In a markedly significant step, the London Court of International Arbitration ("LCIA") announced the LCIA Arbitration Rules, 2020 ("Rules 2020"), which has come into effect from 1st October, 2020, shall apply to Arbitration proceedings commencing from such date. From an analytical point of view, the Rules 2020 seem to contain and preserve a major part of the erstwhile LCIA Arbitration Rules, 2014 ("Rules 2014"), yet the changes/ additions incorporated under the new regime, signal a tectonic shift towards LCIA's resolve to keep up with the international best practice. The Rules 2020 comprise of certain noteworthy amendments that aim to streamline the arbitral process and ensure transparency for arbitrators and parties. LCIA has modernized the rules to meet with the global trends and developments by increased use of digital technology in the arbitration proceedings. Notably, the new rules are suited to equip arbitrators and parties with tools to scuffle with the difficulties precipitated by the COVID-19 pandemic.
Notable Changes in the LCIA Rules
A. Composite Requests
A significant addition in the Rules 2020, is the ease granted to the parties to file a composite request to commence arbitration under multiple contracts against one or several parties.1 The submission of a composite request does not per se consolidate the arbitrations, instead, the consolidation will be determined by the LCIA Court or/and the Arbitral Tribunal. As stated in A v B  EWHC 34172, composite requests were not permitted under Rules 2014 and parties had to issue separate requests for arbitration and then seek permission of the Arbitral Tribunal to consolidate the arbitrations. Article 1.2 of Rules 2020 is a welcome provision that bridges the gap not covered by the Rules 2014. Under Article 2.2, a composite response may be submitted in counter to the composite request. The composite submissions must separately state the value in a dispute, the transactions, defence, counterclaim advanced by another party in the arbitration.
B. Mandate of Communication Through Electronic Mode
Rules 2020 only recognises communication made through electronic mode. Such communications will include submitting the request for arbitration to the Registrar of the LCIA Court, submission of pleadings with the LCIA Court as well as the exchange of pleadings between the parties or any other communication to be done with the Arbitral Tribunal or the Registrar, as the case may be. Whilst the Rules 2014 sanctioned communication through electronic mode along with the option of written communication through physical modes, the Rules 2020 makes it clear that if any party to the arbitration proceedings wishes to communicate written information in any mode other than the electronic mode, prior approval or direction of the Arbitral Tribunal or the Registrar, as the case may be, will have to be obtained.3
- Broadening the definition of Nationality
The nationality of the party to the arbitration proceedings has a major significance for the purpose of determining the composition of an Arbitral Tribunal due to the concerns of neutrality. Under both, Rules 2020 and the erstwhile Rules 2014, the presiding or the sole arbitrator cannot be of the same nationality of any of the parties until or unless the parties give their consent for the appointment of such sole or presiding arbitrator.
To determine the nationality of the party to the arbitration proceedings, the Rules 2020 has given an elaborated method of assessment of nationality of a legal person. The said rules have also clarified the assessment of nationality of a natural person as opposed to the Rules 2014 which only elaborated on a limited aspect for assessing the nationality of a legal person and did not provide for an expressed provision for the nationality of a natural person. Rules 2020 has broadened the meaning of nationality of a party as follows4:
- Natural Person - The nationality will mean the citizenship of a natural person. The citizenship may be acquired by birth or by Naturalisation or other requirements of the concerned nation. The LCIA Rules also states that in cases where a person is a citizen of one or more country, that person will be considered to have the nationality of all such countries.
- Legal person - The nationality of such a person has to be assessed on the jurisdiction under which such legal person has been incorporated, the seat of effective management of such legal person and the nationality of the controlling shareholders or interest holders. Thus, the nationality of a legal person would include the nationality of the country under whose jurisdiction the legal person has been incorporated. The nationality of a legal person will also include nationality of the country under whose jurisdiction the effective management of such legal person is situated. The Rules 2020 also encompasses the nationalities of the controlling shareholders or interest holders of the legal person.
- Powers to the Emergency Arbitrator
An Emergency Arbitrator is a sole arbitrator appointed in cases where a party wishes to seek adjudication upon certain imminent disputes before the formation of the Arbitral Tribunal. Such an appointment is made on an application to be filed with the Registrar along with other requisites under the Rules 2020. Article 9B of the Rules 2020 governs the procedure related to emergency arbitration.
Article 9.12 of the Rules 2020 has granted certain additional powers to the Emergency Arbitrator with respect to passing orders during an emergency arbitration. On an application made by a party or upon its own initiative, the Emergency Arbitrator can do the following acts:
- To revoke, affirm or change whole or part of the previous orders passed by the Emergency Arbitrator including the issuance of additional orders.
