16 April 2020 ArbitrationLinks

Drafting for virtual hearings in arbitration: helping to keep matters moving in light of COVID-19

Due to COVID-19, we now find ourselves in unique and unprecedented circumstances in many aspects of our lives. This includes, as examined in our articles on virtual court trials and the use of video-conferencing in arbitration hearings, a substantial change in how to resolve disputes. What these developments, among others, highlight is that flexibility and innovation is the key to resolving disputes in a fair and timely fashion, in difficult circumstances where parties and their legal representatives are presently deterred or prohibited from holding in-person hearings. This is particularly pertinent for international arbitration, which as its name suggests often features a cross-border element that may ordinarily require travel by parties, their legal counsel and their experts.

In the context of arbitration proceedings, parties who do not wish to appear might maintain the right to ask their tribunal to, for example, postpone any hearings until social distancing measures and travel restrictions are lifted.

Overall, however, most claimant parties, if not all parties, will prefer to have a hearing and see their disputes concluded without undue delay. In such cases, conducting a virtual hearing is now a very real option. Indeed, Linklaters recently represented the first defendant in the first successful virtual trial conducted in English Commercial Court proceedings, NBK and RoK v Bank of New York Mellon and the Stati Parties.

Arbitral tribunals will, in many instances, have the procedural discretion to put in place appropriate arrangements for virtual hearings. However, a counterparty that sees a disadvantage in having a hearing, or wants to employ obstructive and delaying tactics, may still attempt to cause obstruction by refusing to  agree.

At the contracting stage, however, one way of dissuading parties from any such potential mischief-making is to include supplemental wording in an arbitration clause in order to directly set out the procedural arrangements which will apply in the circumstances of a pandemic such as COVID-19.

The International Arbitration team at Linklaters has considered this issue and formulated the following specimen wording which parties can consider including:

“In the event of a declared public health emergency by either the World Health Organisation (the “WHO”) or a national Government, as a consequence of which it is inadvisable or prohibited for the parties and/or their legal representatives to travel to, or attend any hearing ordered by the tribunal, the following shall apply:

i.     any such hearing shall be held via video or telephone conference upon the order of the tribunal; 

ii.     the parties agree that no objection shall be taken to the decision, order or award of the tribunal following any such hearing on the basis that the hearing was held by video or telephone conference; and

iii.    in exceptional circumstances only the tribunal shall have the discretion to order that a hearing shall be held in person, but only after full and thorough consideration of the prevailing guidance of the WHO and any relevant travel or social distancing restrictions or guidelines affecting the parties and/or their legal representatives and the implementation of appropriate mitigation.”

The aim of this supplemental wording is to specifically provide for video or telephone conference hearings as the default option if there is a public health emergency that prevents parties from attending an in-person hearing. It will provide the tribunal with robust encouragement to order such steps, along with minimising the ability of counterparties from taking measures to delay matters.
 
Such wording will be beneficial in the current circumstances arising due to COVID-19, as well as providing a practical enhancement that would cover similar situations from any public health emergencies that may arise in the future. Aside from incorporating such language in new contracts, businesses may also wish to consider incorporating it in existing contractual arrangements (with suitably co-operative counterparties).
 
Changes to business and our way of living are inevitable in our current situation. However, we are confident that we can take steps to ensure that disputes can be resolved in as close to a business-as-usual manner as possible. This is one (of many) that we hope parties would be able to use going forward.