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Coronavirus 'will speed up the adoption of virtual arbitrations'

Out-Law Analysis | 17 Apr 2020 | 9:33 am | 4 min. read

Arbitration is a commercial and flexible process that has been developed to serve the needs of the parties, so it is well placed to adapt to the rapidly changing circumstances due to Covid-19.

Attitudes and practices around conducting substantive hearings remotely that seemed impracticable or impossible a few months ago have fast become the norm.

This change in attitude is likely to last far beyond the Covid-19 lockdown period. It will help arbitrations become more efficient, less costly and will create more 'greener arbitrations' as travel is reduced.

When we conducted our survey last year with Queen Mary University London, respondents said that while there was a need to embrace technology in arbitration, there was frustration that technology was adding to rather than improving the perceived inefficiency of the process. Significantly, they did not place a high priority on conducting substantive hearings remotely.

The response of the legal profession to Covid-19 has shown that 'needs must'.  Courts around the world have been quick to adapt to remote hearings, and arbitration is having to adapt too. Parties are left with the binary choice for hearings scheduled during the lockdown period: adjourn the hearing or conduct it remotely.

The challenge is more a cultural than a legal one: the rules adopted by most of the major arbitral institutions already allow for remote hearings.

The International Chamber of Commerce (ICC)'s arbitration rules contain the most comprehensive provisions on remote hearings, allowing hearings to be held by videoconference or phone 'or similar means of communication'. The LCIA's rules also allow for hearings to be held by videoconference or phone. 

Hambury Jason

Jason Hambury

Partner, Co-head of International Arbitration

As commercial organisations adjust their own operations and practices to ensure that they can continue to operate with minimal interruption, it is only fair to expect those who are resolving their international arbitration to do the same.

The recent ICC Guidance Note on arbitration and coronavirus further clarifies when virtual hearings can be conducted. It says that when deciding on whether the hearing should be conducted remotely, the tribunal should balance all the circumstances; the nature and length of the hearing; the complexity of the case, and the number of participants against whether an adjournment would cause unwarranted, excessive and hence prejudicial delay.

The Guidance Note contains a ‘checklist’ of logistical, technical, security, due process and ‘virtual’ hearing management considerations to take into account when setting up a virtual hearing.

Other guidance is available on using remote hearings, including the Seoul Protocol on Video Conferencing in International Arbitration published on 18 March 2020; the CIArb Guidance Note on Remote Dispute Resolution Proceedings published on 8 April 2020, and the Hague Conference Draft Guide to Good Practice on the Use of Video-Links Under the Evidence Convention published in 2019.

As commercial organisations adjust their own operations and practices to ensure that they can continue to operate with minimal interruption, it is only fair to expect those who are resolving their international arbitration to do the same.

The challenges of remote hearings

There are still some elements of hearing management that will be more challenging than when everyone is in one physical location.

Remote hearings may not be appropriate in cases where the credibility of the witness is at stake.

In some instances, the ability of counsel and the tribunal to assess the answers of a witness may be impaired, particularly as a ‘video presence’ might exacerbate differences of language or culture, potentially leading to a loss of nuance. 

They may not be appropriate for dealing with complex evidence such as competing forensic accounting models, where the video technology is not always good enough to put detailed spreadsheets to experts and witnesses in a way that can be adequately understood by tribunals sitting remotely.

Remote attendance will often mean that parties and counsel will lack the ability to pick up on the tribunal's collective body language and reaction to the evidence, particularly where the tribunal members are themselves ‘attending’ from different locations and are unable to visibly confer. This often indicates the weight the tribunal is giving to the evidence, which can inform the case strategy as the hearing progresses.

Many of these can be addressed by deploying the available protocols which together with the ICC Guidance Note, provide excellent starting points for parties to develop and agree a practicable and workable remote hearing procedure.  Concerns pertaining to how witness evidence is fairly presented during a remote hearing tend to be the angst of counsel from a common law background.  It will typically be less of an issue in civil law seated arbitrations where greater emphasis is placed on the contemporary documents and legal submissions.

Additional tactical and practical considerations will need to be considered.

The impact of different time zones is significant and care will need to be taken to ensure that a party is not prejudiced by its counsel or decision makers having to attend hearings late or early in their time zone, while the other side is able to attend during normal business hours.

Remote hearings may diminish the prospects of a settlement during the hearing as decision makers on both sides will not be physically present together, making the opportunity for commercial discussions during breaks less likely.  Parties will need to think about other ways for decision makers to keep open any commercial dialogue, including the possibility of virtual chatrooms that allow them to speak privately during the hearing.

Where tribunals decide to proceed with a remote hearing without the parties’ agreement, or where a party has objected, this may give rise to a potential challenge. 

Connectivity issues must not become the dominant feature of the hearing and technical glitches will have to be factored in to ensure that hearings are not interrupted or delayed by intermittent internet connection, particularly where parties and witnesses are attending from many locations with varying broadband speeds.   

Now more than ever, the arbitration community should take heed of the guidance on establishing reasonable cybersecurity measures in arbitration, as set out in the 2020 Cybersecurity Protocol of International Arbitration.

All of these considerations must be weighed against the consequences of adjourning for a significant period. The words of Mr Justice Teare in a recent English High Court trial resonate here and are a timely reminder to those who have chosen international arbitration: "The court has to be optimistic rather than hesitant. It is a duty of all the parties to seek to cooperate, to ensure that a remote hearing is possible…The default position now in all jurisdictions is that hearings must be conducted with one, more than one, or all parties attending remotely".