The emergence of the Coronavirus pandemic (COVID-19) has resulted in a full or ‘near-full’ switch to virtual arbitration hearings as an alternative to in-person arbitration hearings. Before the outbreak of COVID-19 and the attendant global lockdown and travel restrictions, arbitration hearings—or at least a large chunk of them—were conducted in-person, with parties, their experts, witnesses, and the arbitrator(s) being physically present at the venue of arbitration. This note briefly considers the effectiveness of adopting virtual hearings on a going-forward basis.
The choice and conduct of arbitration proceedings are founded on the principle of party autonomy. Except in circumstances where the arbitration agreement stipulates the specific powers of the arbitrator(s), the conduct of proceedings usually depends on the applicable procedural rules which parties have agreed to. Most arbitration rules, of course, provide for the arbitral tribunal’s discretion, subject to the agreement of the parties, to determine the modalities for conducting the arbitration hearings, including the general powers to determine the use of in-person or virtual hearings, in whole or in part, during the proceedings.
It appears, from the increased use of virtual hearings occasioned by the COVID-19 pandemic, that this mode of hearings may become the new ‘norm’. Indeed, various arbitration institutions have released guidelines regulating the conduct of virtual hearings. The International Chamber of Commerce (ICC), for example, released the Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic wherein tribunals are encouraged to use either audioconference or videoconference for conferences and hearings where possible and appropriate. The London Court of International Arbitration (LCIA) recently modified its rules to reflect the increased use of virtual hearings. The LCIA 2020 Rules provide that hearings may take place in person, or virtually by conference call, videoconference, or using other communications technology with participants in one or more geographical places (or in a combined form), and also provide for e-awards, amongst others. The Chartered Institute of Arbitrators (CIArb) also released the Guidance Note on Remote Dispute Resolution Proceedings. The CIArb Guidance Note contains provisions on technological and logistical matters, legal and procedural arrangements, and ad-hoc proceedings in relation to virtual hearings. Further, the African Arbitration Academy recently released a Protocol on Virtual Hearings in Africa which requires the consent of the parties to the virtual hearing to prevent frivolous challenges to arbitral awards on the ground of using virtual hearings, in addition to other considerations. Similar provisions are also contained in the Guidelines for Virtual Hearings issued by the Hong Kong International Arbitration Centre, and the Note on Remote Hearings issued by the Lagos Court of Arbitration. Setting out from the above, it seems clear that most arbitration institutions have recognised the need to adapt to virtual proceedings as the way forward unless there are valid reasons for in-person proceedings.
Even before the outbreak of the pandemic, 66% of the respondents in a 2018 survey conducted by White & Case in conjunction with Queen Mary University (2018 Arbitration Survey) suggested an increased use of virtual hearing rooms in the conduct of arbitral hearings. According to the 2018 Arbitration Survey, “respondents are highly optimistic about the role of technology in streamlining the process of arbitration.”
Benefits of Virtual Hearings
A few advantages of virtual hearings include:
- Reduced cost of arbitration: One of the things which pro-litigation advocates hold up against arbitration is its high cost, ranging from expenses involved in bringing parties, experts and witnesses to the venue of arbitration, to arbitrators’ and administrative fees. Although virtual hearings do not eliminate the arbitrators’ and experts’ fees, it could eliminate the transportation costs of converging at physical locations. In the 2018 Arbitration Survey, respondents also highlighted the reduced cost implication of arbitration proceedings when hearings and meetings are conducted in any manner that does not require in-person attendance at such proceedings.
- Accessibility and timeliness of proceedings: Virtual hearings could also eliminate the length of time between hearing sessions, as hearings can be conducted daily without the need for elaborate travel plans and convenience considerations. Since parties will just require access to videoconferencing equipment to connect to the agreed technological platform for the conduct of a virtual hearing, access of parties to arbitration is increased and disputes are more likely to be resolved faster.
- Environmental considerations: The Green Pledge campaign which seeks to minimise the environmental impact of arbitration proceedings brought to fore the impact of the arbitration community in contributing to carbon footprint. Indeed, virtual hearings stand as a viable means to achieve green arbitration and should prove attractive to advocates of green arbitration as it entails a reduction in arbitration-related travels. Virtual hearings will likely result in the increased use of electronic documents and hearing bundles and reduce carbon footprint of the international arbitral community.
