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alert memorandum 2021 icc rules of arbitration unveiled november 12 2020 if you have any questions concerning this memorandum please reach out to your on october 8 2020 the international ...

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            ALERT MEMORANDUM 
            2021 ICC Rules Of Arbitration Unveiled  
            November 12, 2020                                                       If you have any questions concerning this 
                                                                                    memorandum, please reach out to your 
            On October 8, 2020, the International Chamber of Commerce               regular firm contact or the following 
                                                                                    authors. 
            (“ICC”) unveiled its revised Rules of Arbitration  (“2021  ICC          PARIS 
            Rules”), which are expected to enter into  force on                     12, rue de Tilsitt 
                                                                                    75008 Paris, France 
            January 1, 2021.  They are intended to replace the current version      T: +33 1 40 74 68 00 
                                                                                    F: +33 1 40 74 68 88 
            of the Rules, which have been in force since 2017 (“2017 ICC             
                                                                                    Jean-Yves Garaud 
            Rules”).  The text of the Revised Rules remains subject to               +33 1 40 74 68 76 
                                                                                    jgaraud@cgsh.com  
            additional editorial amendments prior to the official launch.            
                                                                                    Laurie Achtouk-Spivak 
            These latest changes are designed to be “a further step towards         +33 1 40 74 68 24 
                                                                                    lachtoukspivak@cgsh.com  
            greater efficiency, flexibility and transparency”  of ICC-               
                                                                                    Zeïneb Bouraoui 
            administered arbitration, in the words of ICC Court President           +33 1 40 74 68 93 
                            1                                                       zbouraoui@cgsh.com   
            Alexis Mourre.                                                           
                                                                                    LONDON 
                                                                                    2 London Wall Place  
            The newly released ICC Rules include noteworthy modifications           London EC2Y 5AU  
                                                                                    T: +44 20 7614 2200 
            that will directly impact ICC users and practitioners in a number       F:+ 44 20 7600 1698 
            of important areas, such as complex arbitrations (with revisions         
                                                                                    Christopher P. Moore  
            affecting both joinder and consolidation of claims), third-party        +44 20 7614 2227 
                                                                                    cmoore@cgsh.com  
            funding, party representation, and constitution of arbitral              
                                                                                    J. Cameron Murphy  
            tribunals.  Apart from a third-party funding disclosure                 +44 20 7614 2396 
                                                                                    cmurphy@cgsh.com  
            requirement, the most striking revision may be the ability of the        
                                                                                    MILAN 
            ICC Court to disregard, in “exceptional circumstances,” any party       Via San Paolo 7 
                                                                                    20121 Milan, Italy  
            agreement on the method of constitution of the arbitral tribunal in     T: +39 02 72 60 81 
                                                                                    F:+39 02 86 98 44 40 
            order  “to avoid a significant risk of unequal treatment and             
                                                                                    Carlo Santoro 
            unfairness that may affect the validity of the award.”                  +39 02 7260 8280 
                                                                                    csantoro@cgsh.com 
            Also of note, and in a departure from prior practice, the 2021 ICC      Paolo Bertoli  
            Rules include tailor-made provisions for investment treaty-based        +39 02 7260 8624 
                                                                                    pbertoli@cgsh.com
                                                                                                 
            arbitration, namely a third-State nationality requirement for           ROME 
            arbitrators and the exclusion of provisions on emergency                Piazza di Spagna 15 
                                                                                    00187 Rome, Italy 
            arbitrators.                                                            T: +39 06 69 52 21 
                                                                                    F: +39 06 69200665 
                                                                                     
                                                                                    Ferdinando Emanuele 
                                                                                    +39 06 6952 2604 
                                                                                    femanuele@cgsh.com 
                                                                                    Chiara Capalti 
                                                                                    +39 06 6952 2294 
                                                                                    ccapalti@cgsh.com 
                                                                                    FRANKFURT  
                                                                                    Main Tower 
                                                                                    Neue Mainzer Strasse 52 
                                                                                    60311 Frankfurt am Main  
                                                                                    T: +49 69 97103 0 
                                                                                    F:+ 49 69 97103 199 
                                                                                     
                                                                                    Prof. Dr. Richard Kreindler  
                                                                                    +49 69 97103 160 
                                                                                    rkreindler@cgsh.com  
            1
                    ICC, ICC unveils revised Rules of Arbitration (Oct. 8, 2020),  
                                                                       .  
