Legal Briefing

The new ICC 2012 Rules of Arbitration

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Eastern Europe | 01 February 2012

On 12 September 2011 the International Chamber of Commerce (ICC) published the revised version of its Rules of Arbitration, updating the 1998 Rules. The new Rules of Arbitration of the International Chamber of Commerce (the 2012 Rules)1 will come into force on 1 January 2012 and will be applicable to all ICC arbitrations (with some limited exceptions) which will be started after that date.


This was one of the major events in the field of international arbitration in 2011 and will bring important innovations. The ICC being one of the leading institutions for the resolution of international business disputes, the amendment of its rules shall be carefully analysed and understood by lawyers, contract negotiators and consultants.

This is particularly relevant for central and eastern European (CEE) countries, as the ICC is the preferred venue for arbitration for parties from this region2. ICC arbitrations involving parties from the CEE increased considerably in the last few years, with more than 100 cases in 2010, including several cases involving states or public entities. This choice is due mainly to the defects of internal litigation in post-socialist countries, which are considered slow, not totally impartial and unsuitable for complex commercial disputes. The new amendments of the ICC Rules will further improve the attractiveness of ICC arbitrations.

The process of amendment of the ICC Rules of Arbitration started in 2008 and was conducted by a task force constituting 175 experts nominated by the national committees of the ICC. The approach adopted by the task force was to maintain the spirit and structure of the 1998 rules by adding, however, some important innovations. A number of them ‘codify’ the already established practice of the ICC Secretariat, while others bring completely new solutions and opportunities. The drafters maintained the traditional flexibility of the ICC rules, making them suitable for parties and arbitrators from different countries and legal traditions.

The main innovations are the integration of the emergency arbitrator into the ICC Rules of Arbitration, the extension of the Rules aiming to address complex disputes and the emphasis put on time and cost efficiency.

EMERGENCY ARBITRATORS

The most innovative provision in the 2012 Rules is the creation of an emergency arbitrator. Such a mechanism has been requested for a long time by practitioners in order to meet the increasing need for effective interim and conservatory measures. Under the old rules, this task was assigned to the Arbitral Tribunal and the parties had to wait for its appointment before they could request emergency measures. This extends the required time for putting in place interim and conservatory measures, reducing consequently the effectiveness of such measures. Parties often needed to seek relief from national jurisdictions.

In 1990 the ICC adopted the ICC Rules for Pre-Arbitral Referee Procedure. This mechanism, however, was not successful and has only rarely been used3. It was contained in a separate rule and required the express consent of the parties. The new emergency arbitrator mechanism, even if inspired by the 1990 Rules for Pre-Arbitral Referee Procedure, is different in many aspects.

While emergency arbitrator provisions already exist under other arbitration rules4 as optional for parties, the drafters of the new ICC Rules have adopted a different approach, making the emergency arbitrator mechanism the rule while opting-out is the exception. This solution was also adopted by other institutions5 and seems currently to be the preferred one.

It is important to underline that the emergency arbitrator mechanism will not apply to arbitral agreements concluded before the entry into force of the 2012 Rules and to agreements in which parties choose expressly to opt-out or to provide for another interim mechanism.

The entire emergency arbitrator mechanism is designed to provide speed and effectiveness. It is applicable only before the appointment of the Arbitral Tribunal. The time limits of the procedure, even if not always strictly defined, are as short as possible – two days for the president of the ICC Court to appoint a sole emergency arbitrator, two days to establish a timetable, 15 days to draft an emergency order.

The powers of the emergency arbitrator are extensive – they may order the measures they think appropriate, including the provision of security. This emergency order is not binding on the Tribunal and will cease to take effect upon its constitution.

It will be interesting to see how national jurisdictions will react to the emergency arbitrator mechanism and how they will enforce its orders.

First, national jurisdictions will need to determine whether such orders are covered by the New York Convention and, in the positive, to what extent. In our opinion it 
is highly improbable that Emergency 
Orders will be enforced under the New 
York Convention. The Convention only provides for the enforcement of arbitral awards. The wording of both the Convention and the 2012 Rules seems to make a clear distinction between awards and other arbitral decisions. In this regard, it is relevant to mention that the decisions adopted under the ICC Rules for Pre-Arbitral Referee Procedure, which also were called orders, are not considered by the doctrine6 and some national jurisdictions as awards and, consequently, are non-enforceable under the New York Convention (see Société nationale des pétroles du Congo
et République du Congo v Société Total Fina Elf E & P Congo, Paris Court of Appeal, 29 April 2003).

