This article has been written by Ashok Om Prakash Pandey pursuing the Certificate Course in International Commercial Arbitration and Mediation from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Smriti Katiyar (Associate, Lawsikho).
The advent and popularization of arbitration over the years has only increased manifolds. it now finds place in almost every major commercial contract whether domestic or international. The popularity of arbitration has in fact reached a stage where it is slowly fading away from being an “alternate” dispute resolution mechanism , but is rather becoming the “preferred” mechanism for dispute resolution.
But eventually, when we go about arbitration, it is also governed by laws and procedures. and needless to say, law changes as society changes. with ad-hoc arbitration being the norm in the initial days, times changed and arbitral institutions came to the forefront with their own rules. concepts of arbitration underwent change and so did the approach of the parties towards it. In order to keep up with the growth in complexities of commercial transactions, arbitral institutions too, adopted changes in their rules. In this article, we discuss the core elements of one such renowned arbitral institution i.e. the international centre for dispute resolution (icdr).
ICDR is the international division of the American arbitration association, which is the largest arbitral institution in the world*. It recently incorporated some very noteworthy amendments in its international dispute resolution procedures (including mediation and arbitration rules) (effective from 1st March 2021). These changes have been made keeping in view the advent of the covid pandemic in order to keep the dispute resolution system functioning smoothly and effectively in these uncertain times.
The new amendments to the mediation rules of icdr too, seek to bring more clarity in the process. Article 3(4) of the arbitration rules now requires the respondent to expressly state if they are willing to mediate upon the dispute prior to the commencement of the arbitration or concurrently. The 2014 rules only required the respondent to mention if they were willing to mediate.
Use of technology for arbitration and mediation
This is the most relevant change pertaining to the restrictions brought forth because of the pandemic. according to article 26(2) of the rules:
“a hearing or a portion of a hearing may be held by video, audio, or other electronic means when: (a) the parties so agree; or (b) the tribunal determines, after allowing the parties to comment, that doing so would be appropriate and would not compromise the rights of any party to a fair process. the tribunal may at any hearing direct that witnesses be examined through means that do not require their physical presence.”
It is pertinent to note that when the tribunal determines that it is necessary to conduct the proceedings in a virtual set up, parties are only required to “comment”. their consent is immaterial and the tribunal has the sole discretion. While some may consider this to be a compromise of party autonomy, the author strongly believes that this discretion is fair, lest one party use the autonomy for such a decision to the other party’s disadvantage and unnecessarily delay the proceedings. However, this discretion is still subject to the guiding principle of arbitration that both parties should be given equal and adequate chance to present their case [Article 22(1)].
Furthermore, keeping the privacy considerations in view, at the procedural hearing, the tribunal is required to discuss with parties about cybersecurity, data protection and privacy to provide for an adequate level of protection while conducting the proceedings virtually [Article 22(3)]. Such discussions are important to uphold the confidentiality principle of arbitration.
In consonance with these changes made in the arbitration rules, Rule m-9 of icdr gives the mediator and the parties the liberty to conduct a part of, or the entire proceedings on virtual platform. Furthermore, Rules m-9(3) gives the mediator the liberty to conduct ex-parte meetings with the parties prior to the commencement of mediation using virtual means.
Third party funding
Third party funding is a new and increasingly popular practice of arbitration. Even though one of the advantages of arbitration was cost effectiveness, the reality of the situation is that arbitration at good, renowned institutions is in fact quite heavy on the pocket. Therefore, third-parties agree to fund a party’s arbitration costs, in consideration of a share of the arbitral award. while many institutional and national law rules are yet to address this, icdr in its 2021 amendments incorporated Article 14(7) whereby parties are required to, either on their own initiative, or upon request by the arbitral tribunal to:
(i) Disclose the identity of any third-party which has agreed to fund a part, or the complete cost of the arbitration for the party;
(ii) Further disclose if such third party has any economic interest in the outcome of the arbitral award. If yes, the nature of interest ought to be disclosed too.
This change has been introduced under Article 14 because third party funding is an important concern as far as independence and impartiality of the arbitrator is concerned.
