Virtual hearings in international arbitration
Prior to 2020, remote or virtual hearings in international arbitration were a limited if not unknown phenomenon. It was relatively common for interim procedural hearings to be heard in the form of telephone conferences. Also, sometimes witnesses might join a hearing by video link. However, to most arbitration practitioners, the idea of a substantive hearing being entirely heard by video link would have been a novelty.
With the COVID-19 pandemic, and associated restrictions on meeting and travel, that has all changed, as it has for proceedings before the court. Indeed, the nature of international arbitration - where the disputes are cross-border and the arbitrators, the parties and their advisers are usually located in different countries - has made the resort to technology inevitable if the resolution of disputes was not to grind to a halt and be put off indefinitely.
Early on in the pandemic, the arbitral institutions recognised the need for a fundamental re-imagining of how hearings were going to be conducted. In April 2020, the International Chamber of Commerce (ICC) published its Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic (The Note). The Note considered the three alternatives open to parties who were due to have a hearing: (i) convening in a single physical location, this being indispensable to the resolution of the dispute and possible despite the conditions of the pandemic (ii) postponing the hearing, because convening in a single physical location was indispensable yet was impossible due to the conditions (iii) a virtual hearing.
The Note refers to the procedural rule in international arbitration that, if the parties agree between themselves on a way forward, then that is adopted. However, if the parties disagree, then the tribunal decides.
Since 2020, option (iii) – either a fully virtual hearing or a ‘hybrid’ solution where some participants attend in person whilst others attend remotely – has become the optimal solution in the pandemic conditions.
There has, of course, been some resistance to the use of virtual solutions. This has been framed in terms of principle and practicalities.
Some parties have argued that there is a right to a physical hearing and opposed a virtual hearing on that basis. However, from the reported cases, it seems that arbitrators have taken a robust approach, directing that a virtual hearing should be held when the only alternative is postponement. The various arbitral rules, even in their pre-2020 versions, have given enough flexibility to arbitrators to make a ruling in favour of a virtual hearing. The arbitrators are also able to point to the parties’ duties, for example, to make every effort to conduct the arbitration in an expeditious and cost effective matter (ICC Rules Article 22(1)). It is not consistent with this duty for a party to insist on a physical hearing which will inevitably cause delay. The International Council for Commercial Arbitration has recently published a series of reports finding that, in the 77 counties examined, there is in fact no express right to a physical hearing.
In terms of practicalities, there have been concerns regarding the reliability of virtual hearings. These include concerns over the risk of interruption to internet connection, confidentiality and data protection, and the difficulty of maintaining the integrity of a process where the participants are in different countries. These are real challenges but are capable of being addressed if the parties engage constructively early on. Arbitral institutions and litigation support consultants provide a variety of digital platforms for the hosting of virtual hearings. Various protocols and checklists have now been published by interested organisations which set out the technical and practical requirements for a virtual hearing. Best practice recommends the use of a number of ‘dry-run’ sessions with all participants before the hearing to check the efficacy of the system.
The author has had recent experience of a major arbitration hearing which was fully remote. Over two weeks, the Kennedys team with its clients and counsel participated from London, whilst the arbitrators were in continental Europe, the other party and its lawyers were in Asia, and some of the expert witnesses were in North America. On a couple of days during the examination of witnesses, the virtual hearing spanned 13 time zones. Whilst there were some early starts for people in North America, and late finishes for those in Asia, there were no technical glitches to speak of and the hearing went on for its scheduled length without interruption.
2020-2021 has, therefore, seen a radical shift in the understanding of what is possible for hearings in international arbitration. As the pandemic recedes, there may be some return to the old familiarity of physical in-person hearings. However, the thinking has changed. With the availability of new technologies and procedures, it will less often be heard that a physical hearing is indispensable.