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COVID-19 Middle East Arbitration: Weathering the COVID-19 storm

  • Market Insight 12 April 2020 12 April 2020
  • Middle East

  • Coronavirus

Over the course of March, the world has undergone drastic changes to adapt to the impact of COVID-19. The virus has destabilised the economy, has put a halt on international travel and has restricted various aspects of day-to-day business that were taken for granted. The extent of the impact that COVID-19 will have on international arbitration remains to be seen. There are, however, measures we can immediately take to minimise the impact of our new reality on the conduct of proceedings.

COVID-19 Middle East Arbitration: Weathering the COVID-19 storm
Written by Nassif BouMalhab AND NOUR AL JAGHOUB

For the time being, we need to continue avoiding gatherings of numerous people in the same space, as part of the 'social distancing' and 'self-isolating' initiatives. If certain measures are not put into place, this could potentially paralyse the legal industry, as much of our work pulls on international strings, i.e. people from across various countries come together to attend hearings, meetings and conferences. Handshakes have been replaced by elbow bumps, and the digital age has been propelled into the forefront of our everyday routines.

Although the virus has hindered many industries, has claimed thousands of lives and has brought the economy to a standstill, the show must go on for international arbitration. It is important to manage the impact of COVID-19 beyond the health threat. It is likely that a myriad of new claims will be brought across multiple sectors as a result of the global fight against this virus. Law firms and businesses are gearing up to address force majeure and hardship clauses and their effects on contractual obligations.

As we globally move towards a more flexible workplace, the legal industry cannot afford to resist the need for flexibility in the conduct of proceedings and change in general. The arbitration community is particularly well placed to rise to the occasion. 

Advantages: making the most of the situation

  • With the increasing need to rely on technology for the foreseeable future, conducting online 'contactless' arbitrations should improve cost efficiencies and procedural timelines, both commonly hailed amongst the key advantages of arbitration;
  • The development of fit for purpose technology in arbitration should progress in leaps and bounds out of necessity;
  • Positive initiatives to reduce carbon footprint and the use of paper in arbitration should thrive out of pragmatism if not necessity;
  • If virtual hearings are embraced as a new standard, opportunities to engage counsel and experts abroad without any additional costs should enhance competitiveness; and
  • Virtual hearings avoid a great deal of costly administrative hassle which often weighs down on the process: visas, temporary work permits, arrangements for venue and accommodation, and the provision of food and beverage to name but an obvious few.

Arbitration centres are stepping up to the plate

International and regional arbitration centres have continued to operate seamlessly.  The International Court of Arbitration of the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA) have swiftly adapted their procedures and case administration to allow for new and pending cases to carry on. 

The ICC has digitalised any Requests for Arbitration, emergency arbitrator applications and any other requests in ADR proceedings.

The LCIA has provided that all requests, applications under Article 9 of the LCIA Arbitration Rules, correspondence and arbitral awards are to be submitted by email.

The International Centre for Settlement and Investment Disputes (ICSID) has also gone digital, advising that Requests for Arbitration, fact-finding proceedings and post-award applications can all completed electronically. It has also embraced the digital future by encouraging parties to conduct electronic filings, and using electronic hearing bundles instead of hard copies.

In Dubai, government directives mandate a comprehensive quarantine with only essential services continuing to operate and any movements outside of essential sectors requiring a permit.  Restrictive measures have also been adopted in other Emirates to varying degrees. 

Regional arbitration centres have adapted their case administration to accommodate the changes directed by government. 

DIAC

The Dubai International Arbitration Centre (DIAC) has closed its office further to the latest directives.  DIAC has put in place various temporary measures to minimise the impact of COVID-19 on the conduct of arbitration:

  1. It will only accept submissions in a soft copy format;
  2. Any new Requests for Arbitration must be submitted through the online portal on DIAC's website; and
  3. Any case related documents must be submitted by email.

DIAC is also encouraging parties and arbitrators to avoid holding physical hearings and instead is embracing the digital culture by requesting parties and arbitrators to use alternative means.

The DIAC's Executive Committee also remains productive with the appointment in March 2020 of Mr Rashid Shahin as the new Director of DIAC, for example.    

DIFC-LCIA

The DIFC-LCIA has of course also complied with the latest directives and temporarily closed its office. 

The centre continues to work efficiently with its entire team working from home.  As one of the centre's frequent users, we have not noticed any change in the levels of services offered by the centre.

While the DIFC-LCIA does encourage parties to make submissions and payments electronically, where hard copies are required (awards issued under the DIFC-LCIA Arbitration Rules 2008 for example) the centre has made arrangements for courier services to complete deliveries.

The DIFC-LCIA reports a 25% increase in the number of cases filed in the first quarter of 2020 as against 2019 and is budgeting for a further uptick in 2020 after enjoying five consecutive years of growth.

The front office remains active as well, with the recent hire of Ms Giovanna Micheli (formerly Director of the International Centre for Dispute Resolution in New York) as Counsel; and the promotion of Mr Matthew Harley to Senior Counsel.  The centre is also looking to recruit an additional Case Administrator and Counsel.

TAHKEEM

Sharjah's resident international commercial arbitration centre, the Sharjah International Commercial Arbitration Centre or Tahkeem, continues to operate with members of staff working remotely.

Email filings and remote payment procedures allow for case administration to carry on as usual.    

Messenger services remain available where required and hard copies are thus making their way to their intended recipients as usual.

The Tahkeem Executive Committee also remains productive, with work continuing on further developing the centre's arbitration rules for example.   

ADGMAC

The ADGM Arbitration Centre (ADGMAC) does not administer arbitrations.  It offers a state of the art facility to conduct arbitration hearings and supports arbitration in other ways.  While the hearing facility is temporarily closed, the ADGMAC remains active in supporting arbitration.

For example, the ADGMAC recently launched its Panel of Arbitrators to assist parties with arbitrator selection.

ADGMAC staff remains available for any enquiries via the website contact us form.        

Conclusion: the show must go on

This is not the first time that the arbitration community is called upon to adapt to disruptive events of a large scale.  Following the disruption created by the volcanic eruption in Iceland in 2010, for example, arbitral hearings went as far as being heard on a bus which travelled between cities collecting witnesses across Europe.   

Arbitration centres have lead by example, adapting their case administration to accommodate for the disruption caused by the global pandemic. 

Arbitration is flaunted as a flexible, cost-effective and expeditious means of resolving disputes.  It certainly provides the framework to be just that. 

Against this backdrop, historical arguments around seeing the white of a witness' eyes on cross-examination and misguided invocations of restrictions on the ability to hold hearings remotely must give way to pragmatism now more than ever. 

Arbitration must make most of its opportunity to take centre stage by capitalising on the differentiating characteristics it has flaunted for decades: resolving disputes flexibly, cost-effectively, and expeditiously.

Lead by the positive response arbitration institutions have shown in adapting their practices to overcome limitations caused by the pandemic, all other members of the arbitration community should be inspired to follow suit.  

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