The London Court of International Arbitration (“LCIA“) has published its new arbitration rules, which are effective 1 October 2014 and apply to all arbitrations commenced after that date (“2014 LCIA Rules” or “New Rules“).
The 2014 LCIA Rules represent the LCIA’s response to the recent wave of revisions of leading arbitration rules, including the UNCITRAL Rules in 2010, the ICC Arbitration Rules in 2012 and the HKIAC Rules in 2013. Equally, the 2014 LCIA Rules are intended to update the LCIA’s previous framework – the 1998 LCIA Rules – and align it with contemporary arbitral practice. With the number of domestic and international arbitrations referred to the LCIA at an all-time high,1 the 2014 LCIA Rules are designed to meet the demands of an increasingly busy international arbitration market, as well as support the LCIA’s international push.
The key additions in the 2014 LCIA Rules include general improvements to the procedure, guidelines to the conduct of the parties’ legal representatives, the introduction of an emergency arbitration procedure and the consolidation of multi-party arbitrations.
The central changes in the 2014 LCIA Rules are intended to make the arbitration process more efficient and less costly. Largely, this has been done by improving communication efficiency and imposing additional duties on arbitrators and the tribunal.
The 2014 LCIA Rules require arbitrators to fulfil their duties in a timely, efficient and expeditious manner. In addition to the traditional requirement that an arbitrator candidate inform the Registrar of the LCIA Court (“Registrar“) of any circumstances that might give rise to justifiable doubts about impartiality or independence, the New Rules require an arbitrator candidate to declare – prior to appointment – that he or she is ready and can devote sufficient time to the arbitration.2 As a consequence, the LCIA may revoke an arbitrator’s appointment if his or her participation in the process is not reasonably efficient and industrious.3 The 2014 LCIA Rules now also require the tribunal to notify the parties and the Registrar of the timetable for the making of the award and to inform the parties of the time it has set aside for deliberations.4 This requirement is designed to make the timeframe for rendering the award more predictable, although it bears noting that the New Rules do not envisage any sanctions (e.g., in the form of reduction of arbitrator fees) should the tribunal fail to stick to the given timeline.
The new rules permit electronic, rather than paper, delivery of filings5 and direct communications with the tribunal rather than through the Registrar.6 These changes should improve the speed and efficiency of arbitration proceedings. Under the 2014 LCIA Rules, arbitral proceedings will also operate within shorter timeframes, with the Response due, at most, 28 days after receipt of the Request for Arbitration by the Registrar. Similarly, the parties and tribunal are required to make contact no later than 21 days from receipt of the Registrar’s written notification of the formation of the tribunal.7
A key innovation in the 2014 LCIA Rules is the Annex of General Guidelines (“General Guidelines“), which sets forth guidelines to the conduct of the parties’ legal representatives (similar to the May 2013 IBA Guidelines on Party Representation), and the corollary power of the tribunal under Article 18 to impose sanctions for breach of those Guidelines. Notably, all counsel appearing before an LCIA arbitral tribunal must agree to comply with the General Guidelines as a condition of representation.8
Under the General Guidelines, for example, parties are prohibited from: (a) repeatedly challenging the appointment of an arbitrator with the intent to unfairly obstruct the arbitration;9 (b) making false statements;10 (c) concealing documents ordered by the tribunal;11 or (d) initiating unilateral contact with the tribunal without disclosing it.12
Where, following a complaint by either party or on the tribunal’s initiative, a breach of the General Guidelines is found, the tribunal may: (a) issue a written reprimand; (b) issue a written caution as to the future conduct of the arbitration; or (c) take “any other measure necessary” required to maintain the tribunal’s duty to act fairly and impartially and to avoid delay and unnecessary expense, while providing a fair, efficient and expeditious process.13 Importantly, the parties’ conduct may also be taken into account when apportioning costs.14 These innovations make the LCIA – under the 2014 LCIA Rules – the first international arbitration institution to empower tribunals to take action with respect to the inappropriate conduct of the parties’ legal representatives.
