Jordan ... the update is a good practice guide for newcomers.
Towards better arbitrations
STUART JORDAN* provides an insight into the recommendations made and guidance provided in the new update to the ICC arbitrations rules that apply to construction disputes.
01 April 2019
After a very substantial gap, the International Chamber of Commerce (ICC) has just published a 2019 Update to its final report on Construction Industry Arbitrations, which was produced in 2001. The update is subtitled “Recommended Tools and Techniques for Effective Management”.
The update follows more or less the same path as the 2001 report: it begins with a discussion of the special factors (“particularities”) in construction disputes and then runs through the sequence of an action, from arbitrator selection through to hearings. As before, the update (rather politely) addresses itself to the assistance of “arbitrators who do not have much experience of construction arbitrations conducted under the ICC Rules or who wish to be reminded of the options available or the practice of others”. In other words, it is a good practice guide for newcomers and for people who already arbitrate construction disputes but perhaps need a refresher.
Although addressed to arbitrators, the update is important also for disputing parties and their representatives. It acknowledges party autonomy (whether following agreed contract terms or jointly-expressed wishes) but states the arbitrators’ duty is to tell parties if they consider the parties’ proposed course of action is not the best – and to suggest alternatives. We, therefore, need to take note of the ways in which arbitrators might be guided in this.
Ostensibly, the update was prompted by the publication of new ICC Rules of Arbitration in 2017 (just as the 2001 report followed publication of the 1999 Rules) and is a handy way to explain the opportunities presented by those revisions. The 2016 revisions to the Rules were generally well-received by the construction industry as the changes were seen as particularly helpful to the handling of construction disputes – especially in being able to handle multi-issue and multi-contract disputes together.
With this update, ICC is trying to help parties make the most of the new Rules. We need to remember that the organisation operates in an increasingly crowded market. In my experience, where ICC would have been “painted in” to the disputes provisions in contracts in 2001, there is more recognition now of the many global and regional arbitration institutions – plus specialist national courts. In disputes resolution, “what’s good is what works” and parties want high-quality decisions, user-friendly procedures and cost-effective outcomes. This update highlights how best to work with the ICC Rules to achieve just that.
Many of the recommendations look like plain common sense but that perhaps doesn’t hurt if it makes practitioners and arbitrators stop before following habit. Many of the recommendations are to drive cost efficiency. Highlights include:
In arbitrator selection, one of the “key qualities” (along with knowing the industry and the law) is…availability! It sounds obvious but many lawyers can attest to the difficulties in finding top-grade arbitrators – and significant delays are caused by unavailability at crucial stages. If the one you want appears to be free, you maybe haven’t asked enough questions. So get definitive answers on a quantified commitment of time.
The number of arbitrators is also considered, based on the value in dispute justifying the cost. The update acknowledges that parties from civil law countries often expect to see a panel of arbitrators regardless of the dispute value.
The first case management conference should comprehensively set the path for the proceedings. The update includes a checklist of issues to be determined – including the need for expert evidence (which might be tribunal-appointed), splitting the issues (deciding preliminary issues, partial awards, procedural awards), document management and settlement procedure.
Disputes based on programmes (schedules) and critical path networks need to be presented clearly and at an early stage. Any party claiming time extensions needs to open its methodology to examination. Experts should meet early to identify the facts and records each considers to be relevant “so as to establish an agreed baseline and methodology”. This sounds a little ambitious but, short of agreement on this, it is right at least to try to understand why the parties disagree on the basic approach required. Delay claims tend to be characterised by the parties’ experts effectively talking past each other until the tribunal decides which one is right – or the least wrong.
Arbitrators are reminded of their powers relating to interim measures, including the ordering of compliance with (or relief from) the decision of a dispute board and preservation of assets.
This update is a useful reminder of what can be achieved by adopting good practice under the latest ICC Rules, although so much of this (especially cost- and time-efficiency measures, issue disposal and use of experts) represents lessons learned some time ago. This still feels some way behind the procedure of modern commercial or construction courts.
* Stuart Jordan is a partner in the Global Projects group of Baker Botts, a leading international law firm. Jordan’s practice focuses on the oil, gas, power, transport, petrochemical, nuclear and construction industries. He has extensive experience in the Middle East, Russia and the UK.
