Arbitral institutions have adopted new measures so that they can continue to manage arbitration proceedings during the COVID-19 pandemic. Several leading arbitral institutions have adopted electronic filings only and encourage the use of video conferencing for hearings (read our earlier client alert on these developments here). While these measures have been welcomed as allowing dispute resolution to carry on “business as usual,” arbitrators and parties must ensure that these measures do not negatively affect parties’ rights to due process. If due process is compromised, the finality of arbitration awards could be jeopardised.
COVID-19 social distancing measures and travel restrictions have particularly affected certain aspects of arbitral proceedings. While procedural hearings are relatively manageable, evidentiary hearings – with witness examination – pose real challenges. Discovery tools such as depositions and site visits are also problematic. Since the pandemic began, the efficiency of proceedings has been compromised, as parties have more often filed requests for extensions of time, citing the pandemic as the reason for delays. Other procedural aspects of arbitration remain largely uncompromised. Electronic filings for submissions and electronic exchanges of document disclosures were widely used prior to the pandemic and continue to be reliable.
The move to online hearings demonstrates the adaptability of arbitral institutions and the arbitration proceedings themselves. However, these same measures, if abused, could present new challenges for due process and equal treatment between the parties. Under Article V(1) of the New York Convention,1 an arbitral award may be challenged if “a party against whom the award is invoked . . . was otherwise unable to present his case” or where “the arbitral procedure was not in accordance with the agreement of the parties, or failing such agreement, was not in agreement with the law of the country where the arbitration took place.” The integrity of the arbitral award stems from a fair process based on party autonomy and a party’s reasonable opportunity to present its case. It is therefore unsurprising that emerging guidance such as The Seoul Protocol and the AAA model order on virtual hearings emphasize that virtual proceedings must be fair to all parties in the dispute.2
Challenges in Online Settings
Evidentiary and technical issues posed by the current “virtual” environment affect different actors in the proceedings – the cross-examining counsel, the witnesses, the experts and the arbitrators. Interactions that are smooth in person – the presentation of the evidence, the deliberation between the arbitrators – must be reconceived for the virtual setting.
There is an inherent risk that the arbitral tribunal might subconsciously take into account the shortcomings of virtual hearings when evaluating witness or expert testimony, compromising the arbitrators’ ability to assess the evidence. During cross-examination, for example, the members of the tribunal may not have the same ability to analyse the answers and the body language of the witnesses or experts as during in-person testimony. A witness unfamiliar with online meeting platforms might not convincingly look directly at a questioner (through a computer camera), inadvertently raising concerns about credibility where no such concerns exist. In a virtual setting, there is additionally the possibility that a witness is being secretly advised off camera or reading documents without the knowledge of the tribunal or opposing party.
Nevertheless, these initial challenges of witness testimony by video conference can be addressed through preparation and the legal team getting their witnesses and experts as comfortable as possible with what is in store for them at the virtual hearing. For example, witness familiarisation trainers now offer training for witnesses to prepare them for testifying in a virtual hearing.3 Additionally, the risk of witness coaching is not unique to virtual hearings. A camera showing a reasonable amount of the witness’s actual physical surroundings could be used to ensure that there is no foul play.
It may even be the case that the challenges posed by hearings during the pandemic could improve a panel’s assessment of the evidence. The procedures imposed by the pandemic may force a tribunal to focus directly on the evidence itself, unfiltered through any unconscious bias or affinity of the tribunal toward particular witnesses. The visual, verbal and behavioural clues used to categorise others based on age, gender or social background might be muted through online witness testimony.
Though the effect of virtual hearings on the assessment of evidence is not certain, it is certain that witness presentation and examination is different in the online setting.
Uneven Access to Technology
International arbitration proceedings involve parties situated at the four corners of the world. A witness situated in a developing country in the Middle East or in Africa may not have access to the same technology equipment or high-speed internet as a witness or expert in Europe.
Furthermore, the common concern that the existing state of technology used by arbitral tribunals is not adequate is misplaced. Courtroom technology has come a long way since overhead projectors and is now not a distraction or an obstacle, but a tool to facilitate a more persuasive presentation. Electronic hearing bundles facilitate the review of submissions as thousands of referenced exhibits, legal authorities, witness statements and expert reports are available in one click. Additionally, there are several useful guides and protocols published by arbitral institutions that parties can adopt to ensure they are on even ground technologically. As with much arbitral procedure, the technological standard should be agreed between the parties, before the hearing.
Translations & Interpreters
Issues related to translations and interpreters present additional challenges in a virtual setting. If a witness requires interpretation to participate in the proceedings, reliable connectivity and transmission speed will be critical. During in-person hearings, there is a risk that an interpreter may impose his own interpretation of ambiguous language or mistranslate testimony, and this risk is significantly increased where simultaneous (rather than consecutive) translation is employed. The opposing party can choose to protect its interests by employing a “check” interpreter, positioned near the witness and the main interpreter, who may interpose objections to the accuracy of the translation. This set-up may be difficult to realise in a virtual setting, and challenges would be compounded by any connectivity difficulties, the quality of video and sound.
