COVID-19: The prompt reaction of the arbitration world
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The coronavirus emergency has undoubtedly affected our lives and left us with major uncertainties about the future. Among the many questions the current times have raised is the compelling question of how litigation (whether future or pending) will be managed. It may be too soon to say how the spread of the virus will impact the vast and multifaceted realm of dispute resolution. Nonetheless, one trend is easy to spot: the reaction of the arbitration world to this unprecedented emergency is not only positive, but rather encouraging.

First, and to a certain extent contrary to what can be observed in the sphere of ordinary justice, the spread of the virus has not stopped the regular conduct of arbitration proceedings held by the world’s most active arbitral institutions. Indeed, these institutions promptly demonstrated an impressive ability to adapt to the inevitable consequences of the current emergency and have attempted to provide guidance on how to react efficiently and swiftly.

As an example, the International Chamber of Commerce (“ICC”) recently released its “ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of the COVID-19 Pandemic,” expressly designed to provide valuable tools to parties, counsel, and arbitrators that will help them deal with the pandemic — minimizing (if not avoiding) the disruption to pending proceedings caused by COVID-19 and the difficulty of progressing with pending and new proceedings.[1]

Similarly, other arbitral institutions worldwide, despite adopting significant and to some extent invasive preventative and precautionary measures against the virus, have ensured they will continue providing their services and remain fully operational.[2]

As far as Italy is concerned, the Milan Chamber of Arbitration (“CAM”) states, “CAM arbitration remote service is operational and effective, and parties can file new requests for arbitration.” While establishing a suspension of any procedural deadlines until May 11, 2020, CAM is strongly suggesting that arbitral tribunals “make any possible effort, in cooperation with the parties and the Secretariat, in order to held hearings by way of video or audio conference, as well as to proceed with those activities that are not in contrast with public order and the parties’ right of defense […] such as deliberating orders and awards.[3]

From east to west and from north to south, institutional arbitration is moving in the same direction, almost as one. The latest sign of this cooperative and constructive spirit and of the imperative desire to demonstrate confidence and solidarity — at a time when fear and uncertainty seem to run rampant — is dated April 16, 2020. On said date, many of these institutions released a common statement on “Arbitration and COVID-19,” expressing their commitment to working together in the fight against COVID-19 and providing the necessary assistance to parties and arbitral tribunals. In the words of the statement, “the joint ambition of […] institutions is to support international arbitration’s ability to contribute to stability and foreseeability in a highly unstable environment, including by ensuring that pending cases may continue and that parties may have their cases heard without undue delay.

Of course, this is no small challenge. Some phases of arbitral proceedings can be managed remotely without particular trouble or concern (for instance, new requests for arbitration can be filed by electronic means or through online filing systems, as well as subsequent written submissions and documents can be exchanged by email between the parties; case management conferences and hearings exclusively dedicated to legal arguments can be held by audio or videoconference), whereas other phases may entail a number of sensitive issues and due process concerns (consider a hearing in which oral evidence must be taken through examination and cross-examination of fact or expert witnesses).

This implies that, besides adapting rules and procedures whenever necessary, arbitral institutions and in general all arbitration players will have to take on additional tasks concerning the protection of privacy, the confidentiality and security of arbitral hearings and activities (including the adoption of specific cyber-protocols[4]), and fair and equal treatment of the parties involved, ensuring that each party is given full opportunity to present its case.

Furthermore, the virus will seemingly result in an escalation of litigation as a whole. In fact, the very same lack of certainty that arbitral institutions are trying to counteract is likely, in the meantime, to result in a steady increase in new disputes. Indeed, the spread of the virus will lead to many significant delays and other contractual breaches and unexpected contractual terminations, and it will be necessary to determine who, among the parties, should bear the related liability and costs. Also, solving interpretative issues will become of the upmost importance, especially with reference to certain clauses, one obvious example being force majeure and hardship clauses. This will be particularly true with reference to specific types of claims, such as health-related claims, where the opportunity to choose arbitrators with expertise will be even more appealing than usual.

Hence, there is more than one reason to believe that, despite the economic struggle that will inevitably follow, somehow arbitration will emerge stronger from the ongoing epidemic outbreak. In fact, it is also safe to assume that one of arbitration’s most “neglected” features, i.e., the arbitration contract or submission agreement (ITA “compromesso”), will finally increase in popularity. What once appeared to be a mere theoretical option will now represent the most viable choice for all contractual parties that signed their agreements before the spread of the coronavirus occurred and that, consequently, did not even consider stemming the related risks by adding arbitration clauses therein.

At the same time, another winner in the current situation could be ADR: in cases where application of force majeure and hardship clauses, as well as insurance coverage, is not straightforward, in order to resolve their disputes parties may conveniently resort to alternatives to litigation and arbitration, including mediation, conciliation, and direct negotiation. Indeed, most arbitral institutions are promoting their ADR services.

To sum up, despite the difficulty in drawing conclusions at this stage, there is concrete reason to hope that arbitration will emerge from this crisis undefeated. The proactive attitude of arbitral institutions is not only inspiring, but also represents a beacon of new hope for economic growth in these challenging times.

[1] Available here: https://iccwbo.org/content/uploads/sites/3/2020/04/guidance-note-possible-measures-mitigating-effects-covid-19-english.pdf.

[2] As mere examples, the Arbitral Institution of the Stockholm Chamber of Commerce (“SCC”) states that “the SCC infrastructure already in place at the time of the outbreak of the COVID-19 has supported a smooth transition to working remotely”; likewise, the London Court of International Arbitration (“LCIA”) declares that “the LCIA’s concern for the health and wellbeing of our staff, and our commitment to our loyal users and friends wherever they are based, means that from Thursday 19 March 2020, we will be working remotely. We therefore hope that you understand the precautionary measures we have decided to take in order to maintain our service, while also safeguarding the welfare of our staff”; and the Hong Kong International Arbitration Centre (“HKIAC”) states that “in these unprecedented times, HKIAC has implemented measures to prioritise the health and safety of guests and staff at HKIAC, and to ensure no disruption to the services we provide.

[3] See CAM’s provisions of April 14, 2020 (amending the previous one of March 25, 2020).

[4] See, for example, the CIArb Guidance Note on Remote Dispute Resolution Proceedings, the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration (2020 Edition); the Seoul Protocol on Videoconferencing in International Arbitration; the Annex I (Checklist for a Protocol on Virtual Hearings) and Annex II (Suggested Clauses for Cyber-Protocols and Procedural Orders Dealing with the Organisation of Virtual Hearings) to the ICC Guidance Note.

Articolo inserito in: Contenzioso, COVID-19
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