The 2021 ICC Arbitration Rules: Keeping Pace With Evolving Practices and Standards

The International Court of Arbitration of the International Chamber of Commerce (ICC) has issued revised Rules of Arbitration (the 2021 ICC Rules) that will enter into force on January 1, 2021. The 2021 ICC Rules introduce several new features relating to both commercial and investment arbitration and are designed to make ICC arbitrations more efficient, flexible, and transparent. As the ICC has noted, the amendments have the potential to make ICC arbitration more attractive for both complex arbitrations and smaller cases. This article highlights a number of the most significant changes in the 2021 ICC Rules.

Multi-party and multi-contract arbitrations

The 2021 ICC Rules broaden the current provisions facilitating multi-party and multi-contract arbitrations.

Upon the request of a party, additional parties will now be able to join an arbitration even after the arbitral tribunal is constituted if they accept the constitution of the tribunal and agree to the Terms of Reference (Article 7(5)). The decision on joinder is made by the tribunal, based on its assessment of all relevant circumstances, including whether the 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.

The 2021 ICC Rules also expand the circumstances in which consolidation of different pending arbitrations is possible without the consent of all parties. Absent an agreement by the parties, the ICC Court could previously consolidate arbitrations where the claims were made under (i) the same arbitration agreement or (ii) more than one agreement, if the arbitrations are between the same parties, arise in connection with the same legal relationship, and are “compatible.” The 2021 ICC Rules now also allow for consolidation where the claims are made under multiple (but the same) arbitration agreements, even if the parties are different (Article 10(b)).

With these revisions, the ICC follows in the footsteps of the London Court of International Arbitration (LCIA), which recently revised its rules to offer a more liberal approach to consolidation (see Sidley Insights, “The 2020 LCIA Arbitration Rules: A Modest but Innovative Update,” dated September 17, 2020). By way of comparison, the Swiss Rules of International Arbitration (Swiss Rules) — and, to a lesser extent, the Singapore International Arbitration Center (SIAC) and Stockholm Chamber of Commerce (SCC) Rules — provide even more flexibility for consolidation and joinder than the ICC and LCIA Rules.

Third-party funding

Parties are now required to notify the ICC Secretariat, the arbitral tribunal, and the other parties of the existence and identity of “any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration” (Article 11(7)). This new requirement targets third-party funding arrangements and is consistent with the ICC’s previous guidance that when assessing whether to make disclosures, arbitrators should consider “relationships with any entity having a direct economic interest in the dispute or an obligation to indemnify a party for the award.” It is also similar to the approaches taken under the Hong Kong International Arbitration Centre (HKIAC) and SIAC Rules and a proposed new provision in the ICSID Arbitration Rules and thus reflects a growing trend to require the disclosure of third-party funding arrangements.

While this disclosure requirement may be necessary to assess potential conflicts of interest, companies considering third-party funding as an option may view this new provision as a reason to select different arbitration rules that do not have such a requirement (e.g., the LCIA or Swiss Rules). The 2021 ICC Rules do not require disclosure of the funding agreement itself, although a tribunal could nonetheless order such disclosure if it were shown to be relevant and necessary.

Changes in party representation

Under the 2021 ICC Rules, a party must promptly inform the ICC Secretariat, the arbitral tribunal, and the other parties of changes in its representation, and the arbitral tribunal can take any measure necessary to avoid a conflict of interest of an arbitrator arising from such a change. This includes excluding new counsel from participating in whole or in part in the proceedings (Articles 17(1), 17(2)). The additions reflect developments in investor-state arbitration and are similar to provisions existing under the rules of certain other arbitral institutions (e.g., the LCIA and HKIAC Rules).

Court appointment of the arbitral tribunal

The 2021 ICC Rules allow the ICC Court, in exceptional circumstances, to appoint each member of the arbitral tribunal where this is necessary “to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award” (Article 12(9)). It remains to be seen what, in practice, constitutes an “exceptional circumstance,” but the ICC has signaled that this new provision allows the court to disregard “unconscionable” agreements relating to the constitution of the tribunal.

