The International Chamber of Commerce has announced that the ICC International Court of Arbitration will start explaining its reasons for many of the decisions it takes under the 2012 ICC Rules of Arbitration.
This new policy was announced on 8 October 2015 and entered into force immediately. It will be applied where all the parties to a case so agree.
This means that, provided that all parties to an arbitration agree and the request is made before a decision is reached, the ICC Court will provide the parties with its reasons in respect of:
- challenges to an arbitrator under Article 14 of the ICC Rules
- decisions to initiate replacement proceedings and subsequently to replace an arbitrator on the Court's own motion under Article 15(2) of the ICC Rules
- decisions on consolidation of arbitration proceedings under Article 10 of the ICC Rules and
- prima facie decisions on jurisdiction under Article 6(4) of the ICC Rules.
The ICC Court may subject the communication of reasons to an increase of the administrative expenses chargeable to the parties in the case, normally not to exceed US$5,000.
What was the situation before?
Prior to 8 October 2015, the ICC Court was not required to provide reasons for the decisions referred to above. For example, Article 11.4 of the ICC Rules (which will need to be amended) currently provides: "The decisions of the Court as to the appointment, confirmation, challenge or replacement of an arbitrator shall be final, and the reasons for such decisions shall not be communicated". Save for the Arbitration Court of the London Court of International Arbitration (the LCIA Court) in respect of decisions on challenges to arbitrators (where pursuant to Articles 10.5 and 10.6 of the LCIA Rules reasons for such decision must be given unless the parties agree otherwise), other arbitral institutions are not required to provide reasoned decisions in respect of these matters, and their general practice is not to do so.
However, withholding the reasons behind these types of decisions has been the subject of criticism. This is particularly the case in respect of decisions on challenges to arbitrators, given the seriousness of such challenges for the parties and tribunal involved.
Why is this change relevant?
The move to publish the reasons behind ICC Court decisions was made in response to growing user demand. According to Alexis Mourre, the President of the ICC Court, the change "will further enhance the transparency and clarity of the ICC arbitration process. This new service is a sign of our commitment to ensuring that ICC arbitration is fully responsive to the needs of our users […]."
Providing reasons is likely to address concerns that withholding them is contrary to principles of basic fairness and natural justice, and a major source of frustration experienced by practitioners and parties who may have presented detailed submissions and supporting citations.
Still challenges ahead?
By changing its policy on the need to provide reasoned decisions, the ICC Court has shown that it is willing to listen to critics and adapt to user demands.
The ICC Court will now provide reasons in respect of more decisions than the LCIA Court. However, critics may query whether the changes have gone far enough and the ICC Court should, as per the LCIA Court in respect of decisions on arbitrator challenges, provide reasons unless the parties expressly agree that reasons shall not be given, instead of providing reasons when all parties so agree. The difference between the position of the two institutions is subtle but in practice it means that in respect of arbitrator challenges the ICC Court's default position is to withhold reasons, whereas the LCIA Court's default position is to provide reasons.
It remains to be seen whether parties involved in ICC arbitrations will agree that reasons shall be given frequently, whether providing reasons will cause delay and whether users perceive that the ICC Court has gone far enough in its endeavour to enhance transparency. However, the policy change and the move towards providing the reasons behind many of the ICC Court's decisions appear to be positive steps towards enhancing the transparency behind important decisions affecting the ICC arbitration process.