New ICC Rules of Arbitration and Note: A Quest for Efficiency, Transparency and Lower Costs

International Commercial Arbitration, ICC, Rules of Arbitration

The International Chamber of Commerce, once again, revised its very popular Rules of Arbitration ("ICC Rules"). The new ICC Rules entered into force on 1 March 2017, and they shall make arbitration more efficient, more transparent and cheaper. An additional unique feature is the introduction of rules for expedited proceedings with respect to relatively small claims ("Expedited Rules"). Apart from that, the new ICC Rules contain general amendments. Alongside the new Rules, the ICC also released a revised version of its Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration ("Note").

Rules on Expedited Procedure

By introducing specific rules on expedited procedure, the ICC follows an international trend. The following are key features of the new Expedited Rules:

  • The Expedited Rules apply automatically if (i) the arbitration agreement was concluded on or after 1 March 2017 and (ii) the amount in dispute is below USD 2 million. The parties have the option to either opt out or opt into the application of these rules.
  • The case is decided by a sole arbitrator, even when the arbitration agreement provides for a three-member tribunal. Usually, the sole arbitrator will be appointed by the ICC Court.
  • Terms of Reference are not required.
  • The parties cannot make new claims after the constitution of the arbitral tribunal, unless expressly authorized by the tribunal.
  • The Case Management Conference shall be held within 15 days from the transmission of the file to the sole arbitrator.
  • The sole arbitrator shall render its award within 6 months from the Case Management Conference, unless this deadline is extended by the ICC Court.
  • The sole arbitrator shall consider the following measures to increase the efficiency of the proceedings: (i) exclude document production; (ii) impose limits as to the number, length and scope of submissions, witness statements, and expert reports; (iii) decide the dispute solely based on documents and without a hearing; (iv) alternatively, hold a hearing via telephone or video conference instead of a hearing in person.
  • Like any other ICC award, an award under the Expedited Rules is also scrutinized by the ICC Court.
  • The fee range for the sole arbitrator is reduced by 20 %, while the ICC administrative fees remain the same.

General Amendments

In addition, the new ICC Rules contain the following general amendments for proceedings that are not expedited:

  • Terms of Reference must be issued within 30 days, instead of previously 2 months.
  • The reasons for ICC Court decisions concerning the appointment, confirmation, replacement or challenge of arbitrators shall no longer be confidential, but shall be communicated upon request of a party.
  • The scale for administrative fees has been modified, effective as of 1 January 2017.

Revised Note

The ICC also issued an updated Note which contains detailed guidance on the new Rules for parties and arbitrators. The most important new features introduced in the Note are the following:

  • Delays in expedited procedures may have financial consequences for the sole arbitrator (as regards submitting the draft award) and for the ICC Court (as regards scrutiny of the award).
  • Arbitrators, parties and their representatives are to abide by "the highest standard of integrity and honesty and to conduct themselves with honour, courtesy and professionalism". Accordingly, the parties and arbitral tribunals are encouraged to draw inspiration from, or where appropriate to adopt, the IBA Guidelines on Party Representation in International Arbitration.
  • Ex partecommunication and contacts between an arbitrator and a party are prohibited, save under exceptional circumstances concerning the appointment of an arbitrator or the constitution of the arbitral tribunal.
  • The ICC introduces a wide range of additional services that are available to the parties in ICC cases, such as (i) the recommendation of administrative secretaries, (ii) services for the organization of the hearing, or (iii) the use of sealed offers.

Conclusions

In recent years, the ICC constantly increased efficiency and transparency in arbitration. The new ICC Rules are a next step in the same direction. The Expedited Rules for smaller claims are inspiring.

Since roughly 1/3 of ICC arbitrations have an amount in dispute below USD 2 million, it is clear that particularly the new Expedited Rules will be very relevant in practice. Accordingly, particular attention will have to be given to the question of whether or not a party shall opt out of or opt into the said rules when drafting an ICC arbitration clause. Will the Expedited Rules be a success? Time will tell, but, in any event, much depends on the conduct and discipline of all participants in the arbitration process.

* Dr. Jonatan Baier

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