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Part I International Arbitration Law, Arbitral Jurisdiction, and Arbitral Institutions, 3 The New 2014 LCIA Rules: An Introductory Explanation

V V Veeder

From: Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators

Edited By: Julio César Betancourt

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: null; date: 27 November 2020

Subject(s):
Arbitrators — Claims — International courts and tribunals, procedure

(p. 27) The New 2014 LCIA Rules

An Introductory Explanation

A.  Introduction

3.01  The LCIA is more than 120 years old. It was previously known by different names and sheltered for part of its long life in London under the protective wing of the CIArb. These two antiquarians, if not actual nestlings, share the same historical and geographical origins, providing arbitration services to domestic and international communities in England and around the world.1

B.  The LCIA Rules

(a)  A modest beginning

3.02  The LCIA’s first arbitration rules were relatively modest. In olden days, under the English Arbitration Act 1889, it sufficed for an arbitration agreement under English law to so provide with the single word ‘arbitration’; and, for an institutional arbitration serving a homogeneous business community, only a few additional provisions were necessary. The LCIA’s later arbitration rules were equally succinct. The major changes began with the successive editions of the LCIA Rules in 1981, 1985,2 1998, and, most recently, 2014. The LCIA’s 2014 Rules came into force on 1 October 2014.3

3.03  Each of these later editions set out in increasing detail the procedures for an LCIA arbitration, nonetheless retaining its traditional features. The LCIA’s emphasis remains on referring (p. 28) the parties’ dispute to the arbitral tribunal as soon as practicable, with the early formation of the tribunal, the immediate reference to that tribunal of questions of jurisdiction, and the fullest freedom of the parties to tailor their arbitration’s procedure to the particular characteristics of their dispute. These features are intended to avoid many of the delays that can often follow the commencement of an international arbitration.

3.04  Thereafter, the conduct of an LCIA arbitration lies largely in the hands of the tribunal in consultation with the parties, with many of its arbitration rules operating as suggestions in default of agreement or order otherwise (such as Article 15). During the arbitration, the LCIA Court (with the LCIA registry) operates ‘administration-lite’ functions, save for the appointment (and removal) of arbitrators and the interim payment of arbitral fees. At the end of the arbitration, the LCIA Court fixes the costs of the arbitration (ie the tribunal’s fees and the LCIA’s own administrative charges); but the LCIA Court plays no part in reviewing the tribunal’s award. From the beginning to the end of an LCIA arbitration, the parties are encouraged with the tribunal to settle their own procedures for what is their arbitration, with the LCIA Rules’ default procedures operating only in the absence of such agreement (subject to mandatory minimum procedural safeguards).

3.05  The 1981 Rules were drafted by the CIArb’s International Arbitration Committee (then chaired by Lord Steyn) under the guidance of Paul Sieghart, creating for the first time a regime for international users. The 1985 Rules were prepared by the LCIA Court (then chaired by Sir Michael Kerr) with Martin Hunter and Jan Paulsson, taking internationalism still further with the benefit of the 1985 UNCITRAL Model Law. The 1998 Rules were prepared by the LCIA Court (then chaired by Professor Karl-Heinz Böckstiegel) with Ken Rokison and the present author, primarily to take account of the English Arbitration Act 1996, itself much influenced by the 1985 UNCITRAL Model Law.

3.06  The 2014 LCIA Rules are the product of the LCIA Court (chaired by Professor William W Park) influenced by a mass of practical suggestions from numerous users, practitioners, and arbitrators based on the increased workload of the LCIA over the last 15 years and (as regards English law) English jurisprudence under the 1996 Act. The LCIA Court’s drafting committee for this new edition was comprised of James Castello, Professor Boris Karabelnikov, and the present author, assisted by Amy Sander.4 Mr Castello (an international arbitration specialist in Paris) has an unparalleled knowledge of drafting arbitration rules, having taken a leading part in the 2010 UNCITRAL Arbitration Rules; Professor Karabelnikov is a legal linguist and comparative lawyer (originally from Moscow), with a sixth sense for English ambiguities; and Ms Sander (of the English Bar) prepared several research papers on the LCIA’s rules and procedures, identifying both red and amber flags.

(p. 29) (b)  The 2014 Rules

3.07  In drafting the 2014 LCIA Rules, the LCIA sub-committee learnt much from the revisions made for the 2010 UNCITRAL Arbitration Rules and the work of the UNCITRAL Working Group on Arbitration generally. There was no attempt to assimilate the LCIA Rules to other institutional rules for international arbitration, or to the LCIA’s other hyphenated arbitration rules in Dubai, India, and Mauritius (being site-specific). Account was taken of published criticisms made by commentators on the 1985 and 1998 LCIA Rules.5

3.08  In addition, many drafts were considered, line by line, with past and present members of the LCIA registry so as to ensure that the new 2014 LCIA Rules accorded with current LCIA practices. The LCIA Court devoted several private and public sessions to successive drafts, making important decisions of principle. Individual members of the LCIA Court also made their views known, particularly on the issue of the ‘emergency arbitrator’ (considered below). There were invaluable responses from the wider consultative processes conducted on several drafts. It was also the first time, since 1981, that an attempt was made as a matter of wording to ‘scrub’ the LCIA Arbitration Rules from beginning to end, so as to make them clearer, less London-centric, and more comprehensible to international users and practitioners.

3.09  These 2014 revisions fall into two basic groups: (i) necessary changes to correct earlier drafting inconsistencies (from 1981 to 1998), inaccurate reflections of actual LCIA practice, and excessively English legal language for an international arbitration; and (ii) new procedures decided by the LCIA Court. The first category lies outside the scope of this chapter: it would require a lengthy and tedious treatise. It may suffice here to give two brief examples.

3.10  First, for obscure historical reasons dating back to the English Arbitration Act 1934, section 48(5)(b) of the English Arbitration Act 1996 permits a tribunal to order specific performance of a contract, other than a contract relating to land unless otherwise agreed by the parties. At least one (non-English) commentator has mistakenly concluded from (p. 30) this provision that, ordinarily, an English tribunal can never decide any contractual dispute relating to land (whether by ordering specific performance, damages, or at all). The solution to such misunderstandings lies in the new provision for such agreement ‘otherwise’ in Article 22.1(vii) of the LCIA Arbitration Rules, granting express power to the tribunal to order specific performance of any contract, including a contract relating to land.

