New rules for the London Court of International Arbitration came into force on 1 October 2020 and shall apply to any LCIA arbitration commenced from that date. It has been six years since the rules have been updated and, in the words of the President of the LCIA, the opportunity was taken:
"to clarify a number of procedural rules, to emphasise the broad discretion for tribunals to conduct arbitrations expeditiously and to reflect the ever-evolving nature of arbitration including the use of electronic means of communication and virtual hearings."
The focus has been on implementing these changes with a light touch and balancing the need for change with the stability of the existing rules. Although the new rules are largely an update, rather than a re-write, there are nonetheless some important changes.
Let's look at some of the key changes.
Early determination: emboldening tribunals
The new LCIA rules have made explicit a tribunal's power to expedite or streamline proceedings by making an 'early determination' order where the tribunal determines that any claim, defence, counterclaim, or application is manifestly outside the jurisdiction of the arbitral tribunal, or is inadmissible or manifestly without merit. The tribunal may, where appropriate, issue an order or award to that effect.
Although, previously, it had been generally accepted that tribunals had an implicit power to summarily dismiss claims outside their jurisdiction or which were manifestly unfounded, those powers were far from being explicit. That fact, combined with the phenomenon of so-called due process paranoia (a perceived reluctance by tribunals to act decisively in certain situations for fear of the arbitral award being challenged on the basis of a party not having had the chance to present its case fully) meant that tribunals have rarely been prepared to deal with aspects of a case summarily, irrespective of how obviously hopeless a specific claim or defence might be.
This is a welcome development and adds a potentially powerful weapon to the tribunal's armoury to guard against parties seeking to derail or protract proceedings (by making claims manifestly without merit), to obtain a perceived strategic advantage or to cause their opponent to incur unnecessary cost.
However, it remains to be seen how enthusiastically tribunals will wield their new power to streamline proceedings and control more tightly the conduct of proceedings.
Case management
Other changes directed at highlighting and enhancing a tribunal's case management powers have also been introduced. The tribunal now has to contact the parties within 21 days of written notification of its formation (Article 14.3). They also expressly confirm the tribunal’s discretion to make any procedural orders it considers appropriate (Article 14.5) and provide a list of efficiency measures the tribunal may wish to consider (Article 14.6). Those measures include limiting the length and/or number of submissions, dispensing with a hearing, or making an early determination (as we saw above). These changes ought to empower tribunals to take a more proactive role in case management.
Awards
Maintaining the theme of enhancing procedural efficiency, the new LCIA rules introduce for the first time an express time limit for the tribunal to issue its award. The tribunal must endeavour to issue its award as soon as reasonably possible and shall endeavour to do so no later than three months following the last submission from the parties.
This is a welcome development and will add to the LCIA's appeal for parties who prize swift resolution of disputes.
Virtual reality: international arbitration in a post-pandemic world
The LCIA is the first major international arbitration institution to update its rules since the arrival of the COVID-19 pandemic, and has taken the opportunity to retain and formalise the best of the innovations seen in response to the pandemic. The new rules implement the following specific amendments:
- Virtual hearings: "a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form)". Although the new rules do not introduce anything ground-breaking (the 2014 rules also referred to the possibility of video hearings) and, of course, many arbitral hearings have already been proceeding virtually as parties and tribunals have adapted to the prevailing circumstances, they formally acknowledge what has already become the new normal for those conducting proceedings in a world dominated by the pandemic.
- Electronic communications are now the default: the new rules confirm the primacy of electronic communications. A request for arbitration must be submitted electronically, and written approval is required if a party wishes to depart from the default position.
- E-awards: unless the parties agree otherwise, or the Arbitral Tribunal or LCIA Court directs otherwise, any award may be signed electronically and/or in counterparts and assembled into a single instrument.
Multiple proceedings: one-stop-shop arbitrations
The requirements for consolidating multiple proceedings and for commencing multiple proceedings have been relaxed and simplified.
It is now possible to commence multiple proceedings, against the same or different respondents, by filing one composite request. Arbitrations that have compatible arbitration agreements "arising out of the same transaction or series of related transactions" can also be consolidated.
Together these changes create the possibility of a one-stop-shop arbitration to resolve all claims arising out of a transaction or series of transactions. This should be welcomed on the grounds of efficiency and cost, and it grants participants in an arbitration greater flexibility in case management. It may prove to be particularly useful in disputes involving a large number of parties (including, for example shareholder disputes).
Setting a benchmark for other arbitration organisations to follow suit
Although relatively modest, the revisions introduced by the new LCIA rules, are nevertheless ones of real substance and not merely form. They reflect a targeted approach to streamlining and modernising arbitral proceedings, which will be widely welcomed by the international arbitration community.
Other arbitral bodies are preparing to follow the LCIA's example in taking the opportunity to update their rules for the post-pandemic world. The ICC, for example, has already released the text of its new 2021 rules, which come into force from 1 January 2021, and its guidance note on possible measures aimed at mitigating the effects of the COVID-19 pandemic. That guidance note includes a checklist for a protocol on the conduct of virtual hearings, representing another example of the industry's adaptation to the new normal.
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