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ALERT MEMORANDUM
2021 ICC Rules Of Arbitration Unveiled
November 12, 2020 If you have any questions concerning this
memorandum, please reach out to your
On October 8, 2020, the International Chamber of Commerce regular firm contact or the following
authors.
(“ICC”) unveiled its revised Rules of Arbitration (“2021 ICC PARIS
Rules”), which are expected to enter into force on 12, rue de Tilsitt
75008 Paris, France
January 1, 2021. They are intended to replace the current version T: +33 1 40 74 68 00
F: +33 1 40 74 68 88
of the Rules, which have been in force since 2017 (“2017 ICC
Jean-Yves Garaud
Rules”). The text of the Revised Rules remains subject to +33 1 40 74 68 76
jgaraud@cgsh.com
additional editorial amendments prior to the official launch.
Laurie Achtouk-Spivak
These latest changes are designed to be “a further step towards +33 1 40 74 68 24
lachtoukspivak@cgsh.com
greater efficiency, flexibility and transparency” of ICC-
Zeïneb Bouraoui
administered arbitration, in the words of ICC Court President +33 1 40 74 68 93
1 zbouraoui@cgsh.com
Alexis Mourre.
LONDON
2 London Wall Place
The newly released ICC Rules include noteworthy modifications London EC2Y 5AU
T: +44 20 7614 2200
that will directly impact ICC users and practitioners in a number F:+ 44 20 7600 1698
of important areas, such as complex arbitrations (with revisions
Christopher P. Moore
affecting both joinder and consolidation of claims), third-party +44 20 7614 2227
cmoore@cgsh.com
funding, party representation, and constitution of arbitral
J. Cameron Murphy
tribunals. Apart from a third-party funding disclosure +44 20 7614 2396
cmurphy@cgsh.com
requirement, the most striking revision may be the ability of the
MILAN
ICC Court to disregard, in “exceptional circumstances,” any party Via San Paolo 7
20121 Milan, Italy
agreement on the method of constitution of the arbitral tribunal in T: +39 02 72 60 81
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order “to avoid a significant risk of unequal treatment and
Carlo Santoro
unfairness that may affect the validity of the award.” +39 02 7260 8280
csantoro@cgsh.com
Also of note, and in a departure from prior practice, the 2021 ICC Paolo Bertoli
Rules include tailor-made provisions for investment treaty-based +39 02 7260 8624
pbertoli@cgsh.com
arbitration, namely a third-State nationality requirement for ROME
arbitrators and the exclusion of provisions on emergency Piazza di Spagna 15
00187 Rome, Italy
arbitrators. T: +39 06 69 52 21
F: +39 06 69200665
Ferdinando Emanuele
+39 06 6952 2604
femanuele@cgsh.com
Chiara Capalti
+39 06 6952 2294
ccapalti@cgsh.com
FRANKFURT
Main Tower
Neue Mainzer Strasse 52
60311 Frankfurt am Main
T: +49 69 97103 0
F:+ 49 69 97103 199
Prof. Dr. Richard Kreindler
+49 69 97103 160
rkreindler@cgsh.com
1
ICC, ICC unveils revised Rules of Arbitration (Oct. 8, 2020),
.
available at: https://www.iccwbo.be/icc-unveils-revised-rules-of-arbitration/
clearygottlieb.com
© Cleary Gottlieb Steen & Hamilton LLP, 2020. All rights reserved.
This memorandum was prepared as a service to clients and other friends of Cleary Gottlieb to report on recent developments that may be of interest to them. The information in it is
therefore general, and should not be considered or relied on as legal advice. Throughout this memorandum, “Cleary Gottlieb” and the “firm” refer to Cleary Gottlieb Steen & Hamilton
LLP and its affiliated entities in certain jurisdictions, and the term “offices” includes offices of those affiliated entities.
