23 March 2020
Arbitration against COVID-19

The spread of coronavirus infection has led to a number of measures taken by states, aimed at restricting movement and business meetings. The number of countries and cities that introduced restrictions, includes places where the largest arbitration centers are located: Hong Kong, Singapore, Paris, Milan, London, Zurich.

Other problems were the ban, or a significant restriction on air travel from Russia to cities where arbitration hearings are usually held (Milan, Zurich), entry ban foreigners on a short-term visa (Singapore), as well as the need to self-quarantine for a minimum of two weeks (Hong Kong).

The coronavirus pandemic means the parties are faced with unexpected and unresolved situations that affect the normal course of proceedings. Practice is showing that due to coronavirus, the defendants are declaring unlimited extensions for the presentation of objections to the claims, arbitrators postpone the hearings for an indefinite period or redirect these to another location, the timing of the preparation of decisions of hearings that have already taken place is delayed.

What does modern arbitration have to offer, as opposed to the traditional format of hearings with presence of parties and arbitrators?

Firstly, the most “advanced” arbitration centers have long launched online platforms for dispute management. As a rule, these are portals with a modern interface, allowing to upload the entire file of case documents in electronic format: submission of the parties, submission of evidence, publication of procedural orders, etc.

Among foreign arbitration centers, the most “advanced” in digital terms can be name the Stockholm Chamber of Commerce (SCC), London International Court of Arbitration (LCIA) and the Chamber of Commerce Arbitration Institute of Switzerland (SCAI). So, at SCC since September 2019 disputes are administered through a special online platform on which for each dispute an own web page is created, where all documents related to the dispute are downloaded. This enables reliable messaging and exchange of case materials between the Chamber, the parties and the arbitrators.

LCIA offers a system for the parties to digitally present procedural documents, make necessary payments, have convenient access to all submissions made during the arbitration procedure.

SCAI also has a special arbitration court for the most comfortable organization of hearings - a portal where trial participants can choose the services they need, for example, hotel, translation services, hearing rooms, trial secretaries.

At the same time, the system itself generates a selection that best meets the expectations of the client and contains all necessary information.

Among the Russian arbitration centers, The Russian Arbitration Center offers full-fledged online support for doing business.

Foreign arbitration centers that have received permission to administer disputes with Russian participation - HKIAC and VIAC, also provide online support for dispute administration.

Companies need to check the terms of existing contracts: if the contract provides for the resolution of the dispute in an arbitration institution that does not have a digital platform to support a digital dispute it needs to agree with the counterparty to amend the arbitration clause to add an alternative arbitration institution that offers digital support to parties and arbitrators. This will ensure the arbitration can be conducted even in quarantine and during the temporary ban on travel.

Secondly, modern rules of arbitration institutions allow holding hearings remotely (in part or completely). Procedural issues are usually discussed on conference calls between parties and the arbitrators, and procedural orders are thereafter the exchanged in electronic form as long as this is agreed by the parties in advance.

The substantive hearings generally begin with oral statements by the parties' lawyers. But most of the time is spent on cross-examination of witnesses and experts. Modern communications allow organizing hearings on video communications, although if there are several plaintiffs and defendants, many witnesses, as well as arbitrators in different jurisdictions, supporting online streaming at the right speed can be difficult. Speed may be lost when there is a translation from a foreign language into the language of arbitration. This compromises an important feature of cross-examination, i.e. the speed of the reaction, but this “sacrifice” is seen as justified in order to run a continuous trial globally.

In order for the exchange of procedural positions and documents, as well as oral hearings, to be carried out using electronic communication channels, it is necessary to provide for the appropriate option in the First procedural order for conducting the case or to add the necessary amendments.

As a general rule, before oral hearings, the arbitral tribunal conducts the so-called case-management conference (procedural hearing), which discusses the details of the organization of the hearing process. If you have a hearing in the near future, but nothing was said about the video call in the procedural order, you must urgently contact the arbitral tribunal and propose holding hearings by telephone or video link in order to determine a new procedure for the consideration of the case without personal presence of representatives of the parties and arbitrators in one place.

