The London Court of International Arbitration’s new rules embrace electronic communications, virtual hearings and faster processes, providing an opportunity to further embrace arbitration.
By Nathan Searle, Ademola Bamgbose and Charlie Howell
The last decade witnessed remarkable developments in the law and practice of arbitration in Africa. For example, jurisdictions like Ghana, South Africa and Tanzania enacted new arbitration laws; courts across the African continent showed a general willingness to enforce validly made arbitration agreements and awards; and various arbitration initiatives have sprung to encourage the growth and practice of arbitration on the continent including the African Promise, Africa Arbitration and the Africa Arbitration Academy.
Little wonder that recent reports and statistics released by leading institutions like the London Court of International Arbitration (LCIA) and ICC International Court of Arbitration show an increase in the number of international arbitrations involving African parties.
On October 1, 2020, the LCIA Arbitration Rules 2020 came into effect, replacing the pre-existing LCIA Arbitration Rules 2014. Drawing from the views and experiences of practitioners and arbitrators, the 2020 rules incorporate a number of important updates intended to facilitate efficiency in the arbitration process and anticipate future trends in the practice. They also reflect the LCIA’s recognition of the increasing role that technology plays in arbitration, a trend that has only been accelerated by the recent Covid-19 pandemic.
A key feature of the 2020 rules is that they take into account technological advances since 2014, and the LCIA has adopted a very proactive approach in this regard. Key changes include the following:
Electronic communications and signatures – the 2020 rules reflect the primacy of email and other electronic communications. Gone are references to ‘post’ and ‘courier’. Instead, communications are now required to be sent by email or other electronic means by default (Article 4.2), and (as a further example) an arbitration’s commencement date is now specifically tied to the electronic receipt of the request by the registrar (Article 1.4). Awards can now be signed electronically and in counterparts (Article 26.2), cutting down the time between an award being finalised and transmitted to the parties. In a world where business communication now occurs via electronic means, this provision is definitely a step in the right direction. With this provision, African parties involved in international arbitration under the 2020 rules should save substantially on time and costs as documents can be sent cheaply and more efficiently.
Virtual hearings and the new normal – the LCIA is the first major institution to incorporate such flexible, future-proof provisions as to the form of hearings directly into its rules. All hearings (including procedural hearings and emergency arbitrator’s hearings) can now be conducted virtually, with broad provision for the use of “other communications technology” between “participants in one or more geographical places” (Article 19.2; see also 9.7 and 14.3). Virtual hearings present the advantage of reducing global travel and the associated time and costs. Given the very nature of international arbitration – with parties, counsel, witnesses, and tribunals often spread around the world – the use of technology to conduct virtual hearings (either partly or entirely) can result in tremendous savings for African parties. Of course, there is the issue of access to good internet and audio visual technology but our recent experiences conducting virtual hearings and negotiation meetings with clients and witnesses in Africa show that with proper planning, virtual hearings can be conducted with little or no disruption.
Data protection and cybersecurity – reflecting the increased importance of electronic communications within the 2020 Rules and of course sweeping changes to privacy and cybersecurity regulations globally since 2014, a new Article 30A requires tribunals to consult with parties on information security measures and personal data at an early stage. It also provides for tribunals and the LCIA itself to issue binding directions to ensure that best practice in these areas is observed. This is particularly important in view of the recent increase in the conduct of virtual hearings and incidences of unscrupulous elements hijacking proceedings.
It’s also worth noting that the 2020 rules contain a number of other important updates relating to procedure, people and costs:
Early determination – although it is within a tribunal’s power under the existing rules to determine disputes on a summary basis, the 2020 rules expressly provide that tribunals can determine (including by order or award) that any claim or defence is manifestly outside its jurisdiction or is inadmissible or manifestly without merit (Article 22.1(viii)). The new early determination provisions are an important confirmation that such claims will be dealt with swiftly and cost-efficiently in LCIA arbitration.
Consolidation, concurrent conduct and composite requests and responses – the 2020 rules expand on the procedural tools available to parties, tribunals and the LCIA Court for dealing efficiently with the large and complex sets of transaction documents and counterparties that often feature in LCIA arbitrations. For example, tribunals’ existing powers of consolidation have been relocated to a new Article 22A, and supplemented with a new power to conduct two or more arbitrations concurrently if all are subject to the LCIA Rules and were commenced under the same or any compatible arbitration agreement(s) (Article 22.7(iii)). The LCIA Court itself gains new limited powers of consolidation in Article 22.8 and it will be possible for claimants to commence multiple arbitrations – against multiple sets of respondents and/or under multiple arbitration agreements – with a single ‘composite request’, each arbitration proceeding separately (i.e. without consolidation) under the 2020 Rules (Article 1.2). Respondents gain a corresponding ability to respond to a composite request by way of a ‘composite response’ (Article 2.2).
Tribunal secretaries – recognising that tribunal secretaries can play an important part in increasing the administrative and cost efficiency of an arbitration, but also that this is an area of arbitration practice where there are a variety of views, the 2020 rules include express provisions about the role and appointment of tribunal secretaries in a new Article 14A. The provisions make clear (for example) that a tribunal’s decision-making function cannot be delegated (Article 14.8), tribunal secretaries must provide written declarations – and assume a continuing duty – of impartiality and independence (Articles 14.9 and 14.14); and appointments are conditional on party approval of the tribunal secretary’s role, the particular person filling that role, their written declarations, and any hourly rate or reimbursement of expenses (Article 14.10). These provisions make the LCIA one of the first arbitral institutions to provide for tribunal secretaries within its rules rather than in separate guidance.
Updated schedule of costs – The 2020 rules include modest adjustments to the LCIA’s 2014 fees and rates. It also retains the hourly rate approach to tribunal fees (rather than the ad valorem approach used by some other institutions which calculate arbitrator fees based on the value in dispute) means that the LCIA is likely to remain one of the most cost-effective arbitration institutions globally (as recently shown in its 2013-2016 Costs and Duration Report).
The 2020 rules are definitely a step in the right direction, and will contribute to ongoing efforts by stakeholders to encourage the practice of arbitration in Africa.
— Searle is a partner, and Ademola Bamgbose and Charlie Howell are associates, in the international arbitration practice at Hogan Lovells in London