ALERT MEMORANDUM
Constitution of the Arbitral Tribunal practitioners alike. Only time will tell how the ICC
Article 12(9) of the 2021 ICC Rules on the Court interprets the “exceptional circumstances”
constitution of the Arbitral Tribunal provides that standard in the new provision. Yet, it may be
“[n]otwithstanding any agreement by the parties on anticipated that an arm’s length party agreement on
the method of constitution of the arbitral tribunal, in the method of constitution of the arbitral tribunal will
exceptional circumstances the Court may appoint not be disregarded except in extremely limited cases.
each member of the arbitral tribunal to avoid a Any more liberal implementation of the provision
significant risk of unequal treatment and unfairness would likely lead to a rise in petitions by the award
that may affect the validity of the award.” debtor to set aside the award or to oppose its
recognition and enforcement on the ground that “[t]he
The new provision aims to further ensure fairness and composition of the arbitral authorities […] was not in
4
equality in the constitution of arbitral tribunals and to accordance with the agreement of the parties”). This
limit the risk of setting aside of arbitral awards by ground is of course firmly anchored not only in
domestic courts on the basis of lack of fairness and international conventions and instruments respecting
equal treatment. The provision may be seen as an international commercial arbitration, but also in the
additional measure by the ICC to avoid the national arbitration legislation of most jurisdictions
predicament of unequally constituted tribunals. The respecting grounds for set aside and refusal of
issue first came into sharp focus in 1992 with the well- enforcement.
known Dutco decision by the French Court of
2
Cassation and has been a focus of attention in almost
every major rules revision by the ICC and other Party Representation
leading arbitral institutions since that time. The 2017 ICC Rules are largely silent on party
New Article 12(9) builds on and goes beyond current representation. Article 17 of the 2017 ICC Rules
Article 12(8), which until now had empowered the simply provides that, at any time during the
ICC Court to appoint each member of the arbitral arbitration, “the arbitral tribunal or the Secretariat
tribunal specifically in multi-party arbitrations “where may require proof of the authority of any party
all parties are unable to agree on a method for representative.” The 2021 ICC Rules add two
3 Unlike the
constitution of the arbitral tribunal.” provisions on party representations. These additions
2012 provision, new Article 12(9) applies to appear designed to increase transparency throughout
multiparty and bilateral arbitrations alike and is thus the arbitration proceedings and to avoid conflicts of
designed to avoid appointment processes which might interest that may undermine the impartiality and
pose a risk to the enforceability of the award. independence of arbitral tribunals.
It remains to be seen what the ramifications of new The first new provision is Article 17(1), pursuant to
Article 12(9) will be, which in view of its potential which each party has a duty to “promptly inform the
application calls for close scrutiny by users and Secretariat, the arbitral tribunal and the other parties
2 arbitrators and the arbitration is a multi-party procedure] and
See, Siemens AG and BKMI Industrienlagen GmbH v. where all parties are unable to agree to a method for the
Dutco Consortium Construction Company Ltd., French Court of constitution of the arbitral tribunal, the Court may appoint each
Cassation, Ch. Civ. 1 (Jan. 7, 1992). Specifically, in Dutco, the member of the arbitral tribunal and shall designate one of them
French Court of Cassation, the highest French court for civil to act as president.”
actions, set aside an ICC award that had been rendered in a multi-
4
party arbitration (where the two co-respondents had claimed that See, e.g., Convention on the Recognition and
they were each entitled to nominate one arbitrator as they had Enforcement of Foreign Arbitral Awards (“New York
conflicting interests). During the arbitration, the ICC Court Convention”), Article V.1(c) pursuant to which “[r]ecognition and
invited the co-respondents to agree upon a joint nomination. They enforcement of the award may be refused, at the request of the party
did so, but under protest, and at the end of the arbitration they against whom it is invoked,” if “[t]he composition of the arbitral
challenged the award, which the French Court set aside on the authorities […] was not in accordance with the agreement of the
grounds that such nomination procedure had not complied with parties”; 2006 UNCITRAL Model Law on International
the principle of equality of the parties in appointing arbitrators, Commercial Arbitration, Article 34(2)(a)(iv) which provides that an
which the French Court found to be a “matter of public policy.” arbitral award may be set aside if “the composition of the arbitral
3 tribunal […] was not in accordance with the agreement of the
See Article 12(8) of the 2017 ICC Rules: “[i]n the parties.”
