The global difficulties caused by the coronavirus (COVID-19), various State measures imposing restrictions on the movement of people, social distancing and complete lockdowns, while necessary to protect health, are inevitably having an impact on litigation in national courts, globally. In certain countries courts have had to limit, or to even entirely close, their operations due to social distancing measures in place, leading to hearings being canceled or postponed. In other countries, only “urgent” and “essential” matters are being heard.
In light of the shutdown of court systems in certain countries, parties already litigating their disputes find themselves in a difficult position – facing significant delays and highly uncertain timelines for the resolution of their case. In such unpredictable circumstances, the parties may wish to consider one of the alternative dispute resolution mechanisms available, such as mediation or arbitration which, at least so far, have proven to be less impacted by the global difficulties caused by COVID-19.
Contrary to the common belief that arbitration is only possible if there is an arbitration clause in the underlying contract, many parties fail to realize that arbitration is also possible in the absence of an arbitration clause, as explained in Arbitration Proceedings without an Arbitration Clause. As arbitration is a purely consensual dispute resolution method, the parties are free to conclude a so-called “submission agreement” (also known as “compromis”) to submit a dispute which has arisen to arbitration. If the parties decide to reach an agreement to submit their dispute to arbitration, which can be done pending court proceedings, it is important to bear in mind that, first, the consent of all parties’ involved is required and, second, the dispute has to be “arbitrable”. While most commercial disputes are arbitrable, the disputes considered to be « arbitrable » are defined in the respective national laws, as explained in further detail in The Concept of Arbitrability in Arbitration.
Why Is Arbitration Less Impacted by COVID-19 than Litigation?
The answer lies within the nature of arbitration itself. Arbitration is a flexible, private and consensual dispute resolution mechanism. These traditional advantages of arbitration in comparison to litigation are proving even more valuable in times of the global difficulties caused by COVID-19. Certain advantages of arbitration in comparison to litigation, include, inter alia:
- Flexibility of the arbitration rules, which allows parties to tailor the procedure to their own needs, for example, to agree on the procedural timetable, to easily adjust the deadlines, to postpone the hearings or to agree to hold all hearings virtually or take other measures in order to diminish health risks.
- Technology, Videoconferencing and Virtual Hearings were widely used in international arbitration even before the COVID-19 pandemic. As reported in Virtual Hearings in International Arbitration, the number of hearings in international arbitration which are being held virtually are sharply rising due to COVID-19, which is unsurprising, as virtual hearings pose no health risk. Unlike before courts, the parties are free to agree on an appropriate technology to be used for arbitration proceedings, with Microsoft Teams, Cisco Webex, BlueJeans, Zoom (despite its security issues) and many other technical solutions being used.
- Continuous Administrative Support, as all major international arbitration institutions, such as the ICC, the LCIA, the SCC, the PCA, SIAC, the HKIAC continue to operate, the parties can count on full administrative support for all pending and future cases.
- Digitalization, E-Filings and Paperless Proceedings are yet another common feature of international arbitration proceedings, useful in in the current pandemic caused by COVID-19. Indeed, it is common in international arbitration for parties’ submissions, witness statements, exhibits, expert reports, as well as all procedural correspondence to be exchanged electronically only, a feature which is still uncommon in many domestic court systems.
- Time and Costs: arbitration is generally considered to be a less expensive and faster alternative to national courts. The primary advantage is due to the fact that there are no appeals, which can drag on for years in many domestic court systems, increasing litigation costs. There is also typically only one final hearing, with most submissions taking place by written correspondence. On the other hand, the fees of private arbitrators must be paid for by the parties, unlike judges who are paid by public funds. In the present circumstances, where courts are delayed, parties may wish to calculate costs in advance and consider proceeding to arbitration, if a case is time-sensitive.
How to Initiate Arbitration Proceedings?
If there is an arbitration clause in the underlying contract, initiating arbitration is a rather simple process, which can be done by lawyers or even non-lawyers, as party representation is not required in most jurisdictions (for further information see How to Initiate International Arbitration?). That said, it is typically wise to use lawyers who are experienced in arbitration, which requires a certain skillset.
