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Insisting on Live, In-person Arbitration Hearings During The Pandemic

Throughout the coronavirus pandemic, parties to an arbitration agreement and arbitrators have grappled with the issue of the right to a live, in-person arbitration hearing.  Is there a due process concern that flows from conducting remote proceedings over one side’s insistence on in-person hearing?  For example, parties’ facility with presenting testimony and evidence remotely may be limited, arbitrators’ technical proficiency may be lacking, and they may be uncomfortable with taking evidence remotely.  Then there is the difficulty of presenting the case effectively across different time zones and the potential unfair advantage to one party over another caused by requiring one party’s witnesses and evidence to be presented outside normal business hours.  In some cases, there may be physical evidence that is difficult to present remotely or the need for a site visit.

While one party may be willing to wait for the COVID-19 crisis to end in order to conduct in-person hearings, the other side might not agree.  Postponing a hearing on the merits may be inconsistent with contractual time limitations, real-world time pressures that affect the parties differently, and/or timing requirements in arbitration rules.  Difficulties may arise when one party insists on in-person hearings in the designated place of arbitration.

In some circumstances, the arbitration rules may contemplate remote hearings.  For example, the London Court of International Arbitration Rules provide that “a hearing may take place in person, or virtually by conference call, videoconference or using other communications technology with participants in one or more geographical places (or in a combined form).” And that the tribunal may use technology “to enhance the efficiency and expeditious conduct of the arbitration.”  Consistent with that directive, at least one English court has recently held that a proposed hybrid hearing in which both in-person and remote proceedings take place would not unfairly advantage one party over the other.

Likewise, while the International Chamber of Commerce Rules of Arbitration provide that the tribunal “shall hear the parties together in person,” the ICC has interpreted this rule “as referring to the opportunity for a live, adversarial exchange and not to preclude a hearing taking place ‘in person’ by virtual means if the circumstances so warrant.”  Indeed, the 2021 ICC Rules, which took effect January 1, 2021, expressly permit tribunals to conduct hearings “remotely by videoconference, telephone or other appropriate means of communication.”

Additionally, the Singapore International Arbitration Centre recently reported that all in-person meetings are now “being conducted by teleconference and videoconference” and has directed all parties to file and exchange papers electronically.  By contrast, the Hong Kong International Arbitration Centre remains operational and will admit parties for in-person hearings and meetings, provided that all parties have remained in Hong Kong continuously for the 14-day period prior to admittance, submit to temperature checks, and otherwise comply with its COVID-19 protocols.

In practice, parties to an arbitration agreement may not be able to force an in-person arbitration hearing during the pandemic.  For example, unless the parties stipulate to proceed telephonically or via Zoom or the panel orders that the hearings will take place telephonically or via Zoom, the Financial Industry Regulatory Authority (FINRA) postponed all in-person arbitration and mediation proceedings scheduled through June 4, 2021.  The FINRA guidance does not specify what happens if one party refuses to stipulate to remote proceedings.

In one well-publicized dispute, a union representing bus drivers in Reno, Nevada commenced an arbitration proceeding against Keolis North America, alleging that Keolis wrongfully threatened to terminate bus drivers who refused to let riders board buses without a face mask.  Keolis insisted on an in-person arbitration hearing that was scheduled for March 5, 2021.  Citing COVID-19 concerns, however, the arbitrator refused to attend the hearing in person and instead offered to attend the hearing via video.  Keolis accused the arbitrator of bias in favor of the union for refusing to attend the hearing in person.  The arbitrator said Keolis’s allegations were baseless but has since withdrawn from the case.

In our experience, attempts to compel non-remote hearings seem unlikely to succeed while public health concerns remain.  Arbitration tribunals have rejected arguments that due process requires in-person hearings or that remote hearings give one side an unfair advantage.  At the same time, arbitration tribunals have taken great pains to protect the principal of equality of arms, often crafting creative case management techniques to address perceived shortcoming of remote hearings.  Our informal survey revealed not a single case in which an international arbitration tribunal has ordered the parties to appear in person during the pandemic.

The remote arbitration hearings are likely to remain the standard for the duration of the pandemic. Arbitrators can and should continue their efforts to ensure that parties and witnesses are not required to participate in remote hearings or present evidence in ways that threaten due process, including such mundane considerations as what time of day a witness must testify or counsel must present arguments.  Arbitrators should also allow sufficient time to elapse between the end of one hearing session and the commencement of another. And they should consider commencing hearings at different times on different days, so each side can present its case at times that are optimal or convenient for its time zone.  If a party wants to ensure an in-person hearing, that party should include mandatory language in the contractual arbitration clause, knowing that such language could make it impossible to enforce time limits on the rendering of an award.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XI, Number 68
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About this Author

Nail Popović, Business Trial Legal Specialist, Sheppard Mullin"
Partner

Mr. Popovic is a partner in the Business Trial Practice Group in the firm's San Francisco office and is Chair of the International Arbitration Practice.

Areas of Practice

Mr. Popovic’s litigation experience includes a wide range of commercial disputes, including consumer class actions, white collar criminal matters (including internal investigations) and international dispute resolution (including international arbitration and litigation) and counseling. Mr. Popovic has developed expertise in legal issues related to environmental marketing, as well as federal...

415.774.3156
James Fazio Intellectual Property Attorney Sheppard Mullin Law Firm
Special Counsel

James Fazio is special counsel in the Intellectual Property Practice Group in the firm's San Diego (Del Mar) office.

Areas of Practice

James focuses on intellectual property and business litigation. He represents public and private companies in disputes such as those involving patent and trademark infringement, theft of trade secrets, fraud, breach of contract, unfair competition, false advertising and various business tort claims. James has more than 24 years of litigation experience and was selected by his peers among the top ten intellectual property...

858.720.7418
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