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Commencement of Virtual Hearings Under the COVID-19 Situation According to the Updated 2020 LCIA Arbitration Rules and the Newly Issued ICC Guidance Note


Due to the continued worldwide spread of COVID-19, many hearings have been postponed or conducted as virtual hearings.  In light of these recent changes, the London Court of International Arbitration (“LCIA”) has announced its updated arbitration rules (“2020 LCIA Rules”), and the International Chamber of Commerce (“ICC”) has also issued an ICC guidance note on possible measures aimed at mitigating the effects of the pandemic (“ICC Guidance Note”) on April 9, 2020.

The updated 2020 LCIA Rules will be effective as of October 1, 2020 and will apply only to arbitration cases commencing from the effective date onwards.  In addition to the revisions pertaining to the COVID-19 situation, other notable revisions will be covered in this newsletter.  As for the ICC Guidance Note, it provides guidance on mitigating COVID-19-related delays in hearings and conducting virtual hearings.  The main points of the ICC Guidance Note are introduced below.

1.   Notable Updates in the 2020 LCIA Rules

LCIA had in fact been updating its arbitration rules before the COVID-19 pandemic began, but LCIA has also made notable updates in respect to the changes of circumstances caused by the COVID-19 situation.

The newly added Article 4.3 states that “delivery by email or other electronic means of communication shall be as agreed or designated by a party for the purpose of receiving any communication in regard to the arbitration agreement.”  In addition, Article 19.2 states 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.”  While the previous 2014 LCIA Arbitration Rules also mentioned a hearing by videoconference, the updated 2020 LCIA Rules introduce more comprehensive and varied hearing methods in consideration of the latest developments in technology and social needs.  Moreover, the newly added Article 26.2 states that “any award may be signed electronically and in counterparts and assembled into a single instrument.” 

As for other major updates, the claimant wishing to commence more than one arbitration against one or more respondents may serve a composite request for arbitration in respect of all such arbitrations under the new Article 1.2.  Article 1.2 further states that even in the case of one composite request, the claimant must still identify separately the estimated monetary amount or value in dispute, the transaction at issue and the claim advanced by the claimant against each respondent.  Each arbitration so commenced will proceed separately, unless the LCIA Court or the arbitral tribunal determines otherwise.  We will need to further wait and see how the LCIA Court applies the new 2020 LCIA Rules, especially when the LCIA Court delivers the composite request for arbitration to each respondent in separate disputes. 

In respect of the arbitral tribunal’s powers, the arbitral tribunal may determine that any claim or defense is manifestly outside the jurisdiction of the arbitral tribunal, or is inadmissible or manifestly without merit, and where appropriate, issue an order or award to that effect (an “early dismissal determination”) under the newly added Article 22.1 (viii).  This addition is expected to expedite the arbitration proceedings by explicitly setting out the arbitral tribunal’s power on early dismissal determination, but the claimant should be more prudent in filing the request for arbitration in order to avoid any early dismissal.

2.   ICC Guidance Note on Possible Measures Aimed at Mitigating the Effects of COVID-19

According to the ICC Guidance Note of April 9, 2020, the Secretariat’s communication of March 17, 2020 expressly required that new requests for arbitration (including pertinent exhibits) and other initiating documents be filed with the Secretariat in electronic form.  The ICC Guidance Note further notes that in order “to mitigate the current difficulties for the submissions of hard copies, tribunals should encourage the parties to use electronic means of communication for the submissions and exhibits to the full extent possible.”

In respect of hearings or conferences, if the parties agree or the arbitral tribunal determines that convening such hearing or conference in a single physical location is indispensable and that doing so is possible despite current COVID-19 situations, the arbitral tribunal and the parties should consult to discuss and apply the specific rules and advisory guidance at the physical location of the hearing/conference and take the appropriate sanitary measures to ensure the safety of all participants.

On the other hand, there may be cases where a party insists on having an in-person physical hearing and opposes a virtual hearing, while the arbitral tribunal deems that a virtual hearing is necessary.  In such cases, when deciding on the appropriate procedural measures to proceed with the arbitration in an expeditious and cost-effective manner, the arbitral tribunal should take account of all the circumstances, including the followings: (i) the consequences of COVID-19; (ii) the nature and length of the conference or hearing; (iii) the complexity of the case; (iv) number of participants; (v) whether there are any particular reasons to proceed without delay; (vi) whether rescheduling the hearing would entail unwarranted or excessive delays; and (vii) as the case may be the need for the parties to properly prepare for the hearing.  The ICC Guidance Note clarifies that while Article 25 (2) of the ICC Arbitration Rules provides that after studying the written submissions of the parties and all documents relied upon, the arbitral tribunal “shall hear the parties together in person if any of them so requests,” this language can be construed as referring to “the parties having an opportunity for a live, adversarial exchange and not to preclude a hearing taking place “in person” by virtual means if the circumstances so warrant.”

The ICC Guidance Note especially mentions Article 25 (1) of the ICC Arbitration Rules, which broadly provides that the arbitral tribunal “shall proceed within as short a time as possible to establish the facts of the case by all appropriate means,” and points out that delaying the hearing until face-to-face hearing is possible due to COVID-19 is unjust and might even cause disadvantageous effects.  Accordingly, the ICC Guidance Note notes that the arbitral tribunal may adopt different approaches such as hearing via virtual conference as it exercises its authority to establish procedures suitable to the particular circumstances of each arbitration and fulfills its duty to conduct the arbitration in an expeditious and cost-effective manner.

Many international disputes are expected to arise as a result of the COVID-19 situation and many of these may end up resorting to arbitration proceedings in the near future.  Arbitration proceedings worldwide are expected to be conducted with different approaches from those before the COVID-19 pandemic.  We expect that the arbitral tribunal will adopt virtual hearings in order to conduct arbitration proceedings in an expeditious and cost-effective manner, in accordance with updated arbitration rules as well as the tribunal’s broad authority to rule on procedural issues.  Therefore, it is important to understand the concept of virtual hearings and to prepare for such hearings in advance with reference to recent updates such as the 2020 LCIA Rules and the ICC Guidance Note.