Thirdly, if it is not possible to quickly translate the hearings into a “digital” format, you need to think about adjourning of the case. This is a last resort, as:

A) the adjournment of the hearings will require the coordination of new dates suitable for all representatives of the parties and referees, which is always problematic, but in the current situation it may simply be impracticable due to the unpredictability caused by the pandemic;

B) the adjournment of the hearings leads to the question of compensation to the arbitrators for the reserved but not used time; as a rule, the closer to the date of the hearing, the higher the compensation cost of an hour of the arbitrator’s time.

Applicable costs should be allocated in each case individually in accordance with agreements between the parties and the composition of the arbitration, as well as on the basis of the provisions of the rules and applicable lex arbitri and taking into account the nature of the pandemic as a force majeure event.

So, to avoid costs in the current situation, you need to start translating documents for arbitration in “digital” format, and the process in electronic format.

Fourth, in arbitration, unlike in Russian state courts, arbitrators should not make a decision immediately after the hearing, having held the meeting indoors. The case is decided as as a rule, a few months after the end of the parties' submission of documents and oral hearings. The signed  decision is sent in electronic format to the parties, and then the original is sent to the parties and in the arbitration institution administering business by mail or courier. The original is required by the civil rules of most countries, for example, in Russia (part 8 of article 75 of the APC of the Russian Federation and part 7 of article 67 of the Code of Civil Procedure of the Russian Federation) for the execution of a decision

or to appeal it. Upon receipt of the original, if necessary, do not forget to take action precautions because, as experts say, COVID-19 pathogens can be stored on paper for up to 5 days.

Thus, in the current situation, despite the presence of restrictive measures taken by states, the state-of-the-art arbitration and communications continue to provide businesses with a non-stop, independent and impartial resolution of disputes.

 

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Background on measures taken by the International Arbitration Centers to contain the spread of coronavirus:

World arbitration centers quickly responded to the current situation and took the necessary  measures to help control the spread of coronavirus Coronavirus. So, for example, ICC COVID 19 Response Group  was created in the International Chamber of Commerce (ICC).

This group reports on measures taken by the Chamber to help contain the virus. In addition, all hearings scheduled before April 13 were canceled at ICC. Chamber employees are not allowed to travel on any business trips. All meetings scheduled in the offices of the Chamber will be conducted using video conferencing systems. Parties are invited to communicate with ICC by e-mail (sending requests for arbitration, requests for appointment emergency arbitrator, etc.)

  • The cancellation of all oral hearings before May 1, 2020 was also reported by the Sports Court of Arbitration in Lausanne (CAS). Depending on the circumstances, hearings may be held using video conferencing systems.
  • The Stockholm Chamber of Commerce (SCC) publishes instructions for litigants on how to behave in a pandemic of the coronavirus. The recommendations relate to the choice of venue, the procedure for conducting it and even whether participants should wear protective masks.
  • The International Center for Settlement of Investment Disputes (ICSID) also made a statement that takes all necessary measures to protect the parties to the proceedings from the coronavirus. Center exercises greatest security for scheduled hearings.
  • The London International Arbitration Court (LCIA) moved to remote work on March 19, 2020. All procedural documents must be submitted by the parties in electronic form.  Same goes for the  documents sent by the arbitration tribunal (in particular, arbitral awards, orders).
  • The Swiss Center (SCAI) has switched to remote work and offers the parties to conduct all communication with the center by email.
  • The Singapore Center (SIAC) switches to semi-remote working mode and also asks the parties to conduct all communication by e-mail (sending requests for arbitration, requests for the appointment of an emergency arbitrator, etc.)

It is important that restrictive measures were not spared by state courts. So in France and Spain because of coronavirus meetings are held only on criminal matters. Administrative and civil proceedings are suspended except in the most extreme cases. The time limits for such cases remain unknown. English courts have so far banned only jury trials lasting more than 3 days. The discussion on the suspension of all trials continues.

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