3.11  Second, owing to the LCIA Court’s broad interpretation of a corporation’s nationality disqualifying the appointment of an arbitrator of the same ‘nationality’ when applied to Crown colonies or dependencies (such as Bermuda, the British Virgin Islands, and Gibraltar), many insurance and shareholder disputes from these jurisdictions were not referred to the LCIA under the 1985 and 1998 Rules. The solution lies in the new provision in Article 6.3 that provides that a legal person incorporated in a state’s overseas territory shall be treated as a legal person incorporated in that overseas territory and not as a legal person incorporated in the state.

3.12  The latter category of revisions includes: the increased use of electronic communications by parties with the LCIA registry and LCIA tribunals, particularly for starting an LCIA arbitration; the procedure for an emergency arbitrator; the changes to the default arbitral seat of an LCIA arbitration; the consolidation, etc, of different arbitrations for multi-party disputes; a solution to the ‘Slovenia’ problem regarding potential conflicts between an arbitrator and a party’s legal representative; general guidelines for the conduct of the parties’ legal representatives within the arbitration; the ‘Jivraj’ problem regarding the selection of arbitrators based on nationality; the ‘West Tankers’ problem regarding ‘Italian Torpedoes’ under the Brussels I Regulation; and further attempts to promote procedures to avoid unnecessary delay and expense. These revisions are briefly explained below, although much more could be said about each of them.

C.  The Start of an LCIA Arbitration

(a)  Commencing proceedings

3.13  The LCIA has hitherto enjoyed a relatively good record for the time taken from the LCIA’s receipt of the claimant’s request for arbitration to the formation of the LCIA tribunal. Excluding expedited formations of the tribunal under Article 9 introduced by the 1998 LCIA Rules (see below), the average time from the request to the tribunal’s formation for 432 arbitrations commenced between January 2010 and May 2012 was 62 days (that is, 32 days from the end of the time for the respondent’s response to the request); the longest time taken was 99 days (that is, 69 days from the end of the time for the response); and the shortest time was 32 days (that is, 2 days from the end of the time for the response). From the users’ perspective (particularly claimants), there was, however, still room for improvement in the time ordinarily taken by the LCIA to form an LCIA tribunal from the LCIA registry’s receipt of the request for arbitration. This cannot be dismissed as ‘claimant’s justice’: it is a regrettable fact that starting any international arbitration is now much more laborious, expensive, bureaucratic, and slow than it used to be.

3.14  The LCIA Court decided that part of the solution was to encourage parties to move increasingly from paper to electronic communications from the outset of the arbitration in all communications between the parties, the LCIA registry, and the tribunal. In our own lifetimes, (p. 31) we have seen the rise and fall of the telex and fax machine; and international postal and courier services remain comparatively slow and expensive. It therefore makes good sense to encourage the electronic filing of requests for arbitration and responses (including all accompanying documentation), as now expressly provided in Articles 1.2 and 2.2 of the 2014 LCIA Rules.

3.15  Moreover, the paper tsunamis in large arbitrations have made it increasingly difficult for arbitral institutions and arbitrators to store paper files (particularly with long retention periods). In recent years, there has been a noticeable increase in electronic filings by parties to LCIA arbitrations (albeit usually followed with confirmatory paper filings): for requests, 14.8 per cent in 2010, 21.9 per cent in 2011, and 27.7 per cent in 2012 (to May 2012). It is significant that other arbitral institutions are also making increased use of electronic filings, websites, and even apps (eg SIAC and AAA). The lessons learnt from the current practice of electronic documentation at the LCIA show that it is best begun as early as possible in the life of an arbitration. It can waste significant time, money, storage, and effort to introduce electronic documentation later, particularly at the stage of an oral hearing.

3.16  Furthermore, the new systems for electronic documentation (such as Opus 2’s Magnum) show how inefficient a mixed system can be, with hard and soft documentation running alongside each other for any significant period of time. This new form of electronic communication is not compulsory under the 2014 LCIA Rules; but it will be strongly encouraged by the LCIA Court.

3.17  The LCIA Court also determined that a significant number of parties, particularly those new to LCIA arbitration, often misunderstand what is required for a request or response at the beginning of an LCIA arbitration. Both documents can be relatively short, addressing in turn only the procedural requirements listed in Articles 1 and 2 of the 2014 LCIA Rules. It is not necessary in the vast majority of cases for a claimant or a respondent to set out there at length its substantive case on the merits, unless it has already decided that its request or response (as the case may be) should stand as its statement of case under Article 15.2 or 15.3 of the 2014 LCIA Rules.

3.18  The adverse reaction to Lord Woolf’s reforms requiring a full pleading of a party’s case at the outset of English civil litigation was a major factor in commercial parties switching from litigation to arbitration. It would therefore be unfortunate if parties unwittingly recreated the same difficulty for themselves in an LCIA arbitration. The start of an LCIA arbitration should be relatively easy and quick. Hence, it makes good sense to encourage parties to use the LCIA’s standard electronic forms for both requests and responses under Articles 1.3 and 2.3 of the 2014 LCIA Rules, available online from the LCIA’s website. Again, the use of these same forms is not compulsory under the 2014 LCIA Rules; but hopefully parties will make use of them, at least as a matter of guidance.

(b)  Article 9A—expedited formation of tribunal

3.19  The LCIA’s procedure under Article 9 of the 1998 LCIA Rules for the expedited formation of the tribunal worked well. It has been retained, with slight changes in wording, as Article 9A of the 2014 LCIA Rules. The 1998 draftsmen had originally considered a procedure for an emergency arbitrator; but the proposal had then been rejected by the LCIA Court. Article 9 of the 1998 Rules was to provide only for the expedited formation of the tribunal in appropriate cases of exceptional emergency, upon a reasoned application to the LCIA (p. 32) Court by any party (whether claimant or respondent). Between 1998 and 2012, there were 111 applications for the expedited formation of tribunals, of which 46 were granted by the LCIA Court, 9 were agreed between the parties, 19 discontinued, and 37 rejected by the LCIA Court (ie about half of all applications were granted by the LCIA Court). Of those granted, the average time taken to appoint the tribunal expeditiously was 20 days from the date of the application under Article 9 and 14 days from the date of the LCIA Court’s decision granting the application. These periods of time, of course, reflect the time abridged by the LCIA Court on different terms for each particular case; and, if necessary, the LCIA Court could appoint a tribunal under Article 9 within a day or even a few hours in a case of extreme urgency.