Security & Confidentiality
Virtual hearings bring new issues of security and confidentiality. Arbitration is sought for its many advantages, particularly the privacy of the proceedings. Potential security breaches are heightened, however, when multiple parties, witnesses and experts are using their home networks to attend virtual procedural or evidentiary hearings where there might be little protection against hackers intruding. Hackers could crash the proceedings through zoom-bombing4 or the arbitral institution’s website or electronic hearing bundle could be hacked. In July 2015, well before the trend to move proceedings virtually, the Permanent Court of Arbitration was hacked in the midst of an ongoing maritime border dispute between China and the Philippines. Malware was implanted on the PCA’s website which infected the computers of visitors, potentially exposing them to data theft.5
Despite the new challenges faced in terms of security and confidentiality, arbitral institutions have been producing guidance to best address these challenges. Best practices would see parties, their representatives and the arbitrator agreeing on a set of reasonable precautions to be taken with regard to cybersecurity, privacy and data protection at the start of arbitration proceedings to ensure an appropriate level of security for the case.
Other seemingly trivial obstacles such as different time zones might have extensive repercussions on the conduct of proceedings. Arbitrations often have parties present in multiple jurisdictions, and witnesses/experts might also be located in different geographical locations. It may be possible to manage the time difference by calling witnesses in an order that allows each witness to give evidence at a time within usual business hours where they are based but finding a time convenient for all in a time of travel restrictions will be challenging.
Notwithstanding some initial logistical challenges, remote arbitration hearings can prove time and cost efficient. Clients, counsel, experts and witnesses will save money on travel and wait times. Counsel will be able to dedicate more time to preparation. Digital files will also make it easier for all parties to locate relevant information, which can add up significantly during the course of the hearing, saving hours of time. Finally, virtual hearings will also promote an increased participation and access to justice and a reduction in logistical externalities.
Responsibilities of Arbitrators
Arbitrators bear the responsibility to manage hearings efficiently during the pandemic, balancing the conflicting requirements of streamlined proceedings and due process. Case management decisions are crucial, even more so in the context of virtual hearings as they may form the grounds to challenge the enforcement of the award. The parties’ right to due process is set out in Article 18 of the UNCITRAL Model Law6 which deals with the equal treatment of parties. The right to due process is also set out in Article V(1)b of the New York Convention, which states the recognition of an award may be refused where the party against whom the award is invoked proves that it “was not given proper notice of the arbitration proceedings or was otherwise unable to present its case.” Although there are no definite international rules as to how and when due process should be observed in the arbitral process, there is an internationally accepted standard of fairness and equal treatment.7
Arbitrators should consider entering procedural orders addressing aspects of virtual hearings. Such orders can be prepared by parties at the request of arbitrators – much like traditional protective orders addressing confidentiality of materials produced in discovery. The International Institute for Conflict Prevention & Resolution (“CPR”) offers a model for such an order, with extensive notes and suggestions.8 The process of collaborating on an order governing virtual hearings will prompt the parties to consider all the issues and reduce problems and misunderstandings later.
Consideration for Parties
Before going to court, during or after arbitral proceedings, a party should be careful not to waive procedural rights. If the parties choose to implement a protocol or procedural order for virtual hearings, each should consider its ability to conform with the protocol, the costs and benefits of doing so. A party with concerns about uneven access to technology, for instance, should raise those concerns and propose solutions. The parties and the arbitrators have an interest in ensuring that the arbitration proceeds fairly and smoothly.
If it becomes apparent that due process has been breached after an award has been issued, a party may: (1) seek redress before the court in the same jurisdiction as the seat of the arbitration to have the award remitted back to the tribunal for reconsideration, set aside, annulled, or (2) challenge the award at the enforcement stage in an appropriate jurisdiction. In England and Wales, the mechanism to set aside or remit an award lies within the Arbitration Act 1996. Section 68 provides a party with a right to challenge an award in circumstances where there has been ‘serious irregularity’ that has caused or will cause an injustice to the applicant.
Challenges under Section 68 are very rare: The threshold is high and the courts will dismiss the challenges unless the minimum requirements are met. Although there has been a slight increase in both the number of successful challenges and the percentage success rate of Section 68 challenges over the past five years, most of the successful Section 68 challenges fell under 68(2)(a) and 68(2)(d).
The new procedural challenges introduced by virtual hearings have not been explored as grounds for procedural irregularity in past challenges to arbitral awards under Section 68. The procedural challenges listed above such as technological interruptions and issues with interpretation would most likely be raised under the legal ground that the tribunal had failed to comply with its duty under Section 33 of the Act, namely a duty to act fairly and impartially as between the parties and to give each party a reasonable opportunity to put its case and to deal with its opponent’s case.
The pandemic has accelerated an inevitable shift in arbitration proceedings towards virtual hearings and has hastened a move online for all administrative processes. Arbitrators will have to adapt and take into account the new circumstances when making case management decisions. Parties to arbitration proceedings will also have to plan and anticipate the potential obstacles their particular case might face and prepare their witnesses, experts and counsel accordingly. Arbitration at its core professes to have certain virtues such as cost effectiveness, flexibility, expeditiousness, enforceability of award, all of which can be served and enhanced by the use of virtual hearings.