Will video hearings replace face to face arbitration?

00:00:05 David Lee, Host

Hello and welcome to Podcast by Brodies. My name is David Lee and today I'm joined by two Brodies experts for our latest discussion on international arbitration. Ian Rutherford is a partner at Brodies and Keith Kilburn is a legal director and they're here to discuss whether the use of video technology means that the days of face-to-face arbitration are over. Welcome to you both. So, Ian, let's start at the very beginning, which is always a very fine place to start. What do we mean by virtual arbitration?

00:00:39 Iain Rutherford, Partner

Thanks, David. Well, there's no great science to this. What we're really talking about are arbitration hearings that are conducted using video communication technology and other kinds of platforms to allow concurrently connected participants to join and participate in the arbitration from several locations. When we're talking about virtual arbitration, we’re also talking about a semi remote hearing type set up where the arbitral tribunal is assembled physically with the parties in one location and maybe several experts or witnesses testifying and giving their evidence remotely. Or we could also be talking about a fully remote hearing where all of the participants are joining from different locations with no main hearing venues. So, it could be a mix of virtual elements or a fully remote, fully virtual hearing where documents are shared, and evidence is given and everything is done using a kind of video communications platform.

00:01:42 David Lee, Host

Thanks, Ian. And, as we'll come on to talk about, the pandemic was a little bit of a watershed, as it was in so many other areas, for use of virtual technology. But let's step back and, Keith, how widely used was virtual arbitration before the pandemic hit in 2020?

00:02:01 Keith Kilburn, Legal director

Thank you. You're right to say that the pandemic would also watershed for many issues and arbitration wasn't alone in that. I think it's fair to say that the concept of virtual arbitration didn't really resonate in the arbitration community, and it was of limited use partly because of the technology and given the nature of arbitration itself. The availability and access to technology worldwide was obviously different and limited. So, there was certainly consideration given to its use in procedural hearings, but I don't think there was serious consideration given pre pandemic to its use in evidential hearings. But obviously, post pandemic, it's a very different landscape now.

00:02:56 David Lee, Host

Thanks, Keith. And Ian, if you can maybe just take us on to follow that through and explain a little bit about how the pandemic was the catalyst for more widespread use?

00:03:07 Iain Rutherford, Partner

As Keith says, there was interest in this in the same way there was interest for all of us in video communications and all the platforms that we ended up using across the board, yet there wasn't widespread adoption of this. But, as in a lot of other areas, and the courts were the same, in order to ensure that hearings could still go ahead, there had to be a fairly swift pivot from in-person hearings to using platforms that were already there and were already available to conduct all hearings and all aspects of hearings using virtual technology. So, the fact that you were not allowed to have in-person hearings anymore meant that there had to be a very quick adoption of this technology and the various platforms that were available. I think the English courts did very well. They pivoted very quickly. They conducted hearings very quickly. In the arbitration world, I think because it's a private process, there's a greater degree of flex built into the process. So, in terms of arbitrations that had started in the conventional way, certainly in the arbitrations that we were involved in, arbitrators were very quick to take soundings from parties and then to pivot to adopt these kinds of virtual platforms to ensure that hearings could still continue. We had one hearing that was supposed to go ahead in person in the summer, just immediately following the March, and we were able to switch. What was supposed to be an in-person hearing was conducted fully virtually. It meant that there was no delay to the proceedings, which is exactly what both parties are looking for in a situation like that.

00:04:55 David Lee, Host

Thanks, Ian. And Keith, just looking back to 2020, again with the reservations in the arbitration community about using virtual technology more widely. What were those reservations, and how would they then overcome?