3.20  These and like statistics had been received with some scepticism in several quarters, it being felt that there may have been an increase in applications under Article 9 in recent times as a tactical manoeuvre by impatient claimants, particularly in default situations with a presumed absent respondent. Subject to this scepticism, there seemed to be no necessity to revise Article 9 of the 1998 Rules. There also seemed to be no need to introduce an entirely new procedure for an emergency arbitrator. On the face of it, the expedited formation of the actual tribunal within a short time period seemed preferable to the appointment of a (temporary) emergency arbitrator followed in turn by the appointment of the actual tribunal. This was so, even with the likely diminution or loss of the parties’ rights (with Article 9’s time constraints) to take part in the ordinary selection of the tribunal’s members under the LCIA Rules.

3.21  In addition, urgent interim relief at the outbreak of a dispute can often be remedied more easily, quickly, and effectively by state courts of competent jurisdiction at the request of an aggrieved party before the commencement of any arbitration.6 In such cases, both an emergency arbitrator and a tribunal are relative latecomers to the parties’ dispute; and ‘emergency’ then bears a qualified meaning.7 As was recognized in the drafting of the 2010 UNCITRAL Arbitration Rules, a private arbitrator (whether emergency or actual) is invariably no substitute for a state court, acting with imperium, in regard to urgent interim relief before, at, or shortly after the commencement of an arbitration.

3.22  Eventually, however, after a very lengthy debate, the LCIA Court decided both to keep the old procedure for the expedited formation of the tribunal under Article 9 of the 1998 LCIA Rules and to introduce a parallel new procedure for an emergency arbitrator. These provisions are now, respectively, Article 9A and Article 9B of the 2014 LCIA Rules. This subtle compromise may be regarded as an experiment. It is not known how the two procedures (p. 33) will work in practice; but it makes good sense to offer to parties the choice of one or the other (or both).

(c)  Article 9B—emergency arbitrator

3.23  As already described, the LCIA Court had considered introducing a procedure for an emergency arbitrator in the 1998 edition of the LCIA Rules. At that time, few arbitral institutions had done so, excepting the ICC (for a short time from 1931 onwards) and the international arbitration institutions in Moscow (MAC and FTAC, later the ICAC).8 After 1998, several institutions introduced special procedures for an emergency arbitrator, most notably the SCC (2010), SIAC (2010), the ICC (2012), and the Revised Swiss Rules (2012), as to which there is now available a significant amount of public information.9 There are other arbitration rules with broadly similar provisions, including ICDR (1999 and 2006), WIPO (2002), ACICA (2011), and CEPANI (2013), about which much less is publicly known of their practical application. It is clear, however, that many international users like the idea of an emergency arbitrator, although in practice there may remain unresolved problems regarding due process, arbitral challenges, high costs, and the cross-border enforcement of such emergency relief, particularly under the New York Convention and the Brussels I Regulation Recast.10

3.24  The published figures for emergency arbitrators before the SCC, SIAC, the ICC, and the Revised Swiss Rules are as follows: SCC (nine applications 2010–2013); SIAC (27 applications, including three arbitral challenges, 2010–2013); ICC (five applications 2012–2013); and the Revised Swiss Rules (one application 2012–2014). All these figures seem surprisingly low. (The ICC’s procedure is only prospective, hence its significantly lower numbers given its overall higher caseload.) However, from anecdotal sources, it seems that applications are increasing before several of these institutions. Only time will tell whether any of these procedures will survive competition from state courts, particularly at the arbitral seat. It is perhaps ominous that the ICC once had an emergency procedure (administered by the ICC Court’s President), but that the ICC later decided to abandon it.

3.25  Equally ominous is a frequent misunderstanding apparently shared by some parties and even certain practitioners. An emergency arbitrator does not conduct a fast-track arbitration or operate a summary procedure to decide finally the merits of the parties’ dispute (as exists in some domestic arbitral jurisdictions, including the Netherlands).11 It may be that an emergency arbitrator’s decision can facilitate an early amicable settlement of the parties’ dispute; but that arbitrator’s decision, without more, is not a final adjudication of the parties’ dispute. Arbitral institutions, including the LCIA, should be careful not to over-sell (p. 34) the virtues of their procedures for an emergency arbitrator. An LCIA emergency arbitrator is not an LCIA tribunal.

3.26  Under Article 9B of the 2014 LCIA Rules, the LCIA is required, in principle, to appoint an emergency arbitrator within three days of the application (if granted by the LCIA Court); and the emergency arbitrator is then required to make his decision as soon as possible, but within 14 days of appointment. These deadlines are necessarily flexible in exceptional circumstances (subject to a decision by the LCIA Court), particularly the time required for the decision. As to that, the SCC Rules prescribe five days from appointment; and the ICC Arbitration Rules prescribe 15 days. The SIAC Rules appear to impose no time limit on the emergency arbitrator; but it is reported that two decisions were made within one day and seven days respectively. The Swiss Rules impose a 15-day time limit.

3.27  Article 9B of the 2014 LCIA Rules permits the arbitrator to make his decision as an order or an award, as likewise provided in the SCC, SIAC, and Swiss Rules. (The ICC Arbitration Rules limit the emergency arbitrator’s decision to an ‘order’.) Article 9B is intended to produce an order or an award enforceable in England under the English Arbitration Act 1996; but it is not clear whether an award would be enforceable in all countries under the New York Convention. For SIAC, Singapore enacted special legislation in 2012 to ensure enforcement within Singapore of orders and awards by an emergency arbitrator. The ICC suggested a like amendment to the 1996 Act (as regards the enforcement of an order in England); but its request was refused on the ground that such an order could already be enforced under the Act, without the need for any amending legislation.

