Virtual hearings in arbitration: here to stay?

June 2022  |  SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION

Financier Worldwide Magazine

June 2022 Issue

When cases of a novel flu virus were first reported, most, including those of us in the midst of, or with court or arbitration hearings approaching, paid little attention. However, by April 2020, almost half of the world was living under stay-at-home orders of some kind because of the coronavirus (COVID-19) pandemic, rendering the traditional ‘in-person’ approach to dispute resolution almost impossible.

An industry that is not known for its innovation, lawyers, their clients and decision makers alike had to engage with the entirely ‘virtual’ hearing. That is, with all evidence, argument and cross-examination taking place often from remote and far away locations and often in less-than-ideal environments: including kitchen tables and spare bedrooms (for those lucky enough to have spare bedrooms or otherwise sufficient space).

Both international arbitral institutions and the courts embraced, and mandated in certain instances, the virtual hearing. For some, the learning curve has been steep and painful. However, post-pandemic wisdom appears to be that ‘virtual hearings’ are here to stay. But in what form, and to what extent – is the practical reality that, certainly lawyers (if not others), will want hearings to return almost entirely to their previous form, with exceptions made to allow only for remote evidence in more exceptional circumstances – and are we seeing that already?

Early 2020: the ‘beginning’

The ability to accommodate virtual hearings in whole or in part had existed for some time pre-pandemic. Procedural conferences were often conducted by telephone and witnesses were permitted to give evidence remotely where appropriate based on the circumstances, for instance the extent to which the evidence was central or ancillary to the case, and whether a demand for international travel was proportionate, particularly where there were numerous witnesses. Similarly, and dependent on the rules of the forum and jurisdiction, remote substantive hearings could be accommodated. However, the ‘2018 Queen Mary International Arbitration Survey’ of more than 1000 international arbitration practitioners, a forum where participants in numerous jurisdictions and substantial international travel is to be expected, indicated that as late as 2018 fewer than one in 10 international arbitration users were regularly participating in virtual hearings and almost two-thirds had never been involved in a virtual hearing.

The legal profession acknowledged the potential benefits that may be brought by increased use of virtual hearings, namely efficiency and costs savings, flexibility, and most of all, the ability to keep resolution of disputes moving in the middle of international lockdowns and travel bans. There simply was no other practical option.

However, as with most technology, the now pervasive use of new and often multiple platforms was always liable to hiccups. No one wants to appear in a virtual hearing or other business meeting as a cat or a potato, or have housemates make a surprise cameo. In reality, such mishaps, while humorous, were minor in comparison to the extent of disruption that a virtual hearing can potentially suffer, especially where there may be tens of attendees logged in from around the world.

Lawyers also had legitimate concerns regarding security and confidentiality, connectivity or other purely technical issues, and the increased prospect of those the more add-ons that were involved, such as simultaneous translations, live transcripts, e-bundles and virtual breakout rooms. Not to mention the question of how one should best privately communicate with their own team members and their clients or maintain any form of momentum or rhythm during cross-examination.

All of these could impact the fairness of proceedings, for example in the form of reduced efficacy of witness cross-examination or indeed the parties’ allocated time lost more generally to resolution of technical issues. That, in turn, also brought a perceived increased risk in certain quarters of challenges to awards based on procedural unfairness in international arbitration.

However, objections to virtual hearings (at least reasonably short ones of a few days), such as they existed, were often half-hearted or given fairly short shrift by decision makers where, taking all circumstances into account, a virtual hearing could clearly be accommodated and any potential concerns about fairness catered for by reserving extra days or conducting short trials of the technology in advance of the hearing. That relevant court and arbitral procedural rules were in many cases amended specifically to anticipate virtual hearings no doubt provided decision makers both the impetus and confidence to proceed accordingly.

A post-pandemic world: what is the verdict on the virtual hearing?

Research made possible by this increase in the use of virtual hearings, including from HM Courts and Tribunal Service, Berkeley Research Group and Queen Mary University, suggests that in both litigation and arbitration, participants are content for some hearings to continue in a virtual format post-pandemic, whether entirely virtual or in a hybrid format, where some participants attend in person and others remotely, depending on the circumstances of the case. These circumstances can broadly be described as ‘when the interests of justice will allow’, and include the type and length of the hearing, the stakes and complexity of the case, the requirement for evidence from witnesses, the support needs and location of participants, the comparative cost of an in-person or virtual hearing, the reliability and security of available technology, including in the participants’ respective locations, and the preferences of the parties. These considerations are unsurprising and essential. They will also differ in every individual case.

