London Court of International Arbitration updates arbitration rules

The revision of the arbitration rules was announced by the LCIA earlier this week but the changes do not take effect until 1 October and apply to arbitration proceedings commenced after that date. The LCIA said it has embedded "recent good practice" established during the coronavirus crisis in its new rules, which will update the current set of rules that were last updated in 2014.

The revised rules clarify a number of procedural issues, including the broad discretion arbitral tribunals have to conduct arbitrations expeditiously, and reflects the evolving nature of arbitration including the use of electronic means of communication and virtual hearings. The 2020 rules are aimed at improving the efficiency of arbitral proceedings, and include new provisions dealing with amongst other things the increasing use of technology in the arbitral process, data protection and information security.

Jason Hambury, of Pinsent Masons', the law firm behind Out-Law, said: "The recent amendments to the LCIA rules reflect a progressive and forward looking approach to the needs of international arbitration parties and users alike. It provides a welcome clarification on a number of procedural issues, particularly the extent and use of electronic means of communication and virtual hearings together with an explicit reference to data protection."

"The shift is a clear sign of a desire by the major institutions to deploy technology to an even greater extent going forward, leading to more efficiencies. It also suggests that the use of virtual hearings during and after the Covid-19 outbreak is now accepted by far larger parts of the arbitral community, users and tribunals alike, understanding that the benefits of in-person hearings remain and that we will also see a return to in-person hearings for appropriate cases," he said.

With its revisions, the LCIA introduces novel provisions on the law applicable to the interpretation of the rules and the forum for disputes against the institution. The new rules are to be interpreted in accordance with the laws of England, irrespective of the law applicable to the arbitration agreement and the arbitration. This new provision is contained in Article 16 dealing with the seat of arbitration, place of hearing and applicable law.

There is also a tightening of procedures around challenges to arbitrators, but no change in respect of the standards expected of arbitrators under the rules and no provisions in relation to the disclosure of third-party funding.

Changes have also been made to the award process. An award may be signed electronically and/or in counterparts and assembled into a single document, unless the parties agree otherwise or the tribunal or LCIA court directs otherwise. If there is a disparity between the electronic and paper form of an award, the electronic form will prevail. This is a change from the 2014 edition of the rules where the paper form prevailed. Hambury said parties are advised to carefully assess the situation in any potential enforcement forum as in some jurisdictions, awards may need to be signed in the traditional form in order to meet local law requirements. Tribunals are required to make their final awards as soon as reasonably practicable and endeavour to do so no later than three months following the last submission.

There is also the introduction of a new explicit consideration of data protection and regulatory issues within the revised rules to address data protection and privacy laws, including the EU's General Data Protection Regulation (GDPR), which came into force in 2018. A reference to data protection in its rules makes the LCIA the first major arbitral institution to include provisions on this topic. Parties to arbitration proceedings will be subject to a new duty to seek a general confidentiality undertaking from all those they involve in an arbitration. The tribunal is also obliged, in consultation with the parties and the LCIA, to consider whether it would be appropriate to adopt information security measures and any means to address data protection obligations and related matters.

In addition to the updated rules, the LCIA has also published a new schedule of arbitration costs, which also has effect from 1 October. Fees have, for the most part, increased. The cap on tribunal hourly rates will  increase from £450 to £500 and the LCIA secretariat's administrative costs have also increased.