UK: Dispute Resolution Briefing

Transcription

1 UK: Dispute Resolution Briefing September 2014 Contents A more efficient process 01 Emergency arbitrators 02 Party representation and conduct 03 Governing law 04 Conclusion 04 Contacts 05 Everything changes: the new LCIA rules On 1 October 2014 the amended rules of the Court of International Arbitration (LCIA) will come into force, replacing the existing rules which have been in effect since The amended rules (the 2014 rules) seek to bring LCIA arbitration up to date with modern arbitration procedure, streamline process and clarify the tribunal s powers. In addition the 2014 rules introduce striking innovations in relation to party representation and conduct. The 2014 rules will apply to any agreement which provides for arbitration under the rules of the LCIA, unless the parties agree otherwise. The changes are therefore of significance for those that have previously specified LCIA arbitration in their agreements, as well as for those now thinking of providing for LCIA arbitration. In this briefing we consider the key changes, and what impact they will have on arbitration under the LCIA rules in future. A more efficient process The 2014 rules make various changes to the process of arbitration to address users complaints of excessive delay and cost. Thus, prior to their appointment arbitrators will now be required to sign a written declaration confirming that, in addition to their impartiality and independence, they are ready, willing and able to devote sufficient time, diligence and industry to ensure the expeditious and efficient conduct of the arbitration (article 5.4). If the arbitrator does not conduct the arbitration accordingly, the LCIA Court may determine they are unfit to act and revoke their appointment (article 10.2). Time limits under the 2014 rules have, for the most part, been slightly shortened so that: wfw.com the response to the request for arbitration should be delivered within 28 days rather than 30 (article 2.1); the time for delivery of statements of case, defence and reply is reduced from 30 days to 28 days (articles 15.2, 15.3, 15.4 and 15.5); and

2 02 UK: DISPUTE RESOLUTION BRIEFING challenges to the appointment of an arbitrator should be made within 14 and not 15 days of the formation of the tribunal or, if later, within 14 days of becoming aware of grounds to challenge the appointment (article 10.3). This trend towards a speedier arbitral process is further demonstrated by a clarification in the 2014 rules that the formation of the tribunal shall not be impeded by any controversy between the parties relating to the sufficiency of the request or the response (article 5.1), and by the encouragement in the 2014 rules for the parties and the tribunal to make contact no later than 21 days from receipt of notification of the formation of the tribunal to agree on proposals for the conduct of the arbitration (article 14.1). Parties are also entitled to treat their request or response as their statement of case or defence (articles 15.2 and 15.3). ʺIn an effort to focus the tribunalʹs mind and speed up delivery of awards following the close of submissions, the 2014 rules provide that the tribunal shall seek to make its final award as soon as reasonably possible...ʺ Further, in an effort to focus the tribunal s mind and speed up delivery of awards following the close of submissions, the 2014 rules provide that the tribunal shall seek to make its final award as soon as reasonably possible following the last submission from the parties in accordance with a timetable notified to the parties (article 15.10). Swifter communications are also facilitated by explicit references in the 2014 rules to the fact that parties may submit documents, including the request for arbitration and the response, by (articles 1.2 and 2.2). The LCIA has also provided standard electronic forms that may be used for these purposes, available on line via its website (articles 1.3 and 2.3). In an acknowledgement of the growing incidence of complex multi party disputes, the 2014 rules contain express recognition of the possibility of multiple claimants and defendants (articles 1.5 and 2.5), and confer on the tribunal the express power to consolidate arbitrations (article 22.1(ix) and (x)). In addition, in exceptional circumstances the LCIA court can appoint more than three arbitrators to the tribunal (article 5.8). The 2014 rules also confirm that the tribunal shall not be required to apply such rates or procedures for assessing the costs incurred by one party but paid by another as practised by any state court or other authority (article 28.3). Further, the tribunal will be permitted to take into account the parties conduct in the arbitration (article 28.4). Emergency arbitrators The importance of the power to seek interim and emergency measures in order to support arbitration proceedings, for example by protecting assets or evidence, is increasingly recognised within the arbitral community. Under the 1998 rules parties had the power to apply, in exceptional urgency, for the expedited formation of the arbitral tribunal, and then to seek urgent interim relief. However, the 2014 rules now introduce the additional power to apply to the LCIA Court for the appointment of a temporary emergency arbitrator prior to the formation of the tribunal (article 9B). The rules provide that the emergency arbitrator should be appointed within three days of receipt of the application (article 9.6) and will decide the claim for emergency relief as soon as possible but no later than 14 days following their appointment, save in exceptional circumstances or by written agreement of all parties (article 9.8). The emergency arbitrator has the power to make any order or award the tribunal could make, save in relation to costs. Any award will be final and binding on the parties, save that any order or award made by the emergency arbitrator may be confirmed, varied, discharged or revoked by the tribunal (article 9.9 and 9.11).

