CAN REMOTE HEARINGS REPLACE PHYSICAL HEARINGS IN ARBITRATION?

Vyapak Desai, Ajar Rab and Rohan Batra

This white paper has been developed pursuant to the first quarterly debate of Project Discourse organized under the helm of Commercial and Financial Law Reporter on the motion of “Can Remote Hearings replace Physical Hearings in Arbitration?”

Introduction

The outbreak of COVID-19 has left a catastrophic impact globally. With lockdown being imposed, arbitration, as a means of alternative dispute resolution is being subject to unprecedented difficulties. This has led to the arbitral tribunals and institutions in India encountering a shift to virtual hearings. As the pandemic spreads, it leaves all the stakeholders of the process of arbitration with the formidable task of seeking justice by swiftly embracing technology and remote hearings.

In a world where disruption is the only constant, COVID-19 has brought about a new approach for conducting arbitration proceedings i.e. virtually. With timeliness and flexibility being a remote hearing’s prominent advantage, anything which brings efficiency and effectiveness in an arbitration proceeding can be a strong way forward.

The dynamics of arbitration are such that they bring us to this pertinent question of replacement of remote hearings with physical hearings under the Indian legal regime.

This debate has been broadly categorized into three heads:

  1. Does the Indian legal regime mandate a physical hearing?
  2. Can the oral examination/cross-examination of a witness be substituted through remote hearings?
  3. Can oral arguments be conducted virtually   compared to the traditional physical hearing?
  1. Does the Indian legal regime mandate a physical hearing?

For the motion

The two strong arguments to support the conduct of virtual hearings are, firstly, the legal framework, the Arbitration and Conciliation Act, 1996 does not mandate conduct of oral hearings physically nor creates any impediment to conduct arbitration hearings virtually.

Secondly, as long as the parties are in consensus on having virtual hearings, there should not be any difficulty in adopting a particular way of proceedings. In other words, party autonomy- one of the salient principles of arbitration, can help resolve this issue. Even if parties don’t agree, the arbitral tribunal, keeping the facts of the case in mind, can direct for virtual holing of the proceedings.

Moreover, the seat of arbitration would not pose as the bone of contention for deciding on the mode of conducting arbitration hearings. Seat, as a legal concept, only determines the legal framework governing the arbitration proceeding. It does not come in the way of holding virtual hearings.

Against the motion

From the strong viewpoint of the virtual hearings cannot replace the physical hearings, yet, there arises a slant disagreement with respect to the Indian legal system being yet inchoate to take on this new phase of virtual hearings.

The argument of party autonomy breaks by pinpointing party autonomy to be a double-edged sword. While everything happens seamlessly when an agreement is being entered into, when a  dispute occurs, the agreement itself becomes the first impediment. The contention arises when one of the parties chooses to challenge the agreement, in order to delay proceedings, unless doing it instantaneously makes commercial sense. The delay can be put into motion by claiming that the parties didn’t contemplate the COVID-19 situation when the agreement was made and that party doesn’t agree to virtual hearings. The important question which arises now is, how do you reconcile efficiency with due process? Also, at what point does the tribunal take on the mantle of putting parties in a spot where they do not want to be?

If the tribunal imposes the procedure of virtual hearings on the parties, it may violate the parties’ right to fair and equitable treatment and the right of adequate opportunity of presenting the case.

The award may be challenged by claiming that the party was forced to follow the procedure of virtual hearings where the party objected to it in the first place.

On the aspect of seat, the opponent suggests that venue will now become more important than the seat. The reason being that, that the location of the venue will determine the situs of data protection rules, other concerns in terms of what platform, confidentiality concerns and which jurisdiction you are in or if there are any public policy concerns. Therefore, the seat will remain to be a legal fiction and the venue will rise to importance in the eyes of the party.

A scenario where parties maliciously challenge the award based on the argument of lack of due process can be put to an end by the scenario of the Courts not overruling the award based on due process.  

As a suggestion, parties’ consent, if required, can be incorporated at the time of agreement to avoid dispute further.

Raising a relevant distinction between delay being deliberate and delay arising out of a situation not in a person’s hand, the side speaking against the motion, clarifies and refutes the argument of due process being a paranoia. The problem of delay may arise due to the fact that a party is not tech-savvy and may face problems of lack of fair and equitable opportunity.

This segment of the debate was concluded on the note of India becoming tech-savvy in the remotest part of the country and as arbitration is resorted to only by commercial parties, the advancement of virtual hearings is going to be embraced. However, not all commercial parties are as sophisticated, tech-savvy and plush with resources to adopt technology, and understand its nuances.

2. Can the oral examination/cross-examination of a witness be substituted Through remote hearings?

Against the motion

The question of effectiveness is pivotal when we check the replacement of physical hearings by virtual ones. Cross examination has a dual objective of either discrediting the character of the person who has given the testimony or by discrediting the testimony itself. The sharp distinction is made between a commercial and criminal dispute by stating that the commercial disputes are complex and documents driven.

Multiple parties are involved and there is a constant need for arbitrators to go back and forth with the documents involved. Just as the witness is about to give the answer to an important question, there may be certain technological issues, and it will be difficult to assess whether such hindrances are bona-fide or not.

Moreover, in an online space, maintaining eye contact and analyzing the witness’s demeanor is made difficult. In this regard, the Hon’ble Supreme Court has asked for the high court to come up with guidelines for cross-examination.

For the motion

Conversely, these concerns are refuted by stating that the importance of cross-examination or rather demeanor is overstated. In a commercial dispute, the document speaks for itself and therefore, the chances of demeanor affecting the mindsets of adjudicators in delivering the judgement is far-fetched. Even during trials, the witnesses and the examiner is sitting several feet away from the arbitrator. In fact, in virtual hearings, the expressions of the witnesses along with their testimonies can be recorded, and later can be re-watched which will aid in better delivering the award. A person can be present with the witness to take care of witness coaching. Nonetheless, concerns of technology can be taken care of through better logistical management. The importance of virtual hearings is brought about by propagating not only a change in the mindset of people in the way they conduct advocacy but also in cases of cross-examination.

At the end, an agreement is reached as to the change required to the style of advocacy. Moreover, cross-examinations can be effectively conducted by pointing out how virtual hearings can be a great tool to enhance credibility. Arbitration is cross-jurisdiction and cross-examination is very jurisdiction specific as to where a party is coming from. Virtual hearings have their own limitations which need to be procedurally aligned with the background of the parties.

3. Can oral arguments be conducted Virtually compared to the traditional physical hearing?

For the motion

As the difficulties of quick references and support from one’s team arises in virtual hearings, a way forward is suggested by, firstly, being more prepared than what we used to. Desperate times call for desperate measures. And in these times, a counsel needs to be better prepared with the written arguments, the opening etc. Secondly, having a team on your side is a COVID-19 issue. A virtual hearing does not mean that everyone is in a different room but everyone need not be in the same room. A person to help you with things can always be present.

The same is refuted by portraying the way of delivering the arguments in a holistic way is more important and satisfying. As a counsel, the way you present the evidence at the end in the holistic manner, tends to sway the judges or arbitrators or at least create an iota of doubt in the minds of adjudicators. Further, in terms of the efficacy, in a physical hearing, even a small pause can be considered as not entirely convincing.

Conclusion

While it may sound that we are not ready yet, there are no legal to adapt remote hearings as a way forward. However, in times like these, it is important to adapt to a new environment or technology in this case but after identifying the challenges in the road ahead. It’s time that we find alternatives for better dispute resolution systems which are faster, quicker, and cost-efficient.

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