The London Court of Arbitration (LCIA) released 2020 update to its arbitration and mediation rules (the “Rules updates”), which comes into effect on October 1, 2020. The purpose of the update is to “aim to make the arbitral and mediation processes even more streamlined and clear for arbitrators, mediators and parties alike.”
The Rules updates, among other things, address the increased use of virtual hearings and the primacy of electronic communication, which became more prominent in the Covid-19 era. Notable and substantive amendments to the Rules include:
Electronic Communications and Signatures
The Rules updates confirmed “the primacy of electronic communication with the LCIA and in the arbitration, as well as…the facilitation of electronically signed awards.” Specifically, requests for arbitration must now be submitted electronically. Otherwise, in accordance with Article 4, a prior written approval must be sought from the LCIA to submit the request for arbitration by any alternative method. Same rule applies to the response and other applications, including for expedited proceedings, emergency arbitrators and expedited appointment of a replacement arbitrator.
The Rules updates now require that all communications be delivered by email or any other electronic means. Under appropriate circumstances, however, the LCIA may order written communications in the event a party is unable to receive electronic communications.
Article 26.2 also provides for electronically signed awards: “[u]nless the parties agree otherwise, or the Arbitral Tribunal or LCIA Court directs otherwise, any award may be signed electronically and/or in counterparts and assembled into a single instrument.” This Rule may facilitate changes to legal practice, including enforcement of the foreign awards under the New York Convention, which requires a party seeking to enforce a foreign arbitral award to provide a duly authenticated original award or its certified copy. It is not clear under the New York Convention, whether an electronically signed award will satisfy this requirement.
Article 19.2 now specifically allows virtual hearings: “[a]s to form, a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).”
Tools Allowing Arbitrators To Expedite Proceedings
The Rules updates include new provisions that allow for more expedited proceedings under certain circumstances. For example, new Article 9A allows, “[i]n the case of exceptional urgency,” any party to apply to the LCIA Court for the expedited formation of the Arbitral Tribunal.
Article 22.1(viii) provides the Arbitral Tribunal with power of early determination. Specifically, the Arbitral Tribunal has power “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.”
Role of Tribunal Secretaries
Article 14A clarifies and limits the role of the Tribunal Secretaries. Although, “an Arbitral Tribunal may obtain assistance from a tribunal secretary in relation to an arbitration,” “[u]nder no circumstances may an Arbitral Tribunal delegate its decision-making function to a tribunal secretary.” Further, “[a]ll tasks carried out by a tribunal secretary shall be carried out on behalf of, and under the supervision of, the Arbitral Tribunal which shall retain its responsibility to ensure that all tasks are performed to the standard required by the LCIA Rules.” Finally, “[a]n Arbitral Tribunal may only obtain assistance from a tribunal secretary once the tribunal secretary has been approved by all parties.”
Broadening of LCIA Court and Tribunal Power to Order Consolidation and Concurrent Conduct of Arbitrations
Article 22A also now allows the Arbitral Tribunal to order consolidation of certain proceedings, without all parties consent, into a single arbitration. The proceedings that may be consolidated are the ones commenced under the same arbitration agreement or any compatible arbitration agreement. The proceedings have to be either between the same disputing parties or arise out of the same transaction or series of related transactions.
New Article 30A recognizes significance of data protection during arbitration and provides for various mechanisms to ensure protection of the Parties’ sensitive data and information, including adoption of “any specific information security measures to protect the physical and electronic information shared in the arbitration.” This provision is particularly important in light of the LCIA’s adoption of the primacy of electronic communication and availability of virtual hearings.
LCIA’s 2020 updates adopt arbitration proceedings to challenges of Covid-19 era, which include travel restrictions and social distancing, and significantly expand application of electronic means and virtual hearings. The Rules updates also contain important provisions concerning expeditious determination of arbitration proceedings under certain circumstances, including early determination.