COVID-19 and international arbitration
The publication is available at media source “Ukrainian Law Firms. A Handbook for Foreign Clients”.
Lockdown has so far paralyzed resolution of many disputes for a few months. In the absence of respective regulation enabling the holding of hearings in online mode, state courts had few options. As a rule, they simply adjourned the hearings, extended the procedural deadlines and took similar measures. In this respect, international arbitration has been in a much better position, as many years before the pandemic arbitration institutions not only allowed but also actively encouraged arbitral tribunals and arbitration users to hold online hearings wherever possible. Even if we look at more advanced jurisdictions with regulation and practice of online hearings in state courts, international arbitration offers more flexible solutions, as it is not bound up with a particular platform, software or strict technical rules.
Another interesting aspect is the shift in format of online hearings. Previously, it was often a mix of online and offline arrangements. For example, the tribunal and the parties were in the same room, while an expert or a witness was located in some other place, cross-examined via videoconference. Or the tribunal, which was sat in the same room, had videoconference with both parties, and each party’s team was gathered in the same premises. At present all the participants to hearings are connecting from different places, and this raises new practical issues and challenges. The list includes a choice of proper online platform, communications with your co-arbitrators (for the tribunal) or with your team members (for the parties), control of the premises where the witness/expert is giving his/her testimony, translation, recording, various technicalities (ensuring a stable Internet connection, good light and sound, positioning of a webcam, use of several screens, etc.).
Some arbitral institutions now offer their protocols to users, sharing best practices in arranging online hearings. Arbitration practitioners actively share their own experiences (both positive and negative). Interestingly enough, various arbitration events and moot court competitions go online as well. This enables the testing of all tips and development of subsequent practices. So, we see the development of new standards.
However, not all parties and arbitrators are happy and prepared to have online hearings instead of planned offline ones. Some seasoned arbitrators are simply not good at using technologies. Some parties want to drag out the arbitral proceedings, so use this situation to adjourn the hearing. Some cases are too complex with many witnesses and experts on each side, and it might be problematic to run a two-week long online hearing and to cross-examine them all in a proper way. This poses new procedural and strategic questions to all those involved in a case.
The negative economic effect of the lockdown and deep global economic recession is now one of the hottest topics discussed in mass media. It is no secret that each financial crisis has always generated more contractual disputes and a rise in the caseload of arbitral institutions all over the world. This crisis will be no exception. However, in this particular case some states may face investment-treaty claims for measures taken during the lockdown. Some measures caused substantial losses for many businesses, right up bankrupting. Not all states offered any compensation for this. And the legality of such measures in many jurisdictions is rather questionable.
And last, but not least. The pandemic, travel ban and other restrictions resulting in more active use of digital and online solutions, have reopened discussion around the so-called Green Pledge. About a year ago, international arbitrator Lucy Greenwood launched an initiative to address the carbon footprint of international arbitrations and mediations. Prior to the lockdown many arbitration practitioners were frequent travelers, often with several copies of paper bundles in their case files. The lockdown has demonstrated that we can (more or less) successfully substitute in-person meetings, conferences and hearings with online alternatives; we can use electronic bundles. Even some arbitral institutions, including the ICSID, have made electronic filing their default procedure to reduce the reliance on paper filings in their cases. These and other environmentally-friendly practices could make arbitration greener. But the question: we will continue to implement them once the pandemic is over?
In any case, in the post-COVID-19 world we will probably see a new ‘normal’ in many aspects of arbitration and even wider use of online hearings.
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