Introduction
Improving efficiency
Multiparty and multi-contract
Emergency arbitrator
Default seat and arbitration agreement
Identity of legal representatives
Conduct of legal representatives
Modernisation – not revolution


Introduction

The London Court of International Arbitration (LCIA) is the latest arbitral institution to overhaul its arbitration rules. Unless parties agree otherwise, the new rules will apply to all LCIA arbitrations commenced on or after October 1 2014. They replace the 1998 version of the rules.

The amendments bring the LCIA Rules up to date with current arbitration practice and procedure. Like other institutions, the LCIA has addressed key issues facing the arbitral process. The amendments seek to:

  • promote efficiency and economy;
  • expand mechanisms for dealing with multiparty and multi-contract situations; and
  • introduce mechanisms to increase access to arbitration-led interim relief.

In addition, the LCIA Rules now contain enforceable guidelines relating to the conduct of parties' legal representatives.

Improving efficiency

The new rules seek to promote efficiency throughout the proceedings with the following new provisions:

  • The request for arbitration and the response may now be filed electronically (Articles 1.3 and 2.3).
  • Prior to their appointment, arbitrators are now required to attest to their ability to devote sufficient time to run the arbitration expeditiously (Article 5.4).
  • The LCIA Court may revoke an arbitrator's appointment of its own initiative if the arbitrator does not conduct the arbitration with reasonable efficiency (Article 10.2).
  • Parties and the tribunal are expected to be in contact within 21 days of the tribunal's constitution (Article 14.1).
  • Tribunals are now required to set aside sufficient time for their deliberations and provide a timetable for delivery of the final award, which should be rendered as soon as reasonably possible following the parties' final submissions (Article 15.10).
  • Tribunals now have an express power to use costs to penalise parties that cause delay or expense through non-cooperation (Article 28.4).

The new rules retain the parties' ability to apply for expedited formation of the tribunal in cases of "exceptional urgency" (Article 9A).

Multiparty and multi-contract

The LCIA Rules 1998 already empowered the tribunal to effect joinder of third parties (Article 22.2(viii)).

Under the new rules, an LCIA tribunal may also order consolidation between one or more arbitrations at a party's request and with the LCIA Court's approval where:

  • all parties have agreed; or
  • the parties are the same, the arbitration agreements are the same or compatible and no other tribunal has yet been appointed (unless all the arbitrators are the same) (Articles 22.2(ix) and (x)).

The LCIA Court also has powers to consolidate arbitrations before a tribunal has been appointed if the arbitration proceedings are between the same parties and are all subject to the same arbitration agreement (Article 22.6).

Emergency arbitrator

The emergency arbitrator mechanism provides parties to arbitral proceedings with recourse to relief on an urgent and interim basis before the tribunal has been appointed. Without it, between commencement of the arbitration and the appointment of the tribunal, parties would have to seek assistance from the courts to provide such relief – which may not always be available.

The emergency arbitrator mechanism is now provided for in the arbitral rules of the International Chamber of Commerce (ICC), the Japan Commercial Arbitration Association, the Hong Kong International Arbitration Centre (HKIAC), the Singapore International Arbitration Centre (SIAC), the Stockholm Chamber of Commerce and the World Intellectual Property Organisation Arbitration and Mediation Centre, as well as in the new Paris Arbitration Rules.

The emergency arbitrator mechanism in the new rules has the following features:

  • Emergency interim relief is available prior to the formation of the tribunal.
  • A request/response for arbitration must be filed with the application together with a fee for the services and all parties must be notified of the application.
  • The LCIA Court will appoint a temporary arbitrator as soon as possible, and in any case within three days. All of the requirements regarding independence and impartiality will apply to the arbitrator.
  • The decision may take the form of an order or an award. It must contain reasons and be rendered within 14 days of the emergency arbitrator's appointment.
  • The decision may be confirmed, varied, discharged or revoked by the arbitral tribunal once appointed.
  • The parties may still seek interim relief from the courts.

These provisions will apply to all arbitrations commenced on or after October 1 2014, unless parties expressly opt out. If the arbitration agreement was concluded before that date, the parties must expressly opt in to these provisions for them to apply.

Although the concept of an 'emergency arbitrator' is relatively untested, its use is likely to increase. The introduction of this tool puts the services offered by the LCIA on a par with those of other leading arbitral institutions.

Default seat and arbitration agreement

As was the case under the LCIA Rules 1998 (Article 16), the parties may agree the seat of arbitration; in the absence of agreement by the parties, the seat will be London, England. Article 16.2 has been amended to clarify that in the absence of choice, the default seat will apply up to and until the formation of the tribunal. Thereafter, the tribunal (and no longer the LCIA Court) may find that a different seat of arbitration is more appropriate, after seeking input from the parties.

The new Article 16.4 now expressly states that unless the parties provide otherwise, the law of the arbitration agreement as well as the law of the arbitration shall be that of the "seat" of the arbitration. This is significant because the law of the arbitration agreement (in the absence of the parties' express choice) continues to be a matter of debate, as demonstrated by recent English cases such as Sulamerica CIA Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA Civ 6; Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm); and Habas Sinai VE Tibbi Gazlar Isthisal Endustri AS v Sometal SAL [2010] EWHC 29 (Comm).

Identity of legal representatives

Under the new rules, parties must now notify all other parties, the tribunal and the LCIA registrar if there are any changes or additions to their legal representatives (Article 18.3).

Such changes are conditional upon the tribunal's approval, which may be withheld if the change of counsel compromises the composition of the tribunal or the finality of the award (Article18.4). These changes grant the tribunal some control over who appears before it and seek to minimise the potential for certain conflict issues arising during the course of the arbitration (as occurred in Hrvatska Elektroprivreda DD v The Republic of Slovenia (ICSID Case ARB/05/24)).

Conduct of legal representatives

The most discussed feature of the new rules is the enforceable guidelines for the conduct of parties' legal representatives, which have generated mixed views among LCIA users. All legal representatives appearing before the tribunal must comply with these guidelines, which create a baseline for the conduct of legal representatives:

  • Legal representatives should refrain from mounting unmeritorious and unfounded challenges.
  • There should be no false statements to the tribunal.
  • There should be no procurement of false evidence.
  • There should be no concealment of documents ordered by the tribunal.
  • There should be no unilateral contact with the tribunal without disclosure to all parties, the tribunal and the LCIA registrar.

The guidelines do not derogate from any mandatory laws and conduct rules applicable to the legal representatives. The new rules expressly give the tribunal the power to police the violation of the guidelines through any or all of a series of specified sanctions: a written reprimand or a written caution as to future conduct of the legal representatives and any "other measures necessary" (Article18.6).

Modernisation – not revolution

The LCIA Rules 2014 follow the release of new arbitration rules by various institutional bodies including the ICC (2012), SIAC (2013) and HKIAC (2013). The aim of the changes is to bring the LCIA Rules up to date with current practice and procedure by catering for the major issues currently facing the arbitral process today. The new rules are innovative in some respects, but do not depart significantly from the approach taken by most institutions. Importantly, they retain the characteristics distinctive to LCIA arbitration, such as time-based fees.

The LCIA continues to be a 'go-to' institution for users – their arbitrations will be well supported by these modernised and comprehensive rules.

For further information on this topic please contact Marie Berard or Anna Kirkpatrick at Clifford Chance LLP by telephone (+44 20 7006 1000), fax (+44 20 7006 5555) or email ([email protected] or [email protected]). The Clifford Chance website can be accessed at www.cliffordchance.com.