Arbitration: a solution to COVID-19 delays in court systems

UPDATE: 17 April 2020

This article provides an overview of the status of court systems around the world during the pandemic, before outlining some of the features of arbitration that make it a potential solution for court users seeking swift access to justice over the coming months. The final section of the article contains our practical tips for remote hearings, which have become the new normal for both court and arbitral hearings during the pandemic.

Status of court systems

As COVID-19 strengthens its hold over the world for at least several months, many litigants will be anxious to hear whether their court cases will go ahead in spite of the virus. Although the answer to that question will vary between jurisdictions, the outlook is not positive:

• Across Europe, courts have closed their doors: civil courts in Italy
  and Ireland (to name but two) have shut down, whilst in France the
  courts are closed for all but “essential litigation”. The Dutch
  courts have announced that more hearings will be carried out remotely
  in the coming weeks, although it is likely that urgent matters will
  continue to take priority. The European Court of Justice has also
  adjourned all hearings until after 30 April 2020 (although that
  suspension looks likely to be extended).

• In England and Wales, the latest message from the Lord Chief Justice
  (available here) indicates that the Courts will, wherever possible,
  look to adapt to provide telephone and video hearings, but that “it
  may be difficult to maintain trials and final hearings in the short
  term, not least because of the inability of people to participate at
  all.” The prevailing view is that, in practice, many large trials
  (particularly where there is contested evidence) may need to be
  adjourned. Find out more about UK Court hearings during the COVID-19 lockdown in England and Wales.

• In Asia and the Middle East, the courts are operating under similar
  limitations: the Hong Kong courts are open only for urgent business,
  whilst the Dubai courts have adjourned some on-shore hearings, with
  all other hearings taking place remotely. In Singapore, the courts
  were operating broadly as normal but from 7 April are only hearing
  urgent and essential matters through either video or teleconferencing
  as part of the broader lockdown introduced in Singapore. At the
  moment the lockdown in Singapore is envisaged to be lifted on 4 May
  2020.

With no clear end to the pandemic in sight, these suspensions and closures will likely need to be in place for many months to come, with the backlog likely to continue for many more months if not years. Many parties already in court and parties with court litigation about to start will not be content simply to wait for normal service to resume, and may be considering whether there is any other route by which they might pursue justice in a timely manner.

Arbitration: a solution to court delays

Arbitration represents a practical alternative to the various difficulties and delays that will likely be experienced in court litigation, both during the pandemic and afterwards as the backlog in cases causes its own delays:

• International arbitration frequently involves parties and arbitrators
  based in different jurisdictions. Arbitrators and arbitral
  institutions are therefore well-used to holding hearings remotely
  (either by video-link or teleconference) and have provided guidance,
  frameworks and protocols by which parties may agree to do so (see for
  example the Seoul Protocol on Video Conferencing as well as recent
  guidance from the Chartered Institute of Arbitrators). International
  arbitration had already been attempting to eliminate the need for
  travel and in person meetings as greener ways of resolving disputes
  (see the Green Pledge).

• Arbitration rules provide the flexibility for proceedings to be
  conducted in almost any manner (and according to any timetable):

  • That adaptability can prove especially useful in times of crisis –
    e.g. if different arrangements for a hearing need to be made at short
    notice. During the volcanic eruptions in Iceland in 2010, which
    prevented air travel, an arbitral hearing was heard on a bus that
    travelled internationally from city to city, collecting and returning
    witnesses based across Europe.

  • Arbitral institutions have signalled their expectation that parties
    will wherever possible use the flexibility provided by arbitration
    rules to mitigate any delays caused by the pandemic (while ensuring
    the fairness and efficiency of the proceedings). In a recent joint
    communication from various arbitral institutions (including the LCIA,
    ICC, SCC and others), parties and arbitrators have been invited “to
    use the full extent of [the institutions’] respective institutional
    rules and any case management techniques that may permit arbitrations
    to substantially progress without undue delay” despite any
    impediments caused by the pandemic.

  • Some Court rules (e.g. those of the Hong Kong courts) require
    physical copies of documents to be filed at Court. Such requirements
    are proving especially burdensome during the pandemic, and (as
    outlined above) many court registries are having to close or put
    temporary measures in place to ensure that deadlines do not lapse. By
    contrast, filing and service by email is well-established in
    arbitration and some arbitral institutions (e.g. the Stockholm
    Chamber of Commerce) are also developing online platforms through
    which documents can be filed. Note, however, that care should be
    taken to ensure that any notice provisions in the relevant contract
    are also complied with (even where these are more onerous than those
    provided for in the relevant arbitration rules).

  • Applications for interim relief in arbitration hearings are
    frequently heard and decided on the papers or by telephone/video
    hearing. Likewise, procedural conferences for arbitrations are
    usually held by telephone. The flexibility that this allows should
    allow arbitrations to proceed as normal, notwithstanding the
    pandemic.

  • Arbitration proceedings are generally conducted more rapidly than
    court proceedings; international statistics show that an average
    arbitration takes 12 to 18 months from start to finish, while most
    court proceedings take at least 18 months (with the prospect with
    multiple appeals extending that timeline even further). As set out
    above, given that the delays introduced by the pandemic are likely to
    extend these timelines even further, parties looking for swift access
    to justice may be better suited by opting for arbitration.