- To correct any computational error as well as clerical or typographical errors or any other mistake in the award passed by the Emergency Arbitrator.
- Pass an additional award regarding a claim which has been presented in the arbitration proceedings but has not been adjudicated upon by the Emergency Arbitrator in its previous award.
An inherent power has also been granted to the Emergency Arbitrator under Article 9.15 of the Rules 2020. It states that the Emergency Arbitrator shall have all the powers for the purpose of administering the proceedings of emergency arbitration and will include powers that have not been expressly provided under Article 9B of the Rules 2020.
- Provision for Recognition/Derecognition of Proceedings by the Reconstituted Arbitral Tribunal
Both the earlier and the new rules provide for the replacement of an arbitrator on account of doubts pertaining to an arbitrator's suitability, independence, or impartiality. However, in the event of replacement of an arbitrator, the Rules 2014 had no provision regarding the fate of the proceedings that were being conducted by the erstwhile Arbitral Tribunal (Arbitral Tribunal which consisted of the arbitrator who was replaced). Article 11.3 of the Rules 2020 provides substantial power to the reconstituted Arbitral Tribunal to decide on the recognition of the previous proceedings and the extent to which such proceedings should be recognised.
- Conduct of Proceedings under Article 14 of the LCIA Rules 2020.
A substantial change has been brought to Article 14 of Rules 2020 in comparison to Article 14 in the erstwhile 2014 Rules, both of which pertains to the conduct of the arbitration proceedings. The Rules 2020 have been restructured to fill the lacuna present in Rules 2014. In contrast to the old rule, the new Rule 14.5, grants powers to the Arbitral Tribunal for the purpose of passing procedural orders. Further, new Rule 14.6 provides different modes for the Arbitral Tribunal to exercise its power under Rule 14.5, which includes the following:
- Limiting the contents of the written statement or dispensing with the written statement which is to be delivered under Article 15 of the Rules 2020.
- Limiting the oral or written testimony of any witnesses in accordance with Article 20.4 of the Rules 2020.
- To adopt and utilise technology to enhance the efficiency and expediency of the arbitration proceedings.
- Deciding the stage at which any issues shall be determined and in what order such issues shall be determined in accordance with Article 22.1(vii) of the Rules 2020.
- Dispensing with a hearing subject to the provisions under Article 19 of the Rules 2020.
- Exercising powers of Early Determination as mentioned under Article 22.1(viii) of the Rules 2020.
- Abridgment of any period in accordance with Article 22.1(ii) of the Rules 2020.
- Tribunal Secretary
Article 14A has been inserted under the Rules 2020 to bring clarity to the role of Tribunal Secretary. Article 14A provides for an appointment of a Tribunal Secretary by the Arbitral Tribunal for the purpose of assisting the Arbitral Tribunal in conducting arbitration proceedings. It has been clarified under Article 14.8 that the Arbitral Tribunal will not delegate any 'decision making' powers to the Tribunal Secretary and all the functions will be carried out by the Tribunal Secretary under the supervision of the Arbitral Tribunal while maintaining the standards required by the Rules 20205.
In accordance with Article 14.10, a Tribunal Secretary can only assist the Arbitral Tribunal after the parties have approved for such assistance6. For the purpose of appointment, a Tribunal Secretary will have to follow the rigours similar to the appointment of an arbitrator under the relevant provisions of the Rules 2020. Such procedural requirements include the submission of a written declaration of impartiality by the prospective Tribunal Secretary7, consent by the parties to the Arbitration for the appointment of the Tribunal Secretary8 and the duty to disclose to the Arbitral Tribunal as well as the parties to the Arbitration, about any information that may raise any doubts amongst the parties regarding the impartiality of the Tribunal Secretary9.
Article 14.15 also provides that a Tribunal Secretary may be removed by the Arbitral Tribunal at its own discretion and the procedure for challenge and revocation of the appointment of an arbitrator, as mentioned under Article 10 of the Rules 2020, shall also apply in the case of the Tribunal Secretary. With respect to Tribunal Secretary, an additional provision has also been added under the updated Schedule of Costs 2020 mentioning charges and expenses for availing its services.
- Broadening the power of an Arbitral Tribunal to conduct Consolidated and Concurrent Arbitrations
The Arbitral Tribunal, after approval of the LCIA Court and upon the application of the parties shall have the following powers:
- To consolidate the arbitration with one or more other arbitrations into a single arbitration, subject to the LCIA Rules where all the parties to the arbitrations to be consolidated, agree in writing.
