How the COVID-19 pandemic may shape the future of international arbitral proceedings
Secretary General of VIAC, Vienna
Binder Grösswang Rechtsanwälte GmbH, Vienna
Binder Grösswang Rechtsanwälte GmbH, Vienna
The travel restrictions and social distancing rules imposed as a result of the COVID-19 pandemic triggered a re-evaluation in the arbitration community of remote arbitral hearings. While several procedural aspects of arbitral proceedings were already regularly conducted remotely, such as organisational conferences and submissions via e-mail, most hearings were still held as physical in-person hearings.
Depending on the degree of remoteness, one can differentiate between fully and semi-remote hearings. Semi-remote hearings use one main hearing venue and one or more remote venues. This may be the case, for example, if the tribunal is assembled with the parties in one location and one or several witnesses or experts testify remotely. While semi-remote hearings have been regularly used in practice, fully remote hearings where all participants are in different locations were rarely practiced prior to the COVID-19 pandemic.1
At the outset of the COVID-19 pandemic, the arbitral community quickly addressed the new challenges through numerous initiatives offering guidelines to help practitioners navigate these unprecedented circumstances. Many of the guidelines and webinars launched during the lockdown focus on when and how to conduct remote hearings and whether remote hearings may affect the enforceability of arbitral awards. One of these guidelines is the Vienna Protocol – A Practical Checklist for Remote Hearings, published by the Vienna International Arbitral Centre (VIAC).2
To the knowledge of the authors, most modern national arbitration laws, while establishing a party’s right to a hearing, do not expressly prohibit remote hearings, and provide the arbitrators with broad discretion in determining the conduct of arbitral proceedings.3 Parties are thus generally free to agree on holding a hearing remotely (or waiving their right to a hearing altogether). However, the more crucial question is whether arbitrators may also hold remote hearings absent an agreement of the parties, that is, against the will of one party.
National arbitration laws rarely address this question; the tribunal will first consider the institutional rules chosen by parties (if any). The more modern and flexible institutional rules either expressly or implicitly allow hearings to be conducted remotely (such as VIAC and LCIA). In such cases the arbitrators, in exercising their discretion to conduct the proceedings, will need to evaluate whether a remote hearing can safeguard the parties’ right to be heard and the right to fair and equal treatment, in light of the particularities of the case at hand.
In the authors’ view, a party’s right to a hearing does not necessarily demand that the hearing be held with participants being physically present. An oral and synchronous exchange of arguments or evidence can satisfy this threshold.4 Not only can a party’s right to a hearing be met through a remote hearing, but not holding the hearing remotely in a situation where one or more parties may be prevented from attending a physical in-person hearing for an extended and unforeseeable period of time, may violate the parties’ right to a hearing and the arbitrators’ obligation to conduct the proceedings in an efficient and expeditious manner.5
In principle, a remote hearing also does not violate the parties’ right to equal treatment. Only in certain circumstances where, for example, one party does not have access to a sufficiently stable internet connection with the necessary bandwidth, would a remote hearing violate a party’s right to equal treatment.
However, while remote hearings can, in principle, satisfy the procedural due process requirements, they naturally present different challenges and require an adapted organisational structure compared to physical in-person hearings to ensure that the right to be heard and the right to equal treatment are safeguarded (eg, necessary bandwidth, access-points, hardware, size and number of screens, monitoring of witnesses, 360-degree cameras; precautions against cybersecurity threats, confidentiality and data protection agreements). Arbitral Institutions including the Vienna International Arbitral Centre6 have responded to the pandemic by issuing a joint statement7 in an effort to provide clarity and guidance to the arbitration community. The joint statement aims to assure the arbitration community that the arbitral institutions stand ready to assist users and practitioners alike, therefore supporting the use of international arbitration’s potential to provide a stable and foreseeable dispute resolution mechanism in such highly unstable times. Institutions ensure that pending cases are continued and that parties’ cases are heard without undue delay. Parties, counsel and arbitrators are encouraged to discuss any impact of the pandemic and potential ways to address it in an open and constructive manner, especially during a case management conference, and areinvited to use the full extent of the respective institutional rules and support. However, how to go forward in a given case is ultimately the responsibility and decision of the tribunal, for instance, postponing a hearing or holding it in person or (semi-) remotely, taking into account the two paramount prerequisites of fair and equal treatment of the parties and the right to be heard.
