Ercüment Erdem Att. Melissa Balikci

LCIA Rules 2020

August 2020

Introduction

On 11 August 2020, the London Court of International Arbitration (“LCIA”) has announced the changes made to the LCIA arbitration rules[1] (“LCIA Rules 2020” or “LCIA Rules”) that will become effective on 1 October 2020. The LCIA Rules 2020 will apply to any arbitration commenced under the rules on or after this date, provided that there is no express agreement between the parties providing that an earlier version of the rules should apply.

The latest revision to the rules was made in 2014 and, with this update, the LCIA aims to ensure that the rules continue to reflect best practice, and aims to “make the arbitration and mediation processes even more streamlined and clear for arbitrators, mediators and parties alike.[2]

As stated by Paula Hodges, QC, (President of the LCIA), the changes were attempted to be done with a “light touch, [3] and some important issues were clarified.

This newsletter aims to provide a brief summary of the amendments made to the LCIA Rules 2020. It should be noted that amendments have also been made to the mediation rules, but those are not within the scope of this newsletter.

Notable Amendments

Following the outbreak of the Covid-19 pandemic, parties involved in arbitration proceedings had to make certain changes to adapt to the “new normal.” In this respect, as a result of the increase of the use of technology, provisions were made relating to electronic communication, as well as virtual hearings. For example, Article 14.3 provides that contact may be made, “By a hearing in person, or virtually by conference call, videoconference, or using other communication technology, or exchange of correspondence.” Another example relates to awards, pursuant to Article 26.2, awards may be signed electronically. Particularly, the primacy of electronic communication has been set out in Article 4.3 of the Rules (unless the parties agree otherwise, and subject to any order the arbitral tribunal may make), and provision has been made as to the how the date of receipt is to be determined. This also includes the submission of the Request for Arbitration and Response electronically, which means that service may be made by email. Accordingly, the commencement date has been defined as the date which the Request is received by the Registrar electronically.

Article 19.2 explicitly states that hearings may be held virtually, by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).

The use of technology is also embedded in the provisions relating to Emergency Arbitrator in Article 9B. Article 9.5 states that an application for the appointment of an Emergency Arbitrator shall be made to the Registrar in writing by electronic means. Although the Emergency Arbitrator is not required to hold any hearing and may decide the claim on available documents, in the event of a hearing, among others, Article 19.2 shall apply.

In this respect, Article 14.6 is also notable as the tribunal is expressly empowered to decide on “Employing technology to enhance the efficiency and expeditious conduct of the arbitration (including any hearing).” As it is known, the arbitral tribunal is under a general duty to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay and expense, so as to provide a fair, efficient and expeditious means for the final resolution of the parties’ dispute.

The arbitral tribunal’s power has also been expressly recognized in respect of early dismissal of claims. Pursuant to Article 22.1(viii), the tribunal may issue an order or award determining that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside its jurisdiction, or is inadmissible or manifestly without merit. This is another tool that shall allow arbitrators to expedite proceedings.

The LCIA Rules 2020 allow the submission of composite Request for Arbitration and Response, thus multiple arbitrations against one or more respondents and under one or more arbitration agreement may be commenced.

The tribunal’s and the LCIA Court’s power to order consolidation of arbitrations has also been updated. The new Article 22A, deals with the LCIA Court’s and the tribunal’s power to order consolidation or concurrent conduct of arbitrations, and sets out the tribunals power to order consolidated or concurrent proceedings where the disputes arise under compatible arbitration agreements, and relate to the same or a series of transactions. This is, thus, an expansion of the situations in which consolidation is available.

Another important issue the rules now deal with relates to tribunal secretaries, and a new article has been incorporated as Article 14.A. Tribunals may require assistance from a tribunal secretary that may positively impact the effectiveness of the proceedings. However, there has been much debate as to the role of tribunal secretaries. The provision clearly expresses that under no circumstances may a tribunal delegate its decision-making function to a tribunal secretary. Additionally, Article 14.8 states that “All tasks carried out by a tribunal secretary shall be carried out on behalf of, and under the supervision of, the Arbitral Tribunal, which shall retain its responsibility to ensure that all tasks are performed to the standard required by the LCIA Rules.” This emphasizes the control the arbitrations shall maintain over the tribunal secretary. It should be noted that the use of a tribunal secretary is subject to the approval of the parties.

Provision has been made with respect to compliance and data protection issues with the inclusion of new Articles 24A and 30A.

The LCIA Rules now set out a three-month time limit, encouraging tribunals to render their award within three months following the last submission made by the parties (whether made orally or in writing); whereas, the previous version of the Rules merely provided that tribunals should issue their final awards as soon as reasonably practicable following the last submission from the parties.

Additionally, the Schedule of Arbitration Costs[4] has also been amended. Particularly, the maximum hourly rate provided for arbitrators has increased from £450 to £500, taking into consideration the complexity and significance of certain cases. However, in exceptional cases, the rate may be higher as previously set out in the Schedule of Arbitration Costs. The registration fee to commence an arbitration, the hourly rates of the LCIA Secretariat, the application fee for the appointment of an Emergency Arbitrator, and the Emergency Arbitrator’s fee, have also been increased. As a reflection of the amendments made with regard to tribunal secretaries, a provision has been included regarding their hourly rates.

Conclusion

The changes made to the LCIA Rules are likely to increase the efficiency of arbitrations conducted under the LCIA Rules and, thus, the updates are welcomed. It seems plausible to suggest that these updates will allow the LCIA to maintain its position as one of the leading arbitration institutions.

 

[1] The LCIA Rules 2020 are accessible at: https://www.lcia.org/Dispute_Resolution_Services/lcia-arbitration-rules-2020.aspx#Article%204 (Access date: August, 2020).

[2] For the update announced in the LCIA website, please see: https://www.lcia.org/lcia-rules-update-2020.aspx (Access date: August, 2020).

[3] For the update announced in the LCIA website, please see: https://www.lcia.org/lcia-rules-update-2020.aspx (Access date: August, 2020).

[4] The Schedule of Costs is acccessible at: https://www.lcia.org//Dispute_Resolution_Services/schedule-of-costs-lcia-arbitration-2020.aspx (Access date: August, 2020).