Michela D'Avino and Bahaa Ezzelarab: 'It is by no means an attack of “due process paranoia” for arbitrators to be concerned about the fairness of an entire final hearing held by videoconference.'
How does the COVID-19 crisis affect the conduct of oral hearings in international arbitration? Is the arbitration community prepared to resort to video/online tools to avoid delays and additional costs in pending proceedings? The current health emergency may raise due process concerns and practical issues, but also favour new approaches to the taking of evidence in international arbitration.
Use of telematics in different phases of arbitral proceedings
The COVID-19 pandemic has prevented in-person meetings in most areas of the world. International arbitration proceedings are no exception. While it is already possible for certain categories of disputes to resort to arbitration through online dispute resolution (ODR) entirely, the use of telematic tools in certain phases of the arbitral proceedings is more sensitive than in others.
A case management conference (CMC) or hearing exclusively dedicated to legal arguments can be easily held through video conferencing (or even simply by telephone), since the ascertainment of facts and determination of authenticity or credibility is not at issue.
For instance, under the ICC Rules (Article 24.4), CMCs 'may be conducted through a meeting in person, by videoconference, telephone or similar means of communication', with no preferential order.
The guiding principle is that using telephone or video conferencing for procedural and other hearings is preferable 'where attendance in person is not essential' (ICC Rules, Appendix IV). But when it comes to fact-finding through oral evidence at a hearing, more problematic issues arise.
Apart from COVID-19, the parties to an arbitration sometimes agree that certain witnesses can be heard by video or telephone to save time and costs by avoiding travelling; on occasion, a witness is unable to attend a hearing in person because of visa obstacles or the like.
In COVID-19 circumstances, if a hearing is to go forward, everyone will be on some video platform. However, oral testimony through telematic tools, when permitted by the applicable arbitration rules and laws, poses a number of critical issues.
First, where a witness’s evidence is decisive, the cross-examining party may be disadvantaged by not being with the witness in the same room. The cross-examination must usually be conducted at a slower pace, and body language clues are more difficult to discern. The attention of the arbitrators is more difficult to engage.
Significant impeachment moments are not as effective when the witness, cross-examiner, and arbitrators are not in the same room. It is more cumbersome to refer witnesses to documents in the course of the cross-examination. These are factors that counsel must take into account when preparing a ‘remote’ cross-examination.
Second, parties and witnesses may not have equal or comparable technological facilities, including access to reliable technology and to a stable internet connection. This potential issue must be explored well in advance, and may be difficult to overcome.
Third, precautions must be adopted in order to mitigate the risk of improper assistance to witnesses being examined via videoconference. The risk of any illicit interference or suggestions to the witness can be mitigated through the setting of camera placement and witness view.
The cross-examining party may also request to have someone attending in the witness room, though of course this may not be practicable (or permissible) in jurisdictions with social distancing rules.
Fourth, where an interpreter is required for a witness examination, the slowness and complications in conducting the examination are multiplied.
Fifth, the administrative control of a video hearing by the tribunal chair may also be more problematic. This is not an insuperable obstacle, if adequate IT tools are available and the organisation of the hearing is agreed in detail in advance between all participants.
As a final point, protecting the privacy and security of the online connection is a critical issue. Certain platforms have experienced security problems, and particularly in sensitive cases the selection (availability) of the video platform will be significant.
Examination by video in common law jurisdictions
In dealing with changes to the way proceedings will necessarily be held in COVID-19 and post-COVID-19 circumstances, it may be useful to consider how some domestic courts in common law jurisdictions have dealt with the legal and practical questions that come up with increased reliance on video conferencing.
While attitudes towards video conferencing in the United States differ across states and federal courts, there is a general amenability to its use in different stages of the proceedings, though with some concerns raised where 'witness credibility' is at issue.
Rule 43(a) of the Federal Rules of Civil Procedure provides that, although a witness’s testimony 'must be taken in open court', video conferencing may be used '[f]or good cause in compelling circumstances and with appropriate safeguards' (Federal Rules of Civil Procedure, B6.1.3, R12.8.3).
The Advisory Committee on the Rules, however, appears to take a relatively restrictive stance towards the interpretation of Rule 43, noting that 'the opportunity to judge the demeanor of a witness face-to-face is accorded great value in our tradition. Transmission cannot be justified merely by showing that it is inconvenient for the witness to attend the trial'.
In practice, many courts have accepted a wide range of reasons (including logistical difficulty of transporting witnesses, and health reasons) as sufficient justification for allowing video conferencing (see, e.g., Virtual Architecture, Ltd. v. Rick, 08 CIV. 5866 SHS, 2012 WL 388507 (S.D.N.Y. Feb. 7, 2012); In re Rand Int'l Leisure Products, LLC, 10-71497-AST, 2010 WL 2507634 (Bankr. E.D.N.Y. June 16, 2010); Matovski v. Matovski, 06 CIV. 4259 (PKC), 2007 WL 1575253 (S.D.N.Y. May 31, 2007)).
English courts have likewise been receptive to the use of video conferencing. Rule 32.3 of the Civil Procedure Rules state that a court may allow a witness to give evidence through a video link or by other means, while Annex 3 to the Practice Direction acknowledges that video conferencing 'may be a convenient way of dealing with any part of proceedings'.
