Header graphic for print
Dispute Resolution in Poland Issues and new developments in dispute resolution in Poland.

Good change in the ICC

Posted in Arbitration

Alexis Mourre took up the office of President of the ICC International Court of Arbitration almost
a year and a half ago. From the beginning it was clear that Alexis had a vision to address the problems of arbitration, particularly the criticism regarding the lack of transparency and lengthy arbitration proceedings. These two issues appear frequently, as the main ills of arbitration. Since he took his post, we have been witnessing a significant change in the practice of the ICC Court. Most of the changes have not been introduced in the Rules of Arbitration themselves, even though the changes were made here, but in the document titled Note to Parties and Arbitral Tribunals on the Conduct of the Arbitration (“Note to Parties”). It is some kind of manual for the ICC arbitration users, available at: http://www.iccwbo.org/products-and-services/arbitration-and-adr/arbitration/practice-notes,-forms,-checklists/.

As early as in October 2015 a modification of Note to Parties was published, regarding justification of certain Court decisions. It refers to the exclusion and replacement of an arbitrator (art. 14 and 15(2) of the Rules), prima facie jurisdiction (art. 6(4) of the Rules) and consolidation of the proceedings (art. 10 of the Rules). Now, these decisions may be justified if all parties so require prior to the issuance of the decision. It must be emphasized that it is an exception to the international and domestic arbitration practice, and except for LCIA, which justifies decisions regarding exclusion of an arbitrator, no major arbitration institution makes justifications of such decisions available to the parties. It will take time to see whether the parties will indeed demand those justifications and whether a coherent policy and the ICC case law emerge from the decisions of the Court.

The issue of transparency was a prerequisite for another change of the Note to Parties made at the beginning of this year. It refers to the listing of cases which require disclosure of a potential conflict of interest (Section A, Chapter III of Note to Parties). Albeit as regards conflicts of interests, IBA Guidelines on Conflicts of Interest in International Arbitration still remain the fundamental document, modification of the Note to Parties confirms the importance of this issue for the ICC management. What is important is that changes to the Note to Parties do not refer so much to the assessment of the existence of grounds for exclusion, but rather to a necessity to disclose the circumstances which may, but do not have to, lead to a successful challenge. The message from the ICC is clear – relevant disclosure of the circumstances regarding a conflict of interest is an arbitrator’s obligation.
A failure to make such disclosure will be taken into account and will influence assessment of impartiality (item 19 of Notes to Parties, in fine), although it does not necessarily have to lead to exclusion.

One of the key criticisms against arbitration, including arbitration before the ICC, is the issue of the lengthiness of proceedings. The issue is complicated, and probably only part of the blame that can be attributed to the arbitrators and arbitration institutions. However, this part of the blame is particularly annoying. A waiting time of over a year for a verdict unfortunately occurs. As a reaction to such situation, the ICC introduced a rather radical system with negative consequences for arbitrators who prolong the proceedings by way of untimely preparation of draft awards. The ICC expects that
a draft award will be submitted for scrutiny by the sole arbitrator within 2 months of termination of the last hearing or submission of the last substantial pleading in the case (item 43 of Note to Parties). For an adjudicating team composed of three arbitrators, this deadline is 3 months. The very expectation as to the timeliness of drafting an award is perhaps not so revolutionary as the consequences of its breach. If the arbitrators fail to submit an award for scrutiny within 7 months, their remuneration might be reduced by 5 to10%. Respectively, if a delay ranges from 7 to 10 months, a reduction may amount to 10-20%, and if the delay exceeds 10 months, the arbitrators’ remuneration can be reduced by 20% or more. Although the ICC has already had the right to reduce arbitrators’ remuneration, the detailed and precise gradation of such reduction is a radical novelty. The aim of such approach is obviously to discipline the arbitrators, but together with a modified form of a statement on impartiality (2012 RulesICC Arbitrator Statement Acceptance, Availability, Impartiality and Independence), which now has a form of a regular calendar, on which a potential arbitrator must explicitly state its unavailability for handling a new case, it is a clear and a strong signal for the arbitration community:  “do not bite of more than you can chew”, as the ICC will monitor it and mete out consequences.

One should also mention completely new amendments to the Regulations to be operational since March 1, 2017. These amendments stipulate that claims with a value of less than USD 2 million will be subject to an accelerated procedure if only the parties have not excluded this possibility. The accelerated procedure involves several important procedural modifications. Basically, cases will be handled by a single arbitrator, and an award must be issued within six months from the date of the organizational meeting. An arbitrator will be able to issue an award without hearing, without production of a documents procedure and without hearing witnesses, relying mainly on the documents. It is clear that this procedure will reduce the costs, including the ICC fees.

The ICC goes further as regards transparency. From January 1, 2016, information on the appointment of arbitrators in all cases in which the Terms of Reference were submitted to the Court, are published on ICC websites. Publication of appointments of arbitrators, both those made by the Court and by the parties, is a milestone in transparency. By virtue of its structure, in which the representatives of the specific National Committees are Court members and participate in the ongoing works of the Court, in this scrutiny process, the ICC has always been international and open to new members. However, public information on the specific appointments is a breakthrough for the transparency of the Court’s activities. A list of nominated arbitrators can now be found on the ICC websites. I think that initial analyses of this list will be possible after the first year of its operation. However, certain tendencies are already clear. For example, the very strong position of the Swiss arbitration community comes as no surprise. So far, no Polish name has  appeared on this list. And this is not surprising either, but I hope it will change quickly.

Alexis Mourre undoubtedly has a vision of changing the ICC Court. He is implementing it quickly and is open to all those criticisms that have been addressed both against arbitration and against the ICC. Lack of transparency and vague criteria for operation of arbitration institutions and lengthiness of proceedings were the most frequent concerns. Alexis provides responses to them that seem to be radical.  I believe that this is what the clients expect.