The New ICC Expedited Procedural Rules: Towards More Efficient Justice
An oft-heard opinion in arbitration circles is that ICC arbitration is good value for money for big and complex claims, and less so for small disputes. This is about to change with the updated ICC Rules (the Rules) that the ICC presented in December 2016, and which will come into force on 1 March 2017. The updated rules provide for an expedited, simpler and cost-effective procedure for claims under US$2 million – which represent around one third of the claims filed with the ICC each year.
The Main Changes Regarding Claims Under US$2 million
The main changes that the new, expedited procedure introduces are to be found in the new Article 30 of the Rules, as well as in Appendices III (scales of administrative expenses and arbitrator’s fees in expedited proceedings) and VI (“Expedited Procedure Rules”). In short, the main changes are the following:
- A sole arbitrator will be appointed by agreement of the parties or, failing such agreement, by the ICC Court, even if the arbitration agreement provides for a three-member tribunal (Article 30.1 and Appendix VI, Article 2).
- The arbitrator and the parties will not have to agree on the Terms of Reference (Appendix VI, Article 3.1).
- The parties may not introduce new claims after the arbitrator has been appointed, unless specifically authorised to do so (Appendix VI, Article 3.2). It is to be noted that, in the normal procedure, the point in time after which the parties may not introduce new claims is the establishment of the terms of reference. In practice, however, it is not uncommon for the parties to introduce new claims with their written submissions.
- The arbitrator must hold a case management conference (during which the procedure to be followed is agreed) no later than 15 days after he or she has received the file from the ICC (Appendix VI, Article 3.3). The case management conference becomes a substantial element in the expedited procedure, as it is the starting point for the calculation of the time limit for issuing the award.
- The parties’ written submissions may be limited (Appendix VI, Article 3.4).
- The tribunal may decide not to allow requests for document production, or to limit the number, length and scope of witness and expert evidence (Appendix VI, Article 3.4).
- The dispute may be decided on the basis of documents only, e. without an oral hearing (Appendix VI, Article 3.5).
- The final award is to be rendered within six months of the case management conference, unless the deadline is extended by the ICC Court (Appendix VI, Article 4.1). Given that it takes, on average, four to five weeks for the ICC Secretariat to scrutinize the award, in practice the arbitrator has to issue the award within four and a half to five months after the case management conference.
- The arbitrator fees will be approximately 20% lower than in a standard procedure. To illustrate, for a dispute amounting to US$1 million, the arbitrator’s fees under the expedited procedure will range between US$11,702 and US$51,304, instead of US$14,627 and US$64,130 under a standard procedure.
- The ICC administrative fees will not differ in the standard and in the expedited procedure. In the US$1 million dispute scenario, the ICC administrative fees will amount to US$23,335 irrespective of the procedure used. It must be noted, however, that there have been certain modifications regarding the amount of the ICC fees with the new 2017 version of the Rules. In particular, the minimum, non-refundable fee charged by the ICC has been raised to US$5,000 from US$3,000. Similarly, marginal raises of ICC administrative fees are introduced for disputes up to US$2 million and exceeding US$80 million, whereas the ICC administrative fees for disputes between US$2 and US$80 million remain unchanged.
Application of the Expedited Procedure
The Expedited Procedural Rules will apply to all claims below US$2 million arising from contracts entered into after 1 March 2017, unless the parties to the agreement have expressly opted out of the application of the Expedited Procedural Rules (Articles 30.2; 30.3(b); Annex VI, Article 1.2). It is noteworthy that the US$2 million threshold is set out in an Annex, and consequently it can be modified relatively easily.
At the same time, the Expedited Procedural Rules may also apply to arbitrations exceeding the US$2million threshold, if the parties have provided so in their contract (Article 30.2(b) of the Rules).
However, the ICC Court retains the discretion to decide that the Expedited Procedural Rules are inadequate in light of the complexity of the dispute, either upon the request of a party before the constitution of the tribunal, or upon its own motion (Article 30.3(c); Annex VI, Article 1.4 of the Rules).
Certainly, the ICC expedited procedure brings with it several challenges: for the ICC Secretariat, which will have to administer arbitrations under both the standard and the expedited procedural rules; for arbitrators, who will have to keep up with shortened deadlines; and for uninformed parties who, unaware of the entry into force of the Expedited Procedural Rules, may expect that their dispute, which falls under the Expedited Procedural Rules, will be resolved by a panel of three arbitrators. Despite these challenges, the Expedited Procedural Rules are an important step towards quick and efficient justice and, as such, should be welcomed.
Athina Fouchard Papaefstratiou, Counsel, Lazareff Le Bars