Arbitration, as an alternative dispute resolution method, continues to play an important role on resolving international commercial disputes during Covid-19 Pandemic.
During the Covid-19 Pandemic, Arbitration Institutions and Arbitration practitioners around the World take a number of measures to tackle the obstacles that they have faced because of the effects caused by the Covid-19 Pandemic.
In this article, we will look at how international arbitration proceedings are affected by the Covid -19 Pandemic and we will then examine the context of virtual hearing in arbitration proceedings. Finally, we will look at how leading arbitration centres tackle with the effects of Covid -19 Pandemic around the World.
1. How International Arbitration Proceedings are Affected by Covid -19 Pandemic
Arbitration represents a practical alternative to the various difficulties and delays that will likely be experienced in court litigation, both during the pandemic and afterwards as the backlog in cases causes its own delays: International arbitration frequently involves parties and arbitrators based in different jurisdictions. Arbitrators and arbitral institutions are therefore well-used to holding hearings remotely (either by video-link or teleconference) and have provided guidance, frameworks and protocols by which parties may agree to do so. International arbitration had already been attempting to eliminate the need for travel and in person meetings as greener ways of resolving disputes.
Arbitration rules provide the flexibility for proceedings to be conducted in almost any manner (and according to any timetable) that adaptability can prove especially useful in times of crisis. Arbitral institutions have signalled their expectation that parties will wherever possible use the flexibility provided by arbitration rules to mitigate any delays caused by the pandemic (while ensuring the fairness and efficiency of the proceedings). In a recent joint communication from various arbitral institutions (including the LCIA, ICC, SCC and others), parties and arbitrators have been invited "to use the full extent of [the institutions'] respective institutional rules and any case management techniques that may permit arbitrations to substantially progress without undue delay" despite any impediments caused by the pandemic.
Some Court rules require physical copies of documents to be filed at Court. Such requirements are proving especially burdensome during the pandemic, and (as outlined above) many court registries are having to close or put temporary measures in place to ensure that deadlines do not lapse. By contrast, filing and service by email is well-established in arbitration and some arbitral institutions are also developing online platforms through which documents can be filed. Note, however, that care should be taken to ensure that any notice provisions in the relevant contract are also complied with (even where these are more onerous than those provided for in the relevant arbitration rules).
Applications for interim relief in arbitration hearings are frequently heard and decided on the papers or by telephone/video hearing. Likewise, procedural conferences for arbitrations are usually held by telephone. The flexibility that this allows should allow arbitrations to proceed as normal, notwithstanding the pandemic.
Arbitration proceedings are generally conducted more rapidly than court proceedings; international statistics show that an average arbitration takes 12 to 18 months from start to finish, while most court proceedings take at least 18 months (with the prospect with multiple appeals extending that timeline even further). As set out above, given that the delays introduced by the pandemic are likely to extend these timelines even further, parties looking for swift access to justice may be better suited by opting for arbitration.
The scope of an arbitration can also be defined as narrowly or as broadly as the parties require. For example, parties may decide to submit discrete matters for resolution by arbitration, such as the filling of a gap in a contract or the modification of the legal relationship between the parties. This is a useful tool at any time, but it may be particularly valuable in these unprecedented times when parties face challenges they had not fully anticipated at the time their contracts were negotiated. It can also be used to make an arbitration as lean (and as cost efficient) as they would like to.
The recent virtual hearing of National Bank of Kazakhstan v Bank of New York Mellon & Ors in the English High Court was livestreamed on YouTube, enabling viewers around the world to follow the hearing and obtain potentially sensitive information. Such measures are likely to become commonplace in many jurisdictions, as courts are usually obliged to ensure public access to hearings. By contrast, arbitrations are normally subject to confidentiality restrictions and will therefore not be livestreamed or otherwise open to the public (with the limited exception of some investment arbitrations).
Where parties are not subject to an existing arbitration agreement (e.g. in court proceedings) the agreement of the parties to the dispute is required in order to transfer the dispute from court to arbitration. In these uncertain times, we are increasingly seeing parties choosing to arbitrate where they would otherwise proceed to litigation, particularly in light of the benefits set out above. That trend looks set to continue as the COVID-19 pandemic develops. We will examine court delays in other jurisdictions and arbitrational decisions after effect of COVID-19 pandemic.
