ACICA releases updated arbitration rules

Australia Publication April 2021

Introduction

The Australian Centre for International Commercial Arbitration (ACICA) is Australia’s premier arbitral institution and a leading provider of international dispute resolution services in the Asia-Pacific region. A report released last month by ACICA (available here) shows that Australian companies are increasingly turning to arbitration as a means of resolving disputes, particularly in the construction and infrastructure, oil and gas, and mining and resources industries. The report shows also that ACICA arbitration clauses are increasingly popular in cross-border contracts, which should lead to more Australian-seated arbitrations in years to come.

In the context of growing demand for arbitration in Australia and the region, ACICA has updated its rules of arbitration. The updated rules (available here) are aimed at increasing the efficiency and effectiveness of international arbitration and modernising the institutional response to issues faced by parties in arbitration, including those highlighted by the COVID-19 pandemic. This article is a practical discussion about the key changes in the amended rules and what practitioners need to be aware of when drafting ACICA arbitration agreements or participating in arbitrations administered by ACICA.

Key changes

The new ACICA Arbitration Rules incorporating Emergency Arbitrator Provisions came into effect on 1 April 2021 (2021 ACICA Rules). Where parties have agreed in writing to refer disputes to arbitration under the ACICA rules, the new rules apply to any arbitration commenced from 1 April 2021 unless the parties have specifically agreed to apply a prior version of the rules (Article 2.4).

However, unless otherwise agreed by the parties, the amended provisions dealing with consolidation and joinder (Articles 16, 17) and the new provisions dealing with single arbitration under multiple contracts (Article 18) will only apply if the arbitration agreement was concluded after 1 April 2021. This means existing ACICA arbitration agreements do not automatically incorporate the new provisions relating to these issues (Article 2.5).

Multi-party arbitration

The rule on joinder in the 2021 ACICA Rules has been expanded so that an additional party can now be joined by the tribunal in circumstances where all parties, including the additional party, expressly agree even if the additional party is not bound by the same arbitration agreement (Article 17.1(b)). However, if a request for joinder is made before the tribunal is constituted, there is no change to the rule that ACICA may only join an additional party that is prima facie bound by the same arbitration agreement as the existing parties (Article 17.8). The 2021 ACICA Rules expressly require both the tribunal and ACICA to give all parties, including the additional party, an opportunity to be heard before exercising the power of joinder (Articles 17.1, 17.8).

The rule on consolidation also has been expanded to remove the requirement, in the case of arbitrations under more than one arbitration agreement, that the arbitrations are between the “same parties” (Article 16.1). In other words, where arbitrations arise under multiple arbitration agreements, ACICA can consolidate if (a) a common question of law or fact arises, (b) the rights to relief are in respect of the same transaction, and (c) the arbitration agreements are compatible – regardless of whether the arbitrations are between the same parties. However, ACICA can only exercise its power of consolidation after it has consulted with the parties and with any confirmed or appointed arbitrators (Article 16.1). The 2021 ACICA Rules provide also that a party wishing to consolidate must submit a request for consolidation including a number of specified matters (Articles 16.2, 16.3).

Multi-contract arbitration

For the first time, the 2021 ACICA Rules expressly permit claims arising out of multiple contracts to be made in a single arbitration (Article 18). Claimants can file a single notice of arbitration for claims arising out of multiple contracts, which will be deemed to commence multiple arbitrations alongside an application to consolidate (Article 18.2). A single arbitration will be permitted to proceed where ACICA decides that any one of the grounds for consolidation is met (Article 18.1). Where ACICA rejects an application to consolidate, the claimant must file separate notices of arbitration in respect of all proceedings that have not been consolidated (Article 18.3).

The 2021 ACICA Rules also allow a tribunal, after consulting with the parties, to conduct two or more arbitrations at the same time, or one immediately after another, or suspend any of those arbitrations until after the determination of any other of them where the same tribunal is constituted in each arbitration and a common question of law or fact arises in all the arbitrations (Article 19). This new provision empowers a tribunal to effectively case manage multiple related arbitrations even where those arbitrations are not formally consolidated or do not meet the criteria for consolidation.

Third-party funding

The 2021 ACICA Rules introduce new provisions dealing with the disclosure of third-party funding arrangements (Article 54). The Rules require parties to disclose the existence of third-party funding and the identity of the funder at the time of submitting a Notice of Arbitration or Answer or as soon as practicable after third-party funding is provided or a third-party funding arrangement is entered into (Article 54.2). Further, there is a continuing obligation to disclose any changes to the arrangements. Additionally, a tribunal now has the power to order that a party disclose the existence and identity of any funder (Article 54.3).