            available at: https://www.iccwbo.be/icc-unveils-revised-rules-of-arbitration/
                    clearygottlieb.com 
                    © Cleary Gottlieb Steen & Hamilton LLP, 2020. All rights reserved. 
                    This memorandum was prepared as a service to clients and other friends of Cleary Gottlieb to report on recent developments that may be of interest to them. The information in it is 
                    therefore general, and should not be considered or relied on as legal advice. Throughout this memorandum, “Cleary Gottlieb” and the “firm” refer to Cleary Gottlieb Steen & Hamilton 
                    LLP and its affiliated entities in certain jurisdictions, and the term “offices” includes offices of those affiliated entities. 
               ALERT MEMORANDUM  
               Constitution of the Arbitral Tribunal                                 practitioners alike.  Only time will tell how the ICC 
               Article 12(9) of the 2021 ICC Rules on the  Court interprets the “exceptional circumstances” 
               constitution of the Arbitral Tribunal provides that                   standard in the new provision.  Yet, it may be 
               “[n]otwithstanding any agreement by the parties on                    anticipated that an arm’s length party agreement on 
               the method of constitution of the arbitral tribunal, in               the method of constitution of the arbitral tribunal will 
               exceptional circumstances the Court may appoint                       not be disregarded except in extremely limited cases.  
               each member of the arbitral tribunal to avoid a                       Any more liberal implementation of the provision 
               significant risk of unequal treatment and unfairness                  would likely lead to a rise in petitions by the award 
               that may affect the validity of the award.”                           debtor to set aside the award or to oppose its 
                                                                                     recognition and enforcement on the ground that “[t]he 
               The new provision aims to further ensure fairness and                 composition of the arbitral authorities […] was not in 
                                                                                                                                               4
               equality in the constitution of arbitral tribunals and to             accordance with the agreement of the parties”).   This 
               limit the risk of setting aside of arbitral awards by                 ground is of course firmly anchored not only in 
               domestic courts on the basis of lack of fairness and                  international conventions and instruments respecting 
               equal treatment.  The provision may be seen as an                     international commercial arbitration, but also in the 
               additional measure by the ICC to avoid the  national arbitration legislation of most jurisdictions 
               predicament of unequally constituted tribunals.  The                  respecting grounds for set aside and refusal of 
               issue first came into sharp focus in 1992 with the well-              enforcement.   
               known  Dutco  decision by the French Court of   
                           2
               Cassation  and has been a focus of attention in almost 
               every major rules revision by the ICC and other                       Party Representation 
               leading arbitral institutions since that time.                        The 2017 ICC Rules are largely silent on party 
               New Article 12(9) builds on and goes beyond current                   representation.  Article 17 of the 2017 ICC Rules 
               Article 12(8), which until now had empowered the                      simply provides that, at any time during the 
               ICC Court to appoint each member of the arbitral                      arbitration, “the arbitral tribunal or the Secretariat 
               tribunal specifically in multi-party arbitrations “where              may require proof of the authority of any party 
               all parties are unable to agree on a method for                       representative.”  The 2021 ICC Rules add two 
                                                                3    Unlike the 
               constitution of the arbitral tribunal.”                               provisions on party representations.  These additions 
               2012 provision, new Article 12(9) applies to  appear designed to increase transparency throughout 
               multiparty and bilateral arbitrations alike and is thus               the arbitration proceedings and to avoid conflicts of 
               designed to avoid appointment processes which might                   interest that may undermine the impartiality and 
               pose a risk to the enforceability of the award.                       independence of arbitral tribunals.  
