Despite the fact that the rules have worked effectively over numerous years, the progressions reflect both handy bits of knowledge picked up from the broad experience of their application and a forwardlooking expectation of the necessities of users in years to come.
The London Court of International Arbitration has been one of the foremost pioneering institutions in the field of international arbitration. Former president Judith Gill QC initiated the update and was concluded by president Paula Hodges QC, upheld by the contribution from an enormous number of users, and with the support of the LCIA staff and outside users. The recent update in the predominant rules of the 2014 LCIA aims to specifically “make the arbitral and mediation processes even more streamlined and clear, providing major reforms and complete justice to the basic objectives of LICA.
The Rules updates were being finalized as the Covid-19 pandemic took hold. While the pandemic did not necessitate any rigid changes on lines of direction or focus of LCIA, however, it allowed it to incorporate explicitly some changes as a reform for its better practice. Notably the increased use of virtual hearings to adapt to the new normal and the primacy of electronic communication across the board. became the areas needing changed policies and rules for a streamlined regulation.
In order to understand these changes and highlight the rules associated with them, it is quintessential to take them one by one and this article aims to do the same by the following in-depth analysis:
The primacy of electronic evidence
One notable mention of the new rules is the provision for an electronically signed award under article 26.2 wherein an award may be signed electronically unless otherwise agreed by the parties. Although the technical elements of an award remain the same i.e. the award must be in a written format, the date should be stated and the seat of the arbitration and, unless the parties agree otherwise, must include the reasons upon which the award is based.
It would be interesting to see this development in light of its enforceability as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958), is silent on electronically signed awards. This issue can be dealt with by using Article VII of the above convention, where the winning party can rely on national laws for the enforcement of the award. The stand on the enforcement of electronically signed awards is one that is highly dependent on the laws and interpretation of those laws in their country’s enforcement is contingent. This may be a limitation in some situations, the courts of various countries must use a liberal interpretation in order to give value to this provision while the process of enforcement. The provision of virtual hearings
As COVID has struck the world, it was the need of the hour to ensure virtual hearings. While 2014, LCIA rules implicitly allowed these hearings, the explicit text would be of high benefit to the parties. Under the article, 19.2 provides that mechanism to hold it through a conference call, video conference or using communication technology that is convenient to the parties. The same is enshrined under article 14.3 where an explicit mention of virtual contact is provided. This is the need of the hour especially in the pandemic situation and LCIA has taken a great initiative in following up with the current trends and mandating the rules to the current need of the situation.
The Electronically signed award
One notable mention of the new rules is the provision for an electronically signed award under article 26.2 wherein an award may be signed electronically unless otherwise agreed by the parties. Although the technical elements of an award remain the same i.e. the award must be in a written format, the date should be stated and the seat of the arbitration and, unless the parties agree otherwise, must include the reasons upon which the award is based.
It would be interesting to see this development in light of its enforceability as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958), is silent on electronically signed awards. This issue can be dealt with by using Article VII of the above convention, where the winning party can rely on national laws for the enforcement of the award. The stand on the enforcement of electronically signed awards is one that is highly dependent on the laws and interpretation of those laws in their country’s enforcement is contingent. This may be a limitation in some situations, the courts of various countries must use a liberal interpretation in order to give value to this provision while the process of enforcement. Data Protection
When we shift everything electronically, the problem of data leak and hackers emerge. To tackle this LCIA has addressed it under article 30A of the 2020 rules. As per the new update, the tribunal is required to consider at an early stage, in consultation with the parties and the LCIA only if necessary, if it is appropriate to adopt (i) any specific information security measures to protect both the physical and electronic communication shared in the arbitration, as well as (ii) any means to address the processing of personal information communicated or exchanged in the arbitration considering the applicability of data protection legislation.
The new power of the tribunal to give bearings with respect to information security or data protection imposes a commitment on tribunal members to acquaint themselves with significant data protection and privacy legislation.
This is a welcome step that gives assurance and confidence to the parties exercising proceedings online. The ambit of these data protection rules is extended to the parties, arbitrators, counsel and the secretariat of LCIA. Moreover, under 30.5 an extension is given under this that with the consent of the parties, additional security measures can be adopted. It is highly relevant to point out here that under article 30.6, the word ‘shall’ be mentioned, that the directions issued by LCIA would be binding on the parties.