3 UK: DISPUTE RESOLUTION BRIEFING 03 The inclusion of emergency arbitrator provisions in the 2014 rules brings them into line with the ICC, SIAC and HKIAC rules. However, it remains to be seen whether the new power to seek the appointment of an emergency arbitrator will prove more popular than the power to seek expedited formation of the tribunal (which is now contained in article 9A). At first glance it would appear that the power to appoint an emergency arbitrator will be available more readily than the power to seek expedited formation given that the latter power is only available in cases of exceptional urgency, whereas the former is available in case of emergency. Further the emergency arbitrator provisions mean it is not necessary to rush the process of tribunal formation, although parties may prefer the fact that, with an expedited formation, they will be able to present their arguments throughout the case to the same tribunal. However, the new provisions do not solve the problem of enforcing compliance with arbitral orders for interim relief. Although the 2014 rules provide that any award made by the emergency arbitrator will be final and binding on the parties (articles 9.9 and 26.8), doubts remain as to whether such awards would be enforceable under the New York Convention. In such circumstances parties may still prefer to seek interim or conservatory measures from a state court, as the 2014 rules explicitly acknowledge they are permitted to do prior to the formation of the tribunal (article 9.12). Party representation and conduct In introducing emergency arbitrator provisions the 2014 rules follow in the footsteps of various other arbitration institutions. However, in an unprecedented move the 2014 rules introduce guidelines for the conduct of LCIA arbitrations by parties legal representatives. The rules provide that all representatives appearing by name before the tribunal will be taken to have agreed to comply with these guidelines (article 18.5), which sit alongside any applicable mandatory laws, rules of law, professional rules or codes of conduct. The guidelines, which may be enforced by the tribunal by written reprimand, a written caution or any other measure necessary to fulfil the tribunal s general duties (article 18.6), including costs sanctions, provide that legal representatives should not: Engage in activities intended unfairly to obstruct the arbitration or to jeopardise the finality of any award, including repeated challenges to an arbitrator s appointment or to the jurisdiction or authority of the tribunal that are known to be unfounded; Knowingly make false statements; procure, assist in the preparation of or rely upon false evidence; or conceal or assist in the concealment of any document ordered to be produced by the tribunal; or Make unilateral contact with any member of the tribunal in relation to the dispute, unless it is disclosed in writing before or shortly after the time of such contact to all other parties and members of the tribunal (Annex to the LCIA rules). ʺIn addition, the 2014 rules emphasise the obligations of good faith owned by both the parties and the tribunal.ʺ In addition, the 2014 rules emphasise the obligations of good faith owed by both the parties and the tribunal (articles 14.5 and 32.2). The rules also now provide that any intended change or addition by a party to its legal representatives shall be notified promptly in writing to the other parties and the tribunal, and will only take effect in the arbitration subject to the approval of the tribunal (article 18.3). The tribunal may withhold approval where such change could compromise its composition or the finality of the award, such as on the grounds of possible conflict. The guidelines are unlikely to have a significant impact on those representatives already subject to rigorous and well developed regulatory regimes and it is difficult to imagine circumstances where the tribunal will refuse its approval of a new legal Watson, Farley & Williams September 2014

4 04 UK: DISPUTE RESOLUTION BRIEFING representative other than in the case of conflicts or where it appears a party is seeking to delay. Nevertheless, together with the IBA Guidelines on Party Representation in International Arbitration (2013), these changes demonstrate an increasing and important trend towards the regulation of conduct in international arbitration and the proactive involvement of the tribunal in such matters. Governing law The 2014 rules also seek to address issues that can arise where the parties do not specify what law should govern the arbitration agreement and the arbitration itself. In such circumstances there may be a dispute as to whether the applicable law is the law governing the underlying contract, or the law of the seat, particularly where the governing law of the arbitration agreement can have a significant impact on its enforceability (see, for example, Sulamérica Cia Nacional de Seguros SA & Ors v Enesa Engenharia SA & Ors). ʺThe new provisions will no doubt assist in ensuring that the LCIA remains one of the most credible institutions for the conduct of international arbitration.ʺ The 2014 rules seek to remove any uncertainty by specifying that the applicable law shall be the law of the seat of the arbitration unless the parties have agreed otherwise (article 16.4). This default position provides a welcome clarification in circumstances where the parties have given little, if any thought to the governing law of the arbitration agreement. However, it also means that it will be more important than ever for parties to make clear when entering into an arbitration agreement if they consider that the law applicable to the arbitration agreement should not be that of the seat. Conclusion The changes to LCIA arbitration made by the 2014 rules are to be welcomed for the clarity they provide, from specifying the tribunal s powers in relation to multi party claims to how to award costs, together with the increased focus on efficiency of process. While it remains the case that tribunals are not under any specified deadline for handing down their award, a tighter timetable and a greater focus on case management should avoid the extensive delays that can plague international commercial arbitration. The outgoing director general of the LCIA, Adrian Winstanley OBE, called the 2014 rules an evolution not revolution. In offering emergency arbitrator provisions the LCIA may merely be catching up with other arbitration institutions. However, the standards on legal representatives conduct and the tribunal s power to impose sanctions for failure to comply with those standards mark a real and significant development. Whether tribunals will embrace the use of such sanctions remains to be seen but the new provisions will no doubt assist in ensuring that the LCIA remains one of the most credible institutions for the conduct of international arbitration.

5 05 UK: DISPUTE RESOLUTION BRIEFING Should you wish to discuss any of the matters raised in this briefing, please speak with a member of our dispute resolution team below. Contacts Andrew Savage asavage@wfw.com Andrew Hutcheon ahutcheon@wfw.com Charles Buss cbuss@wfw.com James Penn jpenn@wfw.com Olga Baglay obaglay@wfw.com Robert Platt rplatt@wfw.com All references to Watson, Farley & Williams and the firm in this publication mean Watson, Farley & Williams LLP and/or its affiliated undertakings. Any reference to a partner means a member of Watson, Farley & Williams LLP, or a member of or partner in an affiliated undertaking of either of them, or an employee or consultant with equivalent standing and qualification. This publication is produced by Watson, Farley & Williams. It provides a summary of the legal issues, but is not intended to give specific legal advice. The situation described may not apply to your circumstances. If you require advice or have questions or comments on its subject, please speak to your usual contact at Watson, Farley & Williams. This publication constitutes attorney advertising. Watson, Farley & Williams LON JO KW 29/09/2014 wfw.com