ICC launches revised Rules for Arbitration: Considerations for commercial parties in the offshore sector
Due to the coronavirus pandemic, conducting arbitration proceedings in 2020 has been challenging for many parties. As a result, several institutions have recognised the need for further developments in procedure and thus this year has resulted in numerous revisions to rules; including the most recent updates of the ICC Arbitration Rules (the "Rules").
The updated Rules now provide for remote hearings, additional joinder and consolidation provisions, as well as an expedited procedure. With the new Rules coming into force on 1st January 2021, our experts have summarised the key changes to consider for parties that are currently conducting, or are considering commencing, arbitration proceedings before the ICC.
Virtual hearings: the new norm and prevention for delays
With travel and health-related restrictions currently in place in most parts of the world, Article 26(1) of the revised Rules grants the tribunal the authority to decide whether a hearing should be conducted remotely. This is consistent with the increasing recognition that many hearings can be efficiently and effectively conducted in a virtual setting. Before deciding whether a hearing should be conducted in person or virtually, the tribunal must consult the parties and have regard to the relevant facts and circumstances of the case.
The updated Rules now prevent parties who object to virtual hearings as a delay tactic from doing so by empowering the tribunal to decide to hold a hearing remotely. Overall, this can result in potential reduction of delay and costs.
Additional joinder and consolidation provisions: important tools to save costs and reduce the risk of inconsistent decisions
Complex multi-party commercial disputes are very common; especially in the offshore sector. Under the previous 2017 Rules, an additional party could not be joined after the tribunal had been appointed unless all parties agreed. 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 make-up of the tribunal and agrees to the terms of reference. As for consolidating claims under Article 10, the updated Rules offer clarification that the tribunal may order a consolidation of two or more arbitrations where "all of the claims in the arbitrations are made under the same arbitration agreement or agreements". This answers the question as to whether the term "same arbitration agreement" encompassed identical arbitration agreements contained in different contracts.
These welcome revisions mean that a new party can be joined, even when one of the existing parties does not agree. Furthermore, the revisions also indicate that a tribunal may now take a more liberal approach to consolidation; resulting in potential cost savings and the quicker resolution of disputes.
Expedited Procedure Rules: promoting time and cost efficiency
Under the updated Rules, Appendix VI and Article 30, where the arbitration agreement is concluded on or after 1st January 2021, the threshold below which parties must "opt out" of expedited arbitration will increase to US$3 million. This will likely increase the number of cases submitted to expedited arbitration on a default basis, in turn promoting time and cost efficiency.
As noted above, parties with arbitration agreements referring to the ICC Rules should be aware that, unless the arbitration agreement states otherwise, any arbitral proceedings registered on or after 1st January 2021 will now be subject to the updated Rules. Many similar changes have already been implemented by other arbitral institutions such as the LCIA and SIAC. However, given the continuing prominence of ICC arbitration in the offshore sector, the changes are most welcome and provide useful tools which enable parties and the tribunal to ensure that the process is efficient and fair.
Wikborg Rein's experts have in depth experience in the contentious offshore sector and have worked on a number of large and complex arbitrations this year; several of which involve multi-jurisdictional and cross-border disputes under the ICC Rules. In addition to ICC arbitrations, our team also have experience conducting arbitration proceedings under LCIA, HKIAC, UNCITRAL, LMAA, SCC and SIAC rules. To find out how the updated Rules may affect the resolution of your disputes, please contact one of our experts.