ICC Adapts to the “New Normal” with 2021 Rules of Arbitration
The International Chamber of Commerce (“ICC”) has introduced new rules for arbitration (the “2021 Rules”) that will apply to cases filed from January 1, 2021 onward. The 2021 Rules respond to the global pandemic by modernizing procedures and increasing the role of technology.
The previous arbitration rules came into force on March 1, 2017 (the “2017 Rules”) and will continue to apply to cases registered before January 1, 2021.
Overview of Key Changes in the 2021 Rules
(a) Increased Use of Technology
The 2021 Rules represent a continuing effort by the ICC to remain responsive to the needs of international arbitration stakeholders in an unprecedented and ever evolving dispute resolution landscape.
Technology has always been important in international arbitration, given the global context. Arbitration was already ahead of traditional court processes in its adoption of flexible procedures, virtual examinations, and electronic filing, and the pandemic has only escalated the need for technology. See our previous blog post on arbitration in the time of COVID-19.
In the new 2021 Rules, Article 3(1) removes the reference to paper filing by providing that all pleadings and written communications “shall be sent" instead of "supplied in a number of copies" to each party, each arbitrator, and the Secretariat.
Additionally, arbitrators will now have increased discretion to conduct a virtual arbitration. The 2017 Rules provided that "the arbitral tribunal shall hear the parties together in person" on a party's request or on its own motion (Article 25(2)). In contrast, the new Article 26 specifically empowers arbitral tribunals to decide between conducting in-person or remote hearings, subject to two requirements: (i) the parties must be consulted as a preliminary step; and (ii) "the relevant facts and circumstances of the case" must be considered.
The 2021 Rules also contemplate remote hearings broadly, either by videoconference, telephone, or “other appropriate means of communication.”
(b) Expanded Scope for Expedited Proceedings
While many international arbitration cases have large amounts at stake, not all disputes warrant a full hearing with witness testimony. In 2017, the ICC created a simplified procedure for smaller quantum or less complex claims, to improve cost-effectiveness and accessibility (see our previous blog post on the 2017 Rules). Expedited arbitrations are often decided on a “documents only” basis.
Building on the success of these procedures, the 2021 Rules increase the opt-out threshold for expedited arbitrations from $2 million to $3 million USD (Article 30 and Appendix VI).
(c) Robust Case Management and Consolidation Procedures
The 2017 Rules provided that an arbitral tribunal “may” adopt such procedural measures as it considers appropriate to ensure effective case management (Article 22(2)). The 2021 Rules replace “may” with “shall” (Article 22(2)), creating a positive duty to effectively manage cases.
The 2021 Rules also expand the scope for consolidations and joinder.
Previously, two or more arbitrations could be consolidated into a single arbitration where the “claims were made under the same arbitration agreement” (2017 Rules). The new Article 10(b) clarifies that the Court may, on a party’s request, consolidate where the claims are made under the same arbitration agreement or agreements. Furthermore, Article 10(c) allows consolidation even when the claims are not made under the same arbitration agreement or agreements, provided that the arbitrations are between the same parties, the disputes arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible.
Article 7(5) of the 2021 Rules now permits joinder of additional parties after the constitution of arbitral tribunals upon a party’s request. The consent of all parties is no longer a requirement, in comparison with the 2017 Rules, which only permitted joinder with the consent of all parties, before the tribunal was constituted.
(d) Preventing Unequal Treatment and Conflicts of Interest
The 2021 Rules build on the due process established in the 2017 Rules to further ensure compliance with public policy and prevent unequal treatment.
Article 12(8) in the 2021 Rules allows the Court to disregard “unconscionable arbitration agreements.” The new Article 12(9) limits the right of parties to nominate their own arbitrator in “exceptional circumstances” where there is a “significant risk of unequal treatment and unfairness that may affect the validity of the award.”
In an effort to improve transparency and impartiality, the new Article 11(7) requires parties to disclose the identity of any non-party which has entered into a funding arrangement or has an economic interest in the outcome of the arbitration. Article 17 requires increased supervision of party representation to prevent conflicts of interest.
The 2021 Rules are the result of the ICC’s vision of arbitration in a rapidly changing environment centered on due process and technology. The focus on greater efficiency, flexibility, and transparency will benefit all stakeholders who adopt the Rules.
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