The 2021 ICC Arbitration Rules: a further opening for Arb-Med-Arb, or business as usual?


I. Background

With the recent entry into force of the Singapore Mediation Convention, many have anticipated a greater role of mediation in international commercial disputes.

This may provide some momentum toward resuming a long-held discussion on the combination of different methods of dispute settlement under the same neutral, e.g. holding a “mediation window” in the middle of arbitration proceedings, with the arbitrator transitioning to act as mediator, and then back to arbitrator if required. In many jurisdictions, this discussion has so far remained largely academic, as the aforementioned practice —also known as “Arb-Med-Arb”— is by no means commonplace.

And while it may be even desirable that parties attempt to reach an amicable settlement while already litigating, relying on the same neutral for these multiple purposes entails unique risks. These risks should not be overlooked, notwithstanding the benefits (mainly, saving time and costs) that Arb-Med-Arb and similar schemes bring.

For instance, the impartiality of the arbitrator may be endangered after participating in a mediation hearing and expressing his substantive views on a case.[1] This may be a concern in the event that mediation is unfruitful, and he is called upon to arbitrate once again. The parties may even be uncomfortable to resume arbitration with the same tribunal, once they shared sensitive information that was not part of the casefile. A controversial case in Hong Kong involved the arbitrator-turned-mediator attending a private dinner with a person related to one of the parties to encourage a settlement.[2]

The extent to which the arbitrator participates in facilitating the settlement during these schemes plays a significant role in the discussion. While simply suggesting the parties to consider settling the dispute amicably is probably unproblematic, outright mediating an agreement may exacerbate the risks described above.

II. The 2021 ICC Rules Arbitration Rules

Apart from the threats to impartiality and, in turn, due process, another obstacle to engaging in Arb-Med-Arb is the question of its legal basis under the applicable arbitration rules.

Most of the rules of the leading arbitration centers envisage the possibility that the parties reach a settlement once arbitration has initiated.[3] However, the rules are generally silent on the tribunal’s role in reaching the settlement. A notable exception may be found in the DIS Arbitration Rules, which devote a stand-alone provision (Article 26) to the encouragement of amicable settlements, stating: “Unless any party objects thereto, the arbitral tribunal shall, at every stage of the arbitration, seek to encourage an amicable settlement of the dispute or of individual disputed issues.”

On the other hand, the black letter of the ICC Rules of Arbitration (including both the 2021 and 2017 editions) is silent on the matter. Article 33, which did not suffer any changes from one version to the other, merely states the following:

If the parties reach a settlement after the file has been transmitted to the arbitral tribunal in accordance with Article 16, the settlement shall be recorded in the form of an award made by consent of the parties, if so requested by the parties and if the arbitral tribunal agrees to do so.

However, the “Case Management Techniques” —found in Appendix IV to both versions of the Rules— delve deeper into the role of the tribunal. The 2017 version described the following techniques regarding settlement during arbitration:

(i) informing the parties that they are free to settle all or part of the dispute either by negotiation or through any form of amicable dispute resolution methods such as, for example, mediation under the ICC Mediation Rules;

(ii) where agreed between the parties and the arbitral tribunal, the arbitral tribunal may take steps to facilitate settlement of the dispute, provided that every effort is made to ensure that any subsequent award is enforceable at law.

These provisions already provided an opening for Arb-Med-Arb, so long as the listed requirements were met. However, the 2021 revision of the Rules brought about a minor but potentially significant innovation. While subsection (ii) above remained unchanged, the wording of subsection (i) currently refers to “encouraging the parties to consider settlement of all or part of the dispute either by negotiation or through any form of amicable dispute resolution methods…”

Now, rather than merely informing the parties of the possibility of reaching a settlement, tribunals may more actively “encourage” this behavior. This subtle amendment may be important, as it reflects a greater acceptance toward arbitration tribunals being more involved in facilitating amicable settlements.

On the contrary, the argument could be made that the amendment is immaterial for our purposes, considering that subsection (ii) above, which is the one referring to Arb-Med-Arb more directly, remained unchanged. Notably, the provision still requires that the parties agree on the combination of roles by the tribunal, and that the tribunal undertakes every effort to ensure the enforceability of the award. Therefore, ICC tribunals are far from enjoying unlimited discretion in this field. Furthermore, the permissibility of Arb-Med-Arb in the past does not appear to have resulted in its general application by ICC tribunals.

However, at the risk of stating the obvious, a final observation may be made that the ICC had some kind of intent in drafting the amendment in question. It remains to be seen whether ICC tribunals will take note of the modification, and whether it will impact their approach to case management.

In practice, ICC tribunals frequently defer to the guidance of the ICC, as evidenced by the widespread use of the ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic. Therefore, this revision of the Case Management Techniques should not be disregarded so fast.

III. Conclusions

The practical application of Arb-Med-Arb does not solely depend on the arbitration rules, but rather, also on the consent of the parties involved, and perhaps more importantly, on the applicable mandatory legal provisions. Precisely, the Case Management Techniques place the latter at the forefront, mandating tribunals to go to great lengths to protect the enforceability of the award.

With the anticipated emergence of international mediation, and the question of arbitrator impartiality being more critical than ever, the discussion at hand promises to be an interesting one for the future.

[1] Rosoff, J. (2009). Hybrid Efficiency in Arbitration: Waiving Potential Conflicts for Dual Role Arbitrators in Med-Arb and Arb-Med Proceedings. Journal of International Arbitration, 26(1), 90 [2] Gao Haiyan v Keeneye Holdings Ltd [2011] HKEC 514 [3] Article 26.9, LCIA Arbitration Rules; Article 10.8, CAM-CCBC Arbitration Rules; Article 45, SCC Arbitration Rules

Jorge Arturo González

Jorge Arturo is a trainee lawyer at a Latin American law firm, having graduated from Universidad de Costa Rica. During his studies, he completed an exchange program in Utrecht University (Netherlands), participated in international moot competitions, and interned in corporate law firms, a start-up incubator and the Costa Rican Congress. He is interested in tech law, international business law and dispute resolution.

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