Credit: JackF/Adobe Stock

Russell Thirgood
Brisbane, Queensland

Background: the use of technology in substantive hearings

The substantive hearing, which may include the examination of witnesses and oral argument on substantive, as opposed to procedural, issues (merits hearing) is an important feature of many arbitral proceedings. It typically follows a process whereby the parties have held a number of case management conferences (generally via videoconference), exchanged their statements of case, delivered witness statements and expert reports and produced requested documents. Natural justice is an important feature of this pre-hearing process. Parties, witnesses and experts are afforded the opportunity of responding to each other’s positions in writing in a sequential and substantive way. This sequential exchange ensures that issues are raised, identified, responded to and, perhaps, narrowed. A focus of the process is to ensure that differences between positions are highlighted and properly understood prior to the hearing commencing.

The value of a focused merits hearing is that it provides the parties and witnesses with an opportunity towards the end of the arbitral process to exchange views simultaneously and respond to questions from counsel and the arbitral tribunal. Accordingly, the essence of a hearing is that it is an exchange of argument and/or evidence that takes place in real time. A prepared arbitral tribunal can use the hearing to ensure its understanding of the nuances of each parties’ positions. A hearing can take place in a physical or a wholly remote format, whereby all participants are not physically located together.^[1] It can also proceed through a hybrid process whereby some participants are geographically co-located while others (such as expert witnesses who may reside interstate or overseas) appear through the use of technology. There are many combinations and permutations of a hybrid process.

The use of technology in the dispute resolution world is not new. Prior to the Covid-19 pandemic, many arbitration practitioners, responding to the demand to reduce cost and increase efficiency, typically conducted case management conferences and other procedural and interlocutory hearings remotely, rather than in person. The arbitral community also had experience with the use of technology in merits hearings. For example, in 2019, the International Centre for Settlement of Investment Disputes (ICSID) announced that the majority of its hearings were held by videoconference.^[2]

The pandemic ensured that vast populations across the world were unable to travel and physical isolation to varying degrees was commonplace. The business community responded to these restrictions through escalating the use of technology which allowed many employees to work from home so as not to be exposed to the virus while vaccines were being developed. While business continued to operate, disputes inevitably continued to arise.

In many respects the pandemic ensured that the dispute resolution community (like others) had no choice but to shift its operations to online platforms so that the interests of the parties, and the broader community, were catered for by having fair and efficient processes for the resolution of disputes. Arbitration practitioners’ experience with remote hearings, including for the merits hearings, increased quite dramatically in a relatively short period of time. An International Chamber of Commerce (ICC) 2020 survey reported that 36 per cent of users had participated in fully virtual hearings in the first quarter of the year and that percentage had increased to 71 per cent in the final quarter of the same year.

This article explores the implications of conducting merits hearings remotely. It outlines some of the advantages and challenges of technology-assisted hearings. Arbitration does not exist in a vacuum. It takes place under the supervision of many different national courts which have their own experience of conducting cases online. Courts have also received applications to determine whether or not arbitral hearings can proceed remotely. Accordingly, the voices of various national judges have been recorded in judgments, and added to those of arbitration practitioners and academics, as to the issues arising from remote hearings.

This article recognises that all cases are different. Arbitral tribunals may need to be flexible and adapt to the needs of a particular case and the parties appearing before it. Rather than take a simplistic view as to whether or not remote hearings are a ‘good thing’, this article sets out some guiding principles that counsel and arbitrators should bear in mind when considering whether or not (and the extent to which) technology is deployed during the merits hearing. Finally, it includes some potential future implications of the use of remote hearings. It may just be that the necessity of embracing technology during the pandemic will be a silver lining to what has indeed been some dark storm clouds for many individuals and communities.

Benefits

In 2018 (before the pandemic), the Queen Mary Survey found that 89 per cent of those users of arbitration services who were surveyed were of the view that videoconferencing should be used more often in arbitration.^[3] Commercial arbitration is an entirely voluntary process that exists to serve the business needs of those who use it. There are also flow-on benefits for the broader community when businesses use private arbitration, including reducing the burden of national courts and the taxpayer who funds them. In this private and commercial environment, one would imagine that the voices of the users ought to carry considerable weight.