Conclusion and outlook
The circumstances during the COVID-19 pandemic have pushed arbitration practitioners to try more modern ways of conducting arbitral proceedings, albeit outside the comfort zones for some. With regard to VIAC arbitrations, the authors have noticed that only about one-third of pending proceedings hearings were postponed to be conducted as physical in-person hearings at a later point in time. One-third were postponed to allow sufficient preparation to conduct a remote hearing and one-third were conducted as originally scheduled but as remote hearings instead of the anticipated physical in-person hearings.
The experience has shown that well-organised remote hearings, having due regard to the recommended protocols and guidelines, can be an efficient and comparatively low-cost method of conducting arbitrations.
These learnings should be used to shape future arbitral proceedings. The increased use of semi- and fully remote hearings, where appropriate for the specific case, could remedy the growing criticism of arbitration as having become too expensive and long. They can also address concerns of the environmental impact of international arbitral proceedings.8
Particularly for small and medium cases, which may not require extensive witness testimony, on-site visits or elaborate expert conferencing, remote hearings may become the norm rather than the exception. This would provide a more cost-efficient option for the parties involved while at the same time providing them with a more in-depth opportunity to present their case than documents-only proceedings would.
In choosing the seat of the arbitration and the arbitral institution, parties should in the future carefully evaluate whether the law at the seat and the institutional rules facilitate the use of remote hearings whenever appropriate. The experience of the courts at the seat with remote hearings (including for regular litigation) may influence their approach to potential challenges relating to due process of remote arbitrations in setting aside and/or enforcement proceedings.9 Parties may also wish to consider addressing the possibility of holding semi- or fully remote hearings in their arbitration clauses and nominating arbitrators who are familiar with using technical tools.
- Compare Maxi Scherer, ‘Remote Hearings in International Arbitration: An Analytical Framework’, in Maxi Scherer (ed), Journal of International Arbitration 2020, Vol 37, Issue 4, item 3.
- Available at www.viac.eu/images/documents/The_Vienna_Protocol_-_A_Practical_Checklist_for_Remote_Hearings_FINAL.pdf.
- Compare Maxi Scherer (n 1 above); Hyun Lim & Markert, ‘Rethinking Virtual Hearings’, Kluwer Arbitration Blog, at http://arbitrationblog.kluwerarbitration.com/2020/07/19/rethinkingvirtual-hearings(2020).
- Compare Maxi Scherer (n 1 above), item 5.1.
- Compare Kun Fan, ‘The Impact of COVID-19 on the Administration of Justice’, Kluwer Arbitration Blog, at http://arbitrationblog.kluwerarbitration.com/2020/07/10/the-impact-of-covid-19-on-the-administration-of-justice (2020).
- For more information on the conduction of VIAC-hearings in times of COVID-19, see www.viac.eu/en/news/checklist-on-holding-hearings-in-times-of-covid-19.
- Available at www.viac.eu/en/news/joint-statement-by-arbitration-institutions.
- Compare Lucy Greenwood & Kabir Duggal, ‘The Green Pledge: No Talk, More Action’, Kluwer Arbitration Blog, at http://arbitrationblog.kluwerarbitration.com/2020/03/20/the-green-pledge-no-talk-more-action (2020).
- Compare Luke Nottage, ‘Will the COVID-19 Pandemic Be a Long-Term Game Changer for International Arbitration?’ Kluwer Arbitration Blog, at http://arbitrationblog.kluwerarbitration.com/2020/07/16/will-the-covid-19-pandemic-be-a-long-term-game-changer-for-international-arbitration (2020).