Adapt or die: can an already “agile” arbitration service survive the pandemic?

It is now trite to state that the business world is having to overcome significant challenges as a consequence of the Covid-19 pandemic. Equally, that the dispute resolution world has had to adapt to a “new normal” in terms of the management of disputes is also yesterday’s news.

For many dispute resolution practitioners, arbitration has often been considered as a more agile process when compared to litigation, and the reaction of arbitral institutions to the disruption caused by the pandemic has been further evidence of this. However, as the economic impact of the lockdown starts to bite, parties looking to achieve cost and time efficiency in the conduct and management of commercial disputes may now look to a number of “off-the-shelf” alternatives to the traditional arbitration process. For practitioners, it will be interesting to see whether the emergence of alternative, more digitised and remote arbitration services will create a new landscape for arbitration and challenge the perceived dominance of traditional institutions.

Arbitral institutions adapting to the challenges

The international arbitration community was perhaps one of the best placed for adapting to the new way of working, having already embraced the use of technology to support remote hearings and flexibility of working across multiple borders and time zones. Long before the pandemic, remote meetings between parties and counsel were common, and case administration was dealt with by key documents being filed and exchanged via email or institutions’ online platforms. Even administrative hearings were completed remotely and, in circumstances where it was difficult for parties to attend substantive hearings in person, it was not unusual for “live” evidence to be given via video conferencing.

Nevertheless, global institutions have still had to move quickly to adapt to the challenges brought about by the pandemic. In April, many of the key institutions (CRCICA, DIS, ICC, AAA, ICSID, KCAB, LCIA, Milan Chamber of Arbitration, HKIAC, SCC, SIAC, VIAC and the IFCAI) released a joint statement demonstrating the willingness of the international arbitration community to collaborate. It stated that “co-operation and collaboration is at the centre of an effective response to Covid-19. Our respective institutions are committed to working together at this time for this purpose”. Rather than seek to delay or cancel their services in the wake of the pandemic, arbitral institutions have echoed the response of the majority of national courts and have sought to provide a “business as usual” service as far as possible, whilst ensuring the integrity and fairness of proceedings.

This “business as usual” approach appears to be working on the ground. The majority of arbitral institutions have closed their offices, with some maintaining a skeleton staff for the receipt of documents. However, case administration has been moved online where it was not already, key documents filed via bespoke portals, with only a handful of institutions still accepting hard copy documents and bundles in limited circumstances.  In-person hearings are being rescheduled, or are being conducted remotely via an array of commercial or bespoke video conferencing platforms. Reports from those who have used this technology have found it to work and the overall arbitration experience to be, on the whole, successful, asking why – in an attempt to cut down on international travel not only in light of the pandemic but also environmental factors – this could not be the new norm.

The rise of the “off the shelf” arbitration package

 Furthermore, parties may opt to use the various institutions’ expedited arbitration offerings at this time. This might be the case if their dispute is of a less complex nature, or if there is consensus between the parties to resolve a dispute quickly and without the need for long and costly proceedings. Many of the arbitral institutions offer expedited services to support the fast-pace of commercial demand; the ICC’s simplified procedure means that a final award is rendered within six months of the case management conference. The SCC offers a similar service, the shorter deadlines meaning that the process is swift. The LCIA also offers its Emergency Arbitrator procedure on a case-by-case basis.

However, although the traditional institutions have shown they can adapt to changing times by providing more business-friendly services, their dominance is being challenged by the emergence of alternative “off the shelf” schemes.

On 26th May, the London Chamber of Commerce launched the London Chamber of Arbitration and Mediation (LCAM) offering arbitration, expedited arbitration and mediation services. Promising “rapid and secure case management delivery, whilst a fixed-fee and cost-effective structure provides certainty to businesses regarding dispute resolution”. Ideally suited to low to medium value disputes, and adopting a process that is document-only, the process seeks to offer certainty and cost-efficiency (potentially not requiring parties to have any legal representation to use it).

The concept of an expedited arbitration process is not a new one but its utility has come into sharp focus in the current climate, and from various sources. For example, Serle Court are promoting their own online arbitration platform whereby disputing parties are able to submit written cases, in “memorial” style, to a mutually-agreed sole arbitrator with a binding decision published within 80 days. The arbitrator’s fees are fixed depending on the value of the dispute, and the standard process (which can be adapted to suit the parties’ needs) requires no live evidence, nor document production, but does provide for a hearing that may be conducted by way of video.

The take up of these and other new schemes is likely to be slow, initially at least, as many contracts contain more “traditional” arbitration clauses, and parties may be reluctant to agree an alternative process (particularly where it is in the interests of a party to slow the process down). Furthermore, the perceived benefits of these “streamlined” services (no “live” evidence, limited – if any – document production, quicker publication of award etc.) may well limit the types of cases these schemes are suitable for (for example, disputes interpretation of force majeure clauses, which is an increasingly important issue coming out of the pandemic, or other cases involving interpretation of contract clauses).

A fork in the road

To many, the arbitration landscape is at something of a turning point. The pandemic has demonstrably accelerated the continued digitalisation of arbitration services. These changes have been welcomed by many and have shown that the arbitration community can, and is willing to, adapt to change.

It seems altogether possible that development of arbitration services (particularly those offering an expedited service) by non-traditional institutions, and the likes of chambers and law firms, will lead to a greater uptake of arbitration going forward. However, moving to remote arbitrations comes with its own challenges, and must be run with clear protocols in place, training of those using it, and care for issues such as cybersecurity, if they are to be successful.

If the “new norm” is to be the increased use of expedited “off the shelf” processes for some cases, or more traditional procedures that fully embrace technology, promote digitalisation and remote working, it remains to be seen how the traditional arbitration hubs of (amongst others) London, Paris and Singapore will fare. Whilst it is possible to see the benefits of conducting an arbitration from start to finish “from the comfort of your own home”, until such time as technology can truly replicate the feel of an arbitration hearing room, the reality (certainly in the near term, post-lockdown) for most disputes is likely to be a hybrid solution where all procedural matters can be conducted through the use of technology, with the final hearing taking place in person. However, if we are to fully meet the demands of our commercial clients who frequently conduct entire business transactions over different time-zones using specialist technology, it is surely only a matter of time until we do likewise on a permanent basis.

 

By Michael Stocks, Managing Associate, Stevens & Bolton LLP

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