In ad hoc arbitration proceedings, for example, under the UNCITRAL Arbitration Rules, arbitration is commenced by service of the Notice of Arbitration to the other party.
In administered arbitrations, proceedings are commenced by submission of a Notice of Arbitration (named a Request for Arbitration under certain institutional rules) before the competent institution, alongside the payment of a filing fee. Fortunately, nearly all arbitral institutions continue operations despite difficulties caused by COVID-19, and most of them have immediately come up with solutions of digitalization, online case management platforms, the conducting of online hearings and electronic filings, as explained in detail below.
While COVID-19 inevitably has had an impact on ongoing arbitration proceedings, the disruptions remain minor, such as adjustments to the procedural timetable or changing to virtual hearings. Most international arbitration institutions have issued guidance on how arbitrations are to be conducted during COVID-19 and how new requests for arbitration may be filed, as discussed below.
COVID-19 and the London Court of International Arbitration (the “LCIA”)
- The LCIA issued Services Update on 18 March 2020: COVID-19, confirming that the LCIA remains fully operational during COVID-19, instructing the parties to file all new Requests through its Online Filing System or via email to firstname.lastname@example.org, with payment of registration fees electronically to its bank account or by credit card.
- The LCIA also notified that it will in all but exceptional cases correspond with parties and arbitrators by email only.
COVID-19 and the International Chamber of Commerce (the “ICC”)
- On 9 April 2020, the ICC issued a Guidance Note on Possible Measures Aimed at Mitigating the Effects of the Covid-19, informing all interested parties, counsel and arbitrators that their offices remain operational, with the staff working remotely.
- On 17 March 2020, the Secretariat of the ICC also issued a communication advising that new Requests for Arbitration should be filed with the Secretariat via email to email@example.com and that it is preferable that all communications take place via email.
COVID-19 and the Arbitration Institute of Stockholm Chamber of Commerce (the “SCC”)
- On 23 March 2020, the SCC issued Information About the Current SCC Work and Event Policy, informing its users that the SCC is fully operational, while working remotely, and that all Requests for Arbitration should be filed via email to firstname.lastname@example.org.
- The SCC has also suggested using its online SCC Platform introduced in September 2019, which was made available to all parties, counsel and arbitral tribunals, even involved in pending cases.
COVID-19 and the Singapore International Arbitration Center (the “SIAC”)
- On 6 April 2020, the SIAC issued a notice of Enhanced Covid-19 Measures, informing its users and interested parties that, while their physical offices are temporarily closed, the SIAC remains fully operational with all staff telecommuting.
- The SIAC also indicated that all queries related to case administration should be directed to email@example.com, while requesting the parties to refrain from sending physical copies of documents during this period.
Furthermore, on 16 April 2020, the most prominent international arbitral institutions, including the CRCICA, DIS, ICC, ICSID, AAA-ICDR, KCAB, LCIA, Milan Chamber of Arbitration, HKIAC, SCC, SIAC and VIAC, issued a joint statement entitled “Arbitration and COVID-19: Institutions Speak With One Voice”, encouraging parties and arbitrators to discuss any impact of the pandemic and potential ways to address it in an open and constructive manner in order to mitigate the effects of COVID-19 to the largest extent possible, by using respective institutional rules and case management techniques that may permit arbitrations to substantially progress without undue delay. This was the first joint statement to be issued by leading international arbitration institutions of this kind.
While arbitration has been impacted by the pandemic caused by COVID-19, the impact on ongoing arbitration proceedings and on potential new cases is clearly less significant than the impact on national court proceedings. While many national courts remain closed, or conduct only urgent and essential matters, international arbitral institutions remain fully operational, working remotely and providing full administrative support.
In addition, both legal counsel working in the field of international arbitration, as well as most arbitrators, are already accustomed to regularly using email correspondence, electronic filings, videoconferencing and online case management platforms which is, certainly, one of the biggest advantages of arbitration in comparison to litigation in these difficult and unpredictable times.