Following the introduction of emergency arbitration provisions in the arbitration rules of many of the world’s leading arbitration centres, the LCIA also provides a method for seeking urgent relief on issues which cannot wait until the constitution of the tribunal, e.g., in situations where one party attempts to move assets out of the jurisdiction in order to make them unavailable should it lose the case or where one party appears to be destroying evidence.
Under the 2014 LCIA Rules, at any time prior to the formation (expedited or otherwise) of the tribunal and subject to the payment of a special fee, a party may file an application seeking the appointment of a temporary sole arbitrator for emergency proceedings.15 Once appointed, that temporary sole arbitrator must decide on the emergency issue within 14 days (although it bears emphasis that any decision(s) taken by the temporary sole arbitrator may later be confirmed, varied, discharged or revoked, in whole or in part, by the tribunal). Pursuant to Clause 9.14 of Article 9B of the New Rules, parties may opt out of the emergency procedure.
Additionally, in order to deal with the growing complexity of, and the stronger focus on, multi-party disputes, the 2014 LCIA Rules also introduce new provisions enabling the consolidation of two or more arbitrations into a single case in situations where: (a) all parties agree in writing to consolidation; (b) two (or more) arbitrations have been commenced under the same or comparable agreements between the same parties; and (c) no other arbitral tribunal has been constituted.16 The New Rules also introduce cross-claims, which will cover claims between multiple respondents and will require a party’s Response to cover not only counter-claims against the claimant(s), but also cross-claims against any other respondent.
Finally, the 2014 LCIA Rules seize the opportunity to try to provide clarity on several issues important to international arbitration practice. Time will tell whether the LCIA’s efforts will prove successful.
For example, the New Rules limit the right of parties to interview potential witnesses by making it subject to “any mandatory provisions of applicable law, rules of law and any order of the tribunal”.17 Similarly, in order to clarify an issue which recently arose in the English courts (particularly the cases of Sulamerica18 and Arsanovia19), the 2014 LCIA Rules provide that, where the parties have not reached agreement on the law applicable to the arbitration agreement, the default law of the arbitration agreement will be the law of the legal seat of the arbitration.20 Thus, if they do not wish to default to the law of the seat of the arbitration, parties are well-advised to choose the governing law of the arbitration agreement expressly.
In summary, the modernisation of the LCIA’s arbitration rules should be welcomed by both the business and the arbitration community. Certainly, the 2014 LCIA Rules seem to provide for a more streamlined arbitration process and have the potential to cut costs and delays, while providing more detailed guidance on some complicated procedural issues. The New Rules should help the LCIA to cement its position as a popular institution for the resolution of complex disputes and to attract additional business. That said, parties contemplating including an LCIA arbitration clause in a contract (or other instrument) should consider the 2014 LCIA Rules carefully; their full impact – particularly with respect to the use of sanctioning powers – remains to be seen.
(1) LCIA Registrar’s Report 2013, available at www.lcia.org.
(2) Article 5.4.
(3) Article 10.
(4) Article 15.10.
(5) Article 4.3.
(6) Article 13.1.
(7) Article 14.1.
(8) Article 18.5.
(9) General Guidelines, paragraph 2.
(10) General Guidelines, paragraph 3.
(11) General Guidelines, paragraph 5.
(12) General Guidelines, paragraph 6.
(13) Article 14.4(i) and (ii).
(14) Article 28.4.
(15) Article 9B.
(16) Article 22.1(ix) and (x), and Article 22.6.
(17) Article 20.5.
(18) Sulamerica CIA Nacional de Seguros SA and others v. Enesa Engenharia SA and others  EWCA Civ 638.
(19) Arsanovia Ltd and others v. Cruz City 1 Mauritius Holdings  EWHC 3702(Comm).
(20) Article 16.4.