The International Centre for Dispute Resolution (ICDR) – the international division of the American Arbitration Association (AAA) – has issued new International Dispute Resolution Procedures, which became effective on June 1, 2014. The International Dispute Resolution Procedures include the ICDR’s International Mediation Rules, International Arbitration Rules, International Expedited Procedures, and Administrative Fees.
The key revisions are to the International Arbitration Rules and the inclusion, for the first time, of the International Expedited Procedures. The new procedures will apply to all international arbitrations submitted to the ICDR on or after June 1 unless the parties have specifically designated that other rules apply.
Many of the revisions are aimed at encouraging and providing mechanisms for more efficient proceedings, including, among other things, an emphasis on mediation efforts. Revisions include new provisions on expedited procedures, mediation, joinder and consolidation, arbitrator appointments, arbitrator disclosures, arbitrator challenges, party representatives, evidentiary matters, and the timing of awards. The revisions also include various other administrative and procedural updates. Some of the more salient revisions are discussed below.
Under Article 1(4) of the new International Arbitration Rules, the International Expedited Procedures will apply in cases where no claim or counterclaim exceeds $250,000 USD (exclusive of interest and the costs of arbitration), unless the parties agree or the ICDR determines otherwise. Parties may also agree to use the International Expedited Procedures in cases where the claims or counterclaims exceed this amount. Further, in cases where no claim or counterclaim exceeds $100,000 USD, the dispute is to be resolved entirely through written submissions, unless the arbitrator decides that an oral hearing is necessary.
The International Expedited Procedures provide for a sole arbitrator and require the arbitrator to issue a procedural order within 14 days of his or her appointment. The parties then have 60 days to make their written submissions, unless the arbitrator determines that additional time is necessary.
If an oral hearing is held, it, like the written submissions, must be held within 60 days of the issuance of the procedural order, unless the arbitrator determines that it is necessary to extend the time period. Hearings may occur in person, via videoconference, or through other “suitable means” at the arbitrator’s discretion and are not to last more than a day, unless the arbitrator permits more time.
The arbitrator must then issue an award within 30 days of the date of the close of the hearing or, if there is no hearing, the date of the final written submissions, unless otherwise agreed by the parties, provided for by applicable law, or determined by the ICDR.
The updated International Arbitration Rules generally encourage mediation as a parallel tool for resolving disputes that have been submitted to arbitration under the ICDR. Article 5 is a new provision providing that the arbitrator may invite the parties to mediate or the parties may agree to mediate under the ICDR’s International Mediation Rules following the submission of the Answer. Notably, Article 5 provides that, unless the parties otherwise agree, the mediation is to run concurrently with the arbitration and the mediator may not serve as the arbitrator in the case. Articles 2(3)(g) and 3(4) also contain new language emphasizing that parties may designate “any interest in mediating the dispute” in the Notice of Arbitration or Answer.
Joinder and Consolidation
Articles 7 and 8 of the International Arbitration Rules are new provisions providing for joinder of parties and consolidation of cases. Under Article 7, a party wishing to join an additional party to the arbitration is to submit a Notice of Arbitration to the ICDR, the additional party, and all other parties to the arbitration. Joinder must occur prior to the appointment of the tribunal; otherwise, all parties (including the additional party) must agree to the joinder. Under Article 8, the ICDR may, at the request of a party, appoint a “consolidation arbitrator” who may consolidate multiple arbitrations pending under AAA or ICDR rules into one arbitration if (1) the parties have agreed to consolidation, (2) all of the claims are made under the same arbitration agreement, or (3) the claims are made under different arbitration agreements, but the arbitrations involve the same parties, the disputes arise in connection with the same legal relationship, and the arbitrator concludes that the arbitration agreements are compatible.
The International Arbitration Rules contain new language in Article 12 emphasizing arbitrator availability in the appointment of arbitrators. The procedures now explicitly require the parties and the ICDR to take the availability of arbitrators into account when selecting them. In terms of the appointment process, Article 12(6) provides that where the parties have not selected arbitrators or a method of appointment, the ICDR is to use a “list method” to select the arbitrators.
