International arbitration update

The Drafting Committee of the LCIA circulated a “final draft” of new Arbitration Rules (New LCIA Rules) for consideration by the LCIA at its Tylney Hall symposium on 9 May 2014. These Rules were approved and came into effect on 1 October 2014. This is a particularly exciting development for the LCIA as the existing rules have been in effect since 1998.

The New LCIA Rules have introduced some key changes relating to speed, formation of the arbitral tribunal, emergency relief, consolidation and the conduct of legal representatives, some of which are similar to the changes seen in the 2012 ICC Rules.

Speed

Generally speaking, the New LCIA Rules have slightly shortened the time limits, with periods of time which previously ran for 30 days now running to 28 days instead. This is a practical change as the time limits are now 4 clean weeks, rather than the potentially unhelpful 30-day limit where the last day could often fall on a weekend.

Whilst saying that, the LCIA will notably have 35 days to constitute the tribunal as opposed to the current 30-day limit, so this period has been extended. However, the New LCIA Rules also prevent parties from delaying the formation of the tribunal, stating at Article 5.1 that any deficiencies in the Request or Response will not impede the formation of the tribunal by the LCIA.

On top of this, declarations must be provided by the arbitral candidates, which include a statement that the candidate is “ready, willing and able to devote time, diligence and industry to ensure the expeditious conduct of the arbitration”. This is found under Article 5.4 and demonstrates that efficiency and speed are at the core of the New LCIA Rules. Similar to the 2012 ICC Rules, a new time parameter for the delivery of the final award has also been added under Article 15.10, which states that the final award should be delivered “as soon as reasonably possible”. The arbitral tribunal is also required to set and notify the parties and the Registrar of a timetable for this purpose.

Formation of the arbitral tribunal and procedures

The LCIA can now, in exceptional circumstances, appoint a tribunal of more than three arbitrators but no party can nominate a sole arbitrator or a chairman unilaterally unless the parties have agreed otherwise.

The tribunal and the parties are also now required under Article 14.1 of the New LCIA Rules to meet to discuss the conduct of the proceedings no later than 21 days following notification that the tribunal has been constituted. This is similar to the case management conference required by the 2012 ICC Rules.

If a party wishes to challenge an arbitrator it must do so within 14 days of the formation of the tribunal, or at the time at which the party becomes aware of the ground giving rise to the challenge.

Furthermore, under the New LCIA Rules, unless the parties agree otherwise, the default seat (which remains London) will apply up to and until the formation of the arbitral tribunal. Once the arbitral tribunal has been constituted, the tribunal (and not the LCIA) may order that a different seat of arbitration is more appropriate. This can be done after seeking written comments from the parties on the matter.

Emergency relief

Following the lead of the SCC, SIAC and the 2012 ICC Rules, the LCIA has introduced emergency relief procedures. Under Article 9B, parties may apply to the LCIA for the urgent appointment of an arbitrator (the Emergency Arbitrator) in exceptional circumstances prior to the formation of the arbitral tribunal.

The Emergency Arbitrator, who will always be a sole arbitrator, will be appointed within 3 days of a party’s request and has 14 days following his appointment to formulate a decision. No hearing is required and the Emergency Arbitrator may decide the claim for emergency relief based on any available documentation.

Once the arbitral tribunal has been constituted, interim measures may only be available from a court and only sought in “exceptional cases” with the tribunal’s authorisation.

The arbitration agreement

The arbitration agreement is now a defined term that incorporates both the agreement itself as well as the LCIA Rules; this is seen in the preamble to the New LCIA Rules.

Unless the parties provide otherwise, the law of the arbitration agreement, and the law of the arbitration, shall be that of the seat of arbitration. This clarification is significant as the law of the arbitration agreement continues to be a matter of debate in recent case law. The New LCIA Rules also clarify that where part of the arbitration agreement is deemed invalid, ineffective or unenforceable by a court or tribunal, this does not automatically adversely affect the award, appointment of the arbitrator or any other part of the arbitration agreement.

Conduct of the legal representatives and the parties

Parties must now, under Article 18.3 of the New LCIA Rules, notify all the other parties, the arbitral tribunal and the Registrar if there are any changes or additions to the parties’ legal representatives. Such changes are conditional on the tribunal’s approval, which may be withheld if the change or addition compromises the composition of the tribunal or the finality of the award.

There is also an Annex to the New LCIA Rules which contains general conduct guidelines that apply to all legal representatives appearing by name before the tribunal. For instance, the legal representatives should refrain from mounting unmeritorious and unfounded challenges. The parties must ensure that their legal representatives have agreed to comply with the Annex and that the tribunal has the power to rule on whether or not the guidelines have been violated. The New LCIA Rules also have a number of sanctions which may be imposed directly on the legal representative for any such violation.

Unilateral communications with the arbitral tribunal are prohibited unless such contact has been disclosed in writing and the New LCIA Rules also give the arbitral tribunal express power to take the parties’ conduct into account when awarding costs.

New LCIA Rules: Overview

Along with the Emergency Arbitrator the similarities between the New LCIA Rules and the 2012 ICC Rules extend also to consolidation. The tribunal may, under the New LCIA Rules, order consolidation where the parties agree to it in writing and with the approval of the LCIA. Where there are multiple arbitrations involving the same parties and only one tribunal has been appointed, the tribunal can also order consolidations. In the latter circumstances the parties’ agreement is not required, though LCIA approval is.

It may be that the LCIA is simply jumping on the bandwagon with the New LCIA Rules but that does not render the changes any less necessary. A number of things have changed since 1998 when the existing rules came into effect, and while these changes are not radical, they will certainly be welcomed when they come into force on 1 October 2014.

By Nicholas Gould
Fenwick Elliott Consultant

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