The incremental rise of COVID-19 infections has, at the time of writing, claimed a total of 655,112 deaths (source: WHO) worldwide. Its global reach, has indisputably and irrevocably transformed life as we know it, leaving no industry, economy or personal interaction untouched. International supply chains have been interrupted, global commerce destabilized and stock markets have plummeted.
While some governments have chosen to resume business by implementing measures, inter alia to reopen nurseries, primary schools as well as lifting travel restrictions, others have voiced concerns over the loosening or indeed abandoning of containment measures in light of the real risk of unleashing a new wave of mass infections. Yet, irrespective of the policy considerations underlying these diverging courses of action, the uncertainty over when a full and safe resumption of economic activities can be expected, remains.
As numerous business relationships are unable to uphold their service obligations, the pandemic has given rise to an array of legal questions on whether and to what extent contractual claims are enforceable and over who is to bear the economic consequences absent clearly assignable blame. While anticipating how the coronavirus crisis will affect international arbitration would be misguided, its impact thus far cannot be negated. Arbitration hearings have been postponed and international conferences cancelled. With conflicting directives applying to different locations of parties, arbitrators and witnesses, concerns persist over how to safely conduct hearings in the foreseeable future. Yet, with many fearing that the virus may become endemic and non-medical interventions, like social distancing, expected to remain in place for the foreseeable future, new avenues are needed to navigate novel legal challenges. It is here that arbitration, by virtue of its recourse to online tools, can provide the necessary flexibility required during these unprecedented times.
The following will address the impact and challenges posed by COVID-19 to those engaging in arbitration. It will touch upon the provisions adopted by the Austrian judicial system as well as outline the methods and possible solutions for conducting arbitration hearings in context of Covid-19.
II. The Austrian Response
In trying to avoid perpetual delays, leading arbitral institutions have offered a number of alternative measures on how to conduct arbitral proceedings.
Seeking to minimise the number of potential disruptions, exacerbated by those seeking to evade arbitral responsibility, institutional guidelines have and continue to be updated on a regular basis. The responses have been wide ranging, with many resorting to virtual meetings, telephone conferences and new channels for the submission of documents and filing requests.
Conducting arbitral proceedings in absence of in-person hearings constitutes a fundamental diversion from what arguably has long been perceived an indispensable element of due process.
The Austrian Judicial System has recognized the necessity of such a revised approach by adopting new strategies that depart from well-established traditions and trusted techniques previously considered instrumental to arbitral proceedings.
On 25 March 2020, the Austrian government established the Bundesgesetz betreffend Begleitmaßnahmen zu COVID-19 in der Justiz ('Austrian Federal Act on Covid-19-Measures for the Judicial System'), which is to remain in effect until 31 December 2020. Its first part outlines rules regarding civil matters, focusing on interruptions of procedural deadlines as well as the suspension of deadlines to initiate proceedings including the Statute of Limitation. Yet it is the introduction of restrictions for oral proceedings and service of process that deserves singling out. Apart from the limits on the freedom of movement already put in place, oral hearings are to be held only if utmost necessity can be demonstrated. Any form of communication is to be conducted through technological means whether telephone or video conferencing, while the physical transfer of documents is to occur via post and should only be utilized in case of urgency. The Electronic Court Filing System remains fully operational. The Act also offers information on the effects of a potential cessation of judicial services rendered by Austrian courts (section 4), the impact of payment default under Sec 156a para 1 of the Austrian Insolvency Code (section 5), extensions of merger control deadlines (section 6), advances on maintenance payments (section 7) and powers of authority of the Minister of Justice (section 8).
While arbitration proceedings are exempt from the provisions set out in the Act, arbitrators and tribunals are entrusted with significant liberties in determining how to effectively balance the interests of stakeholders in pending arbitrations. The Vienna International Arbitral Centre (VIAC) had initially announced that all submissions to and communication with its offices are to be exclusively dealt with electronically until further notice. Its newly released Practical Checklist for Remote Hearings offers a useful reference point on the preparatory measures to consider when planning to hold such hearings. Legal matters such as risk of potential challenges to awards as well as the right to be heard and treated equally are also dealt with in a recently published article made available on its website.ii Seeking to encourage greater collaboration among legal, process and technology professionals, the PlatformsProtocol has been launched for public consultation until 31 August.iii Since 30 May in-person hearings can resume at the VIAC premises, yet availability of rooms remains limited.
