The New DIFC-LCIA Arbitration Rules 2021 – Key Features

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This article first appeared on HSF Arbitration Notes, here.

The updated DIFC-LCIA Arbitration Rules 2021 (“2021 Rules”) entered into force from 1 January 2021.

The amendments introduce changes intended to promote the fair, efficient, and expeditious conduct of arbitrations. In this update, we summarise the key features.

Expedited proceedings and emphasis on case management

In the 2021 Rules, the emphasis has been placed on an Arbitral Tribunal’s power to ensure the efficient and expeditious resolution of arbitral proceedings. The amendments give Arbitral Tribunals express authority to make more robust procedural orders for the faster resolution of arbitrations. The 2021 Rules, under Article 22, give power to the Arbitral Tribunal to, for example:

• make early dismissal determinations on claims manifestly outside the jurisdiction of the Arbitral Tribunal, inadmissible, or manifestly without merit;
• limit the length of pleadings, or dismiss the need for pleadings entirely;
• limit the written and oral testimony of any witness; and
• dispense with the need for a hearing entirely.

Although Arbitral Tribunals were in some circumstances already empowered to make similar procedural orders, the amendments will no doubt embolden Arbitral Tribunals to take a more active role in ensuring the efficient resolution of disputes and with less risk of court challenge where such powers are exercised.

Electronic communications and virtual hearings

The 2021 Rules confirm the primacy of electronic communications for the purposes of DIFC-LCIA arbitrations.

For example, the 2021 Rules:

• provide that any award may now be signed electronically and/or in counterparts and assembled into a single instrument (Article 26.2); and
• emphasise that hearings can be held virtually by conference call, videoconference, or other communications technology (Article 19.2). Whilst this was never precluded, the language has been updated to reflect current methods of convening virtual meetings.

In addition, pursuant to Article 4.1 of the 2021 Rules, parties must submit a Request for Arbitration and Response in electronic form, whether by email or through a designated electronic filing system. Prior written approval must now be obtained from the Registrar to submit a Request or Response by any alternative method.

The same approach has been taken to all written communications between the parties, which must be submitted by email or through a designated electronic filing system (Article 4.2). Until the 2021 Rules came into effect, correspondence by registered post was the preferred means of communication, and, previously, electronic communications required either designation or an order of the Tribunal.

Broadening of the powers of the LCIA Court and Tribunal to order consolidation and the concurrent conduct of arbitrations

The 2016 rules were not silent on the consolidation of proceedings, previously providing the Arbitral Tribunal with many of the same powers to consolidate as now exist in the 2021 Rules. However, the 2021 Rules now, under Article 22A:

• give the Arbitral Tribunal power to order (with the approval of the LCIA Court) that two or more arbitrations may be conducted concurrently where the same Arbitral Tribunal is constituted in respect of each arbitration. Under the 2016 rules, the Arbitral Tribunal had the power to consolidate arbitrations, but did not have the power to conduct arbitrations concurrently;
• give the LCIA Court the same powers as the Arbitral Tribunal to order the consolidation of multiple arbitral proceedings. Under the 2016 rules, this power was only enjoyed by the Arbitral Tribunal (albeit with the approval of the LCIA Court). The overall effect of this change is that parties can now agree or apply to consolidate prior to the formation of the Arbitral Tribunal, which would, in practice, be at the stage of filing the Request for Arbitration and Response.
• give the Arbitral Tribunal power to consolidate one or more arbitrations into a single arbitration where the arbitrations “arise out of the same transaction or series of related transactions”. This is a material departure from the 2016 rules, which only provided the Arbitral Tribunal with power to consolidate arbitrations arising from the same arbitration agreement, or a compatible arbitration agreement.

These changes are among some of the more significant appearing in the 2021 Rules, and may even allow the Arbitral Tribunal or the LCIA Court to consolidate arbitrations between different disputing parties. By way of contrast, Article 10(c) of the new ICC Rules (which also came into effect on 1 January 2021) allows for consolidation when “the claims in the arbitrations are not made under the same arbitration agreement or agreements, but the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible.” The new provisions in the DIFC-LCIA Rules appear to afford a broader scope for consolidation.

Other noteworthy amendments

A number of other interesting, albeit minor, updates have been included within the 2021 Rules:

• At any time prior to the appointment of the Tribunal, the parties now have the opportunity to supplement, modify, or amend a Request for Arbitration or Response to correct minor errors, ambiguities or simple mistakes (Article 1.5).
• The LCIA must appoint a tribunal after 28 days from the Commencement Date where the respondent fails to file a Response. Previously the LCIA was given 35 days to appoint a tribunal (Article 5.6).
• The 2021 Rules confirm that a party may have unilateral contact with the DIFC-LCIA Registrar regarding “administrative matters”. This is an exception to the general rule of procedural fairness that the other side should always be copied on all communications with the DIFC-LCIA and the Tribunal (Article 13.4).
• The Arbitral Tribunal shall endeavour to hand down its final award within three months of the last submission (Article 15.10). Previously, the Arbitral Tribunal was encouraged to make its final award “as soon as reasonably possible”. Neither of these phrases is binding on the Tribunal, and in reality, parties are usually very reluctant to pressure an Arbitral Tribunal to expedite the publication of a final award because it can lead to errors, or give the Arbitral Tribunal an unsatisfactory impression of the parties.

Conclusion

The 2021 Rules introduce amendments demonstrating the DIFC-LCIA’s promotion of the fair, efficient, and expeditious conduct of arbitrations, highlighted most obviously in the amendments dealing with consolidation, and the Arbitral Tribunal’s clarified power to make early determinations.

The 2021 Rules appear to accept that the use of technology and electronic communication in arbitrations, once an optional extra, are here to stay. These updates are perhaps unsurprising following a year in which many arbitrations were conducted virtually by video conference, and they pave the way for the ongoing option of remote hearings in the post-pandemic era.

The updated Rules can be downloaded from DIFC-LCIA website (www.difc-lcia.org).