Columbia Arbitration Day 2021 — Confidentiality, Transparency, and In-Person Hearings: Does a right to an in-person hearing exist in international arbitration?

Author: Wilson Wang*

On the afternoon of March 12, 2021, Columbia Arbitration Day hosted a panel debate on “Confidentiality, Transparency, and In-Person Hearings – Does a right to an in-person hearing exist in international arbitration?” The debate featured Rahim Moloo acting as Counsel for Claimant and Preeti Bhagnani as Counsel for Respondent[1] and was heard by an esteemed tribunal comprised of Professor Dr. Maxi Scherer, Professor John Fellas, and Professor George A. Bermann.[2] This blog post encapsulates key takeaways from the debate.

VIRTUAL VS. IN-PERSON

The first part of the debate focused on “whether a merits hearing scheduled in April should held remotely, or be postponed until an in-person hearing becomes feasible,” and is built on the following assumptions:

• Claimant is a New York company and Respondent is State X in the Middle East. There is a difference of nine hours between them.
• The merits hearing was scheduled for five days in April 2021. Vaccines have yet to be widely disseminated and the parties agree that an in-person hearing would necessitate delaying the hearing by approximately six months.
• The three tribunal members are in Dubai, London, and New York. All counsel are based in New York and State X. Each party has two witnesses and two experts: one of Claimant’s experts and all fact witnesses are based in State X; the other three experts are in New York; and all of them have access to technology required for a remote hearing but of varying quality.
• The UNCITRAL Arbitration Rules 2013 (the “UNCITRAL Arbitration Rules”) apply to the dispute. The BIT provides that the seat of arbitration shall be New York and State X is a party to the New York Convention.

Ms. Bhagnani, as Respondent’s counsel, opened the debate by requesting the tribunal to proceed with a remote hearing in April. Ms. Bhagnani stated that requiring an in-person hearing at a postponed date would create unnecessary delay and a real prejudice to Respondent. Her arguments were structured in two layers.

First, the tribunal has the discretion to order a remote hearing under the applicable arbitration rules, the UNCITRAL Arbitration Rules. Article 17.1 provides that “the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate[.]”[3] As an option that the arbitral tribunal “may” consider, Article 28.4 expressly contemplates videoconference as a means of conducting witness examination.[4] Second, such discretion shall be exercised in a manner that “the parties are treated with equality” and “each party is given a reasonable opportunity of presenting its case.”[5] Ms. Bhagnani further stressed two requirements placed on a tribunal when exercising its discretion: (1) “avoid[ing] unnecessary delay and expense” and (2) “provid[ing] a fair and efficient process for resolving the parties’ dispute.”[6]

The first consideration is the unnecessary delay and potential prejudice to Respondent a postponed in-person hearing would cause. As acknowledged by both parties, an in-person hearing would not be feasible until at least six months later. The quarantine requirements in New York, London, and other cities in the world add a significant burden, making it more difficult to coordinate such an extended hearing period. Given that Claimant requested interest on the damages, having a delayed hearing would be potentially prejudicial to Respondent by resulting in an increased amount of pre-award interest in the event of an adverse award.

Ms. Bhagnani then addressed concerns specific to a remote hearing, including unnecessary expenses and potential issues of fairness arising from technology variances, and time zone issues. Compared with the setting of an in-person hearing, expenses for flights, accommodations, the hearing room, etc. can be avoided if it is held remotely. Although the quality of technology accessible to the witnesses varies, all factual and expert witnesses have the required technology for a remote hearing, and the differences can be effectively mitigated with appropriate pre-hearing tech preparations. Similarly, to address the time differences, Ms. Bhagnani proposed a schedule for virtual hearings, allowing for more hearing days with fewer hours on each day.

Ms. Bhagnani then turned the floor over to Claimant’s counsel and Mr. Moloo started his counterargument by addressing the real risk of “cat filter” in a virtual hearing. He reframed the question as “whether an in-person hearing is better enough for a tribunal to delay the proceedings for six months,” and advocated that the significant advantages and benefits of an in-person hearing warrant the delay.

First, Mr. Moloo laid out that the preferred method of hearing in international arbitration had been in-person. Article 17 of the UNCITRAL Arbitration Rules does not provide a right to an in-person hearing, only requiring that “each party is given a reasonable opportunity of presenting its case” and a tribunal to “hold hearings for the presentation of evidence by witnesses” if “any party so requests.”[7] However, in the practice of international arbitration, the preference and default for an oral hearing is in-person, especially for merits hearings. In the 2010 version of the IBA Evidence Rules, the default rule was that “[e]ach witness shall appear in person,” and that the tribunal “allow[ing] the use of videoconference or similar technology with respect to a particular witness” was an exception, limited only to particular witnesses.[8]

Second, Mr. Moloo illustrated six advantages of an in-person hearing over a virtual one.

