Author: Wilson Wang*
| Jurisdiction: International Switzerland |
Topics: Remote Hearing Witness Examination |
INTRODUCTION
Application of remote hearings is no big news for the community of international arbitration.[1] The technology to conduct remote hearings in international arbitration and the discretion have been there already.[2] Yet, the continuing COVID-19 pandemic has fueled the shift from in-person or partial remote hearings into fully remote ones.[3] Inspired by this year’s Vis Moot Problem, this blog discusses conducting a remote hearing under the Swiss Rules of International Arbitration in particular.
Under normal circumstances, if parties to the arbitration have already agreed on whether to proceed with remote hearings, the arbitral tribunal normally honors the parties’ agreement.[4] The dispute surfaces when one party refuses to conduct a remote hearing, whether an arbitral tribunal has the authority to order so.
Parties’ arbitration agreement incorporating institutional rules which further grant arbitrator(s) power to determine the arbitral procedure, poses an exception to the parties’ autonomy.[5] Article 25.4 of the Swiss Rules of International Arbitration (the “Swiss Rules”)[6] authorizes the arbitral tribunal with the discretion to determine the conditions and the manner under which witnesses may be heard.[7] The express reference to video conferences, which was introduced to the 2012 version, has been seen as a tool to speed up and control the costs of arbitral proceedings.[8]
Since the outbreak of this global pandemic, leading arbitral institutions have all been publishing guidance and notes on conducting remote hearings. Similar to the Swiss Rules, LCIA’s most updated Arbitration Rules 2020 confirm that arbitral tribunals “shall have the fullest authority . . . to establish the conduct of a hearing” and that “a hearing may take place . . . virtually by conference call, videoconference or using other communications technology.”[9] Other institutions have published guidance notes or protocols to either clarify arbitral tribunals’ authority on moving forward with remote hearings, or at least encourage the consideration of holding remote hearings.[10]
POTENTIAL CHALLENGES AND DEFENSES
Under the Swiss Rules, when ordering a remote hearing, arbitral tribunals still need to be mindful of observing the parties’ rights to be heard and treated equally in order to render an enforceable award.[11]
1. Parties’ Right To Be Heard
The party who refuse to proceed with a remote hearing may challenge the order or the final award based on its right to be heard. UNCITRAL Model Law provides that “[t]he parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.”[12] If a party “was otherwise unable to present his case” or “the arbitral procedure was not in accordance with the agreement of the parties . . . or was not in accordance with this Law,” the arbitral award may be set aside upon such party’s application.[13] Such right is also echoed in Articles V(1)(b) and V(1)(d) of the New York Convention.[14] Certain practical difficulties in conducting a remote hearing may help the opposing party establish the case. For example, in an Australian case, the arbitral award did recognize considerable technical difficulties during witnesses’ remote examination, including (i) unstable quality of the tele- and video-conference tools, (ii) difficulties in presenting documents and evidence to witnesses, (iii) hardship for interpretation (especially for simultaneous interpretation), and (iv) failure in supervising witness sequestration.[15]
The other party may distinguish the challenge by arguing that a mere oral and synchronous exchange of arguments or evidence would suffice the right to be heard.[16] Even in the Australian case, despite of the difficulties, the court held that “the mode of evidence by telephone or video conference . . . does not in and of itself produce ‘real unfairness’ or ‘real practical unjustice’.”[17] If remote hearings carried out in the pre-pandemic era did not jeopardize parties’ right to be heard, then how come an entire remote one hurts parties’ right during pandemic?[18] Given the uncertainties in public health and travel restrictions, insisting on in-person hearings will definitely lead to delays in the arbitral proceedings.[19]Under the Swiss Rules, such delays may contravene both the tribunal and parties’ obligation to “make every effort to contribute to the efficient conduct of the proceedings and to avoid unnecessary costs and delays.”[20] For arbitral tribunals, such obligation is recognized as one of the key duties by the Swiss Chambers’ Arbitration Institution.[21]
In the Case No. 19 ONc 3/20s, the Austrian Supreme Court confirmed that remote arbitration hearings are not only permissible if both parties agree, but also over objection of one of the parties.[22] The court further recognized that, where like the COVID-19 pandemic, videoconferencing provides a useful tool to ensure both effective access to justice and the right to be heard, and that only sufficiently strong countervailing factual considerations may could reverse such general conclusion.[23]
2. Parties’ Right To Be Treated Equally
The opposing party may also claim equal treatment protection under Article 18 of the UNCITRAL Model Law, if certain circumstances occur where only one party is affected significantly and affect one side more than the other, disturbing the equality of two parties’ presentation.[24] For instance, if the hearing participants are in London, New York, and Singapore, difficulty in coordinating the time zone differences may arise.
