Art collector's court case signals potential legal and contractual issues with NFTs
Out-Law Guide | 08 Sep 2020 | 11:03 am | 10 min. read
Courts in various European jurisdictions have responded innovatively, putting in place measures to try to achieve business as usual during the pandemic as far as possible.
Covid-19 has accelerated the use of pre-existing technology solutions, but will also act as a catalyst for further change and cutting-edge innovation in the future. These changes will impact formal court procedures, as well as the way in which lawyers work with their clients in and across different jurisdictions.
The concept of a virtual hearing is not an unusual one in England where, for a number of years, the courts have encouraged the use of telephone hearings where appropriate. Witnesses have also been permitted to give evidence remotely, even at trial – for example, where a witness lives abroad. In addition, the English courts have used electronic filing for a number of years.
The English courts were already relatively well prepared for using technology for hearings, and were able to respond quickly to the additional demands resulting from the pandemic.
As a result, the English courts were already relatively well prepared for using technology for hearings, and were able to respond quickly to the additional demands resulting from the pandemic. This is true of the courts at all levels, with the High Court ordering that a full trial can proceed remotely and the Supreme Court hearing submissions and handling down judgments via video.
The courts in England usually use two different platforms: BT MeetMe for audio-only hearings; and Skype for Business where video is required. The courts have largely tried to ensure that hearings still take place wherever possible and have tried to ensure that the public has access to hearings, using YouTube on occasion. They have also issued useful guidance on remote hearings.
Face-to-face meetings between parties and their advisers had already begun to decrease given the increase in flexible and agile working, so the pandemic lockdown has in some ways merely accelerated the inevitable use of virtual meetings. Witness statements can be taken virtually, with an appropriate paragraph inserted dealing with how the statement was taken; and statements can be signed electronically. Some documents, such as affidavits, require a 'wet' signature, but this requirement may soon be relaxed and the courts are already showing sympathy for parties who face genuine difficulties in obtaining them.
Innovative law firms are already offering case extranets to their clients to help manage complex disputes, allowing the client and their legal team to collaborate more closely as a team and to share and access important documents when working at different locations. In future, we are likely to see more interest in the use of litigation data analytics to support a data-driven focus on risks, claims and avoiding disputes.
Arbitration, as a contractually agreed method of dispute resolution, has traditionally had more flexibility in the conduct of hearings. As a result, arbitrators and the parties to a dispute can agree to proceed remotely and decide which platform is best for them. Arbitration is very likely to evolve over the next few years, with the increasing use of fixed fee blockchain-driven arbitration in order to streamline the arbitration process by reducing the length and costs of the process.
Parties have tended to delay mediation until it can once again be run face to face. However, the experience of those who have attempted virtual mediations to date is generally a positive one, with settlements still being capable of being agreed. An added layer of security is needed to allow private communications to take place between each party and the mediator, and between each party and their advisers. See our Out-Law guide – remote mediation.
An Order of 25 March 2020 permits civil and commercial courts to conduct remote hearings provided that the technology used makes it possible to ascertain the identity of participants; guarantees the quality of the transmission; and guarantees the confidentiality of exchanges between the parties and their counsel. Where it is technically or materially impossible to use such a means the judge may, by decision not subject to appeal, decide to hear the parties and their lawyers, or another person to be heard, by any electronic means of communication, including by telephone.
Unlike the civil and commercial courts, France's arbitration institutions have considered the use of virtual hearings on a larger scale.
The National Council of Commercial Court Clerks has directed the legal profession to use Tixéo, a French platform recommended by the French National Commission for Information Technology and Liberties, in order to respect the confidentiality of legal proceedings.
These changes are likely to continue to be implemented at the client's convenience in the future.
Unlike the civil and commercial courts, arbitration institutions have considered the use of virtual hearings on a larger scale.
France is home to the International Chamber of Commerce (ICC), which has requested for all communications to be conducted primarily by email at the present time. However, a number of arbitration hearings have taken place digitally in order to ensure business continuity, and ICC is developing a virtual hearing solution for this purpose.
Other arbitration institutions have worked to provide advice to the parties on practical arrangements in this regard, including through checklists.
