Virtual Hearings in arbitrations in India

With the advent of Covid-19 pandemic, and the consequent lockdown imposed by the Indian government, it may be imprudent or even practically difficult to conduct physical arbitration hearings considering the social distancing norms and the safety of the parties, their counsels, their witnesses and the arbitral tribunal. This present situation has forced the parties and the arbitral tribunals to innovate and consider holding arbitration hearings virtually, especially in a situation where it may be impossible to conduct physical hearings due to travel restrictions. Even the Indian Supreme Court and other High Courts of India have recognized the importance of virtual hearings and are conducting hearings through video-conferencing for urgent matters. There is, thus, a strong impetus for arbitration in the country to follow the guidelines issued by various Courts and consider the use of technology in conducting arbitration hearings remotely.

While there is no doubt that most of the steps in an arbitration proceedings can be done virtually, including sending request for arbitration, selecting and confirming arbitrators, holding case management conferences and deliberations among arbitrators; however, the parties and the arbitral tribunal may be sceptical to holding virtual hearings especially at the stage of evidence and final hearing. Virtual hearings may also pose other issues such as confidentiality and technological interruptions. However, it is the need of the hour to look beyond the conventional methods of conducting arbitration and come up with solutions to tackle these issues. We cannot let the crisis stall the arbitration proceedings indefinitely.

In this article, the authors examine the legal and practical challenges in conducting virtual hearings in domestic arbitration and international arbitration seated in India, and suggest plausible solutions for adopting virtual hearings.

National Framework for Virtual Hearings

The Indian arbitration law, i.e. the Arbitration & Conciliation Act, 1996 (“Arbitration Act”), as well as the 1985 UNCITRAL Model Law, are silent on remote hearings. Even though there may not be express provisions on conducting virtual arbitration hearings under the Indian law, one of the advantages of the arbitration process is that it accomodates great amout of flexibility based on the principles of party autonomy. Further, there are various provisions under the Arbitration Act that may faciliate this new virtual way of conducting arbitration proceedings.

Section 29 B of the Arbitration Act provides for documents-only arbitration in order to fast track the arbitration process with limited oral hearings, where-ever necessary. Such arbitrations can surely be conducted through a reliable electronic platform and tools during these times. Further, Section 19(2) of the Arbitrattion Act gives the parties the freedom to mutually decide upon the procedure for conducting the proceedings, which could include virtual proceedings. In absence of an agreement between the parties, the arbitral tribunal has been given the powers to determine the manner of conducting the proceedings under Section 19(3) of the Arbitration Act. Section 20(3) of the Arbitration Act, further provides that “[t]he arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.” In the absence of any agreement or clause in the arbitration agreement to the contrary, the arbitral tribunal’s broad power to conduct the proceedings includes the decision on whether hearings should be held physically or virtually.

Further, Section 24 of the Arbitration Act gives the parties a right to oral hearings, however there is no explicit requirement of ‘in-person’ hearings. The Supreme Court of India has also made an interesting observation that hearings on video-conferencing can be said to equivalent to in-person hearings, even in criminal proceedings, as one can hear and observe the parties as if they are in the same room. The aforesiad Section 24 also gives power to the arbitral tribunal to determine the length and scope of the oral hearings, for example the time limit for the oral arguments and the issues on which evidence should be lead. Thus, in cases where one party requests for virtual hearings and the other party opposes the same as dilatory tactics, the arbitral tribunal can direct that the proceedings will be held remotely as per its powers under Section 19(3) read with Section 24 of the Arbitration Act. In the absence of an agreement between the parties, Section 24 of the Arbitration Act also grants the power to the arbitral tribunal to direct for electronic discovery of documents and limit the scope of discovery to strictly what is necessary. However, the arbitral tribunal should ensure that due-process is followed and both parties are given a fair and equal opportunity of presenting their case.

