Arbitration has benifited from a great increase in the use of technology which has directly effected the conduct of proceedings. More particularly, with digitalization, the way that we conduct arbitration proceedings has been changed to reflect the current needs of parties, with an aim of increasing time and cost efficiency. In line with these needs, and as a measure against the COVID-19 pandemic, virtual hearings have become common.
The general awareness of environmental issues has also been a subject matter discussed in the legal industry. There have been global initiatives, such as the signing of the Paris Agreement on climate change, as well as trends to reduce carbon footprints and so-called “green pledges.”
Accordingly, this article deals with (i) virtual hearings (ii) electronic submissions and (iii) the green pledge.
COVID-19 caused arbitrators, parties, arbitral institutions, and all participants to adapt to new conditions. Virtual hearings are among the tools participants discovered during the pandemic. Various institutions have had different approaches, where some canceled or delayed hearings and some, such as the International Chamber of Commerce (“ICC”), adapted very rapidly and published guidelines, both on the effects of COVID-19 and on virtual hearings to assist its users.
The Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic (“ICC Guidance”) is a good example. Besides the ICC Guidance, another important tool is the Seoul Protocol on Video Conferencing in International Arbitrations. This protocol provides useful recommendations, mainly on documents, venue, witnesses, observers, technical issues, interpretation, and recording. The American Arbitration Association (“AAA”) also published virtual hearing guides, orders, and procedures.
The ICC Guidance is not only related to virtual hearings, but rather covers a wide range of issues. What comes across as interesting is that, early in 2020, the ICC regulated virtual hearings explicitly in its 2021 Arbitration Rules. Even though this revision was made prior to the COVID-19 pandemic, the timing of the 2021 ICC Rules of Arbitration fit very well with the needs of practitioners. Even before the revision, the wide discretion given by the ICC to arbitral tribunals allowed for the conduct of virtual hearings. Currently, this issue is regulated explicitly in Article 26 of the 2021 ICC Rules of Arbitration, which states that hearings can be conducted remotely by videoconference, telephone, or other appropriate means of communication.
The ICC Guidance provides tips to users by focusing on cost and time-effective measures. It recommends procedures to ensure due process. There are certain practical issues an arbitral tribunal should consider: the type of the hearing, multiple time zones, travel barriers, the duration of the hearing, the number of parties/experts/witnesses, whether the hearing will be recorded, the need for language interpretation, the procedure for taking evidence, and the use of electronic hearing bundles are just some of them. The ICC Guidance further recommends that parties agree on a cyber protocol and lists suggested provisions. This is an important document and a tool that parties should consider complying with, as it deals with issues such as data privacy rules and ensuring cybersecurity.
There is no doubt that one of the biggest advantages of virtual hearings is the reduction of costs. One of the major drawbacks of arbitration is the costs associated with it, and thus this is a very sensitive issue. Accordingly, arbitral tribunals must pay attention to costs when deciding on procedural considerations.
Another important consideration is the enforceability of the award. In this respect, it should always be kept in mind that having a virtual hearing should never be an obstacle before the enforcement of the award. This issue can arise especially if parties do not want to hold a virtual hearing, or if one of them does not and an arbitral tribunal decides to do so anyway. An arbitral tribunal can decide to hold a virtual hearing even if the parties do not agree; in this case, the arbitral tribunal when making a decision should consider the circumstances and make sure that equality of the parties and due process is ensured.
There are benefits of virtual hearings, but these do not come without concerns. It is fair to say that overall, the experience has been very positive for most participants, and the demand for conducting virtual hearings is increasing. All participants have learned from the procedural deficiencies and have gained experience. Major concerns that capture attention are ensuring due process, difficulty in giving oral submissions and cross-examining witnesses, cybersecurity, and data protection.
Due process is a concern, as it can be more difficult to ensure equality between the parties in a virtual hearing. For example, if an arbitrator does not pay attention to the time zones of the parties, it risks creating a privilege for one of them. Therefore, utmost diligence should be paid to every detail. Practitioners are also adapting and learning new techniques for giving oral submissions and cross-examination. With the decreased use of gestures and eye contact, the sequence of questions directed to witnesses as well as the usage of demonstrative exhibits will play an important role in virtual hearings. The technical infrastructure is also vital: slow internet connections or lack of technical support may result in due process concerns. Experience shows that parties may be inclined to turn off their cameras during the hearing because of a slow internet connection, which can raise questions as to the identification of the person testifying. With experience and more detailed regulations, guidelines, and notes published by arbitral institutions, procedural obstacles may be overcome and the conduct of efficient virtual hearings will undoubtedly increase.