The other side could point out that equal treatment does not equal to identical treatment.[25] While those grounds may raise concern of unequal treatment, they can be avoided or mitigated through pre-hearing preparation. In the Austrian case, the Austrian Supreme Court viewed parties’ arbitration agreement as the respondents’ acceptance of potential disadvantages resulting from the geographical distance, including substantial travel and time differences.[26] When comparing traditional physical hearings and remote hearings, the court held remote hearings do not exacerbate the disadvantages but instead, provide a less burdensome alternative to long-hour travels.[27] Furthermore, the court noted that videoconference technology is widely used in judicial proceedings before states courts as well as arbitral proceedings.[28] Such observation is shared by an Illinois federal court in Legaspy v. FINRA, the first U.S. court case addressing remote hearings: the applicant’s arguments were “against this court’s experience holding several remote evidentiary hearings since the pandemic began . . . all of which permitted the parties to air their claims and defenses fully.”[29] The court admittedly acknowledged that remote hearings are “clunkier than in-person hearings but in no way prevent parties from presenting claims or defenses,” nor does it entitle claimants a better fare than respondents.[30] Therefore, from the perspective of national courts, it might be counterintuitive to agree with inequality complaint merely due to a remote hearing.[31]
CONCLUSION
The Swiss Rules give arbitrators large discretion to conduct remote hearings even against one party’s disagreement. When exercising such discretion, the tribunal should pay extra care to both legality and logistic issues, especially over requirements under the national laws. With the help of technology, remote hearings, or semi-remote ones can largely facilitate the arbitral proceeding in the future dispute resolution. For the new generation of “mooties”, not only sharing insights on remote hearings, but merely attending the competition virtually can be a contribution to building a better arbitral process.
[1] Alvaro Galindo, Arbitration Unplugged Series – Virtual Hearing: Present or Future?, http://arbitrationblog.kluwerarbitration.com/2020/05/23/arbitration-unplugged-series-virtual-hearing-present-or-future/, Kluwer Arb. Blog (May 23, 2020) (“Mr. Born clarified that virtual hearings are not a novel technological device used in arbitral proceedings.”).
[2] Gary Born & Mikhail Kalinin, A Fireside Chat With Gary Born: How to Become a Star in International Arbitration in Five (Easy?) Steps, and Is It Still Possible?, Kluwer Arb. Blog (Jan. 12, 2019), http://arbitrationblog.kluwerarbitration.com/2019/01/12/tiona-fireside-chat-with-gary-born-how-to-become-a-star-in-international-arbitration-in-five-easy-steps-and-is-it-still-possible/ (back in early 2019, when asked about new technology to be introduced to assist abitration, Mr. Born “s[aw] no reason why an evidentiary hearing should not take place in a virtual place.”).
Michael Ostrove, Kate Brown de Vejar, Ben Sanderson & Peter Anagnostou, A Review of Key Developments In Response To COVID-19: Online Arbitration Hearings, DLA Piper Publ’ n (Sept. 28, 2020), https://www.dlapiper.com/~/media/files/other/2020/virtual-hearings-report–september-20-updatev6.pdf?la=en&hash=3B95E1486F7794F38EAE6E1B7C9EA3F542FA2BBF, at 4.
[3] See Ostrove et al., at 4.
[4] It is still possible that, under rare scenarios, arbitral tribunals may not follow parties’ agreement, such as where a tribunal insists on conducting a remote hearing against both parties’ disagreement, or a tribunal refuses to organize a remote hearing despite parties’ agreement. SeeMaxi Scherer, The Legal Framework of Remote Hearings, in International Arbitration and the COVID-19 Revolution 65, 76 (Maxi Scherer, Niuscha Bassiri & Mohamed S. Abdel Wahab eds. 2020).
[5] Gary B. Born, International Commercial Arbitration 2143 (2nd ed. 2014).
