The new ICC Arbitration Rules: promoting a modern view of international arbitration

On 12 September 2011, the International Chamber of Commerce (ICC) officially unveiled its new Arbitration Rules (the "2012 Rules"), which come into force on 1 January 2012 . They will apply to any arbitration commenced after that date, unless otherwise agreed by the parties. The first edition of the ICC Rules was published in 1922. Three major revisions occurred in 1955, 1975 and in 1998. Work on this latest revision of the ICC Rules began in 2008 with a task force made up of 200 arbitration professionals and users from 41 different countries, including a smaller drafting sub-committee of up to 20 members from different countries and backgrounds. Justin D'Agostino and Jessica Fei provide an overview of key features and some observations below

Overview of the changes

Overall, the revisions have made the ICC Rules easier to read and more user-friendly. The 2012 Rules contain many changes which clarify but do not modify the substance of the Rules. The text of a number of articles has been made longer and more detailed, and new cross-references have been added.

The changes also add transparency to the ICC process by clarifying the practice of the ICC International Court of Arbitration (the "ICC Court"). In the same spirit, the ICC has announced the forthcoming publication in the spring of 2012 of a guide to the practice of the ICC Secretariat.

In this update, we focus on some innovative changes to the ICC Rules which: (1) aim to make the arbitration process less costly and more efficient; (2) create an Emergency Arbitrator procedure to provide interim and conservatory relief prior to the constitution of the arbitral tribunal; and (3) improve the handling of complex disputes (multi-party and multi-contract disputes and disputes involving states and state entities).

Saving time and costs in ICC arbitration

The 2012 Rules contain several new or improved case management provisions, intended to make ICC arbitration quicker and more cost-effective. Examples of such new provisions include:

• Additional information in the Request for Arbitration and the Answer. Articles 4 and 5(5) set out the information that must be included in these documents, such as the legal basis and value of the claims made. These provisions have been made more detailed in terms of the information that must be provided. This is intended to allow the parties to make better informed decisions about the dispute and its management from the outset, increasing the efficiency of the proceedings and potentially the odds of settlement.
•  Jurisdictional challenges to be referred directly to the arbitral tribunal. Under the current Rules, where a party raises a jurisdictional challenge, the ICC Court makes an initial decision on the challenge. The new Article 6(3) provides that such challenges will generally now be dealt with by the arbitral tribunal directly.
• Faster appointment of arbitrators. To avoid delays in the appointment process, particularly in disputes involving states and state entities, Articles 13 (3) and 13(4) of the 2012 Rules give extended powers to the ICC Court. In certain circumstances, the ICC Court may now appoint arbitrators directly, without reference to National Committees. This revision responded to some states' reservations about the role of National Committees, which are sometimes viewed as favouring the interests of the private sector in the appointment process.
• Both the parties and the arbitral tribunal are obligated to make every effort to conduct the arbitration in an expeditious and cost-effective manner. Article 22(1) sets out this general obligation, with other provisions outlining specific means for achieving it, including:
  1. Case management tools. Articles 24(1) and 24(3) provide that the arbitral tribunal shall convene at the outset a case management conference to consult the parties on procedural measures. A case management conference may be convened again at any time during the arbitration to "ensure continued effective case management". Appendix IV provides a menu of possible time and cost saving measures that may be adopted.
  2. Incentives for arbitrators to render an award faster. Under Article 27, the arbitral tribunal shall declare the proceedings closed "as soon as possible after the last hearing concerning matters to be decided in an award or the filing of the last authorized submissions concerning such matters". The tribunal must then inform the Secretariat and the parties of the date on which it expects to submit its draft award to the Court. It is expected that the Secretariat will monitor compliance with this self-imposed deadline and contact arbitral tribunals where it is exceeded. Further, when fixing the arbitrators' fees, the ICC Court will take into account, among other things, the "diligence and efficiency" of the arbitrator and the timeliness of the submission of the draft award (Article 2(2), Appendix III).
  3. Incentives for parties to conduct the arbitration in an "expeditious and cost-effective manner". Under Article 37(5), tribunals may take into account the extent to which each party has complied with this obligation when awarding costs.
  4. Electronic case management. Recognising the increasing role of technology in arbitration and its potential to drive efficient case management, Article 3(2) makes explicit reference for the first time to the use of email by the Secretariat and tribunals.

The appointment of an "Emergency Arbitrator" for urgent interim or conservatory measures.

