The new London Court of International Arbitration (LCIA) Rules come into effect today. Many of the changes are aimed at improving the efficiency of the arbitration process and will be welcomed by parties and practitioners alike. The new LCIA Rules reflect amendments made to other institutional rules as well as introducing some distinct changes.This briefing highlights the main changes brought about by the new LCIA Rules.
Emergency arbitrator appointments
In line with other arbitral institutions, including the ICC and the ICDR, the new LCIA Rules have introduced emergency arbitrator provisions. These are in addition to, and not a substitute for, the parties right to apply to court for interim measures. The appropriate course of action will need to be considered by the parties on a case by case basis. If the application for appointment of an emergency arbitrator is successful, the LCIA Court has three days within which to make the appointment. The emergency arbitrator must decide the claim for emergency relief within 14 days of appointment. A hearing is not required and the emergency arbitrator has the option to decide the matter on documents only. The ruling of the emergency arbitrator is temporary and may subsequently be confirmed, varied, discharged or revoked, in whole or in part once the arbitral tribunal has been appointed.
The emergency arbitrator provisions apply only to arbitrations where the arbitration agreement was entered into on or after 1 October 2014, though it is possible to opt out. The provisions apply to arbitration agreements entered into before this date only if the parties expressly opt in.
A more efficient procedure
A number of changes have been introduced to the rules in order speed up arbitration proceedings. The timescales have been marginally reduced so that the time allowed to submit statements of case is now 28 days as opposed to 30. This ensures that deadlines are likely to fall on working days.
The rules also provide that the Response and the Request may now be submitted electronically. Further provisions ensure that the process moves quickly with a new provision expressly preventing delays to the formation of the tribunal arising from any deficiencies in either the Request or the Response (Article 5.1). Parties and the tribunal are now encouraged to make contact “as soon as practicable” but no later than 21 days following notification that the tribunal has been constituted.
Formation of the tribunal and the tribunal powers
In addition to the declaration of independence required under the 1998 rules, the new rules require arbitrators to confirm that they are “ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration”. It is hoped that this will ensure that arbitrators only take on appointments when they have sufficient capacity to do so effectively.
The new LCIA Rules provide that no party can unilaterally nominate a sole arbitrator or chairman in the absence of written agreement between the parties (Article 7.3).
New consolidation powers are introduced under the 2014 rules. This can be ordered where the parties agree in writing and subject to the approval of the LCIA Court (Article 22.1(ix). Consolidation can also be ordered (with the approval of the LCIA Court) where one or more arbitrations have been commenced under LCIA Rules between the same parties and under the same arbitration agreement or any compatible arbitration agreements, provided no arbitral tribunal has yet been formed or, if already formed, the tribunal is composed of the same arbitrators (Article 22.1(x)).
Support for the arbitration agreement
The term “Arbitration Agreement” is now defined in the preamble to the new LCIA Rules and incorporates both the arbitration agreement itself and the LCIA Rules.
The new rules strengthen the validity of the arbitration agreement. Article 32.3 provides that where a part of the arbitration agreement is struck down (by a court or tribunal) the validity of any award or arbitrator appointment is preserved.
The problems that can arise where the law of the arbitration agreement is not express were highlighted in the English Court of Appeal decision Sulamerica CIA Nacional De Seguros SA & Ors Enesa Engenharia Sa & Ors 1 WLR EWCA Civ 638 In practice the law of the seat is rarely dealt with expressly in the arbitration agreement. Article 16.4 of the new rules deals with this problem, stating 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.
Article 16.2 of the New LCIA Rules provides that unless otherwise agreed by the parties the default seat (which remains as London) will apply until the tribunal is formed. Once formed, the tribunal (and not the LCIA Court) may order that a different seat of arbitration is more appropriate following the written submissions of the parties.
Conduct of the parties and legal representatives
A notable change introduced by the 2014 Arbitration Rules is the inclusion of an annex containing guidelines on the conduct of party representatives. These guidelines have the purpose of defining and promoting good and equal conduct, and operate to level the playing field for advocates, who frequently come from diverse legal traditions. Parties will be required to ensure that their legal representatives have agreed to comply with the guidelines, which include prohibitions on unfairly obstructing the arbitration, jeopardising the finality of any award, and knowingly relying on false evidence.
If a party representative is alleged to have breached his or her responsibilities under the guidelines, the tribunal may decide if a violation has occurred and, if so, what sanctions to order. The tribunal is empowered to order a written reprimand or caution, as well as ‘any other measure necessary to fulfil within the arbitration the general duties required of the tribunal’.
The tribunal now has the express power to take the parties conduct into account when awarding costs “including any co-operation in facilitating the proceedings as to time and cost and any non-co-operation resulting in undue delay and unnecessary expense” (Article 28.4).
Article 18.3 provides that any change or addition to the parties’ legal representatives must be notified to the other parties, the tribunal and the Registrar and that such changes are subject to the tribunal’s approval. Article 18.4 states that the tribunal may withhold permission where the change or addition compromises the composition of the tribunal or the finality of the award.
The new LCIA Rules provide a timely update to the 1998 LCIA Rules. The emphasis on good conduct from those involved in the process and the strides taken towards streamlining the process, reducing delays as well as increasing and clarifying the powers of the tribunal are particularly welcome.