Giulia Keese Montanhesi
Lawyer at Marcos Martins Advogados
The International Chamber of Commerce (ICC) Arbitration Rules are used in more than 100 countries to resolve international commercial disputes, as well as matters involving intellectual property, joint ventures, share purchase agreements and construction projects. The rules are internationally recognized for ensuring the parties a neutral environment for resolving cross-border disputes.
The new arbitration rules came into force on January 1, 2021 and define the procedures for cases submitted to the International Court of Arbitration since the beginning of this year. According to the official announcement on its website, the new provisions aim to bring more efficiency, flexibility and transparency to ICC arbitrations.
It is important to note that, until the end of 2020, the 2017 Arbitration Rules were in force (which were already an amendment to the rules issued in 2012), however, in October 2020, the ICC promoted a new amendment, with the inclusion and modification of a series of articles, involving matters pertinent to the parties and the functioning of the Court itself.
The most relevant changes relate to the appointment of arbitrators and constitution of the arbitral tribunal, conflict of interest in the representation of the parties, communication of third-party financing by the subsidized party, promotion of agreements and amicable solutions in disputes, investment arbitrations, the possibility of including new parties in the course of arbitration and the additional arbitral award in cases of omission.[1]
In addition, it is worth noting the mobilization of this and other arbitration courts to adapt their procedures to the latest technological advances and digital tools available, even more necessary in view of the current social distancing scenario, through the regulation of virtual hearings and the primacy of electronic communications and submissions, by expanding the use of digital systems and cyber petition protocols (based on green arbitration policies[2]).
Below are some of the changes:
- Art. 7 “Joinder of Additional Parties ” – the new rule provides for the joinder of additional parties even after the constitution of the Arbitral Tribunal, which was previously prohibited, in order to cater for complex, multi-party and multi-contractual arbitrations, for example, infrastructure and construction disputes. Paragraph 5 states: “Any application for joinder made after the confirmation or appointment of any arbitrator shall be decided by the arbitral tribunal […]. In deciding on such a request for joinder, the arbitral tribunal shall take into account all relevant circumstances, which may include whether the arbitral tribunal has prima facie jurisdiction over the additional party, the timing of the request for joinder, possible conflicts of interest and the impact of joinder on the arbitral proceedings.”
- Art. 11, item (7)“Third-Party Funding” – in order to increase transparency in the proceedings, it was determined that the parties must notify all those involved in the proceedings when they usethird-party funding,by providing that “each party shall promptly inform the Secretariat, the arbitral tribunal and the other parties of the existence and identity of any non-party that has entered into an agreement for the funding of claims or defenses and under which it has an economic interest in the outcome of the arbitration”. In recent years, scholars and professionals in the field have debated whether the parties are obliged to disclose the financing of third parties in arbitrations, if this is motivated by an economic interest in the outcome of the case. The rule puts an end to the discussion, at least in this Court, understanding that the novelty promotes the impartiality and independence of arbitrators, since it places these third parties on the same “level” as the parties, due to their economic interest in the arbitral award.
- Art. 13, item (6) and Art. 29, item (6) “Investment Treaty Arbitrations ” – the ICC has introduced two new conditions referring to investment arbitration. The first novelty is in Article 13, item 6, which requires the appointment of arbitrators who are not of the same nationality as the party to the arbitration when “the arbitrationagreement on which the arbitration is based results from a treaty”. Article 29(6), in turn, states that the emergency arbitration provisions do not apply if the arbitration agreement on which the claim is based results from a treaty. The justification for this condition is that the short time limits of emergency arbitration would be impractical for states or state entities involved in investment arbitration.
- Art. 17 “Party Representation ” – What strikes us about these new rules on party representation is that the rule empowers the Arbitral Tribunal to exclude from the proceedings or take any other appropriate action against a representative who demonstrates a conflict of interest, in order to protect the integrity of the proceedings.
- Art. 26 “Hearings ‘ – The new provisions of Article 26 authorize hearings to be held physically or remotely, by stipulating that ’1) […] The arbitral tribunal may decide, after consultation with the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing shall be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication”[3]. Despite the consensus on the ease and convenience of videoconferencing in the face of the health crisis, the article raised doubts and controversial opinions about the scheduling of such videoconferences when involving parties with opposite time zones, which can unintentionally cause benefit or harm to them. Ideally, the parties should reach a consensus on the scheduling of the hearings with the arbitrators, so that everyone can take advantage of the opportunity on an equal footing.
- Annex IV “Case Management Techniques ” – This new wording of the Techniques seeks to reaffirm the promotion of settlements in disputes and the engagement with Mediation, also carried out by the ICC. The standard seeks to “encourage the parties to consider settling all or part of the dispute, either by negotiation or through any form of amicable dispute resolution methods, such as, for example, mediation under the ICC Mediation Rules”[4].
In addition to the modifications, the Model Data Protection Clause for Procedural Order 1 was published on January 12, 2021, which is intended to provide arbitrators with guidance in drafting a data protection clause in the internal procedural order, when the arbitral tribunal considers that the European General Data Protection Regulation (“GDPR”) or other similar data protection laws and regulations apply to the arbitration.
[5] The model data protection clause for procedural order 1 is intended to provide arbitrators with guidance in drafting a data protection clause in the internal procedural order, when the arbitral tribunal considers that the European General Data Protection Regulation (“GDPR”) or other similar data protection laws and regulations apply to the arbitration.
The ICC’s concern regarding data protection in its arbitrations is evident, since privacy and concerns about personal data is one of the main global agendas, even more so with the recent entry into force of the General Data Protection Act in Brazil and the California Consumer Privacy Act (CCPA), of the State of California, in the United States.
[1] Available at: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/#:~:text=They%20define%20and%20regulate%20the,resolution%20of%20cross%2Dborder%20disputes. , accessed on 20.01.2021.
[2] Concept that provides for sustainability in arbitration proceedings by waiving the presumption of physical and paper petitions.
[3] Translated by us for the purposes of this essay only.
[4] Translated by us for the purposes of this essay only.
[5] Available at: https://iccwbo.org/publication/model-data-protection-clause-for-procedural-order-one/, accessed on 20.01.2021.