The wide-ranging benefits of the remote hearing are listed below.

• Avoiding the cost of travel – particularly for witnesses and experts who may live in far-away places and who may only be required for a short and uncertain period of time during the substantive hearing; a remote hearing can amount to substantive cost-savings for the parties. Some witnesses may eventually not be required at all (with counsel reserving their position on this issue until potentially sometime during the hearing itself).

• Flexibility – remote hearings allow parties to require only (all or some) witnesses and experts to be on standby during the relevant stage of the hearing rather than have them leave their homes and workplaces for significant periods of time waiting around at a hearing venue. Decision-makers of the parties (such as major shareholders, chief executive officers or government officials) may have greater opportunity to observe parts of the hearing from the comfort of their own offices rather than set aside periods of valuable time. Counsel and arbitral tribunals similarly may find it easier to juggle all of the moving parts of a particular case, and other aspects of private practice, from their own chambers.

• Neutral hearing venue – parties in a dispute often do not wish to concede any perceived ‘hometown’ advantage by having a hearing take place in the city or office of their opponent. The remote hearing can minimise or remove these perceptions. It is obviously important that the entire arbitral process is not only neutral and fair but also that the parties subjectively perceive that to be the case.

• Greater accessibility – in-demand counsel, arbitrators and expert witnesses may be more accessible to parties should the travel (and related time) element be removed or reduced.

• Reduced toll on the environment – less time in planes and cars is inherently a good thing for the environment and consistent with the movement to reduce the amount of paper that is used in arbitration proceedings with sophisticated databases and online platforms.

A survey conducted by the Chartered Institute of Arbitrators in 2022 found that those surveyed ranked the benefits of remote hearings in the following order (from highest to lowest priority): geographic flexibility, convenience, cost reduction, reduce travel, time saving, environmentally friendly.

The users of arbitration have mostly had their own experiences of conducting their businesses with the benefit of technology. In particular, the record-keeping of large construction, infrastructure and energy-related projects takes place with assistance of highly sophisticated technology. It is rare for physical paper records to be kept given the tremendous volume of correspondence and records. Lever arch files can rarely accommodate the sheer volume of data that large projects produce. Accordingly, complicated and high value construction disputes are potentially more suited to be resolved with the use of high-powered electronic bundles (with helpful search functions) and presented with the assistance of a technology officer at a remote hearing. In many respects, the transition of disputes to online and remote formats is simply a mirror of what has previously occurred in the project management world.

Challenges and potential solutions

It is rare for a transition or change process to take place without the need to overcome challenges. Remote hearings may present their own peculiar challenges that may be surmountable with the goodwill of the parties and careful discernment of arbitral tribunals. Those challenges and potential solutions are listed below.

• Potential inability to observe a witness’s demeanour and credibility – it is often cited that a significant advantage of the physical hearing is the ability to see the witness respond to questioning ‘in the flesh’. It may be that such an advantage is overstated. First, the high quality of many videoconferencing features can magnify the witness’s face on the screens of the arbitral tribunal such that, in many cases, there is a greater ability to scrutinise a witness’ demeanour than at an in-person hearing. Second, there are inherent dangers of relying on witness demeanour as a sound basis for decision-making. Courts have acknowledged the danger in misinterpreting ‘body language’ such as taking nervousness for uncertainty or insincerity, and shyness and hesitation for doubt.^[4] Studies have also been undertaken that have revealed the fallibility of human memory;^[5]

• Risk that a witness is ‘coached’ – a witness who appears in a physical hearing room could not get away with having someone sit in the room with them and assist with answering questions, as has occurred for remote hearings over the last two years. There are steps that the arbitral tribunal and parties can take to reduce this risk, including by having neutral observers in the room with the witness or insisting that 360-degree video footage be taken of the room in which the witness is located to ensure that there is no coaching.

