The most tangible impact of COVID-19 on arbitration has been the adoption of virtual hearings. According to a survey published by Queen Mary University in 2018, 78% of arbitrators had never, or only rarely, utilised virtual hearing rooms. The sea-change has been dramatic and can properly be considered revolutionary. Two preliminary questions arise in this regard:
- Do national arbitration laws allow for virtual hearings?
The short answer is that many do, even where one party objects. Beware, however, that there are some jurisdictions where both parties must consent to a virtual hearing, i.e. China; failing which, a party risks enforcement issues with the arbitral award.
- Do arbitral institutional rules allow for virtual hearings?
Regrettably, the position varies between institutions. Few make express provision for virtual hearings. The LCIA Rules 2014 is one of the more progressive set of rules. Article 9(2) states: “As to form, a hearing may take place by video or telephone conference or in person (or a combination of all three).” We will come back to a discussion on “combination” or “hybrid” hearings later.
Other institutional rules are less clear and institutions have supplemented their Rules with guidance intended to try and resolve the interpretative difficulties, sometimes leaving this to the parties and the tribunal to resolve between themselves. For example, the ICC Rules 2017 provide that a tribunal “…shall hear the parties together in person if any of them so requests”. On 9 April 2020, the ICC issued a Guidance Note on possible measures aimed at mitigating the effects of the COVID-19 pandemic. The Note seeks to construe “in person” as “…referring to the parties having an opportunity for a live, adversarial exchange and not to preclude a hearing taking place ‘in person’ by virtual means if the circumstances so warrant”. This construction, of course, was not what was envisaged when the Rules were drafted.
Since arbitration is a consensual process, in the absence of both parties agreeing to a virtual hearing, parties face a risk with an arbitral award being challenged in enforcement. A party seeking to create delay may also benefit from this ambiguity by objecting to a virtual hearing. What is required, therefore, is a clear amendment to those arbitral institutional rules that do not expressly provide for virtual hearings. Failing that, what we may see is parties reconsidering their choice of arbitral institution, particularly where potential enforcement difficulties arise.
Thereafter, COVID-19 and the virtual new world has forced parties to reconsider their ideas as to what constitutes a hearing. Various aspects of a hearing have had to adapt, including:
1. Forum. Pre-COVID-19, the primary manner in which hearings took place was in person. This has been replaced by virtual hearings rooms. There are a litany of platforms available, including Zoom, Microsoft Teams, Blue Jeans, GoToMeeting, etc. All have slightly different functionality and are in continued and rapid technological development. For example, Microsoft Teams has been developing breakout rooms and Zoom has been addressing its security issues. The advancement in technology development and the use of this technology brought about by COVID-19 has been remarkable. But with technology comes technical difficulties, such as weak WiFi signal leading to visual and audio output not running in tandem, or participants dropping offline. It has become important to test run the access to and functionality of platforms in advance of hearings to seek to resolve these difficulties and ensure the familiarity of participants with the new systems. While this helps to prevent technological “hiccups” on the day, it also adds to the time and, therefore, cost of these hearings. Some have managed this process through the creation of new roles in the hearing environment, such as the Virtual Hearing Manager or Technology Manager.
2. Document management. Overnight, hard-copy bundles have been replaced by electronic bundles as access to offices was restricted. Document management could not be more critical than it is with virtual hearings; thus, detailed document management protocols have been developed. The benefits are obvious: they assist the practical management of case documents with search, bookmark and notes functionality, and also enable a significant environmental saving. Whilst many practitioners already operate via electronic bundles, it is about time this practice became universal. Again, however, all participants’ technological capabilities need to be compatible and able to handle an often vast amount of data.
3. Hearing arrangements. Considerations here include the arrangements required to manage the multiple parties involved (counsel, solicitors, arbitrators, experts, witnesses, transcribers, interpreters, etc.) and to manage intra- and interparty communications, especially when the participants are all in different locations. What separate lines of communication are required? Are online notes between clients and counsel as effective as paper scribbles passed across a desk? Is it necessary for participants to have multiple screens – one to display counsel, one to display a witness/expert (or two if hot tubbing)? Is a “tribunal-only” screen also needed to enable a sense of tribunal reactions? All of these variants need consideration and all take time and money to resolve.