00:05:12 Keith Kilburn, Legal director

I think it's fair to say that there were reservations. I mean, from personal experience, you're looking at the technology and I think perhaps now it's taken for granted that everyone is accessed to teams on a laptop and the technology is readily available. I don't think that was really the case. When we look back during the pre-pandemic era, I think it was perhaps regarded that technology could be a barrier or even disruptive to the conduct of hearings. And, from personal experience, that was the case, and it made hearings difficult to conduct where there was that loss of connectivity, for example. It's very difficult to try and manage that in a process where a party drops off the line. So, there were the practical implications of that as being potential barriers. And I think it was also the availability of the technology as well. In looking at the quality of parties, not all parties necessarily had access to that technology. So, there was a potential imbalance and leading to maybe unfairness in the process. And I think it was also that there weren't really any recognised and accepted protocols in place. How does an arbitral tribunal go about actually managing that process? So, parties were sort of starting from a blank sheet of paper, whereas now the position is much more different, which we'll obviously come on to talk about.

00:06:42 David Lee, Host

Thanks very much, Keith. And then, as pandemic restrictions began to be lifted, Ian, what happened then? Did face-to-face arbitration revert to being the norm?

00:06:53 Iain Rutherford, Partner

I think you would have assumed that that would be the case. But I think, maybe in some ways, because it was a bit of a stop start in terms of the way that restrictions were lifted, our parties were a little bit concerned to decide “right, this is going to be an in-person hearing” because there was a concern that the in-person hearing, if that was the way that you were set up to operate, may well not happen. We certainly had an arbitration which everybody had wanted to be in person. But we almost had it set up to operate virtually as a fall back, just in case the in-person didn't work. In the end, it settled, so we didn't have to go down that slightly odd hybrid route, but I think the answer is no. We didn't just revert back to face-to-face arbitrations being the norm because everybody had seen the benefits that were offered by doing things virtually. There is certainly now a much more widespread adoption of the technology. It will be quite a common conversation, sometimes before even an arbitrator gets involved between the parties, about whether or not there will be a virtual element or if the whole arbitration should be conducted virtually. On the other hand, depending on the nature of the case and depending on the particular arbitrator, there are certainly views that for certain cases and certain circumstances, if you have the choice, virtually is not the way to go.

00:08:34 David Lee, Host

And just before we go into more of that detail, Ian, how much arbitration is being done virtually and how much is being done in person face-to-face and how does that compare to the days before the pandemic?

00:08:49 Iain Rutherford, Partner

There's certainly more virtual arbitration being done now in the same way as there's a lot more use of virtual technology in relation to court hearings. I suspect probably the difference in the arbitration market compared to the way that things have gone with your conventional court hearings is that there is now much more of a market and much more of evidential hearings being done using virtual platforms. Certainly, the UK systems have been very resistant to falling back on that and have tended to only use virtual technology for procedural hearings and still need quite a bit of persuading to use that technology for evidential hearings. But there is absolutely no doubt that the market for it and the level of interest from both arbitrators and from users of arbitration services is massively increased from where it was pre-pandemic. That's for the simple reason that everybody now has an awful lot more faith in the technology and the way that it works, and has seen or experienced the benefits. So, all those who are involved in the industry are now much better placed to sell the benefits to their clients and to have a proper, informed discussion about what is the best fit for the particular dispute given the circumstances of the parties.

00:10:05 David Lee, Host

Thank you. And we'll come on to discuss some of those benefits and also some of the downsides later on. But first of all, Keith, just talk a little bit about the evidence for virtual arbitration being accepted by the arbitration community. Is it here to stay? What has happened in terms of adoption of rules and guidelines that show virtual arbitration has a place in the modern-day arbitration world?

00:10:32 Keith Kilburn, Legal director

What we are seeing is that the arbitral institutions are obviously reflecting the developments in the market itself. So, what we're seeing is that the institutional rules, which parties can adopt for their arbitral process, are then themselves being amended to specifically make provision for virtual arbitration and virtual hearings. To give just a couple of examples: we've got the London Court of International Arbitration (LCIA), we've also got the International Chamber of Commerce (ICC), the Dubai International Arbitration Centre (DIAC)... All their rules have been amended to make express reference to virtual remote hearings. And indeed, if we look at even the UE, they have amended their arbitration law to make specific reference to virtual remote hearings. And they've gone one step further. Their law requires arbitral institutions to put in place the technology, the framework, to facilitate remote arbitrations. I think it's clear where the market has gone, and the arbitral institutions have taken that step to then say “yes, virtual arbitration is here to stay”, and they're actively promoting its use.

