Alok Jain, Dhruv Jain
Alok Jain, Dhruv Jain
Columns

Arbitration in the time of COVID-19

The article focuses on how in the times of social distancing, arbitration has the flexibility and versatility that can achieve resolution of disputes while respecting the health concerns.

Alok Jain

Dhruv Jain

With due apologies to Gabriel Garcia Marquez.

A pandemic such as this brings the dramatis personae of the legal world to the stage – litigation and arbitration, both of which have been vying for the interest of – resolution of disputes.

With social distancing measures being adopted for due cause by the judiciary, the fervor that litigation once professed for being the champion of dispute resolution, already seems to be waning. In these quarantined times, arbitration displays the desired flexibility and versatility that can achieve resolution of disputes while respecting social health concerns.

Consider this – From the stage of commencement, i.e., through an arbitration notice, the trail is contact free. The request for arbitration, the response, the request for appointment and the appointment of the arbitral tribunal is increasingly done through electronic correspondence. Case management and communication in these early stages between clients, lawyers, the arbitral institution and the arbitral tribunal can be exclusively through email, telephonic or video conferencing. Furthermore, the statement of claim, the statement of defence, the counter claim, the defence to the counter claim, the witness statements, the admissions and denials, the applications challenging the jurisdiction and/or the composition of the arbitral tribunal and replies thereto, the applications seeking interim relief and replies thereto, etc. can all be served electronically [1]. Even digital signatures can be appended by relevant stakeholders, which will be accepted by the arbitral tribunal [2].

Some practical issues do arise. These include transmission of voluminous documentation which most stakeholders now have capacity to upload on cloud with secured access. In rare cases where the relevant technological capability does not exist, these documents can be couriered.

Where arbitration truly fosters social distancing is in the conduct of hearings. Firstly, the Arbitration and Conciliation Act, 1996 (“the Act”), permits the arbitral tribunal to decide the dispute on the sole basis of pleadings, documents and submissions without recourse to oral hearings [3]. Secondly, if oral hearings are necessary, they can be conducted through video conference. Most procedural hearings are routinely conducted by such means. Often, examination of witnesses, including experts, is efficaciously carried out over such medium. Even final hearings are quite often conducted through video conferencing. Although, for the same to be fruitful, protocols and decorum along with prior experience are required. Indeed, even during in-person arbitral hearings in the usual course of things, there is an increasing propensity for all actors to be utilizing laptops and tablet-computers to refer to the documents. Thus, the transition to interaction being exclusively across screens is merely the next step in the evolution of arbitration.

Mrinal Jain, Managing Director, FTI Consulting, caveats

“Any increased, sustainable use of technology for dispute resolution in the long run will depend on two key factors: first, the willingness of the arbitration professionals including tribunals to accept and adopt technology and associated facilities for conducting the proceedings, and, second,the availability of adequate and quality infrastructure particularly in developing countries such as India.”

Yes, Online Dispute Resolution has its drawbacks. In certain aspects, the human element is often critical. A rudimentary analogy can be drawn to poker, a game that heavily depends upon a player being able to discern his course of action based on body language or tells. Most counsel worth their salt will tell you that an effective cross examination can happen in person and not through video conferencing. The emotional, physical and tangible response often turns cases on their heads. Lawyers also depend upon instinct and intuition which require real time reflexes. Support during a hearing is also critical as a counsel may need instantaneous client inputs or on spot guidance from his/her team.

Further, in complex matters, since oral hearings may require multiple participants and separate lines of communication to simulate a physical hearing, such hearings may not be feasible unless they are in-person hearings. Here too, segregation through isolated hearing chambers is possible. However, in cases which involve international travel, due to the restrictions imposed by countries, this may yet be one bridge that is uncrossable. There have also been privacy/confidentiality issues that have cropped up during when arbitral hearings are to be conducted vide video conferencing. However, the Act, as recently amended, secures confidentiality of arbitral proceedings through section 42A.

Arbitration does offer a panacea to the crises that has enveloped the globe while permitting continuity of the resolution of disputes. However, the true star is technology which helps to unlock the true potential of this alternate dispute resolution mechanism.

While it is increasingly common for ad hoc arbitrations in India to be conducted without in person meetings, institutional arbitration offers far better amenities to conduct arbitral proceedings through electronic platform. Several renowned institutions such as the LCIA [4] , ICC [5] , SIAC [6], HKIAC [7] , SCC [8] and the AAA [9] have already started issuing case management advisories and general updates [10] such that users are able to work within the constraints caused by the pandemic. While almost all institutions have closed their offices, they offer continuity through technology platforms with all their case managers being available through their individual work from home policies.

