Author: Kavya Jha*
Online Dispute Resolution (ODR), which integrates information communication technology with dispute resolution mechanisms, has gained immense popularity, especially during the COVID-19 pandemic. According to the Queen Mary University 2021 International Arbitration Survey, 79% of the respondents preferred to proceed through virtual hearing if a physical hearing was not possible. While virtual arbitration hearings have various benefits, like being cost and time effective, they also give rise to several concerns. This blog post elaborates two such concerns: confidentiality of proceedings and due process paranoia. It argues that the existing guidelines do not adequately address these concerns. The blog post is divided into three parts: the first part discusses confidentiality concerns; the second part discusses due process paranoia; and the third part provides suggestions to address these concerns.
Part I: Confidentiality Concerns in Virtual Hearings
Confidentiality and privacy of proceedings are crucial as the parties may have chosen Alternative Dispute Resolution (ADR) proceedings for reasons like protecting a trade secret or safeguarding their reputation. Although confidentiality is not globally recognised as an essential element of ADR, most arbitral institutional rules mandate confidentiality of proceedings. In this context, the three themes warranting a discussion are: lack of defined standard, determination of liability, and the need for an ODR appropriate application.
- Lack of defined standard
Various virtual hearing guidelines have come into existence recently, but a glaring lack of defined standard remains.
Part 1 of CIArb’s Guidance Note on Remote Dispute Resolution Proceedings (CIArb Guidance Note) addresses confidentiality concerns. It stresses limiting access to the allocated participants in meetings and break-out rooms. However, there is no mention of software settings, liability in case of breach and other relevant questions.
The Seoul Protocol on Video-Conference in International Arbitration (Seoul Protocol) does not make an explicit mention of protecting privacy. However, Article 5, which deals with Technical Requirements, specifies minimum transmission speeds and resolution, but leaves the option of agreeing upon technical requirements with the parties. Further, Article 8 prohibits recording the proceedings without leave of the tribunal.
The HKIAC Guidelines for Virtual Hearings (HKIAC Guidelines) deals with confidentiality of hearings. They mandate admission of only approved individuals into password-protected conferences. Further, use of headphones to protect privacy is recommended. Again, however, these Guidelines ignore the question of software settings.
Annex I and II of the ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic (ICC Guidance Note) address confidentiality, privacy and security concerns. They prohibit audio recordings of the proceedings unless authorised in advance by the tribunal and mandate that a minimum requirement of encryption of the proceedings be decided by consultation between the parties. The Note is comprehensive and specifies what the parties are required to decide before the commencement of virtual proceedings to minimise confusion and disagreements in the future.
Several institutional arbitration rules have also been revised to reflect latest trends, including the shift towards technology. The London Court of International Arbitration revised its Arbitration Rules in 2020 and included the possibility of virtual hearings under Article 19(2). The Rules also include provisions on confidentiality in general (Article 30) and data protection in particular (Article 30A). Similarly, Article 26(1) of the Arbitration Rules released by the International Chamber of Commerce (ICC Arbitration Rules) and Article 55(1) of the World Intellectual Property Organisation Arbitration Rules permit hearings to be conducted by video-conferencing. However, these rules fail to provide adequate safeguards against confidentiality concerns specific to virtual hearings.
Most arbitration rules of Indian arbitral institutions, such as the Delhi International Arbitration Centre and the Nani Palkhivala Arbitration Center, do not explicitly allow for virtual hearings. The Mumbai Centre for International Arbitration Rules expressly allow hearings through video-conferencing only in cases of emergency arbitration. Indian institutions have not yet revised their rules and guidelines to suit the requirements of today’s world. To add to this woe, India does not have data protection legislation in place that arbitral tribunals and ODR platforms can adhere to.
Despite most international arbitral institutions having their own rules regarding confidentiality of proceedings, there is no uniform standard of determining reasonable care that should be taken by such platforms. For instance, while the CIArb Guidance Note emphasises access to the virtual and physical rooms during the virtual hearing, it is vague about issues such as using an end-to-end encrypted video-conferencing platform, securing email communication, recording of proceedings, etc. There is, thus, a need for a well-defined standard for ensuring confidentiality of proceedings.
- Determining liability
In October 2020, NITI Aayog released a draft of the ODR Policy Plan for India (the Draft). The Draft identifies the challenges faced while adopting ODR, including privacy and confidentiality concerns. It defines a Neutral as “dispute resolution professionals involved in conducting ODR proceedings. Ideally, this term would also include algorithms that perform adjudicatory or facilitative roles.” While laying down standards, it puts the responsibility of protecting confidentiality and due process on the Neutral. This is in consonance with the Arbitration and Conciliation Act, 1996 (the Act), which places the responsibility of maintaining confidentiality on the arbitrator/conciliator, the arbitral institution, and the parties to the agreement. Arbitral institutions, as mentioned in the Act, includes ODR platforms, such as SAMA and Peacegate.