00:12:02 David Lee, Host

Thanks, Keith. Obviously, there is a lot of evidence as you say of that acceptance of virtual arbitration. But, as we know, arbitration is very international. So, what about when it comes to virtual arbitration as in face-to-face the challenges of different jurisdictions and different rules in different parts of the world. What are the international protocols, if we have any, which are governing virtual arbitration specifically?

00:12:29 Keith Kilburn, Legal director

There are protocols which have been promoted by a number of the arbitral institutions. The, for example, has put in place protocols. The position of parties started from a blank slate at the start of an arbitral process. Things have now moved on. People have come together and developed protocols which then facilitates virtual arbitration in relation to dealing with remote witnesses, remote hearings, the security, the platforms, the entire process... So, it makes it much more readily accessible and available for parties to then just adopt those settled rules, which then just makes the process easier.

00:13:17 David Lee, Host

Coming back to you, Ian, is virtual arbitration any different to face-to-face in terms of who's there? Does it work in the same way? Are the same parties involved?

00:13:28 Iain Rutherford, Partner

Yes, although I would probably say that the main difference is because of the greater degree of reliance on technology to make the whole thing work properly. Just to draw a distinction, in terms of the way that documents are put to witnesses, that documents are cited in arbitrations. Still, theoretically it would be possible in an in-person hearing to work the way that we used to, where people were looking at ring binders full of documents and turning pages to access documents. In an in-person hearing there could be a paper set of documents. Clearly that isn't going to work properly in a virtual setting, so you're going to have to rely on an electronic document management system for the purposes of conducting the hearing. But I would say, and I don't know whether Keith agrees or disagrees, on any kind of large-scale international arbitration now, whether it's in person or virtual, parties will be operating with an electronic document management system. The idea of operating with paper documents now, I just don't think that's the way that large-scale hearings are conducted. Beyond that, and the usual kind of rules about making sure that things are properly tightly drafted in the contract, about how the arbitration should work, where the arbitration should be seated..., you could make specific provision for remote arbitration. But there's no need if you're relying on arbitral rules that allow that. Generally, then, it's a case of early engagement with the other side, possibly even before the arbitration is commenced, to talk about whether some or all the arbitration should be conducted virtually. It's just about putting all these robust systems in place. And trying to, as far as it’s possible, agree as much of this because it shouldn't be hugely contentious, but you never know. And in cases where everything is contentious, then it may be that you're just giving yourself something else to fight about. If some of this isn't pre-agreed.

00:15:42 Keith Kilburn, Legal director

I think that's right. And I would echo that, Ian, I think in terms of where we are now, the idea of physical hearing bundles. I think we've thankfully moved beyond that. From my own experience, I remember sitting in a hearing in a hotel dining room and the arbitration bundle effectively covered the entire walls. The entire walls were lined with ring binders of paper. And the reality was, in the hearing itself we probably referred to three or four folders. And you're looking at this vast volume of information and carbon footprint as well. That's another factor in this, and a hugely wasteful process. It's entirely impractical. We've moved beyond that, thankfully. And I think that's just one step in the progression and moving towards the arbitration in a in a virtual environment.

00:16:49 David Lee, Host

Thanks very much, Keith. We'll move on to the benefits now. Obviously, there are downsides for the ring binder and photocopier industries, but there's a lot of benefits of virtual arbitration. Ian, are we talking about things like cost, time efficiency and so on? What are the main benefits?