Opposition to the use of video conferencing generally focuses on its appropriateness for cross-examination and determining credibility.
However, English courts appear to reject this as a sufficient basis for refusing to allow video conferencing. In Ian McGlinn v Waltham Contractors Ltd and others, the court – referring to the decision of the House of Lords in Polanski, where videoconference cross-examination was not seen, in itself, to prejudice any party — stated that 'no real prejudice to the defendants has been or, in my judgment, could be identified as a consequence of [the use of video conferencing]' ( EWHC 2322 (TCC)).
In Canada, the use of video conferencing in courts is regulated at the level of the provinces. In general, courts welcome the technology, although there is a presumption that evidence and arguments should be presented orally in open court.
In Ontario, Rule 1.08(1) of the Rules of Civil Procedure (R.R.O. 1990, Reg. 194) permits trial evidence by video conference where the facilities 'are available at the court or are provided by a party'. Even if the parties do not agree on resorting to videoconference, the court may still order its use.
The Rules highlight the need to carefully assess the impact of video conferencing on determining issues of witness credibility.
In practice, Canadian courts have been open to the use of videoconference. In 2015, the Ontario Superior Court noted in Chandra v. CBC (2015 ONSC 5385) that, despite the general presumption for an open court, 'it is appropriate […] to take a 21st century view of the use of video conferencing (and similar technologies)' (Chandra v. CBC, 2015 ONSC 5385).
In a more recent case in British Columbia, the Supreme Court in Singh v. Chad (2018 BCSC 1860) considered whether inconvenience and costs are sufficient reasons to justify video conferencing.
The court held that requiring the witnesses – who were 'busy professionals' living in India – to testify in person despite available video conferencing technology would be 'contrary to principles of justice'.
Still, recourse to video conferencing is not without its Canadian opponents. In 1337194 Ontario Inc. v. Whiteley (2004 CarswellOnt 2312), the court denied a motion to link a witness through videoconference, noting that videoconference should be used 'rarely and only in exceptional circumstances' where 'credibility of the witness to be examined is a key issue'.
In several cases, the courts find it necessary to give specific directions as to what conditions must be satisfied for video conferencing to replace in-person proceedings. This could include assurances on administering oaths, on guaranteeing a chance for counsel to consult privately with the client, and on guaranteeing that parties would be able to see and speak to each other during all necessary stages of the hearing.
Until now, domestic courts have mainly addressed video-conferencing in cases where perhaps one or two witnesses or one of the parties is unable to attend court in person.
This, however, is different from the current context, where the spread of COVID-19 may mean that everyone will have to be in a different room.
On 26 March 2020, English courts issued a temporary COVID-19 Protocol regarding remote hearings, noting that new legal and practical questions have come up with respect to such hearings, including whether and how they should be public.
Video vs in-person hearings in international arbitration: protecting the client’s interests
As in domestic courts, the international arbitration community, pre-COVID-19, has not particularly welcomed video hearings if the ‘virtual part’ is not limited to some evidence but entails the entire hearing on the merits. Counsel tend to believe that a client can be properly represented only in person, and occasionally are unfamiliar with telematic tools, and may be skeptical as to their reliability.
While concerns regarding the effectiveness of providing representation to clients from a remote setting undoubtedly have a factual basis, the possibility of opting for a full virtual hearing during, and in the months after, the COVID-19 lockdowns must be carefully considered, and trade-offs taken into account.
The parties can jointly agree to postpone a hearing, if scheduled in the near future, but this will have a negative impact in terms of timing, costs, and case preparation, which should not be undervalued – even by those respondents that are not eager for their case to move to an award.
For instance, the parties may have to pay cancellation fees for venue, flights and accommodation for participants; the arbitrators’ schedule may be quite busy and the hearing may have to be rescheduled several months later (even if it were possible to reschedule the hearing in a shorter timeframe, it would be difficult, at this stage, to foresee when and where the lockdowns will be lifted); the legal and experts’ costs may increase, should they need to interrupt and resume the work at a later stage.
In a period of a major crisis like the one we are facing, claimants may wish to move to an outcome as soon as practicable, and respondents may decide that delay will only increase their clients’ costs. Thus, all participants, including the arbitrators, may have strong incentives to consider virtual arbitration hearings.
In order to decide whether to opt for an e-hearing, the parties should first evaluate whether the type of case in which they are involved is compatible with the features of a virtual hearing.
For instance, the organisation of a video hearing in complex construction cases, involving thousands of documents and tens of witnesses and experts, for which a two/three-week slot is reserved, may be very difficult to conduct on an e-hearing platform. Contract disputes with few witnesses and few or no experts would be much more readily manageable remotely.
Second, the parties should consider replacing oral openings and closings with written opening and closing submissions, to be exchanged before and after the hearing. Listening to counsel speak for two to three hours sometimes tries the patience of arbitrators in in-person hearings; seeing a talking head on a laptop screen for that period of time can be mind-numbing.
