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New rules to increase efficiency and transparency in international arbitration

November 14, 2021
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This article has been written by Vivek Vithalrao Jawale. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

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. 

  1. 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. 

  1. 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. 

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/

4.https://www.mondaq.com/turkey/arbitration-dispute-resolution/1051634/new-2021-icc-rules-a-road-to-efficiency-and-transparency.


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