Article: “The New Normal”: Virtual Hearings in Construction Arbitration Disputes – Two steps forward or one step back?
Robert Whitehead
Partner, Head of DIFC & International Arbitration, HAS Law
1. Introduction
The implementation of new technologies into the arbitration space has progressed at a significant pace, including the use of virtual hearings; however, is this an improvement or a detriment to the arbitration process where an in-person hearing is regarded by many, as crucial to the due process of law, or the right to a fair trial.
In this paper, I shall identify;
- what is a virtual hearing;
- how and why virtual hearings have impacted arbitral proceedings;
- what rules, guidelines and instruments are available to regulate virtual hearings;
- what impact and variance virtual hearings have had in different jurisdictions; the use of virtual hearings; and
- whether, or to what extent, virtual hearings should be used in construction disputes.
This paper will argue that virtual hearings should be avoided in construction disputes, where there are likely to be multiple experts, witnesses, counsel and Tribunal members due to the high value, document heavy, complex nature of such claims.
2. Impact of Virtual Hearings on Arbitration Proceedings
Ashford explains that “[a] virtual hearing is a hearing conducted by means of communication technology to simultaneously connect participants from two or more physical locations.”[1] This includes hearings conducted by Zoom calls or Microsoft Teams, along with other platforms. Wong’s position is that “the term virtual hearing is used to refer to a technology-enabled hearing where one or more participants appear via videoconferencing.”[2]
As Chen explains “[t]he COVID pandemic [was] a game changer by turning virtual hearings into a new normal in arbitral practice.”[3] The impact of this change was that tribunals had to react to legal and technological challenges, and “adapt as efficiently and quickly as possible to the requirements of the users of arbitration” [4] which “led to .. inherent technological advances in .. arbitration.”[5]
Giupponi’s view is that “the COVID-19 pandemic prompted contrasting and conflicting views on the use of virtual means for international dispute settlement, particularly concerning arbitration”[6] where “arbitral institutions updated their rules while publishing guidelines and guidance to deal with .. concerns.”[7]
In this regard, institutions “such as ICC, LCIA, VIAC, ICDR, SCAI, DIFC, CEPANI, Delos, CPR and others modified … their rules to expressly offer the possibility to hold hearings by videoconferencing or other modern means of communication”[8], which are considered below.
3. Rules, Guidelines and Instruments Regulating Virtual Hearings
Unlike court litigation proceedings, arbitration agreements often refer to arbitration rules empowering the arbitral tribunal to conduct the proceedings as it sees fit.
Arbitration proceedings are a creature of contract and are based upon the agreement that was entered into between the parties. Put another way, “[t]he permissibility of a virtual hearing depends on the applicable legal and contractual framework, in particular the law of the seat of the arbitration and the agreement to arbitrate (including any arbitration rules incorporated).”[9] This paper shall consider different institutional rules and how they deal with the use of virtual hearings.
Article 19 of the ICC Rules provides that “[t]he proceedings before the arbitral tribunal shall be governed by the Rules and, where the Rules are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on, whether or not reference is .. made to the rules of procedure of a national law to be applied to the arbitration.”[10]
Arp and Nemesio explain that “the ICC in early 2021 amended Article 26(1) of the ICC Rules of Arbitration to provide that the arbitral tribunal may decide, after consulting the parties, and on the basis of the relevant facts and circumstances of the case, that any hearing will be conducted in person or remotely by videoconference.”[11]
Article 14.5 of the LCIA Rules states that “[w]ithout prejudice to the generality of the Arbitral Tribunal’s discretion, after giving the parties a reasonable opportunity to state their views, the Arbitral Tribunal may .. make any procedural order it considers appropriate .. to the fair, efficient and expeditious conduct of the arbitration.”[12]
Further, Article 17(1) of the UNCITRAL Rules gives arbitral tribunals wide discretion to deal with procedural directions and states an “arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at an appropriate stage of the proceedings each party is given a reasonable opportunity of presenting its case..”[13]
Article 28(4) of the UNCITRAL Rules states that “[t]he arbitral tribunal may direct that witnesses, including expert witnesses, be examined through means of telecommunication that do not require their physical presence at the hearing (such as videoconference)”.[14]
The International Bar Association (“IBA”) rules “were amended as a resource to parties and to arbitrators to provide an efficient, economical and fair process for the taking of evidence in international arbitration, among other things, by including a provision on remote hearings.”[15] For example, the IBA Rules on the Taking of Evidence in International Arbitration (“IBA Rules”) grants the power to order a remote evidentiary hearing and establish a protocol to address issues.
