China Desk newsletter - 2020年LCIA仲裁规则 LCIA Arbitration Rules 2020

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Newsletter

Published 09 November 2020
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The London Court of International Arbitration (“LCIA”) recently revised its arbitration rules and these 2020 rules will take effect on 1 October 2020 and will apply to all LCIA arbitrations commenced on or after that date.

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The LCIA

The LCIA includes two bodies which are involved in arbitrations subject to the LCIA Rules:

(1) The LCIA Court. The LCIA Court is the final authority for the proper application of the LCIA Rules. Its key functions are:

  • appointing tribunals;
  • determining challenges to arbitrators; and
  • controlling costs.

(2) The Secretariat. The Secretariat is headed by the Registrar. The LCIA Secretariat is based at the International Dispute Resolution Centre (IDRC) in London and is responsible for the day-to-day administration of all disputes referred to the LCIA.

According to the LCIA, the median duration of arbitral proceedings conducted under the LCIA Rules is 16 months, the median time for arbitrators to produce an award is three months and median costs are US$97,000.

LCIA Arbitrations in general

In LCIA arbitration, there is a presumption in favour of a sole arbitrator, and the award is final and binding, with an irrevocable waiver of the right to appeal insofar as such a waiver is not prohibited under any applicable law.

The LCIA Rules has a provision to ensure that the sole arbitrator or presiding arbitrator should be of a different nationality to any party, unless the parties who are not the same nationality as the arbitrator candidate agree in writing otherwise (Article 6.1).

The default seat of the arbitration will be London, unless either the parties agree otherwise or the arbitral tribunal determines, in view of the circumstances that another seat is more appropriate.

Changes in the 2020 Rules

The general characteristics of the LCIA Rules for Arbitrations, such as those mentioned above,  have not been changed.

The key changes to the new LCIA Rules are the inclusion of express provisions to expedite the arbitral process such as  early determination of claims/counterclaims/issues and new provisions for the consolidation and concurrency of disputes, along with new provisions to address issues arising from the prevalent use of electronic communications and media in today’s working environment, such as data protection and cybersecurity, the use of electronic submission of documents being the default position and virtual hearings.

More details on these key changes are set out below.

Interim measures

Under the current rules, there is a tendency for parties who wish to seek urgent interim relief to first seek tribunal’s authorisation through the appointment of an emergency arbitrator before seeking the relief from the Court. This has raised some concerns about such additional steps and time in an urgent interim relief application.

LCIA Rules 2020 now state clearly that a party may apply to court for interim measures before the formation of the tribunal and that the ability to appoint an emergency arbitrator will not prevent parties from exercising the right to apply to the courts for interim relief.

Electronic Communications

All communications must be now made electronically, unless the tribunal or LCIA Court has previously approved or ordered in writing communications being made in any other way. All such electronic communication will be treated as being received by the parties except insofar as the LCIA Court or the Arbitral Tribunal has been informed of any reason why the communication will not actually be received by such party including electronic delivery failure notification.

Under the current Rules, the position is different. All communications had to be in writing, and could be delivered personally, by registered post, courier or by fax, email or "any other electronic means of telecommunication that provide a record of its transmission" or any other manner ordered by the arbitral tribunal (Article 4.1, LCIA Rules 2014).

The LCIA 2020 Rules also now expressly require that prior to the formation of the arbitral tribunal, the parties should send all communications to the LCIA Registrar, save that, unless the parties agree otherwise, any arbitrator who is required to participate in the selection of the presiding arbitrator may consult any party to obtain its views as to the suitability of a candidate. All communications with the LCIA Registrar must be copied to all other parties, with the exception of purely administrative matters, in relation to which parties may communicate unilaterally with the Registrar. These express provisions make it clear when Parties need not communicate with the LCIA Registrar.

Time limits

The LCIA Rules 2020 contain several time limits for service of documents, with the underlying assumption that documents would be transmitted via electronic means and that a recipient will receive such documents almost instantaneously after the document is sent. The LCIA Rules 2014 contained different provisions for determining the date of commencement of a time limit and determining whether a time limit has been complied with.

Official holidays or non-business days would be included in calculating a period of time, but where the last day of such period falls on an official holiday or a non-business day at the place of that addressee (or the place of the party against whom the calculation of time applies), the period shall be extended until the first business day which follows that last day.

The new 2020 Rules also made it clear that the expiration of any time limit would be determined with reference to the recipient’s time zone.

Requests

Under the LCIA Rules 2020 a single composite Request for arbitration is now valid to refer disputes under one or more distinct contracts and against one or more respondents to arbitration under the LCIA Rules .

The composite Request needs to set out separately the estimated monetary amount or value in dispute, the transaction(s) at issue and the claim advanced by the claimant against any other party in each arbitration. Each arbitration commenced in the composite Request will initially proceed separately, subject to any later order for consolidation or concurrency.

