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Serbia: Commercial Arbitration in the Time of Covid-19

Serbia: Commercial Arbitration in the Time of Covid-19

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As international arbitration should deliver some degree of certainty to the parties, many party representatives and arbitrators have asked arbitral institutions for information and guidance in light of the COVID-19 outbreak in March 2020.

The COVID-19 pandemic is a global health crisis that is unlikely to end in the near future. This pandemic has already strongly affected business operations though-out the world, negatively affecting both companies and their bottom lines. The long-term effects on global business operations in all industry sectors are yet to be seen, but it appears likely that there will be an increase in the number of commercial arbitrations in the near future.

In April 2020, a group of the most reputable international arbitration institutions issued a joint statement addressing parties and arbitrators, pointing out potential ways to resolve their problems in a constructive manner. They invited all participants living under COVID-19 pandemic measures to apply relevant institutional arbitration rules and adequate case management techniques, to permit their arbitrations to start or continue without undue delay.

The procedural rules of most arbitration institutions already allowed for the electronic submission of written statements, and, as a consequence of the pandemic, most arbitration institutions have decided to make this form mandatory, using either e-mail or, where available, an on-line filling system. This has led to the full adoption of electronic case management tools in the practice of many arbitration institutions.

Organizing and conducting oral hearings has been challenging during the COVID-19 pandemic. Most arbitration institutions have strongly encouraged arbitral tribunals and parties to proceed with fully virtual hearings in on-going arbitration cases. In order to facilitate that, the arbitration institutions developed virtual hearings guidelines addressing relevant issues for party representatives and members of the arbitration panels. In practice, a number of virtual hearings have been held in the past six months to make the arbitration proceedings more efficient. This leads to the question: Is the efficiency of arbitration proceeding more important than the principal of orality? Even more importantly, will the arbitral award be based on sufficiently examined witness statements, exhibits, and expert witness statements? Perhaps the arbitration institutions and arbitration panels should have taken a more reserved approach in regards to this issue, especially as virtual hearings could have some disadvantages to specific parties and party representatives. The arbitrators thus have an additional important task – to carefully and wisely determine whether a fully virtual approach is best suited for a particular case.

In the Balkan states, arbitration practitioners have, in general, accepted and adopted new procedural instructions from arbitration institutions and arbitration panels required by the pandemic. But in at least one recent and prominent case, due to the non-flexible position of the parties and their representatives, an arbitration panel had to organize an in-person hearing to examine two expert witnesses (of course making sure to follow all sanitary and health protection measures in the process). It appears sometimes parties and their representatives do not adapt easily to the new trends imposed by this situation.

To conclude, this pandemic has impacted the procedural aspects of commercial arbitrations, and the already-existing tools and mechanisms of arbitration institutions have been pushed forward to be applied in full force in a short period of time. In most cases parties are willing to be flexible and adapt to newly agreed procedures, as long as their rights are not significantly affected. Being flexible in terms of procedural rules, an important skill for any arbitrator, has become very important in light of COVID-19. In the future, once the pandemic is over, arbitration institutions and arbitration panels will have to decide whether to continue with the practice of applying these tools and mechanisms as standard practice or continue to follow the traditional approach of accepting hard copy written submissions and allowing standard oral hearings.

By Boris Baklaja, Partner, Baklaja Igric Tintor

This Article was originally published in Issue 7.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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