ICC Bulletin

Message from the President

One of our most debated recent reforms was the decision to set a time-limit for the submission of draft awards to the Court by arbitral tribunals. Tribunals are required to do so within three months (or two months for sole arbitrators) from the last substantive submission in the arbitration, which is generally either the evidentiary hearing or the post-hearing briefs. If there is a delay in the submission of the draft award that is not justified by the circumstances of the case, the Court considers fee reductions, per the ICC Note to Parties and Arbitral Tribunals.¹ Accordingly, prior to or upon submission of the draft award, arbitrators are expected to explain why such time-limit could objectively not be met. The reasons provided will then be carefully considered by the Court when fixing the fees of the arbitrators. As any other aspect of the arbitrators’ remuneration under the ICC Rules, this policy may not be waived by the parties. Any agreement between tribunals and the parties as to the timing of the submission of their draft award will not bind the Court on fixing the fees.

A reduction of administrative fees also applies to the ICC if the scrutiny process is delayed and if such delay is not attributable to exceptional circumstances beyond the Court's control.

This policy has been applauded by users and corporate counsel, and has greatly contributed to streamlining the final stages of the arbitrations and their overall duration. The figures below may help measure the impact of this reform.

In 2017, a total of 340 draft final awards were submitted for the Court’s scrutiny. Of these, 114 draft final awards were submitted after the expiry of the prescribed time limit (one third of awards), of which 45% were submitted with a delay of more than two months. The Court reduced arbitrators’ fees in 46 cases, i.e. in 40% of the cases where a final award draft was submitted late and the fee reduction ranged between 5% and 30%. Therefore in the majority of cases where draft final awards were submitted late (60%), no fee reduction was applied as the Court considered that such delay was justified, given the particular circumstances of the case, or minor, i.e. did not warrant a reduction.

In 2017, the Court applied a reduction of 5% to the ICC administrative expenses in one case, as the Secretariat submitted the matter to the Court with a one and a half week delay compared to the prescribed four-week time limit (as from the receipt of the draft).

Within the first five months of 2018 (1 January - 31 May), a total of 164 final awards were submitted for scrutiny of which 66 were submitted late (40%). There was a delay of more than 2 months in 23% of the cases submitted late. The Court also considered delays at various stages of the proceedings in seven cases. In 2018, the Court reduced arbitrators’ fees in 60% of the cases where the draft final award was submitted late. The reduction of fees in these cases ranged between 5% and 20%. As in 2017, the Court also applied a 5% reduction to the ICC administrative expenses in one case, due to a similar delay in scrutiny.

Although it has initially been criticized by some arbitrators, I believe this policy is now better understood and widely accepted by our colleagues. The Court will continue to closely monitor delays in the submission of awards and to assess the consequences of the same with equal rigor in light of the circumstances of each case.

Another important recent innovation was, of course, the introduction in the 2017 ICC Rules of an Expedited Procedure for claims involving a limited amount in dispute. Because the Expedited Procedure only applies on an opt-out basis to disputes based on arbitral agreements post-dating the 1 March 2017 (the date of entry into force of the Rules) and because we see numerous examples of parties opting in for higher amounts in dispute, it can be expected that the number of cases filed under this procedure will rise exponentially as from 2019. As a matter of fact, disputes generally arise and are brought to arbitration two to three years after the contract is signed. Yet, the figures that are available after 18 months of application of the Expedited Procedure are extremely encouraging. It is also comforting to see that the quality of awards made under the Expedited Procedure is not lower than that of other awards.

By the end of September 2018, 111 requests to ‘opt in’ to the Expedited Procedure Provisions (‘EPP’) were filed, of which 25 resulted in an agreement to the application of such provisions. In addition, the EPP applied by operation of the Rules in 6 cases, with an arbitration agreement concluded after 1 March 2017 and an amount in dispute not exceeding US$ 2 million, as required by Article 30 and Appendix VI of the Rules. Of these cases, parties have so far only agreed to ‘opt out’ of the EPP in two cases. Twelve more new cases were filed where the EPP will potentially apply by default. Finally, the EPP applied pursuant to a decision of the ICC Court in two cases.

