Arbitration in Times of Restrained Social Relations Due to the COVID-19 Pandemic

The year 2020 will be remembered in history as the year in which humanity faced the COVID-19 pandemic. It seems that it will remain our day-to-day concern for some time with devastating effects on the economies of developed and developing countries all around the world.

Another consequence of the pandemic is that many domestic judicial systems face serious challenges with keeping their schedules. The resulting chaos in some judiciaries has focused attention on arbitration as a more efficient means to timely solve complex legal problems than accessing the courts. The characteristics of arbitration proceedings, such as the procedural flexibility, allow arbitration to adapt well to the use of modern communication technology in these uncertain times and allow for the solution of disputes in a fair, expeditious, and efficient manner.

Flexibility by itself, however, is meaningless unless it leads to another important characteristic of arbitration, i.e. promptness. What would be the point of having a flexible proceeding if it was not expeditious?

The demand for a prompt solution of the dispute is also laid down in numerous arbitration rules and laws, such as the English Arbitration Act 1996 (Art. 33.1(b)), the 2014 ICDR International Arbitration Rules of the American Arbitration Association (Rule 20(b)), the 2017 ICC Arbitration Rules (Rule 22.1), the 2020 London Court of International Arbitration Rules of Arbitration (Art. 14.1(ii)), and the UNCITRAL Arbitration Rules (Art. 20). Most arbitration proceedings may be delayed only in very exceptional and objectively justified circumstances. Even the COVID-19 pandemic and the lockdown measures have oftentimes not been considered a sufficiently strong justification for staying arbitration proceedings.

However, the question remains as to how we can make arbitration effective during COVID-19. Many leading international arbitration institutions have made an incredible effort to preserve the fundamental and unique characteristics of arbitration with the help of a better use of information technology to allow holding hearings virtually.

On March 18, 2020, the Korean Commercial Arbitration Board issued a press release publishing “The Seoul Protocol on Video Conference in International Arbitration”, which is intended to serve as a guide to best practice for planning, testing and conducting videoconferences in international arbitration. This protocol was drafted before the COVID-19 pandemic, although it was released at the time of this pandemic. The protocol provides minimum standards for holding videoconferences, including the requirement to disclose the identity of each individual who will be in the same room where the witness will give his/her testimony, as well as the minimum industry standards to be met by the computer, audio and camera equipment, which are set out by the International Telecommunications Union, the United Nations specialized agency in the field of telecommunications.

The American Arbitration Association (AAA) has issued the “Virtual Hearing Guide for Arbitrators and Parties” and the “Model Order and Procedures for a Virtual Hearing via Videoconference.”

The Hong Kong International Arbitration Centre (HKIAC) has developed the “HKIAC Guidelines for Virtual Hearings”, which provides a comprehensive range of integrated virtual hearing services like video conferencing, audio conferencing, electronic bundling and presentation of evidence, transcription services, and interpretation services. All of them either for arbitrations administered by HKIAC and those that are not.

On August 2020, the Singapore International Arbitration Centre has released the “SIAC Guides: Taking Your Arbitration Remote”, which offers a unique and different guide because it is based on queries and a kind of checklist where you can take into account useful considerations about remote arbitration hearings.

The International Chamber of Commerce (ICC) issued the “ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic”, which guides parties, counsel, and tribunals on possible measures that may be considered to mitigate the adverse effects of the COVID-19 pandemic on arbitrations. This Guide clarifies that the pandemic will not change the fundamental principles by which the arbitration tribunals operate, as set out in Articles 22(1) and 25(1) of the ICC Arbitration Rules. Consistently with such principles, it is a shared responsibility of the parties, counsel, and tribunals to consider other measures to avoid delays in arbitration proceedings, which of course refers to technological means of communication and videoconferencing.Nonetheless, not all cases are suited to being held remotely. The arbitrators and the parties should weight and assess whether a virtual hearing is an acceptable way to ensure the arbitration proceeding runs smoothly and fairly. Since arbitration is a procedure based on agreement between the parties, both parties need to be comfortable with the technology applied in hearings and other means of communication. It would not be good practice that in order to rush a case through the pandemic, which to all accounts seems to be only a temporary situation, other procedural rights and interests are sacrificed. As also in prior instances where arbitration had to adapt to evolving social, economic, and technological changes, a prudent balance between the procedural issues at stake should be found.

By Edwin N. Álvarez Román, Program on International Commercial and International Investment Arbitration at American University Washington College of Law

Sources: