Arbitral rules – The start of a season of change: LCIA Update

International

The LCIA has launched its new arbitration and mediation rules, which come into force on 1 October 2020. This is the first development in a period in which we are expecting updates to arbitral rules from ICC and SIAC in the coming months.

Below is a summary of the key changes introduced to the LCIA’s arbitration rules:

Commencement of arbitration

  1. Application of the new rules: The new rules come into effect from 1 October 2020. The new rules will apply when a LCIA arbitration is commenced after 1 October 2020 irrespective of when then the arbitration agreement was entered into. This is subject to any nuances in the arbitration agreement. 
  2. Party details: Parties are now required to identify their nationalities in the Request for Arbitration and the Response (Articles 1, 2 and 6). The updates to the rules also clarify that a party may have unilateral contact with the Registrar regarding administrative matters (Article 13). In addition, rules clarify that the parties can be represented in the arbitration by non-legal representatives as well (Article 18). 
  3. Request for Arbitration and Response (Articles 1 and 2): Where there are multiple arbitrations to be commenced the new rules introduce the option to provide a composite Request and Response. The new rules = clarify that each arbitration commenced via a composite Request will proceed separately unless the LCIA Court or the tribunal decide otherwise.  This will be efficient because it avoids the need for multiple Requests and Responses that are largely repetitive. This update seeks to address the issue that arose in A v B [2017] EWHC 3417 (Comm) where the English court held that a single Request to commence arbitration under two separate contracts was not valid as per Article 1 of the 2014 LCIA Rules and the tribunal in that case lacked jurisdiction.
  4. Appointment of Tribunal (Article 5): The timeframe for the LCIA to appoint the tribunal in the absence of a Response is reduced from 35 days to 28 days. In addition, the option to appoint as arbitrator the President of the LCIA Court, Vice Presidents of the LCIA Court and the Chair of the LCIA Board of Directors is extended to when any of them are nominated not just by the parties but also when nominated by any other arbitrator candidate.
  5. Confidentiality (Article 30): The parties are required to seek an undertaking of confidentiality from all those that it involves in the arbitration, including but not limited to, any authorised representative, witness of fact, expert or service provider.

Emergency Arbitrator

  1. Emergency Arbitrator (Article 9B): The new rules clarify that the reference to the “Arbitral Tribunal” in the rules includes references to an emergency arbitrator. This will ensure clarity and consistency when an Emergency Arbitrator is appointed. The Emergency Arbitrator now also has the power to determine the amount of the legal costs relating to the emergency proceedings and the proportions in which the parties shall bear the legal costs and the arbitration costs of the emergency proceeding.  This is a helpful modification because it allows parties to start seeking recovery of the costs of the emergency proceedings sooner than waiting for conclusion of the arbitration. In addition, prior to appointment of the tribunal, the Emergency Arbitrator has the ability to vary or discharge its order and also make an additional award as to any claim for emergency relief presented in the emergency proceedings but not decided in any award of the Emergency Arbitrator.

Tribunal’s powers

  1. Challenge to arbitrator (Articles 10 and 11): In the event of a challenge to an arbitrator, the updates to the rules clarify that the LCIA Court may require further information and materials from the challenging party, the challenged arbitrator, other parties, any authorised representative of a party, other members of the tribunal and the tribunal secretary (if any). In addition, the tribunal (when reconstituted) has the power to determine whether, and if so to what extent, the previous proceedings in the arbitration shall stand.
  2. Expedited proceedings (Article 14): The tribunal has wide powers in relation to the conduct of the arbitral proceedings. This includes express powers to expedite the proceedings by, for example, curtailing the time period for written statements, limiting written and oral witness evidence, dispensing with a hearing and deciding whether matters are suitable for a preliminary assessment. It remains to be seen to what extent these powers are deployed by the tribunal and the types of cases in which they are engaged.
  3. Early determination (Article 22): The tribunal has an express power to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the tribunal, or is inadmissible or manifestly without merit; and where appropriate to issue an order or award to that effect. Suitable scenarios for use of these powers may be finance-related arbitrations where there is no genuine defence to a debt claim. 

Consolidation and concurrent proceedings

  1. Consolidation of LCIA arbitrations (Article 22A): The tribunal’s and the LCIA Court’s powers to order consolidation of LCIA arbitration has been updated. This now includes consolidation where:
    1. all the parties to the arbitrations to be consolidated so agree in writing; or
    2. the arbitrations are commenced under the same arbitration agreement or any compatible arbitration agreement and either between the same disputing parties or arising out of the same transaction or series of related transactions, provided that no arbitral tribunal has yet been formed by the LCIA Court for such other arbitration(s) or, if already formed, that such arbitral tribunal is composed of the same arbitrators.
  2. Concurrent proceedings (Article 22A): The updates to the rules also allow the tribunal (with the approval of the LCIA Court) to order that multiple LCIA arbitrations shall be conducted concurrently where the same tribunal is constituted in respect of each arbitration and the arbitrations are commenced under the same arbitration agreement or any compatible arbitration agreement either between the same disputing parties or arising out of the same transaction or series of related transactions.

Court assistance for interim measures

  1. Interim measures (Article 25): The updates to the rules clarify that the parties can apply to a state court for interim measures that the tribunal would have power to award as well. This is likely to avoid arguments of the nature raised in Gerald Metals SA v Timis [2016] EWHC 2327 (Ch) being made in court proceedings that the jurisdiction of the court is limited in relation to interim measures that the tribunal cannot itself grant. 

Communications and hearings

  1. Electronic communications: Although the previous rules and practice did give prominence to electronic communications with the LCIA and the tribunal, the updates to the rules have introduced even more clarity on the use of electronic communications as a valid method.  In addition, communications like an application for expedited formation of the tribunal or for an emergency arbitrator are now required to be made by electronic means.
  2. Virtual hearings (Article 19): The updates to the rules provide clarity on the ability to have virtual hearings.
  3. Tribunal secretary (Article 14A): The updates to the rules permit tribunal secretaries and includes detailed provisions about their role and charges. Before being engaged, a tribunal secretary is required to provide a declaration of independence and can only be appointed once approved by all the parties. A party is deemed to have agreed if it does not object within a reasonable time set by the tribunal. The new article also states that under no circumstances may a tribunal delegate its decision-making function to a tribunal secretary. All tasks carried out by a tribunal secretary are carried out on behalf of, and under the supervision of, the tribunal which retains its responsibility to ensure that all tasks are performed to the standard required by the LCIA Rules.  
  4. Timing of final award (Article 15): The tribunal is now required to endeavour to provide its final award so no later than three months following the last submission from the parties (whether made orally or in writing).  In order to achieve this the tribunal is also required to set aside time for deliberations as part of the timetable setting process.

The updates made to the LCIA arbitration rules are a welcome step. The updates provide some practical solutions to the challenges now being faced by parties, arbitrators and counsel. They also address some quirks that had arisen as a result of recent case law. However, the true test of the effectiveness of the changes will be in the practice that develops, and, for example, how confident arbitrators feel about using their powers for expedited proceedings and early determination.