The new Rules of the ICAC at the Ukrainian CCI: Overview of novelties

• Litigation & arbitration

The International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry was established in 1992 under the recommendation of the Parliament of Ukraine. Nowadays the ICAC is one of the worlds’ leading and most authoritative arbitration centers which performs close cooperation and shares the experience with most part of the permanent arbitration institutions.

The ICAC is competent to resolve the disputes which arise in course of the performance of the foreign economic contracts and other types of the foreign economic relations.

From the very beginning of its activity the ICAC was operating under the Rules of the ICAC at the Ukrainian Chamber of Commerce and Industry (hereinafter – the “Rules of the ICAC” or the “Rules”). The aforementioned Rules of the ICAC had never been amended substantially from the moment of their publication in 2007 until September 2017.

For several years Ukrainian arbitration society actively discussed the need for the development of the procedural Rules of the ICAC at the Ukrainian Chamber of Commerce and Industry. It seems like the requests of the Ukrainian lawyers were heard by authorities of the ICAC at the Ukrainian Chamber of Commerce.

In early September 2017, on its 25^th anniversary, ICAC at the Ukrainian Chamber of Commerce and Industry published its Rules of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. The arbitration proceedings in the ICAC at the Ukrainian Chamber of Commerce which initiated on or after 1 January 2018 would be more expedited.  That is one of the key procedural developments set in the Rules recently published by the ICAC at the Ukrainian Chamber of Commerce and Industry which will come into force on 1 January 2018.

The key changes affected such procedural matters as the types of procedure, third parties involvement, succession, interim measures and the amount of arbitration fee.

Expedited procedure: how will it work?

The key novelty of the new Rules is the right of the parties to refer their dispute for consideration in an expedited manner, in course of expedited procedure.

Quite the similar procure was provided in the ICC Rules of Arbitration, LMAA Small Claims Procedure, SCC Expedited Arbitration Rules, etc. The expedited procedure was invented for resolution of the disputes of a simple nature especially. The main advantages of such a procedure are speed and cost effectives, i.e. the resolution is faster and more cost effective.

In accordance with the new Rules of the ICAC, in particular, the expedited proceedings might be conducted only in case when the parties have clearly provided for it in the arbitration agreement or subsequently agreed upon such proceedings. In any case, such parties’ agreement on expedited arbitral proceedings shall be admissible no later than filing a response to the Statement of Claim by the respondent.

The time limits for payment of the arbitration fee are twice shorter in course of expedited procedure than in course of general procedure. In order to compare, the arbitration fee in course of general procure shall be paid within 30 days after the Order receipt. In course of the expedited procedure the arbitration fee shall be paid within 15 days after the receipt of the relevant order.

In case of the Claimants’ failure to pay arbitration fee timely, the arbitration proceedings would be terminated.

The special order of arbitrators’ appointment was introduced in the new Rules for the expedited procedure. In particular, the time limits for appointment of the arbitrators are at least twice shorter in comparison with time limits for appointment of the arbitrators in course of the general procedure.

Moreover, the making of the arbitral award in expedited proceedings will be 10 days quicker than in course of the general proceedings.

Meantime, there are no special time limits for the expedited arbitral proceedings in the new Rules.

Obviously, the expedited arbitral proceedings would be half faster than the arbitral proceedings under the rules of general procedure, due to the cut time limits for the appointment of arbitrators, payment of arbitration fee, submissions of the counter claim and making of the arbitral award. Herewith, one but essential nuance which stands apart from the other pros and cons of the aforementioned procedure in the new Rules is that the amount of arbitration fee does not differ from the amounts of arbitration fee set for the general procedure.  Meantime, the practice of the most part of the worlds’ leading arbitration institutions demonstrates the different approach and focuses on cost effectiveness of the proceedings, in particular. Thus, the time efficiency usually keeps pace with the cost efficacy. Considering the above, there’s a room for further improvements.

Amount of claim must be indicated in any case  

The matters related to the amount of claim found their detailed regulation in new and separate article.  In the aforementioned article, in particular, were set the requirements of how to determine the amount of claim and mandatory requirement to indicate the amount of claim in the statement of claim even if it’s of non-material nature. In addition, the question with interests’ accrual became more clarified and regulated.  In Rules which are in force there’s no such regulation.

In accordance with new Rules, the amount of damages accrued will be limited by the date of the claim’s filing.  In case when the party claims the interests that continue to accrue the amount of interests shall be determined by the amount of interests that accrued at the date of the claim’s filing.  

In the same time, under the new Rules as well as under the Rules which are in force, the Claimant will still have a right to increases the amount of claim in course of the arbitral proceedings.

Procedural legal succession

The other novelty introduced in new Rules is the right to ask to involve the successor of one the parties in the arbitral proceedings. Thus, it would be possible for the party by filing the relevant written petition to involve the successor into the arbitral proceeding, in the event of termination of the activities of the legal entity, change of a creditor or a debtor in the obligation, death of an individual or declaration of a natural person missing, etc. The new Rules of the ICAC gives the authority to engage the legal successor to the President of the ICAC and the Arbitral Tribunal.

The size and the form of the interim measures

The changes haven’t passed through the interim measures in course of arbitral proceedings. The questions related to the interim measures got their detailed regulation in Chapter 5 (Interim Measures) of Rules. In order to compare, the aforementioned question is regulated quite briefly in Rules which are currently in force.

Under the new Rules, there’s possibility for cross-undertaking in damages. In particular, the ICAC President or the Tribunal on its own initiative or upon the petition of the relevant party may require a party in favor of which the interim measures have been granted to provide the security of the reimbursement for possible damages (the Cross-undertaking in damages).

The ICAC President or the Tribunal may between such forms of the interim measures such as depositing of funds to a deposit account of the Ukrainian Chamber of Commerce and Industry, provision of a bank guarantee, pledgery, etc. Quite similar forms of interim measures are provided, for example, in LMAA Terms. The usage of such forms of the interim measures is common worlds’ practice in international commercial arbitrations.

Arbitration fees

In Rules of the ICAC which are in force there’s no upper limit for the amount of arbitration fees. Meantime, in new Rules the amount of the arbitration fees was limited to 350 000 USD.

Summing up the above, the aforementioned changes and adoption of the new Rules of the ICAC are great and forward step toward the meeting of the requirements of business and time. The developers showed the balanced and reasonable approach in making changes. Whereas there’s a place for further development, the new Rules of the ICAC in their most part comply with the worlds’ leading arbitration trends. In the meantime, the practice only will show the rationality and usefulness of such changes.  

Karyna Gorovaya

gorovaya@interlegal.com.ua