3.28  Given the significant rule change in Article 9B for an LCIA arbitration, the LCIA Court decided that it should apply only to arbitration agreements made after the promulgation of the 2014 LCIA Rules, ie prospectively from 1 October 2014 onwards and not retrospectively. This was the approach taken in the ICC Arbitration Rules, for the same reason. The LCIA Court also decided to distinguish between different levels of urgency: Article 9A applies to a case of ‘exceptional urgency’, whereas Article 9B applies to a case of ‘emergency’. For an applicant party, there may seem to be little difference. However, given that both procedures are subject to the decision of the LCIA Court, there may be a material difference in practice. There is, however, nothing to prevent an applicant party (claimant or respondent) from making simultaneous applications under both Article 9A and Article 9B of the 2014 LCIA Rules. (This issue does not arise under other arbitration rules with no like provision for a tribunal’s expedited formation alongside a provision for an emergency arbitrator.)

(d)  Arbitral seat

3.29  For any arbitration in England, there is a juridical need for an ‘arbitral seat’. Most parties to LCIA arbitrations choose an arbitral seat, most often London. It is, of course, possible for parties to agree to any other arbitral seat. Difficulties have arisen in the past where no seat (English or foreign) was readily ascertainable at the outset of the arbitration, both under the English Arbitration Act 1996 and earlier English legislation. This seems to have affected ICC arbitrations where the parties left the choice of the arbitral seat to the ICC Court, ie to a decision necessarily after the ICC arbitration (p. 35) was to commence.12 For the LCIA, the historical solution to this legal black hole was to designate London as a default seat under the LCIA Rules, in the absence of the parties’ agreement otherwise.

3.30  This approach has hitherto worked well in practice, although it has invited criticism of a pro-London bias inapposite to an international arbitral institution. Under the new 2014 LCIA Rules, London as a default seat is necessarily maintained in Article 16.2. However, under Article 16.1, the parties can still agree upon any arbitral seat at any time before the formation of the tribunal by themselves and, after such formation, with the consent of the tribunal. In addition, under Article 16.2, in the absence of any agreement by the parties, the tribunal may itself choose the arbitral seat in consultation with the parties. Moreover, also by Article 16.2, the default seat of London must play no part in the selection and appointment of arbitrators by the LCIA Court.

(e)  Multiparty, etc, disputes

3.31  About a third of all LCIA arbitrations are multi-party disputes. For 2010, 35.7 per cent of arbitrations were commenced with more than two parties (one with 39); for 2011, 33.5 per cent (one with 33); and for 2012, 33.5 per cent (one with 18). These are significant statistics. For the English Arbitration Act 1996, brave but forlorn attempts were made by the DAC to square the circle for the consolidation of multi-party disputes. The mouse-like result was section 35 of the 1996 Act that effectively leaves all to the agreement of the parties. This provision is mirrored in Article 22.1(ix) of the 2014 LCIA Rules, where the tribunal (with the approval of the LCIA Court) may order the consolidation of the LCIA arbitration with one or more other arbitrations into a single arbitration subject to the LCIA Rules where all parties so agree in writing.

3.32  There is, however, no problem where there is agreement: it arises only where there is no consent by the parties. It is significant that all previous attempts by legislation have been much criticized by users and arbitration practitioners, including, especially, the non-consensual powers under the Netherlands Arbitration Act 1986. In the absence of legislation, is it possible to impose a solution by arbitration rules taking the form of consent, at least as regards parties to one or more arbitration agreements incorporating the LCIA Rules? The answer is mixed, as appears from the LCIA Rules.

3.33  The 1985 and 1998 LCIA Rules contained a limited third-party procedure, now Article 22.1(viii) of the 2014 LCIA Rules. This provision permits the tribunal to join a third person to the arbitration with the consent of that third person and the party making the application. It does not require the consent of other parties to the arbitration (beyond their consent to the LCIA Rules). Article 22.1(ix) of the 2014 LCIA Rules seeks to go further, providing for the consolidation by the tribunal of arbitrations subject to the LCIA Rules commenced under the same or compatible arbitration agreements between the same disputing parties (with the approval of the LCIA Court), provided that no arbitral tribunal has yet been formed for such other arbitration(s), or if formed, provided that the other tribunal is composed of the same arbitrators. Under Article 22.6 of the 2014 LCIA Rules, the LCIA Court is given different powers to consolidate two or more arbitrations, before the formation of any tribunal, commenced subject to the LCIA Rules between the same disputing parties. It seems difficult (p. 36) to do more by arbitration rules, without creating other greater problems for multiparty disputes and still further controversy.

(f)  The Slovenia problem

3.34  Under Article 18.2 of the 2014 LCIA Rules, the LCIA registry and (when formed) the tribunal may require from the outset of the arbitration the names and addresses of the parties’ legal representatives, if not supplied by the claimant with its request or the respondent with its response (as required by Articles 1.1(i) and 2.1(i) respectively). This is not a new idea: it derives from Article 4 of the 1976 UNCITRAL Arbitration Rules (albeit there extending beyond legal representation to legal ‘assistance’ also). If there is any risk of a ‘Slovenia-type’ problem at the commencement of an arbitration preceding the LCIA tribunal’s formation, it should be capable of resolution by the LCIA Court with no adverse effect on the arbitration’s progress. The names of the parties’ legal representatives would be ascertainable and taken into account by the LCIA Court in appointing the members of the tribunal; and indeed those names would be known to those members prior to accepting their appointment for the purpose of any conflict-check, like impediment, and disclosure.

3.35  At a later stage, problems can arise where a party changes or adds to its legal representation. Conflicts can then arise regarding the tribunal, leading to a challenge to an arbitrator (or even to the new legal representative) with the risk of disrupting the arbitral timetable, particularly at or shortly before an oral hearing. By Articles 18.3 and 18.4 of the 2014 LCIA Rules, any such intended change or addition must be notified promptly to all other parties, the tribunal, and the LCIA registry; it cannot be deliberately delayed to spring a tactical surprise on an opposing party; and it can only take effect with the prior approval of the tribunal. Such approval may not be given if the change or addition could compromise the composition of the tribunal or the finality of any award on the grounds of possible conflict or other like impediment.