Further, the International Chamber of Commerce (ICC) continues to progress pending arbitrations, with its Secretariat and ADR Centre remaining fully operational. Like LCIA and HKIAC, it is however advised that all communication is conducted electronically. Recommended measures to ensure disputes are settled in a cost-effective, fair and expeditious manner, have been made available via its Guidance Note.iv
Given the recent surge of coronavirus cases, a decline in litigation and arbitral proceedings is not to be expected. Rather, new claims are likely to arise, not least in relation to international transit, data privacy, biotech, insurance, employment as well as commercial and investment disputes. Moreover, the effects of nationally implemented emergency measures will precipitate new legal issues concerning breach, performance and exemption from liability as well as foreseeability, reasonableness, loss, damage and the duty to mitigate.
III. Options to Consider
As many parties find themselves having to rebuild business relationships through methods other than the strict enforcement of contractual terms, dispute resolution processes like arbitration are an attractive option. In light of the COVID-19 pandemic, new innovative options are needed to ensure parties are offered the opportunity to fully present their case. The following methods are worth considering:
1. Adjourning in-person hearings until such proceedings are
cleared as safe again
While this option allows parties to prevent having to put in place the necessary arrangement for a remote hearing, it remains unclear how long the current restrictions will last. With many businesses, already being put under severe strain due to uncertain or stagnant cash flows, this may not be a viable option.
2. Allowing the dispute to be resolved "on the
This method may prove to be useful in relation to issues that are less dependent on factual evidence and cross-examination. Yet even then, using this method would only in part reduce delays to final and interim awards and may induce parties to settle more rapidly.
3. Divide claims only leaving some to be resolved by
This approach lends itself to cases with distinct heads of claim.
4. Conducting a remote hearing
Given the logistical coordination required in planning for remote hearings, parties need to ensure the availability of a secure internet connection as well as accessibility to necessary documents and requisite soft-/hardware. Additionally, they should take account of sitting hours, time zones and the duration of proceedings as well as the potential to create distinct virtual spaces to allow for easy communication of arbitrators and legal teams. Parties should consider drawing on the recommendations set out in the Seoul Protocol on Video Conferencing In International Arbitration, covering a wide range of practical aspects to ensure procedural fairness. This option has also been acknowledged as a viable alternative by the Chamber of Commerce and Industry of the Russian Federationv and is in line with Article 25(2) of the ICC Rules of Arbitration 2017.vi
With videoconferencing technology already being frequently used, party deliberations are not likely to be affected. Hearing bundles can be made available electronically and will facilitate the work of practitioners due to hyper-linked cross-references and the fact that new documents can be made immediately available. Similarly, arbitral awards can be delivered via email, although the transmission of original and certified copies to the parties may occur at a later stage. Nevertheless, electronic signatures have become a daily occurrence in business transactions and thus do not demonstrate a cause of concern. What remains unclear is whether the forum in which the respective arbitration is meant to take place will allow for a departure from the formalities of in-person hearings and traditional document issuance processes. It is here that parties are advised to confirm with counsel on how to best proceed before engaging in remote arbitration. Given the increased reliance on online communication tools it is essential that, among other things, a secure videoconferencing program is used with end-to-end encryption and that virtual hearing rooms are strictly limited to allocated participants.vii
Parties should consider recommended methods on how to adhere to a high level of online security as well as data protection privacy obligations when conducting international arbitration proceedings. To this end, they may wish to refer to the precautionary guidelines set out in the 2020 Cybersecurity Protocol for International Arbitration,viii the ICC-IBA Roadmap to Data Protection in International Arbitration,ix the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitrationx as well as the African Academy Protocol on Virtual Hearing in Africa.
IV. Where to go from here
Considering the inevitable influx of cases expected to arise from events since the outbreak, it remains paramount for claims to be initiated as soon as the necessary facts can be established. Since arbitral institutions have signalled that they are intending to continue their operation, it is prudent for stakeholders to weigh their arbitration options carefully and expeditiously. Private parties are also given the opportunity to review existing contractual terms and consider incorporating the use of technological tools in the procedural rules of their arbitration agreements. Since there is great uncertainty regarding the duration and measures implemented to contain the spread of the virus, it is crucial for parties to establish a contingency plan in case physical hearings will not be a feasible option in the upcoming weeks or months. While case progression may be slower, taking advantage of electronic tool for the submission of documents, communication and correspondence have proven to be successful options in the past and should now be expanded upon.