- To consolidate the arbitration with one or more other arbitrations, where the arbitration is commenced under the same arbitration agreement or any compatible arbitration agreement or between the same disputing parties or arising out of the series of related transactions. Such consolidation would be subjected to the fact that no arbitral tribunal should have been formed by the LCIA Court for such other arbitrations and if it is already formed, the arbitral tribunals should consist of same arbitrators.
- To decide that two or more arbitrations shall be conducted concurrently in situations where the same arbitral tribunal is constituted in respect of each arbitration.10
- Additional Powers Granted To Arbitral Tribunal
- Power regarding the conduct of arbitration proceedings
The Rules 2020 have recognised certain additional powers of the Arbitral Tribunal for the purpose of conducting arbitration proceedings. Article 15.7 of the Rules 2020 grant powers to the Arbitral Tribunal, which includes but are not limited to directions pertaining to sequence, timing and composition of the written stage of the arbitration, filing of additional written submissions, service of written evidence of an expert witness and written statements with respect to any party's cross-claims.
- Tribunal's Power To Make Early Determination
The Rules 2014 granted powers to the Arbitral Tribunal including the power to allow a party to amend, modify any claim or defense, conduct inquiries, order for inspection etc. However, the Rules 2020 grants two additional powers compared to the erstwhile rules.
Article 22.1 provides that upon an application of any party or upon its own initiative, and after giving the parties a reasonable opportunity, the Arbitral Tribunal shall have power: a) to decide the stage of arbitration at which any issue may be determined, in what order and the procedure to be adopted at each stage in accordance to Article 14; b) to make an early determination and dismiss any claim or defence which is manifestly without merit, inadmissible or outside the tribunal's jurisdiction. Whilst Article 14 of the Rules 2014 provided an implicit power for early determination of claims, the express provision now contained in Article 22.1(viii) of the Rules 2020 will be a welcome relief to the parties that are concerned to ensure there is an effective mechanism to summarily dismiss meritless claims and defences.
J.Place/Manner of Hearing(s) and the Applicable Law
The Rules 2020 provides that if the place of hearing is elsewhere than the seat of arbitration or if any hearing or deliberation takes place through videoconferencing or through other communications of technology ( i.e. otherwise than in person), in whole or in part, it shall be deemed that the arbitration is conducted at the arbitral seat and any order or award being made, should be treated as an order or award made at the seat of the Arbitration.
Article 16.4 provides that the law applicable to the Arbitration Agreement and the arbitration shall be the law applicable at the seat of the arbitration. Notwithstanding the above, the Rules 2020 shall be interpreted in accordance with the laws of England11.
Whilst the Rules 2014 did not contain any provision for conducting the hearing electronically, the Rules 2020 explicitly grants power to the Arbitral Tribunal to conduct hearings by videoconferencing or using other communications of technology where it deems appropriate that the proceedings are being conducted other than in person.12
K. Advanced Payment of Costs
The Rules 2020 has used the word "substitute payment" under Article 24.1 instead of "Advance Payments of Cost" used in Rules 2014, which provides that the LCIA Court may direct the parties to make Advance Payment of Costs to secure the payment of Arbitration Costs. The Article states that the Advance Payments of Cost shall be the property of the LCIA, and such costs shall be disbursed by the LCIA in accordance with the LCIA rules. In contrast to the Rules 2014, the LCIA shall not act as a trustee for the parties and its sole duty to the parties in respect of the Advance Payment for Costs shall be to act in pursuant to the LCIA Rules.
The Rules also provide that the LCIA will make all reasonable attempts to refund the excess amount to the parties using the contact details provided to the LCIA during the proceedings. In circumstances where even after making reasonable efforts, the LCIA does not receive any response from the parties within 30 (thirty) days, the LCIA will provide the party with a written notice revealing its intention to retain the excess amount. In the event no response is received within a further 60 (sixty) days, the party will be deemed to have waived its right to claim and/or receive the excess amount.
L. Electronically Signed Award and Transmission
The Rules 2020 provides that an award may be signed electronically and/or in counterparts and can be assembled into a single instrument13. In contrast to Rules 2014, the new rules provide that an award may be transmitted by LCIA Court to the parties by electronic means only. The recourse to transmission by paper form shall only take place if the transmission by electronic means to a party is not possible. In the event of any conflict between electronic and paper forms, the former would prevail.14
M. Corrections of Awards and Additional Awards
Article 27 of the Rules 2020 has substituted the word "memorandum" with "addendum to the award" compared to the erstwhile Rules 2014. It provides that at the request of the parties, if the Arbitral Tribunal finds that there requires a correction in the award, it may do so by recording in it an addendum to the award. In case the Arbitral Tribunal does not consider the request to be justified, it may yet issue an addendum to the award dealing with the request, including any Arbitration Costs and Legal Costs. Through Article 27.3 of the Rules 2020, the word "counter claim" has been inserted as a contrast to the Rules 2014 which only granted the power to the party to make a request to the Arbitral Tribunal to make an additional award regarding a claim, or cross-claim in situations where such claim or cross-claim was presented in the arbitration but was not decided in any award.
