This is the second in a series of articles exploring non-traditional approaches that parties and tribunals 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 (the first article can be found here.) This article discusses the use of ‘virtual hearings’ and considers why parties seem to have instinctively turned to them as a replacement for face-to-face hearings.
Readers will no doubt have seen many articles discussing the use of virtual hearings (i.e. hearings conducted using video-conferencing, in which no arbitrator, advocate, party or witness is in the same room), with the various available technological solutions being considered and best practice being shared. The surge in interest in such topics has, of course, been sparked by restrictions on travel imposed in countries around the world, which have made it impractical or impossible to hold traditional, ‘in person’ hearings. But why have virtual hearings so quickly come to be seen as the natural replacement for the ‘in person’ hearings?
More of the same (by a different name)?
Partly the use of virtual hearings is born out of necessity. For example, in cases where an ‘in-person’ hearing or trial had been imminent at the time coronavirus-related restrictions were imposed, the case will have been prepared on the expectation that a hearing would take place. It will, therefore, often be more cost- and time-effective for the hearing to go ahead as a virtual hearing, rather than for the hearing to be delayed or cancelled. However, whilst cost and time efficiency should rightly have a material influence on the conduct of proceedings, there is no consistent picture. Hearings are also being adjourned to a later date, typically at the request of a party who claims it is simply not possible to conduct the hearing ‘virtually’. However, the assumption that the shift should be from ‘in-person’ hearings to ‘virtual’ hearings (or an adjournment of the hearing entirely) may also be a reflection of the influence that common law traditions have had on arbitral procedures.
Arbitral procedures can, of course, be whatever the parties choose. However, for the most part, arbitrations tend to follow the procedures provided for by the rules of major institutions and, to a significant extent, established practice, which often combine elements drawn from common law and civil law traditions. But this means that parties in international arbitration often expect a process which permits oral testimony (both fact and expert) and an “evidentiary hearing” at which counsel address their arguments to the tribunal - face to face.
Thus, although parties are sometimes required to submit key documentary evidence together with their written submissions, the rules of most of the main institutions provide for factual evidence to be provided by witnesses, who may then be cross-examined. This largely reflects the processes set out in the IBA Rules on Taking of Evidence (which provide for witnesses to appear and be cross-examined at hearings). The Foreword to the IBA Rules suggests that “The IBA Rules of Evidence reflect procedures in use in many different legal systems, and they may be particularly useful when the parties come from different legal cultures”, and it is often said that the IBA Rules are intended to bridge the common/civil law gap. In reality, however, the hand of the common lawyers can easily be detected.
As a result of this common law influence, final hearings in arbitration often take on crucial importance, allowing the parties to cross-examine the other side’s witnesses in order to challenge their evidence (and tribunals to observe witnesses to assess their credibility) and offering tribunals their primary opportunity to engage with and challenge the more complex aspects of the parties’ respective cases. In moving directly from ‘in person’ hearings to substantive virtual hearings, some parties are looking to replicate the face to face processes to which they have become accustomed. But is this a missed opportunity?
Virtu(al) or vice?
Given the above, it is perhaps unsurprising that, rather than reducing the number of hearings or disposing with them altogether, many parties and tribunals are proceeding with the same hearings as before, but are simply taking them online.
The key benefit of virtual hearings is that they, of course, reduce or eliminate the need for travel, a factor that is important not just in the context of the potentially short-term COVID-19 travel restrictions, but also more generally for the purpose of decreasing the environmental impact of arbitrations. This means that, in addition to some cost savings, tribunals and parties can theoretically be more flexible as to when hearings take place: for example, hearings can be broken into separate parts much more easily when there is no need for arbitrators and counsel to converge in a single location.
However, beyond the above, what other inherent benefits do virtual hearings have? As their use does not result in the removal of any procedural steps, the costs savings they offer are relatively modest (relating predominantly to travel and accommodation costs, which can be significant, but tend not to be the most substantive costs incurred during arbitral proceedings). Further, although the development of video-conferencing technology means that significant signal lags and other technical issues should be things of the past, few would argue that virtual hearings can yet truly replicate the interaction between tribunals and counsel that ‘in-person’ hearings offer. Moreover, cross-examination via video-link has long been unpopular among many advocates.
Should virtual hearings become the new standard model?
Virtual hearings clearly have their place and, where they can provide an effective replacement for ‘in-person’ hearings, it is difficult to argue against their use going forward. However, their current appeal appears to lie in allowing parties and tribunals to continue doing what they have always done.
By simply replacing ‘in-person’ hearings with virtual hearings, are parties missing an opportunity to adopt more nuanced approaches more suitable to their individual cases? For example, why should oral evidence (often provided at a hearing that may take place a number of years after the relevant events took place) be such an important stage of proceedings in an age where few commercial agreements are entered into without there being an extensive electronic paper trial and in light of psychological research demonstrating the unreliability of human memory. (On the reliability of witness evidence, see the comments of Mr Justice Leggatt in Gestmin SGPS SA v Credit Suisse UK Ltd & anor  EWHC 3560 (Comm) and the Report of the ICC Commission on Arbitration and ADR Task Force on “Maximizing the Probative Value of Witness Evidence”). Similarly, is there a need for parties to incur the costs of preparing several rounds of written submissions and an oral hearing (where perhaps one or the other may be sufficient)? Alternatively, should cases proceed in phases, seeking to narrow the issues where possible, such that the need for an extensive evidentiary hearing is reduced, but allowing for more time to be spent on a virtual hearing dealing only with the issues critical to the case?
The disruption caused by the COVID-19 pandemic offers parties, practitioners and arbitrators an unprecedented opportunity to take advantage of the real flexibility offered by arbitration by adopting more innovative approaches tailored to deal with particular needs of each case. However, the risk is that the wholesale introduction of virtual hearings could lull parties and tribunals into thinking that they have been innovative enough in moving to a virtual environment.
There is some cause for optimism. On 9 April 2020, the ICC International Court of Arbitration issued its “Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic”, which reminds parties, practitioners and tribunals that delays (whether caused by COVID-19 or otherwise) can be mitigated by “thoughtful use of case management tools that are either already available… or by the additional steps the [ICC Court] is taking to streamline its internal processes.”
Ultimately, however, it is up to parties, practitioners and tribunals to take advantage of the tools available to them, rather than try to do what they have always done.