The rules of the International Centre for Dispute Resolution (“ICDR”) of the American Arbitration Association (“AAA”) entered into force in 1998. They were first revised in 2014. Seven years later, the ICDR issued a revised set of rules effective on 1 March 2021.
In line with the recent revisions of institutional arbitration rules in Europe,[1] the ICDR 2021 Rules’ amendments aim to provide greater transparency and efficiency in the resolution of disputes by arbitration.
Key amendments include those on:
- Consolidation and joinder;
- Third-party funding disclosure;
- The publication of redacted awards by the ICDR;
- Explicit provisions on the use of video; and
- Electronic signatures.
The key amendments to the 2021 ICDR Rules are discussed below.
ICDR 2021 Arbitration Rules Amendments Targeting Greater Efficiency
Joinder
Article 8(1) (former Article 7(1)) allows joinder after constitution of the arbitral tribunal under two conditions:
(1) the arbitral tribunal considers that the joinder of additional parties would serve the interests of justice; or
(2) the additional parties consent to be joined.
Prior the amendment, joinder after constitution of the arbitral tribunal was not possible unless “all parties, including the additional party, otherwise agree[d].”[2]
This change constitutes an expansion of the ICDR Rules’ application.
Consolidation
Article 9(1) of the ICDR Rules now enables consolidation when arbitrations involves merely “related” parties:[3]
1. At the request of a party or on its own initiative, the Administrator may appoint a consolidation arbitrator, who will have the power to consolidate two or more arbitrations pending under these Rules, or these and other arbitration rules administered by the AAA or ICDR, into a single arbitration where:
[…]
c. the claims, counterclaims, or setoffs in the arbitrations are made under more than one arbitration agreement; the arbitrations involve the same or related parties; the disputes in the arbitrations arise in connection with the same legal relationship; and the arbitration agreements may be compatible.
Under former Article 8, consolidation was limited to arbitrations involving the same parties. The amendment aims to facilitate the resolution of issues within an arbitration setting without referring them to a court.
Electronic Signatures
Taking into account COVID-19 restrictions, new Article 32(4) of the ICDR Rules gives the ability to the arbitral tribunal to electronically sign an order or an award unless:
- the parties agree to physical signature; or
- the tribunal considers that a physical signature is appropriate; or
- the applicable law requires a physical signature.
Article 32(4) of ICDR Rules now reads as follows:
An order or award may be signed electronically, unless (a) the applicable law requires a physical signature, (b) the parties agree otherwise, or (c) the arbitral tribunal or Administrator determines otherwise.
Use of Video
Article 26(2) now explicitly allows the parties to hold a hearing by video and for an arbitral tribunal to determine that this is required:[4]
A hearing or a portion of a hearing may be held by video, audio, or other electronic means when: (a) the parties so agree; or (b) the tribunal determines, after allowing the parties to comment, that doing so would be appropriate and would not compromise the rights of any party to a fair process. The tribunal may at any hearing direct that witnesses be examined through means that do not require their physical presence.
This amendment promotes efficiency, especially under the current COVID-19 restrictions, by avoiding delays in the resolution of disputes. It should also resolve disputes regarding holding a hearing by video when only one party objects to this.
Arbitral Tribunal Secretary
The 2021 ICDR Rules provide for greater efficiency by allowing a tribunal to appoint a tribunal secretary with the consent of the parties. Simultaneously, the exclusion of tribunal secretaries’ liability has been extended.
Articles 17 and 41 replace former Article 38 and are drafted as follows:
Article 17 – Arbitral Tribunal Secretary
The tribunal may, with the consent of the parties, appoint an arbitral tribunal secretary, who will serve in accordance with ICDR guidelines.
Article 41 – Exclusion of Liability
The members of the arbitral tribunal, any emergency arbitrator appointed under Article 7, any consolidation arbitrator appointed under Article 9, any arbitral tribunal secretary, and the Administrator shall not be liable to any party for any act or omission in connection with any arbitration under these Rules, except to the extent that such a limitation of liability is prohibited by applicable law. The parties agree that no arbitrator, emergency arbitrator, consolidation arbitrator, or arbitral tribunal secretary, nor the Administrator shall be under any obligation to make any statement about the arbitration, and no party shall seek to make any of these persons a party or witness in any judicial or other proceedings relating to the arbitration.
Arbitral Jurisdiction
Since the Supreme Court’s decision in First Options of Chicago, Inc. v. Kaplan,[5] it is well-established under U.S. law that “a court must defer to an arbitrator’s arbitrability decision when the parties submitted that matter to arbitration”.