3.36  Accordingly, mishaps, such as occurred in Slovenia (an ICSID case) shortly before the oral hearing, should not occur under the 2014 LCIA Rules.13 Moreover, under Article 18.4 of the 2014 LCIA Rules, the tribunal has power to exclude any change to a party’s legal representation in order to protect the arbitration from improper attempts to disrupt its procedures. Under English law, an arbitration tribunal probably enjoys this power already;14 but it makes good sense to express an implied power in specific terms as an arbitration rule agreed by the parties.

(g)  General guidelines

3.37  The 2014 LCIA Rules contain general guidelines for the conduct of the parties’ legal representatives appearing in an LCIA arbitration, in a short one-page annex. The sanctions for (p. 37) deliberately infringing these guidelines, decided by the tribunal, are contained in Article 18.6 of the 2014 LCIA Rules. Of course, the annex is not essential to the conduct of an LCIA arbitration. The arguments against general guidelines and, still more, ethical codes for international arbitration practitioners are well known and hitherto persuasive. However, as the IBA initiative demonstrated (as also the earlier CCBE initiative within the EU), the battle against outside regulation is being lost in several jurisdictions. To the LCIA Court, it seemed wiser for the LCIA to attempt to influence the conduct of LCIA practitioners with its own internal guidelines, rather than have an ill-considered code thrust upon it by state regulators unsympathetic to international arbitration. Perhaps inevitably, these provisions generated much comment when put out in draft for public consultation, some enthusiastically supportive and others vociferously opposed.

3.38  The immediate origins of the annex may be found in the pioneering work of Professor Catherine Rogers,15 to which much has since been added by other scholars and practitioners.16 However, its roots lie in earlier professional concerns, particularly in England and the United States, over the effective regulation of international arbitration practitioners (not necessarily lawyers).17 It should not be overlooked that sanctions for misconduct by English lawyers have even more ancient origins, namely the ‘silencing’ of advocates under the Statute of Westminster 1275 (3 Edw 1 c 29).18 It is a rich field; and it is here only possible to give a brief account of the LCIA’s relatively modest but innovative contribution.

3.39  It is first necessary to emphasize that the LCIA’s general guidelines are limited to the relationship between the parties’ named legal representatives, the LCIA Court, and the tribunal within the arbitration. They are accordingly more ‘Sands-ILA’ than ‘Bishop-Stevens’. They also depart significantly from the more detailed approach to overall professional ethics taken by the IBA Guidelines on Party Representation and, to a much greater extent, from the CCBE’s ambitious attempts to comprehensively regulate arbitration practitioners within the European Union.19 Moreover, the LCIA’s guidelines are by themselves hardly (p. 38) controversial: each targets deliberate misconduct within the arbitration that would be a criminal or, at least, a disciplinary offence under most legal and professional regimes.

3.40  Much of the criticism of the LCIA’s new provisions may derive from the fact that international arbitration practitioners remain effectively unregulated and therefore fear any effective form of regulation. This approach might have had a certain charm a century or more ago; but today all professions are regulated around the world. There is no cause for international arbitration practitioners to be different. For such practitioners, the choice now lies only between regulation and self-regulation. If there is to be no self-regulation, outside regulators will inevitably seek to impose their own regulations, as has already happened to mediators. It is therefore necessary for arbitral institutions themselves to promote good professional conduct within their arbitrations and to discourage misconduct, with sanctions. There is still time to do so.

3.41  In an article written by the moral philosopher Lord Sacks, albeit addressing the recent banking and rate-fixing scandals in the City of London and not arbitration, the work of behavioural economists was much commended as a means of reinforcing the traditional virtues of self-restraint embedded in a culture and embraced by the majority of that culture’s individuals:

Dishonesty is contagious. Seeing colleagues cheat makes us more likely to do so. Most tempting of all, says Professor Ariely, is ‘altruistic’ cheating. If we can persuade ourselves that an act of dishonesty is for the good of our colleagues, even the best can go bad … How do you change a corporate culture? You need to go beyond codes of conduct, says Professor Ariely. He and his team tested students from two universities. The first were asked at the outset to sign an agreement that they would abide by their university code of honour. The second weren’t. Predictably, the second group cheated, the first did not. The irony is that the first university didn’t have a code of honour, while the second did. What matters, says Professor Ariely, is not the code but the constant reminder.20

3.42  The LCIA’s annex is hardly a ‘code’; but its necessary ‘constant reminder’ lies in Articles 18.5 and 18.6 of the 2014 LCIA Rules. The former requires each party to ensure that its legal representatives appearing by name in the arbitration have agreed to comply with the general guidelines in the annex, as a condition of such representation in the arbitration. The latter permits the tribunal to impose sanctions for a representative’s deliberate violation of the general guidelines, such as a written reprimand, a written caution as to future conduct, or any other measure necessary for the tribunal to fulfil within the arbitration its general duties under Articles 14.4(i) and 14.4(ii) of the 2014 LCIA Rules.

3.43  These arbitral duties reflect, inter alia, the mandatory procedural requirements of section 33 of the English Arbitration Act 1996. Without these sanctions under Article 18.6, the general guidelines would be mere pious aspirations. That is not to say that sanctions are likely to be imposed by any tribunal: their very existence (or reminder) should ensure that they never will, or if so, only very rarely.

(p. 39) 3.44  Given the concerns expressed by several commentators (but not the majority), the LCIA Court decided to place the general guidelines in a separate annex to the 2014 LCIA Rules, susceptible to separate amendment under the preamble to the 2014 LCIA Rules. In the light of future experience and events, it may indeed be necessary to amend or even supplement the annex. This would be particularly so if further threats emerge from state regulators to regulate international arbitration practitioners, whether in the European Union or elsewhere.

(h)  The Jivraj problem

3.45  While the immediate problem may have been successfully resolved with the UK Supreme Court’s innovative judgment in Jivraj v Hashwani,21 there remain possible difficulties for the future in selecting arbitrators by reference to nationality under the laws of the European Union. This is not an isolated English problem or even particular to the LCIA. These possible difficulties would be EU-wide, affecting the great arbitral institutions located in Paris, The Hague, Brussels, Stockholm, Frankfurt, Vienna, and elsewhere. The losing party (Mr Hashwani) has filed a formal complaint before the European Commission against the United Kingdom for its Supreme Court’s (alleged) disregard of mandatory rules of EU law.