Computer tools have made it possible for parties to connect with a mediator in a secure, private online discussion space, where the protection of personal data is assured. For example, the Paris Bar has created a videoconferencing mediation tool on its own platform, allowing emergency mediation to take place in relation to family disputes. Bailiffs have also launched a dispute resolution service through their online mediation platform, allowing individuals and professionals to find a solution to conflicts involving unpaid rent or bills.
Contact Melina Wolman for queries in relation to litigation in France.
German procedural law has allowed for hearings to be conducted via videoconferencing since 2001. However, to date, the use of this technology in German court proceedings has been a rare exception. Covid-19 has prompted the courts to be more open to conducting hearings by videoconference, provided that the court has the appropriate facilities. Telephone conferencing is not sufficient.
Changes to the German courts brought on by the pandemic have the potential to become permanent changes. We expect more judges to conduct hearings using videoconferencing as they become more familiar with the technology, provided that no witnesses or experts need to be heard.
In larger cities, such as Munich, in particular, the courts have now been provided with the required technical facilities, and are being trained in their usage. However, as the principle of public hearings requires judges to be in court during a remote hearing, very few judges do in fact make use of it and most oral hearings are taking place as planned. Judges are using larger hearing rooms equipped with a substantial number of Plexiglas panels, which are disinfected after every hearing.
Witness evidence may also be taken by means of a videoconference, but we do not expect many courts to examine witnesses remotely.
The changes brought on by the pandemic have the potential to become permanent changes. We expect more judges to conduct hearings using videoconferencing as they become more familiar with the technology, provided that no witnesses or experts need to be heard. Judges are free to conduct oral hearings as they wish to, to postpone them due to Covid-19, or to decide the case via written proceedings, although the written approach requires the prior consent of both parties.
Business travel and a culture of face to face client meetings have also been challenged by the pandemic, and we expect that clients may ask for service delivery that involves less travel - and therefore less cost - in the future.
Major international arbitral institutions have encouraged parties and arbitrators to mitigate the effects of any impediments due to Covid-19 by taking advantage of the institutional rules and case management techniques to their full extent. However, every arbitral tribunal makes its own decisions on the handling of cases, although we believe that arbitral tribunal are generally more open to the use of technology and hearings than state courts.
Most European borders are open again, and federal states in Germany are slowly starting to allow gatherings provided health and safety requirements are met. We therefore expect face to face arbitral hearings to be held again soon.
Parties in mediation can always settle their disputes out of court and may use any technologies available to them. However, we have not yet seen any major changes to mediation.
Contact Sibylle Schumacher for queries in relation to litigation in Germany.
The Irish superior courts – the High Court, Court of Appeal and Supreme Court - have been using Pexip VMR to conduct virtual hearings. Parties can connect to the virtual courtroom from their laptop or PC, or from a smartphone or tablet using the Pepix app.
Confidential communications between solicitors, counsel and their clients are conducted through separate conference calls or video calls, outside the system used by the courts service.
We expect the use of video conferencing facilities in lieu of telephone calls to increase in Ireland, as it is just as quick and easy to set up a video conference and clients and solicitors alike are becoming more used to this method of communication.
We expect the use of video conferencing facilities in lieu of telephone calls to increase, as it is just as quick and easy to set up a video conference and clients and solicitors alike are becoming more used to this method of communication. In some instances, there will be no substitute for a face to face meeting, but video conferencing offers the next best solution where management time is limited.
Overall, the changes have been positive for users of the Irish court system and we expect that remote hearings will soon become the norm.
Arbitrations are still proceeding during the pandemic. Although some parties have indicated a preference for socially distanced face to face arbitrations subject to public health guidelines, virtual hearings are also taking place.
The Chartered Institute of Arbitrators (CIArb) has released a guidance note on remote procedures (13-page / 3.1MB PDF), which is being referred to by members of the Irish branch of CIArb in the conduct of remote arbitrations. According to the guidance, technology, software, equipment and type of connection to be used in remote proceedings should be agreed on by the parties and tested with all participants in advance of any meetings or hearings. Cybersecurity requirements should be considered, agreed by parties and a record made. A procedure and a digital platform for transmission and storage of documentation for remote proceedings should also be agreed by the parties before they begin, with use of electronic papers encouraged.
