The London Court of International Arbitration (LCIA) has released an update to its Arbitration Rules, which will take effect on 1 October 2020 ('the 2020 Rules'). There are no dramatic changes to the 2014 edition of the rules; the drafters have adopted a 'light-touch' approach to the revisions. Nevertheless, the 2020 Rules include a number of notable changes aimed at streamlining and modernising both the language of the Rules themselves and the arbitration process, as well as making the process more innovative, efficient and cost-effective for its users. This blog summarises the key changes.
Tribunal’s conduct of proceedings
Changes to Articles 14 and 22 of the 2020 Rules more clearly emphasise the breadth of tribunals’ discretionary powers when it comes to ensuring the efficiency of the arbitration procedure. The power to make procedural orders aimed at expediting the procedure is now expressly included alongside a list of procedural tools and techniques at the disposal of the tribunal for such purpose. These include shortening timescales, limiting evidence, restricting pleadings, dispensing with a hearing and/or using appropriate technology. These changes should embolden tribunals to adopt these techniques where appropriate to enhance the efficiency of the procedure in a given case.
Another procedural tool now expressly provided for in the 2020 Rules is the power to order the early dismissal of claims, defences or counterclaims which are manifestly without legal merit or manifestly outside the jurisdiction of the tribunal. It is hoped that parties and tribunals will use this tool in appropriate cases to save costs and protect parties from having to arbitrate meritless claims. This should also help make LCIA arbitration more attractive to financial institutions and other users to whom the availability of early dismissal is an important factor in their choice of dispute resolution mechanism.
The LCIA is following other institutions, including SIAC, HKIAC and the SCC, by providing expressly for early determination in its rules. The 2020 Rules do not, however, provide any detail as to the procedure to be followed, leaving it to the tribunal to determine the best process in a given case.
Remote hearings and electronic communication
The timing of the LCIA rules update process has enabled the drafters to take on board developments in arbitral practice and procedure resulting from the global pandemic, such as the increased use of remote hearings and electronic communication.
Although the 2014 Rules provided for the possibility of hearings held by video, the 2020 Rules more specifically address the possibility of remote and semi-remote hearings. Article 19(2) states that 'a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in on or more geographical places (or in a combined form)'.
The 2020 Rules also establish electronic communication as the default mode of communication in LCIA arbitration going forward, including requiring the Request for Arbitration ('the Request') and Response to be submitted in electronic form only (Article 4.1). Users will need the LCIA Registrar’s prior written approval to file these submissions in paper form. While this change will help save costs and reduce the carbon footprint of arbitration proceedings, with respect to the Request parties should check whether there are any formal requirements of due notice in any relevant enforcement jurisdiction that would require written notice of the arbitration to be given.
Multi-party and multi-contract arbitrations
Compared to other institutions, the LCIA Rules have historically been more restrictive as regards the circumstances in which consolidation could be sought. The 2020 Rules expand the consolidation and concurrent conduct of arbitration provisions to include arbitrations commenced under the same or compatible arbitration agreement(s) and arising out of the same transaction or series of related transactions, even where the disputing parties are not the same (Article 22.7(ii)). This expansion of the consolidation provisions should lead to greater efficiency and will bring the LCIA Rules in line with other major arbitral rules on consolidation.
New 'composite Request'
Under the new 2020 Rules, parties will be able to commence multiple arbitrations in a so-called 'composite Request' (Article 1.2). The arbitrations included in the Request may be against one or more respondents and under one or more arbitration agreements. Although the composite Request may be accompanied by a request for consolidation of the arbitrations, consolidation is not automatic. Each arbitration will proceed separately in the first instance unless the LCIA Court or tribunal determine otherwise.
Provisions dealing with data protection
The 2020 Rules include a new provision on data protection to address the increasing regulation in this area. The tribunal is expressly required to consider, in consultation with the parties and where appropriate the LCIA, whether it should adopt specific data protection or cybersecurity measures to protect information and/or comply with relevant legislation (Article 30.5). Additionally, the LCIA and tribunal are empowered to issue unilateral directions addressing information security or data protection, which will be binding on the parties and, where relevant, the tribunal (Article 30.6).
In addition to the changes above, the 2020 Rules have formalised various aspects of current practice under the 2014 rules, including with respect to:
- tribunal secretaries, which had previously been addressed in the LCIA’s 2017 Guidance Note to Arbitrators (Article 14A); and
- the conduct of representatives of the parties (Articles 18.5 and 18.6 and Annex to the 2020 Rules).
The confidentiality provisions have been strengthened and there is no change to the approach to publication of awards, which will still require the written consent of both parties and the tribunal (Article 30).
The maximum hourly rate for arbitrators has increased from £450 to £500, which Jacomijn van Haersolte-van Hof, LCIA Director General, notes is to 'accommodate the demands of users in complex cases' and should not lead to an automatic increase in all cases.
The changes made in the new 2020 edition of the LCIA Rules as outlined above are welcome developments that modernise and strengthen the LCIA arbitration process for the benefit of its users.