International arbitration hearings in a post pandemic world13 Jan 2021 // Insights
Aoife Keane examines the effect of recent rule changes and direction of travel regarding international arbitration hearings in a post pandemic world.
In uncertain times, properly advised parties entering into cross-border agreements are likely to prefer arbitration when considering what dispute resolution mechanism to include in their contractual documentation. The consensual nature of arbitration allows parties to cross-border transactions to resolve any disputes in a forum of their choosing and provides for a less rigid dispute resolution process when compared to the national courts of most jurisdictions. In the time of Covid-19, where a party’s inability to meet deadlines and all other manner of pandemic related obstructions can and do occur, the flexibility afforded by the arbitral process is invaluable. This is in addition to the other long recognised advantages of arbitration such as privacy, choice of arbitrator(s), limited disclosure obligations and limited rights of appeal/finality.
The London Court of International Arbitration (LCIA) and the International Chamber of Commerce (ICC) are two of the major arbitral institutions whose rules are regularly chosen by parties to cross-border transactions to govern any disputes arising. Both the LCIA and ICC have recently amended their rules in light of the Covid-19 crisis, and in an effort to increase efficiency generally. The amendments regarding the conduct of hearings, outlined below, may make arbitration even more attractive in today’s uncertain world.
The Covid-19 pandemic has had an impact on almost every aspect of legal practice and international arbitration is no exception. Whilst virtual proceedings - in particular, video conferencing - was already well established in international arbitrations prior to the onset of the pandemic, the ability to hold virtual hearings has now become enshrined in the rules.
The LCIA was the first arbitral institution to issue updated rules that fully took account of the effects of Covid-19. The revised LCIA rules released in October 2020 clearly set out the new focus on virtual proceedings, Article 19.2 providing as follows:
“…As to form, a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).”
While arbitration hearings were on occasion already conducted virtually prior to the onset of the pandemic, it was never previously formally recognised in the rules of any of the major arbitral institutions. However, Covid-19 has prompted widespread use of virtual hearings, to the point where the LCIA has chosen to acknowledge this explicitly.
The ICC has now followed suit in its revised rules which came into force on 1 January 2021. Article 26(1) provides as follows:
“The arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted by physical attendance or remotely by videoconference, telephone or other appropriate means of communication.”
This arguably goes further than the LCIA rules, which simply provide that the hearing “may” take place virtually, i.e. by agreement between the parties. Article 26(1) of the ICC rules explicitly empowers the Tribunal to insist upon virtual proceedings. Whilst this discretion arguably already existed in practice before the onset of the pandemic, enshrining this provision in the rules provides a greater degree of clarity, and is likely to reduce the risk that parties will end up in a dispute regarding the form of hearing.
The above changes to the rules may not seem particularly noteworthy in the greater scheme of things, however, they recognise the fact that the conduct of international arbitration has changed as a result of the pandemic and the change is more than likely here to stay. As a result of Covid-19 and the requirement to hold hearings virtually over the past ten months, arbitrators and practitioners have been forced to recognise the advantages to all in terms of time, costs and general efficiency. Undoubtedly, there are those who will still prefer to hold final hearings in person when this is permitted once again, citing issues around cross-examination, translation/interpretation and general smoothness of operations. However, it seems clear that remote hearings are here to stay, pandemic or no pandemic, and it is likely that other arbitral institutions will follow the LCIA’s lead when it comes to enshrining this in the rules.
For parties to international arbitrations, the amendments set out above are certainly to be welcomed. Virtual hearings give parties greater flexibility in terms of the attendance of witnesses and management and can potentially mean a significant reduction in costs and the length of proceedings, all further reasons to favour international arbitration as a means of resolving cross-border disputes.
Should you have any questions regarding the above information, or need any dispute resolution related legal advice, please get in contact with Dispute Resolution Partner Aoife Keane at firstname.lastname@example.org, or 020 7725 8031.
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