"No further questions?"1
7 Tips for Safe-Distancing Your Arbitral Award from Pandemic Protestations
Introduction: The Virtual Hearing May Not Receive a Warm Embrace
- "No further questions." That's how many cross-examinations end.
- But has COVID-19 brought an end to cross-examination (as we know it)?
- Some would say so. In their view, while arbitrations can largely carry on, arbitral hearings are in jeopardy because of the virus. That's because hearings are (typically) the only part of the arbitration process that brings persons from different organisations into a single physical space at the same time.
- For example, we may be forced to consider (I speak from personal experience) hearings being postponed, e.g. due to client representatives abiding by national or corporate stay home policies, and hearings being relocated, due to original venue providers no longer having adequate on-site manpower to host the hearing.
- We may also have the pleasure of a more drastic measure: the "virtual hearing", that is, a hearing where the participants are spread across more than one physical locations, and at least some of them participate via telephone or video-link.2
- The nitty-gritty of virtual hearings3 are canvassed in guidance such as the Seoul Protocol on Video Conferencing in International Arbitration.
- But what about the steps we take before we even get to the virtual hearing room? And is it (or when is it) defensible for us to step into the virtual hearing room?
- We must anticipate that not everyone will agree to the virtual hearing. For example, parties may (rightly or wrongly) insist on the glories of the familiar in-person hearing, whether in sincere desire for a vision of justice, or a cynical ploy to delay the issuance of an unfavourable award.
- How should an arbitrator, or opposing counsel, respond to resistance against a virtual hearing?
Enforceability is Key
- Enforceability will likely be the primary legal consideration.
- In particular, arbitrators and counsel should consider how the seat Courts and enforcement Courts will look upon the 'virtuality' of the hearing.
- If these Courts are likely to set aside or refuse enforcement of an award on account of the virtual hearing, arbitrators and counsel should seriously consider postponing the hearing, until a physical hearing can be held.
- Local law advice should be sought on this issue.
- That said, one can expect that the Courts which themselves conduct virtual Court hearings, including Courts which have moved towards virtual hearings in light of COVID-19 (e.g. the UK, US, and Singapore Courts), are more likely than other Courts to warm towards arbitral awards that are issued following a virtual hearing.
- There are nonetheless a handful of key considerations, that may be of general application in terms of the enforceability of an award rendered following a virtual hearing.
- Let us consider the following 7 considerations, which are also consolidated into a single list at the end of this article.
I. 'Virtuality': Could the inherent 'virtuality' of a virtual hearing result in the award not being enforced?
- Certain arbitral rules (and by incorporation, arbitration agreements) explicitly cater for the possibility of hearings taking place by video or telephone conference.
- For example, the 2014 LCIA Rules provides that "[t]he Arbitral Tribunal shall have the fullest authority under the Arbitration Agreement to establish the conduct of a hearing, including its date, form, content, procedure, time-limits and geographical place. As to form, a hearing may take place by video or telephone conference or in person (or a combination of all three)…".4
- The 2013 UNCITRAL Rules provide that "[t]he arbitral tribunal may direct that witnesses, including expert witnesses, be examined through means of telecommunication that do not require their physical presence at the hearing (such as videoconference)".5
- These rules expressly empower arbitrators and parties to countenance the possibility of virtual hearings.
- Other arbitral rules do not expressly provide for virtual hearings. While they may not expressly prohibit virtual hearings, parties may seek to argue that they implicitly prohibit virtual hearings.
- For example, in respect of the ICC Rules:
- The general hearings provision (Article 26) does not mention hearings being conducted by video conference or telephone.
- In contrast, the ICC rules on case management conferences, emergency arbitration, and the ICC expedited procedure all expressly provide for conferences and hearings to be conducted "by video conference, telephone or similar means of communication".6
- One can therefore anticipate the argument being made that unlike case management conferences, emergency arbitrator hearings, or expedited procedure hearings, normal ICC arbitrations require physical hearings.
- A similar argument can be made in respect of SIAC arbitrations.
- The general hearings provision (Rule 24) does not mention hearings being conducted by video conference or telephone.
- In contrast, the SIAC emergency arbitration provisions expressly provide for "proceedings by telephone or video conference or on written submissions as alternatives to a hearing in person" (Schedule 1, Article 7).
