LCIA Arbitration Rules24 Mar 2015 2514 Views
The LCIA arbitration rules are universally applicable, being suitable for all types of arbitrable disputes. They offer a combination of the best features ofthe civil and common law systems, including in particular:
- Maximum flexibility for parties and tribunals to agree on procedural matters.
- Speed and efficiency in the appointment of arbitrators, including expedited procedures
- Means of reducing delays and counteracting delaying tactics
- Tribunals’ power to decide on their own jurisdiction
- A range of interim and conservatory measures
- Tribunals’ power to order security for claims and for costs
- Special powers for joinder of third parties
- Waiver of right of appeal
- Costs computed without regard to the amounts in dispute
Staged deposits – parties are not required to pay for the whole arbitration in advance.
Seat of arbitration and place of hearings
Parties to LCIA arbitration may be from any geographical location.
Although the LCIA is headquartered in London, the parties are free to agree the seat, or legal place of the arbitration. Therefore, parties wishing to provide for a seat elsewhere than London should not be deterred from adopting the LCIA rules.
Parties adopting, or adapting, the LCIA’s recommended clauses will specify the seat in their contract, but, if they fail to do so, Article 16.1 of the rules provides for a London default seat. If, however, one or more of the parties wishes to argue for an alternative seat, the LCIA Court will decide the issue.
Hearings may be held in any location convenient to the parties and the Tribunal, irrespective of the chosen seat.
Types of contract in dispute
The subject matter of contracts in dispute is wide and varied, covering all aspects of international commerce, including telecommunications, insurance, oil and gas exploration, construction, shipping, aviation, pharmaceuticals, shareholder agreements, IT, finance and banking.
The LCIA’s charges, and the fees charged by the tribunals it appoints, are not based on the sums in issue. The LCIA is of the view that a very substantial monetary claim (and/or counterclaim) does not necessarily mean a technically or legally complex case and that arbitration costs should be based on time actually spent by administrator and arbitrators alike.
A non-refundable registration fee is payable on filing the Request for Arbitration. Thereafter, hourly rates are applied both by the LCIA and by its arbitrators, with part of the LCIA’s charges calculated by reference to the tribunal’s fees. The LCIA sets a maximum hourly rate, at or below which the arbitrators it appoints must (other than in exceptional cases) set their fees.
Parties may call for financial summaries at any time to keep track of costs. Every payment on account of arbitrators’ fees will be notified in advance and accounted for on disbursement.
It is the LCIA Court which, under the rules, must determine the costs of each arbitration, according to the following procedure.
The Secretariat provides the Court with a financial dossier, which includes a complete financial summary of sums lodged by the parties, sums paid to the arbitrators, outstanding fees and expenses and interest accrued. The dossier also includes a copy of the original confirmation to the parties of the arbitrator’s fee rate, a copy of the arbitrator’s accounts, a copy of the LCIA’s own time and disbursements ledger, a copy of directions for deposits and a copy of all notices given to the parties of payments made from deposits.
The Court reviews the dossier and, if necessary, calls for any further information, or initiates any investigation it may require to satisfy itself that the costs are reasonable and are in accordance with the LCIA schedule of costs, before notifying the Secretariat of the amount to be notified to the Tribunal for inclusion in the award.
Any dispute regarding administrative charges or the fees and expenses of the tribunal is determined by the LCIA Court.
By Article 1.1(e) of the LCIA Rules, if the arbitration agreement calls for party nomination, the Claimant should nominate an arbitrator in the Request for Arbitration.
By Article 2.1(d), the Respondent should nominate an arbitrator at the time of the Response.
By Article 2.3, failure by the Respondent to nominate within time (or at all) constitutes a waiver of the opportunity to nominate.
By Article 5.4, there is a presumption in favour of a sole arbitrator unless the parties have agreed in writing otherwise, or unless the LCIA Court decides that the circumstances of the case demand three.
By Article 5.5, the LCIA Court alone is empowered to appoint arbitrators, though always having due regard for any method or criteria for selection agreed by the parties.