00:17:10 Iain Rutherford, Partner

I think there's likely to be a reduction in overall cost, although there will be a cost for some of the virtual platforms and some of the hosting, a lot of those are costs that you would probably be bearing anyway for the reasons that we've just discussed about document management. There's not a huge amount of additional cost by virtual operating or using a virtual platform. The major benefit is the lack of wasted time for witnesses or for parties. There's a lot of time wasted having to attend somewhere physically. You have to attend well in advance of when you might actually be called to give your evidence. And that means that there's a huge amount of dead time getting there hanging around. Compared to just being able to remotely join an arbitration hearing. From a witness convenience perspective, and therefore a cost perspective, there's a huge advantage there in terms of operating virtually. Also, often you will have quite a few interested parties from a client who want to see what is happening in arbitral proceedings and if there's not a remote option, then those attendees will have to physically be there in person or potentially be looking at a transcript at the end of the day. Effectively, anybody entitled to be there can be there by joining virtually so you can have more input, more people seeing what's actually going on in arbitration, which they are paying for. Therefore, they should really be entitled to have as much access as they want, as long as they are properly a part of the arbitration. So, convenience, flexibility, I think, and this may be slightly more controversial in terms of witnesses, certainly in my experience and there's a probably a bigger point for discussion here, I have certainly found that witnesses tend to come across more like themselves in the way that they give evidence in a virtual hearing as compared to giving evidence in an in person hearing. I think that's for the simple reason that the witness feels a bit more relaxed. It's maybe set up a bit more to favour the witness than it is to favour the Council who is cross examining that witness. That should really be what you're looking to achieve in an arbitration, that the witness comes across like themselves. Some people are better operating in a very pressured environment when they're being cross examined by experienced Council. Other witnesses just struggle in that environment. That doesn't mean that they're not telling the truth. It just means that they're not as good at operating in that kind of environment. To my mind, it levels the playing field a bit as between witness and Council, I think for that reason certain Council don't like virtual hearings as much as in-person hearings, but to my mind, something that allows the arbitral tribunal to have more of a feel for what the witness is actually like is a positive.

00:20:17 David Lee, Host

Any thoughts on that, Keith?

00:20:19 Keith Kilburn, Legal director

I think maybe one added dimension to that from personal experiences. For example, where English isn't the first language of the witness, and there may well be a requirement for an interpreter. A virtual environment in that sense can become a bit disjointed and difficult, and for some witnesses being a completely alien process where it's not in their native language and to be entirely remote and not “supported”. It's not “leading the witness”, but at least showing them that they are supported in the process. But where they're entirely remote from that, some witnesses can perhaps struggle, and I think that's part of the there is no one-size-fits-all for this. I think it's giving careful consideration to each witness and then understanding “is allowing them give their evidence virtually going to allow them to perform at their best, or are they going to struggle, and we might need to maybe consider different arrangements for them?”.

00:21:27 David Lee, Host

Thanks very much. Interesting. We've touched a little bit on sustainability already. Keith, let's talk a bit more about the green angle. Is there pressure to carry out more virtual arbitration just to cut down simply on large numbers of flights and improve the sustainability of the international arbitration process?

00:21:49 Keith Kilburn, Legal director

I don't know if I would necessarily term it as pressure. I think it would perhaps describe it as recognition of the environmental impact arbitration can have. I think there is now a clear understanding that the costs of hearing bundles, flights, accommodation, bringing all these parties from potentially anywhere in the world and together in one place isn't the most economic and does have a significant impact on the environment. I think there's a clear recognition now. For example, there is a campaign for greener arbitration, and a green pledge is being promoted for practitioners to sign up to. And I think that's part of the driving force in relation to moving towards virtual arbitration. But I think there's now a clear recognition and understanding. It's not just about saving costs. There are broader implications in relation to carbon footprint and the environment that should properly be taken into account by parties. As opposed to being entirely insular and only looking at what is the way that we get this dispute resolved.

00:23:01 David Lee, Host

Thanks very much, Keith. Coming back to you, Ian, lots of positives there. You know we've heard a lot of the upsides of virtual arbitration, but what about the downsides? What are they?

