A typical arbitration clause of ICC Arbitration reads as follows: “All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.” At the same time, just like with other arbitration clauses, we suggest that the parties include a more elaborated arbitration clause as described below in more detail.
It is worth noting that an arbitration clause may be included both in the contract made by and between the parties, and in a separate arbitration agreement. In reality, when using arbitration clauses in bilateral contracts, we recommend that an arbitration clause be inserted in the contract made between the parties. A separate arbitration agreement is recommended when:
(i) there are more than two parties to the legal relations; and/or
(ii) legal relations between the parties are governed by, and outlined in, multiple contracts.
According to the general principles outlined in the ICC Rules of Arbitration (ICC Rules of Arbitration) as at present in force, all disputes shall be settled in accordance with the rules as in force on the date arbitration proceedings commenced, unless the parties agreed to apply the rules as in force prior to conclusion of the arbitration agreement. It should be noted that the amendments introduced
to the ICC Rules of Arbitration are predominantly beneficial for the parties to arbitration proceedings. In particular, amendments related to accelerated arbitration proceedings or, in other words, “expedited procedures”, were introduced in 2017. In any event, we recommend that, when drafting the arbitration clause, you take into account the above outlined provision of ICC Rules of Arbitration pertaining to the version thereof.
ICC Rules of Arbitration provide that the parties shall be free to choose the law that will be applied by the arbitral tribunal when resolving the dispute. In the event the parties fail to determine the governing law, the arbitral tribunal will apply the law they consider to be most relevant. When including the mention of the governing law in the arbitration clause/agreement, one should consider the potential need to involve lawyers specializing in a particular jurisdiction. Again, in reality, this need might involve additional expenses. It should be taken into account that the parties choose the substantive law based on which the dispute will be resolved, whereas the procedure for Arbitration (lex arbitri) takes as a basis the law of the place where the arbitration should take place.
As mentioned above, certain amendments were introduced to the ICC Rules of Arbitration on 1 March 2017. In particular, these amendments included introduction of a notion of “expedited procedures” that applies to disputes in which the disputed amount does not exceed 2,000,000 USD, unless the parties have agreed to exclude this provision. Moreover, this procedure applies only to arbitration agreements (clauses) made after 1 March 2017.
At the same time, please note the ICC Rules of Arbitration provides that the parties may resort to “expedited procedures” even if the disputed amounts exceed the established threshold. The differences between the “expedited procedures” and standard arbitration proceedings, include, but are not limited to:
(i) ICC Court may appoint a sole arbiter even if the arbitration agreement (clause) provides otherwise;
(ii) The Terms of Reference do not apply;
(iii) Arbitration expenses and arbiter fees are significantly lower;
(iv) Expedited procedures may be conducted by means of a video-conference or without hearings and examinations;
(v) Arbitration proceedings timeframes are shorter due to inapplicability of the terms of reference and limited timeframes for procedural actions to be taken by the arbitral tribunal;
(vi) After the formation of the arbitral tribunal, the parties may not file new claims, unless they receive special permission from the arbitrator;
(vii) The dispute is referred to the sole arbitrator, even if the arbitration agreement referred to the collegial composition of the arbitration.
Thus, the “expedited procedures” are aimed at reduction of costs to be incurred by the parties and the overall duration of the dispute resolution process. At the same time, in reality, the parties are deprived of the opportunity to defend their point of view and appoint three arbiters. In view of the above, and taking into account the fact that most arbitration agreements (clauses) include a provision on finality of an arbitral award for the parties, which ipso facto implies lack of appeal rights, we believe that in reality the “expedited procedures” are not a preferred mode of dispute resolution for the parties to the arbitration.