- One could therefore conceivably argue that in standard SIAC arbitrations, the tribunal must hold a physical hearing if any party so requests.
- Parties may use such arguments to challenge an award, e.g. on the basis that the arbitral procedure deviated from the parties' agreement, and/or that the party was not able to present its case.
- Counsel should therefore pay heed to the particular set of rules they are dealing with.
II. Opportunity to present the case: Would the virtual hearing give each party an equal and proper opportunity?
- The Model Law stipulates that each party shall be treated with equality and given a full opportunity of presenting his case (Article 18). Certain arbitral rules contain similar provisions.7
- Further, an award can be set aside or refused enforcement under the Model Law if a party was unable to present his case.
- It is therefore worth considering the following three questions.
- The first is 'Does making submissions and cross-examining via video or telephone impinge on the right to properly present one's case?'
- There is no doubt that cross-examining via video-link is not the same as doing so in person. However, the issue is not identity across mediums, but the adequacy of the virtual media.
- Sir Vivian Ramsey observed in a 2018 Singapore International Commercial Court decision that there is a "degree of detachment", and a "degree of prejudice" to the cross examiner, when a witness gives evidence via video.
- He also noted that judges and arbitrators still value being able to assess a witness' demeanour in person.
- Therefore, when deciding whether to permit cross-examination via video-link, he took into account how important the relevant witnesses' evidence was.8
- The English Courts have similarly accepted that cross-examination takes on particular importance in cases where there is a "contest of credibility" between witnesses who attended a particular meeting, and held that deficiencies in the cross examination process can result in the award being set aside.9
- Further, video feeds can lag in ways that real-time interactions do not, and this lag time can impede the cut and thrust of cross-examination.
- One recalls Roman Polanksi being accused by the Vanity Fair publishers of using time delays and audio breakdowns to ask counsel to repeat questions and frustrate what they called "the necessary pace and probing of cross-examination which tests for truth".
- On the other hand, the English Courts have long extolled the virtues – and normalcy – of cross-examination via video-link.
- As early as 2005, the House of Lords and Court of Appeal commented that cross examination via video link can take place "as naturally and freely as when a witness is present in a court room".11
- They added that video links are not a "revolutionary departure from the norm", but "simply another tool for securing effective access to justice".12
- The English Courts have also described the ability to give evidence via video link as a mere "incident of a modern fair trial".13
- Therefore, it appears the answer is the first question is not set in stone – and may differ from judge to judge, and turn on the nature of the case, and the importance of the evidence to be given by a particular witness.
- The second question would be 'Is Party A cross-examining via video equivalent to Party B cross-examining in the same physical space as the arbitrators and/or witnesses?' This question is important, given the Model Law requirement of equality of treatment.
- Aside from medium comparison, time zone issues may be raised – e.g., across a four week hearing, would it be fair for Party A's lawyers to be cross-examining at midnight in New York, while Party B's lawyers do so at noon in Singapore?
- The third question (should the answer to the second question be 'No') is 'Should Party B voluntarily (or be asked to) forego making submissions and cross-examining in the usual way, so as to ensure a level playing field and head off complaints of inequality?'
- There may also be the need to address other significant inequalities, e.g. in technology infrastructure. Consideration should be given to the practical arrangements that can be made to alleviate any alleged inequality or deficiency.
III. Consultation with parties: Have the parties been properly consulted on the virtual hearing?
- Various arbitral rules require the tribunal to consult the parties before organising the hearing.14
- Therefore, if a tribunal does not properly and meaningfully consult the parties before changing the format, date, or place of the hearing, and/or does not properly and meaningfully engage with or address the parties' objections to such changes, the tribunal's behaviour may furnish grounds for challenging an award, again on the basis that the arbitral procedure has deviated from parties' agreement, or on the basis that the party was not able to present its case.
- Arbitrators should therefore ensure that before deciding upon any change to the hearing format, date, time, and place, all parties are given adequate opportunity to comment on the proposed changes, and that objections (if any) are properly addressed.
IV. Notice: Have the parties been given proper notice of the virtual hearing?
- The Model Law stipulates that parties shall be given "sufficient advance notice" of any hearing (Article 24(2)). Various arbitral rules contain similar provisions, requiring e.g. "reasonable notice" or "adequate advance notice".16
- Further, an award can be set aside or refused enforcement under the Model Law if a party was not given proper notice of the arbitral proceedings.