Different mediators are using different tools to facilitate virtual mediations including Skype for Business and Loop Up. In our experience, it is possible to successfully resolve a commercial dispute using virtual mediation.
Contact Ann Henry for queries in relation to litigation in Ireland.
Courts in Northern Ireland have been using SightLink 8 to conduct court hearings during the pandemic restrictions. This software allows participants to connect with the court via Skype, web browser, corporate video conferencing system, smart phone or telephone.
Hearing bundles and authorities to be relied on are physically delivered to the court in the usual way. Witness statements are not a requirement of dispute resolution in Northern Ireland, so the pandemic has had little impact on this area of practice.
The view at this stage seems to be that clients in Northern Ireland would still prefer the formality of physically attending court, or of being able to see and engage with the other party to a mediation.
An Interim Practice Direction sets out the protocol to be followed and what is expected of the parties attending hearings and reviews for case management.
It is unclear if participants in Northern Ireland will continue to use these innovations in the future. The view at this stage seems to be that clients would still prefer the formality of physically attending court, or of being able to see and engage with the other party to a mediation.
Arbitrations appear to be on hold in Northern Ireland. We have not heard of any taking place, although the Commercial Court has dealt with one application to enforce an adjudication award.
Mediations are being successfully conducted, with the parties attending remotely using technology solutions.
Contact Deirdre Cormican for queries in relation to litigation in Northern Ireland.
In Scotland, the appeal courts have started to use video and webex facilities for oral hearings. Some of the lower courts are using telephone conferences for hearings.
Rules of court have been amended to allow email communication and electronic submissions where hard copy would have previously been required. However oral hearings, which are an integral part of Scottish litigation procedure, have largely ceased. For the most part, these are being postponed rather than addressed by a technical alternative.
While the use of video conferencing facilities are becoming better established as a routine means of communicating, the limitations of these communication methods over face to face discussions have also become clear. One of the main drawbacks is that the technology is simply not available or effective enough to support virtual hearings of the scale and number required to offer a reasonable alternative to the Scottish courts. A combination of virtual and in-person hearings may become the 'new normal' once possible to accommodate.
Contact Jacqueline Harris for queries in relation to litigation in Scotland.
Spain has passed temporary laws allowing the courts to implement technical measures during the current public health 'state of alarm', and for up to three months after its completion. Procedural acts such as trials, appearances, statements, hearings and court deliberations can generally be conducted by virtual or remote means without the physical presence of participants, provided that the means are available. The only exception is in the criminal justice system, where proceedings for serious offences require the physical presence of the accused.
The main concern associated with remote hearings is how to maintain the protection of the legal principles that govern proceedings under Spanish law. For example, the fact that a witness may testify from one of the parties' lawyer's offices may be seen as a potentially damaging option.
The Consejo General del Poder Judicial has published a set of guidelines for the conduct of legal proceedings using technology. The guidelines differ between low quality 'virtual rooms' such as Skype, Zoom and Teams, that do not allow for the simultaneous exchange of sound and other elements; and high quality video conferencing systems that allow for sound and images to be exchanged simultaneously and permit full interaction between the parties. Low quality systems should not be used for certain proceedings including witness interrogation and expert evidence.
The guidance states that hearings should continue to be held virtually while the social distancing rules are in force. After that, remote hearings could be advisable where:
We therefore expect these changes will remain in force for a considerable period of time after the public health crisis has passed.
From a Spanish perspective, the main concern associated with remote hearings is how to maintain the protection of the legal principles that govern proceedings under Spanish law. For example, the fact that a witness may testify from one of the parties' lawyer's offices may be seen as a potentially damaging option.
In general terms, arbitration is taking a similar approach. Hearings are being conducted remotely, generally through Teams, Skype or Zoom.
Contact Fernando Gutiérrez for queries in relation to litigation in Spain.
17 Apr 2020
03 Jul 2020
Art collector's court case signals potential legal and contractual issues with NFTs