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COVID-19 Disputes: The impact on litigation in the DIFC Courts

  • Market Insight 12 May 2020 12 May 2020
  • Middle East

  • Coronavirus

The rapid spread of the COVID-19 pandemic has impacted civil court proceedings throughout the world to varying degrees. National courts, including the DIFC Courts, have responded differently, principally depending on their extant technological infrastructure and flexibility of their procedural rules to facilitate and permit digital or remote processes. Against this backdrop, we outline here the changes to litigation processes that parties to a dispute in the DIFC Courts should be prepared for.

COVID-19 Disputes: The impact on litigation in the DIFC Courts

Written by Keith Hutchison & Haleema Wahid 

The DIFC Courts, like several courts in other leading foreign jurisdictions, have promptly made agile decisions about the conduct of proceedings through harnessing technology to enable court business to continue largely unaffected by current events. This is particularly impressive where, by contrast, there are other courts where case progress has materially slowed, or has even been suspended, to the frustration of litigants (in particular, for claimants or intended claimants). It is inevitable in our view that, given the likely importance of social distancing measures in containing the spread of the novel Coronavirus prevailing for an indeterminate future period, the DIFC Courts will be focussed – in the interests of the administration of justice – on enhancing the existing use of technology by the Court and litigants to ensure the continued and expeditious conduct of proceedings.

Remote dispute resolution

The DIFC Courts benefit from having operated an online Court Registry system for many years for the registration of new cases and the filing of applications, pleadings and evidence. More recently (pre-COVID) in a continued move towards a fully 'digital courtroom', the Courts became the first in the Middle East to introduce e-bundling requirements using secure cloud-based technology, whereby hearing bundles are provided to the Court only electronically through an online Registry portal (that can be accessed from anywhere in the world); an evolution from the past common practice of multiple volumes of hard copy document bundles being produced. It has also been not uncommon over the past several years for hearings of the DIFC Courts to be facilitated with either some or all participants attending remotely via telephone or conference from different locations; the Court's procedural rules providing such flexibility for these agile operating practices. That is not to say the technology has worked perfectly every time in the past, and most parties who have appeared at hearings involving video links will have experienced cut-outs, internet speed issues and audio difficulties at some stage, which brings its own challenges to advocacy and the efficacy of hearings versus compared to the physical court room.

So, at the dawn of COVID-19, the DIFC Courts' digital platform and readiness to handle litigation remotely was already there and tested to some degree, while the majority of hearings still took place physically in the court room. With the onset of COVID-19 lockdown restrictions, the DIFC Courts have seamlessly switched to completely online procedures and remote hearings. Cases have been listed for hearings, and timetables are not being subject to suspension (stay) or material delay purely on grounds of the lockdown restrictions impacting the Courts' operating capabilities or practicalities of the parties.

The impact of the restrictions on parties is however being recognised, mainly in procedural timetabling where circumstances merit parties perhaps having more time than usual to complete certain steps in proceeding. Parties are also encouraged (as they are in any event) to seek to agree procedural issues, including as to timetabling, and submit agreed draft orders for the Court's approval where possible, thus reducing the need for hearings (or at least the issues for determination at hearings).

While conducting certain hearings remotely is not unusual for the modern lawyer, e.g. application hearings with no live witness evidence, the challenge of dealing with trial or merits issues with live witness evidence, or hearings with multiple parties, will be a new test. This is a challenge that lawyers, witnesses and parties to litigation need to be in a position to meet, and get familiar with.

Witness evidence given by video link is not entirely new to the DIFC Courts – an order to permit evidence by video link was granted on 12 February 2020 in KBC Aldini Capital Limited v David Baazov & others CFI-002/2017; this was only the third such order to be granted in over a decade. However, such orders contemplated the witness appearing by video link streamed into the court room with the Judge and party advocates physically in attendance. All-party attendance by video will inevitably bring a different dynamic to hearings, including both as to oral submissions of counsel, the efficacy and style of cross-examination, and to the performance of witnesses. Court room advocacy will surely undergo development of new techniques and adjustments (even if only subtle) to the purely digital setting. Those already familiar perhaps have an early advantage here.

