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London Court of International Arbitration updates arbitration rules
13 Aug 2020, 12:43 pm
The London Court of International Arbitration (LCIA) has adopted "progressive" new arbitration rules that reflect the growing use of technology in arbitral hearings, a specialist in international arbitration has said.
The revision of the arbitration rules was announced by the LCIA earlier this week but the changes do not take effect until 1 October and apply to arbitration proceedings commenced after that date. The LCIA said it has embedded "recent good practice" established during the coronavirus crisis in its new rules, which will update the current set of rules that were last updated in 2014.
The revised rules clarify a number of procedural issues, including the broad discretion arbitral tribunals have to conduct arbitrations expeditiously, and reflects the evolving nature of arbitration including the use of electronic means of communication and virtual hearings. The 2020 rules are aimed at improving the efficiency of arbitral proceedings, and include new provisions dealing with amongst other things the increasing use of technology in the arbitral process, data protection and information security.
Jason Hambury, of Pinsent Masons', the law firm behind Out-Law, said: "The recent amendments to the LCIA rules reflect a progressive and forward looking approach to the needs of international arbitration parties and users alike. It provides a welcome clarification on a number of procedural issues, particularly the extent and use of electronic means of communication and virtual hearings together with an explicit reference to data protection."
"The shift is a clear sign of a desire by the major institutions to deploy technology to an even greater extent going forward, leading to more efficiencies. It also suggests that the use of virtual hearings during and after the Covid-19 outbreak is now accepted by far larger parts of the arbitral community, users and tribunals alike, understanding that the benefits of in-person hearings remain and that we will also see a return to in-person hearings for appropriate cases," he said.
Among the notable amendments made to the LCIA rules is the introduction of new tools that allow arbitrators to expedite proceedings, including by introducing an explicit reference to the possibility of early dismissal determination. The new Article 14.6 sets out express tribunal powers aimed at making the proceedings fair, efficient and expeditious, including through the use of technology. Provisions have been refined and expanded to accommodate the use of virtual hearings, and the primacy of electronic communication with the LCIA and in the arbitration, as well as confirming the facilitation of electronically signed awards, has been confirmed in the new rules too.
All requests and responses to requests are to be submitted to the registrar in electronic form only. The registrar’s prior permission will be required to file, or to deliver, requests or responses by other means. The revisions reflect the LCIA's efforts to promote innovation and reinforces electronic communications as the preferred mode of communication going forward.
With its revisions, the LCIA introduces novel provisions on the law applicable to the interpretation of the rules and the forum for disputes against the institution. The new rules are to be interpreted in accordance with the laws of England, irrespective of the law applicable to the arbitration agreement and the arbitration. This new provision is contained in Article 16 dealing with the seat of arbitration, place of hearing and applicable law.
There is also a tightening of procedures around challenges to arbitrators, but no change in respect of the standards expected of arbitrators under the rules and no provisions in relation to the disclosure of third-party funding.
Changes have also been made to the award process. An award may be signed electronically and/or in counterparts and assembled into a single document, unless the parties agree otherwise or the tribunal or LCIA court directs otherwise. If there is a disparity between the electronic and paper form of an award, the electronic form will prevail. This is a change from the 2014 edition of the rules where the paper form prevailed. Hambury said parties are advised to carefully assess the situation in any potential enforcement forum as in some jurisdictions, awards may need to be signed in the traditional form in order to meet local law requirements. Tribunals are required to make their final awards as soon as reasonably practicable and endeavour to do so no later than three months following the last submission.
The recent amendments to the LCIA rules reflect a progressive and forward looking approach to the needs of international arbitration parties and users alike
There is also the introduction of a new explicit consideration of data protection and regulatory issues within the revised rules to address data protection and privacy laws, including the EU's General Data Protection Regulation (GDPR), which came into force in 2018. A reference to data protection in its rules makes the LCIA the first major arbitral institution to include provisions on this topic. Parties to arbitration proceedings will be subject to a new duty to seek a general confidentiality undertaking from all those they involve in an arbitration. The tribunal is also obliged, in consultation with the parties and the LCIA, to consider whether it would be appropriate to adopt information security measures and any means to address data protection obligations and related matters.
In addition to the updated rules, the LCIA has also published a new schedule of arbitration costs, which also has effect from 1 October. Fees have, for the most part, increased. The cap on tribunal hourly rates will increase from £450 to £500 and the LCIA secretariat's administrative costs have also increased.