• Technology problems – like human beings, technology is fallible. Remote hearings are susceptible to technology glitches and rely on stable Wi-Fi connections which may not be present in all potential remote locations. This risk may be best managed by ensuring that the parties and tribunal undertake some live testing of the proposed technology platform before the hearing.

• Privacy and security concerns – arbitration generally takes place in a private and confidential setting. It may be an easier exercise to protect that privacy when the hearing is to take place in a secure physical location with less risk of cyber-attacks. Arbitral institutions have helpfully produced a range of protocols to assist in managing this cyber risk.

• Different times zones and other logistical challenges – while the difficulty associated with travel can be reduced through remote or hybrid hearings, it may be that another challenge is created whereby participants are operating on different time zones. Arbitrators must ensure that parties are treated equally and fairly. Each case is different and practical measures can be taken to ensure that witnesses, experts, counsel and arbitrators are operating in an environment that is not unreasonably burdensome for them – including from a physical and mental fatigue viewpoint.

• Gravitas of the courtroom – it may be that some arbitration hearings take place in rooms which resemble courtrooms and that provides a feeling of gravitas or solemnity that may assist with ‘truth telling’. A contrary view may be that arbitration ought to distinguish itself from litigation by taking place in a more commercial setting. Separately, it may be that the geographical barrier that is created with a remote hearing provides helpful distance between the arbitral tribunal and the parties. For example, if the arbitrators are not in the same physical location as witnesses and counsel, the risk of an arbitrator inadvertently and awkwardly being in an elevator or room with one party or one witness is reduced.

• Unsuitable cases – some cases such as those that may involve fraud allegations may not be suited to an online hearing. Some courts have found that serious allegations such as those involving fraud need to be dealt with in person.

• Evidence presentation – some arbitration practitioners have articulated that they find it easier to perform their role in a face-to-face, rather than a virtual environment. It may be that advocates and arbitral tribunals are in fact required to develop additional skillsets to serve those parties who pay for their services.

A survey conducted by the Chartered Institute of Arbitrators in 2022 found that those surveyed ranked the challenges of remote hearings in the following order (from most to least challenging): evidence presentation, witness management, familiarity with platforms, coordination between parties, technical support, and transcript management.

Key stakeholders such as arbitral institutions have been committed to ensuring the success of remote hearings and have responded to the challenges by introducing a range of measures. There are a plethora of examples of these efforts to strengthen remote hearings including the Hong Kong International Arbitration Centre’s virtual hearing centre; the American Arbitration Association model directions and guidelines for virtual hearings; and the International Chamber of Commerce Report on Information Technology in International Arbitration which addresses confidentiality and data integrity issues.

Conducting an arbitration process, including the remote hearing, can be a pragmatic exercise whereby common sense, communication and consultation can go a long way with dealing with challenges that arise. In that sense, practitioners can be well served by taking practical steps including preparation, organising practice runs, using good and proven technology, considering sitting hours, having a moderator in charge of documents, deploying guidelines or ground rules for advocacy and courtesy, undertaking a 360-degree view of remote rooms, having ways for counsel to communicate with their own teams, adopting protocols for the conduct of the online hearing, and retaining technical support.^[6]

Jurisprudence

Australian courts have considered the merits of remote hearings, including in the context of adjournment applications, and have reached different views, including:

• In Capic v Ford Motor Company of Australia Ltd,^[7] the Court declined an adjournment application (thereby allowing an online hearing to proceed) citing that technology difficulties could be overcome and that the interests of justice would be served by proceeding with an online hearing as it was not known how long the pandemic would last;

• In David Quince v Annabelle Quince and Anor,^[8] the Court allowed an adjournment application (preventing an online hearing taking place) on the basis that it would be unfair to both parties for the hearing to proceed by way of video-link where there were allegations of fraud;^[9]

• In Sino Dragon Trading Ltd v Noble Resources International Pte Ltd,^[10] the Court refused to set aside an award notwithstanding that the applicant had alleged that the online hearing was beset with technological issues;^[11]

• Generally, the Federal Court of Australia (which has jurisdiction under the International Arbitration Act 1974 (Cth) to hear applications to set aside or enforce arbitral awards) is a leader when it comes to conducting hearings with the use of technology and has issued a guide to online hearings.