The LCIA 2020, schedule of cost has been brought in which has given a new dynamic to the LCIA. The specific change in this schedule is that there is an increase in the maximum hourly rate to be charged by the arbitrator from 450 pounds/hour to 500 pounds/hour. This will help LCIA attract more experienced and qualified arbitrators which would be beneficial for the institution to maintain the quality and would also be highly advantageous to the parties.
Moreover, the aspect of cost is addressed. Once, it was called a very expensive seat for arbitration. However, after Hong Kong and Singapore came into the market of arbitration, LCIA had stiff competition and off-late the LCIA drastically brought down the cost. Now they have relooked the cost and made a reasonable increase in the cost. When we see the LCIA comparison chart from 2013-2016: ICC was the most expensive institution, followed by Hong Kong International Arbitration Centre, The Arbitration Institute of the Stockholm Chamber of Commerce (SCC), Singapore International Arbitration Centre and then LCIA. This is a development that is crucial to note for the parties, however, the reasonable increase of cost would not affect the popularity and share of LCIA
Exclusion of Liability
Now the LCIA related disputes are addressed with the exclusive jurisdiction of the English Courts. Because LCIA deals with any dispute from various areas around the world. Now when there would be a jurisdictional challenge, the LCIA would be invited as a party. Now, it would be hard to abide by various laws of various country codes. In 2020, Art 31.3 was included which gives exclusive jurisdiction to the courts of England and Wales to hear and decide any action arising between the parties, LCIA board, and other specifications as mentioned in the section relating to the matter.
Moreover, the mention of article 31.3 should be made in here as it specifies, an irrevocable agreement for the parties to opt for the exclusive jurisdiction of English courts. This is a clause to safeguard the interest of the parties mentioned in the new rule.
Early determination
This is one of the key highlights of the 2020 rules, if we see the 2014 rules there was an implicit power for the same under articles 14.4(ii) and 14.5 of the 2014 LCIA Rules. This has now become explicit in nature in the form of article 22.1(viii). Sometimes in arbitration, there are frivolous claims which would prove to be costly in terms of money and time. They can be a big barrier if there is no provision for early determination, this provision would give latitude to the tribunal in terms of efficiency and its mandate.
Multiple proceedings and claims
A significant change from the 2014 rules to the 2020 rules in respect to multiple proceedings and claims can be noted in Article 22A of the new rules. This is also an extension of the 2014 LCIA rules as under those, the tribunals with the due permission of the court can order the consolidation of matter in two situations: a) Where all the parties agree in writing b) under the same arbitration agreement or any compatible arbitration agreement(s) between the same disputing parties.
Here, under the new rules even if the disputing parties are not the same a consolidation of arbitrations can be done. This is rightly reflected in Article 22.7(ii). Moreover, additionally, Article 22.7(iii) has to be noted here as this empowers that arbitration shall be conducted concurrently.
This means that a claimant no longer needs to file multiple requests in such circumstances and an efficient outcome would be met. If they have a claim pertaining to the same arbitration agreement, that can be consolidated in a single arbitration. This will save cost in terms of both time and money and improve efficiency.
Tribunal Secretaries
The increased use of tribunal secretaries has pulled in much conversation as of late, specifically concerning the fitting boundaries of their contribution with the tribunal.
In spite of the fact that in 2017, the LCIA updated its Notes of Guidance for Arbitrators to cover their use, it has now accepted the open door to address the issue formally in its rules. A new, that is, Article 14A has therefore been inserted which deals with issues such as their role, ensuring their independence, and securing the parties’ agreement to use of one.
The Seat of Arbitration, Place(s) of Hearing and Applicable Law
A novel addition to Article 16 is new 16.5 which prescribes that the LCIA Rules are to be interpreted following English law. Whilst this is intended to promote conformity and certainty in their application, other institutional rules do not attempt similar outcomes. This approach appears to affect a choice of English law as the law applicable to the interpretation of part of the arbitration agreement (as the rules are incorporated therein) in every case.
Depending on the circumstances, such an approach might give rise to knotty issues of applicable law – in particular, whether, under the rules of the seat as to applicable law of an arbitration clause: (i) the application of English law and (ii) the application of the law to part of an arbitration agreement is permissible. And, besides, whether a point (ii) is acceptable under the law which would be applied to govern the arbitration clause generally (as, for example, a matter of formation).
