The International Centre for Dispute Resolution ("ICDR") is the international arm of the American Arbitration Association ("AAA"). It released its revised rules in April this year (the "New Rules"), which came into effect on 1 June 2014. Given the large volume of business conducted between Japanese and US corporations, the key features of the New Rules are worth bearing in mind should they be suggested for inclusion in your arbitration agreement.
Key amendments include those on:
- Expedited procedures;
- Document production/exchange of information;
- Joinder and consolidation;
- Increased emphasis on mediation; and
- Default position for arbitrator appointment.
Key amendments to the ICDR mediation and arbitration rules
The New Rules provide that unless the parties agree or the ICDR determines otherwise, the "International Expedited Procedures" apply to any case where no disclosed claim or counterclaim exceeds US$250,000.1 These procedures are designed to reduce the time and cost of an arbitration and include features such as:
An expedited procedure for the appointment of a sole arbitrator;
- A presumption that cases valued at US$100,000 or less will be decided on documents only;
- An expedited schedule (e.g. a procedural order should be issued within 14 days of the arbitrator's appointment, with the parties' written submissions following within 60 days);
- Short hearing (if any); and
- Final award to be issued within 30 days of the hearing or final written submissions.
Consideration for international parties in document production/exchange of information
The new provision on document production and exchange of information appears to better reflect the needs of parties to international arbitration and may go some way to alleviate common concerns that ICDR arbitration involves US style civil proceedings. For example:
- Article 21(4) adopts the same approach as the IBA Rules on Taking of Evidence in International Arbitration, by allowing parties to request specific documents or classes of documents in the other party's possession "that are reasonably believed to exist and be relevant material to the outcome of the case"; and
- Article 21(10) specifically states that "depositions, interrogatories, and requests to admit as developed for use in U.S. court procedures generally are not appropriate…"
Joinder and consolidation
Other notable features of the New Rules include provisions concerning joinder and consolidation. Article 7 allows a party wishing to join an additional party before the constitution of the tribunal to do so by submitting a Notice of Arbitration to the ICDR against the additional party. After the tribunal is constituted, joinder will require the consent of all the parties and the additional party.
The New Rules also enable a party to request the appointment of a "consolidation arbitrator".2 He or she will have the power to consolidate into a single arbitration two or more arbitrations pending under the New Rules (or the New Rules and any other arbitration rules administered by the AAA or ICDR). Consolidation can take place where the parties have agreed; or where the claims are under the same arbitration agreement; or where the dispute and parties are common, but there are different arbitration agreements.
While many arbitral institutions have revised their rules to incorporate provisions on consolidation, the New Rules are novel in that they provide that in the absence of an agreement between the parties, the consolidation arbitrator should not be an arbitrator appointed to the existing arbitrations, but a new arbitrator appointed by the ICDR.3
Increased emphasis on mediation
The New Rules provide that the ICDR may invite the parties to mediate in accordance with its Mediation Rules following the submission of an Answer. Article 5 states that the parties can agree to mediate at any stage of the proceedings and unless they agree otherwise, the mediation and arbitration can proceed concurrently with a separately appointed mediator. Therefore, the New Rules encourage the parties to mediate even after the arbitration has begun.
Arbitrator appointment, independence and impartiality
Another unique feature of the New Rules is the "ICDR list method" for the appointment of arbitrators where the parties have failed to select an arbitrator or did not agree any other method of appointment. Under this procedure the ICDR sends an identical list of names simultaneously to each party. If after receiving the list the parties cannot reach agreement on the appointment of an arbitrator, the parties will strike out names on the list to which they object, rank the remaining arbitrators in order of preference, and then return the list to the ICDR. The ICDR will then use this information to make an appointment.4
Article 13 of the New Rules provides that, in addition to requiring the arbitrator to confirm that he or she is available to serve and is independent and impartial, the arbitrator or the party is also required to promptly disclose any circumstances that may give rise to "justifiable doubts as to the arbitrator's impartiality or independence" at any stage during the arbitration.
Privilege can be a complex issue in international disputes involving parties from different jurisdictions. Article 22 of the New Rules enables the arbitral tribunal to take into account applicable principles of privilege (including confidentiality between a lawyer and client) and apply the same rules to all parties "giving preference to the rule that provides the highest level of protection."
The New Rules also allow a party to apply for emergency relief before the arbitral tribunal is constituted by submitting a written notice to the ICDR and to all other parties.5 The ICDR will then appoint a single emergency arbitrator within one business day.6
The New Rules are part of a wider effort by arbitral institutions the world over to ensure that the needs of arbitration users are met and common practices and procedures are incorporated into institutional rules. Whilst some of the changes outlined above are similar to those considered by other arbitral institutions in recent months and years, the ICDR has adopted some unique twists, such as the "consolidation arbitrator" and the "list method", which may be worthy of consideration by parties contemplating their next arbitration clause.