Jurisdictions around the world have now had experience of remote hearings. Direct court challenges to remote hearings have taken place in England,^[12] the US^[13] and Europe,^[14] with courts giving cautious support for virtual hearings. In the US decision of Legaspy v FINR it was held that remote hearings do not prevent parties from presenting claims and defences and they do not favour one part over the other.^[15] It may be that in many jurisdictions a broad consensus is emerging that, save for exceptional circumstances, there is no right to an in-person hearing.

In Larsen and Toubro Ltd v NTPC Ltd,^[16] the Delhi High Court received an application to remove a co-arbitrator (appointed by the respondent) who refused to participate in a remote hearing. The respondent (curiously) argued that he had discussions with his arbitrator to persuade him to participate remotely. The co-arbitrator appointed by the respondent informed the Court that he wanted to wait a few more months (in 2020) to see whether the pandemic would end. The Court criticised the co-arbitrator who refused to embrace technology but noted that the case had been going on for seven years, and in that context did not find that a further delay would warrant the removal of the co-arbitrator. It does not appear from the judgment that the Court, or the claimant, were troubled by the private discussions that were taking place between respondent and arbitrator. The Court requested the co-arbitrator to ‘rise to the occasion by utilising the time […] to acclimatize himself with the system of video-conferencing […] [and] endeavour to capitalise on these benefits as also the flexibility offered by electronic technology.”^[17]

Guiding principles

As we come out of the pandemic, and face-to-face hearings become possible, it may be that arbitral tribunals (and supervising courts) are called on more often to decide how a hearing is to take place. Most practitioners have had experience with remote hearings and it is likely that some parties will want to continue using them, or parts of them, in future – just as the business community will continue to use remote meetings to conduct its affairs. Equally, some parties may prefer a face-to-face hearing. Accordingly, more consideration may be given by parties as to whether or not, and to what extent, hearings will be remote. That is, there may no longer be a default position that a substantive hearing will take place in person, as may have existed for many practitioners before the pandemic.

Party autonomy remains the touchstone and guiding principle in arbitration. The choice as to how a hearing is to be conducted (remote or otherwise) may be expressed prior to dispute (in the arbitration agreement) or during the dispute resolution process (such as the first or subsequent case management conferences). The arbitral tribunal (of course) must respect party autonomy and put aside its own preferences when it comes to proceeding with a face-to-face, remote or hybrid substantive hearing. Neutrality will be key, along with competency to adapt if called upon.

When parties cannot agree, the tribunal will need to be guided by the relevant laws that pertain to the arbitration procedure together with what may be set out in the arbitration agreement or any agreed rules. Most rules either specifically permit remote hearings or leave the tribunal with a broad procedural discretion to exercise. For example, Article 26(1) ICC 2021 Arbitration Rules provides:

‘The arbitral tribunal may decide, after consulting the parties, and on the basis of relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication.’

There are no arbitration rules that the author is aware of which prohibit a remote hearing. If there is a contest as to how a hearing is to take place, the tribunal will simply need to receive submissions and apply facts to law to make a considered and reasoned ruling. Issues to be considered and balanced will include treating parties equally, providing the parties with a fair hearing, conducting the process efficiently so as to minimise cost and time wastage, and ensure that the outcome of the process is an enforceable award or awards. What this analysis results in will be different for each case.