4. Hearing length and timing. Pre-COVID-19, standard hearings ran in person from around 10am for six to seven hours, not including the lunch break. Virtual hearings have been reportedly shorter than in-person hearings since it can be difficult to concentrate for long periods online. Time differences between hearing participants have also led to shorter hearings and unusual hearing hours. This has brought to the fore questions as to the fairness of hearings when participants are required to engage during what is their early morning or late evening. Going forward, one can see that parties and institutions may pay more attention to time differences during the arbitral appointment process.
5. Hearing structure. Pre-COVID-19, the most common hearing structure comprised a single final hearing on all matters of liability and quantum. During COVID-19, there has been an increased use of split hearings (i.e. of discrete issues) and hybrid hearings (i.e. hearings part in person and part virtual). This has often been born out of the issues arising with hearing length and timing discussed above. Split hearings are generally well known. Much less well-known or used, however, are hybrid hearings, although they are not a novelty arising out of COVID-19. As explained above, some institutional rules already provide for such combination hearings. Hybrid hearings allow for the most flexible form of hearing. The issues arising from such hearings are how to ensure fairness and equality between the parties. For example, if one party attends a hearing in person with the tribunal and the other attends virtually – is this fair on the party attending virtually, or does it open a tribunal award up to challenge in enforcement? Certain courts are already finding that such hearings are not unfair, but this will be jurisdiction dependent.
6. Evidence. One of the benefits of virtual hearings has been the focus of participants upon the necessary, as opposed to the “nice-to-have”, evidence at a hearing. This saves an abundance of time and money. Parties, however, have also had to give consideration as to how to manage the virtual cross-examination of experts and witnesses. It is more difficult virtually to control the evidence of an opposition expert or witness during cross-examination, or to object to lines of cross-examination of one’s own expert or witness, since both involve interrupting that evidence. Online interruptions are difficult to manage and may cause difficulties in the transcription of the evidence given. A benefit could, however, be the ability to virtually remove a witness from proceedings temporarily to allow parties and/or the tribunal to speak confidentially.
There also need to be sufficient arrangements in place to assist the witnesses and experts giving evidence. For example, assistance when they take the oath, and ensuring no unauthorised assistance is provided from persons or papers (other than what is available in the virtual bundle). Can these issues be resolved by attestations of the witness or expert, a 360-degree screen, the presence of an independent person, or evidence given at the offices of an independent person such as a notary public? All options are being explored. In addition, does a virtual arbitration allow better assessment of facial expressions of a witness or expert? This remains to be seen. Questions have been raised on the inability to properly assess a person’s body language when giving evidence remotely, but questions should also be raised as to how good we are at assessing credibility by reference to body language and facial expressions in any event.
So where does this take us? What we can see from the above discussion is that in a very short space of time, the move into the virtual world has brought with it significant advancements in technology, processes and procedures. There have also been significant cost savings. Flights and hotels have not been required, nor has the cost of participants’ travel. There has, however, been more time – and therefore more cost – involved in virtual hearing preparation, including rehearsals, increased breaks during hearings, and the time taken to electronically format evidence bundles. But the practical issues arising are all capable of being addressed (and in due course many will no doubt be streamlined), and virtual hearings are proceeding successfully.
This begs the question of whether, post-COVID-19, virtual hearings will become the norm. Certainly, we expect that they will become more common, particularly in smaller and/or less complex disputes, or where great cost savings can be achieved. In respect of the larger and/or more complex disputes, or in relation to disputes of a certain nature (such as cases involving fraud), one is likely to see parties revert to in-person hearings if only because of the longer hearing durations and the desire (and in some cases, the perceived need) to see evidence given in person.