Article 12(9) of new ICC Rules: is party autonomy really being eroded?

First published on Thomson Reuters Practical Law Arbitration Blog, here.

The principle of party autonomy is expressed and enshrined in section 34(1) of the English Arbitration Act 1996: the right of the parties to ultimately decide on all procedural and evidential matters. It allows parties to an arbitration agreement the freedom to choose how their arbitration is conducted as well as how their arbitral panel is appointed. In relation to the latter, in two-party arbitrations that require a three-person tribunal, each party often agrees that they can choose and appoint their own arbitrator with those arbitrators then appointing the third.

This fundamental principle of party autonomy in arbitration under English law is different from the approach adopted by some civil law jurisdictions. For example, in France, the principle of equality of the parties has prevailed over the principle of party autonomy since the famous Dutco decision of the French Cour de Cassation in 1992, and is reflected in articles 1453 and 1506 of the French Code of Civil Procedure. More recently, the Paris Court of Appeal has shown this principle in action in the PT Ventures decision, where they upheld an award rendered by a five-member panel directly appointed by the ICC, despite the parties’ agreed appointed mechanism in the arbitration agreement.

One of the ways parties exercise their autonomy in arbitration is by agreeing the rules by which an arbitration will be conducted, with many choosing to agree a set of institutional rules that will, among other things, determine procedural and evidential matters. The new ICC Arbitration Rules 2021 entered into force on 1 January 2021, and define and regulate the management of cases received by the International Court of Arbitration from 1 January 2021 onwards. One of the more controversial provisions of the new ICC Rules relates to the constitution of the arbitral tribunal. Article 12(9) provides:

 “[…] notwithstanding any agreement by the parties on the method of constitution of the arbitral tribunal, in exceptional circumstances, the court may appoint each member of the arbitral tribunal to avoid a significant risk of unequal treatment and unfairness that may affect the validity of the award.”

By that provision, the principle of equality of the parties may prevail over the principle of party autonomy in the appointment of the arbitral tribunal. It goes beyond previous versions of the ICC Rules, which only empowered the court to appoint each member of the arbitral tribunal specifically in multi-party arbitrations where all the parties were unable to agree on a method for constitution of the arbitral tribunal (now article 12(8)).

There is no guidance from the ICC as to what constitutes “exceptional circumstances” and this is left to the discretion of the ICC Court. On its face, it appears to target circumstances when the method of the constitution of the tribunal chosen by the parties is clearly unbalanced. The most obvious examples are where one of the parties is given much more control over the designation process, for example, an arbitration agreement which gives one party the power to appoint a sole arbitrator or the presiding arbitrator, or gives one party exclusive control over a list of potential arbitrators from which the other party must select its appointee.

The ICC’s own notes on this new article state that it has been introduced as an additional safeguard for parties’ equality in the constitution of the arbitral tribunal and that it allows the court to appoint each member of the tribunal “where the method of constitution in the arbitration agreement may pose a risk to the validity of the award”. The notes seem to suggest that it is concerns about enforcement rather than any imbalance per se in the appointment procedure that article 12(9) is specifically targeting. Thus it is most likely to arise where the law of the place of the arbitration does not permit the parties’ agreed appointment procedure, for example, in India, where the right to constitute the arbitral tribunal unilaterally is not permitted.

However, when considering enforcement, it is also important to remember article V.1(c) of the New York Convention (as well as similar provisions in some national arbitration legislation around the world), which provides that recognition and enforcement of an award may be refused at the request of the party against whom it is invoked, if the composition of the arbitral tribunal was not in accordance with the agreement of the parties. Thus there may be a very fine line to tread when exercising the power under article 12(9) of the new ICC Rules.

One possible answer to the potential tussle between article 12(9) of the new ICC Rules 2021 and article V.1(c) of the New York Convention is that by choosing the new ICC Rules, the parties have agreed that the appointment procedure includes article 12(9) and, therefore, a panel appointed in accordance with article 12(9) would be in accordance with the agreement of the parties even if it is contrary to any express provision for constitution of the tribunal in the arbitration agreement.

It will take time to see how, and how often, article 12(9) is applied, but from the perspective of an English trained lawyer, its potential to erode party autonomy is a potential concern.


Ruth Hosking

Ruth’s practice encompasses the broad range of general commercial litigation and arbitration.  Her particular areas of specialism include shipping, civil fraud, private international law and commodities.  She undertakes drafting and advisory work in all areas of her practice and regularly appears in court and in arbitration, both as sole counsel…

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