In total, 33 cases were or had been conducted under the Expedited Procedure Provisions by the end of September 2018, involving 74 parties from 35 countries. Ten of these cases reached a final award, among which eight concluded within the prescribed time limit, namely within six months as from the case management conference. As to the remaining two cases, one concluded within 6 months and 6 days (the 6-month time limit was extended as a result of the parties’ agreement of an extended procedural timetable) and one case concluded within 6 months and 21 days and the Court applied a 5% reduction to the sole arbitrator’s fees due to the delay incurred.

The number of instances in which one of the parties has proposed that the Expedited Procedure apply on an opt-in basis, either because the arbitral agreement pre-dated the 1 March 2017 or because the amount in dispute exceeded the US$ 2 million threshold, is a clear indication of the rising interest for the measure amongst users. The availability of a procedure allowing for an award to be made with the same standards of quality and scrutiny within six months from the case management conference, and at a reduced cost, is clearly perceived as a bold and efficient answer to the burning question of excessive costs and delays of arbitration proceedings. It is also extremely encouraging that, in almost all instances, the award was expeditiously scrutinized by the Court and thereafter effectively rendered within the six-month time limit.

We will closely monitor how this novel system will be implemented as the number of cases increases in 2019. I have no doubt that the results will be greatly successful and we will then assess, on the basis of the available data, whether an increase of the US$ 2 million threshold is appropriate.

A important change in the 2017 ICC Rules was the introduction of a possibility for any party to ask the Court to provide reasons for its decisions on challenges, replacements, prima facie jurisdictional decisions and consolidations. So far, one of the parties has requested that reasons be provided in only eight instances, which is less than I would have expected. Perhaps the measure has not yet been sufficiently publicized. Another explanation may be the parties’ concern that the reasons be used to challenge the award. At any rate, the possibility to obtain reasons has been very well received as a measure of transparency and accountability to our users. It should in this regard be stressed that, each time the Court had to provide reasons, it did so in a matter of weeks, with detailed explanations expressed in a clear and concise form. Whenever reasons have to be provided, the Court constitutes a three-member drafting committee, amongst which the President or Vice-President having chaired the Court session, the reporter (in the case of a challenge) and another Court member. This has resulted in an efficient and high-quality process enabling the parties to be aware, in complete transparency, of the reasons for the Court’s decisions which have important consequences to the parties. This body of decisions will no doubt grow fast, and we will consider in due course whether to publish them on an anonymized basis.

Another important measure of transparency was the publication of the composition of all tribunals constituted as from the 1 January 2016 on the Court’s website.² Anyone can now see who sits with whom in ICC cases, and realize the high quality and diversity of our tribunals. Over 1700 names composing 800 tribunals are now available on the website. In view of the significant number of arbitrators and tribunals listed, a search tool is now available. We will also consider whether additional useful information should be made available, such as the names of the law firms representing the parties and the sector of industry involved in the dispute.

In the past three years, the Court has opened four new offices, of which two case management teams and two representative offices devoted to business development, thereby increasing its global reach.

The Sao Paolo case management team, which is led with enthusiasm and talent by Gustavo Scheffer da Silveira, was launched in November 2017 and will soon be celebrating its first year of activity. Its focus is on Brazilian domestic cases and cases having a strong connection with Brazil. As of the beginning of September 2018, the team had registered 31 new cases involving 102 parties, for a total amount in dispute of almost BRL 7 billion, as well as one Emergency Arbitrator procedure and two requests to opt-in the expedited rules. It is notable that, among the 31 cases registered in Sao Paolo, 10 involved Brazilian State entities, confirming that ICC is the most trusted institution in cases involving the public interest. I have no doubt that the Brazilian case management team will rapidly grow to become the main venue for both domestic and international disputes in Brazil. Our efforts also led to the opening last March,³ in cooperation with ICC Brazil, of a state of the art hearing center in the heart of the Sao Paolo business district, offering a uniquely adapted facility to hold hearings, procedural conferences and deliberations.

