Revised LCIA Arbitration Rules 2020: Ready for the New Normal?
Articles
Legal
Litigation / Arbitration
The London Court of International Arbitration (LCIA) revised its very popular Arbitration Rules.
Dr. Jonatan Baier
Legal Counsel
Overview
The London Court of International Arbitration (LCIA) revised its very popular Arbitration Rules (“LCIA Rules”). The new LCIA Rules entered into force on 1 October 2020 and will apply to arbitrations commenced from that date onwards. They will replace the existing Arbitration Rules of 2014. The 2020 LCIA Rules incorporate a number of changes that facilitate flexibility and efficiency in the arbitration process. These updates reflect on the one hand important recent developments in relation to technology, accelerated by the COVID-19 pandemic, and on the other hand a number of best practices designed to improve the efficient conduct of arbitral proceeding.
Technology-Related Changes
As stated in the announcement accompanying the release of the 2020 LCIA Rules, the COVID-19 pandemic “allowed the LCIA to address explicitly some changes in recent good practice, notably the increased use of virtual hearings and the primacy of electronic communication across the board”. The main changes include the following:
By default, any written communication shall be delivered by email or any other electronic means of communication that provides a record of its transmission (Article 4.2). Gone are references to “registered postal” or “courier service”.
An arbitration’s commencement date is now specifically tied to the electronic receipt of the Request by the Registrar (Article 1.4).
Awards can now be signed electronically and/or in counterparts (Article 26.2). This cuts down the time between an award being finalized and transmitted to the parties.
All hearings (including procedural hearings and emergency arbitrator’s hearings) may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form) (Article 19.2; see also Articles 9.7 and 14.3).
At an early stage of the arbitration the Arbitral Tribunal shall, in consultation with the parties and where appropriate the LCIA, consider adopting information security measures and any means to address the processing of personal data (Article 30.5). These amendments reflect the increased importance of privacy and cybersecurity.
Procedural Changes
In addition, the new LCIA Rules contain a number of changes designed to maximize the efficiency of the proceedings. In particular:
The Arbitral Tribunal shall seek to make its final award as soon as reasonably possible and shall to so no later than three-months following the last submission by the parties (Article 15.10).
The Arbitral Tribunal and the parties are now required (and not just “encouraged” as in Article 14 of the 2014 LCIA Rules) to make contact within 21 days from receipt of the Registrar’s written notification of the Arbitral Tribunal’s appointment (Article 14.3).
Article 14.6 now expressly mentions the means by which the Arbitral Tribunal can expedite the procedure (such as limiting the length or content of written submissions, limiting the written and oral testimony of witnesses or employing technology).
Under the 2014 LCIA Rules (Article 14.4 (ii) and 14.5) it was generally accepted that Arbitral Tribunals had an implicit power of early dismissal in relation to claims outside their jurisdiction or manifestly unmeritorious claims. Article 22.1 (viii) now states expressly that the Arbitral Tribunal may determine (including by order or award) that any claim or defence is manifestly outside its jurisdiction or is inadmissible or manifestly without merit (i.e. make an early determination).
The revised LCIA Rules also contain updated provisions regarding multi-party and multi-contract arbitrations. A Claimant wishing to commence more than one arbitration, whether that is against more than one Respondent or under more than one arbitration agreement, will be able to serve a composite request for arbitration in respect of all such arbitrations (Article 1.2).
The Arbitral Tribunals’ powers of consolidation is broadened (Article 22.7 (iii)).
Other Changes
The revised LCIA Rules contain a new provision regarding Tribunal Secretaries (Article 14A) and now explicitly permit the use of a Tribunal Secretary. The rules make clear that the Arbitral Tribunal may not delegate its decision-making function and that all tasks carried out by the Tribunal Secretary shall be carried out on behalf of, and under the supervision of the Arbitral Tribunal. The Tribunal Secretary and the tasks assigned to him or her must be approved by all parties (Article 14.10).
Finally, the LCIA’s Schedule of Costs has also been updated, increasing the maximum hourly rate to be charged by arbitrators to £500 (from £450). While potentially leading to an increase of costs in some arbitrations, this new Schedule of Costs gives the LCIA flexibility to remunerate arbitrators competitively for their work in resolving complex and significant disputes.
Conclusions
The new LCIA Rules are the first updated rules of a major arbitration institution after the outbreak of the global COVID-19 pandemic. This allowed the LCIA to incorporate a number of topical and important issues which are relevant for our new operating environment, such as an explicit reference to data protection and enhancing the references to electronic communication and virtual hearings. So does that mean that new LCIA Rules are ready for the “new normal”? While it appears that this is the case, only time will tell. It will very much depend on how these new rules are implemented and applied by the practitioners and the arbitrators respectively.