- One can therefore foresee arguments being made that (a) notice of a hearing must include notice of the format of the hearing, and that (b) notice previously given of a physical hearing is not adequate notice where the format of the hearing is changed (to a virtual hearing), even if the hearing takes place on the original dates.
- Tribunals and counsel should therefore be prepared to accommodate at least some delay to the hearing, to fulfil all righteousness in terms of notice.
- As to the length of notice to be given, arbitrators and counsel should take into account how long each party reasonably needs to prepare for the change in hearing format and dates.
- Further, given the fluid nature of governmental response to COVID-19 (e.g. the Singapore Government stating that different measures may be used at different times, as "circuit breakers" to the spread of the virus), hearing arrangements may need to be readjusted accordingly, and tribunals may need to ensure that parties are properly consulted upon and given proper notice of each adjustment.
- For example, a tribunal may first direct that all participants based in Singapore shall physically gather in a single hearing room, with other participants based in New York and London attending via video-conference. This is currently possible, where Singapore has not (yet) imposed a strict lockdown.
- However, should Singapore subsequently be placed on strict lockdown, the original arrangement would no longer be possible, and the tribunal should give parties sufficient notice of the revised arrangements.
- Further, the tribunal may also wish to place a reporting obligation on the parties, once it has set in place arrangements for the virtual hearing.
- For example, the tribunal may order that in the event any aspect of the agreed/directed virtual hearing arrangements are no longer suitable, the relevant party should inform the tribunal of the same as soon as possible, and in any event within no more than 7 days of the party first becoming aware of the relevant circumstance, and simultaneously state and briefly explain:-
- Which aspect(s) of the virtual hearing arrangements are now unsuitable;
- The relevant change(s) in circumstance, and how this has resulted in the said aspects becoming unsuitable; and
- Proposals for alternative hearing arrangements.
V. "Fair intimation": Has any party expressly requested postponement of the hearing, or insisted on a physical hearing?
- The Singapore Court of Appeal has recently held that there is a principle of "fair intimation" which applies to allegations of deficiencies in the conduct of arbitral proceedings:
"[I]f a party intends to contend that there has been a fatal failure in the process of the arbitration, then there must be fair intimation to the tribunal that the complaining party intends to take that point at the appropriate time if the tribunal insists on proceeding. This would ordinarily require that the complaining party, at the very least, seek to suspend the proceedings until the breach has been satisfactorily remedied (if indeed the breach is capable of remedy) so that the tribunal and the non-complaining party has the opportunity to consider the position…"17
- Therefore, if a party has concerns with what the tribunal (and/or the other parties) has proposed with respect to a hearing, that party should:-
- Expressly and promptly voice those concerns to the tribunal;
- Identify how or why the proposed procedure may violate the parties' procedural rights; and
- Clearly articulate alternative proposal(s) – e.g. that the hearing should be vacated, that the hearing should be postponed (and if so till when), that procedural directions should be given for consultations or submissions on hearing-related issues.
- Conversely, if none of the parties have raised any concerns with the tribunal's proposals, the tribunal can draw comfort from the 'sound of silence', and be emboldened to press on as planned (while nonetheless taking heed to the other considerations raised above).
VI. 'No show's: Is there sufficient cause for a party not to show up at the virtual hearing?
- Should a tribunal decide to proceed with a virtual hearing over the protestations of a party, it should be prepared for that party to adopt the 'no show' tactic, e.g. simply not show up for the hearing.
- The tribunal will then be confronted with a decision whether to proceed with the hearing. The key question would be whether the 'no showing' party had sufficient cause to do so.
- This is because while the Model Law permits a tribunal to continue proceedings and make an award if any party fails to appear at the hearing, the tribunal cannot do so if that party shows "sufficient cause" (Article 25). Various arbitral rules contain similar provisions.18
- The 'no showing' party's justifications may include the party and/or its witnesses lacking the requisite technology or expertise to take part in the virtual hearing. Issues may range from a lack of hardware or software, poor internet connectivity, lack of technical know how, and a lack of access to or funding for these.
