The last update to the LCIA Rules took place in 2014. Like many of its competitor institutions, at that time, the LCIA introduced some new and innovative elements. In particular, the addition of the Annex of general guidelines for the parties’ legal representatives was market-leading, incorporating rules about conduct into arbitral rules themselves.
This latest set of rules has been described by the LCIA as an “update” rather than a radical redraft. Careful consideration has been given to the essential character of the LCIA Rules and the institution’s distinguishing features. As evidence of this, the provisions on confidentiality at Article 30 have been further strengthened and the LCIA has shown real confidence in its stance on party representative conduct by retaining the Annex.
The update is perhaps most apparent in the modernisation of the Rules’ language. The fax machine has been removed and communication between the parties, institution and tribunal is now, by default, electronic (Article 4). Article 26 provides for the electronic signature of any award, subject to the agreement of the parties or direction of the tribunal, or LCIA court otherwise. We also see an implicit acceptance that some of the changes in 2014 had caused confusion. For example, there is no longer the blanket use of the term “cross-claim”, which was used in the 2014 Rules to cover both counterclaims and cross-claims against co-respondents. The LCIA has also returned to the use of “authorised representative” from the 1998 Rules rather than the “authorised legal representative” of the 2014 version. Other tweaks include greater clarity in the division of roles between parties, authorised representatives, registrar, court, tribunal and tribunal secretary (with arguably an increased role for the court), and a tightening in certain timescales. We also see the LCIA 2017 guidance on tribunal secretaries formalised into the Rules themselves at new Article 14A.
Within this update, there are, however, also a number of changes of note. We address four of these below.
Commencing multiple claims: the “composite” request
The market expected the LCIA to clarify whether and how a claimant could issue a single request for arbitration in respect of multiple disputes. In 2017, the English court in A v B confirmed that the LCIA’s 2014 Rules did not allow for this and that multiple separate requests for arbitration would have to be issued, and those arbitrations then consolidated.
The LCIA’s solution is, at first sight, arguably out of step with what users and the arbitral community anticipated. Under Article 1.2, a claimant may (under certain circumstances) issue what is called a “composite” request for arbitration in order to commence multiple arbitrations at once. This is then followed at Article 2.2 by the ability for a respondent to file a composite response. While the issue of a composite request may be accompanied by a request for consolidation of those disputes, consolidation is not automatic and will need to be sought in accordance with the LCIA Rules.
Each arbitration issued under the composite request will need to be accompanied by its own separate filing fee instead of a single filing fee in respect of the multiple claims. While there is clearly a potential financial implication, the practical impact of the new process is less clear. This may be a provision that needs time to bed down in order to reach a proper conclusion on its effectiveness, particularly regarding the (as yet unresolved) question of whether consolidation by the LCIA following the issue of a composite request will be more of a formality than a hurdle.
Tribunal discretion, powers and early determination
The two Articles that have seen the most substantial alterations and additions are Articles 14 (conduct of proceedings) and 22 (additional powers). At first glance, the new version of these articles seems to be a departure from the LCIA’s standard “less is more” approach. However, the LCIA appears to have concluded that expressly including in the Rules an armoury of procedural techniques that fall within tribunal discretion will actually increase flexibility and ultimately bring about more robust and efficient management of disputes.
So what have the LCIA included? The new Rules have moved around the existing provisions in Article 14, moving up the general duties of the tribunal from old Article 14.6 to the beginning of new Article 14.1, but leaving these duties unchanged. New Article 14.2 is unchanged from the old 14.7 in making it clear that the arbitral tribunal shall have the widest discretion to discharge these general duties. The new content is at Articles 14.5 and 14.6 and sets out examples of what this “widest discretion” may include, such as shortening timescales, limiting evidence, restricting pleadings and adopting technology. Importantly, particularly given the impact of the COVID-19 pandemic, there is confirmation that this discretion includes ordering a remote or virtual hearing (Articles 14.6(iii) and 19). This clarity on the breadth of arbitrator discretion and the tools available to a tribunal to achieve an efficient process should be welcomed.
It is also clear that this more expansive provision in Article 14 also allows a tribunal to tailor an expedited process if required, without the need to include an express provision for an expedited arbitration within the Rules themselves. In this sense, “more” in Article 14 may actually have enabled the LCIA to include “less” across the wider set of rules.
The LCIA has also introduced an early determination provision, in a change that has been anticipated by the market. New Article 22(viii) allows for a 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). This new wording follows the lead of other institutions, such as SIAC, HKIAC and ICC, that have already provided for summary dismissal or early determination in their rules, or confirmed that such a power exists in a practice note. Financial institutions and banks had historically chosen English court jurisdiction over arbitration for the ability to apply for summary judgment on debt claims. Therefore, the introduction of early determination fits well with the LCIA’s positioning as the go to institution for the resolution of finance disputes.
Widening the circumstances for the consolidation of disputes
In 2014, the LCIA did not follow its competitors in introducing increasingly expansive consolidation provisions. As a consequence, its rules had come to look quite restrictive and potentially out of step with the market. Unless multiple arbitrations were taking place under the same arbitration agreement, or under compatible agreements with the same parties, consolidation could only be achieved by bespoke drafting in the arbitration clause itself, or by the agreement of all the parties after the dispute had arisen.
This has been acknowledged in the changes introduced in the new Article 22A. In addition to the old criteria for consolidation in the 2014 Rules, 22.7(ii) now allows for the tribunal to consolidate arbitrations under compatible arbitration agreements between “the same disputing parties or arising out of the same transaction or series of related transactions”. This broader scope has also been applied to the powers of the LCIA Court under Article 22.8(ii). New Article 22.7(iii) also provides for a tribunal to run concurrent arbitrations which, in practice, is likely to occur where it is standard market practice in the relevant industry (as in maritime arbitration), or where concurrent arbitrations were agreed in the relevant contract.
How the new consolidation provisions are applied in practice remains to be seen, but the provision should enable consolidation in a broader series of circumstances, where previously additional drafting by the parties in their arbitration agreement would have been required in order for consolidation to be possible.
The difficult nut to crack: Gerald Metals
The 2016 English court case of Gerald Metals SA v The Trustees of the Timis Trust and others caused some controversy regarding the interaction of the 2014 Rules and the availability of court-ordered interim relief in support of arbitration under section 44 of the Arbitration Act 1996. There was surprise when the court decided that urgent relief will not be available from the English courts where there is time for an expedited tribunal to be constituted, or emergency arbitrator appointed. Much discussion was had, following that decision, both at Tylney Hall and elsewhere, and change to the LCIA Rules was expected as a consequence.
Many may be surprised by the limited extent of the changes in the new Rules in response to the Gerald Metals issue. There are tweaks to old Article 9.12 (now Article 9.13) and to Article 25.3 (relating to interim relief before an arbitral tribunal, rather than before an emergency arbitrator specifically) to simplify the language and to confirm the availability of court-ordered interim relief in certain circumstances. In practice, however, the LCIA’s response here demonstrates the challenge this case poses for any arbitral institution in respect of English-seated arbitrations. The LCIA can try to reaffirm in its Rules the availability of court-ordered relief, but it remains up to the court itself to decide how the court applies or construes the Act alongside those Rules. Only time will tell whether these small alterations to Articles 9 and 25 bring about any change in approach from the English court in future.