2021 Arbitration Rules, a very welcome gift from the ICC

On December 1, 2020 the ICC launched updated Rules of Arbitration (the “2021 Rules”), which will enter into force on January 1, 2021.[1]

As surveys show,[2] the ICC is the preferred arbitral institution worldwide and the ICC Rules, which provide parties a neutral framework for the resolution of cross-border disputes, are used all around the globe. As a result, beginning in January a great number of arbitral proceedings around the world will be affected by the new provisions introduced in the 2021 Rules.

Some of the 2021 changes reflect established practices of the Court, while others aim to increase the flexibility, efficiency, and transparency of ICC arbitration, as well as to resolve existing doubts about interpretation of certain rules. Among the main amendments, it is worth mentioning the following.

The current pandemic emergency has made it clear that the use of technology is crucial to continuity – even in unforeseen and extraordinary situations – of access to justice and conduct of litigation proceedings. Arbitral institutions in general and the ICC in particular have been able to react faster and more efficiently than state courts to the challenges imposed by the emergency thanks to their greater confidence in and familiarity with technological tools:[3] basically, arbitration has never stopped functioning in these troubled times.

The 2021 Rules build on this recent successful experience and work to render it a stable option and practice.

In this vein, and in a sign that the Court is embracing the call for “green” arbitration, Articles 3, 4, and 5 provide that all pleadings (including the Requests for Arbitration and the Answers), written communications, and notifications shall be transmitted by electronic means, i.e., without need to send hard copies, unless expressly requested by the parties. Under Article 26, after consulting the parties, the arbitral tribunal may decide that hearings can be held remotely by videoconference, telephone, or other appropriate means of communication.[4]

Important amendments regard the conduct of multi-party arbitrations:[5]

  • Article 7(5) entitles the arbitral tribunal to accept a request for joinder of additional parties even after the confirmation or appointment of the arbitrators, provided that the additional parties accept the constitution of the arbitral tribunal and agree to the Terms of Reference (where applicable);
  • Article 10(b) allows the Court to consolidate two or more arbitrations pending under the Rules into a single arbitration, where all of the claims in the arbitrations are made under the same arbitration agreement “or agreements” (thereby doing away with previous uncertainty as to whether “same arbitration agreement” encompassed identical arbitration agreements contained in different contracts); whereas revised Article 10(c) allows the Court to order consolidation when “the claims in the arbitrations are not made under the same arbitration agreement or agreements, but the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible”;
  • Article 12(9) introduces an additional safeguard for parties’ equality in the constitution of the arbitral tribunal by providing that the Court may appoint each member of the arbitral tribunal – “notwithstanding any agreement by the parties” – where the method of constitution in the arbitration agreement may pose a risk to the validity of the award.[6]

For the purpose of improving efficiency in the general conduct of proceedings, the 2021 Rules amend Article 22(2) by replacing the sentence “in order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate” with “the arbitral tribunal shall adopt,” thus expressing a duty rather than an option for the arbitral tribunal.

For the same purpose, on the one hand, the new Rules increase the scope of application of the Expedited Procedure (the streamlined procedure with a reduced scale of fees introduced in Article 30 and Appendix VI of the 2017 ICC Rules)[7] to include disputes with a value not exceeding US$ 3 million for arbitration agreements under the Rules concluded on or after January 1, 2021.[8] Of course, the Expedited Procedure continues to be available on an opt-in basis for higher-value cases.

And on the other hand, under the 2021 Rules the parties are encouraged (and not just informed of the possibility) to consider settlement of all or part of their dispute (see Appendix IV(h)(i)).

Furthermore, Article 36(3) introduces the right of the parties to apply for an additional award with respect to “claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide.

A number of amendments are specifically aimed at increasing the standards of independence and impartiality of arbitrators, as well as of transparency and avoidance of any conflict of interest: Article 11(7) requires the parties to disclose any third-party funding arrangements; under Article 17(2) the arbitral tribunal “may take any measure necessary to avoid a conflict of interest of an arbitrator arising from a change in party representation, including the exclusion of new party representatives from participating in whole or in part in the arbitral proceedings”; in investment arbitrations based on a treaty, pursuant to Article 13(6), unless the parties agree otherwise, no arbitrator shall have the same nationality of any party to the arbitration. Likewise, the need for greater transparency is reflected in the changes made to Appendices I and II concerning the composition and functioning of the Court.

The very early first impression is that the arbitration community seems to be unanimous in its satisfaction with the new Rules, insofar as they smooth over recurring interpretative doubts and further modernize arbitral proceedings, with a clear focus on the ongoing need for greater efficiency, flexibility, transparency, and equality. In the near future we will see whether those ambitious goals are achieved under the 2021 Rules.

[1] They will consequently apply to cases submitted from January 1, 2021 onward, whereas the cases submitted before will be governed by 2017 Arbitration Rules.

[2] See, for example, http://www.arbitration.qmul.ac.uk/media/arbitration/docs/2018-International-Arbitration-Survey—The-Evolution-of-International-Arbitration-(2).PDF.

[3] As early as April 9, 2020, the ICC published a “Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic” with the purpose of “ensuring that disputes will continue to be resolved on a fair, expeditious, and cost-effective basis. This Guidance Note: (I) recalls the procedural tools available to parties, counsel, and tribunals to mitigate the delays generated by the pandemic through greater efficiency, and (II) provides guidance concerning the organisation of conferences and hearings in light of COVID-19 considerations, including conducting such conferences and hearings by audioconference, videoconference, or other similar means of communication (“virtual hearing”)” (see para I of the Guidance Note, available at https://iccwbo.org/content/uploads/sites/3/2020/04/guidance-note-possible-measures-mitigating-effects-covid-19-english.pdf.

[4] Significantly, to avoid any future doubt, Article 25(2) (according to which “the arbitral tribunal shall hear the parties together in person if any of them so requests”) was deleted in the 2021 Rules. Indeed, this provision has been invoked in recent months by parties objecting to the conduct of virtual hearings to support the necessity of physical attendance.

[5] Of note, in 2019 multi-party arbitrations amounted to one third of total proceedings.

[6] This provision is expected to elicit criticism if read as a limitation on the right of the parties to appoint their own arbitrator. However, it is expressly limited to “exceptional circumstances” and is aimed at ensuring compliance with public policy and preserving the enforceability of the awards, in line with the well-established principle stated in the Dutco decision (French Cour de Cassation, January 7, 1992, BKMI et Siemens c. Dutco Construction), which says in part that “equality of the parties in the appointment of arbitrators is a matter of public policy which can be waived only after the dispute has arisen” and which had already inspired the introduction of Articles 12(6) and 12(8) in the 1998 ICC Rules.

[7] The Expedited Procedure has proved to meet the favor of arbitration users. The number of expedited procedures has quickly grown from 15 in 2017 to 89 in 2019 and, interestingly enough, in 47% of the cases the parties voluntarily opted-in to apply expedited procedure.

[8] For arbitration agreements concluded on or after March 1, 2017 and before January 1, 2021 the relevant threshold remains US$ 2 million.

Follow us on