00:23:13 Iain Rutherford, Partner

The main one that is often cited is that if it's a case where it is going to be put to a witness that is actually lying. There was a fraud element where the credibility of particular witnesses was critical to the case. It is often said that you need to have that witness in the room so that the arbitrator can properly assess that witness in person. Judges have said the same, that it's harder to get a read on the credibility of a witness if it's being done over a remote platform. And I have a degree of sympathy for that position. I'm not an arbitrator and I'm not a judge. You have to kind of take what they're saying about that at face value. That's been the main challenge when we've been talking about whether hearing should be virtual or not. The main challenge has been where it is said that there's a significant credibility point in this case and therefore, we need to have the parties in the room to properly test that. And I think there's a wider point there, because if it's being said that you want to test the credibility of a particular witness, you then end up in a conversation about, “well, if one witness is having to give that evidence in person in the hearing room then is it fair for the other witnesses to be dialling in and giving it evidence remotely?” Is their evidence going to be treated in the same way? And that can cut both ways, so that point tends to then taint or colour the rest of the approach to the arbitration about whether it's in person or whether it's virtual. The other downsides are much more practical ones. That technology glitches and it is hugely frustrating if a key point in cross examination, where you're about to land the killer blow, then all of a sudden, the technology cuts out and there's a gap of 15 minutes while everybody gets themselves back online again. And the flow of the cross examination has gone. Even with the most robust systems in the world there is always going to be a moment where there is some kind of glitch and that can be very frustrating. Personally, I would say that in most cases the benefits outweigh those frustrations, but those frustrations will be there in a virtual hearing in a way that they just wouldn't in an in-person hearing. So, it's that loss of face-to-face interaction, but particularly in the disruption to the flow of cross examination. There's also a point that I've experienced in relation to virtual mediations, as against in-person mediations, but it's true in arbitration in a court hearing as well. Having the parties together in a room can facilitate settlement. It may be that there is a conversation outside of the hearing room. That means that the parties have an opportunity that they may not have had previously to resolve. So, there can be an impact on settlement because there isn't that natural meeting that might lead to a conversation that might lead to settlement. Now you would say if the case has been run properly those sorts of processes should have been engineered and made to happen before. But it's human nature that sometimes it's these kinds of more chance meetings that lead to the conversation that does resolve the case. So, I think removing that element could remove that benefit.

00:26:59 David Lee, Host

Thanks, Ian. And Keith, we've talked a bit about moving on from those huge ring binders of documents filling the entire wall. But obviously moving all that documentation online creates challenges itself. So, what about those challenges with data security, broader cyber security, confidentiality and so on? What are the concerns there?

00:27:20 Keith Kilburn, Legal director

That's entirely right. Moving into the virtual sphere brings with it its own issues that parties need to consider. One element would be thinking about the participants who are dialling in remotely. You then perhaps have to give consideration to what is the law which applies at their location. Does that law have any impact in relation to privacy, security, confidentiality? That needs to be considered. You're then also looking at online security, the encryption of that. If all the material, (i.e., the hearing bundle) for the arbitration is put into an online platform, how is access to that restricted? So that's another angle. And there's also thinking about recording of the hearing in relation to recording testimony. Does that then give rise to issues around privacy? And does that then also impact in terms of the law which is governing the arbitration? Or the law which is relevant to where the participant is located, who's given evidence? So, there's all these issues which need to be considered. When you're beginning the journey of an arbitration, it's thinking through all the processes, these hurdles which perhaps delay or frustrate the process, to ensure the arbitral process works smoothly.

00:28:49 David Lee, Host

What happens if one party refuses to take part in the virtual arbitration? And what if that party is very much in the minority, or just one lone voice? Can they be mandated to take part in virtual arbitration?

