Six years after the last update, the London Court of International Arbitration (LCIA) has announced further amendments to its Arbitration Rules (the 2020 Rules), effective from 1 October 2020. The 2020 Rules contain important amendments that are designed to improve the efficiency of LCIA arbitral proceedings, with new tools that will further empower tribunals to make case management decisions as they see fit. The 2020 Rules also contain amendments that address specific issues that have arisen in recent case law and others which reflect the significant shift towards virtual hearings and other technological innovations that have been accelerated by the COVID-19 pandemic.

Whilst likely of benefit to anyone looking for a quick resolution in an arbitration, one interesting question is whether these amendments will make LCIA arbitration more attractive to, for example, those in the financial services sector. Whilst this sector already accounts for over a third of LCIA arbitrations (based on 2019 figures), some participants have historically been more attracted to English court litigation, where tools such as summary judgment and the perception of a judiciary more inclined towards strict case management have been considered to be more advantageous. In this article we consider this question further, whilst taking a look at the key changes in the 2020 Rules.

Early Determination and interim relief

Arguably the most radical change in the 2020 Rules is the introduction of "Early Determination" in circumstances where the claim or defence is manifestly outside the jurisdiction of the tribunal, inadmissible or manifestly without merit.¹ The LCIA in this regard has followed the SIAC and HKIAC by introducing provisions that expressly permit a tribunal to summarily determine a claim, which tribunals may previously have hesitated to do in fear of a subsequent challenge to their award.

As noted, the availability of summary judgment has long been perceived as an advantage of litigating in the English courts, particularly for straightforward debt claims. In LCIA arbitrations, financial services parties appear as claimants nearly four times more often than as respondents.² It is likely that a proportion of these cases involve lenders with debt claims against borrowers with no substantive defence and which are therefore capable of Early Determination, without the need for a full arbitration which may last 12 months or more. This amendment will therefore be particularly reassuring for those claimants, amongst others.

While parties should seek advice regarding the enforcement in other relevant jurisdictions of arbitral awards resulting from a summary procedure, the English courts have shown their willingness to enforce such awards.³ The introduction of an express power to grant Early Determination in the 2020 Rules should also increase the likelihood of enforcement in other jurisdictions, where previously it may have been argued that no such power existed.

Consolidation

A second significant amendment in the 2020 Rules is the ability to consolidate arbitrations in circumstances where they are (i) subject to the LCIA Rules and commenced under the same arbitration agreement or any compatible arbitration agreement(s) and (ii) either between the same disputing parties or arising out of the same transaction or series of related transactions.⁴ It is the final wording here relating to a transaction or series of transactions which is novel, and significantly broadens the scope for consolidation, since there does not now need to be identical parties in each claim.

It is common in many sectors for interconnected agreements between multiple parties to give rise to disputes which would benefit from a "one stop shop" approach to arbitration. These include, for example, upstream and downstream oil and gas transactions in the energy sector and contractor and sub-contractor disputes in construction, as well as finance transactions such as securitisations and syndicated loan facilities. It is also frequently the case that claims under multiple agreements will arise where there has been a default (for example, as between not just lender and borrower but also between the lenders themselves, or the lenders and guarantors). Under the previous LCIA Rules, absent an explicit agreement, such disputes between different parties would likely not have been capable of consolidation. Under the 2020 Rules, they may well be considered to constitute a series of transactions and thus could proceed as one claim.

A related question had also previously arisen in relation to the commencement of multiple arbitrations under the umbrella of a single Request for Arbitration. As a result of the judgment in A v. B (2017),⁵ it was held that the previous iteration of the LCIA Rules did not permit claimants to submit a single Request for Arbitration covering disputes arising under distinct arbitration agreements. Therefore, for certain types of cases, where near-identical claims may arise under a series of contracts between the same parties (but each of which contains a separate arbitration agreement), this had the effect of requiring numerous Requests for Arbitration to be filed (and registration fees paid), thus resulting in increased costs for the parties and inefficiency for the LCIA in administering the case. There will be users from certain sectors for whom the A v. B decision was particularly impactful (most likely in finance and possibly shipping/sale of goods) and those parties will be especially grateful that this has now been addressed.