Early determination

The 2021 ACICA Rules clarify that the powers of a tribunal include the power to make an award granting early dismissal or termination of any claim, defence, or counterclaim (Article 25.7). This amendment is made in the context of recent debate about the extent to which different arbitral institutions’ rules permit the early dismissal of claims or defences that are clearly unmeritorious. For example, whereas the Singapore International Arbitration Centre rules (effective August 1, 2016) include a dedicated procedure for early dismissal of claims or defences (SIAC Rule 39), the International Chamber of Commerce rules (effective January 1, 2021) provide more generally that a tribunal must make every effort to conduct the arbitration in an “expeditious” manner (ICC Article 22(1)).

Arbitrator nomination and appointment

The 2021 ACICA Rules are amended to stipulate that, in the case of both sole arbitrators and co-arbitrators on a three-member panel, the parties’ preferred candidates are nominated for confirmation by ACICA rather than appointed directly to the tribunal (Articles 12, 13). ACICA’s Secretary-General has the power to confirm a nomination, including the nomination of a Chairperson by two arbitrators, if either (a) the nominee has not disclosed circumstances likely to give rise to justifiable doubts as to availability, independence, or impartiality, or (b) the nominee has disclosed such circumstances but no party has raised an objection (Article 14.1). Alternatively, if the Secretary-General declines to exercise the power to confirm, the nomination will be submitted to ACICA itself (Article 14.3).

Use of technology

In light of COVID-19 disruptions, virtual hearings, both preliminary and final, are expressly permitted under the 2021 ACICA Rules (Articles 25.3, 25.4, 25.5, 35.5). Hearings attended virtually are deemed to have been held at the seat, unless otherwise agreed by the parties or directed by the tribunal (Article 27.2). The tribunal is afforded full discretion to establish the conduct of a hearing, including its form, in consultation with the parties (but without requiring their agreement) (Article 35.5).

The 2021 ACICA Rules also introduce an express power for the tribunal, in consultation with the parties and where appropriate ACICA, to adopt any measure to protect information shared in the arbitration and to ensure that any personal data is processed and/or stored in light of any applicable law (Article 26.6).

Time limit for award

The 2021 ACICIA Rules introduce a time limit for the tribunal to render a final award. Unless a shorter period is specified by law or the parties otherwise agree, the final award must be made no later than 9 months from the date the file was transmitted to the tribunal or no later than 3 months from the date the proceedings close, whichever is earlier (Article 39.3). ACICA may extend this time upon a reasoned request from the tribunal or if it otherwise deems it necessary.

Costs

The 2021 ACICA Rules provide that ACICA, on the tribunal’s request, can make interim payments for tribunal fees and expenses from the parties’ costs deposit (Article 50.1). ACICA alone has the power, at any time during the arbitration, to make a portion of its administration fee payable to account for services already performed (Article 50.2). Additionally, ACICA has the responsibility, before the tribunal issues a final award or a consent award (or an order for termination), to determine the tribunal’s fees and expenses as well as its own administration fee (Article 50.3).

The arbitral tribunal, in turn, must fix the costs of arbitration by way of a final award or a consent award (or in an order for termination) (Article 51.1). Where there is more than one arbitrator, the fees and expenses of each arbitrator must be stated separately (Article 51.6). Additionally, the tribunal can at any time during the arbitration make decisions on costs (other than costs to be fixed by ACICA) and order payment, including by way of an interim award, an interlocutory award, or a partial award (Article 51.2).

No arb-med provisions

The 2021 ACICA Rules do not include specific provisions for the conduct of “arb-med”, which is a hybrid process whereby an arbitrator assumes the role of mediator during the course of arbitration. This is despite specific arb-med provisions appearing in the consultation draft rules published last year. Instead, new provisions in the 2021 ACICA Rules require the tribunal to raise for discussion with the parties the possibility of using mediation (or other ADR) (Article 55.1), and empower the tribunal to suspend the tribunal to allow for mediation (or other ADR) (Article 55.2).

Conclusion

Recent amendments to the ACICA rules grapple with the challenges posed by multi-party disputes, management of related disputes arising under separate arbitration agreements, risks to impartiality and independence of tribunal members raised by undisclosed third-party funding arrangements, and the increasing use of technology in arbitration in circumstances of increased data regulation and cybersecurity risk. The amendments are aimed at providing users with modern rules that facilitate increasing efficiency and transparency in the arbitration process, and offer more effective mechanisms for resolving complex disputes.



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