The ICC's new rules: late to the party, but welcome as tools to ensure efficient and fair process
Zoe O'Sullivan QC and Tim Benham-Mirando assess the key changes in the new ICC Arbitration Rules
The new ICC Arbitration Rules come into effect on 1 January 2021 for any arbitration registered after that date. The changes mainly relate to the thorny areas of third parties, conflicts of interest and the appointment of the arbitral tribunal.
There is always a tension between party autonomy and the need for the arbitral tribunal to exercise effective control over delaying or abusive tactics by a party. No arbitral rules can definitely resolve this tension. However, the new rules provide useful tools which recognise challenging new developments in arbitration practice.
Joinder and consolidation
Multi-party commercial disputes are very common, especially in the construction and energy fields. This means that joinder and consolidation are important tools to save costs and reduce the risk of inconsistent decisions. But the fact that the foundation of arbitration is consent throws up difficult problems where a party objects. The 2021 rules provide some assistance in resolving these problems but ultimately do not solve them.
Under the present rules, no additional party can be joined after the constitution of the tribunal unless all parties agree. Under the new Article 7(5), a tribunal may join a new party following a request from an existing party, provided that the new party accepts the constitution of the tribunal and agrees to the terms of reference. This means that a party can be joined even though one of the existing parties does not agree.
In deciding on a request for joinder, the arbitral tribunal is required to take into account “all relevant circumstances, which may include whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the request for joinder, possible conflicts of interests and the impact of the joinder on the arbitral procedure".
Under Article 10(b) of the present rules, consolidation is only possible where the claims in the two arbitrations were made under “the same arbitration agreement”, which requires a single umbrella arbitration agreement between all the parties. Article 10(c) of the 2021 Rules permits consolidation even where 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. The court can also take into account whether one or more of the same arbitrators has been appointed in more than one of the arbitrations.
The requirement of “compatibility” means that when dealing with situations where multiple contracts are involved, it is critical to ensure that the arbitration agreements are the same. The basics – including the seat, arbitral rules and number of arbitrators – should be identical. The draftsman should also consider the possibility of providing in advance for consent to consolidation or joinder.
Avoiding conflicts of interest
The 2021 rules introduce a new Article 11.7 which provides that parties are under an obligation to promptly disclose the identity of any funders. This is important to enable the tribunal members to identify any conflict arising out of a relationship between them and the funder. A practical result of such disclosures is a likely increase in applications for security for costs.
New Article 17(1) requires the parties to promptly give notice of any changes in their legal representation. Under new Article 17(2), the tribunal is given the power to “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. Tribunals will need to be astute to prevent this rule from being invoked for tactical reasons, particularly as it interferes with a party’s right to be represented by counsel of their choice. The new rule will spotlight the common practice in England of counsel from a barristers’ chambers appearing before a tribunal where a member is in the same chambers: this is regarded as not giving rise to any conflict, but parties from a different cultural background may take a different view.
Constitution of the tribunal
Under new Article 12.9, the ICC court is given power, in exceptional circumstances, to appoint each member of the tribunal itself, notwithstanding any agreement by the parties, “to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”. No particular examples are provided. Again, this risks trespassing on the cardinal principle of party autonomy and we suggest it will be rarely exercised in practice. Nonetheless, the existence of this default power is a valuable safeguard against abuse.
The ICC is late to the party. Many of the changes have already been implemented by other arbitral institutions such as the LCIA and SIAC. But given the continuing prominence of ICC arbitration, the changes are very welcome and provide useful tools to enable the parties and arbitral tribunals to ensure that the process is efficient and fair.
Zoe O’Sullivan QC and Tim Benham-Mirando, Serle Court