               It remains to be seen what the ramifications of new                   The first new provision is Article 17(1), pursuant to 
               Article 12(9) will be, which in view of its potential                 which each party has a duty to “promptly inform the 
               application calls for close scrutiny by users and                     Secretariat, the arbitral tribunal and the other parties 
                                                                  
               2                                                                     arbitrators and the arbitration is a multi-party procedure] and 
                         See, Siemens AG and BKMI Industrienlagen GmbH v.            where all parties are unable to agree to a method for the 
               Dutco Consortium Construction Company Ltd., French Court of           constitution of the arbitral tribunal, the Court may appoint each 
               Cassation, Ch. Civ. 1 (Jan. 7, 1992). Specifically, in Dutco, the     member of the arbitral tribunal and shall designate one of them 
               French  Court  of Cassation, the highest French court for civil       to act as president.” 
               actions, set aside an ICC award that had been rendered in a multi-
                                                                                     4
               party arbitration (where the two co-respondents had claimed that                See,   e.g., Convention on the Recognition and 
               they were each entitled to nominate one arbitrator as they had        Enforcement of Foreign Arbitral Awards (“New York 
               conflicting  interests). During the arbitration, the ICC Court        Convention”), Article V.1(c) pursuant to which “[r]ecognition and 
               invited the co-respondents to agree upon a joint nomination.  They    enforcement of the award may be refused, at the request of the party 
               did so, but under protest, and at the end of the arbitration they     against whom it is invoked,” if  “[t]he composition of the arbitral 
               challenged the award, which the French Court set aside on the         authorities […] was not in accordance with the agreement of the 
               grounds that such nomination procedure had not complied with          parties”; 2006 UNCITRAL Model Law on International 
               the principle of equality of the parties in appointing arbitrators,   Commercial Arbitration, Article 34(2)(a)(iv) which provides that an 
               which the French Court found to be a “matter of public policy.”       arbitral award may be set aside if “the composition of the arbitral 
               3                                                                     tribunal […] was not in accordance with the agreement of the 
                         See  Article 12(8) of the 2017 ICC Rules: “[i]n the         parties.” 
               absence of a joint nomination pursuant to Articles 12(6) or 12(7) 
               [i.e., in cases where the dispute is to be referred to three 
                                                                                                                                                     2 
               ALERT MEMORANDUM  
               of any changes in its representation.”  This provision              for the funding of claims or defences and under which 
               is consistent with the 2014 IBA Guidelines on  it has an economic interest in the outcome of the 
               Conflicts of Interest in International Arbitration,                 arbitration.”  Accordingly, parties to an ICC 
               which require each party to inform the arbitral  arbitration will be obligated to disclose the existence 
               tribunal and the other parties of the “identity of its              and identity of any third-party funder, with the aim of 
               counsel appearing in the arbitration”  and                          assisting the members of the arbitral tribunal  in 
                                                                          5
               subsequently of “any change in its counsel team.”                   complying with their own respective duties of 
               The second new provision is Article 17(2).  It bestows              independence and impartiality.   
               on arbitral tribunals the discretionary power to “take              Similar  to the 2018 Hong Kong International 
                                                                                                        6
               any measure necessary to avoid a conflict of interest”              Arbitration Rules,  new Article 11(7) clearly reaffirms 
               arising from a change in the legal representation of the            the ICC’s goal of  avoiding  conflicts of interests 
               parties,  “including the exclusion of new party  stemming from third-party funding arrangements.  
               representatives from participating in whole or in part              The 2019 ICC Note to Parties and Arbitral Tribunals 
               in the arbitral proceedings.”  New Article 17(2) takes              indeed confirmed that it would consider 
               the same  approach as adopted in 2014  by the Rules                 “relationships with any entity having a  direct 
               of Arbitration of the London Court of International                 economic interest in the dispute or an obligation to 
               Arbitration  (“LCIA”),  which have themselves  indemnify a party for the award”  in addressing 
               undergone further revision earlier this year.                       possible objections to confirmation or challenge of 
                                                                                                7
               Users and practitioners will likely welcome the new                 arbitrators.    
