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Digitalizing arbitration: Finding our cruising speed

Digitalizing arbitration: Finding our cruising speed

I am a technology optimist. I believe that technology has the answer to most questions and challenges. And I have previously been frustrated that arbitration has been too slow to adopt new technological solutions. That is why, in the last few months, I have cheered on as technology has taken a few decisive steps onto arbitration’s center stage. While the pandemic has wreaked havoc on life and work as we know it, it has also resulted in the rise of virtual hearings and online case management platforms. Nonetheless, I cannot help but wonder: Is this maybe happening too fast?

Arbitration has not been at the forefront of digitalization. Before COVID-19, many arbitral institutions still required submissions on paper, procedural conferences were often done by old-school telephone, and discussions at arbitration events and seminars were limited to those fortunate enough to be physically present. Arbitrators, witnesses, counsel, and parties traveled from far corners of the globe for every hearing. This status quo may have lasted for a long time still, had it not been for the virus.

Too slow? Electronic case management systems and videoconferencing

Let us look first at one of this year’s digitalization trends, electronic case management systems — software that enables arbitration participants to store and share case documents and other data in a single, shared, permissioned repository. The underlying technology is digital file sharing, which was invented back in the 1980s. Amazon Web Services, the pioneering cloud computing platform, launched publicly in 2006, and Google Cloud in 2010. In the law sphere, IntraLinks started offering its On-Demand Workspaces in the late 1990s, and virtual data rooms were widely used by M&A lawyers already in the decade that followed. 

In arbitration, by contrast, file sharing has been slow to gain a foothold. When the SCC Platform launched in 2019, it was one of the very first electronic case management systems on offer in the world of international arbitration. In July 2020, several law firms joined in the publication of the Protocol for Online Case Management in International Arbitration, which calls for greater digitalisation and efficient, secure document sharing through online tools.

Next, let us consider this year’s biggest digitalisation trend: virtual hearings. The underlying technology is videoconferencing, first offered by AT&T in 1970 and brought into the mainstream by Skype in 2003. Today, most larger companies and firms have well-equipped video-conferencing facilities. In arbitration, however, video conferencing really only gained momentum in 2020, as a necessary solution when the COVID-19 circumstances made meeting in person impossible or too risky. I would dare to guess that more virtual arbitration hearings have taken place since March than in all previous years combined.

Wait, is this happening too fast?

As a technology optimist, and I am very excited about virtual hearings and electronic case management platforms, and also about more cutting-edge legal technologies — such as speech recognition for transcription or translation, analytical tools to find the right case law, predictive AI (so-called AI judges) to assist in adjudication, and blockchain to enforce awards. But I recognise that overnight change is not always a good thing. If we digitalise arbitration too quickly, things may get lost in the process, or there may be a backlash.

In October 2020, the SCC conducted a survey to study the use of and attitude towards virtual hearings in SCC cases since the onset of the pandemic. The surveyed arbitrators identified several benefits, primarily relating to time efficiency and cost savings, but they also listed a whole slew of perceived and experienced downsides. Many of these downsides — such as technical hassles, procedural uncertainty, lack of digital etiquette — are tangible and easily fixable. Other disadvantages are less tangible. From the survey, we found out just how much arbitrators value the subtleties of human interaction in the hearing room, and that deliberations are exponentially better when arbitrators can smell each other’s coffee. In other words, in-person hearings have a certain je ne sais quoi that is hard to substitute in the virtual hearing environment.

Add to this the ever-present cyber-security risks, which increase as we put more and more sensitive data online, and use new channels to transfer it between us. If digitalisation happens too quickly, before everyone has adequate protection and encryption, we may unintentionally put our users at risk.

Addressing these and other concerns will take time — time for arbitration participants to get used to the new forum, and time for the relevant processes to form and spread. Importantly, we must approach new technologies as new, and not expect simply to replace analog tools with digital ones.

Finding our cruising speed

After moving at a snail’s pace for decades, the digitalisation of arbitration has shifted into maximum speed in 2020. For a technology optimist like me, that is cause for celebration, because these new technological tools have enormous potential to increase efficiency and save costs. At the same time, however, I recognise that we may not be able to travel at maximum speed for long. Rather, we should aim at cruising speed — a pace we can keep up without crashing, running out of steam, or leaving some of our passengers behind. And if that means another year or two before blockchain awards become the next big thing, then I guess I will just have to sit tight and hold my excitement until then.  

Head of Business Development Lise Alm

 

SCC Virtual Hearing Survey shows both positive and hesitant attitudes

SCC Virtual Hearing Survey shows both positive and hesitant attitudes

Fast-tracking the future? Since the Covid-19 pandemic outbreak in March 2020 nearly 40% of the hearings in SCC arbitration cases were conducted online. Arbitrators report a generally positive experience of the virtual hearings, but some show hesitations around technology and the assessment of witnesses.

The onset of the COVID-19 pandemic in March 2020 resulted in a fast-tracking of digitalisation in international arbitration. Ideas and technologies that too many arbitration practitioners had seemed futuristic only weeks before suddenly took center stage. The most notable change has been the quick move in the direction of virtual hearings. With no end in sight to travel restrictions and limitations on group gatherings, the arbitration community has come to embrace — or at least accept — the virtual hearing as a necessary choice when meeting in person is not possible.

To learn more about the virtual hearings taking place in SCC arbitrations, the SCC conducted a survey in October 2020. The survey found that virtual hearings have replaced in-person hearings in most international arbitrations, and to a lesser extent, in disputes involving only Swedish parties. Arbitrators report a generally positive experience of the virtual hearings, despite some hesitations around technology and the assessment of witnesses.

Viewed from a broader perspective, the survey findings suggest that the current pandemic may serve as a catalyst for the renewal and improvement of the international arbitration process. Changes necessitated by the crisis may, in fact, leave a permanent imprint in the international arbitration landscape, perhaps making virtual hearings the norm rather than the exception. Because, as one arbitrator wrote, “assuming the technical platform functions smoothly, online hearings have the great benefit of saving time, cost and inconveniences related to the organization of in-person hearings.” Other arbitrators added “reduced climate impact” to that list of benefits.

Read the report SCC Virtual Hearing Survey

The SCC arbitrators´ tips for a successful virtual hearing 
Five things to bear in mind before your meeting

 

SCC Arbitrators’ tips for a successful virtual hearing

SCC Arbitrators’ tips for a successful virtual hearing

A list of tips from SCC arbitrators on how to conduct a successful hearing online.

Be well prepared and very organized! Read the many guides available on virtual hearings.

Use an external service offered by a specialised vendor for very large or technologically complicated hearings (e.g. involving simultaneous translation).

Carefully consider how to conduct the hearing as authentically as possible. Give participants clear guidance on the technical aspects and digital etiquette, including on such details as lighting and eye contact. Do not be afraid to micromanage.
• Should the camera be on at all times?

• Should counsel sit with the witness?


Provide participants with a detailed agenda well in advance.
• Keep in mind that the pace of a virtual hearing is slower than an in-person hearing.

• Allow for more breaks and keep the days shorter.

• Include time for technical issues.

Safe up the tech!
• Make sure everyone has access to the documents and knows how to locate relevant sections.

• Test run the hearing platform, individually and as a group, and ensure everyone knows the relevant functions         (e.g. mute, video, presentation).

• Have an IT-expert on standby.

• Have a back-up plan.

In October 2020, the SCC conducted a survey with SCC arbitrators to learn more about the use and attitudes towards using virtual hearings.

Read more

Read the report, SCC Virtual Hearing Survey

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