The revised International Chamber of Commerce (ICC) 2021 Arbitration Rules have now come into force, applying to all ICC arbitrations commenced on or after 1 January 2021. The new rules are accompanied by a revised Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration (dated 1 January 2021) (the “Note to Parties”).
The ICC Rules 2021
The ICC Rules 2021 are not substantially different from the previous version of the ICC Rules (the ICC Rules 2017), but there are still a number of material changes which parties to ICC arbitration need be aware of. The key changes include the amendments made to the consolidation provision and also the changes to the joinder provisions, which allow joinder after the confirmation or appointment of a tribunal in certain limited circumstances. The new Rules make provision for virtual hearings and move away from paper filings and also allow the Tribunal to limit changes to party representation where this causes difficulties in terms of conflicts of interest. There is a new requirement for parties to disclose certain third party funding arrangements and the ICC Court now has the discretion in “exceptional circumstances” to appoint the entire tribunal to avoid unequal treatment.
We set out our detailed assessment of the impact of these and the other most significant changes to the Rules in our earlier blog post on the revisions.
The new Rules are also covered in our podcast: ICC Rules 2021 – what you need to know. The podcast can be listened to via SoundCloud, Spotify and iTunes.
The Note to Parties
In contrast, the Note to Parties has been significantly expanded, revised and updated to reflect the changes to the ICC Rules 2021 and to provide more extensive guidance on the application and interpretation of the ICC Rules more generally. In particular, there are a number of new sections to the note which expand on the guidance given previously in certain areas.
Sections I B and C of the note reflect the move towards electronic communication and submission. Paragraph 10 states that “As a general rule” the Request for Arbitration, the Answer and any counterclaims, and any Request for Joinder must be sent by email, with hard copies only where delivery against receipt, registered post or courier is required. Paragraph 11 confirms that the Secretariat will communicate via email.
New Section II of the Note to Parties (“Parties”) has been created from some existing content, but also contains significant new guidance as well. Section II B reflects changes to the Article 7(5) of the ICC Rules 2021 regarding Joinder, Section II C covers the small amendments to Article 10 regarding consolidation and Section II D covers the changes regarding disclosure of Third Party Funding. With respect to that disclosure, paragraph 21 is particularly interesting, confirming that “Article 11(7) would not normally capture (i) inter-company funding within a group of companies, (ii) fee arrangements between a party and its counsel, or (iii) an indirect interest, such as that of a bank having granted a loan to the parties in the ordinary course of its ongoing activities”.
There are also changes (set out in Section II, III and V of the note) regarding Arbitrator Independence and Impartiality and the conduct of participants more generally. Section II A covers the changes to the ICC Rule 2021 regarding changes to party representation that may affect an arbitrator’s independence and impartiality. Section III A also contains some amendments, including to paragraph 27 which now specifies that an arbitrator should consider relationships with non-parties “such as third-party funders as well as relationships with other members of the arbitral tribunal, as well as experts or witnesses in the case” when assessing whether a disclosure should be made. Section V includes a new paragraph 67 which requires that arbitrators shall “discharge their duties in accordance with the Rules, be at all times independent and impartial, avoid any behaviour that may create a conflict of interest, a bias or an appearance of bias, and not allow any consideration that is extraneous to the case to influence their decisions”. Parties and their representatives may also be interested to note that paragraph 67 (previously paragraph 48) now encourages them and arbitral tribunals to “adopt or otherwise be guided by the IBA Guidelines on Party Representation in International Arbitration” rather than the prior wording which suggested that they “draw inspiration from” those guidelines.
New Section III C provides additional and helpful guidance on how the ICC will constitute an Arbitral Tribunal. Paragraph 40 clarifies that, where the parties have not agreed upon the number of arbitrators “the Court will normally decide in favour of a sole arbitrator where the amount in dispute is less than US$ 10,000,000 and in favour of three arbitrators where the amount in dispute exceeds US$ 30,000,000”. Paragraphs 42 and 43 provide guidance on the somewhat opaque drafting in Articles 12(8) and new 12(9) as to when the ICC will appoint the entire arbitral tribunal in the absence of a joint nomination, or the exceptional circumstances in which the ICC Court may do so where the party agreed mechanism may result in a significant risk of unequal treatment or unfairness.
A number of the changes to the Note to Parties reflect the ICC’s move towards greater transparency. There is a new Section IV called “Transparency”, drawn from Section III of the 2019 Note to Parties, but with significant additions. This section first addresses the communication of reasons for the Court’s Decisions and the publication of information and materials from ICC arbitrations. Section IV B confirms that the Court will publish (from 1 January 2020) the law firms (where previously it was “counsel”) representing parties in the case and (from 1 July 2021 for arbitrations registered as of 1 January 2021) the names of administrative secretaries. Section IV C also expands the material that the ICC may publish from an ICC Arbitration to cover “ICC Awards and/or orders, as well as any dissenting and/or concurring opinions made as of I January 2019”. However, this section also sets out greater clarity regarding when such material will not be published due to confidentiality. Importantly, this also includes the ability of any individual or entity to tell the Secretariat that it does not wish, as a general policy, any ICC award and related documents to which it is a party to be published, in which case none of these awards or decisions will be published. This may be of particular interest to clients who are frequent users of ICC arbitration.
In recognition of the ongoing realities of holding hearings during the current pandemic, the Note to Parties includes a new Section VII C entitled “Virtual Hearings”. This new section is a fairly lengthy addition. It provides guidance to arbitrators on how to decide whether a virtual or hybrid hearing is appropriate and factors to be taken into account in proceeding with such a hearing without party agreement. Paragraphs 101-108 raise the need for a cyber-protocol for data privacy, suggest considerations for organising a virtual hearing, flag the ICC’s materials on these issues and also discuss the platforms that can be used for holding virtual hearings and sharing documents virtually.
Other interesting additions or changes to the Note to Parties include:
·An addition (set out in Section VII B at paragraph 93) confirming that “the arbitral tribunal may encourage the parties to consider settling all or part of their disputes. either by negotiation or through any form of amicable dispute resolution method, such as mediation under the ICC Mediation Rules”.
·Section III A, new paragraph 35, encourages arbitrators to ensure they have appropriate insurance to cover their liability.
·Section VII E reinforces the importance of data protection and privacy, with new paragraph 121 specifying more clearly the obligations upon the tribunal, parties and representatives to “put in place and ensure that all those acting on their behalf put in place appropriate technical and organisational measures to ensure a reasonable level of security appropriate to the arbitration” before setting out various factors that may affect that level of security.
·Changes to the note to reflect the administrative changes to the ICC processes, particularly the creation of various Committees and Special Committees at various steps, including the scrutiny of ICC Awards.
·Amendments to the section “Treaty-based Arbitrations” (now at section XII) to reflect the small changes to the Rules, including the non-availability of the Emergency Arbitrator provisions.
·New Section XVIII to address the potential for “additional awards” to address claims which an arbitral tribunal has omitted to decide in another Award.
New Section XXIII covering VAT payable on ICC Administrative Expenses.