The Supreme Court did not address whether incorporation of arbitral rules containing a competence-competence clause constitutes valid delegation to the arbitrators to determine arbitral jurisdiction, however.
The American Law Institute (“ALI”) recently adopted a Restatement of the U.S. Law of International Commercial and Investor State Arbitration (2019). Professor Bermann, a member of the ALI, declared that the “Restatement focuses on what courts are asked to do and, among the things they’re asked to do, what they are willing to do. Essentially we have three phases in the life cycle of an arbitration where a court is invited to intervene: launching the arbitration, arbitral proceedings, and post-award.”[6]
Pursuant to the Restatement, when the existence of the arbitration agreement is at issue, the parties cannot avoid court review.
To avoid controversy regarding the power of the arbitral tribunal to rule on its own jurisdiction with respect to arbitrability and the existence or validity of the arbitration agreement, former Article 19 of the ICDR Rules was amended to become Article 21. The amendment strengthens the arbitral tribunal’s jurisdiction over arbitrability objections without court intervention.
Article 21 – Arbitral Jurisdiction:[7]
1. The arbitral tribunal shall have the power to rule on its own jurisdiction, including any objections with respect to arbitrability, to the existence, scope, or validity of the arbitration agreement(s), or with respect to whether all of the claims, counterclaims, and setoffs made in the arbitration may be determined in a single arbitration, without any need to refer such matters first to a court.
2. The tribunal shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the tribunal that the contract is null and void shall not for that reason alone render invalid the arbitration clause.
3. A party must object to the jurisdiction of the tribunal or to arbitral jurisdiction respecting the admissibility of a claim, counterclaim, or setoff no later than the filing of the Answer, as provided in Article 3, to the claim, counterclaim, or setoff that gives rise to the objection. The tribunal may extend such time limit and may rule on any objection under this Article as a preliminary matter or as part of the final award.
4. Issues regarding arbitral jurisdiction raised prior to the constitution of the tribunal shall not preclude the Administrator from proceeding with administration and shall be referred to the tribunal once constituted for determination.
ICDR 2021 Arbitration Rules Amendments Targeting Increased Transparency
Third-party Funding
Former rules of the ICDR were silent regarding third-party funding. Paragraph 7 of Article 14 of the ICDR 2021 Rules constitutes an amendment aiming to increase transparency of arbitral proceedings when claims are funded.
New Article 14(7) of the ICDR Rules gives authority to the tribunal to require the parties to disclose “[w]hether any non-party (such as a third-party funder or an insurer) has undertaken to pay or to contribute to the cost of a party’s participation in the arbitration, and if so, to identify the person or entity concerned and to describe the nature of the undertaking.”[8] The tribunal may also require the parties to disclose “[w]hether any non-party (such as a funder, insurer, parent company, or ultimate beneficial owner) has an economic interest in the outcome of the arbitration, and if so, to identify the person or entity concerned and to describe the nature of the interest.”[9]
This addition is salutary, as an undisclosed third-party funder may have a conflict of interest with a party or arbitrator, undermining the integrity of the arbitration proceedings.
Publication of Awards
In order to provide greater transparency of arbitral proceedings, the ICDR 2021 Rules expand the publication of awards, orders, decisions and rulings by the Centre unless a party has objected in writing to publication within six months from the date of the award.
New Article 40(4) of the ICDR Rules is drafted as followed:
4. The ICDR may also publish selected awards, orders, decisions, and rulings that have been edited to conceal the names of the parties and other identifying details unless a party has objected in writing to publication within 6 months from the date of the award.
This is in line with amendments made by the ICC, which has expanded the publication of ICC arbitral awards since 1 January 2019.
Impartiality and Independence of Arbitrators
The 2021 ICDR amendments increase obligations upon arbitrators. Pursuant to Article 14(1), “Arbitrators acting under these Rules shall be impartial and independent and shall act in accordance with these Rules, the terms of the Notice of Appointment provided by the Administrator, and with The Code of Ethics for Arbitrators in Commercial Disputes.”[11]
Under former Article 13 of the ICDR Rules, arbitrators merely had to act “in accordance with the terms of the Notice of Appointment provided by the Administrator”.[12]
International Administrative Review Council
The ICDR amended Article 5 of the ICDR Rules to offer more transparency on how the International Administrative Review Council may resolve issues such as arbitrator challenges, the number of arbitrators and the place of arbitration.
