The London Court of International Arbitration (LCIA) has adopted new rules that apply to all arbitrations commenced on or after 1 October 2014 (2014 Rules). Focusing on efficiency and fair process, the 2014 Rules include not only new provisions for the appointment of an emergency arbitrator but also, in a novel move, standards of conduct for parties’ legal representatives. A summary of the key changes is set out below.
According to the LCIA, the 2014 Rules have been modernised with a focus on ensuring an effective, efficient and fair process for all parties. The LCIA’s new Director General, Dr Jacomijn van Haersolte-van Hof has attributed the balanced set of rules to a ‘meticulous and thoughtful drafting process’.
Notable changes in the 2014 Rules include provisions for:
- Procedural changes for increased efficiency;
- Apportionment of costs;
- Emergency arbitrator provisions; and
- Conduct Guidelines for the parties’ legal representatives.
Minor procedural changes have been made to increase the efficiency of the process, and ‘modernise’ the Rules. These measures include the introduction of:
- electronic filing;
- shorter time limits for default procedures, initial contact with the tribunal and rendering of the award;
- London as the default seat in the absence of a choice by the parties;
- English law as the default law of the arbitration agreement in the absence of a choice by the parties;
- declarations from arbitral nominees that they are willing to devote sufficient time, diligence and industry to ensure the expeditious conduct of the arbitration; and
- consolidation provisions.
Apportionment of costs
The tribunal has a wide discretion in respect of apportioning costs. While it has been widely accepted that the conduct of the parties may be considered by the tribunal when assessing the division of costs, this was not expressly set out under the old rules. Article 28.4 now provides that tribunals may consider the conduct of the parties when apportioning costs. The effect of this provision is that parties will risk an adverse cost award where they fail to act efficiently or fail to comply with the new conduct Guidelines.
In relation to agreements for the apportionment of costs, Article 28.5 now provides that such agreements will only be accepted if they were:
- entered into before the dispute arose; and
- confirmed in writing by the parties after the request for arbitration was submitted to the tribunal.
Significantly, the LCIA has introduced a mechanism for the appointment of an emergency arbitrator meaning that parties will no longer have to resort to local courts for urgent or interim relief where a tribunal has not yet been appointed. Parties now have the option to make an application for the appointment of a temporary sole arbitrator within 3 days.
The emergency arbitrator provisions have been drafted on and ‘opt-in’/’opt-out’ basis where:
- parties will need to opt-in for arbitration agreements concluded prior to 1 October 2014; or
- parties will need to opt-out for arbitration agreements concluded after to 1 October 2014.
Conduct Guidelines for the Parties’ Legal Representatives
In what is potentially the most significant amendment, the LCIA has introduced novel Guidelines for the conduct of the parties’ legal representatives appearing by name in the arbitration, which are intended to promote the good and equal conduct. The Guidelines, which are provided in an annexure to the 2014 Rules, expressly prohibit certain conduct, including:
- conduct amounting to an abuse of process such as repeated challenges to an arbitrator’s appointment or jurisdiction;
- provision of false statements;
- procurement of false evidence;
- concealment of documents subject to production orders; and
- unilateral communications with the tribunal or member of the LCIA Court making a determination.
The tribunal has also been empowered under Article 18.6 to sanction legal representatives who fail to comply with the Guidelines through a written reprimand or caution as to the future conduct in the arbitration or any other measure necessary to uphold the general duties of the tribunal. It is not clear whether these ‘other measures’ would include reporting the behaviour to the legal representatives regulatory body although the express power to do so was removed from the final draft of the 2014 Rules.
Whether the 2014 Rules achieve a more efficient and fair process is yet to be tested. The bottom line is that where parties fail to act efficiently or fairly, the tribunal now has greater powers to deal with such behaviour from both a procedural and costs perspective.