Zoom is the new normal!

International arbitration is flexible and adaptable (or at least it ought to be). Those characteristics are being tested in the current pandemic environment. Gathering together parties, counsel, witnesses and the tribunal (each of whom may be from a different jurisdiction) in one location for an in-person hearing may well infringe local social distancing and travel rules and, even if it does not, it is probably inadvisable and will be so for some time to come.  This is all the more so if one or more potential participants are shielding or vulnerable.  Moreover, there is the risk that one or more of the potential participants could develop symptoms immediately preceding or during any hearing.

To address these concerns, video conferencing is being very widely used. This has many advantages over telephone hearings, and indeed over in-person hearings: saving time and cost (both financial and environmental).

The English courts have issued a protocol regarding remote hearings, which provides that remote hearings should take place wherever possible. Where a remote hearing is not possible or desirable (perhaps due to the length of the hearing, the number of parties or overseas parties, representatives and/or witnesses), then the Court must either proceed with the matter in court, or adjourn until better days come along.

A similar approach as specified in the protocol should be and is being applied in international arbitration. The key will be advance planning and active case management by the arbitrators and proactive consideration being given by the parties.  Specifically:

• Arbitrators have independent duties to adopt suitable procedures, avoid unnecessary delay or expense and provide a fair means for the resolution of a dispute: s33 AA 1996.  This is irrespective of what one or both parties may prefer. An arbitral tribunal needs to give consideration to its independent duties.
• The arbitrators’ duty to the parties is to act fairly and give each party a reasonable opportunity of putting its case and dealing with that of his opponent: s33 AA 1996.  This gives arbitrators a level of discretion and flexibility in the type of hearing that they conduct. Thus, subject to this overriding duty, there is usually no legal bar to replacing an in-person hearing partly or wholly with a video conference. Indeed, several leading arbitral rules expressly envisage that this may be done, with the matter being within the discretion of the tribunal: see e.g. Art 19.2 of the LCIA Rules 2020 and Art 3(5) of the ICC Rules 2017.  Often some additional method of communication between counsel and client is either necessary or desirable.
• The arbitral tribunal is generally considered to have inherent powers to protect the integrity of the arbitral process. This tends to reinforce the right of the arbitral tribunal to explore other mechanisms for conducting a hearing, and to act flexibly.
• The arbitral institutions continue to emphasise their commitment to provide their services during the pandemic, albeit remotely.
• The hearing venue does not have to be at the seat. Parties can agree to hold the hearing elsewhere (including in another country), if a change of venue makes it easier to have an in-person hearing.
• It is also possible for parties to agree to dispense with hearings altogether and have the entire dispute decided “on the papers”. Again, a number of rules expressly provide for this: e.g. see e.g. Art 19.1 of the LCIA Rules 2020 and Art 25(4) of the ICC Rules 2017.  However, tribunals should be reluctant to abandon oral hearings altogether, even if they have the power to do so in the present circumstances, unless this is the express wish of all parties.

Ultimately, the solution will depend upon the specific circumstances of the case. However, all participants will have to accept that the fact that in-person hearings may have been the overwhelmingly most popular style does not mean that they will be during the pandemic or indeed after it is over.

Video has many advantages over telephone and it is only if the internet link is so poor or temperamental that it cannot be relied upon that ‘phone is likely to be chosen.  Certainly, where there is disputed evidence being tested by cross-examination, video is almost inevitably going to be required, as demeanour is an important aspect of the assessment of witness and expert evidence.  In Polanski v Condé Nast Publications Limited[1] the House of Lords heldthat cross-examining a witness by video link does not, in and of itself, prejudice the party conducting the cross-examination.

Some of the first direct court challenge to a remote hearing that I am aware of has recently been decided in the US: Legaspy v. Fin. Indus. Regulatory Auth., Inc.,[2]and by the Supreme Court in Austria.[3] 

In Legaspy, two of Legaspy’s clients initiated an arbitration against him under the rules of the Financial Industry Regulatory Authority (FINRA) to recover nearly $3 million for brokerage account losses.  Pursuant to FINRA’s rules, the parties signed a uniform submission agreement which provided that “in the event a hearing is necessary, such hearing shall be held at a time and place as may be designated by the Director of FINRA” and that “the arbitration will be conducted in accordance with the FINRA Code of Arbitration Procedure.” An evidentiary hearing was originally set for August 2020.  However, due to the COVID-19 pandemic, FINRA cancelled the in-person hearing and the arbitral tribunal subsequently ordered that the hearing be conducted remotely via Zoom.  Legaspy objected, arguing that a Zoom hearing was unworkable because of the complexity of the issues, the large number of witnesses and documentary exhibits, and the claimants’ need for a translator.  After the tribunal overruled Legaspy’s objections, Legaspy filed suit in federal court to enjoin the virtual hearing on the grounds that it breached the parties’ uniform submission agreement and FINRA’s Code of Arbitration Procedure and denied Legaspy due process.  The court denied Legaspy’s motions for a temporary restraining order and preliminary injunction, allowing the virtual arbitration to proceed.

The court held that Legaspy could not succeed on his claim for breach of the submission agreement or the FINRA Code of Arbitration because, under the Federal Arbitration Act, procedural questions are committed to the arbitrator and “[w]hether FINRA can or should conduct a hearing remotely is a question of procedure that FINRA, not this court, must decide.”  Finally, the court determined that even if it could review the arbitral panel’s procedural ruling mid-arbitration, the FINRA Code of Arbitration permitted the panel to order a virtual hearing.

In the Austrian case, the applicants contended that a hearing by videoconference was unfair conduct and had led to unequal treatment of the parties.  Specifically, it contended that there was no control as to what documents an examined witness was using, nor whether there was another person in the room.  Moreover, there was bias as the tribunal had not made provision for the protection of witnesses against undue influence and the chosen platform (WebEx) allowed private messages through the chat function. The court rejected a challenge to the tribunal as ordering a video hearing, when opposed, could not constitute bias, nor would it violate principles of a fair trial and the right to be heard.  The court accepted that hearing by video was commonplace, both in courts and arbitration.  Ordering a video hearing against the wishes of one party does not violate Art 6 ECHR as Art 6 provides for not only the right to be heard but also effective access to justice to enforce or defend rights: video met those challenges.  The court gave examples of measures to mitigate any risk including the witness looking directly into the camera, as necessary, zooming out and filming the room and having hands visible.

These cases shows an entirely sensible approach and there is little doubt that an English court would adopt a similar supportive stance.  Remote virtual hearings are here to stay and, given the current environment, whilst we can hope for respite through vaccines, at the very least contingency plans ought to be put in place for every in-person hearing that is fixed.  Moreover, the parties, their counsel and tribunals ought to seriously consider the option of preferring remote virtual hearings in the interests of economy. 

[1] [2005] UKHL 10 at [43]. And seeMcGlinn v Waltham Contractors Ltd & ors [2006] EWHC 2322 (TCC) at [11]

[2] No. 20 C 4700, 2020 WL 4696818 (N.D. Ill. Aug. 13, 2020).

[3] Docket 18 ONc 3/20s