Article 5 – International Administrative Review Council
When the Administrator is called upon to act under these Rules, the Administrator may act through its International Administrative Review Council (IARC) to take any action. Such actions may include determining challenges to the appointment or continuing service of an arbitrator, deciding disputes regarding the number of arbitrators to be appointed, or determining whether a party has met the administrative requirements to initiate or file an arbitration contained in the Rules have been met. If the parties do not agree on the place of arbitration, the IARC may make an initial determination as to the place of arbitration, subject to the power of the arbitral tribunal to make a final determination.
International Mediation Rules Amendments
In addition to the above-mentioned amendments to the ICDR’s International Arbitration Rules, the International Mediation Rules were also improved. The 2021 International Mediation Rules aim to encourage the parties to mediate, even after arbitration has begun.
As with the International Arbitration Rules, under the 2021 Mediation Rules, all or part of mediation can be conducted by video.[13]
The International Mediation Rules also clarify the conduct of mediation proceedings. Greater assistance is given to the parties by the ICDR to ensure an efficient resolution of their dispute.[14]
The new International Mediation Rules also include provisions concerning the duties and obligations of the mediator and mediation proceedings. Contrary to the former mediation rules under which both matters were found under Article M-8, the new set of rules are separated to provide more clarity.
In this regard, under new Rule M-8, the mediator (1) “shall conduct the mediation based on the principle of party self-determination. Self-determination is the act of coming to a voluntary, uncoerced decision in which each party makes free and informed choices as to process and outcome”; (2) “does not have the authority to impose a settlement on the parties but will attempt to help them reach a satisfactory resolution of their dispute”; (3) “is not a legal representative of any party and has no fiduciary duty to any party.”
Further, pursuant to Rule M-9, mediation proceedings shall be conducted as follows:
1. The mediator shall conduct the proceedings with a view to expediting the resolution of the dispute. The mediator may conduct a preparatory conference with the parties promptly after being appointed for the purpose of organizing the proceedings of the case. In establishing procedures for the case, the mediator and the parties may conduct all or part of the mediation via video, audio, or other electronic means to increase the efficiency and economy of the proceedings.
2. The parties are encouraged to exchange all documents pertinent to the relief requested. The mediator may request the exchange of memoranda on issues, including the underlying interests and the history of the parties’ negotiations. Information that a party wishes to keep confidential may be sent to the mediator, as necessary, in a separate communication with the mediator.
3. The mediator may conduct separate or ex parte meetings and other communications with the parties and/or their representatives, before, during, and after any scheduled mediation conference. Such communications may be conducted in person, in writing, via video, audio or other electronic means.
4. The mediator may make oral or written recommendations for settlement to a party privately or, if the parties agree, to all parties jointly.
5. In the event that a complete settlement of all or some issues in dispute is not achieved within the scheduled mediation conference(s), the mediator may continue to communicate with the parties for a period of time in an ongoing effort to facilitate a complete settlement.
6. Early in the proceeding or at the preparatory conference, the mediator and the parties shall consider cybersecurity, privacy, and data protection to provide for an appropriate level of security and compliance in connection with the proceeding.
The new Rules also provide for assistance to the parties in enforcing settlement agreements. Pursuant to Rule M-14(e), “The parties may request the mediator (by signing the settlement agreement or otherwise) or the ICDR to issue an attestation that a settlement was reached in the course of a mediation to assist in the enforcement of such settlement agreement under the United Nations Convention on International Settlement Agreements Resulting from Mediation or other applicable law.”[15]
[1] See e.g., the ICC revised Rules of Arbitration due to enter into force in January 2021 https://www.acerislaw.com/revised-2021-icc-arbitration-rules-key-changes/
[2] Former Article 7(1) of the ICDR Rules.
[3] Article 9(1)c of the ICDR Rules (emphases added).
[4] Article 26(2) of the ICDR Rules.
[5] First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
[6] https://www.ali.org/news/articles/restatement-us-law-international-commercial-and-investorstate-arbitration-approved/
[7] Article 21 of the ICDR Rules (emphases added).
[8] Article 14(7)a of the ICDR Rules.
[9] Article 14(7)b of the ICDR Rules.
[10] Former Article 30.3 of the ICDR Rules: “An award may be made public only with the consent of all parties or as required by law, except that the Administrator may publish or otherwise make publicly available selected awards, orders, decisions, and rulings that have become public in the course of enforcement or otherwise and, unless otherwise agreed by the parties, may publish selected awards, orders, decisions, and rulings that have been edited to conceal the names of the parties and other identifying details” (emphases added).
[11] Article 14(1) of the ICDR Rules.
[12] Former Article 13 of the ICDR Rules.
[13] Rule M-1 and Rule M-9.
[14] Rule M-4.
[15] Rule M-14(e).
