The London Court of International Arbitration (LCIA) has recently amended its Arbitration Rules (available here) and Mediation Rules (available here). The amendments seek to embody recent trends and best practices that have emerged in the practice of international arbitration, particularly in light of the Covid-19 pandemic, which has resulted in an increase in virtual hearings and increased dependency and reliance on technology. The amendments are effective from October 1, 2020. This article will give a brief overview of the amendments to the arbitration rules (‘Rules‘).
Expediency and efficiency
All written communication to the LCIA – be it the Request for Arbitration (Article 1.3), the Response (Article 2.3), an application for expedited formation of the arbitral tribunal (Article 9.2), or an application for emergency arbitrator (Article 9.5) – has to be made electronically. The LCIA Rules go so far that the delivery of communication by other means needs to be approved by the Registrar of the LCIA Court or the Tribunal. The arbitral award may be signed electronically and/ or in counterparts by the Tribunal and will usually be transmitted to the parties by electronic means. Only upon a request, a party will receive a hardcopy (Article 26.7).
The LCIA Court must appoint the arbitral tribunal within 28 days, compared to 35 days under the 2014 Rules (Article 5.6). The amendment clarifies that the tribunal shall have the fullest authority to establish the conduct of a hearing. One aspect is to decide whether to hold a hearing in person or virtually, i.e. by conference call, videoconference or using other means of communication (Article 19.2). This clarification lays to rest the debate whether a tribunal can hold only a virtual hearing, even if one of the parties insists on an in-person hearing. This amendment to the Rules was obviously prompted by the rise in virtual hearings due to the Covid-19 pandemic, with people unable to travel or assemble in one room owing to travel restrictions, lockdown and compulsory social distancing measures. This is a nod to how arbitration can evolve to meet challenges, and ensure that no party is denied access to justice.
Composite filing and amendments to filing
If a party wants to initiate more than one arbitration, against one or more respondents under one or more arbitration agreements, the amended Rules allow for one composite Request to be filed in respect of all such arbitrations. However, each arbitration will be treated as separate and distinct under the Rules, and a separate filing fee will need to be paid in respect of each (Article 1.2). Similarly, a respondent responding to the Request can also file one composite Response (Article 2.2). This might promote efficiency, as parties intending to file more than one arbitration no longer need to file separate Requests, when facts and circumstances giving rise to the arbitrations are the same.
Another new feature is that prior to the constitution of the tribunal, the LCIA Court may allow the claimant or respondent to amend, supplement or modify their filings to correct any error or ambiguity (Article 1.5, Article 2.5). The revision seems to suggest that the LCIA has seen various cases where parties filed their Request or Response in a high pressure situation and under severe time constraints, and realize shortly after filing, that there was a computational error in calculating the damages claimed, or mistake of a similar nature.
The amended Rules acknowledge and recognize the use of tribunal secretaries in international arbitration, and set out the scope and extent of a tribunal secretary’s duties (in particular that a tribunal must not delegate its decision-making function to a tribunal secretary). The Schedule of Costs also provides a range for the hourly rate for the tribunal secretary, and also states what charges may be included within the tribunal secretary’s fees. The tribunal secretary is also required to sign a written declaration necessitating him/ her to disclose any circumstances which may give rise to justifiable doubts regarding his/ her independence and impartiality, as also a declaration regarding his/ her availability and willingness to devote time for the arbitration. This is a continuing obligation, until the arbitration is finally concluded (Article 14A). The tribunal secretary is also bound to keep confidential any material or document produced in the arbitration as well as the deliberations of the arbitral tribunal (Article 30.2).
Conduct of proceedings by the tribunal
The amended Rules provide for a more streamlined procedure in the conduct of arbitration proceedings, whether by the emergency arbitrator or by the arbitral tribunal.
The emergency arbitrator has the power to decide how to conduct emergency arbitration proceedings, and can decide to either hold a hearing or decide the emergency application on the basis of available documents. An important development in the amended Rules is that the emergency arbitrator can, prior to the formation of the arbitral tribunal, confirm, vary, discharge or revoke in whole or part, the emergency arbitrator’s order, or issue an additional order; rectify any clerical, typographical or computational error in the emergency arbitrator’s award; and/ or make an additional award for any claim for emergency relief presented in the emergency arbitration proceedings, but not decided in any award of the emergency arbitrator (Article 9.12). Further, the LCIA Court now has the discretion to decide any matter regarding the administration of emergency proceedings that are not covered by the provisions in the amended Rules (Article 9.15).
As regards the conduct of proceedings by the arbitral tribunal, the tribunal has the discretion to make any procedural order it considers appropriate with regard to the conduct of the proceedings. This inter alia includes making any procedural order with a view to expediting the proceedings, including limiting the length or content or dispensing with written statements, limiting written or oral testimony of any witness, employing technology to enhance the efficiency and expeditious conduct of proceedings, deciding the stage of the arbitration at which any issue or issues shall be determined, dispensing with a hearing and so on (Article 14. 6). Another procedural innovation that has been included in the amended Rules is the arbitral tribunal’s power for early determination that any claim, counter-claim or cross-claim is manifestly outside the jurisdiction of the arbitral tribunal, or is inadmissible or is manifestly without merit (Article 22.1(viii)). This provision allows the tribunal to dispose of unfounded claims and defenses which manifestly lack merit, at a preliminary stage of an arbitration, and help save litigation costs for the other party. Similar provisions can be found in other institutional rules, such as the SCC Arbitration Rules, the SIAC Arbitration Rules and the HKIAC Administered Arbitration Rules.
