We all have witnessed the outbreak of COVID-19 and its consequent global proliferation over the course of December 2019 – April 2020. Lockdowns and social distancing being essential for survival, business across the world would have come to a standstill had we all not developed the "new normal" of getting our work done. Resultantly, business as usual in this "new normal" can only progress on the basis of how adaptable a particular industry is to virtual platforms.
Needless to say, the pandemic has also majorly affected the legal sector and even more so the dispute resolution practice. Lockdowns, quarantines, and work from home policies across countries are presently at different stages of implementation and operation and different sectors, including the legal sector are revamping their way the function to adapt to this "new normal" in order to ensure some uniformity, predictability and continuity in the system.
The conventional course of litigation in the judicial system is, however, heavily dependent on extrinsic factors / systems such as procedures established by law and courts, discretion of the designated presiding members/judges, number of pending matters, infrastructure and court decorum. Parties have almost no feasible alternate recourse when the extrinsic systems are shut down or minimally operational. The shutdown of physical premises has increased the burden on an already heavily-burdened judiciary. Although courts are hearing urgent matters via video conferences, the proceedings in the less urgent matters remain in abeyance. Even though hearings in urgent matters are still progressing, the number of matters being heard and effective decisions being passed in no way match the numbers prior to the lockdowns so as to provide an indication as to whether normalcy can be reinstated any time soon.
Alternate dispute resolution systems such as arbitration, however, stand on a different footing than litigation in the judicial system. Procedural flexibility and party autonomy, being the key factors as to why parties opt for arbitration, may in fact aid the arbitration process to better adapt to the "new normal" in this pandemic. Institutional arbitrations especially, are known to be better equipped with their own set of procedural rules that ensure uniformity and a definite structure for conducting arbitration proceedings while also maintaining party autonomy and flexibility to model the procedural rules as per the convenience of the parties and the arbitral tribunal. These rules, even prior to the pandemic, contemplated remote hearings, e-service of documents, e-filing, and .video conferencing These aid the adaptability of the proceedings to shift away from in person hearings and physical service/filing of documents to virtual hearings and e-service/e-filings. It is this very aspect that has enabled these institutions to quickly adapt to the "new normal".
Typically involving parties situated in different jurisdictions, institutional arbitrations have already set up a system that encompasses remote hearings, video conferencing, e-filings, convenience of parties and relaxation of procedural norms. On account of the pandemic, the institutions conducting these arbitrations have also gone a step ahead to mitigate delays for all urgent and non-urgent matters and have formulated their own guidelines for arbitrations to be initiated, progress and conclude effectively under the "new normal".
International arbitral institutions, such as the International Chamber of Commerce ("ICC") International Court of Arbitration ("ICC Court") and the Singapore International Arbitration Centre ("SIAC") have been on the forefront of this effort. ICC and SIAC are presently, successfully facilitating arbitration proceedings involving parties located in various jurisdictions by way of video conferencing, and have released guidelines and advisories for the conduct of arbitrations in these times. For instance, the ICC has released its 'Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic' dated 9 April 2020 ("ICC COVID19 Guidance"), intimating parties regarding the steps which the ICC is taking in this regard, and the considerations which are relevant to the conduct of arbitrations in the present circumstances.
Similarly, the steps being taken by the SIAC in light of the present situation are largely encapsulated by the 'SIAC-COVID Frequently Asked Questions' available on their website.
The London Centre of International Arbitration ("LCIA") has also released a service update on 18 March 2020 on its website, summarily highlighting procedures for potential and existent litigants.
For the purpose of analysing the rules of arbitral institutions under this article, we shall focus on the ICC, the SIAC and the LCIA rules. Notably, all arbitration institutions are contemplating and taking steps to set up similar structures to provide definite guidelines for arbitrations to be conducted smoothly in this pandemic.
Considering the above, this article will briefly discuss the following:-
- The existing framework of the ICC, SIAC and LCIA rules that provide for procedural flexibility required for conducting arbitrations in the "new normal";
- The current steps being taken and/or proposed to be taken by such institutions for dealing with issues faced during arbitrations conducted during the COVID19 crisis; and
- The New Normal: signalling a shift in the way institutional arbitrations will be conducted post COVID19 times.