Article 8(2) of the IBA Rules provides that “[a]t the request of a Party or on its own motion, the Arbitral Tribunal may, after consultation with the Parties, order that the Evidentiary Hearing be conducted as a Remote Hearing. In that event, the Arbitral Tribunal shall consult with the Parties with a view to establishing a Remote Hearing protocol.”[16]
Accordingly, the different institutions either had in place, or amended their rules, to deal with the advent of virtual hearings in arbitration and as Arp and Nemesio explain “other institutional rules support the use of technology to increase the efficiency, economy and expeditious conduct of the arbitration, including the hearings.”[17]
For example, the Singapore International Arbitration Centre (“SIAC”) “implicitly refer[s] to the use of technology by providing for the holding of a hearing “by any other means”.[18] In August 2020, the SIAC Secretariat produced a guide called “Taking Your Arbitration Remote”[19] which recommended for the parties to ask questions regarding virtual hearings to ensure a smooth process and minimize disruptions and explains that “[w]hile Remote Hearings are a viable alternative to traditional in-person hearings, it is not necessarily suitable in all types of cases.”[20]
Ashford comments that “a tribunal will generally follow the parties’ agreement”[21] and any “exercise of any power will likely come down to potentially competing interests of the parties’ right to be heard and treated equally, (enshrined in many national laws and institutional rules) and the tribunal’s obligation to conduct proceedings in an efficient and expeditious way.”[22] In this regard, such protocols on remote hearings should be read, reviewed and adhered to.
The CIArb Note on Remote Dispute also provides some guidance and explains that “[i]n the context of both current and future proceedings it is important to demonstrate parties’ affirmative agreement to the use of a particular type of remote proceeding.”[23]
Arp and Nemesio explain that the tribunal “must decide whether to hold a virtual hearing or not” [24] and “must assess whether to use its specific power that it “may” hold hearings remotely”[25] and “in the absence of any specific provision, the tribunal will have to exercise its broad general power on the organisation and conduct of the proceedings.”[26]
4. Treatment of Virtual Hearings in Different Jurisdictions
The use of virtual hearings has, however, varied in different jurisdictions, and this paper shall consider its impact in Australia, the United Kingdom (“UK”), and the United Arab Emirates (“UAE”).
4.1 Australia
Article 18 of the International Arbitration Act 1974 states that “[s]ubject to these Rules, the arbitral tribunal may conduct the arbitration in such as it considers appropriate, provided that the parties are treated with equality and that at an appropriate stage of the proceedings each party is given a reasonable opportunity of presenting its case..”[27]
As Martinez and Tseng explains the International Arbitration Act 1974 (“IAA”) “gives effect to the Model Law”[28] and “under the IAA, there is no express right to a physical hearing in arbitration [and] the only relevant express rights are for the parties to be treated “with equality” and to have “a reasonable opportunity to present [their] case.”[29]
4.2 UK
Section 33 of the Arbitration Act 1996 provides that “(1) [t]he tribunal shall: (a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and (b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined..”[30]
Further, section 34 of the Arbitration Act 1996 provides that “(1) [i]t shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree any matter. (2) Procedural and evidential matters include – (a) when and where any part of the proceedings is to be held;”[31] This was confirmed by the Supreme Court which held that under section 34 of the Arbitration Act 1996, a court has complete power over procedural and evidential matters[32].
