The disruption caused by the COVID-19 pandemic has left companies across the world scrambling to maintain a sense of continuity, as their executives, employees and advisers adjust to life under government-imposed ‘social-distancing’ measures. For many, ‘business as usual’ includes ensuring that commercial disputes are resolved quickly if not more quickly than usual, so that they can remain focussed on their business
The flexible nature of arbitration means that it is well-placed to adjust, not just to short-term disruption, but also to any broader changes in working practice that might arise as people across the world become accustomed to, and comfortable with, remote-working.
This is the first in a series of articles exploring different procedures that parties may adopt in order to allow arbitrations to proceed, both in the short-term, in a world where people cannot travel, and the long-term, in a world where they may choose not to for other reasons. This article considers arbitrations conducted on a ‘documents-only’ basis, and sets out some issues to bear in mind when considering such an approach.
As the name suggests, documents-only arbitrations are those in which tribunals base their determinations entirely on written submissions and documentary evidence, with no opportunity to hear from counsel or take evidence from witnesses at oral hearings.
Such an approach is not a novel concept. Litigation in civil law jurisdictions are commonly conducted primarily on the basis of documents with relatively short oral hearings, and no or limited examination of witnesses, while the rules of a number of arbitration institutions (including the LCIA, ICC, HKIAC, SIAC, SCC, and ICSID) permit proceedings to be conducted on a documents-only basis (although the rules of those institutions require parties’ consent to such an approach, with the exception of Article 22.4 of the HKIAC Rules).
The benefits of such an approach are clear, particularly in the midst of the travel restrictions and social-distancing measures implemented as a result of COVID-19: tribunals and counsel can work remotely with no need to attend hearings, parties can avoid incurring the substantial costs of preparing for and attending interim hearings and trials, and disputes can often be dealt with on a more expedited basis.
Issues to consider
However, when considering whether to adopt a documents-only approach, the following points should be borne in mind:
- A documents-only approach may not always be possible as a matter of law. Counsel and arbitrators should, as a first step, assess the extent to which mandatory provisions of the lex arbitri may prevent an arbitration from being determined on a documents-only basis.
- A documents-only approach will not be suitable for all cases. In our experience, acting both as counsel and sitting on arbitral tribunals, the documents-only approach appears less suitable in cases where (i) determination of the central issues in dispute is likely to be require the assessment of or an adjudication of oral evidence (for example, of competing recollections of conversations alleged to amount to an oral contract), (ii) highly detailed and technical expert evidence is required to ‘educate the tribunal’, and (iii) there is limited contemporaneous written evidence. In such cases, the lack of a hearing at which evidence can be tested, either through cross-examination by counsel or by questioning from the arbitrator, can cause difficulties for tribunals in assessing and giving weight to conflicting evidence.
- Any decision to proceed on a documents-only basis should be made as early as possible, ideally as part of the first procedural order so that parties can prepare their submissions and approach to the proceedings accordingly.
- That said, should developments in the case allow it (for example, if compelling evidence comes to light), it may be possible to switch to a documents-only approach mid-way through the proceedings. In such cases, the benefits of the documents-only approach mean that serious consideration should be given to changing approach.
- Conversely, difficulties may arise where a decision to proceed on a documents-only basis is made at an early stage, only for one party to raise objections should it become apparent that the approach materially favours one party over the other.
- Who should make the decision to proceed on documents-only basis? The arbitral rules of most of the major arbitration institutions require the parties’ consent for an arbitration to be dealt with on a documents-only basis, although in some cases (such as the HKIAC rules) tribunals themselves have discretion to order the approach. There are clear benefits to tribunals in ensuring that any decision to proceed on a documents-only basis is taken with the consent of the parties, as otherwise the tribunal leaves itself open to a potential challenge to the enforceability of its award. However, institutions and parties could do more to empower tribunals to order a documents only procedure, or at least recommend it to the parties.
- Who should propose proceeding on a documents-only basis? Even where a case may be suitable for assessment on a documents-only basis, there may not be sufficient trust between the parties to allow either party to feel comfortable making such a proposal. As such, tribunals should be proactive in taking the lead in identifying suitable cases and making proposals to the parties. Some institutions do encourage tribunals to consider this approach but to date, it is an option that is rarely explored.
It will not appropriate or even possible for all disputes to be determined on an entirely documents-only basis. However, given that remote working is (for now) the “new normal” and as parties become more cognisant of the environmental impact of international travel, the call for documents-only arbitrations may well increase.
This will require a change of attitude on the part of parties and tribunals. Parties will have to become more flexible in their attitudes towards non-traditional arbitrations, whilst tribunals should be more proactive in identifying cases that are suitable for determination on a documents-only basis and more robust in adopting such measures.
Other institutions may now follow the example of the HKIAC, in order to offer more options to parties in the current environment, and amend their rules to give tribunals discretion to decide whether to proceed on a documents-only basis. Doing so could allow for international arbitrations to be dealt with more speedily and at a reduced cost, but for some institutions, it will be quite a cultural shift.
The authors would like to acknowledge the help of Kristyna Muhlfeitova, trainee at CMS London, in preparing this article.