New LCIA Arbitration Rules 2020 may affect your mining and commodities contracts

Arbitration is prevalent as a means of resolving disputes in the mining and commodities sectors, and contracts often provide for arbitration to be conducted under the rules of leading arbitral institutions such as the London Court of International Arbitration (LCIA).

The LCIA's statistics show that mining and commodities disputes make up a substantial proportion of the LCIA's caseload.

On 1 October 2020, the LCIA Arbitration Rules 2020 (the 2020 Rules) came into effect, replacing the pre-existing LCIA Arbitration Rules 2014 (the 2014 Rules). All LCIA arbitrations commenced after 1 October 2020 will be conducted under the 2020 Rules unless the contract expressly requires the use of the previous version of the rules. Accordingly, the changes to the rules will impact existing contracts providing for LCIA arbitration.

Drawing from the views and experiences of practitioners and arbitrators, the 2020 Rules incorporate a number of important updates intended to facilitate efficiency in the arbitration process and anticipate future trends in the practice. They also reflect the LCIA's recognition of the increasing role that technology plays in arbitration, a trend that has only been accelerated by the recent COVID-19 pandemic.

Technology-related changes

A key feature of the 2020 Rules is that they take into account technological advances since 2014, and the LCIA has been very proactive in its approach. Key changes include the following:

  • Electronic communications and signatures – The 2020 Rules reflect the primacy of email and other electronic communications. Gone are references to "post" and "courier." Instead, communications are now required to be sent by email or other electronic means by default (Article 4.2), and an arbitration's commencement date is now specifically tied to the electronic receipt of the Request by the Registrar (Article 1.4). Awards can now be signed electronically and in counterparts (Article 26.2), cutting down the time between an award being finalised and transmitted to the parties. Under the 2020 Rules, parties involved in international arbitration should save substantially on the time and costs of printing and transporting documents, which can be considerable in mining and commodities disputes.
  • Virtual hearings and the new normal – The LCIA is the first major institution to incorporate such flexible, future-proof provisions as to the form of hearings directly into its rules. The Rules specify that all hearings (including procedural hearings and emergency arbitrator's hearings) may be conducted virtually, with broad provision for the use of "other communications technology" between "participants in one or more geographical places" (Article 19.2; see also 9.7 and 14.3). Virtual hearings reduce global travel and its associated time and costs, and given the broad reach of disputes in the mining and commodities sectors, with parties, counsel, witnesses and tribunals often spread across the world, the option to conduct hearings virtually could result in significant savings for parties in these sectors.
  • Data protection and cybersecurity – Reflecting the increased importance of electronic communications within the 2020 Rules, and the sweeping changes to privacy and cybersecurity regulations globally since 2014, a new Article 30A requires tribunals to consult with parties on information security measures and personal data at an early stage. It also provides for tribunals and the LCIA to issue binding directions to ensure that best practices in these areas are observed.

Procedural and other changes

As summarised below, the 2020 Rules contain a number of other important updates relating to procedure, people and costs.

  • Early determination – Although it is within a tribunal's power under the existing rules to determine disputes on a summary basis, the 2020 Rules expressly provide that tribunals can determine (including by order or award) that any claim or defence is manifestly outside its jurisdiction or is inadmissible or manifestly without merit (Article 22.1(viii)). The new early determination provisions are an important confirmation that such claims – which are not uncommon in the mining and commodities sectors – will be dealt with swiftly and cost-efficiently in LCIA arbitration.
  • Consolidation, concurrent conduct and composite Requests and Responses – The 2020 Rules expand on the procedural tools available to parties, tribunals, and the LCIA Court for dealing efficiently with the large and complex sets of transaction documents and counterparties that often feature in LCIA arbitrations and are increasingly common in mining and commodities disputes, especially where financing is involved. For example:
    • tribunals' existing powers of consolidation have been relocated to a new Article 22A, and supplemented with a new power to conduct two or more arbitrations concurrently if all are subject to the LCIA Rules and were commenced under the same or any compatible arbitration agreement(s) (Article 22.7(iii));
    • the LCIA Court has new limited powers of consolidation in Article 22.8; and
    • it will be possible for claimants to commence multiple arbitrations – against multiple sets of respondents and/or under multiple arbitration agreements – with a single "composite Request," each arbitration proceeding separately (i.e., without consolidation) under the 2020 Rules (Article 1.2). Respondents gain a corresponding ability to respond to a composite Request by way of a "composite Response" (Article 2.2).
    • Tribunal secretaries – Recognising that tribunal secretaries can play an important part in increasing the administrative and cost-efficiency of an arbitration, but also that this is an area of arbitration practice where there are a variety of views, the 2020 Rules include provisions regarding the role and appointment of tribunal secretaries in a new Article 14A. The provisions make clear that:
      • a tribunal's decision-making function cannot be delegated (Article 14.8);
      • tribunal secretaries must provide written declarations – and assume a continuing duty – of impartiality and independence (Articles 14.9 and 14.14); and
      • appointments are conditional on party approval of the tribunal secretary's role, the particular person filling that role, their written declarations, and any hourly rate or reimbursement of expenses (Article 14.10).

These provisions make the LCIA one of the first arbitral institutions to provide for tribunal secretaries within its rules rather than in separate guidance.

  • Updated Schedule of Costs – The 2020 Rules also include adjustments to the LCIA's 2014 fees and rates. The arbitrators' costs are fixed by the LCIA by reference to hourly rates set by the LCIA on a case by case basis up to a maximum rate of £500 under the 2020 Rules. This gives the LCIA flexibility to remunerate arbitrators competitively for their work on what are some of the highest-value and most complex commercial disputes not just in the mining and commodities sectors, but in the market as a whole. 

Conclusion

The updates to the LCIA Rules seek to increase the efficiency of the arbitration process and adapt to the advances in the use of technology in arbitration, and so are to be welcomed.



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