Ultimately, the success of any arbitration requires adequate preparation which in turn will depend on the specific circumstances of the case and for which there can be no all-encompassing framework. Refusing to adapt to these changed conditions due to sheer convenience of customary hearing practices, cannot provide a justifiable basis in light of the current challenges and health risks that the epidemic brings with it. Since justice delayed is justice denied, 'public institutions such as the Court must do all they can to facilitate the continuation of the economy and essential services of government, including the administration of justice.' (Capic v Ford Motor Company of Australia Limited (Adjournment)  FCA 486; para 5).
The threat posed by Covid-19 is one that requires diligence and commitment by leadership and the health care sector, yet it is also dependent on the support of civic society. As such, parties, arbitrators and legal representatives alike have a shared duty to minimise the effects of the epidemic and to halt its spread. The outbreak of the virus has and undoubtedly will continue to alter existing arbitration practices and will force participants and stakeholders to adapt, reflect and improve upon the current system. It will also prove to be the driving force in advancing well-established yet outdated processes in a way that is less dependent on the stringent rituals of conventional court practices but instead can transcend adversities of times such as these.
i Vienna International Arbitration Centre, 2020, 'The Vienna Protocol. A Checklist for Remote Hearings', VIAC, viewed 1 July 2020, https://www.viac.eu/images/documents/The_Vienna_Protocol_-_A_Practical_Checklist_for_Remote_Hearings_FINAL.pdf
ii Scherer, M., 2020, 'Remote Hearings in International Arbitration: An Analytical Framework', Journal of International Arbitration, Volume 37 Issue 4, viewed 28 June 2020, https://www.viac.eu/images/COVID19/Maxi_SCHERER_Remote_Hearings_in_International_Arbitration_An_Analytical_Framework_May_2020.pdf
iii Protocol for Online Case Management in International Arbitration Online Case Management, International Arbitration, 2020, viewed 2 July 2020, https://protocol.techinarbitration.com/p/1
iv International Chamber of Commerce, 2020, 'ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic', ICC, viewed 9 April 2020, https://iccwbo.org/content/uploads/sites/3/2020/04/guidance-note-possible-measures-mitigating-effects-covid-19-english.pdf
v The International Commercial Arbitration Court, 2017, 'ICAC Rules', ICAC, viewed 27 June 2020, https://mkas.tpprf.ru/en/documents/
vi International Chamber of Commerce, 2019, 'Arbitration Rules. Mediation Rules', ICC, viewed 1 July 2020, https://iccwbo.org/content/uploads/sites/3/2017/01/ICC-2017-Arbitration-and-2014-Mediation-Rules-english-version.pdf.pdf; see also Mirèze, P., 2020, 'Offline or Online? Virtual Hearings or ODR', Kluwer Arbitration Blog, viewed 1 July 2020 http://arbitrationblog.kluwerarbitration.com/2020/04/26/offline-or-online-virtual-hearings-or-odr/?doing_wp_cron=1591917290.5999879837036132812500
vii Chartered Institute of Arbitrators, 2020, "Guidance Note on Remote Dispute Resolution Proceedings", CIArb, viewed on 1 July, https://www.ciarb.org/media/8967/remote-hearings-guidance-note.pdf; see also The International Council for Online Dispute Resolution, 2020, "ICODR Video Arbitration Guidelines", ICODR, viewed 27 June 2020, https://icodr.org/guides/videoarb.pdf
viii DELOS, 2020, "Resources on Holding Remote or Virtual Arbitration and Mediation Hearings", DELOS, viewed 25 July 2020, https://delosdr.org/index.php/2020/05/12/resources-on-virtual-hearings/
ix International Counsel for Commercial Arbitration, 2020, "The ICCA-IBA Roadmap to Data Protection in International Arbitration", ICCA, viewed on 3 May 2020, https://www.arbitration-icca.org/media/14/18191123957287/roadmap_28.02.20.pdf
x International Counsel for Commercial Arbitration, 2020, "ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration", ICCA, viewed 1 July 2020, https://www.arbitration-icca.org/media/14/76788479244143/icca-nyc_bar-cpr_cybersecurity_protocol_for_international_arbitration_-_print_version.pdf
xi Africa Arbitration Academy, 2020, "Africa Arbitration Academy. Protocol on Virtual Hearings", Africa Arbitration Academy, viewed 1 July 2020, https://www.africaarbitrationacademy.org/wp-content/uploads/2020/04/Africa-Arbitration-Academy-Protocol-on-Virtual-Hearings-in-Africa-2020.pdf
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