Emanuel Retana*
*LLB and Moot Coach at Universidad Francisco Marroquín and member of the Dispute Resolution team at LEGALSA (Guatemala).
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The Treaty Examiner, Issue 2 (May 2020), pp. 43-48.
There is no doubt that the COVID-19 pandemic has had an unprecedented impact on our way of life. As businesses struggle to survive and people do their best to keep their commercial relationships afloat, one reality seems unavoidable: legal disputes will arise. Whether it is businesspeople having their contracts revised or avoided, or investors suing violations to BIT standards out of a government’s handling of this crisis, claims are sure to ensue.
In some countries, including Guatemala (1), the litigation system has virtually stopped as the constitutional right of access to justice seems to be quarantined with the rest of the population. In most cases, this is a natural result of the Judiciary’s lack of resources which impede judges and litigators from carrying a process remotely. The same is not true for the commercial arbitration system, which, in more than one way, has found it easier to adapt to the current circumstances to guarantee efficiency in dispute resolution (2).
However, not everything is clear bright blue skies as this pandemic has created an opportunity for ill-intentioned practitioners to unjustifiably delay arbitrations. As a new weapon in their guerrilla tactics arsenal, some practitioners, accustomed to the excessive procedural maneuvers that some national systems allow – and incentivize, even – are attempting to use the COVID-19 crisis as an excuse to suspend arbitrations. These attempts, when notoriously frivolous, should be stopped either by arbitrators or by the efforts of diligent legal representatives.
The Role of Parties, Arbitrators, and Institutions
It goes without saying that no industry, discipline, or profession is completely unaffected by this crisis, especially in places with strong government restrictions. However, the current technologies provide many disciplines with the possibility to migrate into the virtual world. This possibility is certainly available for commercial arbitration if parties, arbitrators, and institutions are willing to put in the work.
Now, what exactly is the work? For parties and legal representatives, the first task should be one of true introspection. Are they capable of preparing or maintaining an arbitration under the current circumstances? Does their current technology and way of business allow them to collect and prepare evidence efficiently and extensively while working from home? Are parties able to communicate safely and directly with their lawyers? Which evidence are they intending to produce, and could this evidence be made readily available for virtual examination by arbitrators? Parties and their legal representatives should answer these questions honestly and objectively before deciding to begin an arbitration, or whether to suspend or maintain a procedure which has already begun.
As for arbitrators, their task, as it has always been, is to protect the integrity of the arbitration procedure, with the extensive powers that arbitration agreements and national laws grant them to do so. Faced with the change of circumstances that the COVID-19 pandemic has brought upon their ongoing arbitrations, the arbitral tribunal will have more issues to decide within its jurisdiction: are all the parties in the arbitration capable of effectively presenting their case? And is the tribunal itself capable of administering justice while satisfying the requirements of due process?
While answering these questions arbitrators should not solely focus on how they are used to handle arbitral procedures. As this pandemic has proven, the old ways are bound to change. Instead, arbitrators should research all the technological resources available to suit the necessities of each case (3). Thus, the standard for suspending an arbitral procedure should not be unjustifiably lowered, this decision should always balance the extraordinary circumstances with the right to prompt and effective justice. By doing so, arbitral tribunals defend good faith practitioners against unfounded attempts at delaying justice made by opportunistic counterparties.
As for arbitral institutions, this should be considered a test and the commercial arbitration market should pay close attention to the work implemented by different arbitration centers. Those institutions who were quick to respond should be considered good prospects for the future, while those institutions that took a step back or no steps whatsoever and remained silent should be reprimanded by the laws of offer and demand.
Undoubtedly, arbitration centers should prepare sanitary measures if their offices are to remain open (4) and make those measures available to parties and arbitrators alike. But this is the least they should do. Arbitration centers should also offer institutionalized solutions like virtual arbitration recommendations (5), as well as maintain constant communication with arbitrators and parties as to give them the proper preparation to make proper use of the tools provided.
Institutional arbitration is not a cheap method of dispute resolution, and therefore arbitration centers are very much obligated to keep guaranteeing their customers’ money’s worth, that is if they wish their business model to survive. These centers should do as much as is in their hands so as not to allow this pandemic to be used as a guerilla tacticby litigators.
Now, all of this is not to say that every arbitration must go on. Conversely, it must be recognized that some parties, arbitrators, or institutions are being or will be affected by this pandemic as to the point where suspending the arbitration is the only available measure. This is particularly true for those cases in which parties, arbitrators or institutions do not have the necessary means to maintain effective digital communication, in which evidence needs to be examined physically for whatever reason, or in which the parties, their legal representatives or the arbitrators simply cannot sustain the tasks comprised within their respective roles due, exclusively (6), to the current circumstances.
Virtual Hearings as a Real Solution
Arbitration is already a system with a strong virtual-electronic presence. Notices of arbitration, claims, respondent memos, counterclaims and basically every submission may be presented electronically. Most of the parties’ communications amongst themselves and with arbitrators happen through emails. It is even recommended to hold procedural hearings in a virtual manner (7). Is the same still applicable for evidentiary and hearings on the merits?