1. Time zone difference. The time difference spans over nine hours, meaning that there would be only four to five hours a day possible for virtual hearings. It would be further interrupted by local counsel and witnesses’ need to observe anticipated religious customs for many of the participants in the hearing, such as breaking fast during Ramadan, which was upcoming in April.
2. Quality of technology and internet. A German study in 2014 showed that a delay for merely 1.2 seconds during a teleconference would make people feel that the presenter was less focused and less friendly. That may result in improper adverse impacts such as discrediting a witness.
3. Interaction between witnesses and examiners. With several windows on a screen, it is more difficult for witnesses to focus during the examination. The restricted camera view makes it hard to catch body language of witnesses, and more difficult to monitor and control the examination proceedings. It is also difficult to share the full document when evidence is presented online.
4. Interaction with the arbitrators. Arbitrators may be more hesitant to ask questions during openings, while counsel welcomes arbitrator interventions as the primary goal is to address the tribunal’s questions and concerns.
5. Interaction with the team and clients. Virtual hearings largely become one (wo)man’s battle without team members or clients sitting together to support or discuss tactics and strategies.
6. Zoom fatigue. Credible research identified that videoconference platforms have design flaws that exhaust users both physically and psychologically.[9] Those flaws make participants in an online hearing more stressed, distracted, static, and unnatural.

Coming back to the question, Mr. Moloo emphasized that in deciding whether to achieve all of the benefits of an in-person hearing by delaying for just six months, the goal should not be to meet a minimum requirement. Rather, the Tribunal should weight the potential benefits against the cost of a six-month delay. In response to the alleged prejudice raised by Respondent, Mr. Moloo expressed Claimant’s willingness to waive interest on the damages during the postponed time period, and it would be Claimant who suffers from prejudice by remaining on the sanctions list.

During the rebuttal, Ms. Bhagnani first clarified that the six-month period remains the parties’ assumption and is vulnerable to uncertainties. As to Claimant’s arguments regarding why an in-person hearing is better, Ms. Bhagnani reframed the question as “whether a remote hearing is able to provide parties with a fair and efficient process,” and argued that the alleged disadvantages arising in a remote hearing would be equally applicable to both parties. Some issues, like witness tampering, can be solved by implementing certain hearing protocols, such as setting up a 360-degree camera.

The tribunal shared comments and their experience with remote hearings. Professor Bermann pointed out that arguments on this issue could be heavily connected to facts, and for Claimant generally, it would be a high hurdle to argue that a remote hearing would be inevitably unfair. Professor Fellas supplemented with other factors that may be considered. The fact that it is Claimant who is applying for a postponement makes it more likely to be granted, since Claimant’s rarely have ulterior motives to delay the resolution of a case, whereas Respondent’s sometimes might. Hearing attendees’ individual situations will also influence the tribunal’s decision-making. During lockdowns, it might not be feasible for certain hearing participants to have some working space at home separate from other family members or to be undisturbed by childcare or other duties for multiple hours.

Professor Scherer shared statistics on the overall feedback about remote hearings. In an empirical survey with remote hearing users from over 60 jurisdictions, around 59% of the responders thought remote hearing is better than or as good as in-person.[10] That striking result opened up the discussion. First, on technology, the tribunal members and counsel all recognized the digital improvements as a byproduct of remote hearings. Such perks include digitalizing hearing bundles, the chat feature in a virtual hearing, the option to mute oneself as opposed to whispering to other team members, the simultaneous translation function, and more. Second, despite counsel’s argument and remedial measures on the time differences, Professor Scherer expressed the perspective of an arbitrator: with fewer hearing hours in a day, arbitrators in a similar time zone have more time to discuss and deliberate before and after the hearing sessions, whereas in the previous in-person fashion, arbitrators would have less time for discussion after the eight-hour hearing in a day. Third, specific to witness examination, Professor Bermann and other panelists discussed the upsides and downsides of having a close-up view of witnesses’ face in the virtual environment versus a full picture of the witnesses and the room.

