The LCIA Arbitration Rules 2020: tweaks for a modern age

The updated LCIA Arbitration Rules came into force on 1 October 2020 and apply to LCIA arbitrations commenced after this date. The stated aim of the updates is to make the arbitration process more streamlined and clearer for both arbitrators and parties.1 Sana Mahmud explains what you need to know.

Introduction  

Whilst the 2020 rules do not depart significantly from the LCIA’s last update in 2014, there are some notable changes of which users and practitioners should be aware. Some are likely to assist parties in the conduct of their disputes during the current COVID-19 pandemic; for example, the new rules emphasise the use of technology in the conduct of proceedings and expressly permit the use of virtual hearings. Other amendments include the codification of specific case management powers which provide the Tribunal with broad discretion to expedite proceedings, including the power to make an early determination where appropriate. The new rules also broaden the power of the LCIA Court and Tribunal to order consolidation and concurrent conduct of arbitrations. 

Virtual hearings and electronic communications 

Under the new rules, all communications relating to the arbitration must be made electronically, including the filing of the Request and Response.2 References to personal delivery, registered post and courier service have been deleted. Parties are no longer permitted to submit communications by any other means without the prior written approval of the LCIA Court and/or Tribunal, making electronic communication the default method. 

There is also an express provision permitting arbitrators to sign an award electronically unless otherwise agreed by the parties, or otherwise directed by the Tribunal or LCIA Court.3 Any award may also be signed electronically and/or in counterparts and assembled into a single instrument. Additionally, specific reference is made in the new rules to the use of technology that enables the use of virtual hearings.4 Whilst the Tribunal must organise the conduct of any hearing in advance and in consultation with the parties, Article 19.2 makes clear that it may take place virtually “by conference call, videoconference or using other communications technology”. 

The purpose of these changes is to improve efficiency and reduce costs. The LCIA’s emphasis on electronic communication reflects what is already standard practice in most arbitral jurisdictions. The inclusion of an explicit reference to the use of virtual hearings is a welcome addition in current circumstances where in-person hearings are not always possible. The amendments provide the parties with a degree of needed clarity on an issue that has been the subject of recent uncertainty and debate due to the impact of COVID-19. 

Prior to the pandemic, procedural hearings were commonly conducted via telephone conference because typically everyone would be in different geographical locations. The use of remote hearings is therefore not a new concept; however, it remains to be seen whether hearings on merit that involve the presentation of substantial witness and expert evidence continue apace once COVID-19 restrictions are eased. The LCIA’s approach suggests that they are of the view that virtual hearings will become increasingly common.

Expedited proceedings

The new rules seek to clarify the Tribunal’s discretion in relation to case management powers. Under Article 14, the Tribunal retains the “widest discretion” to discharge its general duties;  however, the new rules define this discretion to include the power to:

• limit the length, content and number of written submissions;
• limit the written and oral witness evidence;
• employ technology to enhance efficiency; 
• decide the stage of the arbitration at which any issue(s) will be determined and in what order; 
• dispense with a hearing; and 
• exercise its powers of Early Determination.5

In relation to the last point, the Tribunal is given an express power to make an “Early Determination” under Article 22.1. On the application of a party, this provision allows the Tribunal “to determine that any claim, defence, counterclaim, cross-claim, defence to counterclaim or defence to cross-claim is manifestly outside the jurisdiction of the Arbitral Tribunal, or is inadmissible or manifestly without merit; and where appropriate to issue an order or award to that effect (an "Early Determination")”. The new rules therefore make clear that a Tribunal has the authority to summarily dismiss claims that lack merit. Other institutional rules such as those of SIAC,6  SCC7 and HKIAC8 already contained similar provisions. The ICC had also issued specific guidance9 which confirmed that the Tribunal has the power to dismiss unmeritorious claims under the broad scope of Article 22 of its 2017 rules.

Whilst it is arguable that these amendments do not confer any real new powers, the fact that they are now expressly codified may give otherwise reluctant arbitrators the assurance needed to deploy them, which should in turn reduce time and costs for parties. 

There is one new change under Article 15. Under the LCIA Rules 2014, the Tribunal was obliged to issue an award “as soon as reasonably possible” after the last written or oral submission.10 Under the new rules, the Tribunal must now endeavour to issue its final award no later than three months after the last written or oral submission.11  It remains to be seen whether this amendment will have the desired effect in relation to large and/or complex disputes.

Composite requests

The addition of a new Article 1.2 allows a Claimant “to commence more than one arbitration under the LCIA Rules (whether against one or more Respondents and under one or more Arbitration Agreements)” and serve a composite request in respect of all such arbitrations. The purpose of this provision is to permit a party to commence a single arbitration in relation to disputes under multiple contracts.

In A v B [2017] EWHC 3417,12 it was held that the LCIA Rules 2014 did not allow a party to commence one arbitration in respect of related claims under two separate contracts. The effect of this judgment was that a Claimant would need to issue multiple Requests and seek to have them consolidated under the LCIA Rules 2014. The inclusion of the new provision at Article 1.2 addresses this previous limitation. Under Article 2.2, the Respondent is permitted to file a composite Response. However, multiple arbitrations commenced under this provision are not automatically consolidated. The Claimant must include a request for consolidation with its composite Request, which will be determined by the Tribunal or the LCIA Court. 

