On 5 January 2016, the ICC Court announced two new policies aimed at enhancing the efficiency and transparency of ICC arbitration proceedings. The first aims to promote transparency for users and stakeholders in ICC arbitration by publishing the names and certain details of arbitrators sitting in ICC cases. The second aims to encourage the prompt submission of awards by arbitrators to the ICC Court for scrutiny, by tying the arbitrators' remuneration to the time taken to submit the award.
The new policies will be of interest to users and practitioners alike. From a practical perspective, the move towards increased transparency will provide practitioners and users with a useful additional resource for identifying the likely availability and case-load of potential appointees (albeit only in relation to ICC arbitrations). Availability is an important factor in choosing an arbitrator as an arbitrator with an already busy case load will have more limited time to devote to an additional arbitration, which could impact upon the efficiency of the proceedings after appointment and the timing of any award. With an eye on diversity, the data will demonstrate the frequency of appointments and trends in appointments, which may incentivize greater diversity on arbitral tribunals. It may also help to assuage concerns about the transparency of international arbitration.
The new cost consequences for unjustified delays in submitting draft arbitration awards to the Court are also a welcome announcement. The new policy should encourage the timely submission of awards, which is naturally a key concern for users of ICC arbitration and the delayed submission of awards is a common complaint from users.
Promoting transparency: publication of the names and nationalities of all arbitrators sitting in ICC cases
For any ICC cases registered on or after 1 January 2016, the names and nationalities of all arbitrators sitting in ICC cases will be published on the ICC International Court of Arbitration website. The listing will also identify whether the appointment was made by the ICC Court or by the parties, the identity of the tribunal chairperson and any changes in the tribunal's composition. The names of the parties and counsel, the case reference number and the reason for any changes in the tribunal's composition will not be published, unless requested.
This information will remain on the website once the case is terminated and so it is expected that over time the policy will lead to a useful database of current and historical appointments.
Paula Hodges QC, Herbert Smith Freehills Global Head of Arbitration, commented this week in GAR that the publication of names of arbitrators is "a welcome step towards the promotion of greater diversity on tribunals" and "will also provide a helpful guide to parties and counsel when assessing whether a particular arbitrator is too busy to take on a new case".
The policy is an "opt-out" one: the information will be published unless the parties choose to opt out. Equally, the parties may request the Court to publish additional information about a particular case. It is not clear at what stage an opt-out must be exercised. However, since the data will not be published until after constitution of the tribunal, parties and counsel will have sufficient time to consider that option. As mutual agreement is required, parties with particular confidentiality concerns may choose to opt-out in their arbitration agreement.
Promoting efficiency: cost consequences for unjustified delays in submitting awards
The new policy provides that Tribunals should submit draft awards to the ICC Court for scrutiny within three months (or two months for sole arbitrators) of the later of: (i) the last substantive hearing concerning the matters to be decided in the relevant award; or (ii) filing of the last written submissions (excluding cost submissions).
Critically, the ICC Court has also introduced (discretionary) financial sanctions for arbitrators who do not comply with these timeframes.
The Court may lower the arbitrators' fees by 5 to 10% for draft awards submitted up to four or five months late (in the case of tribunals and sole arbitrators respectively). It may lower their fees by 10 to 20% if submission is up to seven or eight months late, respectively, and by 20% or more if submission is more than ten or eleven months late, respectively. When determining whether any reduction should be applied, the Court will also consider any delays to the submission of previous partial awards. For example, if a tribunal submits its draft award nine months after the last substantive hearing or written submissions, the arbitrators' fees may be reduced by up to 20%, a significant reduction.
However, if the Court is satisfied that the delay is justified by factors beyond the arbitrators’ control or to exceptional circumstances, it may choose not to exercise the sanction. Naturally the effectiveness of the policy will depend in part upon the degree to which it is enforced and it remains to be seen how strictly the ICC Court will apply the sanctions.
The Court also has the power to increase arbitrators' fees to reward and incentivise the expeditious conduct of an arbitration by the arbitrator(s).
It will be interesting to see if the Court expands the theme of transparency to the extent of disclosing information or statistics on the use of these costs sanctions and incentives, and how the policy develops in practice.
To see the ICC Court bulletin in full click here.
For further information, please contact Chris Parker, Partner, Susan Field, Associate or your usual Herbert Smith Freehills contact.