Article 29 provides for the appointment of an Emergency Arbitrator to issue orders concerning interim or conservatory measures "that cannot await the constitution of an arbitral tribunal". This is a new procedure which represents a significant development in ICC arbitration. The main features of this procedure are:

•  Available up until the constitution of the arbitral tribunal – and even before the filing of a Request for Arbitration (unlike the emergency arbitrator regimes of some other institutions, which can only be invoked after a notice of arbitration has been filed). The new provisions are intended to deal with urgent situations that cannot await the constitution of the arbitral tribunal. If the application is made before a Request for Arbitration is filed, the applicant must file a Request within 10 days, failing which the Emergency Arbitrator proceedings will be terminated.
• An opt-out provision. The procedure is applicable whenever the parties agree to arbitration under the ICC Rules, unless the parties have agreed otherwise. However, given the substantial change that it introduces, the procedure will be applicable only to arbitration agreements concluded after 1 January 2012. To avoid any conflicts it is also specified that, if the parties have agreed to some other pre-arbitral procedure for seeking interim or similar measures, the Emergency Arbitrator provisions shall not apply.
• Open only to signatories or successors to signatories of the arbitration agreement. This restriction is intended to prevent Emergency Arbitrator proceedings from being brought against third parties who are not party to the arbitration agreement, and it is likely that investment treaty arbitrations will therefore typically fall outside the scope of the Emergency Arbitrator provisions.
• Short deadlines. Articles 2(1) and 6(4) of Appendix V set out short deadlines which are consistent with the urgent nature of the emergency proceedings. The Emergency Arbitrator should be appointed by the President of the ICC Court no later than 2 days from the application (Article 2(1)); and the Emergency Arbitrator must make an order no later than 15 days following receipt of the file (although this time limit may be extended in some circumstances) (Article 6(4)).
• Order, not award. The Emergency Arbitrator's decision will take the form of an order and not of an award. The "parties undertake to comply with" the order. The arbitral tribunal thereafter appointed will have the power to modify, terminate or annul the order and to decide upon any claims relating to noncompliance (or compliance) with it, including by making costs orders. The enforceability of the Emergency Arbitrator's order will depend upon the provisions of relevant national laws.
• Applications to state courts still available. Article 29(7) makes clear that the recourse to an Emergency Arbitrator does not prevent applications for urgent measures from being made to the state courts.

Dealing with the growing complexity and diversity of disputes

Over recent years, the ICC Court and arbitrators have dealt with issues arising out of increasingly complex arbitration disputes, in particular joinder and consolidation as well as multi-party and multi-contract arbitrations. The 2012 Rules introduce new provisions to deal with these issues. These provisions largely codify the practice that the Court has developed over time. The new provisions have also taken into account the growing number of disputes involving States. These revisions include:

• Joinder of additional parties. Under Article 7 of the 2012 Rules, a party that wishes to join an additional party to an arbitration must file a Request for Joinder against that additional party with the ICC Secretariat. However, there is no provision allowing a third party to initiate this process to ask to be joined to a pending arbitration (commonly known as "intervention"). Joinder is not available after confirmation or appointment of any arbitrator, unless all the parties (including the party to be joined) agree, and will be subject to the ability of the arbitral tribunal to ultimately determine whether or not it has jurisdiction to hear the dispute insofar as it applies to the joined party.
• Claims between multiple parties. In arbitrations with multiple parties (i.e. more than two), any party can make claims against any other party – Article 8 provides no limitation on cross-claims or counterclaims, provided they are not made after the Terms of Reference.
• Advances on costs. New provisions have also been added to allow the ICC Court to determine the most fair and appropriate manner of fixing and allocating advances on costs in complex multi-party arbitrations.
• Multiple contracts. Under Article 9, claims arising out of more than one contract can be made in a single arbitration, provided that the Court is satisfied that (i) the arbitration agreements may be compatible, and (ii) all the parties may have agreed that those claims can be determined together in a single arbitration (subject, again, to the ability of the arbitral tribunal to ultimately determine its own jurisdiction).
• Consolidation. Under Article 10, at the request of a party, the Court may consolidate two or more pending arbitrations into a single proceeding, provided that: (i) the parties have agreed to consolidation; or (ii) all of the claims are made under the same arbitration agreement; or (iii) the arbitrations are between the same parties, the disputes arise from the same "legal relationship" and the Court finds the arbitration agreements to be "compatible". When arbitrations are consolidated, they will be consolidated into the arbitration that commenced first (unless the parties agree otherwise).
• Promoting ICC arbitration involving states and state entities. The ICC has long dealt with disputes involving states and state entities but the 2012 Rules make a particular effort to promote its ability to administer such disputes. For example, Article 1 now refers to "disputes", rather than "business disputes", and as already noted above, Article 13(4) enables the ICC Court to appoint arbitrators without going through National Committees in disputes involves states or state entities.
• Avoiding hybrid clauses. Article 1(2) makes clear that the Court alone is empowered to administer arbitration under the ICC Rules and to scrutinize awards. This is intended to discourage the use of "hybrid clauses" in which parties seek to have arbitration conducted pursuant to the ICC Rules but administered by another institution.

In summary, the 2012 Rules codify existing practice in several areas, while adding a number of innovative features intended to address the growing complexity of today's disputes, the particular features of disputes involving states, and demands for greater speed and cost-efficiency.

Please note that this briefing is unable to address all changes made in the 2012 Rules. Should you wish to discuss any of the issues outlined above, or if you have any questions, please contact our Justin D'Agostino or Jessica Fei from our international arbitration team for more details.