Though the Draft formally includes algorithms in the definition of Neutrals, it also suggests that there are technological limitations in India. If algorithmic dispute resolution is embraced, it raises the vital question of liability: in case of breach of confidentiality, will liability fall on the developer of the Artificial Intelligence (AI), the manufacturer of the hardware, the technology provider, the arbitral tribunal or the parties themselves?
So, a legal vacuum exists around the question of liability for the use of AI. Further, most institutional rules have a limitation of liability clause, for example, Article 41 of the ICC Arbitration Rules limit the liability of the arbitrator tribunal, persons appointed by the tribunal, the courts and the ICC for an act or omission related to the arbitration. Domestic legislations, such as the Act, do not pin liability on the technology provider. Therefore, in a virtual arbitration proceeding, if the meeting room is hacked and information stolen, the provider of the online platform will not be held liable.
- Need for ADR tailored application
The government advisory issued at the beginning of the national lockdown in India stating that Zoom was not a safe platform, reiterates the fact that there is a need for a trusted video-conferencing platform to conduct confidential meetings. Further, if ODR is going to be the new normal, it is essential to develop a platform tailored specifically for ODR. This application should include features like waiting rooms, break-out rooms for caucusing, end-to-end encryption for ensuring privacy, password-protected meetings, amongst others. While Zoom and some other applications do have such features, an application which ensures the highest level of cybersecurity should be specifically tailored for ODR.
Part II: Due Process Paranoia
One of the main concerns regarding virtual hearings is the potential abuse of due process and the power of the arbitral tribunal to decide on conducting virtual hearing without the consent of one of the parties. This has been conceptualised as “due process paranoia” which has been defined as “a perceived reluctance by tribunals to act decisively in certain situations for fear of the arbitral award being challenged on the basis of a party not having had the chance to present its case fully.”
Though arbitrators can decide to conduct arbitration proceedings in a manner they deem fit, ideally, decisions on virtual hearings should entail considerations such as the nature of the dispute, technical preparedness of the parties and counsels, etc. In reality, this is not always the case. For instance, a court in the United Kingdom rejected the argument of one of the lawyers that they did not have experience with the video-conferencing platform and thus would not be able to participate fully and fairly. Further, there is no recognised right to an in-person hearing, and tribunals may decide to hold virtual hearings in the absence of a mutual agreement between the parties.
Courts around the world have addressed due process concerns in virtual arbitration proceedings. Illustratively, the Australian Supreme Court recently rejected objections related to time zone differences and witness tampering. While Indian courts have shown a positive attitude towards virtual arbitration proceedings, no due process concerns have been addressed so far.
Most virtual hearing guidelines and institutional rules, such as the Seoul Protocol and HKIAC Guidelines, make no mention of due process concerns. The ones that do, fail to set strict standards. For example, while the ICC Guidance Note addresses due process considerations and advises consultation between the tribunal and the parties on practices to be followed to safeguard the rights of the parties and cooperation between parties on technical matters, no minimum standards are provided for.
Part III: The Way Forward
While jurisdictions such as China and Hong Kong have adopted robust ODR practices during the pandemic, countries like India are still at the brink of effectuating a comprehensive ODR mechanism. In May 2020, the Indian Supreme Court released a Standard Operating Procedure for e-Filing, Mentioning, Listing and Video-Conferencing Hearing. There is a pressing need for similar procedural guidelines for virtual arbitration proceedings.
Further, standardization of such guidelines with regards to minimum privacy and due process requirements should be undertaken in accordance with best international practices. The ICC Guidance Note is a comprehensive protocol that takes into account everything from physical and environmental security to communication and operation security. It also deals with post-arbitration document retention and destruction, as well as due process concerns. Such standards can be adopted by arbitral institutions uniformly. A set of reasonable security practices, such as prohibiting the use of public Wi-Fi, maintaining a trusted anti-malware software, and conducting phishing tests, penetration tests, etc. ought to be formulated. Strict liability for breach of confidentiality and data security should be imposed on the party/arbitrator responsible for the breach. Arbitral tribunals should also be mindful of the due process paranoia and act in accordance with factors such as technological literacy of the parties, especially in developing countries like India.
As Gary Born has remarked, careful preparation of virtual hearings will make them effective. The need of the hour, therefore, is comprehensive regulations and guidelines that address the various confidentiality and due process concerns in the spirit of proper preparation.
*Kavya Jha is a penultimate year BA LLB candidate at the Rajiv Gandhi National University of Law, Punjab
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