2. Development of Virtual Hearings in International Arbitration
The use of virtual hearings to circumvent travel and meeting restrictions represent an opportunity for parties and tribunals to test the technology available, as well as the procedural safeguards that need to be put in place, with a view to continuing and increasing its use in the post-COVID-19 world.
Virtual hearings are not unknown to international arbitration practitioners and may prove valuable tools in the quest for time and cost-efficient arbitrations in the future. The jurisdictional notes for each country especially the ICC's provide valuable guidance on how to achieve this, while safeguarding the integrity of the arbitral process. However, some effects of the COVID-19 pandemic may be impossible to overcome through the use of technology. For example, delays may prove more difficult to mitigate if the COVID-19 pandemic affects the parties themselves, including their witnesses and the possibility to access evidence.
However, the demands will initially seem great and, perhaps to some, too difficult. But the alternative of postponing the proceedings indefinitely in the pursuit of some unquantifiable conception of perfection does not serve the interests of the parties who have entrusted the timely and effective resolution of their dispute to the counsel teams they have chosen and the tribunal they have empanelled. The traditional features of a hearing (such as hearing length; the hearing day: its length; its timetabling, order of submissions and witnesses etc) are already handled flexibly by most tribunals with the active support of most arbitration practitioners. The 'New Normal' is going to call for even more flexibility and a pragmatic realisation that things will not be the same for an undefined future time. So: hearings and hearing days may have to be shorter; with witness evidence pruned and focused on the things that really matter to make it more manageable to assimilate and test virtually; with greater use of pre-reading in relation to witness evidence with, possibly, counsel showing their hand so that the tribunal can see in advance what the main challenges to a witness' evidence are, before the live 'show' of cross-examination when the documents are put to the witness with a flourish; with the use of telephone only hearings for parts of the arbitration main hearing as appropriate; and timetabling hearings in portions and at mutually uncomfortable times to spread the pain of linking up widely distant participants. If arbitration is anything, it is inherently flexible from a procedural perspective, so as to achieve effective and efficient resolution of the parties' dispute.
Arbitration serves business needs, not the other way around. As businesses find ways of adjusting their practices to suit the new environment and operate without disruption or interruption, they need to know that their business partners who handle the resolution of their commercial disputes are equally adaptable and ready and are learning from the challenges we're all facing together. That includes changing the way in which we handle new disputes arising now, in real time. Counsel should assume that their disputes will be born and live their lives in a world where expensive and diary challenging in-person hearings are neither the norm nor necessarily desirable as a default. We should think carefully about the way in which we draft pleadings, focusing on the issues that really matter, rather than assuming for example that there will be time, utility and patience for the examination of peripheral witnesses on largely immaterial issues. The same goes for an appropriate and judicious evaluation of the evidence – for example, the number and nature of witnesses and experts to be presented or called; the documentary burden to be placed on the tribunal; or the scope and focus of document requests, knowing that any interlocutory applications may not be heard by the tribunal in person. Procedural timetables might similarly assume that hearings and meetings will be conducted by videoconference, and accordingly provide the logistical and technical details in advance. Indeed, all of these things could and should result in shorter overall timetables and lead to quicker awards. If handled responsibly, then who knows when happier times return, we may emerge having all learnt to do things better, more efficiently and more cost-effectively, with long-term advantages for the streamlining and simplification of arbitration hearings.
When we take into an account that the COVID-19 pandemic with its statement in the form of the World Health Organisation, as a global epidemic, it can be envisaged that it could hold on more power currently in which our new normal has to adapt to virtual hearings. However, it should be noted that the content and statement of virtual hearings could change in each jurisdiction and the procedures regarding on this subject could differ at the same time. For more detailed information, you can contact us via the following information.
3. How International Arbitrations Centres Tackle to Eliminate the Effects of Covid – 19 Pandemic.
A. ICC Guidance Note on Covid 19 Pandemic
On 9 April 2020, the ICC International Court of Arbitration issued a Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic.
The note provides guidance to parties, counsel and arbitrators on measures aimed at mitigating the effects the COVID-19 pandemic may have on ICC arbitrations and safeguard the parties' and tribunals' health and safety.