To be in a position to comply with remote dispute resolution procedures, parties to litigation should ensure that all evidence in their proceedings is readily available in an electronic format, and that any witnesses and/or experts relevant to the proceedings are able to provide evidence remotely, and are made familiar with how to do so.

A further point to note – where the general rule is that court hearings are in public unless ordered otherwise (save for limited exceptions), is there an issue of transparency and openness in the administration of justice for hearings that are conducted remotely, which are typically only accessible to the parties to attend online? The Rules of the DIFC Courts stipulate that public hearings do not require the court to make special arrangements for accommodating members of the public (RDC 35.3), such that the nature of the hearing would remain public (as opposed to being listed in private). As noted above, remote hearings in the DIFC Courts are not a novelty, and issues of this nature are not expected to arise with all hearings being conducted remotely. We note that hearings in public proceedings will remain as listed in public (so appear on the public hearing calendar) and recordings of many hearings are also posted online on the Court's YouTube channel.

Settlement

A pause for thought is also merited on the impacts for settlement of disputes. Commercial entities base their prospective operational and financial outlook on projections; however, the future is hard to predict against the unsettling unpredictability of the COVID-19 pandemic. In such circumstances, the option to settle disputes (whether before or during litigation) has gained renewed traction – one that has not stemmed in some quarters exclusively from the parties themselves.

It is conceivable that settlement discussions may become a court-mandated process as part of the Courts' renewed focus on efficiency in litigation proceedings in a COVID-19 world. The New South Wales Supreme Court, for example, is now conducting court-ordered mediations by telephone (with further options being considered and developed). There is no evidence to suggest that the DIFC Courts would follow suit, but parties to litigation should be aware of this prospect and, depending on the nature of their dispute, be more mindful of 'exiting' a dispute, rather than to focus solely on 'winning' it.

There have been many recent writings on the potential for remote ADR procedures, and this firm has already been involved in a successful mediation conducted entirely remotely. Certainly we see this as an area for significant development in the UAE, and adoption of such settlement processes may be accelerated by the realisation that they can work remotely, saving yet further costs for the parties.

The digital future of DIFC Courts litigation

It is inevitable that the DIFC Courts will continue to operate in a remote manner and/or with social distancing measures in place for the foreseeable future. As such, for commercial entities/parties to litigation proceedings, we propose that the following be considered:

  • More resources should be allocated to developing technologies for use in litigation proceedings; this includes having up-to-date software to facilitate remote video evidence and investing in secure cloud-based solutions that enable the swift and seamless sharing of large data quantities.
  • Greater cost budget allocation should be allowed for the digitisation of resources in order for parties to be equipped for remote dispute resolution.
  • Key documentation should be managed more efficiently – contracts/commercial documents should be extracted, archived and stored ready for use in remote dispute resolution (in the event that this becomes necessary), cloud storage should be utilised more effectively, and the security and protection of such data should be of central importance.
  • Commercial entities and parties to litigation should continue to work closely with legal advisors to ensure that the correct approach is followed in this dynamic situation.
  • For enhanced pre-litigation preparation, a committee could be established or the duties of company boards could be extended to monitor compliance with some of the recommendations above.

'Business as usual' in an unusual world

The COVID-19 pandemic will not bring an end to litigation – the sources and causes of disputes have not and will not dissipate (indeed, in some areas, they may even increase) as a result of the pandemic. Parties must embrace the reality of litigation in a virtual world, actively consider engaging in virtual mediation/negotiation, and not be afraid to consider proposing procedural solutions that will assist courts in conducting matters online or through virtual hearings.

We can see that the new remote way of working and facilitating commercial litigation, while it may initially be uncomfortable for some, ultimately has tremendous potential to make litigation more efficient on many levels, which can only be a good thing for litigants. It will be interesting to see whether, when the time comes for court rooms to open again for physical hearings, the conduct of cases will return entirely to the pre-COVID 'normal', or if the compelled adoption of these remote technologies will be retained for the long-term. A balance of both may be the more likely for now, perhaps tilted slightly more towards the virtual end of the scale than before.

Please contact Keith Hutchison or Haleema Wahid if you would like more information about the effects of Coronavirus on litigation in the DIFC Courts.

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