”New ICC rules light the path for international business”

The ICC has new rules which will come into effect on 1 January 2012.  This would be a different sort of news if it involved a game of 11 a side, and a large field (and that confusion has been known before!). 

David Stewart
David Stewart

David Stewart is managing partner of Olswang

It is, of course, the International Chamber of Commerce that is involved, not the governing body for cricket.   The ICC we are concerned with is probably the best-known arbitration body in the world. Many have referred to it as the gold standard of arbitration institutions.   The ICC’s mission is to match globalised trade with a globalised arbitration system, and it has been very successful.

As free market champions, the ICC will not have been surprised to find that its lead produced imitators and challengers (and in some parts of the world it is so highly regarded that it has been straightforwardly copied, much to its irritation). There are now many other institutions that vie for a piece of the international arbitration pie.  In London, New York, Singapore, Hong Kong, Stockholm, Geneva, Beijing and many other places there are successful institutions offering to administer arbitration.  Each has a set of arbitration rules, many of which have been updated recently.  This shows that arbitration is here to stay as an essential tool for international business.  It is a prize that is worth competing for, and that drives changes to meet user demand and experience.  This ‘arms race’ between institutions largely benefits the consumer, although there will always be some sense in saying “if it ain’t broke, don’t fix it”, and avoiding inevitable complexity during the period of transition from old rules to new.

The current ICC rules have been applied largely without change since 1998, and have worked well.  The participation of the ICC in the updating arms race is interesting, as it sees a benefit in responding to competition.   The ICC has also said that some of its changes are simply to reflect already existing practice, and so make that more transparent for all users, not only those who are experts in the ICC process. There are several areas where the recurring issues have highlighted the need for more guidance in the rules.  Some of the more interesting are mentioned in no particular order, and others are to be found in the rules.

Cost and time come as a boxed set in any consideration of arbitration procedure.  Several years ago the ICC even produced a booklet on how to herd those cats, and much of the guidance set out there is now reflected in the new rules.  This is one of those areas where usual practice in ICC arbitrations is being made more transparent.  The new additions (for example, holding procedural meetings, using technology, and limiting disclosure) do provide a global, recognisable process, and should be helpful most of the time, although prescribing approaches to all procedures will not necessarily be best practice in all disputes.  It is important that procedural flexibility remain a feature of arbitrations.

Many commercial arrangements are complex, involving different but connected contracts and different contracting parties. That leads to confusion when arbitrating disputes, as it is sometimes unclear how to strike a balance between the practical advantages of having all connected things heard by one set of arbitrators and the cold fact that arbitration is available only if all the parties have agreed to it in writing.  The new rules provide some helpful guidance on when and how the ICC can be expected to allow multiple parties to arbitrations, or even consolidation of arbitrations.  This topic is one where different approaches have been taken by courts in different jurisdictions.  For example in one recent case the Supreme Court in England and Wales refused to enforce an award on the basis that the Respondent was not a party, but the very same award is enforceable in France according to the court there.  The ICC operates in all these places and is trying to find a balance.

A word for a subject I am very fond of – diversity.  The ICC has taken every effort to make the new rules gender neutral.  This shows that awareness of the issues involved has developed, and is pleasing for that.

The ICC has also added provisions allowing appointment of an “emergency arbitrator” to make urgent decisions before a tribunal has been appointed, or even before a request for arbitration has been served.  The results will be binding on the parties, although reviewable by the tribunal once appointed.  The party applying will have to commence an arbitration within a short period as well.  There is still the question of sanctions to apply should any of the parties ignore the directions of the emergency arbitrator, and it will still be sensible to consider applications to the court for injunctions or other orders, which are enforceable in a more immediate way, at least in the jurisdiction of the court that made them.  But it is a useful tool to have, and a welcome development.  A similar system already operates in Singapore, with some success reported anecdotally.

Hidden in the back of the new rules and appendicies is a hint that the ICC may be prepared to take payment of costs in stages in the future, and we should all look for further developments in this.  This is one of the topics that can put clients off using the ICC, as any substantial claim attracts a request for a very large upfront sum.  Although that is often the only payment the ICC takes, it can create the impression of an expensive process.  Taking payment in stages approximating to work done would do a lot to address this.

David Stewart is the CEO of Olswang and a partner in the Litigation Group. The Group has over 100 litigators and is headed by Richard Bamforth