Normally, Moot Courts are the ones to borrow experience from real life commercial arbitration, but this time the opposite would be quite useful. During the last 4 months, various prestigious Moot Court competitions found their current models frustrated by governments’ restrictions on travel and academic events. Instead of postponing or cancelling their events, administrators and participants alike found a way to adapt into the world of virtual hearings (8).
Certainly, there are many differences between an academic exercise and a real-life arbitration hearing. However, the real-life economic interest of the parties involved should stand in favor of looking for ways to celebrate these hearings, while still maintaining governmental restrictions. In many cases, particularly in international arbitration, virtual hearings will even allow the parties to save resources which they would have normally spent in traveling and lodging expenses for representatives, witnesses, and arbitrators.
Nevertheless, this savings, many argue, still come at a cost. As the Moot Courts participants probably realized, delivering a convincing intervention through a screen is certainly a challenge. In real-life arbitration practice this is also true, and it will be equally as challenging to interview witnesses, question experts and examine evidence, in general.
Challenging, yes, but not impossible. Organizations are already putting their minds at work to provide practitioners and arbitrators with the best advice as to how to conduct these hearings in an effective manner (9). Arbitrators should also do their best to go beyond the natural implications of virtual communication, and preserving the substance of communications maintained via videoconference.
Additionally, if we were to hold that the entire result of a hearing depends on the power a person has to perform convincingly in public, the entire legitimacy of commercial arbitration as a fair method of dispute resolution would crumble to pieces. But then again, practitioners should not be unprepared against the barriers presented by virtual communication.
As soon as possible, arbitral institutions, the parties, and the arbitrators should agree on the virtual communication service they wish to conduct their hearings on. When this is all settled, parties (and their representatives), arbitrators and administrative staff should familiarize themselves with the intricacies of this system.
As for the parties and their legal representatives, they should prepare and practice their interventions while using the respective service. This will provide a useful experience which could allow them to anticipate any possible setback. Also, when possible, legal representatives should communicate with witnesses via the selected service to acclimate them to the procedures, functions and even the interface of the app. The same applies to any other evidence which needs to be presented electronically.
As for the arbitrators and administrative staff, as soon as the videoconferencing app is selected, they should hold their internal communications through it. This will also allow them to familiarize themselves with the functions and interface of the app, which is especially important with arbitrators who are not used to the ever-changing world of virtual conferencing.
Arbitrators could even consider to hold some sort of “practice hearing”, in which the parties would not present any argument or evidence on the case, but with the sole purpose of agreeing on all the possible details of how the actual hearing will be conducted. Allocating times, establishing rules for communication between representatives, procedures for objecting during witness testimony, media and document sharing, procedures for party or witness questioning by the tribunal, amongst others.
The universe of available videoconferencing apps is not a limited one. With enough timing and effort, any arbitral tribunal, party, and legal representative interested in an efficient and effective arbitration procedure would be able to find one to suit their needs.
Final Remarks
There are many reasons as to why a businessperson would prefer arbitration over national litigation. Certainly, the possibility to adapt to a crisis created by a pandemic was not on anyone’s top of mind. Nevertheless, the flexible nature of arbitration as a dispute settlement mechanism must be put to the test in the interest of justice.
While the unavoidable bureaucratical nature of national litigation deprives interested parties from their right of access to justice, arbitral tribunals should be taking every available step to render prompt justice in arbitration procedures. In institutional arbitration, these efforts by arbitrators should be accompanied by strong support from arbitration centers.
But the biggest responsibility sits on the shoulders of the disputing parties and their legal representatives. During this highly uncertain times, businesspeople and lawyers alike should recognize the ever-growing value of legal certainty. And on the interest of said certainty, both claimants and respondents should make a genuine effort to see their arbitrations through, whenever that is possible.
Even, or even especially, during these troubling times, the good faith battle for that final award must go on.
PIE DE IMPRENTA: Juan Pablo Hernández (editor-in-chief), Guatemala, 18 May 2020.
Endnotes
1. Judicial procedures, except for criminal ones, have been suspended in Guatemala since 16 March 2020 by order of the Supreme Court.
2. For example, the Singapore International Arbitration Centre (SIAC) is promoting the use of virtual hearings. See SIAC, COVID-19 Information for SIAC Users, available at: https://www.siac.org.sg/images/stories/press_release/2020/%5bANNOUNCEMENT%5d%20COVID-19%20Information%20for%20SIAC%20Users.pdf.
3. Recently, A2J Tech Store and Peruvian Young Arbitrators held workshops on the use of tools for virtual hearings, which are available on Peruvian Young Arbitrators’ Facebook.
4. ICC, HKIAC, and LCIA are amongst those who have already taken measures.
5. ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic, Annexes I and II.
6. Not out of pure negligence or a simple desire not to fulfill their responsibilities.
7. See Article 24 of the ICC Rules of Arbitration.
8. For example: The 27th edition of the Willem C. Vis International Commercial Arbitration Moot; XII edition of the Moot Madrid: Competición Internacional de Arbitraje y Derecho Mercantil; 7th edition of the Competencia de Arbitraje Internacional de Inversión.
9. Such as A2J’s efforts, see supra note 3.
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