Second, national jurisdictions will have to determine whether Emergency Orders may be enforced under national arbitration law. In some CEE countries, such as Austria and Ukraine, orders and interim measures ordered in international arbitrations are enforceable, In other countries, for example in Bulgaria, the Czech Republic and Hungary, under national arbitration laws only final awards may be enforced.

COMPLEX DISPUTES

The text of the 1998 Rules contained only very limited provisions dealing with arbitrations, involving more than two parties or more than one contract. However, the practice shows the increasing need for provisions regulating more complex disputes, for instance with multiple parties or based on different contracts.

The 2012 Rules provide for the possibility for additional parties to join the arbitration before and after the appointment of the Tribunal. As to claims between multiple parties, it is specified that ‘claims may be made by any party against any other party’, which represents a flexible and pragmatic approach. In case of multiple contracts or arbitration agreements between the same parties and providing ICC arbitration clauses, the rules allow resolving the disputes in a single arbitration.

In order to make arbitration more effective, rational and attractive, under the 2012 Rules the possibility for the ICC Secretariat to consolidate different pending arbitrations is extended.

TIME AND COST EFFICIENCY

Last year’s international arbitration has been subject to an unprecedented escalation of delays and costs. For this reason, the drafters of the new ICC arbitration Rules, took particular care to ensure time and cost efficiency.

The 2012 Rules provide an express duty for both the parties and the Tribunal ‘to conduct the arbitration in an expeditious and cost-effective manner’. In this regard, Annex IV to the Rules suggests some case management techniques, which may be used by the Tribunal and the parties. Moreover, when deciding the costs, the Tribunal may take in account the conduct of each party and how it contributed to the efficiency of the whole procedure.

An innovation is also the obligation for the Tribunal to hold a ‘case management conference’ with the parties prior to 
drawing up the terms of reference. The purpose of this meeting is to establish a procedural timetable and to discuss with the parties the case management techniques to be applied.

The measures taken to make ICC arbitration more cost-effective and predictable will be particularly welcomed in CEE countries, where ICC litigation has been used mainly for large international disputes, while more ordinary business disputes are still often submitted to local arbitration institutions.

OTHER PROVISIONS

The 2012 Rules are also tailored to facilitate arbitrations involving states or state entities. There are specific provisions for the arbitrator’s appointments in those cases. This will allow the ICC to attract more mixed arbitrations, including also investment arbitrations, towards which, until now 
the United Nations Commission on International Trade Law (UNCITRAL) Rules, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) or International Centre for Settlement of Investment Disputes (ICSID) were much more adapted.

Finally, the 2012 Rules modernise the communication provisions and reflect the growing use of internet and electronic communications. Some old technologies such as facsimile and telex are not mentioned any more.

CONCLUSION

The 2012 Rules constitute a major development in international arbitration. The recent amendments to leading arbitration rules, such as the ICC, UNCITRAL and the SCC Rules, show dynamic changes in the field of international dispute resolution. International arbitration proves to be better adapted to resolve international business disputes than national litigation.

The ICC task force managed to draft a modern, flexible set of Rules that are responsive to business needs. They are adapted to a broad range of possible litigations and may be a convenient choice for an arbitration clause in international commercial contracts.

Notes

  1. Available in different languages at http://www.iccwbo.org/ICCDRSRules/
  2. M Hodyson, ‘The rebirth of arbitration in central and eastern Europe’, Global Arbitration Review, volume 6, issue 3.
  3. Y Derains, E Schwarz, Guide to the ICC Rules of Arbitration (2005, Kluwer Law 
International) p10.
  4. For instance the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) provisions on Emergency Arbitrators and the 1990 ICC Rules for Pre-Arbitral Referee Procedure.
  5. For instance the new rules of the Australian Centre for International Commercial Arbitration (ACICA), the AAA International Dispute Resolution Rules and the Singapore International Arbitration Centre (SIAC) rules.
  6. E Gaillard, Ph Pinsolle, ‘The ICC Pre-Arbitral Referee: First Practical Experiences’, Arbitration International (2004) volume 20, No 1 and P Tercier, ‘Le référé pré-arbitral’, ASA Bulletin(Kluwer Law International, 2004 volume 22 issue 3 ) pp464–478.