The ICC Court Decides to Provide Parties With Reasons for Administrative Decisions

Most major international arbitration rules require that an award rendered by a tribunal include the reasons upon which it is based.

However, arbitration institutions themselves often render decisions of significant importance to parties—for example regarding challenges to arbitrators—and most arbitration rules do not require that the institution provide reasons for such decisions. It is therefore of considerable interest that the International Court of Arbitration of the International Chamber of Commerce (“ICC Court”) announced in a note to parties and arbitrators on 8 October 2015 that the ICC Court will now give reasons for many administrative decisions taken under the ICC Rules.

This note follows the statement of Alexis Mourre, the President of the ICC Court since 1 July 2015, during his opening remarks at the 10th ICC Conference in New York on 21 September 2015, that the ICC Court would provide information to the parties on administrative decisions taken by the institution under the ICC Rules.

The ICC has stated this new service will apply to decisions regarding challenges to arbitrators pursuant to Article 14 of the ICC Rules, and decisions to initiate replacement proceedings and subsequently to replace an arbitrator on the Court’s own motion, pursuant to Article 15. The service may also apply to decisions regarding consolidation of arbitration proceedings pursuant to Article 10, and prima facie decisions on jurisdiction, made pursuant to Articles 6(3) & (4).

Any request for the communication of reasons must be made in advance of the relevant decision in respect of which reasons are sought, and the ICC Court may subject the communication of reasons to an increase of the administrative expenses, normally not to exceed US$ 5,000. The reasons will be provided solely to the parties. The new service is effective immediately in new arbitrations, and will apply in ongoing cases where all parties to the case agree.

The ICC Court’s new practice represents a significant advance in international arbitration practice. In some instances, other institutions have provided reasoned decisions for administrative decisions, perhaps the most notably the London Court of International Arbitration (“LCIA”), which provides reasons for its decisions regarding challenges to arbitrators pursuant to Article 10.6 of its arbitration rules.

Among other institutions, the International Centre for Settlement of Investment Disputes (“ICSID”) has rendered a number of reasoned decisions on administrative decisions regarding challenges to arbitrators;

the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”), has periodically published in its Bulletin summaries of its decisions on challenges to arbitrators, most recently those taken from 2010-2012;

and the Hong Kong International Arbitration Centre (“HKIAC”) secretary general has stated that while it has no obligation to do so, the HKIAC elects to provide reasoned decisions for challenges to arbitrators “on a case by case basis.”

However, the ICC announcement appears to be the first official policy regarding the provision of reasons behind administrative decisions, other than Article 10.6 of the LCIA Rules noted above, which applies only to decisions regarding arbitrator challenges.

A number of factors appear to have driven the change in ICC practice. First, providing the parties with reasoned decisions contributes to the transparency of the process and promotes confidence in the independence and impartiality of the tribunal and institution. As noted by the ICC Court in its announcement, the new policy will “enhance the transparency and clarity of the ICC arbitration process. This new service is a sign of our commitment to ensuring that ICC arbitration is fully responsive to the need of our users the world over.”

Second, although publication of administrative decisions (in redacted form, of course) has not yet been addressed by the ICC Court, it would be anticipated that periodic surveys of such decisions by the ICC Secretariat in the ICC Bulletin will assist the parties in understanding the ICC’s practices regarding its administrative decisions. Parties and counsel will better be able to determine the likelihood of success of applications for administrative decisions, thereby encouraging meritorious applications and discouraging frivolous ones, and allowing parties to make more persuasive arguments in their applications and oppositions. Moreover, the availability of previous, reasoned decisions on challenges to arbitrators will assist arbitrators in evaluating whether particular circumstances are likely to result in disqualification, and therefore assist them in determining whether to disclose information as to potential conflicts and even whether to accept or decline appointments. This should in turn reduce the number of challenges, with the corresponding savings of the resources and time of parties, arbitrators and the ICC Court.

Finally, provision of reasoned decisions on administrative matters may aid national courts asked to set aside an award based on an allegedly incorrect administrative decision. At present, a court asked to set aside or decline to enforce an ICC award due to, for example, the failure of the ICC Court to remove a challenged arbitrator can have no direct insight into why such a challenge was accepted or rejected. Under the new ICC Court practice, a national court could rely on such a decision to more easily deny requests to set aside, or challenges to enforcement, of awards on this ground.

The above considerations were considered by the ICC Court to trump concerns that providing reasons may adversely affect the confidentiality and privacy of proceedings; increase the costs of arbitration proceedings; and signal a shift to a precedent-driven system.