4.3 UAE
Article 23 of Federal Law No. 6/2018 (as amended by Federal Decree-law No. 15 of 2023) (the “Federal Law”) provides that “(1) [t]he parties may agree on the procedures that the Arbitral Tribunal shall follow to conduct the arbitration proceedings.. (2) If there is no agreement to follow certain procedures, the Arbitral Tribunal may determine the procedures that it may deem appropriate subject to the provisions of the present Law, in compliance with the basic principles of litigation and international agreements to which the State is a party.”[33]
Article 26 of the Federal Law provides that “[t]he Parties to the arbitration shall be treated with equality, and each party shall be given an equal and full opportunity to present his claims and defence.”[34]
Article 28 of the Federal Law provides that “[t]he parties to arbitration may agree on the seat of arbitration in reality or virtually through means of modern technology or in technical environments..”[35]
In the Dubai International Financial Centre, Article 26 of Arbitration Law, DIFC Law No. 1 of 2008 (as amended by Arbitration Law Amendment Law DIFC Law No. 6 of 2023) (the “DIFC Arbitration Law”) provides that “(1) [s]ubject to the provisions of this Law, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting the proceedings. (2) In the absence of such agreement, the Arbitral Tribunal may, subject to the provisions of this Law, conduct the Arbitration in such manner as it considers appropriate..”[36]
Accordingly, the Tribunal has wide powers and authority to deal with evidence, including the use of video conferencing in arbitration proceedings.
Article 31 of the DIFC Arbitration Law states “[s]ubject to any contrary agreement by the parties, the Arbitral Tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials..”[37]
Snider, Gaffney and Nasreddine explain that “[t]he UAE Federal Arbitration Law, DIFC Arbitration Law and ADGM Arbitration Regulations do not expressly provide for a right to a physical hearing in arbitration proceedings”[38] and “unless the parties agree otherwise, in an arbitration seated in the UAE, a tribunal has the discretion to decide whether to hold a physical or remote hearing for the presentation of legal arguments or evidence or whether the proceedings are to be conducted on the basis of documents only.”[39]
The writer recently appeared as counsel in a five-day in-person hearing and directions were given by the Judge to have closing submissions delivered virtually in circumstances where the Judge was based in Hong Kong, the Defendant’s counsel was based in London, and I was based in Dubai. This worked well, and reduced time and costs significantly than if all parties were to return to Abu Dhabi for closing submissions. The virtual hearing was administratively pragmatic, cost-effective and greener in nature.
5. Intersection of Virtual Hearings and Construction Disputes
Construction disputes tend to be highly complex and document heavy, where construction projects can last several years with several parties involved, including, for example, employers, contractors, subcontractors, engineers, contract administrators, designers. These issues are propounded in construction cases where the credibility of witnesses is important and the need to take client instructions and understand the complexities of the case are essential.
Most importantly, are the parties, witnesses and expert’s demeanor and credibility, as if they are not physically present in the same room it may create a due process challenge. As Chen puts it “cross-examination may be limited by technical difficulties, which can impact the ability of counsel to challenge the witness’s evidence”[40] and “[t]here may be challenges in controlling the hearing environment, such as ensuring that witnesses are not coached during breaks.”[41]
Other issues may include technical limitations and malfunctions and ‘screen fatigue’.”[42] For example, if the arbitration proceedings are disrupted by technical glitches, poor connectivity or software issues and these disrupt the hearing such as making certain parts inaudible, there is a right to justice concern.