Its recommendations will be welcomed by both parties and tribunals caught in the midst of the COVID-19 pandemic, who want their disputes to be resolved in an expeditious and cost-effective manner.
The ICC's proposed measures focus on two aspects:
- The possible mitigation of COVID-19 related delays; and
- The organisation of virtual hearings.
The ICC's note identifies aspects of proceedings that can take place remotely, including the tribunal's initial consultation with the parties for the organisation of the case management conference, pursuant to Article 24 of the ICC Rules, and the tribunals' deliberations or preparation of draft awards. These aspects of proceedings do not necessarily require the physical presence of the parties or members of the tribunal in one place and are routinely performed remotely in many cases.
Importantly, the time limit for the submission of draft awards to the court, as well as the policy to reduce arbitrators' fees in case of unjustified delays, remain in effect. This is an important safeguard of the time and cost-efficiency encouraged by the ICC Rules in these challenging times. In ICC arbitrations, tribunals enjoy wide discretion to adopt procedural measures or modify the procedural timetable. The discretion conferred by Article 24(3) of the ICC Rules can and should be used by arbitral tribunals to adapt and address issues caused by the COVID-19 pandemic.
B. United Kingdom: England and Wales
Recent government announcements have stressed the vital importance of the continued administration of justice in England and Wales and the courts continue to operate, though with adjustments.
Most civil court buildings currently remain open, but civil hearings are now being conducted remotely wherever possible. Physical hearings are only to take place if a remote hearing is not possible and suitable arrangements can be made to ensure safety. Civil courts have long permitted remote hearings in appropriate circumstances, but a new "Protocol Regarding Remote Hearings" was issued on March 20, 2020 to provide further guidance, including on the forms of remote technology offered and use of electronic documentation. The courts' technological infrastructure is also being rapidly upscaled to support expanded utilisation of telephone, video and other remote technology (including Skype for Business, Zoom and BT conference call).
On March 24, 2020, the Supreme Court conducted its first ever remote hearing. The Supreme Court building has closed, and it will be hearing all cases and delivering judgments through video conferencing until further notice.
The LCIA has confirmed that, although they expect to remain operational, in order to deal with matters as usual, they have requested that all further interactions be done online or over the telephone. Insofar as hearings are concerned, the LCIA Rules cater for the possibility that proceedings need not take place in person. Article 19 that entails 'Oral Hearings'; provides that "as to form, a hearing may take place by video or telephone conference or in person (or a combination of all three)." In its Guidance Note for Arbitrators, the LCIA acknowledges that it may be appropriate for hearings to be held by telephone or by videoconference rather than in person. The tribunal should also consider "where appropriate, whether some or all of those who must attend any meeting or hearing might do so by video conference, rather than in person (for example, if a witness is unable to travel due to health issues)."
Pursuant to a decision of the Council of Judges and Prosecutors' dated March 30, 2020, all non-emergency court hearings are postponed at least April 30, 2020. Pursuant to Presidential Decree 2279 certain measures regarding enforcement and bankruptcy proceedings will be in place until April 30. These include a suspension of all ongoing enforcement and bankruptcy proceedings; a prohibition on the initiation of new enforcement and bankruptcy proceedings; and a temporary stay on the execution of interim attachment decisions.
Pursuant to an omnibus law published in the Official Gazette all time periods relating to origination, exercise and termination of any rights including the statute of limitations or prescription terms for initiating a lawsuit or enforcement proceeding, filing an application, complaint or objection, sending notices etc are stayed from March 13, 2020 until April 30, 2020. However, a new Presidential Decree submerged that postponed all court hearings and enforcement and bankruptcy proceedings until 15th of June,2020.
Istanbul Chamber of Commerce Arbitration and Mediation Centre (ITOTAM) staff have been working remotely since March 23, 2020 and are available by email and by phone. The filing of submissions carried out via email and courier. Payment of any sums due to ITOTAM are only possible electronically. ITOTAM has adopted similar measures as the national courts and announced on its website that all deadlines regarding existing arbitral proceedings or mediation processes, as well as other deadlines ordered by arbitrators, mediators or the ITOTAM Secretariat. During the stay period, parties can submit a request for arbitration but the 30-day window to receive an answer to such a request will not commence until further notice. Parties are still entitled to resort to an emergency arbitrator during the stay period which rules expressly cater for the use of videoconferencing as a means to conduct a hearing.