Third, it is advisable that the parties agree in advance the procedures and technicalities of the hearing, to avoid surprises. For instance, they should regulate what happens in case of technical interruptions affecting one or more parties; whether the video hearing should be recorded and/or transcribed; whether to introduce electronic hearing bundles; how to ensure sequestration of a witness in case that rule applies; whether to provide shorter sessions or more breaks per day, given the necessity to stare at a screen for several hours and the possible different time-zones of all involved; whether to freeze some reserve days, to take into account the possibility of interruptions due to technical issues, and so on.
In particular, a six-hour time-zone difference inevitably means late evenings or early mornings for some participants, which raises fairness issues. An eight-to twelve-hour time difference would make a regular in-person hearing day a virtual impossibility.
Each party should also arrange a separate channel to easily communicate with its client and the other members of team, on the assumption that they cannot physically be in the same place.
Video hearing and due process concerns: an increased risk of abuse?
The need, or will, to hold a full video hearing on the merits due to the COVID-19 emergency may give rise to due process issues, particularly when the arbitral tribunal opts for such a hearing despite the objection of one of the parties (likely the respondent).
A reluctant respondent may indeed be tempted to leverage the denial of an in-person hearing to claim its inability to present its case properly, invoking Article V(i)(b) of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Of course, any such protest should be expressly made during the discussion of a video hearing possibility, which the tribunal will always want to hold with parties.
A party seeking to annul an award on such a ground might argue that it was denied a reasonable opportunity to be heard because, for instance, it is located in a country where IT facilities are less stable and accessible.
Or it might allege that making oral submissions, presenting evidence and cross-examining witnesses by videoconference is not equivalent to the opportunity to interact with the tribunal and the counterparty face-to-face.
A respondent may also invoke unequal treatment, for instance: (a) should it have access to IT tools less reliable and effective than those available to the counterparty; or (b) should it be located in a country where each member of the counsel team and the client’s representative cannot be physically in the same place due to the COVID-19 emergency, thus creating an imbalance between the parties if analogous measures are not taken in the counterparty’s country.
There is also the question whether arbitrators have the power to opt for a full video hearing to protect the integrity of the arbitral process and avoid unnecessary delay or costs, notwithstanding the reluctance of one of the parties.
While a tribunal usually cannot act in defiance of the parties’ procedural agreements (for instance, in case of specific arbitration procedures expressly provided in the arbitration clause), it is commonly understood that arbitrators have a duty to adopt appropriate procedural measures, aimed at assuring a smooth, cost-effective and efficient conduct of the arbitration, leading to an enforceable award.
The ample discretion of the tribunals in making case management decisions is reflected in most arbitral rules (see, for instance, Article 17(1) of the UNCITRAL Rules (2017); Article 22(2) of the ICC Rules (2017); Article 14(1) and (5) of the LCIA Rules (2014); Article 19.1 of the SIAC Rules (2016)).
While the wording may vary, it is generally acknowledged that the tribunal may conduct the arbitration in such a manner as it considers appropriate, provided that each party is given a reasonable opportunity of presenting its case. Some rules go even further, expressly attributing to the arbitrators the power to allow the presentation of evidence by videoconference (AAA Arbitration Rules (2013), R-32(c)), or giving them full authority ‘to establish the conduct of a hearing (including its date, form, content, procedure, time-limits and geographical place)’, and providing that a hearing may take place by video or telephone conference (Article 19.2 of the LCIA Rules (2014).
A limit to the arbitrators’ discretion may be imposed by the law governing the arbitration procedure, to the extent it provides for a right to an oral hearing; however, many national laws do not provide for such a right at all, while in several other cases it can be waived.
In summary, arbitrators have, in most cases, broad authority to prevent any attempt to delay an arbitral proceeding due to the current health issues, and provide for its regular continuation by ordering that the final hearing be held via videoconference. Of course, such decisions cannot be made lightly, but should consider: (i) the arbitration agreement; (ii) the law of the seat; (iii) the circumstances of the case, as discussed above, including the accessibility of all participants to adequate IT tools; and (iv) any guidance and support from the institution, in case of administered arbitrations.
It is by no means an attack of ‘due process paranoia’ for arbitrators to be concerned about the fairness of an entire final hearing held by videoconference.
As long as the COVID-19 lockdowns prevent the regular conduct of arbitral final hearings, participation in non-traditional, virtual hearings must be closely considered, and, if certain conditions are met, implemented, to outweigh the costly disadvantages of postponement.
It is difficult to predict if this will open the way to increasing recourse to virtual arbitration hearings, when lockdowns are relaxed.
While the advantages of an e-hearing in terms of cost and time savings are undeniable, and the sensitivity to climate issues discouraging long and frequent travel has intensified, the fear of losing grip on the procedure and jeopardising a client’s opportunity to put its case (particularly if the client is a party-respondent) may prevail.
Much will depend on how long the emergency will last, and on how many lawyers and arbitrators will have the opportunity to become familiar with a wide-raging use of telematic tools, assuring themselves (sometimes, with surprise) that this is a viable option.
Michela D’Avino (Milan) and Bahaa Ezzelarab (Cairo) are senior associates of the International Arbitration practice at BonelliErede
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