This article has been written by Vivek Vithalrao Jawale. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).
Table of Contents
Introduction
Society is not static, it is ever-changing. Therefore the law is also bound to change. The ability to change is called intelligence. Law is not the autonomy of any particular generation. Every generation has the right to change it as per the prevailing circumstances. The principle of change is applicable to both municipal and international law. But it is found that international law adopts new changes very quickly and municipal law follows it to some extent. Hence, it can be said that international law may shape municipal law. The present article is an attempt to study the New Rules of Arbitration, 2021 (“2021 Rules”), developed by the International Chamber of Commerce (“ICC”) through an online conference held on 1 December 2020.
These new rules have emerged due to the inability of the old laws of international arbitration to tackle the problems like consolidation, joinder, third party funding, arbitral appointments and changed circumstances during the COVID-19 Pandemic. The application of the new rules is prospective as it came into force from 1 January 2021 and has been made applicable for future cases. Thus, this article is an endeavor to discuss new rules in international arbitration so as to increase efficiency and transparency in international arbitration.
International arbitration
“Arbitration” means the use of an arbitrator to settle a dispute. The “Arbitrator” means an independent person or body officially appointed to settle a dispute. Dispute means a disagreement or argument on a particular issue. It may be called a conflict of interest. If the dispute is international then the international arbitration process is applicable. Thus, “Arbitration” is a mechanism to settle a conflict between the parties through an arbitrator by issuing a proper award, which is binding on both the parties.
The term “International Arbitration” is used in a peculiar sense, which is a hybrid form of international dispute resolution because it is a mixture of civil law procedure and common law procedure. It respects disputant parties’ freedom to finalize their terms and conditions pertaining to the resolution and arbitrator. But it is one of the limitations of international arbitration that it is only applicable to the matters which are arbitral. Its scope is very wide. It includes all types of international commercial disputes. The arbitral agreement is generally made prior to the arising of the dispute but sometimes it may be made after the dispute arises . The latter is called a “submission agreement”. The submission agreement is an arbitration agreement which is made and signed by the disputant parties after the arising of the dispute.
Moreover, the disputant parties are allowed the liberty to frame the terms and conditions of the international arbitral agreement, laws binding on the international arbitration, number of international arbitrators, place of international arbitration, the language of international arbitration etc. The best example of international arbitration is “investment arbitration”. It is related to the arbitration process by foreign investors against the state on the basis of bilateral or multilateral treaties.
International arbitration rules
It is found that the most of the international arbitration institutions generally formulate “international arbitration rules” which are applicable to the dispute settlement through international arbitration, e.g. the rules of arbitration formulated by the International Chamber of Commerce (“ICC”), the London Court of International Arbitration (“LCIA”), the International Centre for Dispute Resolution of the American Arbitration Association (“ICDR”), the rules of the Singapore International Arbitration Centre (“SIAC”) and the Hong Kong International Arbitration Centre (“HKIAC”). Investment arbitrations are often resolved under the rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) or the United Nations Commission on International Trade Law (“UNCITRAL”) rules. Much of the arbitration involving Russian businesses takes place under the rules of the Stockholm Chamber of Commerce (“SCC”).
New rules to increase efficiency and transparency in international arbitration
These new rules emerged due to the problems faced by parties to arbitration in changed circumstances during the COVID-19 Pandemic. Accordingly, an online conference was held on 1 December 2020. Its main purpose was to streamline the International Arbitration process. Its operation is prospective since it came into force on 1 January 2021 and was made applicable for future cases raised after 1 January 2021. The “Following new rules” aim to bring new changes in international arbitration so as to increase efficiency and transparency in reality.
- New rules of International Arbitration for Increasing Efficiency in International Arbitration
“Following new rules” of international arbitration are made by ICC in 2021 so as to tackle the failure of old rules about the joinder of parties and consolidation of arbitration proceedings. It proved that disputes concerning multiple parties and multiple contracts may be resolved.