Expedited procedures

In 2017, as part of ongoing efforts to improve cost and time efficiency, the ICC introduced Expedited Procedure Rules applicable to cases where the amount in dispute is less than US$2 million, joining a growing trend of other arbitration rules to do so (such as the Swiss and SCC Rules). These cases are typically heard by a sole arbitrator (even if the arbitration agreement calls for three arbitrators) and are decided on an accelerated six-month timetable, at a reduced cost. Currently, where the amount in dispute is less than the US$2 million threshold, parties can opt out of the expedited procedure, and parties can agree to opt into this procedure where the amount in dispute is higher than this threshold.

The 2021 ICC Rules increase the threshold for applying the expedited procedure to US$3 million for arbitration agreements concluded on or after January 1, 2021 (Appendix VI, Article 1(2)). This higher threshold will likely extend the expedited procedure to a significantly higher number of ICC arbitrations.

Virtual hearings

Resulting in part from the COVID-19 pandemic, the 2021 ICC Rules now make clear that hearings may be conducted “by physical attendance or remotely, by means of videoconference, telephone or other appropriate means of communication” (Article 26(1)). Other arbitration rules (e.g., the LCIA and Swiss Rules) have long authorized arbitral tribunals to conduct evidentiary and other hearings by videoconference, and the 2017 ICC Rules already encouraged the use of hearings by videoconference in appropriate cases to increase efficiency (Appendix IV, paragraph f). However, there was some uncertainty as to whether a tribunal could order a virtual hearing over the objections of a party, given that the rules previously provided that the tribunal “shall hear the parties together in person if requested” (Article 25(2) of the 2017 ICC Rules). In April 2020, the ICC Secretariat issued guidance that this language does not preclude a virtual hearing but rather “can be construed as referring to the parties having an opportunity for a live, adversarial exchange.” The 2021 ICC Rules have resolved any uncertainty in this respect by deleting Article 25(2).

Arbitrators, parties, and counsel are actively developing new tools and strategies to engage ever more effectively in the increasing number of virtual hearings. For its part, the ICC is developing a secure “virtual hearing solution” to facilitate arbitration hearings during the pandemic.

Additional awards

Similar to other arbitration rules (including the SCC and Swiss Rules), the 2021 ICC Rules now provide that an arbitral tribunal may make an “additional” award on claims advanced in the arbitration that the tribunal omitted to decide in a final award (Article 36(3)). This expands on current ICC practice allowing such awards if permitted by the law of the seat and avoids the need for parties to initiate a new arbitration where the law of the seat is silent.

A party must make the application for an additional award within 30 days of receipt of the award. Upon receipt of the application, the tribunal is to give the other party or parties a short time period (normally not exceeding 30 day) in which to respond. The tribunal must then submit its draft decision, which is to take the form of an additional award if the application is granted, to the ICC Court within a further 30 days (Article 36(4)).

Investment treaty arbitration

The 2021 ICC Rules include two new provisions that apply specifically to investment arbitrations based on a treaty. The first, Article 13(6), provides that no arbitrator in an investment treaty arbitration shall have the same nationality of any party, which is designed to ensure “complete neutrality” in cases involving States. The second, Article 29(6), codifies the ICC’s existing practice that the emergency arbitrator procedure is not available for investment treaty arbitration.

Organization and functioning of the ICC Court

Finally, the 2021 ICC Rules include several new provisions on the organization and functioning of the ICC Court. One such addition provides that any claims relating to the court’s administration of arbitral proceedings shall be governed by French law and subject to the exclusive jurisdiction of the Paris Judicial Tribunal in France (Article 43). This is designed to help manage the costs and risks that the court has historically faced as a result of being sued in a host of different national courts around the world.

In addition, the Internal Rules of the ICC Court now specify that upon the request of a party, the court will communicate the reasons for its decisions on whether there is prima facie an ICC arbitration agreement, the consolidation of arbitrations, the appointment of tribunals, and the challenge and replacement of arbitrators (Appendix II, Article 5). However, in exceptional circumstances, the Court may decide not to communicate the reasons for any of these decisions.

Overall assessment

Overall, the 2021 ICC Rules do not break significant new ground, but they do encompass a number of helpful updates to ensure that ICC arbitration keeps pace with the constantly evolving practices and standards of international arbitration. As such, this rules revision will help maintain the ICC’s position as one of the leading arbitral institutions of the world.