- Existing Framework of Rules providing Flexibility for conducting Arbitrations in the "new normal"
Since most institutional rules serve as the law governing arbitral procedure, the same need to operate in consonance with the law of the juridical seat of arbitration, and must necessarily be subservient to the same. Accordingly, most of these rules have been drafted in a manner that accords immense flexibility to the parties and the arbitral tribunal for conducting the arbitration proceedings. The rules offer enough leeway for parties to mould procedural norms as per their convenience, while adhering to general principles of law and the lex fori (law of the seat of arbitration). Thus, uniformity and structure for conducting proceedings is maintained and party autonomy and flexibility remain protected.
The relevant existing rules providing flexibility for conducting arbitrations in the "new normal" are discussed below.
- ICC Rules, 2017
Rule 22(2) of the ICC Rules reads as follows:
"In order to ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties."
Further, the ICC Rules make provisions for convening a case management conference while drawing up the terms of reference or soon thereafter to finalize the procedural rules applicable to the arbitration.
Further case management conferences can also be scheduled, as may be requested by a party/ies and permitted by the arbitral tribunal to modify procedural timetables..,
To substantiate the above the relevant rules are provided below.
Article 24 (1) of the ICC Rules states:
"When drawing up the Terms of Reference or as soon as possible thereafter, the arbitral tribunal shall convene a case management conference to consult the parties on procedural measures that may be adopted pursuant to Article 22(2). Such measures may include one or more of the case management techniques described in Appendix IV."
Appendix IV of the ICC Rules stipulates the techniques to convene an effective case management conference whereby the arbitral tribunal can inter alia:-
- bifurcate proceedings and render partial awards on key issues for effective resolution of those issues;
- identify issues which can be resolved by agreement between the parties;
- identify issues where only documentary proof may suffice as opposed to oral hearing or legal arguments;
- limit the time period and effectively regulate production of documents and request for production of documents by a party;
- limit the length and scope of written arguments and oral hearings;
- direct the use of telephone or video conferencing for procedural and other hearings where attendance in person is not essential and use of virtual tools that enables online communication among the parties, the arbitral tribunal and the Secretariat of the Court.
Rule 24(3) of the ICC Rules states:
"To ensure effective case management, the arbitral tribunal, after consulting the parties, may adopt such procedural measures as it considers appropriate, provided that they are not contrary to any agreement of the parties."
Rule 24(4) of the ICC Rules says:
"Case management conferences may be conducted through a meeting in person, by video conference, telephone or similar means of communication. In the absence of an agreement of the parties, the arbitral tribunal shall determine the means by which the conference will be conducted. The arbitral tribunal may request the parties to submit case management proposals in advance of a case management conference and may request the attendance at any case management conference of the parties in person or through an internal representative."
- SIAC Rules, 2016
Similar provisions exist in the SIAC Arbitration Rules, for example, Rule 19 states:
"19.1 The Tribunal shall conduct the arbitration in such manner as it considers appropriate, after consulting with the parties, to ensure the fair, expeditious, economical and final resolution of the dispute.
19.3 As soon as practicable after the constitution of the Tribunal, the Tribunal shall conduct a preliminary meeting with the parties, in person or by any other means, to discuss the procedures that will be most appropriate and efficient for the case.
19.4 The Tribunal may, in its discretion, direct the order of proceedings, bifurcate proceedings, exclude cumulative or irrelevant testimony or other evidence and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case.
19.7 The President may, at any stage of the proceedings, request the parties and the Tribunal to convene a meeting to discuss the procedures that will be most appropriate and efficient for the case. Such meeting may be conducted in person or by any other means."
- LCIA Rules, 2014
Similarly, the LCIA Rules state that:
"14.4 Under the Arbitration Agreement, the Arbitral Tribunal's general duties at all times during the arbitration shall include:
(ii) a duty to adopt procedures suitable to the circumstances of the arbitration, avoiding unnecessary delay and expense, so as to provide a fair, efficient and expeditious means for the final resolution of the parties' dispute.
14.5 The Arbitral Tribunal shall have the widest discretion to discharge these general duties, subject to such mandatory law(s) or rules of law as the Arbitral Tribunal may decide to be applicable; and at all times the parties shall do everything necessary in good faith for the fair, efficient and expeditious conduct of the arbitration, including the Arbitral Tribunal's discharge of its general duties."
The above provisions clearly indicate that the institutional rules give the arbitral tribunal wide discretionary powers for the determination of the procedure to be followed in the arbitration.