               disclosure requirements as a useful tool to ensure                  By more specifically addressing when use of third-
               transparency and avoid unnecessary belated arbitrator               party funding must be disclosed, the ICC is actively 
               challenges in ICC proceedings.  At the same time,                   attempting to limit conflicts of interests by responding 
               depending upon the law deemed applicable to the                     to the rapid increase in third-party funding 
               issue and because of the controversy surrounding the                arrangements in international arbitration.  For 
               extent of the power of the arbitral tribunal to limit the           example, some of these arrangements have involved 
               ability of parties to appoint legal representatives of              cases in which a party was receiving financing from a 
               their choice, it will behoove both parties and arbitral             third-party funder that had a pre-existing relationship 
               tribunals to carefully consider the scope of this power             with  one of the arbitrators appointed in the same 
               in the specific arbitration and in view of the specific             matter.  
               law deemed applicable to the question.                               
                                                                                   Complex Arbitrations: Joinder And 
               Third-Party Funding Disclosure                                      Consolidation 
               The 2021 ICC Rules introduce a significant new                      Complex cross-border disputes often involve the 
               provision regarding third-party funding disclosure at               interaction between multiple parties on the basis of 
               the outset of an arbitration.  Pursuant to new  multi-layered contractual relationships.  The 
               Article 11(7), “[i]n order to assist prospective  2021 ICC Rules introduce amendments intended to 
               arbitrators and arbitrators in complying with their                 facilitate the joinder of third parties and to clarify the 
               duties under Articles 11(2) and 11(3), each party must              process for the consolidation of arbitrations 
               promptly inform the Secretariat, the arbitral tribunal              conducted between different parties and/or based on 
               and the other parties, of the existence and identity of             different contractual instruments.  
               any non-party which has entered into an arrangement 
                                                                  
               5                                                                   7
                         See, Guideline No. 7(b).                                            ICC International Court of Arbitration, Note to Parties 
               6                                                                   and Arbitral Tribunals On the Conduct of the Arbitration Under the 
                         Hong Kong International Arbitration Rules, Article 44     ICC Rules of Arbitration (Jan. 1, 2019),  available at: 
               which mandates that “[i]f a funding agreement is made, the          https://iccwbo.org/content/uploads/sites/3/2017/03/icc-note-to-
               funded party shall communicate a written notice to all other        parties-and-arbitral-tribunals-on-the-conduct-of-arbitration.pdf  
               parties, the arbitral tribunal, any emergency arbitrator and 
               HKIAC” regarding the existence of the funding agreement and the 
               identity of the third-party funder. 
                                                                                                                                                 3 
             ALERT MEMORANDUM  
                  •   Joinder                                                  (iii)  The arbitration involves different parties and 
             Under the current 2017 ICC Rules, “[n]o additional                     the claims arise out of more than one 
             party may be joined after the confirmation or                          arbitration agreement, provided that the 
             appointment of any arbitrator, unless all parties,                     dispute arises in connection with the same 
                                                                     8              legal relationship and the arbitration 
             including the additional party,  otherwise agree.”                                                  11
             New Article 7(5) of the 2021 ICC Rules will allow                      agreements are compatible.   
             requests for joinder of a consenting additional party to     New Article 10 of the 2021 ICC Rules takes the same 
             be made even after the confirmation or the  approach recently adopted in the 2020 LCIA 
             appointment of any arbitrator.  Once constituted, the        Arbitration Rules, which, under Article 22.7, likewise 
             arbitral tribunal will decide on the request.  In doing      allow for greater flexibility in the consolidation of 
             so, the arbitral tribunal may take into account all          claims commenced under compatible arbitration 
             circumstances, including whether the tribunal has            agreements and arising out of interrelated contractual 
             prima facie jurisdiction over the additional party, the      instruments. 