TRANSPARENCY VS. CONFIDENTIALITY

The second part of the debate addressed whether the remote or in-person merits hearing should be open to the public. Additional assumptions relevant to this question are:

• The primary claim in the case relates to Respondent’s placement of Claimant on a sanctions list. Claimant alleges that there was no basis for Respondent to do so; rather, the designation was done for political reasons in response to the U.S. placing certain companies from State X on its sanctions list. As a result of this designation, Claimant alleges that it has been unable to continue operating its business and has had to file for bankruptcy. The key facts relate to whether Claimant was properly placed on State X’s sanctions list.
• The UNCITRAL Transparency Rules is applicable.

Ms. Bhagnani submitted that a web conference link to the virtual hearing should be made public. First, Ms. Bhagnani made reference to the Transparency Rules. By adopting the UNCITRAL Transparency Rules, the parties agreed to the requirement that “hearings for the presentation of evidence or for oral argument [] shall be public,”[11] and that “[t]he arbitral tribunal shall make logistical arrangements to facilitate the public access to hearings.”[12] Ms. Bhagnani pointed out that, pursuant to the Transparency Rules, the tribunal has the power to adapt the requirements of any provision for conducting a hearing to the circumstances of the case, but such adaptation shall be limited to be consistent with the transparency objectives of the Rules.[13] Even though there are certain exceptions not to hold a public hearing, Claimant is required to prove that “there is a need to protect confidential information or the integrity of the arbitral process pursuant to article 7.”[14] Ms. Bhagnani further contended that, even were Claimant able to deliver the required showing, the exception rule would only extend to certain parts of the hearing, not empowering the tribunal to hold the entire proceeding in private.

Ms. Bhagnani preempted two arguments that could be raised by the opposing side: confidentiality and cybersecurity. To address the confidentiality concern, Ms. Bhagnani first identified that the only information that can possibly be alleged as confidential is the impact of the designation on the sanctions list to Claimant and Claimant’s business. As the very premise of Claimant’s complaint indicated this information is already public, the request for confidential treatment is moot. Ms. Bhagnani then noted the fact that Claimant was placed on a sanctions list does not fall within any of the four categories of confidential information in Article 7.2 of the UNCITRAL Transparency Rules.

To weigh the competing interests involved in the disclosure, Ms. Bhagnani put forward three points arguing that the public interest in being able to access the hearing far outweighed Claimant’s interest in keeping the information secret:

1. Claimant’s claim involves an important governmental measure. Despite Claimant’s view that those remain political issues, State X has the right to carry out measures to ensure its economic and financial stability, and that information is exactly what State X and the citizens thereof are entitled to know.
2. The amount of requested award is millions of dollars. Should Claimant prevail, that is a huge financial burden on State X and its people. The public has the right to watch the proceedings, so that they can have their own assessment of the issue.
3. It is increasingly recognized in international instruments that the public has a right to access this sort of information. For example, the European Court of Human Rights noted in Hungarian Civil Liberties Union v. Hungary that the public has the right to information in the nature of affecting public interest.[15]

As to the cybersecurity concern, Ms. Bhagnani argued that releasing a web link to the virtual hearing would not increase the risk significantly, and conversely, having it in-person would not mitigate the risk. Protective measures should be adopted regardless of an in-person hearing or a virtual one, including guarding digital permits by firewalls, implementing anti-spy software, setting up frequent automatic operating system updates, creating access control, and using encryptions for sensitive data.

Moving to the other side, Mr. Moloo first pointed out that under Article 6.3 of the UNCITRAL Transparency Rules, “the arbitral tribunal may, after consultation with the disputing parties, decide to hold all or part of the hearings in private” where necessary.[16] It is Claimant’s position that the essence of the underlying dispute warrants privacy. Sanctions are used by States as a tool for foreign policy or national security purposes, often involving issues such as terrorism, narco trafficking, involvement in or relating to proliferation of weapons of mass destruction, and the like. It would be significantly prejudicial and potentially slanderous against Claimant to disclose such serious allegations and sensitive information in the public domain, since such allegations, deemed politically motivated and untrue by Claimant, are still subject to the tribunal’s determination.

During the rebuttal, Ms. Bhagnani came after the nature of the “confidential” information — the allegations relating to the sanction list. She argued that if the allegations are not true, there would not be a need to protect the information, and it is ludicrous that allegations become confidential just because of Claimant’s dislike. In response, Mr. Moloo reiterated that if there exists any confidential portion of the hearing, it would be much easier if the tribunal “bifurcates” the parties attending the hearing in person and the public accessing the hearing online. Otherwise, the logistical burden of asking the audience to leave the virtual room every time there is confidential information and come back would be highly inefficient. Professor Scherer echoed the logistical difficulty, adding that it can be very disruptive and burdensome to make an in-person hearing accessible to the public as well. For example, in her experience, in a hearing conducted in the Peace Palace, it was a logistical nightmare to perform security checks and ask people to leave and come back every time there was a confidential issue, so they ended up live broadcasting the hearing online.