Under the current LCIA Rules 2014, a single request could not be used in this way.

Conversely, the new Rules would allow the respondent may serve a composite Response in respect of all or any of the arbitrations in response to a composite Request. The composite Response needs to identify separately the estimated monetary amount or value in dispute, the transaction(s) at issue and the defence, counterclaim or cross-claim advanced by the Respondent against any other party to each arbitration.

Under the LCIA Rules 2020, in the period between commencement of the arbitration and appointment of the tribunal, the claimant can apply to the LCIA Court for permission to supplement, modify or amend its Request to correct an error or ambiguity. All other parties to the arbitration will be given a reasonable opportunity to state their views on the proposed change(s) before it makes a decision on whether to allow the changes(s). Such provisions in relation to the Request did not exist in the LCIA Rules 2014.

Remote hearings

Regardless of the choice of arbitral seat, the new Rules now expressly permits in-person hearings to be held in any convenient location as determined by the tribunal in consultation with the parties or remotely, or by a mixture of in person and remote attendance.

In addition, the new Rules allow the tribunal to dispense with an oral hearing in order to expedite the proceedings. This does not affect a party’s entitlement to a hearing, but it does mean that under the new Rules, if a party wishes to proceed with a hearing, a request must be made to the tribunal to order one.

Data Protection

The LCIA Rules 2020 specifically deals with cybersecurity and data protection whereas the LCIA Rules 2014 did not.

Under the new Rules, the tribunal must consider at an early stage of the arbitration, in consultation with the parties and where appropriate the LCIA, whether specific information security measures are needed to protect the physical and electronic information shared in the arbitration. At the same time, the tribunal must also consider whether there is a need to address the processing of personal data produced or exchanged in the arbitration in the light of applicable data protection or equivalent legislation (Article 30.5). The LCIA and the tribunal may issue directions in relation to information security or data protection, which will bind the parties and, in the case of directions from the LCIA, also the tribunal, subject to the mandatory provisions of any applicable law or rules of law.

Powers to expedite

Under the new Rules, the parties and the arbitral tribunal must now make contact (whether in person, by conference call, video conference, other communications technology or through correspondence) no later than 21 days following receipt of the Registrar's written notification of the arbitral tribunal's formation to agree on joint proposals for the conduct of their arbitration as far as possible. This differs from Article 14.1 of the LCIA Rules 2014, where the parties and tribunal were "encouraged" to make contact.

The tribunal also has the "widest discretion" to discharge its general duties, subject to any mandatory provisions of any applicable law(s) or rules of law that the arbitral tribunal decides is applicable and introduced a list of non-exhaustive powers that are included in this wide discretion such as limiting the extent to which any questions or issues will be addressed in cross-examination and in written statements (including witness statements), abridging any period of time limits and making orders employing technology to enhance the efficiency of the arbitration proceedings.

The tribunal has the right to decide the stage at which any issue is determined, the order that issues are dealt with and the arbitral procedure for each stage. The tribunal can make any procedural order required to expedite the arbitration procedure.

As part of the enhancement of the tribunal’s powers to expedite the arbitration process, the new Rules also expressly empowers the tribunal strike out a case which is outside of their jurisdiction, inadmissible or “manifestly without merit” through a party’s application for early determination.  The tribunal has the power to make any procedural order with a view to expediting the arbitral procedure in the exercise of its powers of early determination.

The tribunal did not expressly have such powers under the current LCIA Rules 2014.

Award within 3 months

The new Rules now expressly provides that the tribunal must seek to make its final award no later than three months following the last submission from the parties. Where there is more than one arbitrator, the tribunal is obliged under the new Rules to notify the parties of the time it has set aside to deliberate on the award.

Advanced Payment

Under the current LCIA Rules, the LCIA Court required the parties to lodge deposits to cover the costs of the tribunal and of the LCIA. These deposit funds were held on trust by the LCIA and interest on sums deposited credited to the account of the party depositing them.

Under the new Rules, the payments will usually be required in stages. Nevertheless, the arbitration will not proceed until it has ascertained from the Registrar that the LCIA is or will be in requisite funds as regards outstanding and future arbitration costs. Failure by a claimant, counterclaimant, or cross-claimant to pay the advance payment may be treated by the arbitral tribunal as a withdrawal of the claim or cross-claim.

Conclusion

With these new changes, the LCIA is in a better position to ensure that disputes are resolved in an expeditious and effective manner, especially given the uncertainties posed by the global COVID-19 pandemic, through maximising the use of electronic communications and providing the tribunal with greater flexibility to exercise their discernment. Please contact us if you are considering resolving a dispute through an arbitration or have queries about LCIA arbitrations.