Ercüment Erdem Prof. Dr. H. Ercüment Erdem

Consolidation Of Arbitrations in ICC Arbitration

October 2014

With respect to International Chamber of Commerce (“ICC”) arbitration, consolidation is a procedural mechanism used when two or more pending arbitrations are merged into a single arbitration. Due to the current practice in international commercial transactions that require technical, commercial and financial specialization, the number of multi-party disputes has a tendency to increase. Consolidation may have advantages with regard to procedural efficacy, and may provide procedural economy and cost efficiency. It also lowers the risk of inconsistent decisions. Additionally, the fact-finding phase is facilitated and may be finalized more efficiently, with a more comprehensive presentation of legal and factual positions.

In General

The consolidation of arbitrations is set forth under Art. 10 of the ICC Arbitration Rules (“the Rules”). Pursuant to the relevant article, the International Court of Arbitration (“the Court”) may, at the request of one of the parties, consolidate two or more arbitrations that are pending under the Rules into a single arbitration. The Court may decide on the consolidation under the following scenarios, which shall be further examined in this article:

- Where the parties have agreed to consolidation, or

- Where all of the claims in the arbitrations are made under the same arbitration agreement, or

- Where the claims in the arbitrations are made under more than one arbitration agreement, the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible.

Conditions for Consolidation

The first scenario in which different arbitrations may be consolidated is the parties’ agreement. If there is an explicit agreement of the parties in all of the arbitrations to be consolidated, the Court may order consolidation.

The second scenario is the case in which all of the claims are made under the same arbitration agreement. In this instance, the arbitrations may be consolidated even if the parties are not the same[1]. This broader scope adopted by the 2012 Rules is considered as a more useful and appropriate preference, since there is usually no reason to exclude consolidation from the beginning where all of the parties are bound by the same agreement to arbitrate, even though they may not be parties to both pending arbitrations[2]. On the other hand, it can be the case that the claims made in these arbitrations are totally unrelated to each other. In such cases, the Court shall consider on a case-by-case basis whether to consolidate the cases that have been brought under the same arbitration agreement. In the event that there is no link between the claims, then the Court may refuse to consolidate the arbitrations[3].

The third and the last scenario is that the claims are made under more than one arbitration agreement, under the condition that the arbitrations are between the same parties, the disputes in the arbitrations have arisen in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible. The arbitration agreements may be considered incompatible in cases where factors such as the place of arbitration, the language of arbitration, the mechanism for selecting arbitrators, or the number of arbitrators are different.

The Court’s Discretion on Consolidation

Taking into consideration the wording of Art. 10, which includes the term “may,” it should be stated that the Court has discretion to grant the consolidation. The Court may consolidate, or may deny the request, even though the requirements under Art. 10 are met, considering the case at hand.

Pursuant to Art. 10(2) of the Rules, in exercising this discretion, the Court may take into account any circumstances it considers to be relevant, and consider factors such as whether one or more arbitrators have been confirmed or appointed in more than one of the arbitrations, and if so, whether the same or different arbitrators have been confirmed or appointed. If the arbitrators have been confirmed in more than one of the arbitrations, and if they are different individuals, the Court will not be able to constitute a single arbitral tribunal. As the arbitrations would become one single arbitration once consolidated, to be decided by a single arbitral tribunal, the constitution of a single arbitral tribunal would be necessary. Therefore, it would be impossible to constitute a single arbitral tribunal unless the different arbitrator, or arbitrators, resigns or is removed by the Court at the parties’ request[4].

It should be emphasized that the Court is not limited to the examples stated in the relevant article, and may consider any other circumstance it considers relevant, such as the procedural stage of the proceedings, and whether the terms of reference have been established[5].

The party requesting consolidation shall submit a written request to the ICC Secretariat. It is preferable that the party provides the necessary information and explanations to the Court in order for it to decide on consolidation, such as the link between the disputes, and the grounds for granting consolidation under the Rules.

