Modernised arbitration rules will offer greater efficiency and effectiveness of arbitration
Recent months have seen rule changes at the two most popular commercial arbitration institutions, with the introduction of the LCIA Arbitration Rules (2020) in October last year and the ICC 2021 Arbitration Rules from 1 January, with others like the Singapore International Arbitration Centre (SIAC) expected to revise their rules during 2021.
The changes relate to greater use of technology, virtual hearings, the dismissal of claims found to have no merit and consolidation and joinder.
Arbitration rules changes champion modernisation and virtual hearing flexibility
The updated rules of both the LCIA and ICC provide for greater use of technology and expressly permit virtual hearings, reflecting the enforced changes as a result of the Covid-19 pandemic as well as longer-term modernisation efforts and concern for the environmental impact of arbitration.
While the 2014 iteration of the LCIA rules allowed arbitrators full powers to determine the conduct of the hearing, the updated rules expressly provide that a hearing may take place virtually (Article 19(2)). The 2020 rules also provide for electronic delivery as the default means of all communications in relation to the arbitration, including the Request for Arbitration and Response (Articles 4.1 and 4.2).
The updated ICC rules provide that hearings may take place virtually (Article 26.1). In a similar vein to the updated LCIA rules, the ICC rules introduce the presumption that pleadings and written communications will be provided electronically (Articles 3.1).
New powers to dismiss claims without full hearing
In perhaps the most noteworthy update of the LCIA rules, Article 22.1(viii) provides that claims or defences may be dismissed if they are “manifestly without merit”. While this appears to be a higher threshold than the test for summary judgment under the English Civil Procedure Rules, the new rule makes clear that arbitral tribunals may dismiss claims without the need for a full trial. This should allay concerns around the perceived lack of effective controls on weak or even frivolous claims and defences.
Consolidation and joinder simplified
The updated LCIA rules allow the Tribunal to order consolidation (Article 22.7(ii)) or the concurrent conduct (Article 22.7(iii)) of arbitrations “commenced under the same arbitration agreement or any compatible arbitration agreement(s) and either between the same disputing parties or arising out of the same transaction or series of related transactions”. The rules also now provide for composite Requests for Arbitration and responses (Articles 1.2 and 2.2).
The updated ICC rules simplify the joinder process, providing that an additional party may be joined to an arbitration after confirmation or appointment of the tribunal and without requiring the consent of all the arbitrating parties (Article 7.5). The ICC rules also clarify that arbitrations commenced under multiple contracts containing the same arbitration clause may be consolidated (Article 10(b)) and provide that arbitrations under separate arbitration agreements may be consolidated where the arbitration agreements are “compatible” (Article 10(c)).
Increased powers to improve efficiency
The LCIA rules grant the tribunal increased powers to improve the efficiency of arbitral proceedings, including by limiting the length of submissions and written and oral testimony, employing technology to enhance efficiency, dispensing with a hearing where appropriate and shortening time periods (Articles 14.5 and 14.6). The rules also aim to shorten the time taken to produce awards by providing that the tribunal will endeavour to render its final award within three months (Article 15.10).
The ICC rules include a duty upon the tribunal to manage the process efficiently (Article 22(2)). As above, the joinder and consolidations requirements have ben relaxed, while the threshold for the expedited procedure has been increased from USD2 million to USD3 million (Appendix VI, Article 1(2)).
This article is part of the International Arbitration Review.