New ICC Arbitration Rules Expedite Procedures for Smaller Disputes

The International Chamber of Commerce (ICC) has responded to in-house counsel and private practice’s concerns that international arbitration has become slower, more costly and opaque with the publication of its updated Arbitration Rules (2017 Rules).

The 2017 Rules entered into force on 1 March 2017 and apply to arbitrations commenced on or after that date. The major innovation is the inclusion, for the first time, of specific streamlined provisions for disputes of less than or equal to $2 million.

New Expedited Procedure

In recent years, about 30 percent of newly-filed cases at the ICC have involved a dispute value of $2 million or less. Queen Mary University’s 2015 International Arbitration Survey, “Improvements and Innovations in International Arbitration,” also found that 92 percent of respondents favoured inclusion of simplified procedures for claims under a certain value. To address this trend and finding, the ICC has made provision in the 2017 Rules for an expedited procedure. The key points to note are:

• Automatic application: The expedited procedure takes precedence over any contrary terms of the parties’ arbitration agreement.
• Constitution of the arbitral tribunal: The ICC Court has the power to appoint a sole arbitrator regardless of any contrary provision in the arbitration agreement.
• Time limit for making a final award: The arbitral tribunal must deliver its final award within six months of the case management conference.
• Reduced fees: Whilst the administration fees under the expedited procedure remain the same as for the non-expedited Rules, the arbitrator fees are substantially reduced.

Other Noteworthy Changes

The 2017 Rules also contain more modest changes aimed at improving the efficiency, cost-effectiveness and transparency of arbitration under the ICC’s Arbitration Rules. With a view to improving transparency, the 2017 Rules now permit arbitral tribunals to provide reasons for their decisions as to the appointment, confirmation, challenge or replacement of an arbitrator. On the efficiency side, the time limit for arbitral tribunals to submit to the ICC Court agreed Terms of Reference signed by it and the parties has been cut from two months to 30 days.

Comment

The changes heralded by the new 2017 Rules are welcome and have the potential to significantly improve the speed and cost-effectiveness of dispute resolution for parties with significant but lower value claims. Although many of the changes, including the expedited procedure, are well-established in the industry, the “automatic application” principle is especially noteworthy for going beyond the existing expedited procedures of other arbitral institutions. For example, under the 2016 Rules of the Singapore International Arbitration Centre, a party must file an application for arbitral proceedings to be conducted in accordance with its expedited procedure. Clearly, the ultimate success of the new 2017 Rules will depend on how ICC arbitral tribunals use the wide discretion granted to them under the expedited procedure. If this discretion is exercised prudently, within the parameters of fairness and with a view to avoiding challenges to final arbitral awards, the new 2017 Rules will offer a real benefit to parties.