ICC revamps dispute resolution service

On the back of the revisions to the ICC Rules of Arbitration in 1998 and the recent report on construction industry arbitrations by the ICC Commission on International Arbitration, the ICC has turned its attention to alternative dispute resolution (ADR). On 29 June this year it announced new rules for the amicable resolution of business disputes. The new rules are called the ICC-ADR Rules (the ADR Rules) and are effective from 1 July 2001. They replace the 1988 ICC Rules of Optional Conciliation (the 1988 Rules).

The Foreword to the ADR Rules emphasises that ADR can be used at any time - before, during or without arbitration - and that the ADR Rules and the ICC's arbitration services remain distinct, with each being administered by a separate secretariat.

So, what's new?

There are two major differences between the ADR Rules and the 1988 Rules:

1. The most distinctive feature of the ADR Rules is that the parties are free to agree the technique(s) they consider most conducive to settlement of their particular dispute. Failing agreement on the method to be adopted the fallback is mediation. The 1988 Rules provide for conciliation only.

2. The ADR Rules set out four suggested ADR agreements providing for: optional ADR; an obligation to consider ADR; an obligation to submit disputes to ADR with an automatic expiration mechanism; and an obligation to submit disputes to ADR followed by ICC arbitration. These do not constitute model clauses but are simply suggestions that may be adapted to suit the parties' requirements.

The remainder of the ADR Rules essentially follow the 1988 Rules in terms of subject matter, although there are differences, the more important of which are as follows:

The Neutral

Helpfully, the ADR Rules provide guidance on the contents of the request for ADR. The 1988 Rules simply stated that the request should "set out succinctly the purpose of the request". The ICC appoints the Neutral but, in accordance with the consensual nature of ADR, the parties have more influence on the selection of the Neutral than under the 1988 Rules. The Neutral is selected either by the agreement of the parties or, failing agreement, by the ICC but in the latter case the parties may agree upon any desired qualifications or attributes of the Neutral and the ICC will make all reasonable efforts to appoint a Neutral with those characteristics. The ICC can also take into account the suggestions of any party regarding the qualifications of the Neutral. Where the ICC designates a Neutral the parties have the opportunity to object to the appointment, in which case the ICC must appoint another Neutral. The parties may designate more than one Neutral.

Fees and costs

Again, the provisions are similar to the 1988 Rules but with difference. So, there is a non-refundable registration fee payable on submission of the request for ADR but under the ADR Rules the fee is US$1500 and is payable by the party making the request. Under the 1988 Rules the fee was US$500 per party.

As under the Old Rules, a deposit is payable in respect of the administrative costs of the ICC and the fees and expenses of the Neutral. The ADR proceedings will not go ahead until payment of the deposit has been received.

The old sliding scale for calculating the administrative fees of the ICC and fees of the Neutral is abolished. Instead, both sets of fees are at the ICC's discretion, with a cap of US$10,000 on the administrative fees. The Neutral's fees are assessed on a time basis and the agreed hourly rate must be "reasonable in amount and shall be determined in the light of the complexity of the dispute and any other relevant circumstances". The Neutral is also entitled to his reasonable expenses as fixed by the ICC.

Conduct of the dispute

It is worth repeating that the ADR Rules give the parties the right and opportunity to agree the appropriate techniques for resolving the dispute, failing which the dispute is to be dealt with in mediation. Guidance on the various types of settlement techniques are set out in the Guide to ICC ADR (see below). Although the Neutral shall conduct the procedure in such manner as he sees fit, the Neutral should not impose a technique on the parties but must take into account the wishes of the parties.

The other point to note is that the ADR Rules contain an express duty on the parties to co-operate in good faith with the Neutral.

Confidentiality

There is an express confidentiality agreement and an express agreement, not to produce (as a general rule) in evidence in any subsequent judicial, arbitration or other proceedings any documents or communications submitted to the Neutral (unless they can be obtained independently by the party seeking to rely upon them) or any admissions made by the other party (or parties) during the ADR proceedings. As with the 1988 Rules, the Neutral is not to be called as a witness in or to act in any judicial or arbitration proceedings unless otherwise agreed by the parties. Under the ADR Rules the agreement of the parties must be in writing.

Termination

The main point to note here is that the Neutral can determine the proceedings if in his opinion the proceedings will not resolve the dispute. In accordance with the confidentiality agreement it is implicit that any settlement agreement should not be communicated to the ICC.

Finally, the ICC has published a useful Guide to ICC ADR for those who require further information on ADR and a commentary on the ADR Rules.

This article first appeared in Construction Europe in September.

For further information, please contact John Uwins at [email protected] or on +44 (0)20 7367 2502 or Helen Kenyon at [email protected] or on +44 (0)20 7367 2412.