REUTERS | Hannah McKay

Agile arbitration during a pandemic: change for the better?

Arbitrating commercial disputes has often been considered an agile resolution process, and the reaction of arbitral institutions to the disruption caused by the COVID-19 pandemic has been further evidence of this. However, as the economic impact of the lockdown begins to take its toll, companies and their legal teams will be looking to achieve cost and time efficiency in the conduct and management of commercial disputes. In-house lawyers, under pressure to keep costs down, will watch with interest to see whether the emergence of alternative, more digitised and expedited arbitration services will create a new landscape for arbitration.

New challenges

Every sector and profession have had to adapt in recent weeks as, all over the world, office doors closed and kitchen tables became workstations. Most have successfully risen to the challenge. However, perhaps some of those best placed for adapting to this new world of work were those in the international arbitration community. Long before we were familiar with COVID-19, international arbitration had embraced technology to allow disputes to be managed across multiple borders and time zones. Remote meetings were commonly held between parties and counsel. Increasingly, case administration required key documents to be filed and exchanged on online platforms, and administrative hearings were conducted remotely with live evidence sometimes given via video conferencing in final hearings.

However, despite these efforts by arbitral institutions to meet the needs of clients and legal teams situated in disparate parts of the world, they still had to move quickly to adapt to the challenges brought about by the pandemic. In recent weeks, we have seen institutions seeking to provide a business as usual service as far as possible, rather than delaying or cancelling their services, while ensuring that the integrity and fairness of proceedings remain. Thankfully, this approach appears to be working as, although most arbitral institutions have closed their offices, technology has come to their aid. Case administration has been moved online with key documents being filed via bespoke portals, and hearings of both an administrative and substantive nature being conducted remotely via an array of commercial or bespoke video conferencing platforms.

Speedy arbitration

Disputing parties who are seeking quicker resolution or are facing cost pressures may wish to consider adopting one of the expedited arbitration services being offered by many institutions. These might be most useful if a dispute is less complex, where limited evidence is required and where there is alignment between the parties for a speedy resolution. Many arbitral institutions are now offering expedited services to support the fast pace of commercial demand. For example, the ICCs simplified procedure means that a final award is rendered within six months of the case management conference. The SCC offers a similar service, imposing limits to written submissions and a speedier timetable without the need for a hearing (unless a party demands it).

Competing with these expedited services offered by the traditional institutions are alternative off the shelf arbitration schemes. Take, for example, the London Chamber of Commerce’s London Chamber of Arbitration and Mediation (LCAM) that launched last month. Ideally suited to low to medium value disputes, it adopts a document-only process and offers a fixed fee and secure case management delivery, which seeks to offer certainty and cost efficiency (potentially without requiring parties to need any legal representation to use it).

Another example is an online arbitration platform which is being promoted by Serle Court, where 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. The standard process (which can be adapted to suit the parties’ needs) requires no live evidence or document production, and offers a hearing that may be conducted by video.

These speedy schemes are certainly a step forward, but will they become the norm? No, or at least not yet in the author’s view. Their take up is likely to be slow, initially at least, as many contracts contain more traditional arbitration clauses, and in-house lawyers may encounter resistance to any suggestion of circumventing tried and tested dispute resolution clauses. Furthermore, the perceived benefits of these streamlined services (such as no live evidence, limited document production, quicker publication of the award) limit the types of cases for which these schemes are suitable (though they may suit contract interpretation disputes, such as those expected on whether the disruption caused by the pandemic will be covered by force majeure clauses, which is an increasingly important issue for companies with complex and time-critical supply chains).

A new road ahead?

So far, reports from those who have had to embrace technology to manage arbitrations have found the overall experience to be largely successful. Doesn’t this pose the question why, as we strive to reduce international travel not only in light of the pandemic but also for environmental reasons, this should not be the new norm?

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.

Going forward, it is likely that the development of arbitration services (particularly those offering an expedited service) by non-traditional institutions will lead to a greater uptake of arbitration. The fact that such off the shelf services are offering fixed arbitrator fees, limited document production, electronic hearing bundles and faster procedures which rely on technology to reduce the need for in-person hearings (and therefore reduced expenditure on lawyers and travel), should be welcomed by in-house lawyers.

However, this should not be at the expense of the integrity of the process. Assurances will still be required that such services are being run with clear protocols in place, including the training of those using the services and consideration of issues such as cybersecurity. With in-house lawyers frequently conducting commercial transactions, often over different time zones, and facilitated by technology and the desire to get the deal done, it must be time for the dispute resolution world to try and keep up with their pace.

Share this post on: