When the Show Must Go On, Are Online Hearings the Future of International Arbitration?

By Duncan Gorst, Attorney at Law (New York), Foreign Associate at Hogan Lovells International LLP

The scourge of the COVID-19 outbreak is as unprecedented as it is dreadful. The pandemic has already wreaked devastation on almost every aspect of human life, including its momentous impact across the entire spectrum of international trade and commerce — disrupting financial markets, global supply chains and prompting many governments to introduce travel restrictions or outright prohibitions. Assessing the impact of the pandemic is not a solely academic exercise — we can see the fallout unfolding around us at terrifying speed.

COVID-19 is also forcing us to reflect on our relationship to technology. The recent cancellation of the hearing week in the 27th Vis Moot has demonstrated how unforeseeable circumstances such as the consequences of health emergencies can have a significant impact on the business of dispute resolution. To the great dismay of thousands of students, coaches and arbitrators across the world, COVID-19 quickly frustrated the realization of many months of tireless preparation in Vienna and Hong Kong. Even before the organisers officially cancelled the event completely, many teams had already faced the prospect of dropping out due to the travel restrictions. Many genuine arbitration hearings are suffering the same fate, leaving the participants out of pocket and the resolution of the disputes in limbo.

The organisers of the Vis Moot have, however, already announced a bold alternative: to replace the traditional competition with online hearings. This means that the teams can still participate and receive feedback from arbitrators from the comfort of their home turf. Although not as glamorous as a week of pleadings in Vienna or Hong Kong, it is in any event the much more practical alternative, taking into account the complexity and cost to all involved of reorganizing an event as large as the Vis Moot.

This raises the question: why are virtual hearings in international arbitration still so uncommon?

They do happen, of course, and it is conceivable that some of the hearings currently in jeopardy will instead be transferred online. Interviewing witnesses and experts already frequently takes place via video link. Exclusively online hearings are nevertheless rarely agreed or requested. We read a lot nowadays of artificial intelligence in arbitration, of the feasibility of robot arbitrators and of the application of blockchain, all advanced applications of still fledgling technology. One of the most basic applications of technology in a dispute resolution scenario, however, would be that of minimizing or abolishing the necessity for everybody to be in the same room at the same time. This is by no means a ground-breaking concept: everybody nowadays is professionally and personally familiar with video calling and conferencing, under the guise of services such as TelePresence, Skype and FaceTime.

This raises a second question: why should virtual hearings in international arbitration be more common? Historically, of course, the reason for their absence was the lack of appropriate technology. Now there are number of services available that make it possible for all participants to communicate with each other from separate countries and time zones. National courts in several countries are also piloting virtual hearing schemes, recognising the impact the internet can have on access to justice.

What might be the advantages be of a virtual hearing? Let us look at three: costs, practicality and the environment.

  • Costs: arbitration hearings can be expensive. Imagining the common scenario of the participants in a hearing all travelling from different countries to the seat of the arbitration — the cost of travel for the parties, lawyers, witnesses, experts, translators, court reporters — the cost of the accommodation, the rental of the venue, the catering, and so on, adds a significant sum to the total cost of the dispute. Ultimately, the parties must pick up the tab. Virtual hearings can eradicate these costs almost entirely. The flexibility of even being able to agree on a virtual hearing, and the corresponding cost benefits, is a factor parties may take into account when deciding on arbitration over other forms of dispute resolution.
  • Practicality: there are many reasons other than a pandemic why a lawyer, arbitrator, witness, or any other participant to may not be able to travel to attend a hearing. Visa issues, illness, or even a fear of flying may preclude a physical appearance. Holding a hearing via video conference is also not without its hurdles. When spread across different time zones, it is of great benefit when the participants on either side of the International Date Line can instead gather in one central and easily accessible location. Whereas online hearings may not be feasible for every situation in which the participants are spread across the world, if the participants are flexible, particularly in regards to their sleep schedules, different time zones can easily be accommodated. 4:00 pm in New York is 8:00 pm in London and 7:00 am the next day in Sydney – not necessarily ideal but by no means prohibitive.
  • The environment: Independent arbitrator Lucy Greenwood’s brainchild, the “Pledge for Greener Arbitrations” aptly summarises some of the key considerations of the ever-increasing emphasis on sustainability, climate change and “greener” proceedings – in particular the need to fly and the use of video link and screen sharing technology for interviewing witnesses and arbitrator deliberations. Holding video hearings where feasible and thereby cutting down on the need for intercontinental travel minimises the impact of each dispute on the environment. Corporate sustainability initiatives may ultimately require justifying why an international hearing should be in-person rather than online.

In view of the above three points, it is also worth questioning whether a hearing is really necessary in the first place. The disposal of a claim without a hearing is a common hallmark of expedited proceedings, but there is no reason why parties could and should not agree on a documents-only arbitration if their dispute does not merit a hearing. Even a virtual hearing may require a considerable outlay of time and resources without necessarily providing any additional advantages.

The Vis Moot does little to emulate the reality of an arbitration hearing, where the issues are invariably much more complicated and the stakes are much higher. Parties and their counsel are intensely preoccupied with procedural fairness, to which the ceremony of a physical arbitration hearing may lend a lot of psychological credibility. But at a time where we are forced to rely on technology to continue doing business at all, it is worth thinking about whether what is now a compromise could instead become the new normal.

What is clear is that a ready access to technology may, even if only as a contingency, save the headache and cost of having to completely rearrange important events. Developments in technology also bring new challenges along with the solutions. A further shift towards virtual arbitration will be no exception – but the burden will be on the legal profession to devise clever solutions to the new challenges that technology presents, rather than resisting or simply ignoring its application.