provisions regarding the Constitution of the Arbitral Tribunal. The 2021 Rules incorporate a new provision in Article 12(9) under which, “in exceptional circumstances,” the ICC Court may disregard the parties’ agreement on the method of constituting the arbitral tribunal and directly appoint each member of the arbitral tribunal. Under the new Rules, this power could be applied to avoid a significant risk of “unequal treatment and unfairness that may affect the validity of the award.”

 

• Party Representation. The 2021 Rules also bring about changes regarding party representation in the arbitration. The new Article 17(1) of the Rules provides that each party must promptly inform the Secretariat, the arbitral tribunal and the other parties of any changes in its representation. In the event that a conflict of interest of an arbitrator arises from a change in party representation, Article 17(2) allows the arbitral tribunal to take any measure necessary to avoid such conflict of interest (including the exclusion of new party representatives), after it has afforded an opportunity to the parties to comment in writing within a suitable period of time.

 

• Value in dispute for the Expedited Procedure Rules to apply. The 2021 Rules increased the limit of the amount in dispute for the application of the Rules of Expedited Procedure from USD 2,000,000 to USD 3,000,000 for arbitration agreements entered into on or after January 1, 2021. This type of arbitration —introduced through the 2017 revision of the Rules— provides for a series of measures aimed at speeding up the process and reducing costs, such as the appointment of a sole arbitrator, the reduction of the time period for the issuance of the award or the power of the tribunal to decide the dispute solely on the basis of the documents submitted by the parties, without an evidentiary hearing. This change may increase the number of arbitrations that will be processed under this procedure.

 

• Treaty-based arbitrations. For the first time, the ICC Rules incorporate in their 2021 version provisions specifically aimed at regulating investor-state arbitrations, in response to the increasing use of the ICC in such disputes. Article 13(6) provides that, in an investment arbitration, no arbitrator may have the same nationality as either party. In addition, Article 29(6)(c) excludes the application of the Emergency Arbitrator Provisions in these cases.

 

Although the ICC Rules that will enter into force in 2021 do not represent a radical change with respect to their previous version, they introduce several relevant changes that seek to reflect current trends in arbitration practice and will have a significant impact on arbitrations administered under this institution.