Modifications Made by the 2012 Rules

Under the 1998 Rules, consolidation was regulated under Art. 4(6). The relevant article permitted consolidation only in cases in which the parties were the same, unless the parties had agreed to consolidate. The 2012 Rules adopt a more liberal approach than that of the 1998 Rules concerning consolidation. Art. 10, subparagraph (b) permits consolidation when the claims in the arbitrations are made under the same arbitration agreement, including the cases in which the parties are not the same.

On the other hand, the 1998 Rules were silent on the conditions to be considered for consolidation under multiple agreements, which are expressly regulated under the 2012 Rules. It should be emphasized that although it was not regulated under the 1998 Rules, the practice developed by the Court was in line with the new provision of the Rules[6].

Procedural Issues on Consolidation

Pursuant to Art. 10(3) of the Rules, when arbitrations are consolidated, they shall be consolidated into the arbitration that commenced first, unless otherwise agreed by all parties. Consequently, the consolidated case will bear the case number of the arbitration that commenced first, while mentioning the numbers of the case that were consolidated[7].

Following consolidation, the Secretariat informs the parties of the new case caption, and sets a short time limit for the parties to submit their objections, if any.

Potential Problems of Enforcement

It should be emphasized that enforcement issues may arise in the presence of consolidation of arbitrations. Under the New York Convention, the fundamentals of enforcement may be stated as the agreement of the parties to submit their differences to arbitration, the scope of the authority of the arbitrators, and the fairness of the conduct of the arbitration. In the doctrine, it is stated that if another dispute is consolidated to the first arbitration, this may violate the fundamental agreement between the two parties to submit their disputes to arbitration[8]. Consequently, the probable basis for refusal to enforce an award under the New York Convention may be the absence of an arbitration agreement between the parties.

To overcome this problem, tribunals and institutions may encourage the parties to record their agreement to consolidation, either in the terms of reference or in some other document, such as the procedural orders, or other early procedural decisions[9].

Conclusion

Consolidation of ICC arbitrations is of great importance, considering the fact that multiparty arbitrations represent 30% of the total caseload of the ICC[10]. Beyond any doubt, the complex nature of international transactions is the major factor in this significant number of cases. The Rules set firm grounds for the consolidation practice of the Court, in line with the previous Court practice, and the needs of arbitration practitioners. We hope that the consolidation of arbitrations will not endanger the enforcement proceedings, and that the precedents of national courts will develop in an arbitration-friendly direction.



[1] Please note that this is an amendment to the 1998 Rules that required the parties to be the same. This issue will be further examined under the title, “Modifications Made by the 2012 Rules” of this article.

[2] Jason Fry, Simon Greenberg, Francesca Mazza, The Secretariat’s Guide to ICC Arbitration, ICC Publication 729 (Paris 2012), p. 113 (“Secretariat’s Guide”).

[3] Secretariat’s Guide, p. 113.

[4] Secretariat’s Guide, p. 113.

Marily Paralika, Alexander G. Fessas, Joinder, Multiple Parties, Multiple Contracts and Consolidation under the ICC Rules, Presentation made on the ICC Conference “New Trends in ICC Arbitration and Mediation” held in Nicosia, Cyprus on April 29th, 2014. Source: http://www.ccci.org.cy/wp-content/uploads/2014/05/Multi-Joinder-Consolidation.pdf (“Paralika-Fessas”).

[6] Simon Greenberg, A Closer Look at Consent: Consolidation, Multi-Contract, Joinder, Cross-Claim, and Applicable Rules Versions, ICC Dispute Resolution Services. Source: https://www.international-arbitration-attorney.com/wp-content/uploads/1icc-dispute-resolution-servicesa-closer-look-at-consentconsolidation-multi-contract-joinde.pdf.

[7] Secretariat’s Guide, p. 113. The example given in the Secretariat’s Guide is as follows: If cases 12345/XY and 12356/XY were to be consolidated, the consolidated case would be referenced as 12345/XY(c 12356/XY).

[8] Julian D M Lew, Loukas A Mistelis, Stefan M Kröll, Comparative International Commercial Arbitration, Kluwer Law International, 2003, p. 408 (“Lew-Mistelis-Kröll”).

[9] Lew-Mistelis-Kröll, p. 409.

[10] Paralika-Fessas.