In cases where the parties do not agree as to how a hearing will take place, the question of whether a party has the onus of proof arises. Some decisions of national courts have suggested that the party wanting a remote hearing has the onus of proof as it is trying to depart from the ordinary course of a physical hearing.^[18] Other cases take the opposite approach, allowing remote hearings in the absence of considerable impediments.^[19] There is an intermediate solution, which may be more suited to an international commercial arbitration, adopted by other courts (such as those in Canada and Singapore) whereby neither side is burdened with the onus of proof and the tribunal simply receives submissions and then balances the various factors in order to make a decision that suits the particular case.^[20]

Arguments about the difficulties of remote hearings may be more difficult to make out in a post-pandemic world where many practitioners and arbitrators have had perfectly good experiences and challenges have been overcome. As set out above:

• It may be possible to take steps to avoid witness coaching;^[21]

• Witness can be seen up close to monitor their reaction to cross-examination;

• The manner of a witness, including appearances, may not be important for many witnesses;

• Counsel have developed and added to their advocacy skills through the effective and persuasive use of technology as a communication-enhancer;

• Security and confidentiality concerns have been addressed by the plethora of guidelines that have been written
by institutions;^[22]

• So many service providers provide exceptional online services at reasonable costs, with many of these services being required regardless of the format of the hearing in order to manage the documentation which is wholly online;

• Practical experience shows that having some test runs before the hearing with counsel and witnesses reduces problems.

An experienced arbitral tribunal will understand the grounds on which the enforceability of its award can be attacked and accordingly will ensure that it provides the parties with a right to be heard and treats them equally. There are no reported cases that the author is aware of where an award was set aside or refused enforcement due to the hearing taking place remotely. Gary Born has stated that

‘where national courts conduct full remote hearings in domestic litigations, it is very difficult to regard similar hearings as denying parties to an international arbitration an opportunity to be heard.’^[23]

There are also decisions of courts that have found that the absence of any hearing does not violate the parties right to be heard.^[24]

Finally, a good arbitrator or tribunal will be proactive in engaging the parties in discussion about how to best conduct the substantive hearing, and will always listen to advice provided by counsel as to how efficiency and fairness can be achieved.

Future implications

There are many future implications for users, and arbitration stakeholders, from the more prominent use of remote substantive hearings, including:

Choice

Party autonomy is assisted by choice. Users of arbitration have more options, and many combinations and permutations, of how a merits hearing can take place to suit their conveniences and business imperatives. This service element is something that distinguishes arbitration from litigation. Arbitrators are chosen by the parties to provide a service and help them resolve disputes; whereas courts have a different function and exercise the coercive power of the state in order to uphold the rule of law. It is not necessarily the role of courts to meet the conveniences of those who appear before them. Courts are not in the business of providing services.

Selection of seat

Perhaps there was a tendency for parties to choose a seat based on geographical considerations in the pre-pandemic world. For example, Singapore or Hong Kong may have been chosen as seats in cases where the parties are from the US and Europe, or in cases between parties located in Australia and the UK. Geography may now be less important. Rather, the track record of the potential supervising court may become the defining characteristic when parties choose a seat. Consideration may also be had to the experience that courts in the potential seat have had in conducting their own remote hearings. Courts who have vast (positive) experience with remote hearings may be less receptive to arguments that remote hearings do not work.

Diversity

Remote substantive hearings may open the market of experienced and available arbitrators. Geography may not be as defining during the selection and nomination of arbitrators although consideration may need to be given as to how best to manage time zones to ensure fairness to parties and witnesses (and that the arbitral tribunal is not fatigued when performing its function at the hearing).

Conclusion

For all the challenges associated with a rapid transition to fully and hybrid remote hearings, an inflexion point seems to have been reached (perhaps by force rather than universal will) whereby the use of technology may be embraced as a ‘new normal’. This has profound potential consequences for the resolution of commercial disputes. Remote hearings are probably cheaper, more efficient and environmentally friendly than in-person hearings. Stakeholders (such as arbitral institutions) have found ways of dealing with most challenges, such that the remote substantive hearing could be here to stay (in some form) for many years to come for many disputes. In time, we may regard this development for commercial arbitration as representing a silver lining to the Covid-19 storm cloud.