3.46  That complaint is supported by the unprecedented law review article by Sir Richard Buxton attacking the reasoning of the Supreme Court’s judgment (the article’s author, now retired, was a member of the Court of Appeal in Jivraj and party to its judgment, later overturned by the Supreme Court).22 In December 2012, the European Commission admitted the complaint and required the United Kingdom formally to respond in writing, as the first step towards enforcement proceedings before the CJEU. If successful, these enforcement proceedings could require the Supreme Court to vacate its judgment and re-hear the case, arriving at a different result. There is no public information regarding the United Kingdom’s response. Hence, possible difficulties remain until more is known of the Commission’s eventual decision and, possibly, the judgment of the CJEU on any enforcement proceedings against the United Kingdom.

3.47  In these awkward circumstances, the options for the 2014 LCIA Rules were limited; namely either retaining the wording of Articles 5.5, 6.1, and 6.2 of the 1998 LCIA Rules (first used in the 1985 Rules); or adopting the arguably different wording of Article 6(7) of the 2010 UNCITRAL Arbitration Rules; or drafting a completely new rule which, inevitably, would remove any reference to ‘nationality’ in the selection of arbitrators. The LCIA Court decided that the last of these three options would be unattractive to many users of LCIA arbitration, given the apparent effect of the UK Supreme Court’s decision (at least for the time being) and the traditional use of an arbitrator’s nationality as a badge of neutrality. The choice lay between the first and second options, neither of which was entirely satisfactory given the uncertain state of EU/UK law as regards discrimination on grounds of nationality and national origins. Eventually, the first option was chosen with slightly different wording, (p. 40) together with the addition of a ‘saving’ provision for the arbitration agreement and award in Article 32.3 of the 2014 LCIA Rules in the case of nullity under EU law, as regards unlawful discrimination based on nationality.

(i)  The West Tankers problem

3.48  The new ‘arbitration exception’ in the 12th Preamble to the Brussels I Regulation Recast looks like a ‘Pyrrhic victory’ for arbitration users in England, albeit far from the worst of the possible proposals made by the European Commission for revisions to the Brussels Regulation (with the Lugano Convention). There are likely to be continued representations by users (not limited to LCIA users) for a more secure solution to the problem of ‘Italian Torpedoes’ within the European Union (not, of course, limited to Italy). These are most unlikely to be met by UK legislation in the form of any amendment to the English Arbitration Act 1996; the Commission is unlikely to address the problem for several years; and, if anything could be done at all, it required new provisions to the 2014 LCIA Rules.23

3.49  Accordingly, after the tribunal is formed, Articles 23.1 to 23.5 of the 2014 LCIA Rules are designed to confer exclusive jurisdiction on the tribunal to decide upon its own jurisdiction, with the express power under Article 22.1(vii) to order specific performance of any arbitration agreement, not limited to the arbitration agreement founding the tribunal’s jurisdiction. As regards the latter, albeit only as an arbitration rule, these provisions operate as both the positive and negative consequences of kompetenz-kompetenz. A remedy for the specific performance of an arbitration agreement was not thought previously available under English law, but by agreement it is now permitted by section 48(1) of the English Arbitration Act 1996. Any resulting award by the tribunal, including a first partial award on jurisdiction, could be enforced under the New York Convention in ‘Italy’, thereby avoiding several of the difficulties arising from the West Tankers problem (provided always that no final judgment on the merits has already been given by the ‘Italian’ state court).

3.50  It should be noted that the arbitral remedy is specific performance of the wrongdoer’s promise to arbitrate, being the language of Article II of the New York Convention and of pacta sunt servanda. It is not an ‘anti-suit injunction’. None of this can provide a complete solution to the problem of ‘Italian Torpedoes’, given also that ‘Italian Torpedo’ courts invariably do not act in good faith under EU law and circumvent the New York Convention, a regrettable fact of legal life in the European Union which appears to have gone unrecognized in the CJEU’s judgment in West Tankers.24

(j)  Avoiding unnecessary delay and expense

3.51  Under section 33(1)(b) of the English Arbitration Act 1996 (a mandatory provision), a tribunal is required to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense. This general duty is re-stated in Article 14.4(ii) of the 2014 LCIA Rules; and by Article 14.5, the parties are required to do everything necessary in good faith for the efficient and expeditious conduct of the arbitration, including the tribunal’s discharge of this general duty. This objective is usually supported by all users (p. 41) of international arbitration, in principle. It is, however, sometimes difficult to apply in practice.

D.  Conclusion

3.52  The LCIA Rules are designed to move the arbitration relatively quickly from the request, via the response, to the formation of the tribunal. Following the tribunal’s formation, Article 14.1 of the 2014 LCIA Rules encourages the parties and the tribunal to make contact (whether by a procedural hearing in person or otherwise) as soon as practicable, but no later than 21 days from receipt of the notification of such formation. In the absence of agreement or order from the tribunal, the default procedure and timetable are set out in Article 15 of the 2014 LCIA Rules, with specific deadlines for the parties’ written submissions (28 + 28 + 28 days). The tribunal with the parties must then address the need for an oral hearing, including its length, form, and content. Thereafter, the tribunal is encouraged to issue its award as soon as reasonable in accordance with a timetable notified to the parties and the LCIA registry (subject to revision and re-notification); and, in particular, the tribunal ‘shall set aside adequate time for deliberations as soon as possible after the last submission from the parties and notify the parties of the time it has set aside’. While a set deadline for an award may have the attraction of simplicity, it would be unworkable for the vast range of different disputes decided by LCIA tribunals, where it would be either too short or too long.

3.53  In conclusion, the 2014 LCIA Rules will, it is hoped, remain in force for the next decade or so. There will be, of course, new challenges and fresh mishaps for LCIA arbitrations, in addition to further developments in international arbitral practice. It would greatly assist the LCIA Court for the next edition of the LCIA Rules for all users, practitioners, and arbitrators to send to the LCIA any record of their triumphs or disasters requiring changes to the 2014 LCIA Rules. Like Sisyphus, the work of revising arbitration rules is never finished, not even after 120 years.(p. 42)

Footnotes:

*  All views regarding the LCIA Rules here expressed are personal to the author and should not be attributed to the LCIA. The author acknowledges with appreciation the work performed by the LCIA Court, the LCIA registry, and his fellow members of the LCIA Court’s sub-committee responsible for drafting the LCIA’s 2014 Rules, from which much has been gratefully borrowed for the purpose of this contribution.

