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Changes to the LCIA Arbitration Rules: Searching for efficiency in International Arbitration

Posted on 20 August 2020

The LCIA – formerly the London Court of International Arbitration – released its revised arbitration rules on 11 August 2020. The revised rules will apply to any LCIA arbitration commenced on or after 1 October 2020. 

Commercial contracts governed by English law and providing for arbitration with a London seat can be governed by any number of institutional rules, but the LCIA Arbitration Rules remain a popular choice for English law, London seated arbitrations. 346 arbitrations governed by the LCIA Arbitration Rules were commenced in 2019, in connection with disputes in every corner of the world and across a wide range of industry sectors. The LCIA has already reported, albeit informally, that the COVID-19 pandemic has seen an uptick in demand for arbitration governed by its rules.

The key objective behind the rule changes appears to be greater efficiency in LCIA arbitration, in a world of virtual hearings and a greater reliance than ever on technical solutions. The most significant changes to the rules are considered briefly below. 

Tribunals' case management powers

The revised rules give the tribunal a wide range of case management powers, including the right to limit the length of legal submissions and to use technology to enhance the efficiency of the process.  Perhaps most importantly, the tribunal now has the express power to make an early determination where a claim or defence is "manifestly without merit". Tribunals sitting in London have traditionally been very slow to make any award or order which resembles summary judgment in litigation before a state court, often fearing that an award made on that basis is susceptible to challenge. It will be interesting to see whether tribunals take the opportunity presented by this rule change.

Virtual hearings and electronic communications

Virtual hearings, which have become the norm during the COVID-19 pandemic, are explicitly recognised as an alternative to traditional "in person" hearings. With international travel curtailed to some extent, at least for the foreseeable future, parties, arbitrators and counsel have no choice but to embrace video conferencing as part of the "new normal". Similarly, electronic versions of submissions and correspondence are expected to replace hard copy documents.

Role of tribunal secretaries

The revised rules permit the use of tribunal secretaries, although the rules also make clear that the tribunal must not delegate its decision making powers to that tribunal secretary. On one level this is a statement of the obvious – disputes under the LCIA Arbitration Rules should be determined by the arbitrators appointed by the LCIA and not tribunal secretaries invited by senior arbitrators ostensibly to assist on administrative matters. However, this rule change should go some way to assuaging the concerns of parties troubled by the influence of a de facto fourth arbitrator.

Consolidation of linked disputes

The 2014 LCIA Arbitration Rules gave tribunals wider powers to order the consolidation of linked disputes than had previously been the case. The revised rules give tribunals wider powers to conduct concurrent proceedings arising under related contracts, such as a chain of contracts in a large construction project. Any change which minimises the risk of costly parallel but separate sets of proceedings arising from the same or similar facts is to be welcomed.

Data protection, cybersecurity and compliance issues

The revised rules contain confirmation that the data held by the LCIA is subject to data protection legislation, no doubt mindful of the EU General Data Protection Regulation in force since 25 May 2018, after the date of the last revision to the LCIA Arbitration Rules. The rules also require tribunals to consider any specific steps that may need to be taken as regards information security measures.  Where genuine cybersecurity concerns exist, parties and counsel must be alive to any complacency on the part of the tribunal.

Revision to maximum hourly rates of arbitrators

Parties are charged by the LCIA and arbitrators on an hourly rate basis. The previous maximum hourly rate for arbitrators of £450 has been raised to £500. Should senior arbitrators take the opportunity to charge the higher sum, and one assumes that they will, parties will have no choice but to meet those increased costs. Parties seeking some consolation may be interested to know that £500 per hour is still below the standard hourly rate applied by many senior arbitration practitioners for work as counsel rather than work as arbitrator.

Comment

Taken in the round, the changes adopted by the LCIA fall firmly into the evolutionary rather than revolutionary category. That said, the steps taken by the LCIA to improve efficiency in arbitral proceedings under its auspices can only be in the interests of users. In particular, the adoption of a rule allowing the early disposal of weak claims and defences, and the wider powers to consolidate linked disputes should act as deterrents to obstructive parties. Arbitrators have on occasion been criticised for indulging parties determined to employ guerrilla tactics in arbitration. It is now down to tribunal members to make proper use of the tools at their disposal.

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