Article 13 of the updated International Arbitration Rules further emphasizes the importance of arbitrator availability (noted above with respect to Article 12) by requiring a prospective arbitrator to affirm that he or she is available to serve. Previously, a prospective arbitrator only had to affirm that he or she was independent and impartial, both of which, of course, are still required under the new procedures.
Article 14 of the updated International Arbitration Rules provides new procedures for challenging an arbitrator. Any party wishing to make such a challenge must send a notice to the ICDR. After notifying the other parties of the challenge, the ICDR will inform the tribunal that a challenge has been made without identifying the challenging party. The ICDR may also advise the challenged arbitrator of the challenge and request information from him or her in relation to the challenge. As was the case under the previous version of the procedures, the ICDR is to make a decision on the challenge if the challenged arbitrator does not withdraw.
In addition, the new procedures provide that the ICDR, “on its own initiative, may remove an arbitrator for failing to perform his or her duties.”
Article 16 of the International Arbitration Rules has been updated to give the ICDR the power to regulate the conduct of party representatives (i.e., legal counsel). Under the new version of Article 16, “[t]he conduct of party representatives shall be in accordance with such guidelines as the ICDR may issue on the subject.” While the ICDR has not issued any such guidelines to date, it may follow the lead of another international arbitral institute, the London Court of International Arbitration (LCIA), which recently proposed guidelines for legal representatives involved in LCIA arbitrations as an annex to a new draft of the LCIA rules expected to come into effect later this year.
Exchange of Information
The ICDR’s emphasis on efficiency can also be seen in new Article 21 of the International Arbitration Rules, which addresses the exchange of information between the parties. Article 21(1) provides that the tribunal is to manage information exchange “with a view to maintaining efficiency and economy.” It also directs the tribunal and the parties to “endeavor to avoid unnecessary delay and expense” in the exchange of information. Article 21 also provides relatively detailed standards, akin to the International Bar Association’s Rules on the Taking of Evidence in International Arbitration, governing the exchange of information. In particular, Article 21(4) provides that arbitral tribunals may require a party to disclose documents to another party “that are reasonably believed to exist and to be relevant and material to the outcome of the case.” Article 21(4) further provides that document requests are to “contain a description of specific documents or classes of documents, along with an explanation of their relevance and materiality to the outcome of the case.”
Changes have also been made to Articles 20(7) and 21(9) of the International Arbitration Rules to permit arbitral tribunals to draw adverse inferences “to protect the efficiency and integrity of the arbitration” and where a party does not comply with an order for information exchange respectively.
Confidentiality and Privilege
Another new provision, found in Article 21(5) of the International Arbitration Rules, provides that “[t]he tribunal may condition any exchange of information subject to claims of commercial or technical confidentiality on appropriate measures to protect such confidentiality.”
Article 22 requires the arbitral tribunal to take “applicable principles of privilege” into account and encourages arbitral tribunals to adopt an expansive notion of privilege when possible, providing that “[w]hen the parties, their counsel or their documents would be subject under applicable law to different rules, the tribunal should, to the extent possible, apply the same rule to all parties, giving preference to the rule that provides the highest level of protection.”
Timing of Awards
In another nod to efficiency, Article 30 of the updated International Arbitration Rules requires arbitral tribunals to render a final award within 60 days of the closing of the hearing, unless otherwise agreed by the parties, specified by law, or determined by the ICDR.
The ICDR is one of several international arbitral institutions that have updated their rules in recent years. Others include the International Chamber of Commerce (ICC), the Swiss Chambers’ Arbitration Institution, the Singapore International Arbitration Centre (SIAC), the Hong Kong International Arbitration Center (HKIAC), and the China International Economic and Trade Economic Commission (CIETAC). As noted above, the LCIA has also published new draft rules, which are expected to come into effect later this year.
These changes at the ICDR and elsewhere reflect an ongoing effort by these institutions to ensure that the latest developments in international arbitration procedures are incorporated into institutional rules and that the international arbitral process continues to serve the needs of its users.