Lastly, the tribunal and counsel’s expectation of what happens in six months is pivotal. Compared with a year ago, the tribunal is in a relatively better position now to estimate that in six months, there is a high likelihood that the majority of hearing participants will be able to attend in-person. On the other hand, our panelists have different views as to future hearings: some prefer going back to the in-person format, and others expect more remote, or at least hybrid hearings to emerge. Madam Chair Arbitrator of this tribunal, Professor Scherer remarked that with the digitalization of hearings as a result of the pandemic, future hearings could hopefully be optimized with such positive changes.

[1] Mr. Rahim Moloo is a partner in the New York office of Gibson, Dunn & Crutcher and leads the firm’s international arbitration practice in the Americas. He is also an adjunct faculty member at Columbia Law School, where he teaches an advanced course on international arbitration. The arguments that Mr. Moloo made during the debate do not necessarily reflect his views.

Ms. Preeti Bhagnani is a partner in the International Arbitration Group at White & Case, and is based in New York. She represents both States and investors and has served as counsel in commercial and investor-state arbitrations conducted under most major international arbitration rules. The arguments that Ms. Bhagnani made during the debate do not necessarily reflect her views.

[2] Professor Dr. Maxi Scherer is a Professor of Law at Queen Mary University of London, School of International Arbitration, where she holds the Chair for International Arbitration, Dispute Resolution and Energy Law, as well as being Special Counsel at Wilmer Cutler Pickering Hale and Dorr LLP in London.

Professor John Fellas is an independent arbitrator at Fellas Arbitration, with over three decades of experience in international dispute resolution and an adjunct professor at New York University School of Law, teaching international arbitration.

Professor George A. Bermann is the Jean Monnet Professor of EU Law, Walter Gellhorn Professor of Law, the director of the Center for International Commercial and Investment Arbitration and Editor-in-Chief of the American Review of International Arbitration at Columbia Law School. He is also an active international arbitrator in commercial and investment disputes. The views Professor Bermann expressed during this panel do not necessarily reflect the views of the Review.

[3] UN Comm’n on Int’l Trade Law (UNCITRAL), UNCITRAL Arbitration Rules (Dec. 16, 2013), art. 17.1 [hereinafter UNCITRAL Arbitration Rules].

[4] Id., art. 28.4.

[5] Id., art. 17.1.

[6] Id.

[7] Id., arts. 17.1, 17.3.

[8] International Bar Association (IBA), IBA Rules on the Taking of Evidence in International Arbitration (May 29, 2010), art. 8.1.

[9] Vignesh Ramachandran, Stanford researchers identify four causes for “Zoom fatigue” and their simple fixes, Stan. News (Feb. 23, 2021), https://news.stanford.edu/2021/02/23/four-causes-zoom-fatigue-solutions/ (identifying four main causes for “Zoom fatigue”, including (i) “[e]xcessive amounts of close-up eye contact is highly intense,” (ii) “[s]eeing yourself during video chats constantly in real-time is fatiguing,” (iii) “[v]ideo chats dramatically reduce our usual mobility,” and (iv) “[t]he cognitive load is much higher in video chats”).

[10] See Gary Born et al., Empirical Study of Experiences with Remote Hearings: A Survey of Users’ Views, in International Arbitration and the COVID-19 Revolution 137, 148 (Maxi Scherer et al. eds., 2020) (“[t]urning to counsel and arbitrators, only 14% of their ratings expressed a positive preference for fully remote hearings, with all other feedback being neutral (‘as good as’) (45%) or negative (‘less good’) (41%)”).

[11] UNCITRAL, UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration (Apr. 1, 2014), art. 6.1 [hereinafter UNCITRAL Transparency Rules].

[12] Id., art. 6.3.

[13] Id., art. 1.3(b).

[14] Id., art. 6.2.

[15] Társaság a Szabadságjogokért v. Hungary, App. No. 37374/05, ¶ 28 (July 14, 2009), http://hudoc.echr.coe.int/eng?i=001-92171.

[16] UNCITRAL Transparency Rules, supra note 11, art. 6.3 (emphasis added).

* LL.M. Class of 2021, Columbia Law School. He served as LL.M. President for the Columbia International Arbitration Association during the 2020-2021 academic year and was a member of the Organizing Committee for the Columbia Arbitration Day 2021.