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The future is now: what arbitration will look like after the pandemic

  • Market Insight 16 November 2020 16 November 2020
  • Global

  • International Arbitration

The Covid-19 pandemic has forced disputes lawyers to change their ways. But how effectively are arbitrations being conducted now, and what lessons can be learned to help international arbitration develop in the future, after the pandemic is over?

This article first appeared on Practical Law's arbitration blog.

It is now six months since the COVID-19 pandemic took hold outside China and brought legal proceedings to a grinding halt. What is remarkable, in retrospect, is how quickly courts reopened their doors , not physically, but electronically, through ‘remote’ hearings. Arbitrations, too, have continued in many cases, and the LCIA has just issued a new version of their rules, for example, taking the pandemic fully into account. So dispute resolution rolls on, but what lessons can to be learned for the benefit of arbitration in the longer term, once the pandemic is over?

Overcoming challenges

The challenges posed by remote (or ‘virtual’) hearings are largely practical or technological ones. These are not trivial. It is crucial that documents can be accessed and video links work well, and individuals within a legal team can communicate freely and privately with each other. To help with all this, numerous guidelines and checklists have been published by the ICC and others.

However, wider issues also need to be addressed. One is that virtual hearings require a different style of advocacy than do physical hearings. There is no room to be dominated, and no need even to speak up if the technology is working properly. However, there may be little or no immediate feedback from the arbitrators , expressions of face and other non-verbal cues that indicate how they are thinking. Cross-examination also works differently when the witness is giving evidence by video link, and the ‘hot-tubbing’ of experts has to be very focused if it happens at all.

A particular problem is that virtual hearings exacerbate an existing tendency to deluge a tribunal with every conceivable argument and document, something that it is very easy to do if materials are presented exclusively in electronic form. Up to now, rightly or wrongly, physical hearings have been an opportunity to draw the tribunal’s attention to the most important materials and arguments that they need to consider, and to tell them what they can safely ignore. However, this is more difficult to do in a virtual hearing, because without visual cues it is not so obvious if the tribunal is bored, irritated or confused. So stricter rules may need to be developed, at least in arbitration, where procedure is less regulated than in the courts.

Future opportunities

What we are seeing now has been compared by some commentators to a giant pilot scheme for alternative ways of conducting dispute resolution, and some positive outcomes have emerged already. One of these is the surprising success of the ‘semi-virtual’ hearing. This is a hybrid arrangement where a few individuals are physically present in a hearing centre while all the others attend by video link. Among other things, it allows advocates to react to nonverbal feedback from arbitrators, and to deal more easily with the problem of information overload just mentioned.

Another lesson learned is the usefulness of local venues (or ‘hubs’), equipped with advanced video technology and a strong internet connection, which witnesses can use to give their evidence. In many developing countries individuals and businesses may not have access to this technology on their own premises, and travelling to a local hub is much easier than flying to another country to give evidence in person. Even in developed countries, where most people have a good internet connection, there are benefits to this arrangement. Local hubs also allow witnesses to be observed and guided at a practical level when giving evidence, and lend an appropriate feeling of formality to the occasion.

Then there is the question of whether a hearing is needed at all. Sometimes case management issues can be dealt with ‘on the papers’, that is, without any kind of hearing. The English courts have adopted this approach with time extensions, for example, although (as a safeguard) new Practice Direction 51ZA does allow a party to demand a hearing at a later date, should they wish to challenge any order initially made. This is the kind of compromise that might work in arbitration too.

A new normal?

When considering the way forward after the pandemic, context is key. COVID-19 may have come as a bolt from the blue, but arbitration was already under certain pressures, all of which pointed to a more streamlined and technologically engaged version of the procedure.

There is a growing feeling that international arbitration is often conducted in a way that is not environmentally friendly. Lawyers, clients and witnesses fly around the world to attend meetings and hearings when they could be meeting online or corresponding instead. This also has costs implications for the parties, of course, who have to fund all the flights, hotel rooms and facilities used.

Another pressure is competition from the courts. In England, the judiciary is imitating arbitration’s request-led approach to document production. This should result in disclosure become considerably more efficient in the specialist courts. Litigants are also beginning to benefit from the easy enforcement across borders of court judgments under the Hague Convention on Court of Agreements 2005, which is gradually taking wing. Up to now the USP of international arbitration has been the easy enforceability of awards internationally, but this looks less of a unique advantage now.

In this context, arbitration arguably needs to go back to its roots as a simpler, cheaper and more informal form of dispute resolution than proceedings in the courts. In other words, it needs to stop aping litigation and take a fresh and more radical approach to resolving disputes, using all the technology available. There was some impetus to do this when the Prague Rules were issued in December 2018, but that has certainly not led to a general change in culture or practice. The COVID-19 pandemic, and the challenges thrown up by that, may just provide the spark that is needed to achieve radical change.


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