ICC Rules 2021

Four years after the first revision in 2017, the International Chamber of Commerce in Paris (ICC) has updated its Rules of Arbitration (ICC Rules 2021). The ICC Rules 2021 were rolled out globally through a series of virtual events and entered into force on 1 January 2021. They apply to all new disputes submitted to the ICC Court from now on. According to outgoing ICC Court President Alexis Mourre, the ICC Rules 2021 “mark a further step towards greater efficiency, flexibility and transparency”.

This post highlights the most prominent and practical changes of which users should be aware, in particular the relevant amendments based on past experiences with the ICC Rules 2017 and adaptations due to the COVID-19 pandemic.

Arbitral tribunals may order the remote conduct of hearings

The ICC Rules 2017 did not expressly deal with whether and under which circumstances hearings may be conducted remotely or virtually instead of in person. In this regard, the ICC Rules 2021 introduce a new third sentence to Art. 26 (1) stating that

“The arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication.”

Of particular note, the ICC Rules 2021 now expressly empower arbitral tribunals to order the remote conduct of a hearing, even over the objection of a party. The tribunal must, however, consider all relevant facts and circumstances of the case making it difficult in practice and requiring sound judgment by the arbitrators.

This amendment of Art. 26 (1) was foreshadowed by the ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic released by the ICC on 9 April 2020 (ICC Guidance Note). According to the ICC Guidance Note, parties, counsel, and tribunals were encouraged to consider whether the hearing should be postponed or conducted physically or virtually while taking into account all circumstances, including the consequences of the COVID-19 pandemic, the nature and length of the hearing, the complexity of the case and number of participants, the urgency of the case, delays, and the need for the parties to properly prepare for the hearing. These criteria stated in the ICC Guidance Note can therefore serve as orientation for the circumstances to be considered pursuant to the amended Art. 26 (1) of the ICC Rules 2021.

Additionally, users and arbitrators should be aware of possible obstacles that the remote conduct of a hearing on the merits may bring for the enforceability of an eventual final award, which is a question decided by state courts during the enforcement proceedings and which has yet to be decided in most jurisdictions.

New threshold of USD 3 million for application of Expedited Procedure Provisions

The most practically important amendment in the previous rules revision was the introduction of the Expedited Procedure Provisions in Art. 30 of the ICC Rules 2017 and the new Appendix VI. Under the ICC Rules 2017, ICC arbitrations with an amount in dispute up to USD 2 million were to be automatically conducted as expedited proceedings if the arbitration agreement was concluded on or after 1 March 2017, unless the parties explicitly agreed to opt out of the Expedited Procedure Provisions.

For a more detailed overview of the Expedited Procedure Provisions, their application and special features, please see our previous news post here.

According to the ICC statistics for 2019, 146 arbitrations had been or were being conducted under the Expedited Procedure Provisions at the end of 2019. To further increase that number, the ICC  considered various higher quantum thresholds for automatically triggering the application of the Expedited Procedure Provisions. In the end, they fixed the new quantum threshold at USD 3 million if the arbitration agreement was concluded on or after 1 January 2021. The old threshold of USD 2 million remained in place if the arbitration agreement was concluded on or after 1 March 2017 and before 1 January 2021 (Appendix VI Art. 1(2)). The number of expedited proceedings will continue to increase in the next years as a result.

Hence, when using an ICC arbitration clause, the parties need to consider carefully whether their potential disputes are fit for expedited proceedings or additional provisions should be incorporated to declare an opt-out.

Summary of other updates in the ICC Rules 2021

• Parties who are funding their claims or defences are now obligated to disclose to the ICC Secretariat, the arbitral tribunal and the other parties the name and identity of a third-party funder (Art. 11 (7) of the ICC Rules 2021).
  
  
• A Request for Joinder of additional parties to the arbitration may now also be made after the confirmation or appointment of any arbitrator (addition of new Art. 7 (5) of the ICC Rules 2021). This extends the time limit to join additional parties to the arbitration. The Joinder is subject to the additional party accepting the Constitution of the arbitral tribunal and agreeing to the Terms of Reference (if applicable).
  
  
• In exceptional circumstances, the ICC Court can appoint each member of the arbitral tribunal (regardless of a party agreement) to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award (Art. 12 (9) of the ICC Rules 2021). This has been the standing practice of the ICC Court.
  
  
• In treaty arbitrations, no arbitrator shall have the same nationality of any party, unless the parties agree otherwise (Art. 13 (6) of the ICC Rules 2021) and the Emergency Arbitrator Provisions do not apply (Art. 29 (6)(c) of the ICC Rules 2021).
  
  
• After the arbitral tribunal is constituted, it can exclude new party representatives in order to avoid a conflict of interest (Art. 17(2) of the ICC Rules 2021).
  
  
• There now exists a 30-day period for an application to the Secretariat for an additional award for claims of the arbitral proceedings on which the court failed to decide (Art. 36 Sec. 3 of the ICC Rules 2021).

Conclusion

The updated ICC Rules 2021 expressly reflect experiences with the ICC Rules 2017 as well as questions occupying the arbitration community since the start of the Covid-19 pandemic. First and foremost, they address the validity and implications of the remote conduct of hearings. The amended Art. 26 (1) of the ICC Rules 2021 empowers the tribunal to decide that any hearings are conducted remotely by videoconference, telephone or other appropriate means of communication instead of by physical attendance, after considering all circumstances of the case. Since this decision can be made by the tribunal even over the express objection of a party, users may want to come to an agreement regarding a virtual or physical hearing beforehand and include it in the arbitration clause.

The ICC Rules 2021 are accessible at the ICC’s website here.