Arbitral Proceedings in the Era and Aftermath of COVID-19

The advent of COVID-19 has reinforced particular shifts in the dynamic field of arbitration. This article critically analyses the impact of virtual arbitral proceedings and their sustenance in the long term.

As a means of dispute resolution, arbitration is well equipped to resolve disputes in the COVID-19 era. Arbitration is built on the fundamental principle of party autonomy – the idea that the parties can agree on the particular procedures for resolving their dispute (so long as the parties are treated equally and have the right to be heard). Party autonomy injects flexibility into the arbitral proceedings and gives the parties – and the tribunal – wide latitude in crafting a procedure that works best for the matter at hand. While it is currently in vogue to refer to the “new normal” in the midst of the COVID-19 pandemic, it can be said that there should be nothing “normal” when it comes to the arbitral process given its inherent flexibility, though there are, of course, familiar recurring aspects that one sees frequently in “typical” arbitrations.

Arbitration is already demonstrating that it can work well in the current environment. Anecdotal reports have emerged of virtual evidentiary hearings having been held in large cases in recent weeks with arbitrators, counsel, and witnesses appearing from multiple countries on different continents. That is not to say that such hearings are always easy – as discussed further below, practical challenges will always arise – but it does go to show that it can be done in some cases. In assessing the impact of the COVID-19 situation on arbitrations, it is helpful to consider some of the key milestones one will often encounter in a “typical” arbitration.

Case-Management Conference

An arbitration will often kick off with an initial procedural conference frequently referred to as a case-management conference. In the past, case-management conferences were typically held in person and gave the tribunal, counsel, and parties an early opportunity to read the room and consider the inter-personal dynamics between the various actors. Over time, however, there has been a move towards holding case-management conferences via telephone (or in some cases videoconference), which, of course, is more cost- and time-effective, particularly where the tribunal members, counsel, and parties are in different jurisdictions. This approach has only accelerated with the advent of the COVID-19 pandemic; thus, COVID-19 is really only reinforcing a trend that had already started in this regard.

Written Submissions and Submission of Documents

Following the case-management conference, counsel will typically embark on the written advocacy stage of the arbitral proceedings with the exchange of a Statement of Claim (or Memorial) and Statement of Defense (or Counter-Memorial) and, later in the proceedings, the exchange of a Reply and a Rejoinder. Here, the COVID-19 pandemic seems to have had less overall impact on the arbitral process. For the most part, lawyers have been able to continue to draft at home, but access to hard copy authorities, clients, and underlying documents can be difficult. In addition, where lawyers or their clients are working in jurisdictions where internet connectivity is patchy, or where access to the technologies for home working are not as easy, the production of written submissions may become harder.

Another wrinkle to this is that the email submissions are often followed by the transmission of hardcopies to the tribunal and opposing counsel via courier. In this regard, things are changing to some extent – tribunals are consistently instructing the parties not to send hardcopies in the current environment, which makes sense given the practical difficulties that are now inherent. What remains to be seen is whether tribunals will dispense with hardcopies altogether in ongoing cases once the current restrictions relax. Given the vast amount of paper that is consumed in arbitral proceedings each year, this could be a positive impact of the COVID-19 pandemic on arbitrations if it contributes to a general move away altogether from paper submissions. In this regard, an initiative to reduce the carbon footprint of those participating in international arbitration – known as the Campaign for Greener Arbitration – was recently launched.

Document Disclosure

Staying with the topic of documents for a moment, the next phase in a typical arbitration is the document-production phase in which the parties request documents from one another, frequently proceed to object (often vigorously) to these requests, and ultimately provide some documents following orders by the tribunal. The document-production phase is always a challenge from a client perspective – it is intrusive, clients do not always fully comprehend their obligations at the outset, and document-retention systems vary among companies and individuals. These challenges will only become more pronounced during the current situation as people are working remotely, especially in cases where hardcopy documents are requested or need to be searched.

Hearing

The next phase in a typical arbitration is often the “main event” – the evidentiary hearing. It is here, of course, where the COVID-19 situation is probably having the greatest impact and may leave its strongest legacy. As noted above, hearings in case with substantial sums at stake are moving ahead virtually in the current environment; legal arguments are being made and fact and expert witnesses are being examined via videoconference or telephonically, and the feedback has been generally positive. Technology has evolved to the point where hearings can proceed relatively effectively in a virtual manner in some cases.
That being said, challenges certainly do remain. There are the practical considerations of time zones – if the tribunal is comprised of arbitrators from Singapore, Lagos, and Vancouver, the simple issue of identifying a time slot of six or eight straight hours can be difficult. Translation of witness testimony can also be complex and slow. Connectivity will also be a key practical challenge, especially for arbitrators, counsel, or parties in developing regions of the world where connectivity may not be as reliable. Virtual hearings thus run the risk at placing these participants at a disadvantage.

There are also strategic and tactical challenges involved in a virtual hearing from the counsel’s perspective, especially in relation to the examination of witnesses. While cross-examination of a witness can be and is conducted via videoconference or telephonically, it often is not as effective. The pressure that is placed on a witness having to appear in person before an arbitrator and be subjected to questioning by the other party’s lawyer is relieved to some degree by engaging in the process virtually (though certainly some pressure still remains). Moreover, the counsel loses some real-time ability to read the witness, the tribunal, and opposing counsel when an examination is conducted virtually. A virtual cross-examination also provides a potential benefit to the witness in that he or she can feign connectivity issues to buy a few additional moments (or more) to consider his or her answers. More broadly, as recent experience shows, there can be security issues as potential hackers have the ability to disrupt a virtual hearing.

While many hearings have proceeded virtually in the COVID-19 environment, others have been postponed because of such concerns and challenges.

Conclusion

Ultimately, the question remains as to what the lasting impact of COVID-19 will be on arbitration. We will no doubt see the COVID-19 situation contributing in some way to an increased use of online arbitrations for small disputes and some sustained increase in the use of virtual hearings, especially for smaller-stakes matters or where fact-witness and expert testimony may not have as large of a role to play. However, as noted at the outset, it can be said that there is nothing normal about arbitration – it is a dispute-resolution mechanism that is constantly evolving. The COVID-19 situation will certainly contribute to the evolution of the arbitral process, and may even accelerate it in certain respects, but it is unlikely to revolutionize arbitration in any significant manner.


Author