It is safe to say that digitalization of arbitration and the use of Information Technology (IT) solutions shall inevitably contribute to a greener arbitration. A report dealing with Information Technology in International Arbitration prepared by the ICC Commission on Arbitration and ADR, dated 2017, shows that IT solutions are not widely used in international arbitration. However, that does not mean there are no efforts to increase the use of IT solutions. Within this context, document management systems are worth mentioning. These platforms encourage parties to refrain from printing all sorts of documents. With the increased use of technology, online bundles have become more popular as well.
A good example of a document management system is the NetCase platform, which was a document management platform that allowed parties to electronically follow the course of the arbitration. The NetCase platform was presented by the ICC as early as 2005, but has been abandoned. However, the ICC has announced that parties will soon be able to rely on fully digitalised services through a new case management platform, which will allow documents such as terms of references and awards to be concluded electronically. This platform will also allow parties to be notified electronically.
Currently, there are other arbitral institutions that offer such systems, such as the AAA, World Intellectual Property Organizastion, and Stockholm Chamber of Commerce. These systems also provide for more efficient and cost-effective arbitral proceedings. It is also noteworthy that many institutions, including the ICC, have allowed electronic submissions during the COVID-19 pandemic as also provided for under the ICC Guidance.
Similar to other institutions, under the ICC Rules of Arbitration, arbitral tribunals have the power to decide whether or not to order the production of documentary evidence, including electronic documents, and to manage any such process in a fair and efficient way. The ICC Arbitration Commission Report on Managing E-Document Production is also worth reviewing by practitioners. Arbitral tribunals consider various issues when making orders related to production of documents, and it is safe to say that these days, more environmentally friendly choices are being made by arbitral tribunals.
As a result of concerns about cybersecurity, data security, and drafting procedural orders related to usage of platforms, a working group including practitioners from different law firms was established. This working group prepared the Protocol for Online Case Management in International Arbitration (“Protocol”). The Protocol seeks to deliver a globally consistent approach to the use of online case management platforms in international arbitration.
Apart from these platforms that arbitral institutions offer, there are various programs available that may be used by practitioners. The International Bar Association (“IBA”) provides guidance related to these platforms. As stated by the IBA, there are platforms which allow practitioners to host, manage, organise, sort, and transfer voluminous documents and submissions gathered and/or exchanged in an arbitration.
The Green Pledge
It is clear that the awareness of environmental issues including the reduction of carbon footprints has increased recently. This increase of awareness can be classified as a global trend that includes not only efforts from the legal industry, but from various other industries. The efforts to make arbitration more environmentally friendly includes the Green Pledge.
The Green Pledge seeks to raise awareness of the significant carbon footprint of the arbitration community, and aims to encourage all arbitration practitioners to commit to the Campaign for Greener Arbitrations’ Guiding Principles and to reduce their carbon emissions. The Guiding Principles set out examples that may be easily implemented by practitioners. These include creating a work space with a reduced environmental footprint by looking for opportunities to reduce energy consumption and waste, and corresponding electronically, unless hard copy correspondence is expressly needed in the circumstances. Practitioners should also be mindful that email has a carbon footprint when requesting the use of electronic rather than hard copies of documents. Practitioners should also promote the use of electronic bundles at hearings, and use suppliers and service providers (for example when arranging an arbitration hearing) who are committed to reducing their environmental footprint. The Guiding Principles also mention the use of videoconferencing facilities as an alternative to travel, which includes holding virtual hearings rather than in person hearings, a topic dealt with above.
A similar approach is seen in mediation. The Mediators Green Pledge, which was inspired by the Campaign for Greener Arbitrations and its Green Pledge, was launched in October 2020.
The digitalisation of arbitration is expected to result in reduced costs, reduced carbon footprint, and an increase in the efficiency of proceedings. Virtual hearings, electronic submissions, document management systems, and the platforms established by the arbitral institutions, will all play a vital role in reaching such expectations.
(Authored by Prof. Dr. H. Ercument Erdem and first published by Erdem & Erdem on August 2021)