COVID-19 Pandemic and its Impact on International Arbitration

COVID-19 Pandemic & its Impact on International Arbitration

Author: Kavya Gopal, Prestige Institute of Management

Abstract

COVID 19 had a bad impact on all the works of private individuals as well as government. It has changed the working pattern and style of all the business. The impact of the virus is so dangerous that the government has cancelled all the schemes and started funding to cure people from the virus. The courts have also started working digitally. Despite of this advanced technology, they are facing some of the issues like digital glitch, lawyers and judges are facing problems during the case hearing. Due to these many amendments have been made in the Arbitration Rules and Guidelines. COVID-19, a virus called Coronavirus has vitiated the whole world. It was first detected in China’s city Wuhan in December & then very rapidly it spread its root throughout the Globe. COVID-19 outbreak which greatly affected the entire world has been declared a pandemic by World Health Organization (WHO).

This pandemic has not only disturbed the economy of the countries but also the law and  order also along with that both judicial proceedings & the arbitration proceedings. Many countries were under a lockdown to get control over this and due to this everything was closed at that time even the courts. Many people lost their jobs, many were kicked out of their jobs. There was a lot of unemployment and workers were starving & wanted to return to their villages. This made parties realize the need of arbitration as it provides certain flexibilities in seeking dispute resolution.

International Development

After so many months of lockdown, a new normal came up. Slowly & steadily everything is restarting & the working of the courts has started functioning digitally through various online platforms. The Courts have started hearing cases through video conferencing or teleconference. In this regard, on 18 March 2020, the Korean Commercial Arbitration Board published the Seoul Protocol on Video Conferencing in International Arbitration, which is intended to serve as a guide for the best practices regarding planning, testing & conducting video conferences in International Arbitration. [1]

On 16 April 2020, leading arbitration institutions around the world including International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA) & the International Centre for Settlement of Investment Disputes (ICSID) published a joint statement that the usage of technology in the most effective way in the working of arbitration.[2] It also aimed at creating a better world which will be ready to face new challenges after the post COVID-era. They also declared that cases will be heard without any undue delay & they will discuss about the effects of the outbreak it had on arbitration proceedings & what are the measures which can be taken to reduce the effect of COVID-19.

Dealings with COVID-19 Challenge

COVID-19 has affected the whole routine of the world & even the working of legal proceedings. DEALINGS can be looked upon in 3 ways, i.e. short-term dealings, mid-term dealings & long-term dealings.

Short-term dealings

Earlier COVID-19 was considered an epidemic disease but after seeing its disastrous effect it was declared as a pandemic disease. The death count due to COVID was very enormous. Therefore, the countries announced for complete shutdown, sealed the borders, increased the number of testings , requested people to maintain social distancing & wear masks. Apart from this, after sometime working started through online mode.

Refuge in the Home Office

All the offices & courts got shut down. They stopped considering documents hand delivered or in hard copy. All cases going in the courts were also suspended whereas in some countries, then institutions told that despite the premises are closed, they would remain fully operable.

Virtual Hearings

After confirming about their staff’s corona report, they started operating again. It was really a magical solution. Indeed, the Seoul International Dispute Resolution Center reports that compared to 2019, the no. of cases & days of hearing using Seoul IDRC virtual hearing services have increased by 500% in no. & 460% in days. The Hong Kong International Arbitration Centre also reports that the demand for HKIAC’s virtual hearing services has increased significantly with the onset of   COVID-19.

Side effects of Going Virtual

Going virtually was a nice step to start proceedings but it also had side effects. The evidences shown virtually may be affected due to online arrangements, even the witnesses testimonies could also be negatively affected. It might be possible that at the time of testifying witness, they might be secretly advised or looking into some unknown documents. The main problem is the technical issues faced by the parties. There are also issues related to security & privacy of video conferencing, any uninvited person can join in the virtual hearing & may interfere.

Mid-term Dealings

It was realised that some more long-lasting steps needed to be taken as the virus would stay for a longer period of time. Therefore, more sustainable case management improvisation steps were taken.

Amended more flexible Arbitration Rules& Guidelines

Some of the changes made are:

     (a) The Australian Centre for International Commercial Arbitration (ACICA) published guidance on managing the impact of COVID-19 & the use of arbitration to mitigate risk, which sets out the advantages of arbitration & includes links to sample submission agreements & a sample preocedural order.[3]

    (b) LCIA publised a services update on 18 March 2020, stating that it would be operating remotely from the following day & providing instructions to parties & Arbitrators on how to communicate with the LCIA.[4]

    (c) On April 9, 2020, the International Court of Arbitration at the ICC, released its ICC Guidance Note on possible measures aimed at Mitigating the Effects of the COVID-19 pandemic on arbitral proceedings. In particular, it includes information on organizing virtual hearings, as well as two annexes: a checklist for a protocol on viryual hearings, & suggested clauses for cyber-protocols & procedural orders dealing with the organization of virtual hearings.[5]

More New Arbitration

Often, bad times bring great opportunities for dispute resolution practitioners. It will occur as in this time new rules & regulations may contravene with the foreign investor’s expectation. So, there is opportunity for arbitrators.

Long-term Impact

Due to ongoing social distancing, courts & lawyers are doing business online, law students are unable to start their career as practitioners, people are losing their jobs. The digitalization will speed up enormously. With increasing digitalization Arbitration would become faster, cheaper & may even reduce the travelling from one place to another.

Conclusion

 COVID-19 pandemic has shown that International Arbitration is too flexible. It can change itself with changing circumstances. It also provides flexibility to the parties. According to Section 29A of the Arbitration & Conciliation Act, a time of 12 month is provided for settling of the dispute. It can be extended up to further 6 months.  Extension more than this can be granted only by the courts. Digitalization made everything so easy. We hope, that there will be lot more opportunities.


[1] Lexology.com

[2] ibid

[3] See important information for ACICA Users-COVID-19Update, https://ACICA.org.au/ important-information-for- acica-users/

[4] See LCIA Services Update: COVID-19, LCIA, https://www.lcia.org/lcia-services-update-covid-19.aspx.

[5] See ICC Guidance Note, supra Note 39

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