The (Astonishingly) Rapid Turn to Remote Hearings in Commercial Arbitration.

• Author: Karton, Joshua
• Position: Special Issue: COVID-19 and the Law

Introduction I. Remote Arbitration Hearings in 2020: The Legalities and the Practicalities II. Remote Hearings as the Present and Future of Commercial Arbitration III. Beyond Commercial Arbitration Introduction

If any phrase has become overused during the COVID-19 pandemic, it's "the new normal". Yet I cannot help returning to this tiresome cliche. Note the lack of the customary question mark; I do not posit that remote hearings may become the new normal in commercial arbitration, but rather assert that they already are} The change has been fast, largely smooth, and--I argue--permanent. It will have lasting effects for commercial arbitration and for dispute resolution more generally.

This article considers the impact of the COVID-19 pandemic on commercial arbitration. As in so many areas, the pandemic has accelerated pre-existing trends: remote arbitration hearings pre-date COVID-19, and parts of arbitral proceedings (such as case management conferences) have routinely been conducted remotely for more than a decade. Nevertheless, the pandemic marks a clear turning point. There have been other impacts of the pandemic on commercial arbitration, but the field's rapid shift to nearly ubiquitous remote hearings is the most notable and pervasive, and the most likely to endure. As a recent blog post put it, 2020 was "the year of virtual hearings". (2)

The speed of the shift is in some ways unsurprising. For many commercial disputes, delays are so costly that, although at first most people expected the lockdowns to pass within a few weeks, waiting for in-person hearings to restart was not a viable option. Moreover, the participants (business lawyers and their clients) have the means to purchase the necessary hardware, software license, enterprise licenses for videoconference software, headsets, ring lights, and other hardware for their staff, and bear other necessary costs. For at least a decade, some case management conferences, minor procedural meetings, and tribunal deliberations have been held at least partly by teleconference or videoconference, so there was a broad familiarity with the technology at a basic level. An underrated factor may also be that many practitioners participated as arbitrators in the Willem C Vis International Commercial Arbitration Moot and the Vis East companion moot, which were held remotely in late March and early April 2020, respectively. (3) In short, the commercial arbitration community had the motivation, the capacity, and the willingness to "go remote".

Even given this context, the speed and pervasiveness of the shift to remote hearings has been spectacular. According to a survey that ran from June 10 to July 20, 2020, more than three times more fully remote hearings were held or scheduled in the second quarter of 2020 than in the whole time before March 15, 2020. (4) On an annualized basis, fully remote hearings were eleven times more numerous after March 15 than ever before. In forty per cent of the cases where fully remote hearings were held, the hearing date was not postponed, and the scheduled hearing was simply converted from in-person to remote. (5) The Seoul International Dispute Resolution Centre reported in May 2020 that the number of hearings it administered that involved remote hearing services had grown five hundred per cent compared with 2019. (6) In Canada, Arbitration Place, a Toronto-based hearing venue and service provider, reports that the hearings it hosts went from over ninety-five per cent in-person before the pandemic to over ninety-five per cent semi- or fully remote by early 2021. (7)

Arbitration Place exemplifies the rapidity of commercial arbitration's turn to remote hearings. It came out with an advertising blitz in March 2020, just two days after the first lockdowns were announced, saying, essentially, that "business as usual" could be restored through remote videoconferencing technology and its services. (8) That publicity, along with an intensive investment in personnel and equipment for what is now called Arbitration Place Virtual (APV), has paid off for the company. Its caseload has skyrocketed, hosting not only remote arbitration hearings but also court and regulatory proceedings in Canada and abroad.

At the same time, there were good reasons to believe that the commercial arbitration community would hesitate to embrace remote hearings. Arbitration harbours a particular concern for procedural fairness, defined largely in terms of equality of arms. This is partly a matter of necessity, as arbitral awards may be annulled or refused enforcement if the losing party did not have an adequate opportunity to make its case. (9) But ensuring parity between the parties in the implementation of their chosen procedure is a preoccupation of the field bordering on obsession. "Due process paranoia" is alleged to be prevalent, especially in international arbitrations, where recalcitrant parties who do not want to pay an adverse award are notorious for latching onto any opportunity to seek annulment or non-enforcement of the award. (10)

Accordingly, arbitrators may desire to order remote hearings, but will hesitate to do so if one party objects. Hearings are optional in arbitration, but most arbitral rules of procedure provide that if either party requests a hearing, the tribunal must hold one. Most such rules do not specify whether that hearing has to be in-person. The issue rarely arose before the COVID-19 pandemic, since it would not have occurred to most arbitrators to try to impose a remote hearing on an objecting party. As of April 2020, it was an entirely open question whether tribunals have the power to order remote hearings.

1. Remote Arbitration Hearings in 2020: The Legalities and the Practicalities

   Only a year later, this question is largely settled. Parties, arbitral institutions, and even courts have collaborated to ensure the viability of remote hearings and the enforceability of awards arising from them. Most parties accept remote hearings as a matter of course. Rules of procedure have been amended to provide for remote hearings, including expressly empowering tribunals to order that proceedings be held remotely. Courts in several jurisdictions have enforced arbitral awards issued following remote hearings, or have signalled their willingness to do so by ordering remote hearings in court proceedings over the objections of one party.

   A telling example is that of the International Chamber of Commerce (ICC), which recently amended its Arbitration Rules (the "Rules"). (11) Under the version of the Rules in place when lockdowns began, Article 25(2) provided that the tribunal "shall hear the parties together in person if any of them so requests". (12) This could reasonably be read to mean that parties arbitrating under the ICC Rules had a right to request an in-person hearing, and consequently that ICC tribunals could not order remote hearings over the objections of a party. The Rules thus posed serious risks: for arbitrations in progress, they gave parties seeking to delay or derail the proceedings a powerful weapon, and for cases where tribunals had already issued awards following a remote hearing, they threatened the enforceability of those awards.

   The ICC took immediate action. On April 9, 2020, it issued a "Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic". (13) The Guidance Note deals with several matters relating to pandemic adaptation, but takes particular aim at this potential hindrance to remote hearings. It states that Article 25(2) should be "construed as referring to the parties having an opportunity for a live, adversarial exchange and not to preclude a hearing taking place 'in person' by virtual means if the circumstances so warrant". (14) The Guidance Note concludes that a tribunal may order remote hearings over the objections of a party "as it exercises its authority to establish procedures suitable to the particular circumstances of each arbitration and fulfills its overriding duty to conduct the arbitration in an expeditious and cost-effective...