The Singapore case management team, launched last April and established at Maxwell Chambers, is ably led by Hazel Tang, who brings to ICC her profound experience of the Singapore market and the region more broadly. The team is currently administering 62 cases, including one emergency arbitration, most of which are seated in Singapore. Parties to our Singapore cases originate from Australia, British Virgin Islands, Cambodia, Canada, China P.R., Curaçao, Ethiopia, France, Germany, Hong Kong S.A.R., India, Indonesia, Ireland, Japan, Korea, Malaysia, Mauritius, New Zealand, Norway, Oman, Pakistan, Philippines, Portugal, Saudi Arabia, Singapore, Slovenia, Sri Lanka, Switzerland, Taiwan R.O.C., Thailand, the UAE, USA, United Kingdom, and Vietnam.

It is now possible to have an arbitration seated and administered in Singapore under the ICC Rules, which was long awaited by users in the region, and particularly by Indian parties – 19% of the South Asian parties to ICC Arbitration in 2017.

Our Shanghai office has now two and a half years. With the tireless efforts of Professor Mingchao Fan, our regional director for North Asia since March 2016, a series of events have been organized in the region to promote ICC Arbitration, including: the Inaugural ICC Arbitration Days in the Philippines and Taiwan, jointly organized with ICC Japan, Vietnam International Arbitration Center and CIETAC, a two-day lecture on international arbitration delivered to Vietnam National Judicial Academy, and a seven-hour lecture on management of destressed assets and dispute resolutions on the Belt and Road delivered to the 1^st Circuit Court of China’s Supreme People’s Court. At the end of August, our Shanghai office worked with the Shenzhen Court of International Arbitration and the Bar Association of Guangdong Province to organize a three-day training on international arbitration delivered to 30 elite lawyers in the region. This training was broadcasted nationwide and attracted approximately 550,000 online viewers.

The importance of the Gulf for international arbitration, in particular in the energy sector, cannot be overstated. This is why we decided to open a representative office in the region, with the support of Abu Dhabi Global Markets. The office was launched in March 2018 and is skillfully led by Dania Fahs. One important feature of the office is that it is authorized to register requests for arbitration locally. Nine cases have been registered at our Abu Dhabi office, by parties established locally or in neighboring countries. This is a very encouraging figure, which confirms that the opening of this office was needed and expected by users in the region.

One recent major initiative of the Court is the launch of its Belt and Road Commission, with the aim of promoting the use of ICC Arbitration in disputes arising from this unprecedented investment program. The Belt and Road Commission is composed of 13 Members, chaired by Justin D’Agostino, Global Head of Disputes of Herbert Smith Freehills and Alternate Member of ICC International Court of Arbitration from Hong Kong, and 19 Ambassadors from 11 jurisdictions. The ICC website provides an overview of ICC’s arbitration services relating to the Belt and Road both from geographic and practical aspects.⁴ The Members and Ambassadors have attended a number of conferences and events to share the first-hand ICC Arbitration experiences with the public, towards a more effective and efficient use of ICC Arbitration to resolve Belt and Road disputes.

Africa, more than any other region in the world, is where the future lies for international arbitration. The huge projected increase in Africa’s population (which the World Bank estimates up to 2.8 billion in 2060, from the current 1 billion) will result in increased cross-border transactions and increased demand for alternative dispute resolution services, in a region where these services are not well developed.

The Court launched its Africa Commission in July 2018,⁵ with the ambition to contribute to the growth of the local arbitration communities and to the training of much needed African arbitrators. The Commission will also reach out to users, investors and businesses in the region. We are grateful to Ndanga Kamau for accepting to act as the Commission’s President, which adds to the already burdening role of Vice-President of the Court.

I could not end this short account of the implementation of some of our recent initiatives without mentioning the continuing success of the ICC Users’ Forum. This program is led by Karl Hennessee, Chair of the ICC Governing Body for Dispute Resolution Services, and consists in organizing closed-door encounters with select high-level corporate counsel around the world. This program allows ICC users to freely express their views, suggestions and criticism on the Court’s performance, leading directly to an improvement of the quality of DRS services. So far, 13 encounters have been organized in 12 different cities with the participation of more than 90 high profile corporate counsel. Their voice is priceless to us, and our users should rest assured that their views and suggestions will be carefully considered and taken onboard for future initiatives and reforms, which aim will always be to better serve the thousands of parties from all continents who entrust ICC for the resolution of their disputes.

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