In construction cases, technical points that need to be assessed often require an expert witness. Construction experts in virtual hearings must be well prepared, responsive and adaptable; however, there are several challenges that an expert may face in a virtual hearing as “[a]part from the technical disruptions .. reading body language and facial expressions in a virtual hearing may be difficult, impacting the expert witness’s ability to establish rapport and credibility with the tribunal .. and it may be more difficult for the expert witness to establish a rapport with the tribunal or to respond to questions and concerns in real-time”[43] with “concern that virtual hearings will curtail the tribunal’s ability to assess the credibility and strength of the evidence”[44] and “risk that the expert witness communicates with someone outside the virtual hearing.”[45] In my experience, certain practitioners are against virtual hearings due to unfamiliarity with online platforms; however, as Ashford explains “[i]t is not acceptable for technophobia to impede or override the parties’ consent.”[46]
In the alternative, as indicated above, an advantage of online hearings is greener arbitration. Ashford comments that “innovation through the promotion of virtual hearings; reduced costs (by reducing travel); freed up diaries by taking out travel, acclimatation time, and conferences; and made us all better at working without paper .. the result is to have a greener planet and a cheaper and more efficient arbitration world.”[47] As Yuying explains the campaign for greener arbitrations in the Green Pledge is “a general commitment to greener practices, with some of the key principles including promoting virtual hearings as an alternative to traveling.”[48] From my own experience, legal representatives, witnesses and experts, particularly in construction disputes, may all be in different geographical locations, making attending a physical hearing problematic; a party may instruct a barrister from London, a witness from India, and if the seat/place of the arbitration is Dubai, results in international travel and increased carbon footprint. Yuying explains that “for medium to large sized arbitrations, ‘just under 20,000 trees could be required to offset the total carbon emissions resulting from just this one arbitration. Long haul flights alone can contribute over three quarters of these carbon emissions .. [and] that even ‘offsetting the carbon emissions of the caseloads of all major arbitral institutions in one year would require planting a forest eleven times the size of Paris.”[49]
Other benefits are “the ‘potential for greater availability of dates for hearings, ‘greater efficiency through use of technology’, and ‘greater procedural and logistical flexibility’.”[50] Giupponi explains that “[d]espite apparent differences, the divide between Civil Law and Common Law traditions dissipates when it comes to online arbitration”[51] as “[v]irtual hearings eliminate the need for travel and accommodation expenses for participants, including arbitrators, parties, witnesses and legal representatives, and this reduces overall costs associated with conducting arbitration proceedings.”[52]
However, as Legg explains “users appearing on video may have greater difficulty engaging in the proceedings and may feel alienated, stressed or fatigued.”[53]
Giupponi points out that “[f]or those cases in which the arbitral agreement stipulated a specific “place of arbitration”, the shift to a virtual environment could be considered detrimental for the parties’ rights .. [t]his entails looking at these provisions through the lens of the due process of law principle and further examining the scope of the arbitrator’s mandate.”[54]
There is also concern regarding confidentiality and security, as although cyber security protocols and procedures seek to avoid any breaches of confidentiality, there remains a risk of breach in the virtual environment, by using third party websites and providers, capable of being hacked. Chen explains that “[t]he use of remote hearings has increased the risk of cybersecurity, which can compromise the integrity and security of the information shared during the hearing.”[55] There is also the “difficulty of accommodating multiple or disparate time zones, harder for counsel teams and clients to confer during hearing sessions, difficulty in controlling witnesses and assess their credibility.”[56]
6. Conclusion
The question then is whether virtual hearings should become the ‘new normal’ in construction arbitration disputes.
The facts of a construction case often raise technical points involving extensive records, such as programmes, weekly and monthly reports, minutes of meetings and detailed correspondence. Given the nature of such disputes, a crucial element is expert evidence; on delay or quantum, as experts are often appointed to produce an independent report, and then a joint report. However, witness testimony can also be an issue where witnesses, who were present at the time of the project, may no longer be employed by the same party, may not be available to give evidence, or may be based in a different jurisdiction. In this regard, the writer’s view is that emotional intelligence such as the demeanor, mannerisms and the general feel for an expert or a witness, is essential for the arbitrator to reach a verdict which is fair and in line with proper due process, and in such circumstances, an in-person hearing should be used.
Florescu explains that “human contact is one of the most important factors which differentiates us from the so promoted artificial intelligence”[57] however “efficiency will have its say and parties will probably opt for virtual hearings when the interests require”[58] and “the virtual will still not replace personal human interaction and that it will not become by itself the new norm”.[59] The writer agrees that virtual hearings should be used in certain circumstances, especially where the need arises; however, in complex construction cases, which are often high value, document heavy, and where complex issues are at play, virtual hearings should generally be avoided.
