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August 03, 2020 Article

Virtual Arbitration – A Passing Fancy or a Temporary Stopgap?

John E. Bulman and Michael A. Marra

Many construction attorneys steeped in traditional domestic arbitration processes look askance at voluntarily adopting virtual arbitration.  Many international parties, who routinely deal with witnesses and clients on different continents, ask “What’s the big deal?”  The advent of COVID-19 is forcing parties and arbitrators to reconcile the travel and face-to-face restrictions in play with the “just, speedy and fair” requirements under nearly every set of arbitration rules.  COVID-19 may well work a seed change in how arbitrations are handled.  Witness statements, audio or video conferencing of witnesses, use of arbitrator written questions, and other techniques have been used for years, particularly in international cases.  With appropriate safeguards and procedures, it is not a substantial leap to conduct the entire arbitration process virtually.  The question is, “Should arbitrators and parties embrace or fight virtual arbitration?”  This article briefly addresses the arbitrator’s authority to order a virtual hearing and some of the technical and logistic considerations.

COVID-19 is forcing to reconcile the travel and face-to-face restrictions in play with the “just, speedy and fair" requirements under arbitration rule

COVID-19 is forcing to reconcile the travel and face-to-face restrictions in play with the “just, speedy and fair" requirements under arbitration rule

Credit: filadendron // Collection: E+ // Getty Images

Authority of the Arbitrator

Generally, the applicable rules and laws make it clear that the arbitrator has the authority to order virtual hearings. AAA Rule R-33(c), for example, provides that the arbitrator may allow “presentation of evidence by alternative means including video conferencing, internet communication, telephonic conferences and means other than an in-person presentation.” Having the authority and discretion to do so is one thing, ordering a shift to a virtual hearing is another.   It requires careful consideration of a number of factors.  Can the supporting technology be marshalled effectively to provide a smooth hearing process?  Will both parties have a full opportunity to present their cases?  Will there be any impediments to conducting appropriate cross-examination?  Can the confidentiality of the proceeding be maintained?  Fundamentally, due process requires that each question be fully assessed and answered “yes.”

The decision is relatively easy if the parties waive oral hearings and jointly pursue a virtual hearing.  When one party objects to a virtual process, the arbitrator must answer the above questions positively and evaluate additional concerns.  For example, the arbitral process requires that resolution of the dispute be fair, private, prompt and economical.  See AAA Construction Rules Introduction.  If hearings cannot be held for an inordinate (or unpredictable) period of time absent a virtual platform, this weighs in favor of opting for a virtual process.   If both parties object to a virtual process, this brings into play the reality that arbitration is fundamentally the parties’ agreed upon process, which may indeed be considered the process that is due.  If the parties agree not to utilize the alternative virtual process, there would have to be extraordinary circumstances present for an arbitrator to overrule the parties’ agreement.

Logistical Considerations

In discussions with a number of arbitrators and advocates, it seems that assessing witness’ credibility virtually is one of their primary concerns.  Many have noted that it may be difficult to discern body language and facial expressions on a computer screen (although several arbitrators have pointed out that the virtual platform allows for uninterrupted focus on the witness, more so than in a hearing room).  Credibility assessment may be a valid concern, the counter is the COVID-19 generated question as to what an in person hearing will look like in the foreseeable future.  Will social distancing requirements include a much larger room to space participants? Will everyone be required to wear facemasks to in person hearings?  Another concern in the virtual setting is controlling the witness to make sure there is no improper communication while under examination.  In some unusual instances, high tech solutions with multiple cameras scanning the room may be required but it may also be as simple as putting the witness on notice that the arbitrators may stop the hearing at any time and ask the witness to move the camera to scan around the room.  Of course, it is up to the arbitrators and counsel to determine the best option for the particular case. That said, it may be that viewing someone on a screen is the better option to assess credibility and arbitrate disputes in a timely manner.

Deciding to utilize virtual arbitration is only the first step.  It is important to ensure that the process is well thought out and that the arbitrators, parties and their counsel are all on the same page. There are many resources available through ADR institutions to guide arbitrators, counsel and their clients.  See, for example, the AAA-ICDR Virtual Hearing Guide for Arbitrators and Parties; the ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic; CPR’s Guidelines/Discussion Checklist for Virtual Arbitration Proceedings.  

Highlighting some of the key considerations, anyone electing to conduct virtual hearings should evaluate how secure the video-conferencing platform they select is and should make use of the features available to protect the process.  The platform utilized should have a unique, automatically generated meeting ID for each virtual hearing, not personal meeting ID’s that are utilized more than once. As an additional layer of security, the hearing should be password-protected with a unique password but that password should be shared with the participants via a medium other than the virtual hearing invitation email.  Participants should use secure high-speed internet connections and not attend from public locations or in circumstances where non-invitees might hear or see the proceedings.  It is also recommended to use a PC or laptop for the video portion of the hearing as monitor size will be important, particularly for hearings with many participants.  A quiet location with adequate lighting and without background noise is essential.

At least one week before the hearing, there should be a trial run with the panel, representatives and any technical support people who will participate to verify connectivity and to get them familiar with some basic features of the video conferencing platform.  If there are any technical issues with any of the participants’ equipment, that is the time to take steps to get them resolved or decide whether the hearing can proceed virtually.  Arbitrators should document and communicate any ground rules in advance; see the AAA-ICDR® Model Order and Procedures for a Virtual Hearing for an extensive list of considerations, including:

  • How will document display be managed?
  • Conditions for witness participation
  • Camera use
  • Entering the hearing with full names
  • Whether the hearing will be recorded and security concerns
  • Will there be a transcript?
  • How to manage panel and party private conferences

At the start of the hearing, participants should show up early to allow time to verify participants and their connectivity, restate ground rules and ensure that any available security features are enabled during the hearing to manage waiting or breakout rooms, screen sharing, chat, and locking the hearing.

The ultimate effect of COVID-19 is unknown and unpredictable.  It may well be that even if it passes and allows resumption of traditional in-person hearings, parties may well resort more often to virtual platforms, in whole or in part.  As counsel, arbitrators and parties become more facile in the virtual arena and the technical support becomes more standard, reliable and fluid, the economic savings of using a virtual platform may be a deciding factor.

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John E. Bulman

Pierce Atwood LLP, Providence, RI, Division 1 (Litigation and Dispute Resolution)

Michael A. Marra

American Arbitration Association, Philadelphia, PA