"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Saturday, August 22, 2020

Guest Post: Response of Arbitral Institutions to the COVID-19 Crisis– An Indian Perspective: Part I

 [Pranay Jaiswal, a fourth year student at the ILS Law College, Pune, writes on how well the arbitral institutions in India have responded to the Covid19 crisis. This interesting post is in two parts. This is the first part of the post] 

Response of Arbitral Institutions to the COVID-19 Crisis–  An Indian Perspective: Part 1

By Pranay Jaiswal, IV BA.LLB, ILS Law College, Pune.

Excerpt

With advent of global pandemic, everything on this planet has come to a standstill creating hurdles in daily life. Dispensation of Justice is one of the crucial things which is witnessing significant impact due to the COVID-19 crises. Arbitration being the alternatve dispute resolution method to litigation is also facing the hurdles making it difficult to make it accessible for the parties. This piece analyses the problems that are being encountered in the prevailing circumstances and how the arbitral insitutions are tackling towards it or what are the measure that can imbibed to make the procedure party- friendly.  

1.      Introduction

In the prevailing circumstances arising from the COVID-19 pandemic, there is an increase in the number of disputes arising out of contracts, which are to be resolved. Parties are unable to find solutions to the crisis and an unforeseen situation that the pandemic has resulted in.

The conventional way of resolution of disputes through litigation is found to be cumbersome as the physical operation of the Courts has come to a standstill due to the lockdown restrictions. Even though the courts are phasing to new alternatives such as video conferencing, non-urgent matters remain in abeyance.

Parties are facing problems in performing their part of contracts leading to substantial difficulty in project completion. The defaulting parties are relying on the ground of force majeure and other defences such as incapacity to perform, change of law, delay in payment, etc. This has led to many unresolved issues which are likely to be referred to arbitration in the near future, thereby leading to a flood of references to Arbitral Institutions.

Arbitral Institutions will have to get these disputes resolved in an efficient, effective and in an expeditious manner in the backdrop of the COVID-19 situation. Some Arbitral Institutions have positively reacted to the pandemic situation by taking steps which set a benchmark for other Arbitral Institutions to follow. These measures are the subject-matter of this post.

2.      Virtual Hearings

Virtual hearings are becoming the norm in International Arbitration considering that proceedings cannot be conducted in person. Incubating the usage of technology during such times when parties cannot meet in person to resolve disputes, virtual hearings are certainly going to prove a definite alternative to the existing way of conducting proceedings. Hence, there are numerous benefits that virtual hearings provide, even outside the circumstance in which we currently find ourselves.[1]

At the same time, virtual hearings bring with themselves, certain problems. As is the human nature, parties tend to lose concentration in lengthy proceedings that could prove as a major drawback of virtual hearings. Nonetheless, this can be regulated by Tribunals with the consent of parties, by scheduling the hearings at specific time slots convenient to all the parties. This will be in consonance with the fundamental principle of arbitration: equal treatment of the parties.

Additionally, major issues arise out of cross-examinations held virtually. Evidence could be manipulated, putting one party at a disadvantage.

To mitigate this problem, tribunals could seek a 360 degree view of the witness. Another method to address this issue is to enable Arbitral Tribunals to focus/zoom on the witness’s image on the screen which will help in detecting cues that suggest that the witness is being coached. For instance, the fact that a witness is constantly looking away from the camera may indicate that another person is aiding the witness during cross-examination. Whispers and shuffling of papers may raise suspicions that something is afoot.

Another concern that virtual hearings attract is that of  “Seat of the arbitration”. Previously, the parties used to agree upon the seat expressly or impliedly or the tribunal would designate the seat. However, a decision on the seat would be a challenge in ‘online’ proceedings. Consider, for instance, a case where the sole arbitrator is located in India, one party is located in New Zealand and the other party is located in Sri Lanka. The party in New Zeland has to create a software as per the contrct for the Sri Lankan party. In this case, it would be extremely difficult for the tribunal to designate a seat, especially if parties have not agreed to any seat in the arbitration agreement. This is a grey area that needs further research and Arbitral Institutions should address to the earliest.

