As overseas travel is restricted and face-to-face interaction between individuals is avoided as a result of the COVID-19 pandemic, we expect changes to international arbitration proceedings, which is a major solution to disputes in international transactions. In fact, with the spread of COVID-19, it has become difficult to proceed with in person hearings. In response, a new option has emerged to change the hearing that was previously conducted in person to virtual. Several global institutions have issued press releases on conducting virtual hearings and have been preparing guidelines or protocols therefor. For this reason, we briefly introduce below the matters that need to be considered when preparing for, and proceeding with, a virtual hearing.
It is of the utmost importance to confirm that there will not be any issues in enforcing an arbitral award rendered through a virtual hearing in the relevant countries in question. If the parties to arbitration expressly agree to proceed with a virtual hearing without any objection, enforcement of an award rendered will be possible unless otherwise stipulated in the arbitration laws of each country in question. Furthermore, it is necessary to confirm whether virtual hearings are possible under the applicable rules of each international arbitration institution. Most prominent arbitration institutions such as the ICSID, ICC, LCIA, SIAC, HKIAC and KCAB, have declared that virtual hearings in lieu of in-person hearings are permitted. On the other hand, if the parties fail to reach an agreement regarding the virtual hearing proceeding or the virtual hearing is conducted by an arbitration institution that has not yet permitted virtual hearings, it is necessary to carefully review whether or not an arbitral award rendered through a virtual hearing would be enforceable.
Moreover, in the case of virtual hearings, unlike in person hearings, it is important to fully prepare for potential (i) technical problems and (ii) confidentiality and cybersecurity issues.
Technical issues: For virtual hearings, it is necessary to prepare video conference equipment specialized for arbitration proceedings. In particular, it is important that the arbitral tribunal, parties of different interests, and factual or expert witnesses participate and view the evidence together in virtual hearings. Thus, unlike general video conferences, the number of monitors required per participant will increase (for example, in the case of an arbitral tribunal, at least five monitors—one monitor each for both parties, one for witnesses, one for evidence and one for transcripts—may be required) and cameras and microphones may also be needed more than before. In addition, virtual hearings will require a stable platform and internet connection, and it would be important to have technical support personnel on standby who can promptly resolve technical problems.
Confidentiality and cybersecurity issues: In principle, arbitration proceedings are conducted on a strictly confidential basis, but in the case of virtual hearings, maintaining confidentiality may be a challenge. For instance, it is conceivable that a third party be able to observe the hearing outside the camera angle, or the hearing is recorded and reproduced as captured images. To prevent these potential risks, we advise taking precautionary measures, such as obtaining confidentiality undertakings from all participants in the virtual hearing and arranging screens showing the entire room in which each party is participating. Moreover, using a platform equipped with a firewall to prevent problems such as hacking would be helpful.
Ultimately, the parties should agree on the following matters before a virtual hearing: (i) which platform to use for the virtual hearing, (ii) where the arbitral tribunal, each party and witnesses will conduct the virtual hearing, (iii) when the virtual hearing will be held (considering different time zones), and (iv) what other kinds of basic rules apply to the virtual hearing. Further, efforts to minimize confusion in the actual virtual hearing by conducting test calls prior to the hearing should be made.
As virtual hearings are conducted differently from traditional in person hearings, unexpected challenges may occur in their early stages. Nevertheless, some believe that the transition predicted following the development of telecommunications technology has only been accelerated by the spread of COVID-19. As Kim & Chang also has experience in conducting cross examination of factual witnesses via video conference in certain past hearings, based on these experiences, we already possess the capability to effectively adapt to virtual hearings. Of course, in the early stages of change, we expect to incur extra costs from technical problems and equipment, but once virtual hearings take hold, we believe that virtual hearings will likely increase in the future as it may result in cost savings attributed to a decrease in the need for international travels. Therefore, it is important to closely monitor the development and respond effectively to future changes.