Last week I looked at some current trends in ICC arbitration. I highlighted some of the parties’ concerns, in particular the time and expense of pursuing arbitration.
This week, my focus is on the International Chamber of Commerce’s (ICC) response: in particular, its new arbitration rules (the 2012 ICC Rules).
The ICC’s response to parties’ concerns in the 2012 ICC Rules
The 2012 ICC Rules came into force on 1 January 2012 and will apply to all ICC arbitrations that commenced on or after that date, unless the parties have agreed that the previous version (1998) of the Rules will apply.
The FIDIC forms of contract anticipate in their arbitration clause that all disputes shall be finally settled under the Rules of Arbitration of the ICC, without specifying a particular version of the Rules. Construction disputes that arose under an unamended FIDIC contract will therefore be subject to the 2012 ICC Rules, if the arbitration was commenced on or after 1 January 2012.
Impact of the new ICC Rules (2012) on the management of construction arbitration cases
By and large, the 2012 ICC Rules maintain the main characteristics of ICC arbitration, such as the terms of reference, the scrutiny of draft awards by the International Court of Arbitration (the ICC Court), and the involvement of national committees in the appointment of arbitrators.
Many of the changes introduced by the 2012 ICC Rules are a codification of current practice of the ICC Court and Secretariat, since 1998. However, they also seek to address some of the concerns I mentioned last week, by bringing in new procedural mechanisms and principles, including case management techniques focused on time and costs. This posts highlights some of those changes that may improve the way ICC arbitration cases are managed.
Appointment and availability of arbitrators
To address one of the traditional complaints made against the appointment of arbitrators by national committees (in particular the length of time it sometimes takes for those committees to appoint a very busy arbitrator from a limited pool of arbitrators), the 2012 ICC Rules empower the ICC Court to appoint arbitrators directly (Article 13). It may do this if it does not accept the proposal made by the national committee or no proposal is made within the time limit it fixes. It may also appoint arbitrators directly in certain circumstances, including arbitrations involving a state entity.
Article 11(2) of the 2012 ICC Rules requires any prospective arbitrator to sign, before his appointment, a statement confirming his availability for the case. In reality, this requirement simply confirms the ICC’s practice to distribute to prospective arbitrators a form that requires them to disclose information not only about their independence, but also their availability to arbitrate a particular case. In itself, this new requirement is unlikely to avoid delays attributable to arbitrators. However, the ICC is conscious that this is a serious issue and both the ICC Court and its Secretariat will no doubt continue to place pressure on slow arbitrators.
Conduct of the proceedings under the 2012 ICC Rules
A mandatory case management conference must now form part of the arbitral process under Article 24 of the 2012 ICC Rules, to consult the parties on the appropriate procedural measures at the outset of the proceedings. Article 24 calls on the arbitral tribunal to hold subsequent case management conferences “to ensure continued effective case management”, and under Article 24(4) the arbitral tribunal is specifically empowered to request the attendance of a party representative at a case management conference, the intention being to ensure the parties “buy in” to these procedural measures.
Appropriate procedural measures may include one or more of the case management techniques described in new Appendix IV, which incorporates the ICC’s publication “Techniques for Controlling Time and Costs in Arbitration”. None of these case management techniques are terribly new, but the Appendix is a useful reminder of the procedural measures that can be used to control time and cost. They include:
- Bifurcating the proceedings or rendering one of more partial awards on key issues, for example, issues of principle and quantum. Although this split is sometimes appropriate, in some case it can lead to a significant lengthening of the proceedings and therefore an increase of the overall costs.
- Identifying issues that can be resolved by agreement between the parties or their experts, typically issues of quantum in construction cases.
- Identifying issues to be decided solely on the basis of documents rather than through oral evidence or legal arguments at a hearing.
- Limiting disclosure of documents. This is particularly relevant to construction cases, which tend to involve a considerable amount of documents.
- Limiting the length and scope of written submission and evidence so as to avoid repetition and maintain a focus on key issues.
- Encouraging the parties to consider settlement.
New duty of the parties and arbitrators to conduct the arbitration in an expeditious and cost-effective manner
Article 22(1) of the 2012 ICC Rules imposes on the arbitral tribunal and the parties a new duty to “make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute”. The duty on the parties is confirmed by Article 37(5), which specifically authorises the arbitral tribunal to consider in its cost decision the extent to which each party complied with its general duty.
Timescale for the award under the 2012 ICC Rules
The 2012 ICC Rules seek to address the issue of delays in the drafting of awards. At the close of the proceedings, the arbitral tribunal must inform the ICC Secretariat and the parties when it expects to submit its draft award to the Court for approval. To reinforce that duty, a new Appendix III to the 2012 ICC Rules (on “Costs and Fees”) provides that in setting the arbitrators’ fees, the ICC Court will take into account their “diligence and efficiency”, “the time spent”, the “rapidity of the proceedings”, and “the timeliness of the submission of the draft award”. This may well work as an incentive for arbitrators to render their award within the anticipated timescale.
Conclusion: improvement will depend on implementation
Although not radical, the procedural mechanisms and principles introduced by the 2012 ICC Rules to improve case management may contribute to giving the parties more faith in the arbitration process by allowing them to have more certainty over the likely time and cost involved in pursuing a claim in arbitration.
However, this will be so only if these mechanisms are implemented properly by the arbitrators and the parties. In reality, there will be cases where only one party may have interest in pushing for a resolution of the dispute (typically the claimant), while the other will do everything to delay the proceedings and the outcome of the case, and will ask for more time for more time to present its case.
It is too early to predict the impact of the 2012 ICC Rules on how arbitral tribunals will conduct arbitration proceedings. However, judging from the cases brought to ICC arbitration this year by my clients and my colleagues’ clients, it would seem that arbitrators may well have embraced the ICC’s new emphasis on case management and appear ready to stand up to the parties when determining the procedure of the arbitration by insisting, in particular, on shorter timetables.
(For a longer version of this post, combining this post and my previous post, see Impact of the new ICC Rules (2012) on the management of construction arbitration cases.)