3.      Recourse to Emergency Arbitration

Emergency arbitration is witnessing a significant rise in International Arbitration in recent times, especially owing to the COVID-19 pandemic.[2] Access to emergency relief could preserve the status quo and protect cash flow to contractors executing projects.

Certain arbitral tribunals have digitized applications for emergency arbitrators.[3] Arbitral Institutions in India provide recourse to such procedure under their rules. For instance, the Delhi Centre for International Arbitration, Nani Palkhiwala Arbitration Centre and Mumbai Centre for International Arbitration have incorporated similar provisions in their respective arbitration rules.

However, it is pertinent to note that even if these institutions have incorporated the provisions of emergency arbitration, the position of the Indian Courts is very dicey regarding it. It can be seen from the judgement of HSBC PI Holdings[4] and of Raffels Design International[5] that there is no uniformity on the stand of the Indian Courts regarding the enforceability of the emergency awards.

4.      Electronic Correspondence

Many institutions have explicitly dispensed with the need for hard copy submissions. Requests for arbitration and evidentiary submissions can be made via email. Some institutions have already informed parties to ongoing arbitration that email would be the only mode of correspondence between the institution, parties and arbitrators. Electronic correspondence is something that presents very little concern for commercial parties.[6]

5.      E-filing – Written Submissions and Evidentiary Documents (Electronic Bundles)

Arbitral Institutions have been stressing upon the e-filing of written submissions. Even documents relevant to a case and of evidentiary nature are made to be submitted online.[7] Institutions like LCIA, ICC have already issued guidelines pertaining to initiation of the new arbitral proceedings through the online filing system of the institution.[8]

Similarly, in India, the ICA has issued a notice describing a procedure for filing of arbitration matters.[9] Even so, the ICA has forced the parties to submit the hard copies of documents post the lockdown orders, which may not be desirable.[10]

6.      Exclusion of Oral hearings.

Given the prevailing conditions of the pandemic, certain flexible steps have been introduced by Arbitral Institutions with the consent of the parties.  In some cases, parties have jointly requested for suspension of the proceedings to hold “without prejudice” settlement talks. In less complex cases, parties have requested the tribunal to dispense with oral hearings and decide the dispute based on documents alone.[11]

In India, the Delhi International Arbitration Centre (DIAC), has issued a consolidated guidance note[12] wherein it has mentioned that the arbitrator may prescribe a fast track procedure for expeditious disposal of disputes where the arbitrator may decide upon the documents alone, on the exclusion of oral evidence.[13]



[1] Key measures taken by Arbitral Institutions in response to the COVID-19 pandemic, Stephen Harwood,

https://www.shlegal.com/news/key-measures-taken-by-arbitral-institutions-in-response-to-the-covid-19-pandemic

[3]How COVID-19 might affect international arbitration, by Tola Adeseye, APRIL 8, 2020 http://arbitrationblog.practicallaw.com/how-covid-19-might-affect-international-arbitration/         

[4] MANU/MH/0050/2014

[5] MANU/DE/2754/2016

[6]IBID.

[7]COVID-19: Arbitrating in the Midst of a Pandemic, by Matteo Clarkson Maciel, 01 APRIL 2020

https://www.kirkland.com/publications/article/2020/04/covid19-arbitrating-in-the-midst-of-a-pandemic

[8]LCIA Online Filing, https://onlinefiling.lcia.org/

[9] Indian Council of Arbitration, http://www.icaindia.co.in/Notice-for-ICA.pdf

[10]Supra note 6

[12] GUIDANCE NOTE FOR CONDUCTING ARBITRATION PROCEEDINGS BY VIDEO CONFERENCE. http://dacdelhi.org/DataFiles/CMS/file/guidancenote.pdf

[13] Section 29B of the Arbitration and Conciliation Act, 1996.

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