These issues should not arise in situations where English law is the governing law of the contract and the seat of arbitration is also in England (or where the seat of arbitration is in England and the circumstances are such that, applying English rules on applicable law, English law would otherwise govern the arbitration clause, or, finally, in cases where the seat is elsewhere and the circumstances are such that, applying the seat’s rules on applicable law, English law would otherwise be applied to govern the arbitration clause1). In such situations, the law applicable to the arbitration clause will, in any event, point to English law. Outside of those situations, however, the simplest solution for parties to avoid any of the difficult analytical issues noted above maybe, if the LCIA Rules are to be chosen, to insert a provision into their arbitration agreement disapplying the effect of Article 16.5.2
Composite Requests
The new provision (Article 1.2) for composite Requests is without any doubt a response to the choice but it goes further than may have been expected. It contemplates an invitation which could cover several claims against different parties under different contracts. there’s no explanation on how duties of confidentiality wouldn’t thereby be breached. A party, who already has an LCIA article in an existing contract, might not have contemplated such a departure from one among the elemental benefits of arbitration. That party might not be expected to understand that associated transactions with other parties might likewise be subject to LCIA arbitration which respective claims against each of them risked being shared during this way, contrary to their commercial interests.
Arbitrations so commenced would each be separate and therefore the provisions of LCIA Rules 2020, art 1.1 would apply to every one of them. It follows that a registration fee is going to be payable in respect of every such arbitration. Costs savings, which could motivate a composite Request, wouldn’t, therefore, be available. Of course, the power to submit composite Requests could also be attractive for a few would-be claimants.
Amendments to Requests
This provision is enshrined under article 1.5 on the new 2020 rules. The basic understanding of this provision is that it confers the power to the LCIA courts to allow certain amendments to requests. We must understand the importance of this new amendment, particularly in certain circumstances, a claimant would request this is to rectify a problem where the proceeding has begun. Until now, this was left to the able hands of the arbitral tribunals where the other party would defend the nature of this problem with applicable defenses. This new power would surely bring a fresh dimension to the working of LCIA.
Expedition of proceedings and preparation of the award
The LCIA has presented further prerequisites on and conceded further powers to tribunals to advance the quick lead of procedures. The 2020 Rules presently require the tribunal to contact the parties within 21 days of written notification.
They additionally affirm the tribunal’s discretion to make any procedural requests it considers appropriate and provide a list of efficiency measures that include limiting the length and/or a number of submissions, dispensing with a hearing, or making an early determination on a claim or defense leading further encouraging tribunals to play a more dynamic function in the case management.
Further, tribunals should now attempt to make their award no later than a quarter of a year” following the party’s final submission. As per the LCIA’s figures, a quarter of a year is right now the middle measure of time LCIA tribunals take to deliver their awards. While it may not be practical in unpredictable cases, the default cutoff time sends a solid message about what parties can expect of their councils.
Conclusion
The new 2020 London Court of International Arbitration Rules, 2020 have been welcomed by the international arbitration community, the update might not be groundbreaking, but it does strike a balance between meeting the needs of modern arbitration users and keeping up to the stability and consistency of the LCIA Rules. It is said to be a light-touch that the rules have provided to the previous 2014, LCIA rules. As emphasized by the LCIA’s Director-General Jacomijn van Haersolte-van Hof, “a stable rules framework is important for users,” yet this thought must be offset with the need to guarantee “that rules continue to reflect best practice.”
Despite the fact that the Rules have worked effectively over numerous years, the progressions reflect both handy bits of knowledge picked up from the broad experience of their application and a forwardlooking expectation of the necessities of users in years to come. The updated 2020 LCIA Rules straightforwardly and transparently address the gaps of the 2014 LCIA Rules and addresses new dimensions for effective advancement of proceedings. These 2020 LCIA rules cover a wide range of issues and include a plethora of new provisions that address issues that are not addressed in other leading arbitral rules, for instance, the shift to electronic communications, the recognition of the prevalence of virtual hearings and focus on data protection and privacy as essential elements. These progressions do mirror the LCIA’s endeavors to advance the development and greater efficiency in global arbitration proceedings. Given the unpredictable circumstances where we are living in, it is trusted that the update will give consolation in regards to the crucial standards whereupon LCIA discretion is based, yet with an undeniably current and reformist methodology.