Separately, Ashford explains that “[m]ore difficult issues arise if the parties are not agreed [and] .. [t]his will involve the consideration of whether the power exists, at law or by reason of the arbitration agreement …, to order a virtual hearing; the considerations that weigh in the exercise of the power and how the facts fit to those considerations.” [60]
Perhaps the solution then is not just choice, but to offer hybrid hearings if the need arises, which is “an alternative to an in-person hearing and parties and tribunals should consider whether it is possible to find a solution to any particular difficulty that has been identified with a virtual hearing [a]n example would be where counsel attend in-person, but a witness, who is self-isolating, gives evidence virtually .. [i]t may be appropriate for oral evidence to be given in person and closing arguments to be delivered virtually.” As the writer has explained, this worked particularly well in a recent case he was involved in where the hearing took place in person (in Abu Dhabi) and closing submissions were virtual.
Regardless, any issues regarding virtual hearings can be avoided by following clear protocols[61] including tribunal directions, by way of procedural orders, where the parties agree upon the technology to be used and the use of virtual testimony. As the CIArb Guidance Note on Remote Dispute Resolution Proceedings provides “[i]n the interests of equality, it is preferable that if one party must appear to the tribunal remotely, both parties should do so.”[62] Ultimately, as Legg points out the aim is to “strike a balance between procedural fairness and the efficient administration of justice”.[63]
[1] Peter Ashford, “The Right to an ‘In-person’ Hearing in International Arbitration” (2021), p576
[2] Anna SP Wong, “Virtual Court Hearings: Judicial Perspective from Ontario Judgments” (2022), p10
[3] Lei Chen, “Will Virtual Hearings Remain in Post‑pandemic International Arbitration?” (2024), p832
[4] Christina Ioana Florescu, “Practices deployed to foster efficiency in international construction arbitration.” (2021), Abstract
[5] Ibid
[6] Belen Olmos Giupponi, ““Virtual” Dispute Resolution in International Arbitration – Mapping its Advantages and Main Caveats in the Face of COVID-19”, (2023), p63
[7] Ibid
[8] Christina Ioana Florescu, “Practices deployed to foster efficiency in international construction arbitration.” (2021), p16
[9] Peter Ashford, “The Right to an ‘In-person’ Hearing in International Arbitration” (2021), p576
[10] 2021 Arbitration Rules, ICC – https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/2021-arbitration-rules/ – accessed on 09 November 2024
[11] Bjorn Arp and Edwin Nemesio, “The Practice of Virtual Hearings during COVID-19 in Investment Arbitration Proceedings,” (2022), p160
[12] 2014 LCIA Arbitration Rules (effective from 01 October 2014) – https://www.lcia.org/dispute_resolution_services/lcia-arbitration-rules-2014.aspx – accessed on 09 November 2024.
[13] UNCITRAL Arbitration Rules (2021) – (effective from 2021) – https://uncitral.un.org/sites/uncitral.un.org/files/media-documents/uncitral/en/21-07996_expedited-arbitration-e-ebook.pdf – accessed on 09 November 2024.
[14] Ibid
[15] Ibid, p162
[16] IBA Rules on the Taking of Evidence in International Arbitration – adopted by resolution of the IBA Council 17 December 2020 – https://www.ibanet.org/MediaHandler?id=def0807b-9fec-43ef-b624-f2cb2af7cf7b – accessed on 09 November 2024.
[17] Bjorn Arp and Edwin Nemesio, “The Practice of Virtual Hearings during COVID-19 in Investment Arbitration Proceedings,” (2022), p161
[18] Ibid, p161
[19] SIAC Guides, Taking Your Arbitration Remote, SIAC Secretariat – August 2020 – https://siac.org.sg/wp-content/uploads/2022/07/SIAC-Guides-Taking-Your-Arbitration-Remote-August-2020.pdf – accessed on 09 November 2024.
