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


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