Liberal consolidation of arbitration
Prior to the 2021 amendments, the rules mandated that two arbitrations could be consolidated only when “the claims, counterclaims, or setoffs in the arbitrations are made under more than one arbitration agreement; the arbitrations involve the same parties; the disputes in the arbitrations arise in connection with the same legal relationship; and the arbitration agreements may be compatible.” However, the new rule adds the clause “or related parties” to Rule 9 after “involve the same parties”. This gives the consolidation arbitrator the liberty to join two arbitrations even if the parties are not the same, thereby effectuating a consolidation and a joinder. it is also noteworthy that a party’s opposition would be immaterial, if the tribunal thinks that the joinder is “appropriate”. such an amendment would greatly help in dealing with multi-party disputes like in cases of m&a and even maritime disputes.
Early disposition of issues
Under the new article 23 of the icdr rules, a party may make an application to the arbitral tribunal to dispose of any issue set out in the claim or counterclaim, prior to the adjudication of the dispute on merits. the tribunal is mandated to allow such an application if;
(i) the application has a sound possibility of succeeding,
(ii) the application could dispose of, or narrow, one or more issues in the case,
(iii) the consideration of the application is likely to be more efficient or economical than leaving the issue to be determined with the merits.
Article 23(2) gives the other party a reasonable opportunity to oppose the application. Furthermore, under Article 23(3), the arbitral tribunal can pass any order or a reasoned award with respect to the issue being disposed of early.
It is pertinent to note that such provisions were already present in article 29 of the Singapore international arbitration center (siac) rules since 2016 and in article 22.1(i) of the rules of the London court of international arbitration (lcia) since 2020.
Enhanced ceiling on invocation of expedited procedure
Under the 2014 arbitration rules the expedited procedure, which gives parties a faster and simpler procedure to resolve their disputes, could be invoked only if the claims (exclusive of interest) did not exceed $250,000. However, under the 2021 amendments, this limit has been enhanced to $500,000. This is a welcome step in line with the internationally accepted standard limit on invocation of expedited procedure in other renowned institutions.
Execution of settlement agreement
While the 2014 mediation rules only required the mediating parties to have representatives who have the ability to “consummate a settlement” [Rule m-8 (2014)], the 2021 rules go one step further and under Rule m-10, parties are required to bring representatives who can “execute settlement agreements”.
ICDR’s publication of awards
The rules relating to the publication of awards have not only been moved (they are now addressed as a matter of confidentiality under Article 40 rather than under the article entitled “time, form and effect of award”) but they are now more specific. In particular, unless any party provides a written objection to publication within 6 months from the date of the award, the icdr may publish selected awards, orders, decisions and rulings which have been redacted to conceal party names and other identifying details (Article 40(4)). This provides useful clarity for parties and promotes increased transparency of arbitral decision-making under the icdr rules.
New Article 17 confirms that the tribunal may, if it has the parties’ consent, appoint a tribunal secretary, who will act in accordance with icdr guidelines. exclusion of liability has also been extended to any arbitral tribunal secretary under Article 41. This is significant because the immunity from claims that cloak arbitrators have not applied with the same universality to tribunal secretaries, despite the fact that institutional guidelines could provide them with some protection in this sense.
New rules adapted to our digital world
Last updated in 2014, the icdr rules have now been revised to take account of the increased digitalisation of international arbitration. Articles 22 and 26 both recognise that procedural and final hearings (including witness testimony) may be conducted by video, audio or other electronic means and the same applies to expedited proceedings in which there is an oral hearing (Article e-9) and to mediations under the mediation rules.
As a corollary, the icdr rules also oblige the parties and the tribunal to discuss data protection, privacy and cybersecurity and hence work to ensure adequate compliance and security for their case. The icdr also sends the parties useful resources in each case (aaa-icdr best practices guide and aaa-icdr cybersecurity checklist). The parties should also consider the adoption and use of online case management platforms early on, with the above issues in mind, and are free to make use of other tools, such as the recently launched protocol for online case management in international arbitration designed to assist with an arbitration (regardless of jurisdiction, subject matter or applicable rules).
The progressive and visionary approach of icdr is indeed laudable. Their latest amendments not only incorporate the new, changing trends in international arbitration but also align themselves with the international standards set by other reputed institutions. With institutional arbitration becoming a norm in India, the global stage has set a standard that could be followed and incorporated in our arbitration landscape as well. with majority of the 2019 amendments to the Arbitration and Conciliation Act, 1996 relating to arbitral institutions still not being notified, it is time that the standards being set by these international institutions be met by the institutions of our country as well so that when the provisions of the 2019 amendment are notified, india shines along with other nations as an arbitration-friendly destination.
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