First Guidance Notes for Arbitrators, Parties and on Emergency Procedures

At the end of June 2015, the London Court of International Arbitration (the LCIA) issued three guidelines on arbitration - the LCIA Notes for Parties, the LCIA Notes for Arbitrators and the LCIA Notes on Emergency Procedures (the Notes). These are the first such guidance notes issued by the LCIA on the recent arbitration rules that came into effect on 1 October 2014.

The Notes facilitate the intention of amendments found in the LCIA Rules 2014 (the Rules) - efficient management and cost-effectiveness in arbitrations. In particular the guidelines are intended to facilitate the "diligent and timely conduct of arbitrations".  The three Notes will be of particular interest to those involved in, or considering the use of, arbitration to resolve disputes. 

Notes for Arbitrators

The LCIA Notes for Arbitrators also include items of interest to users of arbitration - the Rules (Article 5.4) require arbitrators to complete availability forms ensuring that they can commit "sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration".  Devoting a section to this specific issue in its Notes for Arbitrators indicates that the LCIA places particular importance on the practical application of the rule.  This also includes the prompt issuance of awards following a hearing - with the LCIA stating that the Secretariat monitors the adherence of arbitrations and award-writing to their timetables.

The guidelines encourage early procedural conferences, within 21 days of the formation of the tribunal, to ensure that each stage of the arbitration is appropriate and may lead to an enforceable award.  In doing so, the choice of parties is emphasised.  It encourages parties to make use of the flexibility available in the Rules (Article 14.2) to agree their own timetable, in contrast to the default timetable (Article 15) if the parties do not agree a bespoke timetable.  Arbitrators are encouraged to review the timetable regularly and ensure that appropriate amendments are made in order for it to remain "realistic and reasonable".

Notes for Parties

The LCIA Notes for Parties comment on the mechanism of an LCIA arbitration and as such they are useful supplementary reading to the Rules. Fees are one area of focus with LCIA arbitrators working on a per-hour fee basis unlike the ad-valorem underlying basis of DIAC, SIAC or ICC arbitrations. The LCIA defends this on the basis that the value of a dispute does not reflect its legal complexity.  The periodic payment of arbitrator fees in LCIA arbitrations offers a lesser cash flow burden for clients than significant up-front fees paid on an ad-valorem basis in other types of institutional arbitration (on the as yet unfinalised true value of a dispute when the tribunal is formed).

Notes on Emergency Arbitrators

For parties seeking to expedite tribunal formation, the Notes on Emergency Arbitrators assist in understanding the LCIA decision-making process. The Notes indicate the LCIA's preference for advance warning of expedited tribunal formation requests, enabling it to promptly implement such requests.  The LCIA will decide whether to hear comments from the other side on the expedited tribunal formation.  It may override time limits set out in the party arbitration agreement without reason, under the power given to it under the incorporation of the Rules.

The availability of emergency arbitrator appointments in circumstances of exceptional emergency is an option available under arbitration agreements concluded on or after 1 October 2014, when the Rules came into effect.  The Notes also emphasise that appointing an emergency arbitrator does not preclude an expedited tribunal formation if necessary and requested by a party.  The LCIA Notes on Emergency Procedures cautiously offer limited examples of what is considered, and not considered, as an exceptional emergency.  These scenarios indicate an exceptional emergency occurs when a clear deadline is approaching with resultant loss at the deadline if action is not taken.

Summary

The Notes are a welcome supplement for LCIA users, particularly as they indicate a strong intent within the LCIA to provide cost-efficient and timely arbitration for the business community.  This intent is likely to make an increasingly strong case for the inclusion of LCIA Rules in contract arbitration clauses in the near future.