‘Light-touch’ changes have been made to the new The LCIA Rules 2020 in force from 1 October 2020

By Sophie Eyre, Yvanna Miller, Rebecca Slater

10-2020

The LCIA has published a new set of LCIA Arbitration Rules, which are due to take effect on 1 October 2020 (the “2020 Rules”). In this article we provide a brief overview of some of the key changes to the current framework (the “2014 Rules”) and explain what this means for parties who will be involved with LCIA arbitration proceedings moving forward.

According to the LCIA, the aim of the update is to streamline their arbitral and mediation processes to provide greater clarity for all parties involved. It has been called a ‘light-touch’ update rather than a full scale revision but there have been some significant changes. There is a notable shift towards the use of technology, with electronic communication being the primary method of communication under the 2020 Rules. The 2020 Rules were in the process of being finalised when the Covid-19 pandemic took hold and so their publication comes at an opportune moment and provides welcome flexibility which we have already seen is so vital at this time.

Use of Technology

A key feature of the 2020 Rules is the primacy of electronic communication. Whilst under the 2014 Rules parties were permitted to submit requests for arbitration and responses either in paper form or, if so desired, by email, the new default under the 2020 Rules is for all documents to be submitted electronically and for all communication with the tribunal to take place by electronic means. The 2020 Rules provide for future technologies and so the LCIA has given the 2020 Rules an element of future proofing.

The 2020 Rules also contain new express provisions on virtual hearings and recognise that participants may attend a hearing virtually whilst in different geographic locations. For example, Article 19 states that hearings “may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).”

It is also worth noting that under the new rules arbitral awards may be signed electronically.

Conduct of Proceedings

The 2020 Rules include additional powers for arbitrators to expedite proceedings. For example, there is explicit reference to the power of the tribunal to make orders relating to limits on written statements and witness evidence and the power to employ technology to enhance efficiency and expedition of proceedings.

A new early determination procedure has also been introduced. Upon the application of a party, or upon its own initiative, a tribunal will now have the power determine that a claim, counterclaim, defence or cross-claim is manifestly without merit or outside the tribunal’s jurisdiction and dismiss such claim. This is in line with provisions of other institutions such as the HKIAC and SIAC.

Tribunals will also have increased powers to order consolidation and concurrent conduct of arbitrations where the parties agree or where proceedings are commenced under the same arbitration agreement and relate to the same transaction or involve the same parties. This area is one of the biggest changes under the 2020 Rules as previously the parties would have been required to draft bespoke provisions in order to consolidate proceedings.

A welcome addition for parties to LCIA proceedings is a new provision requiring tribunals to endeavour to make a final award within three months after the last submissions from the parties.  While three months is not a binding requirement for the tribunal, it is a useful starting point for when parties might expect a final award to be made.

Confidentiality and Data Protection

Parties to the arbitration and the tribunal will be required under the 2020 Rules to seek confidentiality undertakings from any third parties that they involve in the arbitration. There is also an express requirement for the tribunal to consult with the parties and consider adopting certain information security measures together with measures to address the processing of personal data. The LCIA and the tribunal will have the power to issue directions concerning data protection and information security.

Tribunal Secretaries

While a tribunal has previously been able to rely on assistance from a tribunal secretary, the 2020 Rules contain express provisions which formalise the process of their appointment and the remit of their role. Notably, following the English High Court decision in P v Q [1], the new provisions confirm that a tribunal secretary cannot be involved in the decision-making function of the tribunal. The parties to the arbitration must approve the appointment of the tribunal secretary and agree the tasks they are to carry out.

Fees

The new rules have increased the maximum hourly rate that can be charged by arbitrators in LCIA arbitrations from £450 to £500.

2020 Rules apply only to new arbitrations

The 2020 Rules will take effect only in relation to new arbitrations commencing after 1 October 2020. What remains unclear is whether (and how) existing arbitrations will be affected. Although the 2014 Rules will continue to apply to arbitral proceedings which commenced prior to 1 October 2020, parties proceeding under the 2014 Rules may seek to agree on procedures which are more akin to the 2020 Rules. What is clear is that the 2014 Rules will be working in parallel with the 2020 Rules for some time to come.

Comment

Many of the additions to the 2020 Rules will be seen as welcome developments by parties to LCIA arbitrations. If the LCIA achieves its aim, then the 2020 Rules should make the process of conducting an arbitration both more efficient and more streamlined for parties and arbitrators alike. There has been notable modernisation through the shift towards the use of technology and the primacy of electronic communication, reflecting how parties communicate in a commercial setting. Provisions relating to virtual hearings and the use of electronic communications as default are particularly relevant in present times, but may also have a positive impact from a sustainability perspective. Remote working is becoming the new norm and the 2020 Rules are likely to benefit parties in the long term.

There are some concerns about the effects of some of the new provisions. For example, the new provisions on consolidation will raise issues of confidentiality between parties who are not part of the same agreement and some jurisdictions may not have legislation permitting the enforceability of electronic awards. The LCIA is due to publish some additional guidance on the 2020 Rules and this may address some of these concerns. We will update you when that guidance is published, but for now, the 2020 Rules are welcome.

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[1] P v Q [2017] EWHC 194 (Comm)