Certain procedural matters, such as hearings and general conferences, are likely to proceed in future, either entirely virtually or in a mixed format. Absent a detailed legal argument and evidence, as opposed to merely procedural arguments, parties have historically been more amenable to the efficiency and convenience of virtual hearings in that context.

However, the post-pandemic approach to substantive hearings seems likely to revert, to a considerable extent, to a preference for in-person hearings where those can reasonably be accommodated. For high-value, complex international commercial matters, our experience has been that in a number of instances over the last two years, all parties considered that future substantive hearings should be conducted entirely in person, subject to COVID-19 restrictions. This will not be the case in every instance, but it underlines that lawyers, their clients and decision makers consider that taking everything into account, there are considerable advantages to hearing participants sitting in one room together.

Certainly, surveys conducted in light of the now considerable virtual hearing experience indicate that matters which concerned practitioners regarding effective and fair conduct of virtual hearings, have not been assuaged entirely.

Participants in English High Court litigation, a court system which was particularly agile in embracing the need for virtual hearings during the pandemic, especially judges, view remote hearings as resulting in less formality, more distractions and poorer focus for participants. In particular, many judges are of the view that the physical court environment is necessary to establish the formality and seriousness of the court process, something that cannot be replicated via video link.

Aside from ordinary connectivity issues, many participants experience ‘screen fatigue’ during lengthy sittings, finding it difficult to concentrate, with giving evidence from home further exacerbating the problem. Judges also report that virtual hearings negatively impact their wellbeing, including stress levels and fatigue.

There also remain concerns about the confidentiality, security and privacy of virtual hearings, particularly when participants join from their homes. Even witnesses giving evidence from local offices are often closely surveilled, having additional cameras set up to ensure they have no unauthorised guests or documents with them during cross-examination.

Expert witnesses report a perception that judges and juries are less interested in their evidence when given remotely. Experts also report adverse impacts on their performance during hearings because preparation generally takes place virtually rather than in person.

Therefore, concerns that parties now have with virtual hearings perhaps extend beyond those which they identified in the early stages of the pandemic.

In England & Wales, the judiciary was keen to return to the ‘gold standard’ of in-person trials as soon as COVID-19 restrictions permitted. In arbitration, almost all participants would prefer post-pandemic hearings to proceed either in person or on a hybrid basis, with fewer than one in 10 wanting them to remain fully virtual.

With these factors in mind, it appears more likely that fully virtual proceedings will continue only for substantive hearings concerning smaller, relatively straightforward commercial disputes, with limited issues, where evidence is relatively limited or where the cost of an in-person hearing involving numerous international participants is considered disproportionate, and where the parties agree. Even in those instances, hybrid hearings may be more likely in such circumstances, allowing for some of the disadvantages of fully virtual hearings to be mitigated.

In other instances, practitioners can expect decision makers to challenge whether a hearing should be postponed to accommodate in-person attendance, or the submission that a witness or set of witnesses is so ‘key’ that they must be available for in-person cross-examination, to a greater degree. Similarly, particularly where more junior practitioners and client representatives have become ingrained at an earlier stage of their careers with at least hybrid or in certain instances, fully virtual hearings, a more flexible approach may, in certain instances, become increasingly welcome.

Are virtual hearings here to stay? Yes – in some form – and what that is will depend on several factors, on a case by case basis.

 

James Bremen and Elizabeth Wilson are partners and Lucy Hirsch is a senior associate at Quinn Emanuel Urquhart and Sullivan LLP. Mr Bremen can be contacted on +44 (0)20 7653 2270 or by email: jamesbremen@quinnemanuel.com. Ms Wilson can be contacted on +44 (0)20 7653 2022 or by email: on elizabethwilson@quinnemanuel.com. Ms Hirsch can be contacted on +44 (0)20 7653 2066 or by email: on lucyhirsch@quinnemanuel.com.

© Financier Worldwide

BY

James Bremen, Elizabeth Wilson and Lucy Hirsch

Quinn Emanuel Urquhart and Sullivan LLP

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