The London Court of International Arbitration (“LCIA”) released an update to its Arbitration Rules on 11 August 2020, with the revisions taking effect on 1 October 2020 (“2020 Rules”). Whilst the 2020 Rules have been said to be a “light touch”[1] update, the new rules relating to virtual hearings and electronic communication, early determination of claims, consolidation and data protection in particular, represent significant developments of the LCIA 2014 Arbitration Rules (“2014 Rules”).
The 2020 Rules reflect not only the changing environment, but also the LCIA’s continuing efforts to enhance efficiency and make the arbitration process “even more streamlined and clear for arbitrators, mediators and parties alike”.[2] This post considers the main changes in 2020 Rules.
Virtual Hearings and Electronic Communication
The focus on enhancing efficiency in the 2020 Rules is evident in the express addition to the tribunal’s powers to make a procedural order “with a view to expediting the procedure to be adopted in the arbitration”, including by use of technology “to enhance the efficiency and expeditious conduct of the arbitration” (Article 14.6). This can be seen in the LCIA’s explicit consideration of a hearing taking place virtually (Article 19.2) by “conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form)”. Whilst video hearings are referenced in the 2014 Rules, the expanded provisions relating to the use of technology in the 2020 Rules reflect the enormous increase in the use of technology as a result of the global COVID-19 pandemic.
The 2020 Rules also make electronic communication the default method of communication in LCIA arbitrations. Further, a request for arbitration and a response must be filed electronically; indeed prior written approval must now be obtained to submit a request or a response by an alternative method (Article 4.1). The 2020 Rules also make clear that an arbitral award may be signed electronically (Article 26.2).
Data Protection and Confidentiality
Consistently with the European Union’s General Data Protection Regulation (“GDPR”) which came into force in 2018 and the shift in favour of electronic communication in the 2020 Rules, a further change introduces provisions expressly requiring a tribunal to consider data protection. Tribunals must consider data protection at an early stage of arbitration proceedings in consultation with the parties and adopt appropriate measures accordingly (Article 30.5). The 2020 Rules also provide the LCIA and tribunals with the power to issue binding directions relating to information security or data protection (Article 30.6).
Article 30.4 of the 2020 Rules states that the LCIA’s processing of personal data is subject to “applicable data protection legislation” and the LCIA’s data protection notice, which refers to the GDPR. The express provisions for data protection in the 2020 Rules are a timely update in the context of the GDPR and it is significant that the LCIA is the first of the major arbitral institutions to codify data protection practices in its arbitration rules. Other institutions may follow suit.
The confidentiality provisions under the 2020 Rules also confer on the parties, the tribunal and (if any) the secretary a duty to seek confidentiality undertakings from those involved in the arbitration, including any authorised representative, expert, witness of fact or service provider (Article 30.1 – 30.2). This widens the confidentiality provisions under the 2014 Rules, by which parties undertake to maintain confidentiality of awards and other materials.
Early Determination
Another significant development in the 2020 Rules is the express provision relating to the early determination of claims. In particular, Article 22.1(viii) provides tribunals with the power to determine that any claim, defence, counterclaim, cross-claim, defences to counterclaim or cross-claim “is manifestly outside the jurisdiction of the [tribunal], or is inadmissible or manifestly without merit”. Tribunals may issue an order or award to this effect.
The power of early determination of claims was considered to be implicit in the 2014 Rules. This change arguably reflects a wider trend to make such powers express, bringing the LCIA Rules into line with e.g. rule 29 of the SIAC Rules (introduced through the 2016 revisions). Users may justifiably hope that the introduction of an express power will make it easier to persuade tribunals to use such powers in future and will reduce the risks upon enforcement of awards (and the associated “due process paranoia”).
Consolidation of Proceedings
The 2020 Rules significantly expand tribunals’ powers to consolidate LCIA arbitrations. Whereas under the 2014 Rules tribunals were empowered to order consolidation, even without the parties’ agreement, of two or more LCIA arbitrations commenced under “the same arbitration agreement or any compatible arbitration agreement(s) between the same disputing parties”, Article 22.7(ii) now provides that it may also do so even where the parties are not the same but the arbitrations are “arising out of the same transaction or series of related transactions”. The precondition in the 2014 Rules 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, is preserved.
The power of tribunals to consolidate arbitrations (LCIA or otherwise) where all the parties agree in writing remains in effect.
The 2020 Rules also enable concurrent conduct of arbitrations “where the same arbitral tribunal is constituted in respect of each arbitration” (Article 22.7(iii)), further demonstrating the LCIA’s approach towards enhancing efficiency in arbitration.
The 2020 Rules also enable a claimant wishing to commence multiple arbitrations to serve a composite request for arbitration, “whether against one or more respondents and under one or more [a]rbitration [a]greements” (Article 1.2). This procedural change lifts the burden on a claimant having to file multiple requests and may well be the LCIA’s response to A v B [2017] EWHC 3417 (Comm), in which the English Commercial Court held that the claimant’s “attempt to refer separate disputes to a single arbitration” (at [23]) under a single request was invalid under the 2014 Rules.
Schedule of Costs
Lastly, under the updated LCIA Schedule of Costs, the maximum hourly rate to be charged by arbitrators has increased from £450 to £500 “to reflect the demand of users in certain cases involving complex and significant disputes.”[3] Section 2 of the updated Schedule of Costs also makes clear that in exceptional cases, the rate may be higher if the tribunal’s fees are fixed by the LCIA Court on the Registrar’s recommendation and following consultation with the arbitrators, and if all the parties are in express agreement.[4]
Concluding Remarks
The 2020 Rules are certainly not a wholesale revision of the LCIA Rules, for which few were calling. Nevertheless, they do make significant changes in the areas of consolidation of proceedings, virtual hearings and electronic communications. Whether the changes serve the LCIA’s objective of making its arbitration process “even more streamlined and clear” remains to be seen in practice, but they are encouraging signs of the LCIA seeking to reflect current global challenges and trends.
[1]Quote by Paula Hodges QC, President of the LCIA – Updates to the LCIA Arbitration Rules and the LCIA Mediation Rules (2020): https://www.lcia.org/lcia-rules-update-2020.aspx
[2]Updates to the LCIA Arbitration Rules and the LCIA Mediation Rules (2020) https://www.lcia.org/lcia-rules-update-2020.aspx
[3]Updates to the LCIA Arbitration Rules and the LCIA Mediation Rules (2020) https://www.lcia.org/lcia-rules-update-2020.aspx
[4]Section 2 of the Schedule of Arbitration Costs (effective 1 October 2020) https://www.lcia.org//Dispute_Resolution_Services/schedule-of-costs-lcia-arbitration-2020.aspx