Recently, the Delhi High Court issued a guidance note for conducting arbitration proceedings by video conferencing and directed the Delhi International Arbitration Centre to adopt these guidelines with effect from 8th June 2020. The guidelines provide for: E-filing of cases; conducting hearings and examination of witness through a video conferencing platform such as Cisco Webex; and arbitral awards and orders to be digitally signed and circulated through e-mail among the parties. The guidelines also provide for the parties to submit written submissions, with copies of relevant documents and judgments, and video clips of their oral arguments. These steps have been incorporated to make virtual hearings through video-conferencing more efficient, and dispense with hearings through video-conferencing in cases where the partes are satisfied with the written submissions and video clips. In case the arbitral tribunal have further queries, they may direct for virtual hearings or request the parties to submit additional notes. This way of recording the arguments through written submissions and video clips will also rule out the possibility of the parties objecting to the proceedings at the time of challenging the arbitral award before the Courts and give the Courts a complete record of the proceedings. The guidelines also provide for taking consent of the parties before recording evidence through video-conferencing, getting the parties and arbitrators sign a confidentiality undertaking, and a fast track arbitration procedure.

Further, the Indian Council of Arbitration (ICA), another leading arbitral institution in the country, has started taking consent from its parties and arbitral tribunal to conduct the on-going arbitration proceedings through use of information technology and video conferencing; and has also issued a notice for accepting fresh fillings of arbitration cases through electronic means. These are indeed very welcoming steps; and we are of the view that other Indian arbitration institutions may also issue guidelines for virtual arbitral hearings to cope with the changing times.

1. State of Maharashtra v. Praful B. Desai, (2003) 4 SCC 601, paras 19 and 20.

2. Sukhbir Singh v. Hindustan Petroleum Corp., 2020 SCCOnLine Del 228, (2020) 266 DLT 612 .

3. Union of India v. Reliance Industries Ltd. and Ors., 2018 SCC OnLine Del 13018.

4. Accessed at http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/PublicNotice_QS9BF6S2KSA.PDF.

Challenges & their Remedies

Before fully embracing virtual arbitration hearings, we need to address the practical and legal challenges posed by this new way. Some of the challenges are as follows:

Virtual witness examinations

In cases where a witness’ testimony is not decisive, such as when there are differing versions of facts from both the sides, the party cross-examining the witness may perceive a disadvantage in not being able to guage the body language and demeanour of the witness on the virtual platform. This may also impact the ability of the arbitral tribunal to determine the credibility and strength of the witness. However, these concerns may not come up in commercial arbitrations where the arbitral tribunal relies more on commercial documents and records rather than witness credibility. It is also interesting to note that the Supreme Court of India has remarked that these issues with respect to assessing the witness’ demeanour and credibility may not arise if the technology works effectively even in the context of criminal cases. Thus, the arbitral tribunal should ensure that the proceedings are being conducted on an effective technology platform and in case it is of the view that parties right of a fair hearing is impacted then they may adjourn the proceedings and direct for evidence to be lead again in the most appropriate way.

http://www.icaindia.co.in/Notice-for-ICA.pdf

Witness Coaching

There also exists the risk of coaching or improper assistance to witnesses being examined via video-conference, as during the proceedings the witness may be engaging with his counsel through different means. The parties and the arbitral tribunal should agree on the measures for maintaining the integrity of the presentation of the witness amd for eliminating any illicit interference or suggestions to the witness. The arbitrators and parties can follow guidelines issued by international arbitration institutions, such as Chartered Institute of Arbitrators and Seoul International Dispute Resolution Centre, to be able to address these issues. Some of the steps that could be taken are as follows:

• Before proceeding with the examination, the witness must confirm if they are alone in the room they are testifying from, or make disclosures as to persons present, and affirm that they are not receiving any directions or assistance while providing testimony.
• Issues like coaching of witness can be averted through requiring the witness to enable their screen-sharing function, so that any notification that comes up on their screen is visible to the other participants.
• The witness should be clearly visible to the other participants, the witness should not be permitted to use features like “virtual backgrounds”, and a sizeable view of the room they are seated in must be visible.
• Parties should consider using 360° cameras that can provide a full view of the room, and can be controlled by the tribunal.