The 2020 Rules now expressly permit composite Requests for Arbitration to be submitted to cover multiple claims.⁶ A claimant must still identify separately the estimated monetary amount or value in dispute, the transaction(s) at issue and the claim advanced against the other party in each arbitration, and each arbitration so commenced will still proceed separately. However, this amendment addresses the inefficiencies at the outset of the proceedings and it remains open to the parties to seek consolidation of the arbitrations in accordance with the consolidation provisions. The respondent is likewise able to respond to the composite Request for Arbitration by filing a composite Response.⁷

Case management

The 2020 Rules now expressly grant tribunals the power to exercise a number of case management tools, including to:

• limit the length or content of written statements;
• limit written and oral testimony of witnesses;
• employ technology to enhance the efficiency of proceedings;
• decide at what stage of the arbitration, and in what order, any issue(s) will be determined;
• dispense with a hearing entirely; and/or
• set appropriate periods of time for any stage or step, or abridge any period of time.⁸

Again, these changes should further empower tribunals to ensure that arbitrations are tailored to the circumstances of the relevant case, ensuring that, for example, unnecessarily lengthy written statements or evidence are curtailed and that the timetable is appropriate. This will be welcomed by all users, including those who have previously considered that such case management was more a feature of the courts.

One small but potentially notable change is that statements of case must now be filed with "all documents relied upon", whereas previously parties only needed to produce "essential" documents.⁹ This change will ensure that written statements of case are accompanied by a more complete set of exhibits, reducing the need for document production and allowing parties to understand each other's case more comprehensively at the written submissions stage, although it may be that many parties are doing this already. This is an encouraging development and, along with the power for directions regarding the service of written evidence,¹⁰ may result in more LCIA proceedings that adopt a "memorial" style approach to the written stage of the arbitration.

In addition, the parties and the tribunal are now required to "make contact" as soon as practicable and, in any case, within 21 days from the tribunal's formation.¹¹ This is a firmer obligation than had existed in the 2014 Rules, which merely "encouraged" the parties to make contact. This should facilitate the adoption of earlier engagement and case management conferences, enabling the parties to seek to reach agreement, and the tribunal to understand the issues that cannot be resolved in the proceedings.

As was to be expected in light of the COVID-19 pandemic and the embracing by the arbitration community of virtual hearings (whether entirely remote or hybrid), the 2020 Rules now place a much greater emphasis on the use of electronic communications and virtual hearings. This can be seen in multiple places. For example, Requests for Arbitration and Responses must now be submitted in electronic form and arbitrations will commence upon the receipt of the electronic version of the Request.¹² All communications are to be in electronic form¹³ and there is a presumption that such electronic communications have been received by the other party.¹⁴ As noted, the use of technology (including in relation to hearings) is now explicitly referenced as part of the tribunal's case management powers. ¹⁵ A virtual hearing is expressly contemplated (whether by conference call, videoconference or by other technology), including the possibility of a "hybrid" hearing with attendees in multiple locations.¹⁶ Finally, the 2020 Rules now state that the default is for awards to be issued in electronic form.¹⁷

The 2020 Rules also now require tribunals not merely to deliver their final award as soon as reasonably possible but to "endeavour" to do so not later than three months after the final submissions from the parties.¹⁸ Whilst the intention behind this amendment is admirable, experience suggests that in many cases tribunals may not meet this timeframe. There has, for example, for some time been a provision in the ICC Rules requiring arbitrators to issue their award within six months of signing the Terms of Reference, which in many cases has proved difficult for them to achieve.¹⁹ The focus on efficiency also extends to the LCIA at the start of proceedings, with the LCIA Court now required to appoint the tribunal promptly after 28 days of commencement (rather than the previous 35-day period), where no Response is received.²⁰

Emergency arbitrator

Amendments have been made to the emergency arbitrator provisions to address the judgment in Gerald Metals.²¹ The decision in Gerald Metals provided that the test for urgency under section 44(3) of the Arbitration Act 1996 would not be satisfied unless (i) the matter was so urgent that the time taken to appoint an emergency arbitrator or to form an expedited tribunal would be insufficient, or (ii) the powers granted to an emergency arbitrator or an expedited tribunal would be insufficient to grant relief.