1  The LCIA was founded in 1891 by the Corporation of the City of London and the London Chamber of Commerce, after the failure of the Bramwell Arbitration Code culminating in the English Arbitration Act 1889. These sponsors were joined later (in 1975) by the CIArb. The LCIA became an independent arbitral institution in 1985/1986. See generally Edward Manson, ‘The City of London Chamber of Arbitration’ (1893) 9 LQR 86; and Michael Kerr, ‘The London Court of International Arbitration 1892–1993’ (1992) 8 Arb Int’l 317.

2  Before 1985, the LCIA Rules were known as the London Court of Arbitration Rules.

3  The LCIA’s 2014 Rules are published on the LCIA website <http://www.lcia.org> accessed 25 September 2015.

4  Mr Castello is a long-serving member of the US delegation to the UNCITRAL Working Group; and Professor Karabelnikov is a law professor (now in Latvia) who practises (inter alia) as an arbitrator in Moscow and London. Both were members of the LCIA Court. Ms Sander was the researcher for the Mance Committee’s 2009 Report on s 69 of the 1996 Act; and for the 2014 LCIA Rules she produced a detailed schedule of historical changes from the 1981, 1985, and 1998 LCIA Rules with critical comments from available sources. The present author was a member of the UK delegation to the UNCITRAL Working Group, a member of the DAC responsible for the English Arbitration Act 1996, and the co-draftsman of the 1998 LCIA Rules.

5  In particular, Peter Turner and Rez Mohtashami, A Guide to the LCIA Arbitration Rules (OUP 2009) and Robert Hunter and Sabine Konrad, ‘LCIA Rules’ in Rolfe A Schutze (ed), Institutional Arbitration—Article by Article Commentary (Beck–Hart Publishing 2013) ch VI, 413ff. See also Martin Hunter and Jan Paulsson, ‘A Commentary on the 1985 Rules of the London Court of International Arbitration’ in Pieter Sanders (ed), Yearbook Commercial Arbitration, vol X (Kluwer Law International 1985) 167; Marc Blessing, ‘The LCIA Rules—Aus Sucht des Pratikers’ (2003) SchiedsVZ 198; W Lawrence Craig, ‘The LCIA and ICC Rules: the 1998 Revisions Compared’ in Andrew Berkeley and Jacqueline Mimms (eds), International Commercial Arbitration: Practical Perspectives (Centre of Construction Law and Management 2001) 79; Ottoarndt Glossner and Jens Bredow, ‘ICC, LCIA und DIS-Schiedsgerichtsordnng—Unterschiede und Gemeinsamkeiten’ in Robert Briner and others (eds), Law of International Business and Dispute Settlement in the 21st Century, Liber Amicorum Karl-Heinz Böckstiegel (Carl Heymanns 2001) 219; Jonathan L Greenblatt and Peter Griffin, ‘Towards the Harmonization of International Arbitration Rules: Comparative Analysis of the ICC, AAA, LCIA and CIETAC’ (2001) 17 Arb Int’l 101; Sergei N Lebedev ‘The LCIA Rules for International Commercial Arbitration’ (1992) 8 Arb Int’l 321; Simon Nesbitt, ‘LCIA Arbitration Rules’ in Loukas Mistelis (ed), Concise International Arbitration (Kluwer Law International 2010) 412; Adam Samuel, ‘Jurisdiction, Interim Relief and Awards under the LCIA Rules’ in Andrew Berkeley and Jacqueline Mimms (eds), International Commercial Arbitration: Practical Perspectives (Centre of Construction Law and Management 2001) 35; V V Veeder, ‘The New 1998 LCIA Rules’ in Albert Jan van den Berg (ed), Yearbook Commercial Arbitration, vol XXIII (Kluwer Law International 1998) 366; Thomas W Walsh and Ruth Teitelbaum, ‘The LCIA Court Decisions on Challenges to Arbitrators’ (2011) 27 Arb Int’l 283; and Adrian Winstanley, ‘The LCIA—History, Constitution and Rules’ in Andrew Berkeley and Jacqueline Mimms (eds), International Commercial Arbitration: Practical Perspectives (Centre of Construction Law and Management 2001) 21.

6  For discussion, Doug Jones, ‘Emergency Arbitrators and Court-Ordered Interim Measures: Is the Choice Important?’ in Julio César Betancourt (ed), Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators (OUP 2016) ch 14.

7  For example, a recently reported case under the Swiss Rules consisted of the following timetable: Day 1: request for emergency relief; Day 3: appointment of emergency arbitrator; Day 4: procedural meeting (by telephone conference call) followed by a procedural order and timetable; Days 8–12: written submissions filed by the parties; Day 15: oral hearing; and Day 17: decision of the emergency arbitrator—thereby meeting the deadline required by the Swiss Rules. This 17-day continuous time period, admirable for any arbitration tribunal, seems nonetheless slow for ‘emergency’ interim relief: a ship can sail in hours; a demand guarantee can be called in minutes; and monies can be transferred from a bank account in the mere twinkling of an email. This extended time period is not unusual for most procedures for emergency arbitrators, including the LCIA’s new procedure under Article 9B of the 2014 LCIA Rules (see below).

8  Under the 1931 ICC Rules, the ICC Court President could appoint an expert to take conservatory and other measures before the arbitration tribunal entered upon its duties: see Eric Schwartz, ‘The Practices and Experience of the ICC Court’ in Conservatory and Provisional Measures in International Arbitration (ICC Publishing 1993) 45, 46. The Moscow arbitral institutions were formed in 1930–1932 and may have been influenced by the ICC’s example in Paris.

9  See SCC Rules, Appx II; SIAC Rules, r 26.2 and sch 1; ICC Arbitration Rules, Art 29 and Appx V; and 2012 Swiss Rules, Art 43.

