The International Chamber of Commerce (ICC) has amended its Arbitration Rules

POSTED BY Timothy Lindsay
17 May 2017

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The International Chamber of Commerce (ICC) has amended its Arbitration Rules (ICC Rules) to improve the efficiency of smaller claims (under US$2 million, and higher if parties opt-in). The amendments make these smaller claims subject to an expedited procedure, pursuant to which the arbitral tribunal’s final award must be given within 6 months of the first case management conference. In our view the changes will materially improve the efficiency of ICC arbitration for disputes arising out of smaller international contracts.

The ICC's New Expedited Procedure Rule for Smaller Claims

By Article 30 of the ICC Rules, all ICC arbitrations where the amount in dispute is under US$2 million will be subject to the ICC expedited arbitration rules contained in Schedule VI of the Rules (Expedited Procedure). The Expedited Procedure only applies to ICC arbitration agreements concluded on or after 1 March 2017. Parties can also “opt out” of the Expedited Procedure through agreement (Article 30.3(b)). Where the amount in dispute exceeds US$2 Million parties can “opt in” to the Expedited Procedure (Article 30.2(b)).

The key features of the Expedited Procedure are:

  • Sole arbitrator appointed in "as short a time as possible". The parties may jointly nominate a sole arbitrator within a time limit fixed by the secretariat. In the absence of such nomination the Court will appoint the sole arbitrator in “as short a time as possible” (Schedule VI, Article 2).
  • Terms of Reference. These shall be binding on the parties, and no new claims can be brought without authorisation (Schedule VI, Article 3.2).
  • Case management. The sole arbitrator must convene case management conference within fifteen days of receiving the file (Schedule VI, Article 3.3).
  • Wide procedural discretion. The sole arbitrator has a wide discretion to adopt any procedural measure he or she deems appropriate (Schedule VI, Article 3.4). This extends to forgoing a hearing and deciding the dispute solely on the papers (Schedule VI, Article 3.5).
  • Award within 6 months. The final award must be given within 6 months of the case management conference (Schedule VI, Article 4.1).

The two key changes that will drive timeliness and efficiency under the Expedited Procedure are the accelerated appointment of the sole arbitrator and the requirement that the final award be rendered within 6 months of the first case management conference. The latter requirement in particular will have a “cram down” effect on procedural timetables, requiring the parties to make written and any oral submissions within short order. The clarification that a sole arbitrator operating under the Expedited Procedure may forego a hearing and decide the dispute solely on the papers is welcomed, and ensures that frivolous claims can be given short shrift.

Other Amendments to the ICC Rules

The following further amendments to the ICC Rules also apply to all ICC arbitrations commenced after 1 March 2017:

  • The ICC Court may now communicate their reasons for the appointment, confirmation, challenge or replacement of an arbitrator (Article 11.4).
  • The time allocated to drawing up the Terms of Reference is reduced from 60 days to 30 days, from receipt of file (Article 23.2).
  • A tribunal may now proceed to hear a party’s claims or counterclaims once the entirety of the advance on costs for the claims has been paid (Appendix III, Article 1.3). In contrast, under the 2012 Rules the Tribunal could not proceed with a hearing until the Terms of Reference and procedural timeline had been finalised.
  • Clarification that “any party”, including additional parties, may challenge the existence, validity, scope of the arbitration agreement. Previously only the respondent could do this.
  • Updates to the schedule of fees.

These changes reflect the ICC’s commitment to ensuring its arbitral procedures enable the efficient conduct of disputes. The key provisions concern the Terms of Reference process which, notwithstanding the focus it brings to the dispute at an early stage, can be a source of delay (whether innocent or cynical). The Terms must now be drawn up within 30 days of the Tribunal’s receipt of the file, and in the interim the tribunal can proceed with the conduct of the arbitration.

Advantages of International Arbitration for International Contracts

Internationally, commercial arbitration is the predominant means by which commercial parties resolve their disputes.

Arbitration, as with litigation, is an adversarial system of dispute resolution. Lawyers advocate their clients’ positions in written and oral submissions, and merits hearings during which the cross-examination of witnesses and experts is conducted are the norm. The arbitrators then determine the dispute in accordance with legal principles, in a reasoned award. Arbitration is not mediation or conciliation, where a mediator or conciliator will seek to broker a negotiated settlement between the parties in dispute.

In contrast to litigation, however, arbitration is not public, disputes are not adjudicated by judges and hearings are not conducted in a court. Arbitration is a private process, disputes are heard before and determined by neutral independent arbitrators, often specifically chosen by the parties for their legal or subject-matter expertise and arbitration hearings are held in hearing rooms at arbitration institutions or board rooms at law firms and, often, hotels. Procedural flexibility, informality and efficiency are the hallmarks of arbitration practice, unlike the rigid, formal procedures of most court systems.

In addition to neutrality and expertise, the key benefit of international arbitration for international contracts is its so-called “enforcement premium”. Arbitration benefits from a vastly superior regime for the cross-border enforcement of arbitral awards than exists for court judgments. This is secured by the 1958 UN Convention on Recognition and Enforcement of Foreign Arbitral Awards (referred to as the ‘New York Convention’), which has been ratified by over 150 countries and provides for the streamlined recognition and enforcement of arbitral awards in those jurisdictions (subject to limited exceptions).

Lowndes Jordan

Lowndes Jordan is a specialist law firm, with top tier expertise and experience in corporate, litigation and IT.

Partner Tim Lindsay specialises in arbitration and litigation, and was recently recognised by Who's Who and Global Arbitration Review as one of the country’s leading arbitration experts. Tim has appeared as counsel is some of the most significant international arbitrations in the past decade, and has led policy development in the field internationally. He has particular expertise in corporate/shareholder, complex contract, banking and financial services (creditor and debtor), foreign investment, energy/resources, projects/engineering, telco/IP/technology and regulatory disputes.
Contact details for Tim:

POSTED BY Timothy Lindsay
17 May 2017

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