By Article 6.1, nationality restrictions apply in the selection of a sole arbitrator or Chair.
By Article 7.1, any purported agreement that the parties themselves, or some third party, shall appoint an arbitrator is deemed an agreement for partynomination.
By Article 7.2, the LCIA Court may, itself, select an arbitrator, notwithstanding an agreement for party nomination, if any party fails to nominate, or nominates out of time.
By Article 8, multiple parties lose the right to nominate if they cannot agree that they represent two sides to the dispute for the purposes of the formation of the tribunal.
By Article 9, the LCIA Court may abridge the time for the appointment of the tribunal, in cases of “exceptional urgency” and may, thus, require a Respondent to nominate its arbitrators within a shorter period than the 30 days prescribed by Article 2.
By Article 11.1, the LCIA Court may refuse to appoint a party-nominated arbitrator if it determines that the nominee is not independent or impartial or is not “suitable”.
In all cases, whether or not the arbitrators are nominated by the parties, the basic LCIA procedure is as follows, save that steps 4, 5 and 7 are omitted in the case of party nomination:
- The LCIA Secretariat reviews the Request for Arbitration and accompanying contractual documents, and the Response (if any).
- A résumé of the case is prepared for the LCIA Court.
- Key criteria for the qualifications of the arbitrator(s) are established.
- The criteria are entered into the LCIA’s database of arbitrators, from which an initial list is drawn.
- If necessary, other sources are consulted for further recommendations.
- The résumé, the relevant documentation, and the names and CVs of the potential arbitrators are forwarded to the LCIA Court.
- The LCIA Court advises which arbitrator(s) the Secretariat should contact (who need not be, but usually will be, from among those put forward by the Secretariat) to ascertain their availability and willingness to accept appointment.
- In the case of a party nomination, the LCIA Court advises whether it considers the nominee suitable, subject to conflicts checks.
- The Secretariat sends the candidate(s) an outline of the dispute.
- When the candidate(s) confirm their availability, confirm their independence and impartiality, and agree to fee rates in accordance with the LCIA schedule of costs, the form of appointment is drafted.
- The LCIA Court formally appoints the tribunal and the parties are notified.
Given the Secretariat’s considerable experience in selecting arbitrators, and personal knowledge of many candidates, there are some cases in which a suitable selection of candidate arbitrators may be put forward to the Court by the Secretariat, without the need to interrogate the database. (See step 4, above).
Whilst the LCIA is, of course, concerned that each arbitrator should be appropriately qualified as to experience, expertise, language and legal training, it is also mindful of any other criteria specified by the parties in their agreement and/or in the Request and Response.
The LCIA is also concerned to ensure the right balance of experience, qualifications and seniority on a three-member tribunal; in particular, what qualities the Chair should have to complement those of his co-arbitrators. The LCIA is mindful also of any particular national and/or cultural characteristics of the parties to which it should be sensitive, so as to minimise conflict. Similarly, it addresses such issues as whether the arbitrator(s) should have a light touch or a firm touch, bearing in mind, for example, the degree of professionalism it expects of the parties given whom they have chosen to represent them.
The LCIA also considers the nature of the case (sum in issue, declaratory, technically complex, legally complex, etc); the identity and known characteristics of the parties’ lawyers and, indeed, whether the parties are represented at all.
The LCIA is equally concerned to ensure that arbitrators are not only suitably qualified and without conflict, but are also available to deal with the case as expeditiously as may be required. The LCIA is amenable to a joint request by the parties to provide a list of candidate arbitrators, from which they may endeavour to select the tribunal, whether in straightforward negotiation, or by adopting an UNCITRAL-style list procedure. In such cases, the selection process described above is carried out in respect of all candidates to be included on the list, so that any candidate(s) selected by the parties have already confirmed their willingness and ability to accept appointment and have been approved for appointment by the LCIA Court.
Thus, the process of selecting arbitrators is by no means mechanical; it is a considered combination of science and art, as to which the LCIA, both in its Secretariat and in its Court is well qualified.