Amendments to the ICC Arbitration Rules

The International Chamber of Commerce (ICC) launched a new version of the Arbitration Rules, which entered into force on January 1, 2021. Even if there are no substantial changes, it is important to be aware of the new additions because those amendments address the arbitral procedures in a way that fits the new ‘remote’ reality.

Much has been written and spoken about the post COVID era and the need for technology, not only during the pandemic, but hereinafter. Thus, the purpose of this article is not to be reiterative in that sense, but to remark that some institutions are making efforts to comply with the challenges that this era will demand.

Having said the foregoing, I recall that in a prior article I stated that we transitioned our daily activities almost automatically, giving as examples that arbitration hearings are now being held via videoconference; and also construction-related hearings are using BIM Modeling technology as well as drones in order to know the status of the projects in real time.

In that regard, it is worth noting that the ICC is amending the arbitration rules accordingly by optimizing the use of technology in the written briefs as well as in the way to hold the hearings. Please note that the optimization of the use of technology is not the only amendment to the arbitration rules, but this article will address that change only.

With respect to the written briefs and communications, the new version of the ICC Arbitration Rules, in articles 4 and 5, provide that electronic transmission instead of hard copies is the default method of submitting documents. Even though this was already the general practice, the fact that it is incorporated in the ICC Arbitration Rules represents a good step toward the new reality.

Regarding the use of technology in hearings, article 26 (1) of the new version of the ICC Arbitration Rules, establishes that the Arbitral Tribunal has the authority to decide if the hearing will be held in person or remotely. Such decision will be taken, of course, after hearing the parties and taking into account the circumstances of every case.

Also, it is well known that paragraph (2) of article 25 of the 2017 ICC Arbitration Rules generated some controversy because its reference to “in person” left open to interpretation by some litigators that final arguments shall be in person only.

The new version of the ICC Arbitration Rules solved this issue by removing this paragraph, so there is no doubt that, interpreted jointly with article 26, the hearing can be held remotely.

The amendments addressed in this article are consistent with the nature of arbitration, i.e. a flexible arbitration that has to fit the requirements, not only of the parties, but also to the current reality, which demands increased use of technology as practical.

Litigation and academic topics apart, I wish to my readers and to everybody in the Construction Forum of the American Bar Association, a very good 2021.

I hope to keep in touch in the new year and wish you a 2021 full of good vibes.

Author Juan Pablo Sandoval García is an Associate at COMAD, S.C. (www.comad.com.mx). His email address is jpsandoval@comad.com.mx.

Discovery Denied in ICC Arbitration over Panama Canal

As many people are aware, the Panama Canal expansion is one of the largest "megaprojects" going on in the world today. In January of 2014, the joint-venture contractor called GUPC (which stands for Grupo Unidos Por El Canal, S.A.) announced that cost overruns required $1.6 billion in additional money to be paid to it by the Panamanian government.  Then, in December of 2014, the GUPC consortium stated that it had additional claims totaling $737 million.

Of course, in the world of the international construction lawyer, this means arbitration.  GUPC filed its arbitration in December of 2013 under the International Chamber of Commerce ("ICC") rules in Miami, Florida, in accordance with the contractual dispute resolution clause. Discovery in the case is being conducted under the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration -- the IBA Rules.

In that arbitration, GUPC seeks compensation for its cost overruns and other damages from Autoridad del Canal de Panama -- the Panama Canal Authority, or ACP.  ACP contracted with CH2M Hill Panama, S. de R.L., for CH2M Hill-Panama to serve as ACP's program manager for the Canal expansion.

GUPC believed that CH2M Hill-Panama would have documents necessary for its arbitration with GUPC and served a request for production of documents under 28 U.S.C. § 1782 on CH2M Hill-USA in Colorado as a result.  CH2M Hill-USA refused to provide the documents.

The result of that subpoena ended up in a battle in the United States District Court for the District of Colorado.  In re Application of Grupo Unidos Por El Canal, S.A., Civil Action No. 14-mc-00226-MSK-KMT (D. Colo. April 17, 2015).  Bear in mind that this opinion is a magistrate's recommendation to the District Court, so this is by no means a final decision.

CH2M Hill-USA made five major arguments.  First, CH2M Hill-USA argued that the ICC arbitration was not a tribunal as that term is defined under §1782.  Second, CH2M Hill-USA claimed that the ICC arbitration is not a "foreign or international tribunal" as is required by § 1782.  Third, CH2M Hill-USA stated that they do not have possession or control of the documents -- CH2M Hill-Panama does -- and, further, that the documents are located outside the United States. Fourth, CH2M Hill-USA argued that the subpoena was unduly burdensome and intrusive. Finally, CH2M Hill argued that the subpoena in federal court was an attempt to circumvent discovery limitations imposed in the ICC arbitration.

In the end, the magistrate agreed with CH2M Hill-USA on all of its arguments.  First, the ICC arbitration was not a "tribunal" because it arose out of a private agreement to decide claims using certain rules. Even though those rules may lend the appearance of being a quasi-judicial proceeding, the court was not persuaded that voluntarily agreeing to those rules created a "tribunal" for purposes of §1782.

Second, the court held that private arbitration does not fall under the meaning of "foreign or international tribunal" under §1782.  The distinction drawn is that arbitral proceedings that are the product of contractual agreements differ from state-sponsored proceedings in foreign courts. The magistrate was persuaded that enforcing the subpoena "would defeat the timeliness and cost-effectiveness of arbitration, and would place a heavy burden on the federal courts to determine discovery requests." Slip Op. at 16.  Further, the magistrate was not persuaded that this was an international arbitration because it was being held in the United States, but she did not rule on the issue because it was not necessary to do so.

Third, as to the location of the documents, the magistrate cited to the fact that Congress likely meant for the reach of §1782 to apply only to evidence located inside the United States. After all, it would be outside the Court's jurisdictional reach to compel CH2M Hill-USA to produce documents physically located in Panama.

Fourth, in analyzing the burden issue on CH2M Hill-USA, the magistrate considered the factors set forth in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004).  Even though the magistrate was not required to reach these factors, the court noted that if the statutory requirements under §1782 had been met, she still would have denied production. Under Intel, certain discretionary factors such as burden come into play. Here, production would have required CH2M-Panama to produce 89 boxes of paper and 1.6575 terabytes of information -- which works out to approximately 80,000 boxes of documents. Thus, the magistrate held that on that fact alone, it is likely that the requests were too broad.

Finally, the magistrate agreed that the subpoena was an effort to circumvent the ICC panel's authority related to discovery.  GUPC neither sought nor received approval from the arbitration panel to obtain the information requested.  This fact led the magistrate to believe that the delay associated with such a "grandiose document production" would not be well received by the Panel.  As such, for every reason possible -- both statutory and those within the court's discretion -- the request for the subpoena to be enforced was denied.