It is no secret that international arbitration proceedings can have a significant carbon footprint owing to a number of factors, ranging from large volumes of paperwork to international travel, particularly in cross-border disputes and complex matters which require the involvement of multiple witnesses, experts, and counsel from various jurisdictions. However, in recent years, organisations have encountered an increasing amount of pressure from shareholders, investors and other stakeholders to consider environmental, social and governance (ESG) factors in the context of their business models and activities. Together with more stringent ESG requirements and detailed guidance from financial regulators, it will only be a matter of time before organisations need to be actively mindful of their environmental impact when pursuing international arbitration and other similar forms of alternative dispute resolution.
Lucy Greenwood, an independent arbitrator specialising in disputes in the energy sector, created the Green Pledge in 2019, which encourages arbitration practitioners to minimise the environmental impact of their practice. In the short space of two years, the Pledge has attracted the attention and support of prominent arbitral institutions and the wider arbitral community, resulting in the development of a broader campaign, the Campaign for Greener Arbitrations (the Campaign).
How bad could an arbitration be for the environment?
Pretty bad. To support the basis of the Green Pledge, the Campaign’s Steering Committee conducted an environmental impact assessment using a case study of a medium-sized international arbitration. Having made some conservative assumptions, the study found that an arbitration of this size would require 20,000 trees to offset its emissions. The mind boggles when one thinks of how many mid-sized arbitrations are likely ongoing at any point in time around the globe.
What can arbitrators and parties do?
The answer is obvious and simple. Eliminate hard-copy filings and printing and reduce travel, particularly of long haul flights. The Campaign’s Steering Committee found that carbon emissions from paperwork and travel were the largest two contributors to the overall emissions of the case study. There are, of course, other ways in which the arbitral community can minimise its carbon footprint, including reducing energy consumption and waste, choosing renewable energy sources, selecting suppliers and other third parties who are also committed to reducing their environmental impact.
To assist with putting this into practice, the Campaign has published a framework and green protocols as a useful guide to outline steps to be implemented towards green arbitration. Arbitral facilitators are encouraged to promote the use of virtual platforms for digital presentations and file sharing; practitioners and witnesses are advised to only travel if there is a significant practical benefit in doing so; and parties and institutions are recommended to opt for remote proceedings where practical.
Remote hearings — Cure or Curse?
As with most industries, the legal sector was forced to adapt to the unprecedented circumstances the COVID-19 pandemic imposed upon it, by adopting technological innovation in order to minimise disruption and continue business as usual. Most notably, remote legal proceedings have proven to not be an impossibility but, rather, a saviour for legal practitioners. Despite the continuing pandemic, many business hubs around the world are starting to emerge from periods of lockdown restrictions, and some might expect in person proceedings to make a comeback and remote proceedings to fall away. However, remote hearings are likely to become the status quo, instead of a mere contingency plan.
As well as the environmental benefits discussed above, remote hearings have a number of advantages, one of which is cost efficiency. Clients undoubtedly welcome remote hearings for this reason and in a growing austerity climate, legal practitioners will remain conscious of passing on large disbursement bills to clients. Further, virtual proceedings (which also make it easier to stagger proceedings or factor in ‘rest days’) may reduce the overall time a dispute may take to be resolved, particularly where a common difficulty encountered in bygone days was identifying a clear range of dates convenient for arbitrators, counsel, experts, witnesses and then also factoring in travel times on either end. This could be particularly advantageous in time-sensitive proceedings and erode a party’s ability to engage in dilatory tactics around calendars and availability. Although remote hearings still require logistical planning across time zones, this burden can be spread across teams in different locations, which is more manageable than organising the parties and other arbitral participants to be in the same place at the same time.
However, one main challenge to remote hearings is technology (who hasn’t experienced a sudden drop in bandwidth and screen freezes on video conferences?). As we have all experienced in the pandemic, there is nothing worse than having to deal with unexpected technical issues or the lag of what is supposed to be a tech-savvy tool, which ends up being more counterproductive than helpful. It is therefore essential that participants to virtual proceedings have continued access to the appropriate technology, support and training provided by specialist service providers. Preparation might also involve test runs and additional logistical checks to ensure hearings run seamlessly on the day. The use of a single interface streamlining all the user-friendly tools in one place could also alleviate this concern. For example, the International Chamber of Commerce (ICC) is in the process of developing its Virtual Hearing Solution which aims to provide tools and services to conduct hearings in ICC administered cases, as well as cases administered by other arbitral institutions, in a virtual environment. Although hard-copy documents may still be useful for internal processes, the case study mentioned above found that the impact of reducing physical bundles alone would make the transition to a virtual setting worthwhile from an environmental standpoint.
But it is not all one-way traffic in favour of virtual hearings. Anecdotal evidence suggests a mixed reception. Whilst case management conferences and procedural hearings may be fine, many have rued the inability to properly read a witness, arbitrators, or opposing counsel’s reaction and body language or establish eye contact. These issues could be mitigated by the use of 360 degree cameras during depositions and virtually checking rooms, and it is generally considered that such issues will become lesser concerns as virtual platforms become more sophisticated. In addition, the risk of witnesses being unduly influenced or guided in virtual hearings (as compared to when everyone is present in the same room), and cybersecurity, particularly in relation to matters of privilege and confidentiality, are also factors to consider.
The future of Green Arbitration
Greener arbitration is a necessity of the times, especially as we have seen the devastating effects of climate change, such as bushfires, record-breaking temperatures and water scarcity. In light of this, and other considerations discussed above, it is inevitable that remote hearings will continue to become a norm rather than an exception. Green Arbitration is definitely here to stay!
But we will end with one final thought: what will the cost of all this new technology, high powered deskcams, zoom lights, 360-degree cameras, high bandwidth routers and the like end up to be in carbon footprint terms?
With thanks to Haania Amir, trainee solicitor at Morrison Foerster, for her contributions to this post.