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Evolution not revolution: LCIA launches new rules adapted to the COVID era

  • Legal Development 10 septembre 2020 10 septembre 2020
  • Global

  • Arbitrage international

The LCIA says its arbitration rules have been updated with a 'light touch', but significant changes have been made to help arbitration through the COVID era and streamline proceedings generally. We look at the main ways in which the new rules differ from the old.

The London Court of International Arbitration (LCIA) was about to publish its new arbitration rules when the COVID-19 virus struck.  Now they have been launched at last, and will come into force on 1 October 2020, applying to all LCIA arbitrations commenced on or after that date.  New mediation rules have been issued too.

Key changes

The LCIA has used the extra time well.  Although its 2014 rules were better adapted than most to electronic communication, the new rules make electronic communication the norm,  not only within an arbitration but also when commencing it and bringing it to an end with the transmission of an award (Articles 1.3, 4 & 26.7).  Similarly, wording allowing virtual (and semi-virtual) hearings was already in place, but has been made more explicit (Article 19).

Naturally, there are pitfalls here.  Courts in some countries take a narrow view of the New York Convention's Articles V(1)(b) and IV(1)(a) and may not be satisfied that a party has been properly notified of an arbitration or that the resulting award has been properly issued if everything was done electronically.  This could impede cross-border enforcement of an award if the claimant does not insist on obtaining a hard copy of the award, as it is entitled to do under Article 26.7.  But subject to local concerns, the new primacy of electronic communication is a significant step forward that other major institutions will no doubt also take soon.

The new rules make other changes too, some of them quite significant.  Among other things they:

  • Allow parties to make composite Requests covering claims arising from more than one contract (Article 1.2).  Previously it was necessary to commence separate arbitrations and then seek to consolidate them.  The circumstances in which arbitrations can be consolidated have also been broadened (Articles 22.7 & 22.8).
  • Provide for the 'early determination' of claims, counter/cross-claims and defences that are (a) manifestly outside the tribunal's jurisdiction, (b) inadmissible, or (c) manifestly without merit (Article 22.1(viii)).  Here the LCIA is following SIAC, HKIAC and others in introducing a procedure akin to the English courts' summary judgment.  This does not solve the problem of defendants choosing not to cooperate and the non-availability in arbitration of an equivalent to default judgment, but it does allow open and shut cases to be concluded quickly and cheaply in many circumstances.
  • Encourage an expedited procedure to be adopted in cases that (high value or not) are relatively uncomplicated but not capable of early determination under Article 22.1.  In practice, standard procedure could be streamlined by, for example, limiting statements or witness evidence in some way, abridging time periods, or dispensing with a hearing (Article 14.6).  It is not clear whether a severely abbreviated procedure will prove popular with parties  -  experience of the Shorter Trials Scheme in the English courts suggests that it will not  -  and it is something that a tribunal could order anyway, under the current LCIA rules.  But setting out the specific short-cuts that are possible is helpful, and may lead to tribunals ordering them more often in appropriate cases.

Minor changes

In addition to these more substantial changes, the drafters have given the language of the rules a general spring clean (it is markedly more user-friendly now) and have occasionally changed the location of individual provisions too.  The tribunal's general duties have been moved to the front of Article 14, for example, giving them more prominence, and rules on the use of tribunal secretaries have been developed and moved from Section 8 of the Notes for Arbitrators into the main body of the rules, becoming new Article 14A. 

Practitioners should also be aware that certain time periods have been made shorter or firmer, which could catch them out.  The LCIA appoints the tribunal within 28 days now, rather than 35; parties and the tribunal are now required (not 'encouraged') to make contact within 21 days of the tribunal's appointment; and the tribunal should make its final award no later than three months after the last oral or written submission (Article 5.6, 14.3 and 15.10 respectively).  

Finally, new rules on regulatory compliance and data protection are included (Articles 24A and 30A) and Article 30 has been extended so that confidentiality undertakings have to be obtained from third parties involved in the arbitration, reflecting those given by the parties themselves. 

A significant advance

Overall, the new LCIA rules represent a significant advance on the 2014 ones, and are also timely, being the first rules of a major institution to take the challenges of the COVID-19 era fully into account.  Although the LCIA says it has approached reform with a 'light touch', there have been more substantive changes than expected, as well as a thorough-going revision of its language and, where appropriate, relocation of certain provisions.  However, the LCIA knows when to let well alone  -  the annex on the conduct of party representatives is largely unchanged, for example  -  and the basic numbering of its articles remains as before, providing continuity amid the many changes. 

Maurice Kenton and Ben Knowles are co-chairs of Clyde & Co's Global Arbitration Group

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