10  For commentary see Andrew Dickinson and Eva Lein, The Brussels I Regulation Recast (OUP 2015).

11  The ‘kort geding’ procedure in the Netherlands, much misunderstood by foreigners, is in practice limited to summary orders for the immediate payment of indisputable monetary obligations.

12  For example, see Int’l Tank and Pipe SAK v Kuwait Aviation Fuelling Co KSC [1975] QB 224 (English Court of Appeal). Part 1 of the English Arbitration Act 1996 only applies to an arbitration with its seat in England, Wales, or Northern Ireland: see s 2(1).

13  Hrvatska Elektroprivreda dd v The Republic of Slovenia, ICSID Case No ARB/05/24, Tribunal’s Ruling regarding the Participation of David Mildon QC in Further Stages of the Proceedings (6 May 2008); see also The Rompetrol Group NV v Romania, ICSID Case No ARB/06/3, Decision on Respondent’s Preliminary Objections on Jurisdiction and Admissibility (18 April 2008). The former case concerned a barrister-arbitrator and a barrister-advocate from the same London barristers’ chambers, foreshadowing further similar cases, unreported (particularly ICC arbitrations). Early disclosure (particularly by the barrister-advocate with better knowledge of a potential conflict) seems to be essential, as suggested by the IBA Guidelines on Conflicts of Interest (General Standard 7a). This is particularly so if, in the future, English barristers’ chambers transform themselves into partnerships or professional corporations under the 2015 Entity Regulation.

14  For a discussion, see Margaret L Moses, ‘Inherent and Implied Powers of Arbitrators’ in Julio César Betancourt (ed), Defining Issues in International Arbitration: Celebrating 100 Years of the Chartered Institute of Arbitrators (OUP 2016) ch 21.

15  For example, see Catherine A Rogers, ‘Context and Institutional Structure in Attorney Discipline: Developing an Enforcement Regime for Ethics in International Arbitration’ (2002) 39 Stan J Int’l L 1; Catherine A Rogers, ‘Fit and Function in Legal Ethics: Developing a Code of Attorney Conduct for International Arbitration’ (2002) 23 Mich J Int’l L 341; and Catherine A Rogers, ‘Lawyers without Borders’ (2009) 30 U Pa J Int’l L 1035.

16  For example, see William W Park, ‘Arbitrator Integrity’ (2009) 46 San Diego L R 629; William W Park, ‘A Fair Fight: Professional Guidelines in International Arbitration’ (2014) 30 Arb Int’l 409; and Edna Sussman and Solomon Ebere, ‘All’s Fair in Love and War—Or Is It? Reflections on Ethical Standards for Counsel in International Arbitration’ (2011) 22 Am Rev Int’l Arb 611.

17  Peter C Thomas, ‘Disqualifying Lawyers in Arbitrations: Do the Arbitrators Play Any Proper Role?’ (1990) 1 Am Rev Int’l Arb 562; John Toulmin, ‘A Worldwide Common Code of Professional Ethics?’ (1992) 15 Fordham Int’l LJ 673; Jan Paulsson, ‘Standards of Conduct for Counsel in International Arbitration’ (1992) 3 Am Rev Int’l Arb 214; John Uff, ‘Duties at the Legal Fringe: Ethics in Construction Law’ (Centre of Construction Law and Management, The Michael Brown Foundation King’s College London, 19 June 2003) <http://www.scl.org.uk> accessed 25 September 2015; and Cyrus Benson, ‘Can Professional Ethics Wait? The Need for Guidance in International Arbitration’ (2009) 3 Disp Resol Int’l 78.

18  The Statute of Westminster (repealed in 1948) was applied in Coxe v Phillips (1736) 95 ER 152 (Hardwicke LCJ) at 153: ‘it is incumbent on Courts of Justice to keep the streams of justice clear, or they will be made use of as means of scandal’. See generally R v Visitors to the Inns of Court, Ex p Calder [1994] QB 1, 10 (CA). The penalties attaching to trial lawyers in the United States are described in Alex B Long, ‘Attorney Deceit Statutes: Promoting Professionalism through Criminal Prosecutions and Treble Damages’ (2010) 44 UC Davis L Rev 413.

19  Doak Bishop and Margrete Stevens, ‘International Code of Ethics for Lawyers Practising before International Arbitral Tribunals’ in Albert Jan van den Berg (ed), Arbitration Advocacy in Changing Times (ICCA Congress Series No 15, Kluwer Law International 2011) 408; The ILA Hague Principles on Ethical Standards (chaired by Professor Sands) <http://www.ucl.ac.uk> accessed 25 September 2015; and the IBA Guidelines on Party Representation <http://www.ibanet.org> accessed 25 September 2015.

20  Jonathan Sacks, ‘It is the End of a Dangerous Moral Experiment’ Daily Telegraph (London, 7 July 2013). Lord Sacks (formerly the Chief Rabbi of the United Kingdom) was citing Professor D Ariely’s work: Dan Ariely, The (Honest) Truth about Dishonesty (Harper Perennial 2013).

21  Jivraj v Hashwani [2011] UKSC 40, [2011] 1 WLR 1872, in Albert Jan van den Berg (ed), Yearbook Commercial Arbitration, vol XXXVI (Kluwer Law International 2001) 611 and (2011) 4 Rev arb 1007; reversing Jivraj v Hashwani [2010] EWCA Civ 712, [2010] ICR 1435 (CA); reversing Jivraj v Hashwani [2009] EWHC 1364 (Comm) (Steel J).

22  The Rt Hon Sir Richard Buxton, ‘Discrimination in Employment: The Supreme Court Draws a Line’ (2012) 128 LQR 1. See also the response, R Davies (Mr Jivraj’s Leading Counsel), ‘A Line Drawn in the Right Place’ (2013) 129 LQR 1.

23  It was thought that the CJEU’s Grand Chamber might review this aspect of West Tankers in the recent Gazprom case; however, the court did not address this particular question. See Case C-536/13 Gazprom OAO EU:C:2015:316; [2015] 1 Lloyd’s Rep 610 (ECJ (Grand Chamber)).

24  Case C-185/07 Allianz Spa & Generali Ass Gen Spa v West Tankers Inc [2009] ECR I-663.