The Revised Rules address, among other things, the use of technology and remote hearings, data protection and security and the expedition of proceedings. The updates will apply to arbitration and mediation proceedings commenced after 1 October 2020. According to the LCIA, the aim of the Revised Rules is to “make the arbitral and mediation processes even more streamlined and clear for arbitrators, mediators and parties alike”. We consider the key amendments to the Revised Rules below.
Many of the changes are administrative and reflect the modern business world of electronic communications. Perhaps the changes that are most significant and likely to bring practical benefit, are those concerning expedition of proceedings and multi-party and multi-contract arbitrations. There have been concerns that arbitral tribunals have not acted decisively in relation to unmeritorious claims. Whereas in litigation such claims can be dealt with using summary judgment procedures, arbitrators do not generally embrace that practice, no doubt mindful of potential challenges over fairness. The changes in the rules for early determination now set out powers to deal with cases “manifestly without merit” and it is hoped that this will embolden tribunals to determine these cases at an early stage utilising these rules.
The problem of how to deal with multi-party and multi-contract arbitrations are long-standing in international arbitration. The changes made and discussed below serve to address some of the practical problems that arose out of case law by allowing for composite requests.
We turn to consider the main changes.
Expedition of proceedings
The Revised Rules enable arbitrators to expedite the proceedings by, for example, limiting written and oral witness evidence, dispensing with a hearing and deciding whether matters are suitable for a preliminary assessment. In addition, the Revised Rules expressly provide that the Arbitral Tribunal may issue an order for “early determination” in circumstances where the Tribunal considers that a case is “manifestly without merit”. The extent to which these new tools will be employed by arbitrators remains to be seen but the expectation is that these changes will make the LCIA more efficient, in terms of both time and cost. The Revised Rules also state that Arbitral Tribunals shall endeavour to make their final awards no later than three months following the last submission of the parties, rather than merely “as soon as reasonably possible”, which was the position under the old LCIA rules.
Pursuant to the Revised Rules, the Arbitral Tribunal and mediators are encouraged to use technology to enhance the efficiency and expeditious conduct of arbitrations and mediations. In recognition of the issues that have arisen during the COVID-19 pandemic, the Revised Rules expressly provide that hearings may take place virtually by conference call, video conference or using other communication technology with participants in one or more geographical places (or a combination of remote and physical attendance). In an earlier article (available here), we considered the court’s approach to the COVID-19 pandemic and its willingness to embrace technology. It is encouraging to see that the LCIA is adopting a similarly flexible approach when it comes to newfound working practices. While virtual mediations and arbitrations may not become the “new norm” post-lockdown, they will likely become a far more attractive proposition than they once were and could lead to significant cost savings for parties to an arbitration or mediation.
Multi-party and multi-contract arbitrations
The Revised Rules allow the consolidation of two or more arbitrations into a single arbitration (i) where the different proceedings are based on the same arbitration agreement concluded between the same disputing parties (as under the old rules) and also (ii) where the proceedings arise out of “the same transaction or series of related transactions”. The Revised Rules also introduce the option to provide a composite Request to commence arbitration and composite Response. This will avoid the need for parties to submit multiple Requests and Responses (which are often largely repetitive), which should ultimately lead to efficiencies.
Role of tribunal secretaries
Under the Revised Rules, an Arbitral Tribunal may obtain assistance from a tribunal secretary in relation to an arbitration but the Tribunal must not, under any circumstances, delegate decision-making functions to tribunal secretaries. Before assisting a Tribunal, secretaries must provide a written declaration on their impartiality and confirm whether they are “ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the tasks to be performed by the tribunal secretary”.
Data protection and regulatory issues
The Revised Rules contain new provisions which explicitly address data protection and regulatory issues. For instance, the LCIA and the Arbitral Tribunal/mediator may issue directions addressing information security or data protection, which shall be binding on the parties. At an early stage of the arbitration or mediation, the Arbitral Tribunal or mediator must consult with the parties and consider whether it is appropriate to adopt (i) any specific information security measures to protect the physical and electronic information shared in the arbitration/mediation; and (ii) any means to address the processing of personal data produced or exchanged in the arbitration/mediation in light of applicable data protection and legislation. Given the fundamental importance of data protection and cybersecurity in today’s digital era, these amendments are likely to strengthen parties’ confidence in LCIA mediations and arbitrations.
Finally, the LCIA has revised its Schedules of Arbitration Costs and Schedule of Mediation Costs, effective as of 1 October 2020. The maximum hourly rate for arbitrators, mediators and the LCIA Secretariat will be increased from £450 to £500 “to better reflect the demands of users in certain cases involving complex and significant disputes”.
The Revised Rules are indicative of the LCIA’s forward-thinking approach to increasing innovation and efficiency. They reflect a conscious effort by the LCIA to adapt to the COVID-19 pandemic and parties’ resulting preferences in respect of greater use of technology in arbitral and mediation proceedings. The Revised Rules are a welcome step since they promote efficiency and modernisation and allow parties to deal more effectively with the current challenges of travel restrictions and social distancing measures which should, in turn, save parties both time and cost. The changes to expedition of proceedings and multi-party and multi-contract arbitrations are particularly welcome.