Due to the Covid-19 pandemic, the arbitration community was confronted with a sudden and urgent need for change. In terms of digitalization, it quickly had to adapt to what would have been considered unthinkable or at least distant future only weeks prior. An ICC YAF online event, which took place on 7 May 2020, was precisely the right place to discuss the most pressing issues in this regard, namely the specific challenges that virtual arbitration hearings might bring about as well as how to tackle them efficiently and safely.

Panel 1: Pros, cons and legal requirements

In the first panel, moderated by Sebastiano Nessi (Counsel, Schellenberg Wittmer, Geneva), Janice Feigher (Counsel, Norton Rose, Paris) and Eliane Fischer (Principal Associate, Freshfields Bruckhaus Deringer, Vienna) discussed the pros and cons as well as the legal requirements of virtual hearings.

In terms of the arguments militating against virtual hearings, it was underscored that the complexity of certain arbitration disputes could make virtual hearings potentially unsuitable and raise issues of due process. The panelists (and some of the participants) also voiced concerns about possible problems of security and confidentiality associated with virtual hearings, and the fact that no online platform could guarantee an absolute protection against any external intrusion. Problems with internet connections (slowdowns or complete shutdown) were also seen as a potential threat to the right of each party to present its case fully. It was also emphasized that the time differences between the place where the parties, the counsel (and possible co-counsel), the witnesses, the translators and the arbitral tribunal are located could also make it practically impossible to hold virtual hearings and could trigger issues of due process. Finally, it was underscored that in any hearing, one would need the ‘human touch’ for the truth to emerge, such as the possibility to maintain direct eye-contact with the witnesses during cross-examination, which would be impossible in virtual hearings.

On the pro side, it was explained that virtual hearings have the benefit of speed and efficiency. Furthermore, the speakers explained that many of the perceived disadvantages of virtual hearings could be resolved if the parties and the tribunal decide to tackle properly potential issues beforehand. As to the equality of arms and due process, they would not be violated if all the parties are attending online. The panelists also insisted on the fact that the right to be heard in person did not mean ‘physically’. Finally, one of the panelists explained that virtual hearings had the advantage of saving costs and were, in some instances, more environmentally friendly than in-person hearings.

Turning to the arbitral tribunal’s perspective on virtual hearings, it was emphasized that under the ICC Rules and most lex arbitri, arbitrators are vested with the power to decide on how proceedings should be conducted. It was nevertheless agreed that the arbitrators’ power should be carefully exercised. It was recalled that the ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic (‘ICC COVID-19 Note’)1 provides that arbitral tribunals can decide to proceed with a virtual hearing despite the objection of one of the parties. However, the panelists agreed that arbitral tribunals should carefully consider the relevant circumstances of each case, assess any issue of enforceability, and provide reasons for their determination. The panelists also agreed that, to date, there appears to be no case law where an award would have been set aside or denied recognition and enforcement on the mere basis that the hearing would have been held virtually.

Panel 2: Procedural order

Johanna Büstgens (Senior Associate, Hanefeld, Hamburg) and Leon Kopecký (Partner, Schönherr, Vienna), in a panel moderated by Roland Kläger (Partner, Haver & Mailänder, Stuttgart), addressed the question of how a good procedural order may serve as a solid basis for the organization of virtual hearings in arbitration proceedings. Their presentation started with an outline of instructive legal resources that are increasingly made available by arbitral institutions and others such as e.g. the ICC COVID-19 Note.2 These resources contain many ideas and model procedures which may be very helpful in the preparation of virtual hearings, and provide guidance as to what may or should be regulated by way of a procedural order.