absence of a joint nomination pursuant to Articles 12(6) or 12(7)
[i.e., in cases where the dispute is to be referred to three
2
ALERT MEMORANDUM
of any changes in its representation.” This provision for the funding of claims or defences and under which
is consistent with the 2014 IBA Guidelines on it has an economic interest in the outcome of the
Conflicts of Interest in International Arbitration, arbitration.” Accordingly, parties to an ICC
which require each party to inform the arbitral arbitration will be obligated to disclose the existence
tribunal and the other parties of the “identity of its and identity of any third-party funder, with the aim of
counsel appearing in the arbitration” and assisting the members of the arbitral tribunal in
5
subsequently of “any change in its counsel team.” complying with their own respective duties of
The second new provision is Article 17(2). It bestows independence and impartiality.
on arbitral tribunals the discretionary power to “take Similar to the 2018 Hong Kong International
6
any measure necessary to avoid a conflict of interest” Arbitration Rules, new Article 11(7) clearly reaffirms
arising from a change in the legal representation of the the ICC’s goal of avoiding conflicts of interests
parties, “including the exclusion of new party stemming from third-party funding arrangements.
representatives from participating in whole or in part The 2019 ICC Note to Parties and Arbitral Tribunals
in the arbitral proceedings.” New Article 17(2) takes indeed confirmed that it would consider
the same approach as adopted in 2014 by the Rules “relationships with any entity having a direct
of Arbitration of the London Court of International economic interest in the dispute or an obligation to
Arbitration (“LCIA”), which have themselves indemnify a party for the award” in addressing
undergone further revision earlier this year. possible objections to confirmation or challenge of
7
Users and practitioners will likely welcome the new arbitrators.
disclosure requirements as a useful tool to ensure By more specifically addressing when use of third-
transparency and avoid unnecessary belated arbitrator party funding must be disclosed, the ICC is actively
challenges in ICC proceedings. At the same time, attempting to limit conflicts of interests by responding
depending upon the law deemed applicable to the to the rapid increase in third-party funding
issue and because of the controversy surrounding the arrangements in international arbitration. For
extent of the power of the arbitral tribunal to limit the example, some of these arrangements have involved
ability of parties to appoint legal representatives of cases in which a party was receiving financing from a
their choice, it will behoove both parties and arbitral third-party funder that had a pre-existing relationship
tribunals to carefully consider the scope of this power with one of the arbitrators appointed in the same
in the specific arbitration and in view of the specific matter.
law deemed applicable to the question.
Complex Arbitrations: Joinder And
Third-Party Funding Disclosure Consolidation
The 2021 ICC Rules introduce a significant new Complex cross-border disputes often involve the
provision regarding third-party funding disclosure at interaction between multiple parties on the basis of
the outset of an arbitration. Pursuant to new multi-layered contractual relationships. The
Article 11(7), “[i]n order to assist prospective 2021 ICC Rules introduce amendments intended to
arbitrators and arbitrators in complying with their facilitate the joinder of third parties and to clarify the
duties under Articles 11(2) and 11(3), each party must process for the consolidation of arbitrations
promptly inform the Secretariat, the arbitral tribunal conducted between different parties and/or based on
and the other parties, of the existence and identity of different contractual instruments.
any non-party which has entered into an arrangement
5 7
See, Guideline No. 7(b). ICC International Court of Arbitration, Note to Parties
6 and Arbitral Tribunals On the Conduct of the Arbitration Under the
Hong Kong International Arbitration Rules, Article 44 ICC Rules of Arbitration (Jan. 1, 2019), available at:
which mandates that “[i]f a funding agreement is made, the https://iccwbo.org/content/uploads/sites/3/2017/03/icc-note-to-
funded party shall communicate a written notice to all other parties-and-arbitral-tribunals-on-the-conduct-of-arbitration.pdf
parties, the arbitral tribunal, any emergency arbitrator and
HKIAC” regarding the existence of the funding agreement and the
identity of the third-party funder.