With the publication of the Istanbul Arbitration Centre, Online Arbitral Hearing Rules and Procedures, it is now possible to hold Istanbul Arbitration Centre hearings through video or teleconference. Istanbul Arbitration Centre Online Arbitral Hearing Rules and Procedures provide rules for, among other things, the submission of documents during online hearings, and witness or expert participation.
The Online Arbitral Hearing Rules and Procedures
The online hearing rules and procedures consist of a total of 10 articles very simply addressing the main issues involved in conducting online hearings to serve as a guideline to parties and arbitrators. Parties and arbitrators may agree upon other rules and procedures for online hearings provided that due process rights of parties are not violated.
Online Hearing Rules and Procedures aim to determine the rules and principles applicable to the hearings which the participants will conduct without physical attendance, through teleconference or video conference, during arbitration proceedings subject to ISTAC Rules. At the request of any party, or upon its own initiative, the Sole Arbitrator or the Arbitral Tribunal, may designate rules and procedures other than those provided. Accordingly, hearings can be conducted online upon request of one of the parties or if the arbitrator or the arbitral tribunal deems it appropriate.
The technical infrastructure and preparation shall be completed prior to conduct of the online hearing. Such include technical details such as the software to be used, dial-in information, usernames and passwords to participate in the online hearing, as well as taking necessary measures to maintain confidentiality and security of the hearing. ISTAC Secretariat offers its technical support to parties and arbitrators in these respects.
During the online hearing, only one participant shall be allowed to speak at one time and the others shall mute their microphones to maintain audio and video quality. Parties may submit documents electronically during the online hearing upon approval of the arbitrator or the arbitral tribunal. Witnesses and experts may also participate in the online hearing provided that they are situated in front of their computers to allow the rest of the participants to clearly see their faces. Witnesses and experts may be questioned based on documents shown to them electronically upon approval of the arbitrator or the arbitral tribunal. Interpreters may also be present during the online hearing either separately or together with the person requiring interpretation.
Before COVID-19 hit Singapore, the Singapore courts had an existing practice in place that enabled lawyers to make applications by video link. The Singapore court is also quite used to parties or witnesses appearing in court by way of video link. Insofar as the Supreme Court is concerned, hearings are continuing. Since the spread of COVID-19, the Singapore Court has implemented a justice continuity plan by dividing the judges of the High Court into two separate teams, Team A and Team B. The High Court has adopted arrangements such that no judge from Team A will be in physical proximity or in close contact with a judge from Team B. As a result of this, there have been court proceedings with a bench of three judges where one judge attends by video link. For example, in situations when two judges are from Team B and one judge is from Team A, the judge from Team A attends by video link. In short, whilst the Singapore courts have taken measures to implement social distancing, these measures are an extension of the pre-existing use of attendance by video link prior to COVID-19.
As for Singapore International Arbitration Centre, SIAC is continuing to operate as per normal. SAIC have split their staff into two teams with one team working at the Centre and one team working from home. It is also asking for Notices of Arbitration to be filed electronically only and for applications for emergency relief to also be filed by email only. Payments of any sums payable to the SIAC are to be made electronically only.
E. United Arab Emirates (UAE)
On March 17, 2020 the Managing Director of the Dubai Courts issued Decision No. 30 of 2020 declaring a temporary postponement of all ongoing proceedings and court hearings until April 16, 2020. The Dubai courts has since confirmed that commencing April 19, 2020, all hearings will occur electronically utilising Microsoft Teams. This allows parties to participate in hearings by videoconference. Filing of all new cases is also being carried out electronically.
The Dubai International Financial Centre (DIFC) Court remains open, however all staff are working remotely. The DIFC Courts and Registry offices are physically closed until at least April 26, 2020. Hearings, however, are planned to continue. In their latest update, the DIFC Court has advised that generally, all hearings conducted from March 17, 2020 will be via teleconference. The court is urging practitioners to make use of the eBundling software and require permission not to do so for hearings listed in the near future. It has long been commonplace in the DIFC for both judges and advocates to attend hearings by videoconferencing when, with the court's permission, it is considered appropriate to do so.
By Ali Guden, Partner, and Dilara Nihal Tunc, Associate, Guden