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New ICC Arbitration Rules in Comparison to KCAB Rules

2021.02.15

The International Chamber of Commerce’s revised arbitration rules came into force as of 1 January 2021 (the “<a href="https://iccwbo.org/content/uploads/sites/3/2020/12/icc-2021-arbitration-rules-2014-mediation-rules-english-version.pdf">2021 ICC Rules</a>”), replacing the rules that were in effect since 2017 (the “<a href="https://iccwbo.org/content/uploads/sites/3/2017/01/ICC-2017-Arbitration-and-2014-Mediation-Rules-english-version.pdf.pdf">2017 ICC Rules</a>”). Some of the key changes reflect modern trends and developments in international arbitration practice, and may signal changes to be expected in the Korean Commercial Arbitration Board’s International Arbitration Rules in effect since 2016 (the “<a href="http://www.kcabinternational.or.kr/common/index.do?jpath=/contents/sub020101">KCAB Rules</a>”). 
 
 
1. Joinder of Additional Parties 
 
In ICC arbitration practice, a party that wishes to join a third party to the arbitration must submit a request to the ICC Secretariat. The 2017 ICC Rules required that all parties (including the party to be joined) must agree to such joinder if the request is made after confirmation or appointment of any arbitrator.1    The 2021 ICC Rules relaxed this requirement by introducing Article 7(5) which provides that a third party may be joined after confirmation or appointment of an arbitrator without party consent if the arbitral tribunal so decides taking into account “all relevant circumstances” and the additional party accepts the constitution of the tribunal.2 
 
The rules for joinder under the KCAB Rules is more permissive than the 2017 ICC Rules but perhaps less so than the 2021 ICC Rules. Under the KCAB Rules, a third party maybe joined to an arbitration even without the consent of all of the parties if the additional party is “a party to the same arbitration agreement with the parties”.3    Another distinction between the KCAB Rules and the ICC Rules is that the request for joinder is made directly to the tribunal under the KCAB Rules. The KCAB Rules is silent regarding joinder applications prior to the constitution of the tribunal. 
 
 
2. Consolidation of Claims 
 
Article 10 of the 2017 ICC Rules provides that the ICC Court may consolidate two or more arbitrations for cases where “all of the claims in the arbitrations are made under the same arbitration agreement”.4    The revised 2021 ICC Rules clarify that the term “same arbitration agreement” refers to not just a single instrument but also identical arbitration agreements in different contracts.5    Unchanged from the 2017 Rules are provisions allowing consolidation where (i) the parties have agreed to it, or (ii) “the arbitrations are between the same parties, the disputes in the arbitrations arise in connection with the same legal relationship, and the Court finds the arbitration agreements to be compatible”. 
 
The KCAB Rules are more restrictive. Consolidation of claims is only possible if the proceedings are between the same parties.6    While the KCAB Rules do not explicitly address consolidation of arbitrations among multiple different parties arising from one arbitration agreement, consolidation may still be possible under the tribunal’s discretionary powers under Article 17 of the KCAB Rules. 
 
 
3. Disclosure of Third Party Funding 
 
Transparency in international arbitration continues to be a much-debated topic and the 2021 ICC Rules introduce a new provision designed to address this issue. Article 11(7) of the new Rules requires parties to disclose the existence and the identity of “any non-party which has entered into an arrangement for the funding of claims or defences and under which it has an economic interest in the outcome of the arbitration”, so as to assist arbitrators’ compliance with disclosure duties. 
 
The current KCAB Rules do not contain an equivalent provision. While there are on-going discussions regarding permissible third party funding under Korean law (for example, under Article 6 of the Trust Act or Article 34 of the Attorneys-At Law Act), the KCAB Rules do not expressly require parties to disclose any third party funding relationship.7 
 
 
4. Appointment of Arbitrators 
 
Under the 2017 Rules, the ICC Court’s authority to appoint arbitrators was limited to circumstances where the parties could not timely nominate the arbitrators or agree to a method for the constitution of the tribunal.8    The 2021 ICC Rules expanded this authority by introducing Article 12(9), which vests with the Court the power to appoint all members of the tribunal “in exceptional circumstances… to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award”. The ICC’s stated purpose of the provision is to protect parties from being harmed by “unconscionable arbitration agreements”.9 
 
There is no such equivalent under the KCAB Rules. The KCAB Secretariat may appoint arbitrators when the parties fail to do so or cannot agree on the method of constitution, and is not authorized to strip the parties of their choice of arbitrator.10 
 
 
5. Nationality of Arbitrators in Treaty-based Arbitration 
 
Another addition in the 2021 ICC Rules is the Article 13(6) requirement for all arbitrators in treaty-based arbitrations to be of different nationalities. This brings the 2021 ICC Rules more in line with other treaty-based arbitration rules such as the ICSID Rules.11 
 
The KCAB Rules has no separate provisions regarding treaty-based arbitrations. 
 
 
6. Remote Hearings & Electronic Submissions 
 
In tandem with the global COVID-19 crisis greatly increasing the awareness and need for remote arbitration hearings, the 2021 ICC Rules have made a number of amendments that reflect such changes in time. First, Article 25(2) of the 2017 ICC Rules which required hearings to be conducted in person has been removed from the new Rules and replaced by a new provision that allows hearings to be conducted “by physical attendance or remotely by videoconference, telephone or other appropriate means of communication”.12    Second, unlike the 2017 ICC Rules which required submissions and documents to be “supplied in a number of copies sufficient to provide one copy for each party, plus one for each arbitrator, and one for the Secretariat”, the 2021 ICC Rules do away with this paper filing requirement and simply state that documents “shall be sent” to the parties, arbitrators and the Secretariat.13 
 
Remote hearings and electronic submissions are also possible under the KCAB Rules. While the KCAB Rules do not explicitly provide for the possibility of virtual hearings, there is also no requirement for an in-person hearing. As for electronic submissions, the KCAB Rules expressly provide for such under Article 4(1). 
 
 
7. Expedited Procedure 
 
Lastly, the amount threshold for the expedited procedure has been increased from USD 2 million to USD 3 million.14    By comparison, the applicable threshold under the KCAB Rules is KRW 500 billion (approx. USD 444,721 as of February 5, 2021).15 
 
 
______________________________________________________ 
1.  2017 ICC Rules, Article 7(1). 
2.  2021 ICC Rules, Article 7(5). 
3.  KCAB Rules, Article 21(1). 
4.  2017 ICC Rules, Article 10. 
5.  2021 ICC Rules, Article 10. 
6.  KCAB Rules, Article 23(1). 
7.  See, e.g., The Legal 500’s Comparative Guide on International Arbitration in South Korea, Q. 45 (<a href="https://www.legal500.com/guides/chapter/south-korea-international-arbitration/">Link</a>). 
8.  2017 ICC Rules, Article 12. 
9.  ICC, Notes to the Parties and Arbitral Tribunals on the Conduct of the Arbitration under the ICC Rules of Arbitration, 1 January 2021, para. 43. 
10.  KCAB Rules, Article 12. 
11.  See, e.g., ICSID Arbitration Rules, Rule 1(3). 
12.  2021 ICC Rules, Article 26(1). 
13.  2021 ICC Rules, Article 3(1). 
14.  2021 ICC Rules, Appendix VI, Article 1(2). 
15.  KCAB Rules, Article 43(a).

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