- Consolidation: The old rules of international arbitration did not elaborate on whether consolidation of arbitration proceedings was allowed only in the circumstance where each of the claims in the arbitrations arises from the same arbitration agreement, or if the dispute was arising from different contracts that contain identical arbitration agreements. But now the new rules of international arbitration allow the consolidation of cases involving different parties but taking its roots from the arbitration agreements. Moreover, consolidation is also allowed if the same parties’ claims arise from different arbitration agreements in connection with the same legal relationship.
- Joinder: The old rules of international arbitration were not comprehensive about whether the parties to adjoin an additional party after the consolidation of the tribunal. But now, the new rules of international arbitration allowed a joinder of additional parties after the appointment of the arbitrator, without obtaining the consent of all relevant parties.
- Green and Remote Arbitration: The COVID-19 pandemic promoted social distancing. Hence virtual court proceedings became the norm in almost every jurisdiction in the world. But the old rules of international arbitration were not comprehensive to allow virtual hearing of international arbitration but the new rules allowed a virtual hearing and electronically submission of documents.
- New threshold for Expedited Procedure and Emergency Arbitration: The new rules of international arbitration (ICC 2021 Rules) increased the automatic threshold from USD 2 million to USD 3 million. It will be applied prospectively to cases with an arbitration agreement date of on or after January 1, 2021, it is aimed to encourage speedy, efficient, and low-cost international arbitral proceedings. Thus, it will increase cases of international arbitration as the threshold for initiating emergency arbitration has been raised to USD 3 million by new rules. It will ultimately develop efficiency as more cases will be solved speedily and cheaply.
- New rules of International Arbitration for increasing Transparency in International Arbitration
New rules of international arbitration emerged due to the problems faced by parties to arbitration in changed circumstances during the COVID-19 Pandemic. The amended new rules made by ICC in 2021 brought greater accountability in the international arbitration process. The “Following new rules” are made to increase transparency in international arbitration.
- Disclosure of Third-Party Funding: The old rules of international arbitration were not comprehensive about whether the third-party financing will come within the preview of international arbitration. But the new rules made by ICC have made the international arbitration proceedings more transparent by allowing third-party financing within the ambit of international arbitration. Hence it may be predicted that the other funding agreements like insurance coverage will also be brought within the same lines in future.
- Limiting Changes to Party Representation: The old rules of international arbitration were not comprehensive about whether the change in the representation of parties to be reported to the Secretariat and the authority of the Secretariat to take cognizance of such change so as to protect the interest of the parties to the dispute but the new rules made by ICC has allowed it. It is a positive measure taken so as to avoid any disturbance to the international arbitration proceeding due to a change of lawyer or counsel.
- Arbitral Appointments: The old rules of international arbitration were not comprehensive about whether the ICC Court has the power to decide all members of the arbitral tribunal. But the new rules of international arbitration have granted such power to the ICC Court so as to assure equality, fairness and transparency in the international arbitration for enforcement of arbitral awards. It is also made clear that the arbitrators may not be from the country of the disputant parties so as to avoid bias to be entered in the arbitral award. Thus, the principles of natural justice are truly followed and applied in international arbitration.
Conclusion
It is true that recent amendments in the rules of international arbitration of both; the ICDR and the ICC are made to provide solutions to the problems emanating out of previous rules. It successfully tackled the issues like multi-party disputes, the management of related disputes arising under separate arbitration agreements, the potential risks to arbitrator impartiality and independence because of undisclosed third-party funding arrangements, the increasing use of technology in arbitration in circumstances of increased data regulation and cyber security risk etc. Therefore the new rules of international arbitration may increase efficiency and transparency in international arbitration and provide an opportunity to the disputant parties to settle their complicated dispute in an amicable manner. Thus, the new 2021 ICC Rules can serve as a benchmark to other institutional arbitration to bring such innovative rules in for increasing their efficiency and transparency in future.
References
1. https://www.international-arbitration-attorney.com/what-is-international-arbitration/
2. https://www.international-arbitration-attorney.com/definition-of-arbitration/
3. https://iccwbo.org/media-wall/news-speeches/icc-unveils-revised-rules-of-arbitration/
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