2021 ICC Arbitration Rules
The new 2021 Arbitration Rules of International Chamber of Commerce has been entered into force as of January 1, 2021 (“2021 ICC Rules”). Any arbitration agreement which has been executed as of this date shall be subject to the new 2021 ICC Rules and the disputing parties will benefit from the amendments and novelties provided thereof.
From a general perspective, it is seen that the 2021 ICC Rules aimed to strengthen the major elements of arbitration proceeding which are transparency, efficiency and flexibility. In this respect, ensuring effective case management became a “duty” for the arbitral tribunal. Before the adoption of 2021 ICC Rules, it was at tribunal’s discretion to adopt any procedural measures in order for the arbitration to be efficient. Not only this, the 2021 ICC Rules introduced new concepts addressing procedures of arbitration and supporting the impartiality and independency of the arbitral tribunal such as joinder of a third party, consolidation of numerous arbitration cases, third party funder and party representation. Further, difficulties of physical hearings and submissions which had arisen out due to the COVID-19 pandemic lead the emergence of new concepts: virtual hearings and online (green) submissions. Again, the monetary threshold for the automatic application of expedited rules was increased which will for sure increase the efficiency of arbitration. Moreover, a neutrality requirement has been introduced to the treaty-based disputes which underline the importance for impartiality and independence of the arbitral tribunal. The highlights of these amendments and novelties under the 2021 ICC Rules are as follows:
- Joinder of a third party:
With the additional clause of Article 7, in case of parties’ mutual consensus, without any need of an existing agreement between parties, a third party may join an ongoing arbitration proceeding. Even if the arbitral tribunal has duly constituted, likewise to the arbitral parties, the joinder party signs the Terms of Reference. The acceptance of a third party joinder is at the discretion of arbitral tribunal who decides taking into consideration the timing, possible conflicts of interests and the impact of the joinder on the arbitral procedure.
- Consolidation of numerous arbitral cases:
Under the previous version of the ICC Rules of 2017, although it was allowed to consolidate claims into one arbitration, it was not clear whether “the same agreement” refers to the “arbitration agreement” in different contracts. This issue was clarified with 2021 ICC Rules setting forth that the International Court of Arbitration may consolidate all claims in the event that all of the claims in the arbitrations have been raised as per the same arbitration agreement or agreements.
Furthermore, in the same revision, the International Court of Arbitration at its discretion may consolidate the claims even if they do not trigger from 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.”
- Constitution of arbitral tribunal:
This is one of the most significant amendments made with 2021 ICC Rules as this provision hinder parties to appoint their arbitrator and grants right to International Court of Arbitration to constitute the arbitral tribunal in exceptional cases. Article 12(9) of 2021 ICC Rules sets forth that International Court of Arbitration in exceptional cases where the impartiality of the tribunal is doubtful or the validity of the award will be debatable, at its sole discretion; may appoint each member of the arbitral tribunal to avoid any major risk. Although this amendment emphasizes the importance of an effective arbitration proceeding and finally aims to ensure the enforceability of awards, as the parties are not allowed to appoint their arbitrator in accordance with their arbitration agreement, the parties may request setting aside the final awards before national courts.
- Third party fund provider:
This amendment of Article 11(7) ensures disclosure of a third party funder who is linked to the parties of the ongoing arbitral proceeding or has an economic interest in the outcome of the arbitration and this amendment put an obligation on parties to disclosure any fund relationship by and between themselves and a third party to the ICC Secretariat by way of notifying “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”. As this is a common practice in most arbitration proceedings nowadays, it can be concluded that this amendment is also related to the transparency of arbitral proceedings.
- Arbitral Tribunal’s right to hinder representation:
As per the newly introduced Article 17 of the 2021 ICC Rules, arbitration parties are obliged to notify any change in their representation during the arbitration proceeding to the arbitral tribunal. However, the discretion is still at the arbitral tribunal to decide on non-approval of such change of representation asserting that the new representative bears conflict of an interest.
- Virtual hearings and online submissions:
Article 26(1) of the 2021 ICC Rules turned the current practice held during the pandemic into the rules. In this respect, the arbitral tribunals are allowed to decide on the virtual hearings instead of the physical ones after consulting with the arbitral parties by way of taking into consideration the relevant facts of the case.
Also, as an environmental friendly rule, all the communications “shall” now be submitted in electronical means. As the result of this amendment, parties will get rid of obligation of submitting the heavy dossiers before the secretary. Plus, the awards will be announced through online platforms saving the parties’ interference for such publications due to privacy concerns.
- Treaty-based (investment) arbitration:
There are two new concepts emerged under the treaty arbitration with 2021 ICC Rules. One is set forth under Article 13(6) of 2021 ICC Rules: it is not followed for a party to appoint an arbitrator from its own nationality unless parties agree otherwise. The other one is stated under Article 29 and this new provision provides an opportunity not to apply emergency arbitrator provisions in case of a dispute raised on the basis of a treaty. These changes are reflections of ICC’s willingness to attract investor-state disputes and to be another option in front of International Centre for Settlement of Investment Disputes (ICSID) Arbitration Rules.
- Additional awards allowance:
As per the previous ICC Rules of 2017, the final awards held by the tribunals could be objected by a party, and they could be subject to the correction by the tribunal. With the amendment under Article 36 of 2021 ICC Rules, another option is served to parties. In this respect, if any claim of a party (which is raised during proceedings) has not been decided under the award, an additional award may be requested for the claims which have been left undecided by the tribunal.
- Expedited rules threshold:
The application of expedited rules has been introduced with the ICC Rules of 2017. These rules allow parties to get rid of some procedures during arbitration allow the award to be announced earlier and at the same time lower the cost of arbitration. Previously, the threshold for the automatic application of these rules was 2 million USD before. This time, with 2021 ICC Rules, the threshold increased to 3 million USD for the arbitration agreements which are executed as of 1 January 2021. As the consequence of this amendment, efficiency of the arbitration will be increased.