Revised ICC Arbitration Rules Enter Into Force

The International Chamber of Commerce (ICC), one of the world’s main arbitration institutions, approved the revised ICC Rules of Arbitration (“the 2021 ICC Rules”), which entered into force on January 1, 2021, and will govern cases submitted to the ICC from that date onwards. The ICC also released the new Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration.

The previous version of the regulation – the 2017 ICC Rules – will continue to apply to all cases registered with the ICC Court before January 1, 2021.

According to the ICC Court President, Alexis Mourre, the review of the 2017 Arbitration Rules sought to provide a further step towards greater efficiency, flexibility and transparency of ICC Arbitration, making it even more attractive, both for large, complex arbitrations and for smaller cases.

Some of the main amendments brought by 2021 ICC Rules are the following:

• Joinder of Additional Parties: 2021 ICC Rules allows the arbitral tribunal to admit the joinder of additional parties (third parties), even absent consent of all parties, “subject to the additional party accepting the constitution of the arbitral tribunal and agreeing to the Terms of Reference, where applicable.”

In deciding on a request for joinder, the arbitral tribunal shall take into account all “relevant circumstances”, which may include (i) whether the arbitral tribunal has prima facie jurisdiction over the additional party (third party); (ii) the timing of the request; (iii) possible conflicts of interests; and (iv) the impact of the joinder on the arbitral procedure.

• Consolidation of two or more arbitrations: The new wording of Article 10 (b) and (c) of 2021 Arbitration Rules expressly provide the possibility to consolidate two or more arbitrations based on distinct arbitration agreements, provided that the arbitrations are compatible, the parties are the same and the disputes arise in connection with the same legal relationship.
• Third Party Funding: Aiming at increasing transparency and empowering the arbitral tribunal members to evaluate as completely as possible the existence of obstacles to their independence and impartiality, Article 11 (7) of the 2021 Arbitration Rules require the parties to disclose to the ICC Secretariat, the arbitrators and the other parties, the existence and identity of any non-party that has entered into an arrangement for the funding of claims or defenses and under which it has an economic interest in the outcome of the arbitration.
• Appointment of the Arbitrators: Article 12 (9) of the 2021 ICC Rules grants to the ICC Court the power to disregard the arbitrator appointment method provided for in arbitration agreements and to appoint arbitrators, when in “exceptional circumstances”, the ICC Court find it a necessary measure “to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”.

In addition, according to Article 13 (6), when the arbitration agreement arises from a treaty, no arbitrator may have the same nationality as the parties to the arbitration, unless the parties agree otherwise.

• Conflict of Interest: Article 17 (2) of the 2021 Arbitration Rules allows the arbitrators “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 from participating in whole or in part in the arbitral proceedings, prior to the arbitral tribunal constitution.
• Electronic Communication and Remote Hearings: Reflecting the trend that arose in response to the restrictions caused by the COVID-19 pandemic, the 2021 ICC Rules also provide amendments to address the reality of electronic communication (Articles 3(1), 4(4) and 5 (3) of 2021 ICC Rules) and remote attendance of hearings, at the discretion of the arbitral tribunal (Article 26 (1) of the 2021 Arbitration Rules).
• Additional Awards: Article 36 (1) of the 2021 ICC Rules innovates when allowing that, within thirty (30) days of receipt of the arbitral award, any party may request the arbitral tribunal to issue an additional award, deciding on pleas made during the arbitral proceeding and that, for whatever reason, were not originally addressed. In this case, the other party shall be summoned to submit any comments thereon before the arbitral tribunal renders a decision, in “a short time limit, normally not exceeding 30 days”. To reflect this amendment and maintain consistency, Article 2 (v) of the 2021 ICC Rules was also amended, clarifying that the word “award” includes, among other things, provisional, partial, final or additional award.
• Governing Law and Settlement of Disputes: Article 43 of the 2021 ICC Rules defined that any claims arising out of or in connection with the administration of the arbitration proceedings by the Court under the ICC Rules shall be governed by French law and settled by the Paris Judicial Tribunal (Tribunal Judiciaire de Paris)[1] in France, which shall have exclusive jurisdiction.
• Reasoning of ICC Court Decisions: Aiming at encouraging transparency in arbitration, Appendix II, Article 5 of the 2021 ICC provides that, at the request of the parties, the ICC Court shall disclose the reasoning of its decisions on the (i) existence, validity and effectiveness of arbitration conventions (prima facie); (ii) consolidation of arbitration proceedings; (iii) appointment or challenge of arbitrators by the Court itself.
• Expedited Arbitration: Appendix VI, Article 1 (2) of the 2021 ICC Rules expands the scope of application of this expedited procedure by increasing the threshold for their opt-out application from US$2 million in dispute to US$3 million.
• Investment arbitration: In addition to the issue of the nationality of the arbitrators, the 2021 ICC Rules included another specific amendment for investment arbitrations. Article 29 (6) (c) confirms the practice established by the ICC Court of not applying the emergency arbitration mechanism to disputes between investors and the State.

It is too early to foresee all the advances brought by the 2021 ICC Rules. However, the brief comments above make it clear that the new ICC Rules have brought about significant changes, endorsing established practices and adapting the ICC Arbitration to a new reality.

Demarest’s Arbitration team is available to provide any further information or clarification on the new rules, as well as other related matters.

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[1] French jurisdiction of first degree with general jurisdiction to settle civil, commercial, labor or criminal disputes not subject to any other specific jurisdiction.