The 2020 Rules have been drafted such that the right to apply to a competent state court for interim measures prior to the formation of the Arbitral Tribunal is expressly recognised, rather than the emergency arbitrator provisions merely being expressed as not prejudicing any such right.²² However, it could be argued that this wording leaves open the question of which is the correct forum in such circumstances, since it appears to give a choice to a party seeking interim measures in those circumstances between an emergency arbitrator and the court. In addition, it also appears to leave a risk that the court may nevertheless interpret the rules in such a way as to hold that a party should in the first instance seek to appoint an emergency arbitrator.

Confidentiality

The 2020 Rules now contain stronger confidentiality obligations, which apply not only to the parties but also expressly to the Arbitral Tribunal, any tribunal secretary, and any tribunal-appointed expert.²³ Further, parties are required to "seek the same undertaking of confidentiality from all those that it involves in the arbitration, including […] any authorised representative, witness of fact, expert or service provider".²⁴ This may provide reassurance to parties seeking to resolve disputes with high levels of commercially sensitive or private information, as it binds even those who are involved in an ancillary manner to the dispute. The confidentiality provisions also now contain provisions relating to data protection that require the Arbitral Tribunal (at an early stage and in consultation with the parties) to consider whether any specific data security/protection measures are needed.²⁵

Advantage arbitration?

These measures should enhance the attraction of arbitrating under the LCIA Rules. The availability of these improved rules will be put alongside the other advantages that apply to arbitration more generally, including:

• Enforceability: Pursuant to the New York Convention, which now has 165 Contracting States, arbitration awards can be recognised and enforced in most jurisdictions worldwide. Despite the recent launch of The Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, there remains no equivalent regime for the enforcement of court judgments on a global basis. Particularly in jurisdictions where it may be especially difficult to enforce a foreign judgment (sometimes requiring a claimant in effect to re-litigate a claim), the enforceability of arbitration awards internationally remains a key attraction.
• Arbitrators: Many disputes require particular expertise in a given sector, which parties cannot guarantee they will find among the court judiciary should they choose to litigate. The ability to nominate an arbitral tribunal with such expertise remains a key advantage of arbitration.
• Confidentiality: For London-seated arbitrations, there is an implied duty of confidentiality arising from English common law (which may be enhanced by agreement; for example, as noted above where such arbitrations are under the LCIA Rules). By contrast, most court proceedings are public and therefore carry a greater risk that sensitive or confidential aspects of the case may reach the public domain.

The LCIA's clear commitment to modernising and streamlining its arbitral procedures should be a boost to the attractiveness of arbitration. As a result, it may be that for some parties arbitration under the LCIA Rules is now by a distance the preferred option for dispute resolution, whereas for others it may be that the 2020 Rules have the effect of tipping the balance in favour of arbitration as against litigation. Either way, the amendments are to be welcomed.

Thanks to Shayan Farooqi for her help with this article.

1. Articles 14.6(vi) and 22.1(viii).↩
2. From the LCIA 2019 Annual Casework Report: "The banking and finance sector continued to show a greater prevalence of claimants from these sectors (22% of claimants), compared with respondents (6% of respondents)."↩
3. Travis Coal v. Essar Global Fund [2014] EWHC 2510 (Comm).↩
4. Article 22.7(ii).↩
5. A v. B [2017] EWHC 3417.↩
6. Article 1.2.↩
7. Article 2.2.↩
8. Article 14.6.↩
9. See Articles 15.2-15.5.↩
10. Article 15.7.↩
11. Article 14.3.↩
12. Articles 1.4, 2.3 and 4.1.↩
13. Article 4.2.↩
14. Article 4.3.↩
15. Article 14.6(iii).↩
16. Article 19.2.↩
17. Article 26.7.↩
18. Article 15.10↩
19. ICC Rules 2017, Article 31(1).↩
20. Article 5.6.↩
21. Gerald Metals SA v. The Trustees of the Timis Trust and others [2016] EWHC 2327 (Ch). ↩
22. Article 9.13↩
23. Articles 30.1 and 30.2.↩
24. Article 30.1.↩
25. Article 30.5.↩