• The scope of an arbitration can also be defined as narrowly or as
  broadly as the parties require. For example, parties may decide to
  submit discrete matters for resolution by arbitration, such as the
  filling of a gap in a contract or the modification of the legal
  relationship between the parties. This is a useful tool at any time,
  but it may be particularly valuable in these unprecedented times when
  parties face challenges they had not fully anticipated at the time
  their contracts were negotiated. It can also be used to make an
  arbitration as lean (and as cost efficient) as they would like to.

• The recent virtual hearing of National Bank of Kazakhstan v Bank of
  New York Mellon & Ors in the English High Court was livestreamed on
  YouTube, enabling viewers around the world to follow the hearing and
  obtain potentially sensitive information. Such measures are likely to
  become commonplace in many jurisdictions, as courts are usually
  obliged to ensure public access to hearings. By contrast,
  arbitrations are normally subject to confidentiality restrictions and
  will therefore not be livestreamed or otherwise open to the public
  (with the limited exception of some investment arbitrations).

Where parties are not subject to an existing arbitration agreement (e.g. in court proceedings) the agreement of the parties to the dispute is required in order to transfer the dispute from court to arbitration. In these uncertain times, we are increasingly seeing parties choosing to arbitrate where they would otherwise proceed to litigation, particularly in light of the benefits set out above. That trend looks set to continue as the COVID-19 pandemic develops.

Practical tips for remote hearings during the pandemic

The dispute resolution team at Simmons has already undertaken a number of remote hearings over the past few weeks. We are also in the process of planning how we will facilitate the remote hearing of an upcoming 5-week trial. We share below some of our key practical tips for remote hearings.

• Video conferencing software: Choosing the right video conferencing
  software is key. Think about the functionality you need and find
  software to match. We have found Zoom to be especially effective
  because it has important features such as virtual break-out rooms so
  parties can confer privately where required. During a substantive
  hearing, Zoom settings permit the creation of “active” and “passive”
  participants (the latter being anyone merely observing the
  proceedings and the former being the advocates and tribunal members).
  Presentations (e.g. via PowerPoint) can also be operated via Zoom.

• Privacy: Maintaining the confidentiality of arbitrations is, of
  course, of tantamount importance. Users of video-conferencing
  software should assess the security, encryption and privacy settings
  of their chosen platform in detail well in advance of any hearing.

• Dealing with technical issues: To ensure that a recent hearing ran
  smoothly, we conducted training and testing with all participants and
  ran a test hearing with 17 participants to check that the software
  worked. Although this is time intensive, it is a critical part of
  preparation for a remote hearing. This identified, for example, that
  individual broadband connections can be a problem requiring prior
  resolution. We also recommend having nominated “hosts” – one
  representative for each party to maintain balance – to monitor the
  hearing, deal with technical queries, monitor the participant list,
  flag if difficulties arise and so on.

• Third party services: We have found that service providers are more
  than willing to work with us to find remote solutions. We have, for
  example, been liaising with Opus 2 who are able to provide remote
  access to live transcription (and/or live recordings, if preferred),
  e-bundles and electronically presented evidence. We recommend
  engaging with third parties as early as possible and, again, leaving
  time to test connections in advance of your hearing.

• Hardware: Serious consideration must be given to the physical
  environment of each participant, e.g. number of screens, video and
  audio equipment etc. The stability of each participant’s internet
  connection is also one of the most important considerations. We have
  turned to our firm’s IT team, and to service providers like Opus 2,
  to assist with hardware provision and internet connection testing.

• Witnesses: Where witnesses are giving evidence via video link, ensure
  that the specific arrangements are agreed with the other side as far
  in advance as possible. Considerations can include (i) the hearing
  venue, (ii) whether anyone will be in the room with the witness (and
  if so, who), (iii) how the witness will access/view documents (i.e.
  electronically or in a hard copy bundle) and (iv) whether any extra
  technology (e.g. screens/audio equipment) will be required.

• Simultaneous translation: Where witnesses are giving evidence in a
  foreign language and simultaneous translation is therefore required,
  consider and account for how the translator will participate in the
  hearing. In particular, parties should allow extra time in the
  hearing timetable to account for any interruptions/delays caused by
  remote translation.

• Time zones: For hearings where parties are based in multiple
  jurisdictions, consider whether the hearing timetable needs to be
  altered to accommodate witnesses, tribunal members, transcribers, and
  lawyers. If there is not much overlap between time-zones, it may be
  necessary to hold the hearing for shorter sittings but spread over a
  longer period of days.

• Hearing centres: Consider whether to use a hearing centre, such as
  the International Dispute Resolution Centre (IDRC), to host the
  remote hearing. The IDRC can provide a virtual hearing manager to
  deal with any technological hitches, and has also recently stated
  that it anticipates the use of semi virtual hearings when the
  lockdown restrictions are loosened, which will involve arbitrators
  and counsel (as the core participants) in a physical hearing room at
  the IDRC, whilst the parties (and witnesses) join by video link.

• Advocacy: Consider how advocacy needs to be changed, for example it
  may make sense for only one member of the counsel team to speak per
  session and counsel should consider how to modify their speaking
  voice and delivery given the different style required over a video
  conference.

• Intra-team communication: For hearings held by telephone or video
  conference agree in advance how you will communicate with other
  members of the team and the client during the hearing (e.g. by text
  or email). It may also be appropriate to set up WhatsApp groups (e.g.
  one for the counsel team, one for counsel and client).

See our Coronavirus (COVID-19) feature for more information generally on the possible legal implications of COVID-19.