00:29:03 Keith Kilburn, Legal director

I think touching upon the issue that Ian mentioned earlier, it really goes back to the very beginning when parties perhaps are even entering into their contract, and parties giving consideration to how they resolve disputes. So, one element to address those sorts of challenges, which can be made during an approval process, is that parties agree at the very beginning. “Yes, we're both content that more hearings take place”. That really removes that issue because parties have already agreed it. If not, you're then looking perhaps at the institutional rules or the arbitration agreement, which parties would then subsequently agree. If things are contentious, then every point is contentious. These are challenges that maybe one party is trying to be disruptive or to frustrate the process. Ultimately the arbitral process is strong enough that it can withstand these challenges and address them. But nevertheless, they can be an inconvenience. So, if parties have agreed to the arbitral institution rules, they may specifically refer to remote hearings. In those instances, the arbitral tribunal is then empowered if it considers that's most appropriate in the circumstances. The default position being that the Arbitral Tribunal can conduct the arbitration in the way that it sees most appropriate. As part of that, it may well then be that both parties would make submissions in relation to how it considers the part the Tribunal should exercise its powers. Ultimately the arbitral Tribunal will take those submissions on board and if it has the power, it will then make an appropriate decision. In most cases, if the parties are making submissions and one party is just being seen as being difficult, I would suspect an arbitral tribunal would give that argument short shrift. Particularly if you're looking at the local courts, who are quite content for virtual hearings to take place. Then I think it would be difficult to try and sway an arbitral tribunal to take a different direction, unless there's a very compelling reason for doing so.

00:31:23 David Lee, Host

Thanks, Keith. And Ian, that leads to something we touched on earlier on the idea of hybrid or semi remote hearings, are we seeing much of that? Are we seeing many hybrid hearings? If so, how are they working out?

00:31:38 Iain Rutherford, Partner

Yeah, I think we are, for the convenience factors that we've mentioned. The difficulty with hybrid hearing is if you have a hearing where some factual witnesses join remotely and others are there in person, there is a view, and I think it is right in some ways, that the way the evidence is received by the panel or by the arbitrator from a remote witness as opposed to an in-person witness that can colour the view of the evidence of that particular witness. So, I think yes, there are hybrid hearings, and yes, if it's maybe quite a limited witness to fact, they might join remotely. Whereas the key witnesses to fact would be there in person. I think it can be quite difficult trying to mix up the key witnesses to factor one-on-one side or the other and having some remote and some there in person. The best approach tends be particular categories of witness joining remotely. But yes, hybrid technology is very much there and operating remote semi remote. Even if the hearing is in person, it still has an ability for those within the parties or clients to join remotely and access the full in-person hearing. Having that video technology available so that others who have an interest in proceedings can see what's going on and can dip in and dip out as they see fit.

00:33:11 David Lee, Host

We'll move towards a conclusion now. First, I'll ask you both; we've talked a lot about virtual arbitration. What do you think of it? How do you find it? And would you recommend it to your clients? Ian? And then Keith?

00:33:26 Iain Rutherford, Partner

Yes, I think you've got to look at the particular case and the particular witnesses and the nature of the case, but it's definitely one of these situations where I think the positives do outweigh the negatives. That's not going to be the case for every case, but I've got no major concerns about virtual arbitration, and I think the client benefits can be quite significant.

00:33:53 Keith Kilburn, Legal director

I would echo that. From what we've discussed before, it's here to stay. The market has moved in that direction and is continuing to move in that direction. There is the infrastructure now in place to support virtual arbitration, which I think can only lead to an increased uptake in the process. As he mentioned it, it's horses for courses in some elements and but arbitration gives parties the flexibility. And this is just another tool in the arsenal in relation to what is the best way to manage this process, to then get to successful outcome.

00:34:32 David Lee, Host

Thanks, Keith. And finally, Ian, the question we posed at the very beginning, will virtual arbitration replace face-to-face decision making?

00:34:44 Iain Rutherford, Partner

Not entirely. I don't think. There will always be a place for face-to-face and in-person hearings. Certainly, the view expressed by judges and experienced arbitrators is that there will always be cases where their strong preference will be to hear from witnesses in person. There are always going to be cases that will have to be conducted in person because both parties and arbitrators are still going to want that. So, I don't think in person hearings have gone. I just think that there is a more limited market for them now.

00:35:18 David Lee, Host

Thanks very much to Ian Rutherford and Keith Kilburn for your expert insights in a really interesting conversation today. This podcast is part of Podcast by Brodies, where some of the country's leading lawyers and special guests share their enlightened thinking about the big issues and developments in the legal sector. And what they mean for organisations, businesses and individuals across the various sectors of the UK and global economy and wider society. If you'd like to hear more, please subscribe to Podcast by Brodies on all the main podcast platforms. And for more information and insights, please visit brodies.com.