As to the first concern, it is important to note that while international arbitration has traditionally been private, it has not necessarily been entirely confidential. The ICC Rules themselves do not obligate the parties to preserve the confidentiality of the arbitration proceedings, although of course applicable national law may impose confidentiality obligations and parties often agree to some level of confidentiality in their underlying contract, the Terms of Reference or elsewhere. In any case, as stated above, the new services provided by the ICC Court do not as of now reference publication or other public disclosure of the reasons for administrative decisions, and therefore should have no effect on privacy or confidentiality of the proceedings.

As to the second concern, the ICC Court is of course very conscious of parties’ increased emphasis on the time and cost of arbitration. In the case of an objection to the confirmation of an arbitrator, the Secretariat will henceforth inform the prospective arbitrator of the objections (by providing him or her with a copy of the objections) and provide a short time-limit to provide comments, so as not to delay to process for the constitution of the arbitral tribunal. Although written, reasoned decisions on arbitrator challenges and other matters can impose increased burdens on Court members and Secretariat staff, the potential small increase in administrative fees that may follow from a request for a reasoned decision is meant to cover this additional cost.

As to the third concern, while some critics of providing parties with reasoned administrative decisions also claim that it would develop a shift to a precedent-driven system within the ICC Court, it is not clear that this is a disadvantage for arbitration users and arbitrators. As noted above, a more transparent system would allow parties to formulate more meritorious applications for administrative decisions, and better understand when potential challenges are unlikely to succeed. This should lead to a more predictable and efficient arbitral process.

In conclusion, the new ICC policy is a welcome advance in international arbitration practice, as it will increase the transparency of the arbitral process; lead to increased predictability and therefore efficiency in the conduct of arbitration proceedings; and may allow certain arbitral awards to be confirmed and enforced more easily. It will be interesting to see whether other arbitral institutions follow the lead of the ICC, and reasoned administrative decisions become the rule, rather than the exception, in international arbitration.

• 1
  See, e.g., International Court of Arbitration of the International Chamber of Commerce (ICC) – Rules of Arbitration of the International Chamber of Commerce (2012) (“ICC Rules”), Article 31(2); International Centre for Dispute Resolution (“ICDR”) International Dispute Resolution Procedures (2014), Article 30(1); International Centre for Settlement of Investment Disputes (ICSID) – Rules of Procedure for Arbitration Proceedings (Arbitration Rules) (2006) (“ICISD Rules”), Rule 47(1)(i); Arbitration Rules of the London Court of International Arbitration (2013) (“LCIA Rules”), Article 26; Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (2010), Article 36(2); China International Economic and Trade Arbitration Commission Arbitration Rules (2014), Article 49 (1); but see Arbitration Rules of the Singapore International Arbitration Centre, Article 28 (not technically requiring such a statement of reasons).
• 2
  Press release at the ICC Court’s website (http://www.iccwbo.org/News/Articles/2015/ICC-Court-to-communicate-reasons-as-a-new-service-to-users).
• 3
  See id. Note that the service does not appear to apply to other decisions made by the ICC Court, and namely those regarding joinder of additional parties pursuant to Article 7 of the ICC Rules, or determination of the place of arbitration, pursuant to Article 18 of the ICC Rules. See id.
• 4
  Id.
• 5
  See LCIA Rules Art. 10.6.
• 6
  Note that in these cases, it is not the primary administrative body of the Centre, its Secretariat, but rather the World Bank President (in his or her role as Chairman of the Administrative Council), that decides challenges to arbitrators in certain cases, namely when the unchallenged tribunal members are split in their opinion as to the challenge of the third arbitrator, or when a majority of the Tribunal is challenged. See ICSID Rules, Rule 9; International Convention on the Settlement of Investment Disputes, Article 58. In many such cases the President has issued reasons for its decisions. See, e.g., Burlington Resources, Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on the Proposal for Disqualification of Professor Francisco Orrego Vicuña (Dec. 13, 2013), available at http://italaw.com/sites/default/files/case-documents/italaw3028.pdf.
• 7
  See http://sccinstitute.com/media/30001/felipe-mutis-tellez_article-on-scc-challenges-on-arbitrators.pdf.
• 8
  In a practice note on the challenge of arbitrators issued in 2014, the HKIAC stated that it had “no obligation to give reasons” for decisions on arbitrator challenges. Global Arbitration Review, 8 October 2014 (http://globalarbitrationreview.com/news/article/34219/icc-court-communicate-reasons-decisions).
• 9
  Press release at the ICC Court’s website (http://www.iccwbo.org/News/Articles/2015/ICC-Court-to-communicate-reasons-as-a-new-service-to-users).