In the "new normal" of the day, arbitrations will face unprecedented circumstances in terms of inability to hold physical meetings, travel restrictions, impediments to cross-examination, unavailability of witnesses, cost implications, etc.
In view thereof, the above provisions can be invoked by the parties or the arbitrators to mould procedures to account for these problems and avoid unnecessary delays in the arbitration proceedings. As discussed above, parties can even modify procedural timetables by scheduling a case management conference (or any procedural equivalent thereof). Arbitral tribunals can identify issues that can be amicably settled by the parties, render partial awards to minimize further hearings and even identify and categorize issues where mere documentary proof may suffice. The arbitral tribunal can conduct the arbitration to focus on key issues. Case management conferences/preliminary meetings ensure that the arbitration is cost effective and time spent on the proceedings is effectively managed. If the road map of the arbitration proceedings is thus thoroughly laid out, the proceedings can effectively progress and oral hearings can be scheduled only when necessary. Use of virtual platforms is also largely promoted by the aforesaid rules. All these components ensure that arbitrations can proceed without delay, and parties can avail of the virtual platforms where oral hearings, when necessary, can take place.
Considering the present economic downturn caused by COVD-19, and the sudden changes being faced by businesses all over the world, (like shut downs, force majeure invocations, increased regulatory oversight) it seems that going forward, focus on time and cost efficiencies will be prime considerations in conducting arbitrations, such that the troubles of commercial parties are ameliorated as far as possible.
Thus, institutional arbitrations come with their own definitive set up to take care of administrative and procedural issues which would aid parties to initiate and participate in arbitrations across jurisdictions with ease and uniformity and also make arbitrations cost and time effective.
- Current Steps taken by Institutions to Mitigate the Fallout from COVID19
The ICC, SIAC, LCIA have been issuing various press releases to assure the world at large that issues and delays arising out of the pandemic are being mitigated by them. These institutions have taken into account various considerations, like the safety of parties, tribunals and the institutions' administrative staff, time and cost efficiencies, procedural fairness, etc while formulating guidelines for arbitrations to proceed in this pandemic.
- Postponement of proceedings:
The institutions have stated that on account of COVID19, parties to various arbitration proceedings may postpone hearings, should they so require (thus, ensuring that party autonomy is protected), and no postponement request has been denied by the registry / secretariat of these institutions, when it pertains to these grounds.
- Avoidance of Delay and Social Distancing:
The institutions have also stated that the best way to avoid delays and still conduct these proceedings with some degree of efficiency is to adopt measures including inter alia:-
- passing interim awards for issues which may be decided summarily and pursuing the merits at a later stage;
- adopting a "documents-only" approach to certain hearings if the subject matter therein allows for the same;
- conducting hearings via video conference, etc;
- imposition of size limitations for pleadings and exhibits;
- conduct of examinations through written questions, etc.
- Electronic service of documents:
As discussed above, prior to COVID19, institutional arbitrations provided mechanism for the extensive use of electronic facilities for various aspects of the arbitral proceedings, like service of pleadings, communications with the administrative staff (the case management team of the ICC Secretariat, the SIAC registry, etc.). This has been further emphasised post March 2020, when the ICC specifically stated that all requests for arbitration and all subsequent filings must be filed in electronic form. Considering that various countries are in a state of lockdown and do not have functional courier services, and that the offices of various institutions in worst affected areas are also temporarily closed (whilst the staff and employees are still working from home), such measures will greatly benefit parties to invoke arbitrations in these times.
The ICC has also indicated that final arbitral awards may also be delivered by the tribunal to the institute and parties by electronic means, and such awards could be signed in counterparts electronically. However, parties will be required to specifically agree to such a procedure, because traditionally, awards have always been signed by the tribunal in person. In our experience however, internal communication between the arbitral tribunal and the institutional secretariat/registry has been timely and the pandemic has not caused any significant delay in the same.
- Video conference:
At the very least until lockdowns and travel restrictions in the wake of COVID19 persist, and very likely for a long time thereafter, hearings / case management meetings / procedural meetings where the entire arbitral tribunal and the parties may be physically present in the same venue are highly unlikely. The obvious work-around, which is also being employed in courts across the world, is hearing by way of video conference. Institutions like ICC and SIAC have employed the services of various video conference applications, such as Zoom, Microsoft Teams, WebEx, etc. in order to have hearings conducted, and the same have apparently been facilitated successfully. However, it is yet to be seen as to what liability institutions will bear for the confidentiality of information exchanged through such third-party platforms. These institutions have also indicated that they are considering developing their own virtual platform for the conduct of hearings.
