The LCIA announced yesterday that it is introducing a package of updates. The updates include a revised Schedule of Costs and revised terms and conditions, both of which will come into effect on 1 December 2023. The LCIA has also updated its policy on receipt of funds, and published an updated Guidance Note for Parties and Arbitrators, which integrates the LCIA’s previous three Guidance Notes and is intended to provide some “best practice” guidance on the application of the 2020 rules in practice.
We elaborate on each of these developments below.
Revised Schedule of Costs
The revised Schedule of Costs will come into effect on 1 December 2023 and apply to LCIA arbitrations registered on or after that date. The key changes are as follows:
- Fees of the arbitral tribunal may now be set by reference to hourly rates in a range of £250-£650. When setting the maximum hourly rate in each case, the LCIA Court will consider the overall complexity of the case and not simply the amount in dispute.
- The top hourly rate for arbitrators has increased from £500 to £650.
- Hourly charging rates for tribunal secretaries will be set by reference to a range from £100 to £250.
- The application fee for the appointment of an Emergency Arbitrator will increase from £9,000 to £10,000, and the Emergency Arbitrator’s fee will increase from £22,000 to £25,000.
- The LCIA Secretariat’s hourly charging rates will rise by 7%, reflecting increased costs due to inflation.
The most noteworthy changes are those which relate to arbitrator fees. The LCIA’s announcement states that these changes offer the LCIA Court increased flexibility – the new approach will mean that there is a range of fees available to suit all cases. The LCIA’s announcement also comments that the rise in the top rate for arbitrators ensures that arbitrators’ hourly charging rates in LCIA cases remain competitive. The LCIA’s previous cap of £500 for arbitrators was considered by some to be lower than the market rates for top arbitrators appointed to resolve high value and/or complex ad hoc arbitrations. This development should therefore ensure that LCIA arbitration continues to attract the top calibre arbitrators, whilst retaining the flexibility to fix lower hourly rates in lower value or less complex cases.
Revised Terms and Conditions
Revised terms and conditions for other services provided by the LCIA will also come into effect on 1 December 2023. The revised conditions will apply to all new requests for such services on or after that date where the LCIA agrees to provide them in the proceedings.
The revised terms and conditions apply to certain services that the LCIA provides in relation to arbitrations that it does not administer. The terms and conditions are for (i) fundholding; (ii) the administration of and/or provision of specific services in UNCITRAL arbitrations; (iii) the holding of funds by way of security; and (iv) appointment only services in adjudication, expert determinations and ad hoc arbitrations.
The LCIA states that revised terms and conditions broadly align these services with the approach to cases administered pursuant to the LCIA Rules.
Receipt of funds
The LCIA has clarified that it will update its policy on the receipt of funds from 1 December 2023. Subject to the principles set out in Article 24A of the LCIA Rules 2020 (which are intended to ensure that the LCIA complies with relevant laws related to prohibited activities such as bribery, corruption, money laundering and sanctions), the LCIA notes that it will only accept payments from the parties or from an account held in the name of a person or law firm who is authorised to act on legal matters for a party. If payments are made from other accounts, the LCIA retains the sole discretion to return the payment to the account from which it is paid.
Director General of the LCIA, Professor Dr Jacomijn van Haersolte-van Hof commented that these changes “reflect in part the reality of a stricter regulatory and compliance environment, which has impacted the LCIA and its users like all other businesses“.
Updated Guidance Note
The LCIA has also published an updated Guidance Note for the Parties which integrates the three previous Guidance Notes (Notes for Parties, Notes for Arbitrators and Notes on Emergency Procedures). This Guidance Note reflects the revised Schedule of Costs and is intended to provide “best practice” on the application of the LCIA Rules 2020.
This package of updates demonstrates the LCIA’s commitment to ensuring its rules and approach reflect best practice and remain user-friendly. The new “best practice” guidance in the new Guidance Note should be a very useful resource for practitioners to read alongside the rules. Whilst the revised Schedule of Costs may mean that parties will experience an increase in institutional costs as well as an increase in arbitrator costs for some arbitrations, these increases appear to be in line with the market, and the flexibility afforded by these changes should give parties comfort that the appropriate fee scales will be fixed on a case-by-case basis.
For more information, please contact Andrew Cannon, Partner, Vanessa Naish, Professional Support Consultant, Liz Kantor, Professional Support Lawyer or your usual Herbert Smith Freehills contact.