Our world has changed as a result of COVID-19; so has dispute resolution. In response to the onset of the COVID-19 pandemic, the ICC Commission on Arbitration and ADR established a Working Group to update the 2017 edition of its Report on Information Technology (IT) in International Arbitration. The report identifies issues to be considered when using digital solutions and processes in conducting arbitration proceedings. However, as a result of the sudden uptick in the use of technology in international arbitrations resulting from the pandemic, rather than updating its 2017 report, the ICC produced an entirely new report entitled titled ICC Commission Report on Leveraging Technology for Fair, Effective and Efficient International Arbitration Proceedings (the “Report”). The Report was released on February 18, 2022.
The scope of the Report is: (i) to identify the technologies being used most frequently in the arbitral process, (ii) to provide insight into the features and functionality that may enhance the arbitral process, and (iii) to discuss useful procedural practices and pitfalls to be avoided. The Report includes sample procedural language relating to technology tools and solutions, checklists for virtual hearings, items to consider when choosing an online case management platform and a template procedural order for the conduct of evidentiary hearings via teleconferencing.
In preparing the report, the ICC surveyed over 500 international arbitration community members on their experiences with, and opinions of, technology tools and solutions for international arbitration. The survey results indicated that the use of technology in international arbitration will increase in the future. Like the changes in the court system which resulted from COVID-19, the survey predicts that hard copy filings will not be the default in the future of international arbitration and that other items, such as e-briefs and hyperlinked exhibits, will be used much more frequently.
93% of respondents believe technology has transformed arbitration by helping streamline processes and improve the cost-effectiveness of the process. This is reflected at our firm, which was engaged in multiple international arbitrations throughout the early stages of the COVID-19 pandemic and to date. Rather than parties having to fly in to testify and incur the costs of staying at a hotel, parties could simply videoconference into the arbitration on an as-needed basis.
One of the key takeaways from the report is that the use of technology should be considered, and parties should examine their assumptions about how hearings will unfold at the outset of an arbitration. Arbitrators and parties should ask themselves how they can make better use of technology, without compromising fairness or efficiency. Most respondents to the survey said that they believed that there should be no presumption in favour of physical, hybrid or virtual hearings. Rather, tribunals should decide which method is appropriate based on the circumstances of the case to be heard. For example, parties with fewer resources or in rural areas may not have readily available access to reliable internet or possess the required technological competency for a virtual hearing. This may tip the balance in favour of a hybrid or in-person hearing, again depending on the circumstances of the case.
Another interesting point which arises out of the report is that in the ethical codes of some jurisdictions and arbitration bodies, it is now explicit that tribunals and arbitrators have a responsibility to possess basic technological competence, which includes keeping up to date with new developments. One of the reasons for this is that arbitrations are particularly at risk for cybersecurity and data privacy issues due to the sensitive nature of the information involved. Thus, all parties involved in the arbitration must be competent in technology in order to preserve the integrity of the process at large.
Below are key takeaways from the Report with respect to utilizing technology for international arbitrations, as well as issues to consider with respect to technology use.
One of the main technologies discussed in the Report is an online case management platform, which enables parties to track and store files in a centralized location. A secure case management platform administered by an arbitral institution allows parties to upload, share and store all documents for a case in a single location and helps avoid the need to prepare hard copies of pleadings and evidence. It can also result in time and cost savings and may help to streamline the document management process. The ICC is designing a secure digital platform and is expecting to launch phase 1 by June 2022.
Cybersecurity and Data Privacy
The Report explores how cybersecurity and data privacy have become important concerns in international arbitration. One of the main reasons parties choose arbitration is that, unlike traditional commercial litigation, it allows parties to resolve their disputes confidentially. International arbitrations often involve commercially sensitive and/or confidential information that is not publicly available. Arbitral proceedings are prime targets for cyberattacks given that the parties are often governments, large corporations, multinational groups, state entities or public figures. The implementation of proper cybersecurity protocols is critical to maintaining public trust in the arbitration process.
As such, arbitral institutions including the ICC now commonly expect that arbitral participants will take reasonable measures to prevent digital intrusions into the arbitral process and may require that the matter of cybersecurity be considered by no later than the first case management conference. The ICC also recommends that parties and tribunals have a written record of the technical measures that will apply during the arbitration.
Another potential risk of using technology for arbitrations is the risk that parties can alter or otherwise tamper with virtual documents and evidence. To ensure information is not altered after it has been produced, parties should produce information in a format which makes it more difficult to alter, such as Bates-numbered PDFs.
It may also be helpful for the parties to have access to metadata when the authenticity of a document is questioned. Metadata is data embedded within the document that can be used to show the date a document was most recently altered, among other things. It is also important to allow parties the right to inspect the originals of any documents where their authenticity is questioned.
The implementation of various technology and security measures may be costly and the question of who will bear the costs could become a point of contention between parties. Further, the licensing costs of certain platforms may not be proportionate to the dispute and the benefit derived may not be equally shared by or accessible to the parties.