[20] Ibid
[21] Peter Ashford, “The Right to an ‘In-person’ Hearing in International Arbitration” (2021), p578
[22] Ibid, p579
[23] CIArb Guidance Note on Remote Dispute Resolution Proceedings – 2020 https://www.ciarb.org/media/3pkhacut/16-remote-hearings-guidance-note.pdf?v=TBrWbI3nk1E – accessed on 09 November 2024.
[24] Bjorn Arp and Edwin Nemesio, “The Practice of Virtual Hearings during COVID-19 in Investment Arbitration Proceedings,” (2022), p163
[25] Ibid
[26] Ibid
[27] International Arbitration Act 1974, No. 136, 1974 (compilation date 18 February 2022 and registered date 02 March 2022) – https://www.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/consol_act/iaa1974276/ – accessed on 09 November 2024.
[28] Lucy Martinez and Jay Tseng, “Does a Right to a Physical Hearing Exist in International Arbitration? Australia” (2022), p2
[29] Ibid
[30] Arbitration Act 1996 (effective from 25 January 1996) – https://www.legislation.gov.uk/ukpga/1996/23/contents – accessed on 09 November 2024.
[31] Ibid
[32] Jivraj v. Hashwani [2011] UKSC 40
[33] Federal Law No. 6/2018 (as amended by Federal Decree-law No. 15 of 2023) – https://uaelegislation.gov.ae/en/legislations/1069/download – accessed on 09 November 2024.
[34] Ibid
[35] Ibid
[36] Arbitration Law, DIFC Law No. 1 of 2008 (as amended by Arbitration Law Amendment Law DIFC Law No. 6 of 2023) – https://www.difc.ae/business/laws-and-regulations/legal-database/difc-laws/arbitration-law-difc-law-no1-2008 – accessed 09 November 2024
[37] https://edge.sitecorecloud.io/dubaiintern0078-difcexperie96c5-production-3253/media/project/difcexperiences/difc/difcwebsite/documents/laws–regulations/arbitration_law_difc_law_no_1_of_2008.pdf
[38] Thomas R. Snider, John P. Gaffney and Malak M. Nasreddine, “Does a Right to a Physical Hearing Exist in International Arbitration?” The ICCA Report, p3
[39] Ibid, p3
[40] Ibid, p841
[41] Ibid, p841
[42] Ibid, p838
[43] Ibid, p844
[44] Ibid, p844
[45] Ibid, p844
[46] Ibid, p582
[47] Peter Ashford, “The Right to an ‘In-person’ Hearing in International Arbitration” (2021), p574
[48] Zhang Yuying, “Sustainable Arbitration Along the Belt and Road Initiative: The Green Model Clause”, (2024), p191
[49] Ibid, p181
[50] Ibid, p183
[51] Belen Olmos Giupponi, ““Virtual” Dispute Resolution in International Arbitration – Mapping its Advantages and Main Caveats in the Face of COVID-19”, (2023), p66
[52] Lei Chen, “Will Virtual Hearings Remain in Post‑pandemic International Arbitration?” (2024), p830
[53] Michael Legg and Anthony Song, “The Courts, the Remote Hearing and the Pandemic: from action to reflection”, p137
[54] Belen Olmos Giupponi, ““Virtual” Dispute Resolution in International Arbitration – Mapping its Advantages and Main Caveats in the Face of COVID-19”, (2023), p63
[55] Lei Chen, “Will Virtual Hearings Remain in Post‑pandemic International Arbitration?” (2024), p838
[56] Ibid, p838
[57] Christina Ioana Florescu, “Practices deployed to foster efficiency in international construction arbitration.” (2021), p15
[58] Ibid
[59] Ibid
[60] Peter Ashford, “The Right to an ‘In-person’ Hearing in International Arbitration” (2021), p579
[61] CIArb Guidance Note on Remote Dispute Resolution Proceedings – 2020 https://www.ciarb.org/media/3pkhacut/16-remote-hearings-guidance-note.pdf?v=TBrWbI3nk1E – accessed on 09 November 2024.
[62] Ibid
[63] Michael Legg and Anthony Song, “The Courts, the Remote Hearing and the Pandemic: from action to reflection”, p147