- The New Normal
- The Way Ahead
While all the aforementioned steps have been taken in light of COVID19, there seems
to be an emerging consensus that if they are successfully carried out over a slightly prolonged period of time, giving rise to a legitimate sample size for reference, the global dispute resolution practice may gradually shift towards video conferencing as the primary method of the conduct of hearings. Outside of the atmosphere created by present circumstances, conducting remote, virtual hearings has some very obvious advantages by way of increased time and cost efficiencies. Especially in international arbitrations, this would significantly defray travel expenses incurred by parties, arbitrators and counsels. It also ensures that arbitrators are capable of attending to more than one set of proceedings in a day as a result of cutting out travel time.
Additionally, if a documents-only approach to hearings / witness examinations becomes more common, and it is proven that by default, the same is workable, then it might prompt institutions across the world to allow for the same in more circumstances, or consider making it the default norm for a proceeding, unless oral hearings are specifically required.
However, this is a workable solution only under the assumption that all parties to such proceedings have access to equally efficacious internet and video conferencing facilities, in the absence of which, such remote hearings would be grossly unfair. It seems unlikely that any tribunal would allow for the same if a party is seemingly disadvantaged.
- Pending Questions
While the institutional rules and the procedures stipulated therein allow for video conference hearings, the practical implications of the same ought to be considered as well.
A common concern is whether witness examination /cross-examination via video conference is as effective as in person hearings. The possibility of facing certain practical challenges regarding the recording of evidence / witness statements cannot be ignored. In- person witness examination/cross- examination, being the norm, ensures that such witnesses respect the sanctity of the adjudication process and refrain from any sort of perjury. One cannot completely eliminate the possibility of witness prompting in a video conference hearing where the effect of the decorum of the tribunal is considerably diluted. Further, the examination/cross examination of witnesses and recording of evidence is also dependent on the lawyers and the tribunal being able to effectively ascertain the import and veracity of witness statements using factors like body language, facial expression, inflection and emphasis. A video conference does not allow for this and will detract from the advocates' ability to effectively cross-examine witnesses and the tribunal's ability to take into account these subjective factors while drawing conclusions.
Further, there is always a concern that the "right to be heard" of parties may be adversely affected due to the inherent disadvantages of this method of hearing. None of the guidelines or statements issued by institutions have categorically stated that tribunals are specifically bound by a party's objection to video conferencing or documents-only hearings, even though they have indicated that they are likely to take cognizance of the same.
Under the Indian law, it remains to be seen whether issues created by video conference as the means of conducting proceedings can give rise to grounds for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"). In most common law jurisdictions, where oral advocacy and case presentation are of paramount importance in hearings and often take priority over written submissions, parties may contend that their right to a fair hearing or right to be heard was severely hampered in the event an oral hearing is completely dispensed with.
In situations where hearings are conducted via video conferences, one cannot ignore the difficulties that lawyers and parties may face which include technical difficulties faced in presenting their case, difficulties faced in reading the requirements/mindset of the tribunal, difficulties in effectively putting forth objections at the right time to the other side's arguments, difficulties face when in person cross examination and confrontation of witnesses is not feasible. In such situations, in person hearings do not have really have a feasible alternative. Parties may then contend that such difficulties faced during video conference hearings have severely impaired the parties' right to be heard, which is a right enshrined in the principles of natural justice. Parties may even contend that virtual hearings have resulted in party incapacity caused by such technical issues. It also remains to be seen if such a ground can be established for refusal to enforce a foreign award under Section 48 of the Arbitration Act.
Another thing that remains to be seen is how easily parties and tribunals will adapt to the protocols adopted by arbitral institutions with respect to pleadings and hearings in international arbitrations. In India, such hearings were never common since oral hearings and the manner in which written pleadings are presented before the tribunal and advocacy skills may not be easily substituted by a written document.
However, the fact remains that the "new normal" which is here to stay here across the world for at least the near future, may make parties more amenable to such hearings due to their commercial viability, depending also on their access to the technological infrastructure required. It remains to be seen, once the "new normal" of institutional arbitration is amply tested, whether litigants and arbitrators adapt to the "new normal" with ease, and physical hearings become the exception, as opposed to the rule.
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