- Convenience: Flowing from the increased accessibility that virtual arbitration hearings offer, parties, experts, witnesses and arbitrators have the privilege of participating in arbitration in the comfort of their homes, offices, or wherever they choose to be at the time of the proceedings, as they do not have to travel. Interestingly, this eliminates the potential risks that participants are ordinarily exposed to while travelling for physical arbitration proceedings.
Challenges of Virtual Hearings and Solutions
- Data protection and privacy concerns: Virtual hearings face a risk of cyber-attacks that could undermine a distinctive feature of arbitration (and advantage over litigation) which is the privacy and confidentiality. There is a need, therefore, for parties to agree to a suitable technological platform for the virtual hearing and the relevant cyber protocol and security requirement. The CIArb Guidance Note, for example, requires parties to consult the International Council for Commercial Arbitration, New York City Bar Association and International Institute for Conflict Prevention & Resolution Working Group’s 2020 Cybersecurity Protocol for International Arbitration and the Korean Commercial Arbitration Board’s newly adopted Seoul Protocol on Video Conference in International Arbitration when determining the level of cybersecurity and security technology required to cover remote proceedings. Also, the ICC Guidance Note contains suggested clauses for cyber-protocols and requires the parties and tribunal to agree on the minimum requirements of encryption to safeguard the integrity and security of the virtual hearing against hacking or illicit access. Similarly, the AAA Protocol contains extensive minimum cybersecurity standards for virtual hearings. Specifically, the AAA Protocol encourages the use of artificial intelligence for continuous user authentication, facial recognition, silhouette tracking and multifactorial authentication. Overtime, cybersecurity and privacy concerns in virtual hearings would be of lesser concern as efforts would be channeled to improve the encryption and advancements of the platforms used.
- Unequal access to technological equipment: Access to technological equipment for the conduct of arbitral hearings may also pose a challenge in some circumstances. And where accessibility and reliance on technology for the conduct of the proceeding is in issue, it poses a challenge to the fairness of the arbitral process. Internet connectivity issues could, for instance, result in difficulty in enforcement of procedural rules and ethical conduct in cross-examination. Also, the degree of technical knowledge of a party may place such a party at a disadvantage in the use of technological equipment for the virtual hearing and thus raises fairness concerns. Hence, it is necessary for technical sessions to be held before the commencement of the virtual hearing on the appropriate use of technological equipment and platform for the hearing. Further, the development of virtual hearing centres that provide for facilities and equipment for teleconferencing would be helpful to avoid all attendant internet connectivity and technical issues which may raise fairness concerns.
- Inapplicability to specialised arbitration proceedings: Virtual hearings may not be suited for certain arbitration proceedings, like construction disputes where site visits could, in some instances, help the arbitrators to view the condition of the site and make technical decisions based on their assessment of what they see as opposed to relying solely on diagrammatical representations of the site. To this end, there may be a need to have the parties present for clarification and all these would tie into the hearing and inform the eventual award. This essentially means that for construction disputes, there would always be an aspect that cannot effectively be done virtually. The adoption of a quasi-virtual hearing to cater for specialised arbitration proceedings only when such site visits are necessary may well be the solution to this challenge.
- Possibility of the challenge of the arbitral award: A party could also challenge an award on the basis that the arbitration proceedings were conducted virtually, particularly if the parties did not agree to such procedure in advance. Even though some arbitration rules, for example Article 22(2) of the ICC Rules of Arbitration, grant the arbitral tribunal the power to ‘…adopt such procedural measures as [the tribunal] considers appropriate, provided that they are not contrary to any agreement of the parties’, parties’ written consent to the conduct of virtual hearing is highly recommended in order to limit the possibility of a subsequent challenge.
As hinted above, virtual hearings are not entirely new. For example, correspondence and filings are done electronically in most cases. However, while remote hearings have become prominent in recent times because of the COVID-19 pandemic, they may well represent the future of arbitration proceedings if arbitration must retain its relevance and advance at the same pace as the world.