6. State of Maharashtra v. Praful B. Desai, (2003) 4 SCC 601, para 20.

7. Guidelines for Witness Conferencing in International Arbitration (2019).

8. Seoul Protocol on Video Conferencing in International Arbitration (2018).

Technological Interruptions and Inequality

The parties and the arbitral tribunal should also consider whether the parties and their witnesses have equal or comparable technological facilities, including access to reliable technology and a stable internet connection. An inequality in the technological capacity of the parties may pose a challenge with respect to the issue of due process at the enforcement stage of the award. Thus, steps should be taken to ensure that both parties are given a fair opportunity of hearing. It is advisable that the parties agree in advance with respect to the technology to be used, the procedures and technicalities for conducting the virtual hearing, and the steps that will be taken in case of linkage interruptions, to avoid challenges at the enforcement stage. The Arbitral Tribunal may also pass a procedural order to this effect. It is also essential that the parties test the technology to be used before commencing the virtual arbitral proceedings and point out the issues at that stage itself so that they are estopped from doing so at the stage of enforceforcement.

Confidentiality

Section 42A of the Arbitration Act mandates that the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings. Breach of confidentiality may also be lead to setting aside of the arbitral award under Section 34 of the Arbitration Act. Thus, during virtual proceedings, it is important for the arbitral tribunal to ensure that confidentiality is maintained by all participants in the proceedings including witnesses and technical assistants; and thus, take an undertaking of confidentiality from them, and perhaps impose sanctions for breach of confidentiality. It should also be ensured that the parties choose a reliable and encrypted platform for the proceedings. This is particularly important in sensitive cases to prevent leakage of data, such as in disputes relating to Intellectual Property.

The Way Forward

This crisis has compelled all of us to consider virtual arbitration proceedings as the way forward and come up with plausible solutions to deal with its challenges. However, virtual hearings could be a transformational tool in innovating domestic arbitrations and India-seated international arbitrations during post Covid-19 times too; and making the process more efficient and cost-effective. Virtual hearings could also give access to the parties to the best of lawyers and arbitral tribunals from across the world at reasonable cost.

However, in order to deal with various issues of virtual hearing, the parties must address the same at an early stage, such as at the stage of drafting the arbitration clause or during the case management conference. Further, it is also important for the parties and the arbitral tribunal to consider whether the dispute will be able to be resolved in a fair manner through virtual hearings depending on the complexity of the case, nature of the dispute and the circumstances of the parties. For example, a case that would involve large volume of documents as well as many witnesses and experts may be difficult to conduct virtually, and the parties may have to opt for a virtual platform that can ensure confidentiality of the documents and other evidence and facilitate the proceedings with multiple participants.

The arbitral tribunal may also have to assess as to which issues can be resolved through a document-only procedure or virtual hearing and which issues may need a physical hearing. The arbitral tribunal may also have to use its discretion in limiting evidence, written submissions and oral hearings in order to facilitate virtual hearings; but at the same time it should ensure that due-process is followed.

Under Section 29A of the Arbitration Act a time limit of 12 months from the date of completition of pleadings has been provided to the parties and arbitral tribunal to come up with an arbitral award in the case of domestic arbitrations and international arbitrations seated in India. The parties through mutual consent can extend this time limit only for a further period of 6 months. Thereafter, the parties may have to seek extension of the Court, which may grant this extension only for sufficient cause. It will be interesting to see if the Courts will grant extensions owing to the lockdown or look at the efforts taken by the parties in adhering to the timelines and opting for virtual hearings. Virtual hearings may also assist parties in addhering to these timelines.

India has more of ad hoc arbitrations, therefore the arbitrators should adopt the guidelines suggested by various arbitral institutions and Courts when administering arbitration proceedings through video conferencing and direct the parties accordingly. Ad-hoc arbitrators could also take the assistance of arbitral secretaries, who are technologically advanced, and can assist the parties during the virtual process. This is a great opportunity for yonger lawyers to train as arbitral secretaries and assist in virtual hearings in the coming future.

The world as we know it has changed, and there is no looking back. It is only time that we adapt and acclimatize to this new world of dispute resolution.