Consolidation of arbitrations
One of the most significant changes in the amended Rules is the insertion of a provision on consolidation and concurrent conduct of arbitration (Article 22A). Under the newly inserted Article 22.7, after giving all affected parties a reasonable opportunity to state their views, the arbitral tribunal with the approval of the LCIA Court, has the power to:
- consolidate an arbitration with one or more other arbitrations into one single arbitration under the Rules, after all parties agree to the consolidation;
- consolidate an arbitration with one or more other arbitrations commenced under the same or compatible arbitration agreements under the Rules, and either between the same disputing parties or arising out of the same transaction or series of related transactions, provided that no arbitral tribunal has yet been formed, or if formed, then such tribunals are composed of the same arbitrators (emphasis supplied). Under the 2014 Rules, consolidation could be ordered only where the disputing parties were the same. Under the amended Rules however, consolidation could be ordered either between the same disputing parties, or arising out of the same transaction or series of related transactions. This encompasses a scenario where disputes may arise in large project finance contracts, or large construction projects, where there may be a series of related contracts, all with the same underlying project or transaction, the performance of which may be even related to one another, and involving different parties. It will be interesting to see how this provision plays out in practice, particularly in ensuring that a party’s right to equal treatment and party autonomy in the appointment of the arbitral tribunal, are given due consideration.
- concurrently conduct two or more arbitrations subject to the Rules and commenced under the same or compatible arbitration agreements under the Rules, and either between the same disputing parties or arising out of the same transaction or series of related transactions, where the same arbitral tribunal is constituted in respect of each arbitration (emphasis supplied). This provision on concurrently conducting proceedings is new.
The LCIA Court also has the power to order consolidation of arbitrations, under the same circumstances as the arbitral tribunal can order consolidation. However, in cases where the arbitrations are commenced under the same or compatible arbitration agreements, or between the same disputing parties or arising out of the same transaction or series of related transactions, the LCIA Court can order consolidation only when no arbitral tribunal has been formed by the LCIA Court for any of the arbitrations to be consolidated (Article 22.8). Further, the LCIA Court cannot order two or more arbitrations to run concurrently.
Other notable features
In addition to the provisions described in more detail above, the other notable amendments to the Rules include provisions on compliance with laws and regulations to ensure that the LCIA is not associated with any kind of illegal activity (Article 24A) and provisions on data protection (Article 30A). As regards party representation, the amended Rules acknowledge that a party may be represented by non-lawyers, and provides that a party may be represented by one or more “authorised representatives” (Article 18.1). The LCIA has also marginally increased its Schedule of Costs by about 10 to 12.5%. As regards all payments made by parties towards advance on costs, the amended Rules clarify that the LCIA no longer acts as a trustee in respect of the advance payment on costs (Article 24.2).
As with the 2014 Rules, Article 16.4 of the amended Rules provides that the law applicable to the arbitration agreement and the arbitration shall be the law applicable at the seat of arbitration. By choosing to arbitrate under the LCIA Rules, the parties thus choose that the law of the seat of arbitration, and not the law governing the substance of the contract shall govern their arbitration agreement.This is a notable rule in view of the recent UK Supreme Court decision in Enka Insaat Ve Sanayi A.S. v OOO Insurance Company Chubb. The UK Supreme Court reversed the decision of the England & Wales Court of Appeal and held that the law chosen to govern the contract will generally be construed as applying to the arbitration agreement. The UK Supreme Court has, however, also clarified that the general rule does not apply if the parties have chosen a law applicable to the arbitration agreement (e.g. in Article 16.4 LCIA Rules).
Under the amended Rules, Article 16.4 is subject to a new Article 16.5. Article 16.5 of the amended Rules provides that the Rules shall be interpreted in accordance with the laws of England (emphasis added). It is submitted that the relevance of Article 16.5 is rather limited. It only applies in rare cases where there is a dispute between the parties on how to understand the terms of the LCIA Rules.
A further provision that has been added to the Rules is a provision on dispute resolution, which confers exclusive jurisdiction on the Courts of England Wales to hear and decide any dispute between a party and the LCIA (including the members of the LCIA Court, the LCIA Board and the employees of the LCIA), any arbitrator, and emergency arbitrator, tribunal secretary and/ or tribunal appointed expert, which may arise out or in connection with any arbitration (Article 31.3). This is a novel provision, and so far not seen in any other institutional rules.
The amendments capture the mood of the moment as they focus on the use of technology in initiating and conducting arbitration proceedings. The amendments have also helpfully laid down broad parameters for the arbitral tribunal in conducting proceedings, and this also gives the parties an idea of what to expect. Consolidation of multi-party arbitrations comes with its own set of challenges, so it will be interesting to see how such cases are handled under the amended Rules.
  UKSC 38.