A NEW CHALLENGE:
ARBITRATION CONFRONTS COVID-19 PANDEMIC
Reading time: 3 min.
Contribution written by Riccardo Aquilini
For several years modern legislation has been increasingly developing faster, more flexible and simpler tools to conduct international commercial arbitrations. Since the introduction of the Internet in the legal sector (at the beginning of 2000), the arbitration institution has started to deal with the use of tools such as “virtual arbitrator” and “cybertribunal”[1] that allow to completely delocalize the seat of the arbitration making the parties meet in virtual spaces without the need to move, in a faster time and with a significant decrease in costs.
These tools, in addition to making it easier for the parties, have modified and revolutionized all the procedural stages of the process. A concrete example can be seen in the preliminary investigation phase, where often to avoid having to move some witnesses, they proceed with their examination by remote. In addition to benefits, these technological revolutions have brought with them several critical issues and problems, mainly related to the protection to be guaranteed to the parties in the process, such as the right to a fair hearing and defense.
This new vision of an innovative, technological and completely virtual arbitration became mandatory during the Covid-19 pandemic, which made it impossible to conduct any kind of hearing in presence all over the world. Permanent arbitral institutions, arbitration chambers and all their operating offices immediately reacted with maximum efficiency to this disastrous situation, and since about mid-2020, they have started to experiment with new regulations to continue to perform their functions and encourage the use of this tool.
The first example of such new regulations issued is given by the ICC’s “Rule 2021[2] “, which includes, as a major change from the previous “Rule 2017”, a new provision in Article 26[3] headed Virtual Hearing, providing that they may decide whether to hold hearings remotely after first hearing the parties and taking into account the relevant facts of the specific case. Not only that, art. 26 also extends the possibility of using as a technological tool, “any appropriate means of communication”, thus expanding the possibility of the court to hold hearings at a distance, thus expanding the court’s ability to choose as it sees fit. This new provision of Art. 26 modifies the old Art. 25(2) which provided, in order to ensure a fair hearing, for the parties to be heard in person, establishing the need for in-person hearings. The ICC, even before the introduction of the “Rule 2021”, had already remedied this problem by publishing the “Guidance Note” in April 2020 which gave a different interpretation to art. 25, establishing that the adversarial process between the parties was also guaranteed with the use of suitable technological tools, but leaving several doubts as to the application of the virtual hearing.
In addition to remote hearings, the new regulation, includes some provisions to encourage what is called “green arbitration“[4], inviting courts to disable the use of virtual arbitration. It invites courts to discourage the use of paper documents, using only electronic ones. Article 3 of the new regulation, taking its cue from the LCIA 2020 Arbitration Rules, requires that all submissions, notices and communications be sent electronically in lieu of paper filings, but leaves it to the parties to object to these new rules.
Another example of how arbitration institutions have come to the aid of the parties during the pandemic is the Milan CAM and its new July 1, 2020 rules, which, in addition to providing for changes similar to those we have already seen and commented on, introduce a Simplified Arbitration procedure, offering a more streamlined, faster and cheaper way to settle a dispute. This new procedure provides for the appointment of a single arbitrator, halved filing deadlines, a reduced number of briefs and, where possible, a single hearing. In addition, to better meet the parties even the costs of fees are visibly decreased.
These are just two of the many examples that can be given, it is certainly still too early to draw conclusions and assess the results and efficiency of these new regulations. And it is still too early to understand how arbitration will evolve when the pandemic is over, but one thing is certain, as always, arbitration will be able to change and adapt to the needs of society.
[1] See the initiatives of the American Arbitration Association for introduction of “Virtual Magistrate” and the University of Montreal for “Cybertribunal”
[2] Here is the link to the “Rule 2021”: https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/#:~:text=The%20below%20ICC%20Rules%20of,the%20world%20to%20resolve%20disputes.
[3] Art. 26 “1) A hearing shall be held if any of the parties so requests or, failing such a request, if the arbitral tribunal on its own motion decides to hear the parties. When a hearing is to be held, the arbitral tribunal, giving reasonable notice, shall summon the parties to appear before it on the day and at the place fixed by it. 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.
2)If any of the parties, although duly summoned, fails to appear without valid excuse, the arbitral tribunal shall have the power to proceed with the hearing.
3)The arbitral tribunal shall be in full charge of the hearings, at which all the parties shall be entitled to be present. Save with the approval of the arbitral tribunal and the parties, persons not involved in the proceedings shall not be admitted.
4) The parties may appear in person or through duly authorized representatives. In addition, they may be assisted by advisers.”
[4] Green arbitration is a new way to make arbitration more ecological and eco-friendly, avoiding waste of paper documents, travel and other consumption typical of arbitration as we know it today. It is now a campaign carried out by several operators in the sector, who dream of a completely green and eco-friendly arbitration.