             timing of the request for joinder, possible conflicts of     The 2021 ICC Rules on consolidation of claims 
             interest and the possible impact of the joinder on the       should prove particularly  helpful in multi-party 
             arbitral procedure.  In any event, for the arbitration to    arbitrations arising  out of several interrelated 
             go forward the additional party must accept the              contractual instruments.  Nevertheless, in the event  
             constitution of the arbitral tribunal and must agree to      parties to an ICC arbitration  contemplate 
             the arbitration’s Terms of Reference, in order to avoid      consolidation under new Article 10 of the Rules, it 
             any risk to the enforceability of the award.                 will be important to scrutinize each agreement’s 
             This new provision on joinder is designed to enhance         arbitration provision, in order to ensure that all of the 
             the efficiency and flexibility of the arbitration  arbitration agreements are either identical or at least 
             proceedings.  But  only time will tell  whether  compatible.  
             Article 7(5) is used  with any frequency in future            
             proceedings under the new ICC Rules and whether it           Issuance of Additional Awards  
             proves to have  a significant impact in practice, in 
             particular regarding time efficiency.                        The 2021 ICC Rules introduce a new Article 36(3) on 
                                                                          additional awards.  This provision allows the arbitral 
                  •   Consolidation                                       tribunal to issue an additional award on claims which 
                                                                          the tribunal has failed to decide.  The party requesting 
             Currently, Article 10 of the 2017 ICC Rules does not         the additional award must make an application to that 
             expressly address whether consolidation of claims is         effect to the arbitral tribunal within 30 days of receipt 
             permitted only where the claims in the arbitration           of the award by that party.  The other party is given a 
             arise out of the “same arbitration agreement” or also        short period of time – not exceeding 30 days – to 
             where the dispute arises from multiple contracts             comment on the application.  The arbitral tribunal 
             which contain identical arbitration agreements.              must then submit its decision in draft form to the ICC 
             Article 10 of the 2021 ICC Rules clarifies this              Court not later than 30 days following the expiry of 
             question and confirms that consolidation of claims is        the time limit for receipt of the other party’s 
             allowed where:                                               comments or within any other time period which the 
                                                                 9        ICC Court may decide.  
                   (i)  All of the parties agree to consolidation ;  
                   (ii)  The arbitrations involve different parties and   This new provision adds another mechanism which 
                       the claims arise out of more than one  has the potential to reinforce the parties’ due process 
                       arbitration agreement, provided that the  rights and to enhance the efficiency of the arbitral 
                       arbitration agreements are identical10             proceeding.  To limit the risk of challenge to awards 
                                                              ; or        on the ground of infra petita, that is in an amount or 
                                                                          otherwise of a nature less than what was sought, the 
                                                                
             8                                                            10
                      2017 ICC Rules, Article 7(1) [emphasis added].               2021 ICC Rules, Article 10(b).  
             9                                                            11
                      2021 ICC Rules, Article 10(a).                               2021 ICC Rules, Article 10(c).  
                                                                                                                                  4 
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...Alert memorandum icc rules of arbitration unveiled november if you have any questions concerning this please reach out to your on october the international chamber commerce regular firm contact or following authors its revised paris which are expected enter into force rue de tilsitt france january they intended replace current version t f been in since jean yves garaud text remains subject jgaraud cgsh com additional editorial amendments prior official launch laurie achtouk spivak these latest changes designed be a further step towards lachtoukspivak greater efficiency flexibility and transparency zeineb bouraoui administered words court president zbouraoui alexis mourre london wall place newly released include noteworthy modifications ecy au that will directly impact users practitioners number important areas such as complex arbitrations with revisions christopher p moore affecting both joinder consolidation claims third party cmoore funding representation constitution arbitral j came...

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