Quantum Leap: Analysing the Transition from Traditional Institutional Arbitration to Online Dispute Resolution due to the COVID-19 outbreak

By-Tamanna Gupta, Student, Rajiv Gandhi National University of Law, Punjab.

Reading Time: 6-8 minutes

Introduction 

The onset of the COVID-19 (Coronavirus Disease) pandemic, which has disrupted economies worldwide, led to severe financial strain, and has led to the imposition of lockdowns worldwide, has left no domain of life unscathed. The Arbitration community has also faced several challenges due to the pandemic. The pandemic has forced several arbitral institutions to alter long-standing modes of functioning, shifting to virtual platforms to perform functions that were traditionally performed at the seat of the dispute concerned. While ad-hoc arbitration proceedings have witnessed considerable changes in lieu of the pandemic, a dramatic transition in institutional arbitration proceedings has been observed due to the pandemic.

A United Front: Joint Statement by International Arbitral Institutions 

In a statement issued by 13 major International Institutional Dispute Resolution Centers, including signatories such as International Court of Arbitration (ICC), Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC), amongst others, major concerns raised by stakeholder parties & tribunals affiliated to or dealing with the institutes were addressed. The arbitral institutions jointly proclaimed their aim to support the continuation of stability and foreseeability in arbitration proceedings, by way of several measures, including speedier disposal of pending cases, without compromising on the rights of the parties to be heard in a fair and reasonable manner.

The Legality of Online Disputes Resolution

While it can be ascertained that the major institutes of arbitration have rapidly adapted to the change in circumstances, it is important to analyze the legality of the transition to Online Dispute Resolution (ODR) in light of the numerous challenges it raises. Article 2 of the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules states that any notice for arbitration, including any notification, communication or proposal, is deemed to have been received if it is “physically delivered” to the addressee at his or her habitual residence. This clause stands as an exclusionary clause since no addition for electronic transmission of notices has been made. 

However, the United Nations Commission on International Trade Law (UNCITRAL), in its 46th Session (2013), adopted the Rules on Transparency in Treaty Based Investor State Arbitration, wherein Sub-clause (2) states that dissemination of the Rules on Transparency in Treaty Based Investor State Arbitration must be done, both physically and electronically, thus acquiescing to the fact that electronic and online dispute resolution is an emerging trend, which shows no signs of subsiding in the recent future.

 It was stated by the Supreme Court in the case of State of Maharasthra v Dr. Praful B. Desai (2003) that video conferencing is an acceptable method of recording evidence in witness testimonies. Thus, ODR, which is based on video conferencing, is a conducive method for resolving disputes, especially in the COVID-19 context. 

Paradigm Shift: The leap from Institutional Resolution to Online Dispute Resolution 

While Online Dispute Resolution (ODR) as a mechanism for dispute resolution was fairly common in the pre-pandemic scenario, the extent of reliance on the same has increased exponentially. Earlier, only certain circumstances such as the physical impossibility of appearance, or electronic transmission of evidence warranted virtual or video-conferencing, however, in the present stage, virtual proceedings, even at crucial stages of the case have become a “norm” rather than the “exception”. Several institutions have released an organizational response, clearly demarcating an action plan for further disposal of cases. Several remarkable characteristics mark the advent of the Online Dispute Resolution Process initiated by various institutes- 

1. Shutdowns, Timings, and Disposal of Cases

Complete shutdowns marked the Modus Operandi of most of the Institutions, wherein employees from London Court of International Arbitration (LCIA), International Chamber of Commerce (ICC) & Singapore International Arbitration Centre (SIAC), etc. shifted to remote arrangements temporarily. Noting the easing of several restrictions during the subsequent stages of the lockdown, organizations such as Judicial Arbitration & Mediation Services (JAMS) announced a systematic and phased re-opening of offices, by June-July, 2020. However, several precautions have been taken such as installing Plexiglass screens, proper sanitization and cleaning at regular intervals, reduction in the number of cases being resolved daily in order to maintain social distancing, etc.

2. General Case Administration, Meetings & Hearings 

Most institutions have allowed the filing of notice for institution of arbitration proceedings via email/online modes of communication in light of the pandemic, while a few institutions such as Deutsche Institution Germany (DIS) depart from the status quo, continuing to accept hard-copies of requisite documentation, utilizing postal and courier services. The dissemination of information regarding changes instituted by various institution varies from case to case, with some institutions updating their website regarding the same.

3. Guidance, Hearing Service Providers & Helplines

In order to safeguard the various interests involved during the entirety of the arbitration process, steps have to be taken in order to ensure that maximum security is maintained. In order to serve the dual objectives of privacy & security during proceedings, several arbitral institutions have released “Guidance Notes”, which lays down measures for compliance in order to maximize security and minimize risks during the proceedings. 

International Chamber of Commerce (ICC) has released a Guidance Note, specifically taking into consideration conditions created due to the COVID-19 pandemic, also stating suggested clauses to inculcate in case cyber-security is involved. Furthermore, even language services are being provided in order to maximize the output of arbitration proceedings during the pandemic. 

4. Conduction of Events & Conferences

Due to the onset of the pandemic, several major arbitral events stood cancelled in light of the restrictions imposed due to lockdowns, etc. Other events were postponed to the year 2021, contingent to change in circumstances. Many institutes took to conducting their annual events and seminars relating to arbitration online, specifically discussing methodologies of adaptation in the COVID-19 context. Some examples of such enterprising arbitral institutions include Hong Kong International Arbitration Centre (HKIAC) that conducted a webinar series, Stockholm Chambers of Commerce (SCC) conducted Online Seminars, Conflict Prevention & Resolution (CPR) conducted a webinar on Alternative Dispute Resolution in the COVID-19 context etc. 

 Probable Way Forward & Concluding Remarks

“Justice Delayed is Justice Denied”

It is imperative that the COVID-19 pandemic is increasingly pressurizing the arbitration community to step up to the plate, regarding which the top-tier institutions of arbitral excellence have responded well. The arbitral community has systematically & swiftly adopted technologies for facilitating ODR, or virtual hearings. Three leading arbitration bodies, the Arbitration Place, Maxwell Chambers & International Disputes Resolution Centre (IDRC) have already formulated an alliance to facilitate hearings in conformity with COVID-19 guidelines. Many steps are being taken by other institutes swiftly, in order to dispose off the pending cases swiftly, and ensure no harm ensues to the parties due to the onset of the pandemic.

The current crisis has opened the doors of ODR for various stakeholders & arbitral institutions on a global scale. While ODR practices were prevalent even before the advent of COVID-19, the onset of the pandemic has speeded up the popularity of ODR as a mode of dispute resolution. While several concerns regarding ODR arise, such as cyber-security, data privacy, confidentiality, etc., major stakeholders are formulating guidance notes & rules to counter the same. In order to ensure minimum loss of time, technology has to be incorporated in the dispute resolution process on a large scale. Concerned stakeholders, such as arbitrators, judges, counsels, & parties must rapidly adapt to the advent of ODR, which will prevail even in the times to come, marking the future of dispute resolution.

Author: Tamanna Gupta, Student, Rajiv Gandhi National University of Law, Punjab.

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