- Inclusion of authorized representative, witness of fact etc. within the arena of Confidentiality
The Rules 2014, casted a legal duty of confidentiality on the parties and the members of the Arbitral Tribunal in relation to all materials and documents produced in the arbitration. However, Rules 2020, in addition to casting a legal duty of confidentiality upon the parties and the members, has mandated for the parties to seek a similar undertaking of confidentiality from all those person(s) that are involved in the arbitration. Such other person(s) include but are not limited to any authorised representative, witness of fact, expert or service provider.15 This rule extends (with necessary changes) to any tribunal secretary and any expert to the Arbitral Tribunal.16
- Data Protection
Article 30A has been inserted under Rules 2020, which was absent in Rules 2014. The newly inserted article has taken measures to protect the data and information shared in the arbitration and provides that the LCIA can only process the personal data of the parties subject to the applicable data protection legislation. The Rules 2020 requires an Arbitral Tribunal (and where appropriate the LCIA), to consider at an early stage of arbitration after consulting the parties, whether it is appropriate to adopt any: (a) information security measures to protect the information(s) exchanged during the arbitration, and (b) means to address the processing of personal data generated or exchanged in the arbitration in view of any applicable data protection regimes17. It further grants power to the LCIA and the Arbitral Tribunal to issue any directions regarding information security and data protection which shall be binding on the parties18.
- Exclusive Jurisdiction of Courts of England and Wales for LCIA- Related Disputes
A new jurisdictional clause has been added to Article 31 of the Rules 2020 which provides that a party who agrees to the arbitration under or in accordance with the Rules 2020, irrevocably submits themselves to the exclusive jurisdiction of courts of England and Wales. Article 31.3 provides that the courts of England and Wales shall have the power to hear and decide any action, suit or proceedings between that party and the LCIA, the LCIA Board (including its members), the Registrar, the Deputy Registrar, any arbitrator, any Emergency Arbitrator, any tribunal secretary and/or any expert to the Arbitral Tribunal, which may arise out any such arbitration19.
Other Changes in the Rules 2020
- The Emergency Arbitrator has been recognised under the definition for "Arbitral Tribunal" as mentioned under Article 5.2 of the Rules 2020. Such an inclusion under the definition has entailed an implied application of the Rules 2020 onto the emergency arbitrations in all respects.
- Unilateral communication by one party to the Registrar has been allowed under the Rules 2020 but the same has only been allowed for administrative matters20.
- In contrast to the Rules 2014, Article 28 of the Rules 2020 provides that the Arbitral Tribunal shall specify by an order or award the amount of the Arbitration Costs determined by the LCIA Court.
- Insertion of the word "counter claim" in addition to claim or cross claim under various articles21 of the Rules 2020.
- In an effort to ensure that the Rules 2020 remain in consonance with existing international legal and regulatory frameworks, the Rules 2020 classifies bribery, corruption, terrorist financing, fraud, tax evasion, money laundering and economic or trade sanctions as "Prohibited Activities" and provides that the LCIA may refuse to act on any instruction and accept or make any payment relating to a Prohibited Activity.22
1 See Article 1.2 of LCIA Rules, 2020
2 A v B  EWHC 3417 (Comm) (21 December 2007)
3 See Article 4.2 and 4.3 of LCIA Rules, 2020
4 See Rule 6.2 of the LCIA Rules 2020
5 See Article 14.8 of the LCIA Rules 2020
6 See Article 14.10 of the LCIA Rules 2020
7 See Article 14.9 of the LCIA Rules 2020
8 Ibid 3.
9 See Article 14.4 of the LCIA Rules 2020
10 See Article 22A of LCIA Rules, 2020.
11 See Article 16.5 of LCIA Rules, 2020
12 See Article 19 of LCIA Rules, 2020
13 See Article 26. 2 the LCIA Rules, 2020
14 See Article 26.7 of the LCIA Rules, 2020
15 See Article 30.1 of LCIA Rules, 2020
16 See Article 30.2 of LCIA Rules, 2020
17 See Article 30.5 of LCIA Rules, 2020
18 See Article 30.6 of LCIA Rules, 2020
19 See Article 31.3 of the LCIA Rules, 2020
20 See Article 13.4 of the LCIA Rules 2020
21 See Article 25, Article 27 of the LCIA Rules 2020
22 See Article 24A of LCIA Rules, 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.