Consolidation and concurrent arbitrations

Following on from the above, the new rules also contain updated provisions relating to the consolidation and concurrent conduct of arbitrations under Article 22A. The LCIA Rules 2014 did contain provisions allowing the consolidation of an arbitration with one or more other arbitrations conditional on approval by the LCIA Court, and provided that all parties to the arbitrations agreed to the consolidation in writing.13  Alternatively, the Tribunal could order consolidation with one or more arbitrations that were subject to the LCIA Rules and had been commenced under the same arbitration agreement or any compatible arbitration agreement(s) between the same disputing parties, provided that no arbitral tribunal had yet been formed for such other arbitration(s) or, if already formed, that such tribunal(s) was (were) composed of the same arbitrators. If no Tribunal existed at the consolidation stage, the LCIA retained those powers.14

Article 22.7(ii) of the new rules broadens the circumstances in which consolidation is permitted, and states as follows:

“The Arbitral Tribunal shall have the power to order with the approval of the LCIA Court, upon the application of any party, after giving all affected parties a reasonable opportunity to state their views and upon such terms (as to costs and otherwise) as the Arbitral Tribunal may decide: ...

(ii) the consolidation of the arbitration with one or more other arbitrations subject to the LCIA Rules and commenced under the same arbitration agreement or any compatible arbitration agreement(s) and either between the same disputing parties or arising out of the same transaction or series of related transactions, provided that no arbitral tribunal has yet been formed by the LCIA Court for such other arbitration(s) or, if already formed, that such arbitral tribunal(s) is(are) composed of the same arbitrators”. [Emphasis added] 

The inclusion of proceedings arising out of the same transaction or series of related transactions (even if the disputing parties are different), is a new addition to the scope of the Tribunal’s powers and reflects similar provisions already adopted in the SIAC15 and SCC16 Rules. 

Article 22.7(iii) gives the Tribunal the power to order that two or more such arbitrations are conducted concurrently where the same Tribunal is constituted in respect of each arbitration. 

These new provisions align with the LCIA’s stated aim of streamlining the arbitration process, being designed to reduce costs that parties would otherwise have to incur in conducting multiple and/or concurrent arbitrations. Broadening the scope of the consolidation provisions also reduces the risk of parties having to deal with inconsistent awards. This is a common issue in relation to disputes arising out of different interrelated contracts on large construction projects and the LCIA’s amendments in this regard provide welcome mitigation against that risk. 

Other notable amendments 

The new rules also include provisions governing the appointment and role of tribunal secretaries in Article 14A. These provisions are not wholly new; rather they arise out of detailed guidance for arbitrators previously issued by the LCIA in 2017.17 Under these provisions, the tribunal secretary and the tasks they are to carry out must be approved by all parties and they must disclose any potential or actual conflicts of interest.18 The Tribunal is not permitted to delegate its decision-making function to a tribunal secretary under any circumstances and must retain responsibility to ensure all tasks are performed to the standard required by the LCIA Rules.19

Given the focus of the new rules on electronic communications and data, there are new provisions included under Article 30A relating to data protection that allow the LCIA to process personal data in accordance with applicable data protection legislation.20 The Tribunal is also given powers to adopt specific information security measures to protect the physical and electronic information shared in the arbitration,21 as well as to issue directions addressing information security or data protection. 22

Article 24A contains new provisions dealing with compliance regulations in relation to bribery, corruption, terrorist financing, fraud, tax evasion, money laundering, and economic or trade sanctions.23 Lastly, the maximum hourly rate that can be charged by arbitrators has increased from £450 to £500 in the latest Schedule of Costs.

Conclusion 

The new rules should be welcomed as they appear to go some way in achieving the LCIA’s stated aim of making the arbitration process more streamlined. The changes described above are not a radical departure from the LCIA’s 2014 Rules. They do, however, represent a significant step towards ensuring that the LCIA’s Rules meet the demands of current best practice and incorporate the use of available communication technology, whilst at the same time retaining the necessary flexibility required by parties that choose to resolve their disputes through arbitration.  

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• 1. https://www.lcia.org/lcia-rules-update-2020.aspx
• 2. LCIA Rules 2020, Article 4.
• 3. LCIA Rules 2020, Article 26.2.
• 4. LCIA Rules 2020, Articles 9.7, 14.3 and 19.2.
• 5. LCIA Rules 2020, Article 14.6.
• 6. SIAC Rules 2016, Rule 29.
• 7. SCC Rules 2017, Article 39.
• 8. HKIAC Rules 2018, Article 43.
• 9. Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration, Section VI C.
• 10. LCIA Rules 2014, Article 15.10.
• 11. LCIA Rules 2020, Article 15.10.
• 12. A v B [2017] EWHC 3417 (Comm) (21 December 2 0 07 ).
• 13. LCIA Rules 2014, Article 22(ix).
• 14. LCIA Rules 2014, Article 22(x).
• 15. SIAC Rules 2016, Rule 8.1c.
• 16. SCC Rules 2017, Article 15(1)(iii).
• 17. LCIA Notes for Arbitrators, Section 8.
• 18. LCIA Rules 2020, Articles 14.9 and 14.10.
• 19. LCIA Rules 2020, Article 14.8.
• 20. LCIA Rules 2020, Articles 30.4 and 30.5(ii).
• 21. LCIA Rules 2020, Article 30.5(i).
• 22. LCIA Rules 2020, Article 30.6.
• 23. LCIA Rules 2020, Article 24.9.