Neeti Sachdeva, Registrar & Secretary General, MCIA reaffirms,

“MCIA is encouraging the use of technology to ensure arbitration proceedings continue uninterrupted in the restrained atmosphere of COVID-19. Parties and counsel may use our integrated audio video capabilities to conduct arbitrations remotely.”

This proactive approach has permitted a high number of matters to proceed uninterrupted while the pandemic derails litigation to a large extent.

Be that as it may, it is not as if arbitration has escaped unscathed from COVID-19. With most of the leading seats getting affected, including Singapore, Hong Kong, London, Paris and Mumbai, a lot of arbitrations have taken a breather due to the travel restrictions and venues being closed.

Montek Mayal, Senior Managing Director, FTI Consulting states,

“We have seen outright cancellation of hearings, delays in ongoing arbitrations (mostly on account of extensions for filing evidence) and uncertainty around commencing new arbitrations. However, in a small subset of matters, we are also observing increasing (proposed) use of technology for procedural hearings and parties accepting – at least in principle – use of video-conferencing facilities for cross examinations.”

However, these are early days and depending upon the stage at which these arbitrations are, there is effort being expended in regrouping and in the resumption of proceedings. Naturally, the sophisticated arbitral institutions are leading by example in offering continuity through effective work from home policies. Although we fervently hope not, the larger impact will be felt when stakeholders are themselves affected directly by the pandemic.

Even ELP’s recent experience in various ongoing arbitration matters has been mixed. While in a few proceedings we have successfully conducted and participated in procedural proceedings through electronic platform, in some mandates, due to the complexity of the dispute and certain drastic linguistic differences between the stakeholders, adjournments have been sought or not objected to.

Having said that, there is no doubt that arbitration complemented with technology may be the new normal during and post the decline of COVID-19. A few weeks of solitude (and hopefully not One Hundred Years of Solitude!) may not be such a bad thing after all – It allows us the opportunity to rethink and structure our dispute resolution strategies.

Practical Tips

If you are currently in an ongoing arbitration the following self-assessment may be of assistance:

a) How tech ready and savvy are you, your advocates, your opponents, your opponents’ advocates, the arbitral tribunal and the arbitral institution (if any)?

In an arbitration to be conducted through the relevant platform, all stakeholders must possess adequate equipment and connectivity along with the requisite know how and comfort to facilitate the arbitral proceedings to be conducted without physical contact. Adequate security protocols, confidentiality/privacy measures and controlled access must exist for all transmissions. A good guide on what measures must be taken and suggested usage of information technology in arbitrations is the Report of the ICC Commission on Arbitration and ADR Task Force on the Use of Information Technology in International Arbitration. [11]

b) What stage of the arbitration are you in?

The earlier the stage of the arbitration, the easier it is to transition into conducting the arbitration through electronic means. This is why we are seeing several arbitrations which are at the stage of RFA, appointment or submission of pleadings quickly regaining lost ground.

c) How complex is the dispute?

While it is not uncommon for complex disputes also to be conducted across the virtual network, the more unsophisticated the dispute, the easier this is. In most of the simpler disputes, parties can resort to a documents-only arbitration which is done entirely online.Several online platforms are already catering to these apart from the recognizable Indian arbitral institutions. [12]

Alok Jain is an Associate Partner and Dhruv Jain is an Associate at Economic Laws Practice

[1] Bright Simons v. Sproxil, Inc, judgment dated 9 May 2018 in O.M.P. (Comm) 471 of 2016, High Court of Delhi.

[2] Section 85B, Indian Evidence Act, 1872.

[3] Section 24 and 29B(3)(a) of the Arbitration and Conciliation Act, 1996.

[4] https://www.lcia.org/lcia-services-update-covid-19.aspx

[5] https://iccwbo.org/media-wall/news-speeches/covid-19-urgent-communication-to-drs-users-arbitrators-and-other-neutrals/

[6]https://siac.org.sg/images/stories/press_release/2020/[ANNOUNCEMENT]%20COVID-19%20Information%20for%20SIAC%20Users.pdf

[7] https://www.hkiac.org/our-services/Facilities

[8] https://sccinstitute.com/about-the-scc/news/2020/covid-19-how-the-scc-is-responding/

[9] https://go.adr.org/covid19.html

[10] https://www.tas-cas.org/fileadmin/user_upload/CAS_Guidelines_COVID-19_16.03.20.pdf

[11] https://iccwbo.org/publication/information-technology-international-arbitration-report-icc-commission-arbitration-adr/

[12] https://doj.gov.in/page/online-dispute-resolution-through-mediation-arbitration-conciliation-etc

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