3
ALERT MEMORANDUM
• Joinder (iii) The arbitration involves different parties and
Under the current 2017 ICC Rules, “[n]o additional the claims arise out of more than one
party may be joined after the confirmation or arbitration agreement, provided that the
appointment of any arbitrator, unless all parties, dispute arises in connection with the same
8 legal relationship and the arbitration
including the additional party, otherwise agree.” 11
New Article 7(5) of the 2021 ICC Rules will allow agreements are compatible.
requests for joinder of a consenting additional party to New Article 10 of the 2021 ICC Rules takes the same
be made even after the confirmation or the approach recently adopted in the 2020 LCIA
appointment of any arbitrator. Once constituted, the Arbitration Rules, which, under Article 22.7, likewise
arbitral tribunal will decide on the request. In doing allow for greater flexibility in the consolidation of
so, the arbitral tribunal may take into account all claims commenced under compatible arbitration
circumstances, including whether the tribunal has agreements and arising out of interrelated contractual
prima facie jurisdiction over the additional party, the instruments.
timing of the request for joinder, possible conflicts of The 2021 ICC Rules on consolidation of claims
interest and the possible impact of the joinder on the should prove particularly helpful in multi-party
arbitral procedure. In any event, for the arbitration to arbitrations arising out of several interrelated
go forward the additional party must accept the contractual instruments. Nevertheless, in the event
constitution of the arbitral tribunal and must agree to parties to an ICC arbitration contemplate
the arbitration’s Terms of Reference, in order to avoid consolidation under new Article 10 of the Rules, it
any risk to the enforceability of the award. will be important to scrutinize each agreement’s
This new provision on joinder is designed to enhance arbitration provision, in order to ensure that all of the
the efficiency and flexibility of the arbitration arbitration agreements are either identical or at least
proceedings. But only time will tell whether compatible.
Article 7(5) is used with any frequency in future
proceedings under the new ICC Rules and whether it Issuance of Additional Awards
proves to have a significant impact in practice, in
particular regarding time efficiency. The 2021 ICC Rules introduce a new Article 36(3) on
additional awards. This provision allows the arbitral
• Consolidation tribunal to issue an additional award on claims which
the tribunal has failed to decide. The party requesting
Currently, Article 10 of the 2017 ICC Rules does not the additional award must make an application to that
expressly address whether consolidation of claims is effect to the arbitral tribunal within 30 days of receipt
permitted only where the claims in the arbitration of the award by that party. The other party is given a
arise out of the “same arbitration agreement” or also short period of time – not exceeding 30 days – to
where the dispute arises from multiple contracts comment on the application. The arbitral tribunal
which contain identical arbitration agreements. must then submit its decision in draft form to the ICC
Article 10 of the 2021 ICC Rules clarifies this Court not later than 30 days following the expiry of
question and confirms that consolidation of claims is the time limit for receipt of the other party’s
allowed where: comments or within any other time period which the
9 ICC Court may decide.
(i) All of the parties agree to consolidation ;
(ii) The arbitrations involve different parties and This new provision adds another mechanism which
the claims arise out of more than one has the potential to reinforce the parties’ due process
arbitration agreement, provided that the rights and to enhance the efficiency of the arbitral
arbitration agreements are identical10 proceeding. To limit the risk of challenge to awards
; or on the ground of infra petita, that is in an amount or
otherwise of a nature less than what was sought, the
8 10
2017 ICC Rules, Article 7(1) [emphasis added]. 2021 ICC Rules, Article 10(b).
9 11
2021 ICC Rules, Article 10(a). 2021 ICC Rules, Article 10(c).
4
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