- The tribunal and the other parties should engage seriously with these justifications. Consider the example of an elderly expert witness and the missing video camera:
- In the new normal of the COVID-19 world, one can imagine an elderly expert witness living in Italy who realistically cannot procure a video camera by himself. This may be attributable to a lockdown in his city, which means he cannot leave the house, or cannot leave the house except to buy essential items. We should bear in mind that in various countries, restrictions on movement are more severe for the elderly than for the general population.
- Even if a video camera can be couriered to the expert witness' abode, the expert may struggle (as we all may) to install and operate the camera without someone else's assistance, and that 'someone else' may be illusory, because of COVID-19 rules on safe distancing.
- The social restrictions arising from COVID-19 therefore give added reason for proper consultation between tribunals and parties concerning a possible virtual hearing, and for tribunals to give parties adequate advance notice of the same.
VII. Duty of efficiency: Would insistence on a physical hearing cause undue delay and expense?
- While arbitrators generally have a duty to ensure a fair hearing, they often also have a duty that can tug in a seemingly opposite direction: the duty to conduct proceedings efficiently, expeditiously, and economically.
- Many arbitral rules impose such a duty upon the tribunal, whether framed as a duty to run the arbitration in an "expeditious and cost-effective manner" or a duty to avoid "unnecessary delay and expense".20
- Therefore, if a combination of COVID-19 and participants' calendars mean the next available slot for a physical hearing lies far in the future, a tribunal may be more inclined to switch to a virtual hearing if that means the hearing can take place sooner rather than later.
- No doubt the case for a virtual hearing can be further strengthened by the potential costs savings – no long-haul flights, no hotel stays, no venue bookings. It is hard to imagine that the set-up costs for a virtual hearing would wipe out these costs savings.
'Vaccinations': Immunity against delays
- However, despite the host of measures one can take to "safe-distance" an arbitral award from COVID-19-related grievances, there may still be residual risks to enforceability.
- That being the case, parties may ultimately conduct a cost-benefit analysis and decide to accept a postponed physical hearing (as opposed to an earlier, virtual hearing), particularly where:-
- They expect to be adequately compensated for the delay by an award of interest.
- They do not expect to lose any critical evidence. This may depend on the state of health of the witnesses, as well as the risk (if any) of evidence tampering.
- The arbitrators and counsel are in a state of health that is not expected to compound the delays, or otherwise adversely affect the case.
- There is little or no risk of the dispute being aggravated in the interim, e.g. via dissipation of assets. Of course, how long this 'interim' period will last is currently subject of much conjecture. If there is a real risk of aggravation / dissipation, a party may wish to apply to the tribunal and/or the Courts for suitable interim relief.
- The consequences under any third party funding arrangements are acceptable – bearing in mind that some funding agreements provide for the multiplier for the funder's returns to go up over time.
Conclusion: We need to "work from home" – back to basics, to deliver the highest prize
- COVID-19 has brought us "back to the future" of virtual hearings. Once seen as a fall back option or something for the mooters, virtual hearings may now be the boon and bane of arbitration practitioners, and the subject of considerable debate.
- Cool heads will prevail. While many are eager to hype (or deride) the wonders (or wobbles) of virtual hearings, the arbitrator or counsel who can cut through the noise, and ensure a defensible decision-making process, can reap his ultimate reward – the enforceable award.
- How will we do this? My humble suggestion is to "work from home", i.e. work from our familiar territory of arbitral statutes and rules, and work out what they require of the arbitration process.
- From the Model Law and the rules of leading arbitral centres, I have drawn up (and elaborated upon above) 7 key questions you should ask yourself, when attempting to safe distance your arbitral award from the pandemic:
- What do the arbitral rules say about virtual hearings?
- Would each party have an equal and proper opportunity to present his case?
- Have the parties been properly consulted about the virtual hearing?
- Have the parties been given adequate notice of the virtual hearing?
- Has any party intimated concerns regarding the virtual hearing?
- Would 'no shows' at the virtual hearing be justified?
- How can the arbitration be conducted expeditiously and economically?
- And with that, I (for now) have no further questions.
Andrew Foo – Clifford Chance Asia
Disclaimer: The views expressed in this article are the author’s personal views and do not represent the views of Clifford Chance Asia