If the tribunal requires a certain technology be used, for example, an online case management platform, it should consider whether the reasonable costs incurred to comply with the tribunal’s directions should be borne by one party or split between the parties and if such costs will be potentially recoverable by the successful as part of the costs of the arbitration. These kinds of cost issues can be determined and agreed upon as part of the initial case management conference.
Applicable Arbitration Rules and Mandatory Law
It is becoming increasingly common for parties in arbitrations to electronically sign and exchange documents, notifications and communications. In international arbitrations, it is important to keep in mind that some jurisdictions do not consider certain notifications, the service of documents or signatures, as valid where they are entirely or in part electronic. For example, in Nigeria there are express legal requirements for giving a hard copy notice of the commencement of an arbitration. Other countries have legislative requirements for an “original” or certified copy of an award.
There are now widely available e-signature applications, such as DocuSign, which people can use to create a signature and sign legal documents. However, some jurisdictions do not recognize electronic signatures or even scans of manual signatures and require a physical signature on hard copy paper. As such, it is important to comply with the laws which apply with respect to electronic documents and signatures in the jurisdiction of the arbitration.
In addition to familiarizing themselves with the laws which apply to the arbitration, the parties should clarify at the outset of the proceedings their preferred method of communication with respect to receiving documents and discuss whether any party or tribunal member is subject to technical restrictions on the size of email or attachments that can be received. Again, this is something that can be dealt with at the first case conference.
During parts of the pandemic, in-person hearings were not possible. As a result, parties and arbitrators were forced to adapt and virtual hearings became much more common. In the beginning stages, many parties and arbitrators experienced a learning curve as they navigated this relatively new method of hearing, including videoconferencing technologies and real time, on-screen document sharing. Now, some parties prefer virtual hearings because of the potential savings they offer in terms of time, travel and costs. They can also be more conducive to arbitrations where parties are located different time zones. Others still prefer in-person hearings, or a mix of both (hybrid hearings).
Generally, the ICC supports the use of virtual hearings. It has prepared a document called Checklist for a Protocol on Virtual Hearings and Suggested Clauses for Cyber-Protocols and Procedural Orders Dealing with the Organization of Virtual Hearings to assist parties and arbitrators participating in virtual hearings.
That being said, it is important to note that if a virtual hearing is convened despite the objection of a party or without the agreement of the parties, there is a risk that a party may challenge the validity and enforceability of the arbitral award. To ensure enforceability, the ICC has revised its rules to confirm the tribunal’s authority to conduct virtual hearings. Further, in ICC cases, when tribunals have proceeded with virtual hearings by agreement of the parties, they have sometimes incorporated language in the procedural order whereby parties agree to waive their rights to object to the enforceability of the award by reason of the hearing taking place virtually.
Although there are undoubtedly benefits to virtual hearings, the objections raised in recent ICC cases raise some questions regarding whether it is preferable to conduct virtual or hybrid hearings. Some of the concerns raised are as follows:
- The potential violation of due process rights, including the right to present one’s case;
- Technological limitations due to the participation from different locations and countries and older participants potentially being less technologically savvy;
- Confidentiality and time zone issues, limiting appropriate time slots;
- Additional costs involved;
- Difficulties in displaying or following evidence;
- Difficulties relating to witness preparation; and
- ‘Screen fatigue’ requiring shortened hearing days.
Arbitrators should consider these issues at the outset, when determining how the arbitration hearing will take place.
ICC Survey on Use of IT in International Arbitration
The ICC Commission on Arbitration and ADR conducted a survey to better understand the current state of technology in modern international arbitration practice and received 520 responses, mostly from those whose primary role in international arbitration proceedings is as counsel or arbitrator, or whose time is split between the two roles. Some key findings from the summary are as follows:
- 93% of respondents believe technology has transformed arbitration by helping streamline processes and improve the cost-effectiveness of the process;
- 83% agreed that technology has been underutilized in the arbitral process;
- 74% disagreed that technology has created or exacerbated concerns about fairness and/ or equal treatment of the parties, yet respondents were nearly evenly split as to whether technology has levelled the playing field between the parties, with 51% agreeing that it has and 49% responding that it has not;
- 95% of respondents believe that during the initial case management conference, tribunals should routinely discuss with the parties how IT may be used to increase the efficiency of, or otherwise enhance, the arbitral proceedings.
Some of the IT solutions the respondents stated that they would use ‘more often’ after the pandemic are:
- Videoconferencing for a case management or other procedural conference (83%);
- Online case management platform/virtual data room for exchange of all or most communications and submissions (71%);
- Cloud file sharing site for the exchange of documents (68%); and
- Hyperlinked submissions/e-briefs or e-bundles (58%).
Asked about whether technological competence will be an important consideration going forward when selecting an arbitrator, 51% responded ‘yes’ and 40% responded ‘it depends’.
Technology is becoming more entrenched in the legal system, including alternative dispute resolution methods. Although we are now seeing some return to in-person hearings, the legal system will not be returning to how it was before the pandemic. Further, as technology continues to advance and institutions such as the ICC continue to improve solutions to issues such as cybersecurity, technology will increasingly be used as a tool to facilitate access to justice by decreasing costs and time commitments.