[6] Swiss Rules of International Arbitration 2012, art. 25.4 (“[a]t the hearing, witnesses and expert witnesses may be heard and examined in the manner set by the arbitral tribunal. The arbitral tribunal may direct that witnesses or expert witnesses be examined through means that do not require their physical presence at the hearing (including by videoconference).”).
[7] Gabrielle Nater-Bass & Stefanie Pfisterer, Chapter 3, Part II: Commentary on the Swiss Rules, Article 25 [Evidence and hearings, II], inArbitration in Switzerland: The Practitioner’s Guide 686, at ¶¶ 41, 46 (Manuel Arroyo ed., 2018).
[8] Id. at ¶ 56.
[9] LCIA Arbitration Rules 2020, art. 19.2.
[10] See, e.g., ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic,¶¶ 21-22; The Vienna Protocol: A Practical Checklist for Remote Hearings; SIAC COVID-19 Frequently Asked Questions (FAQs), Questions no. 13 & 14; HKIAC Guidelines for Virtual Hearings.
[11] Scherer, supra note 3, at 95. Born, supra note 4, at 3512. Klaus Peter Berger & J. Ole Jensen, Due Process Paranoia and the Procedural Judgment Rule: A Safe Harbour for Procedural Management Decisions by International Arbitrators, 32 Arb. Int’l 415, 419.
[12] UNCITRAL Model Law, art. 18.
[13] UNCITRAL Model Law, arts. 34(2)(a)(i), 34(2)(a)(vi).
[14] United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arts. V(1)(b), V(1)(d).
[15] Sino Dragon Trading v Noble Resources International [2016] FCA 1131 (13 September 2016) 39-40 (Austl.).
[16] Scherer, supra note 3, at 79.
[17] Sino Dragon Trading, supra note 14, at 46.
[18] Scherer, supra note 3, at 96 (citing cases).
[19] Yvonne Mak, Do Virtual Hearings Without Parties’ Agreement Contravene Due Process? The View from Singapore,http://arbitrationblog.kluwerarbitration.com/2020/06/20/do-virtual-hearings-without-parties-agreement-contravene-due-process-the-view-from-singapore/, Kluwer Arb. Blog (June 20, 2020).
[20] Swiss Rules, art. 15.7.
[21] Swiss Chambers’ Arbitration Institution’s Guidelines for Arbitrators 2020, § A bis, ¶ 1. Note on SCAI 2020 Revised Guidelines for Arbitrators, at 2.
[22] Maxi Scherer, Franz Schwarz, Helmut Ortner & J. Ole Jensen, In a ‘First’ Worldwide, Austrian Supreme Court Confirms Arbitral Tribunal’s Power to Hold Remote Hearings Over One Party’s Objection and Rejects Due Process Concerns, http://arbitrationblog.kluwerarbitration.com/2020/10/24/in-a-first-worldwide-austrian-supreme-court-confirms-arbitral-tribunals-power-to-hold-remote-hearings-over-one-partys-objection-and-rejects-due-process-concerns/, Kluwer Arb. Blog (Oct. 24, 2020).
[23] Id.
[24] Scherer, supra note 3, at 100.
[25] Id.
[26] Scherer et al., supra note 21.
[27] Id.
[28] Id.
[29] Legaspy v. Financial Industry Regulatory Authority, No. 20 C 4700, 2020 WL 4696818, at 8 (N.D. Ill. Aug. 13, 2020). Chaffetz Lindsey LLP, Illinois Federal Court Refuses to Enjoin Remote Arbitration Hearing, https://www.chaffetzlindsey.com/report/arbitration-in-the-courts-october-2020vol-4/, Chaffetz Lindsey Insights: Arb. In The Ct. (Oct. 2020).
[30] Id.
[31] See generally, Amina Afifi, Conducting Remote Hearings Against A Party’s Wishes: Overview of Arbitration Laws of Main Arbitral Seats, in International Arbitration and the COVID-19 Revolution 331.
*Wilson Wang is currently an LL.M. Candidate at Columbia Law School. He is working as LL.M. President for the Columbia International Arbitration Association, a research assistant to Professor George A. Bermann, and a student editor for the American Review of International Arbitration. He is also a Vis Moot alumni, having participated in the 14th Vis East Moot and the 25th Vis Moot representing KoGuan Law School of Shanghai Jiao Tong University. He would also like to thank the AAA/ICDR and JAMS for hosting inspirational panel discussions on this topic and all the panelists for sharing their insights.