The presentation continued with a discussion on a number of critical points and questions to be considered: First, what is the right level of detail for a procedural order preparing a virtual hearing? This was said to depend on a variety of factors such as the parties’ experience, the cooperative or hostile atmosphere of the proceedings, and the tribunal’s approach to handling organizational aspects of the proceedings. Second, what are the core elements that a procedural order should govern? The panelists highlighted that the procedural order should record the parties’ agreement to hold a virtual hearing, or (in case the parties do not agree) the reasons for the tribunal’s decision to hold the hearing virtually. The order should also regulate basic technical questions such as the videoconferencing platform to be used, the basic technical requirements for using it, the persons allowed to attend the virtual hearing, and issues concerning the protection of confidentiality and cyber security. It was further emphasized that the order should stipulate the rules on the conduct of witness interviews, the display of exhibits, and the use of interpreters and court reporters in the particular virtual setting. Third, what happens if technical problems emerge during the virtual hearing? The panelists suggested including trouble-shooting measures into the procedural order in order to anticipate . what happens if a participant is disconnected or if another failure of the videoconferencing system occurs which cannot be resolved within a short period of time, for instance. In order to avoid technical problems from the outset, it was advised to hold a testing session in advance of the virtual hearing and/or to designate a technical assistant that would help the participants ahead of and during the hearing.

In a lively Q&A session that followed the presentation part, panelists and participants shared practical considerations and their experiences with the organization and conduct of virtual hearings. In this discussion, the role of hearing centers and the organizational support provided by arbitral institutions and other independent bodies was considered as a factor that could considerably facilitate the preparation of virtual hearings and increase their acceptability to parties and arbitral tribunals.

Panel 3: Witness and expert interviews

In the third panel of the evening, Anya Marinkovich (Senior Associate, Bär & Karrer, Geneva) and Joseph Schwartz (Partner, Wagner Arbitration, Berlin) under the moderation of Emmanuel E. Kaufman (Partner, KNOETZL, Vienna) discussed the technical aspects and challenges of witness and expert examination during virtual hearings as well as the existing procedural rules and issues that might be relevant in this regard. Following the panel, the participants were invited to open virtual roundtables to analyse the previously debated issues in even further detail.

The discussions that followed revolved around three main aspects: First, how to ensure that the witness or expert is not unduly influenced or assisted during the testimony – a crucial point for most practitioners. Similarly, many expressed concern for the loss of atmosphere, since certain levels of interhuman perception simply cannot be transferred by video cameras, no matter how good the camera. In addition, practices such as hot tubbing or expert conferencing may be difficult to arrange, and counsel may not feel comfortable conducting these in a virtual setting.

Second, discussions revolved around how confidentiality of arbitral proceedings can be safeguarded in virtual hearings. Contrary to in-person hearings where the participants are in the same room, recording and sharing virtual hearings is rather simple from a technical point of view. The consensus between participants was rather clear on this issue: In a world based on virtual arbitration proceedings – which we are not (yet) facing – trust between all participants in the arbitration will be of the highest importance.

Third, the discussions touched upon the enforceability of awards that are rendered on the basis of a virtual hearing – an issue of critical importance, since ensuring the enforceability of the arbitral award is in the interest of arbitrators, counsel and parties alike. The audience agreed that the most problematic situation occurs where either one or both parties do not agree on conducting the hearing virtually, but the arbitrators nevertheless order a virtual hearing. At the moment, in this situation, both counsel and arbitrators are left with a lot of uncertainty. Explicit rules are currently lacking, with the Arbitration Rules of the Finland Chamber of Commerce and the IBA Rules on the Taking of Evidence in International Arbitration being singular exceptions.

So far, there seem to be very few cases of this kind, and the participants did not report challenges in this regard. However, we are only at the beginning, and we have seen how fast times can change. Thus, this seems to be a time to be alert and cautious, while at the same time being open to change all at once. Only time will tell what the right balance will be.


1
https://iccwbo.org/publication/icc-guidance-note-on-possible-measures-aimed-at-mitigating-the-effects-of-the-covid-19-pandemic-french-version/.

2
Other resources include e.g. the AAA-ICDR Virtual Hearing Guide for Arbitrators and Parties; the AAA-ICDR Model Order and Procedures for a Virtual Hearing via Videoconference; the DELOS Checklist on Holding Arbitration and Mediation Hearings in times of Covid-19; the Seoul Protocol on Video Conferencing in International Arbitration; the CIArb Guidance Note on Remote Dispute Resolution Proceedings; the Draft Zoom Hearing Procedural Order by Stephanie Cohen (TDM, April 2020); and the Draft Procedural Order to Govern Virtual Arbitration Proceedings by Richard Ziegler (TDM, April 2020).