New ICC rules of arbitration aim to cut costs and time

With an eye to cutting the cost and time of complex arbitration matters, the International Chamber of Commerce has released a revised version of its rules of to better serve businesses and governments engaged in international commerce and investment.

Jason FryJason Fry, secretary general of the ICC International Court of Arbitration, was in Toronto yesterday to provide the legal community with an overview of the changes to the rules of ICC arbitration, which come into force Jan. 1, 2012, and outline the reasons for some of the changes.

“The objective was to design a modern set of arbitration rules to meet the needs of the business community and states engaged in international commerce that would serve those needs for the next 10 years,” said Fry, who spoke at a luncheon hosted by Neeson Arbitration Chambers, the Canadian Chamber of Commerce, and William Horton Dispute Resolution. “There is a strong emphasis on time and cost management and so we have introduced case management procedures to help address those concerns.”

The revision process began in 2008 with a drafting committee of 20 members including civil lawyers, arbitrators, representative from the ICC court, and two representatives of the people who actually use ICC dispute resolution procedures — as well as a number of in-house counsel.

“One of the key objectives of the revisions to the rules was to seek to address some of the criticism of international arbitration, which is that it is too expensive, time consuming, over-lawyered and isn’t really addressing the parties’ business needs. So we brought the in-house counsel in to help with the drafting process and they in turn consulted with a much wider group of corporate counsel,” said Fry.

That drafting committee was supported by a wider task force of 200 members, as well as a consultation process with ICC national committees around the world and the ICC Commission on Arbitration.

The rules were last revised in 1998 and the new rules take into account current developments in arbitration practice and procedure as well as acknowledging changes in information technology.

Additions to the rules include provisions to address disputes involving multiple contracts and parties; updated case management procedures; the appointment of an emergency arbitrator to order urgent measures; and changes to facilitate the handling of disputes arising under investment arbitration.

“That wasn’t the main driving factor behind a revision to the rules — these rules remain principally for use in international commercial disputes rather than investment disputes, but they are being used by some countries for investment disputes and some provisions in the rules had to be amended as a consequence,” said Fry.

Other amendments have also been made to ensure the arbitral process is expeditious and cost effective.

Fry explained there is now a duty now in art. 22 of the rules that states the arbitral tribunal and parties shall make every effort to conduct the arbitration in an expeditious and cost-effective manner having regard to the complexity and value of the dispute.

“The parties undertake a contractual obligation to behave themselves and to adopt procedures that should be proportionate to what’s at issue,” said Fry. “We felt it necessary to have a case management conference as a tool for the arbitral tribunal to bring parties together right at the outset of the case in order to decide how this case should be conducted. It’s compulsory and cannot be avoided.”

How the case management conference takes place is at the discretion of the tribunal — it can be by telephone, in person, or teleconference.

“What we want to encourage is a tailor made approach to the arbitration. We want to discourage arbitrations going on autopilot. Everyone needs to turn their minds to what is needed for this particular case. In doing so, the tribunal may include the case management techniques outlined in the ICC’s publication in controlling time and cost in arbitration,” he said.

Fry said input on that process came from the user community who indicated there was too much of a divide between mediation on the one hand and arbitration on the other.

There is also a greater emphasis on upfront case disclosure

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