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The impact of coronavirus on arbitration: the options

Out-Law Analysis | 23 Mar 2020 | 10:28 am | 3 min. read

Despite increasing restrictions being placed on people in response to the coronavirus crisis, some arbitral hearings might be able to proceed through the use of technology.

At a time when many arbitral institutions and courts have advised parties, arbitrators and others involved in arbitrations to consider the potential impact of coronavirus, or Covid-19, parties should explore the option of holding a virtual hearing.

Virtual hearings will not be a panacea in every case, however they may be a viable option for parties who might otherwise be faced with an extended period of financial uncertainty.

Coronavirus impact and restrictions

In the fast-moving health and economic crisis arising out of the coronavirus, or Covid-19, pandemic, it is important for parties to ongoing legal proceedings to consider the options available to them to overcome social-distancing and travel restrictions.

International arbitration is particularly vulnerable to disruption caused by the Covid-19 outbreak due to the disparate locations of parties, arbitrators, witnesses and others involved in a hearing, as well as the differing recommendations and directives applying to those locations.

Options open to businesses involved in arbitration proceedings

Many parties are now faced with a difficult decision, particularly where an in-person hearing had been planned for the near future. Some options might be to:

  • Postpone all in-person hearings indefinitely, until such time as it is deemed safe to proceed. With many parties facing uncertainty as to their cash flow due to the impacts of Covid-19 on other areas of their business, this might not be an attractive option. In addition, with experts divided in their views on when the threat of transmission will pass, when to reschedule a hearing is anyone's guess.
  • Have some or all issues decided "on the papers" without the need for an in person hearing. This approach may not be appropriate for all issues in dispute, for example where a witness's credit is in issue requiring rigorous cross examination. Even if only some issues can be determined on the papers, the length of delay to the final award might be reduced and an interim award on certain key issues might be capable of prompting the parties to settle.
  • Conduct a virtual hearing. We certainly have the technology to conduct virtual hearings successfully but they are not yet routinely utilised.

Relevant considerations for virtual hearings

The use of technology as part of legal proceedings is commonplace. In many jurisdictions we have become familiar with some witnesses providing evidence remotely by video-link, for example.

There are a number of platforms on the market which are capable of hosting a virtual hearing. Many allow for the sharing of documents and this is especially effective when paired with an online review book. The platforms also provide virtual break out rooms and private chat features, either for one-to-one conversations or as a group.

Costs associated with virtual hearings are relatively low, especially when the savings gained by avoiding travel costs are taken into account.

Virtual hearings will not be appropriate in all circumstances, however. 

Some factors against virtual hearings might be:

  • Hearing length: Anyone who has participated in a lengthy videoconference will attest that it is more difficult to maintain focus than it is when meeting in person. Delays and disruptions, possibly arising from technology failures, may be amplified over a prolonged period.
  • Atmosphere for witnesses: Witnesses tend to be more relaxed giving evidence by video link. Where a witness's evidence is contentious, the cross-examiner might be unfairly disadvantaged by not being able to see the witness in the flesh and to be seen in the flesh by them. This cuts both ways, with a party's own witnesses and also their opponent's witnesses.
  • Sitting hours: In a cross-border dispute with various time zones, some or all parties may be forced to sit at unsociable hours, potentially creating an imbalance.
  • Availability of internet: A fast, reliable and secure internet connection for each participant is a necessity. While this is ordinarily taken for granted in many parts of the world, internet performance is not guaranteed during this pandemic as telecommunication networks come under increasing strain.
  • Independent observer: Ideally an independent observer should be present at the location of each witness to ensure that the witness is properly sworn in and that they are comfortable using the technology. This might not be possible for whatever reason, including if a witness is required to isolate or quarantine.

Parties to extant legal proceedings should weigh up all the factors and work out what is best for them. In some cases a virtual hearing may well be the answer.