The outbreak of COVID-19 disease that spread around the world for
several months brought challenges to the international community. As a result,
the states closed their borders on lockdown to stop the disease’s expansion.
This lockdown has relocated all meetings, judicial and arbitral proceedings to
the online regime, hence, that is why scholars recalled an idea of
arbitration’s digitalization. However, we should analyze all risks of this
digitalization process. The list of such risks is quite extensive since it
covers the existence of technical problems for the parties, threats to the
parties’ confidentiality, violations of human rights, and obstacles in the
awards’ enforcement.
Main concerns of the arbitration’s digitalization
The reason for the unwillingness to conduct virtual arbitral proceedings
is peoples’ mistrust of new technologies. That is because people have never
used complicated computer technologies or do not want to use them because of
their unsuccessful experiences. For instance, the
2018 Queen Mary University of London Survey found that 80% of arbitrators have
never participated in online hearings with all participants in different
countries. Therefore, not all participants will agree on the virtual
hearings, which cannot be conducted without their consent.
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Even though parties consented to online hearings, another obstacle is
the availability of technology and its cost. The parties should find reliable
and complex equipment that will be suitable for online hearings. However, many
practitioners fear that technology will not work properly or that camera’s
quality will not be sufficient. Furthermore, usage of such high technologies
can increase the costs of arbitration several times. These costs are called
upon expenses on an online drive for document storage, an online platform for
hearings, and training for arbitrators and councils on the usage of these
technologies.
Threats to the parties’ confidentiality
Even if procedural problems can be resolved, the substantive concerns
require much more attention. One of such is the confidentiality concern that
encompasses fields of sensitive documents’ security and privacy during online
hearings. As we know, assurance of confidentiality is one of the main
arbitration’s advantages. Supporters of digitalization propose the creation of
an online platform to maintain all arbitration-related documents and conduct
hearings. The operation of this platform requires minimal human input. Hence,
all confidential documents may be accessed by unauthorized persons. Moreover,
there is no guarantee that documents will not be intercepted or that parties
will not record video and audio during an online hearing. As a solution,
arbitrators may ask all participants to confirm in writing that they will not
record hearings. However, such type of precautions cannot be based only on good
faith.
Does digitalization lead to the violation of human rights?
Lots of debates are held concerning the online hearings’ impact on the
fundamental right of due process, namely the right of fair trial and equality
of the parties. In that perspective, two problems may arise – the rationality
of online cross-examination of witnesses and realization of the right to be
heard. Supporters of digitalization argue that current technologies facilitate
conducting online cross-examination. However, opponents draw attention to the
inability to identify a witness’s facial expression, body language, and voice
sounds. What is more important, participants of a hearing cannot be sure that a
witness does not read a text hidden behind a camera or follow someone’s instructions.
Last but not least, the lawyer and witness may have a different Internet
connection that will lead to misunderstanding from the lawyer’s and
arbitrators’ side. As a result, all these factors complicate the witness
questioning stage and undermine the credibility and value of this evidence.
Source: USCIB
Online hearings threaten the right to be heard from different aspects.
Firstly, communication errors can deprive a party of the ability to transmit their
documents on the online platform. Such errors can be caused by the site’s
overloading or interception of the signal by third parties. For instance, hackers
placed a vicious code on the Permanent Court of Arbitration’s website that
inflicted computers of lawyers and diplomats. Hence, the party can be prevented
from filing its submissions in time that leads to the slowdown of arbitral proceedings.
The second concern relates to the stability of the Internet connection
during hearings. Opponents argue that Internet connection may cease to work at
the most important moment such as the respondent’s rebuttal of the claimant’s
position. It should be expected that persons from the rural environment may not
have a high-speed connection that is necessary for proceedings. Bad Internet
connection leads to the parties’ frustration, misunderstanding the parties’
positions by arbitrators, and undermining of the confidence in the faithful
outcome of a case. As a result, one of the parties may claim the inability to
present its position due to the technical errors and set aside an award.
Thirdly, these hearings require sophisticated technologies that cannot
be easily accessible or understandable by the parties. As was mentioned above,
such technologies demand a lot of expenses and experience. Therefore, if one of
the parties does not have enough technical knowledge, it is simply deprived of
the opportunity to defend itself.
The last problem concerns arbitrators’ obligation to manage time for
virtual hearings. Since councils of arbitral proceedings usually work from
different time zones, arbitrators should find the most convenient time for all
participants. Despite the arbitrators’ attempts, some councils may be forced to
participate on a nightly basis. Such a situation leads to the violation of the
parties’ equality.
The enforcement of awards
The process of digitalization also affects the last stage of proceedings
– recognition and enforcement of awards.
The Convention on the
Recognition and Enforcement of Foreign Arbitral Awards (“Convention”)
stipulates that arbitration agreements must be in writing. Thus, awards based on written agreements will be
enforceable. Unfortunately, there are no such provisions regarding online
awards. Notwithstanding that States can amend provisions of the Convention,
parties can easily set aside the enforcement of an award. Particularly, they
may claim an inability to present a case due to lengthy technical failures and
as a result, violation of the right to be heard.
Conclusion
Summarizing all points, the process of arbitration digitalization can
cause unnecessary risks for the parties. That is why legal practitioners and
parties to disputes fear the above-mentioned concerns and still prefer a
paper-based approach. Parties should consider all pros and cons before
starting online arbitral proceedings to avoid the possibility of an
unenforceable award. However, the COVID-19 pandemic can become a powerful
catalyst for the revision of all digitalization’s problems. In this perspective,
it is important to pay maximum attention to the legal regulation of these
digitalization processes and create a platform that will be suitable for
arbitration participants. In case of successful results, we shall adapt
ourselves to the new reality of online proceedings.
Written by Valeriia Yakimova, Kyiv-Mohyla Academy (Ukraine), degree in
Law