Introduction

The emergence of Coronavirus Disease of 2019 (the “COVID-19”) back in 2020 has provided significant effects to all sectors of human life, unexceptionally business and law sectors, where at the time, many legal disputes arise out of the COVID-19 pandemic, among others, legal disputes in relation to the non-performance or delay of fulfillment of a party’s one or many contractual obligations due to the pandemic.

There was concern of the parties on how to resolve the legal disputes, particularly, in the event the contract governs that any disputes shall be resolved through an international arbitration institution with the seat of arbitration located overseas, whereas the majority of countries in the world issued lockdown policy forbidding any citizens from overseas travel.1 However, arbitration, compared to litigation, has its own characteristic, that is freedom of contracts principle (in arbitration, widely known as party autonomy principle), where the parties can jointly choose the venue of the hearings as well as tailor the proceedings according to their needs.2 Armed with the party autonomy principle along with the assistance of current technology, a solution has been created to resolve this matter, namely, online arbitration hearings.

A survey from an arbitration institution, the International Chamber of Commerce (“ICC”) of 2020 reported that 36 percent of the parties disputing through ICC had participated in fully online hearings in the first quarter of 2020, and subsequently, that percentage has increased to 71 percent in the final quarter of the same year.3 This is because online arbitration hearings are a key solution to travel restrictions, either intercity or cross-border, imposed by the government all over the world during the COVID-19 pandemic.

In 2020, the Singapore International Arbitration Centre (“SIAC”) issued the SIAC Guide – Taking Your Arbitration Remote (the “SIAC Guide”) providing key legal and technical issues to be considered and agreed by the parties prior to conducting online arbitration hearings. The SIAC is currently drafting the SIAC Arbitration Rules 7th Edition Consultation Draft (the “SIAC Rules Draft”) where the SIAC Rules Draft also accommodates the same matter. Thus, a question arises on whether online arbitration hearing saves more on the cost of institutional arbitration compared to that of in-person institutional arbitration hearing? Given that institutional arbitration, in particular, international arbitration proceedings, is deemed as more costly.

This article will further discuss more on online arbitration hearings and answer whether online arbitration hearings may reduce the costs of institutional arbitration.

Discussion

  1. Institutional Arbitration
    In both theory and practice of arbitration, generally speaking, there are two forms of arbitration, ad hoc and institutional.4 An institutional arbitration is one that is administered by a specialist arbitral institution under its own rules of arbitration.5 Meanwhile, ad hoc arbitration is arranged solely between the arbitrators and the parties; therefore, the parties must envisage and advance the arbitration procedure themselves under the supervision of the tribunal/sole arbitrator.6

    In general, institutional arbitration offers huge advantages, namely, (i) comprehensive procedural rules, (ii) the institutions are given the authority to appoint arbitrators at the parties’ request or in the event the parties cannot otherwise agree, and (iii) good administration (including case management and communication to the parties).7 On the other hand, one of the drawbacks of  institutional arbitration is that some arbitration institutions charge more costly fees, in particular, administrative fees and case examination fees.8

    Subsequently, ad hoc arbitration offers more flexibility to the parties to tailor the arbitration to their specific needs and arbitration costs seem to be less costly than that of institutional arbitration.9 However, in the event the parties fail to cooperate on the arbitration due to the lack of experience in arbitration, this could be a disaster to the arbitration of the parties.10

    Regardless the disadvantages of institutional arbitration which charges a costly arbitration fees, the parties seem preferring institutional arbitration to ad hoc arbitration, given that, the lack of experience of the parties in arbitration as well as incorrect decisions in ad hoc arbitration instead will result in a more costly fees than the arbitration fees charged by an arbitration institution.11

  2. Online Arbitration Hearings at SIAC
    Online arbitration hearings at SIAC have been introduced since August 2020 when the COVID-19 pandemic emerged. At the time. SIAC issued the SIAC Guide setting out legal and technical issues that the parties shall consider if the parties wish to conduct arbitration hearings in online manners, namely, the agreement of the parties on online arbitration hearings, platform selection, and code of ethics of the hearings.12

    The abovementioned SIAC Guide is based on the flexibility set by the SIAC Arbitration Rules 6th Edition (2016) (the “SIAC Rules 2016”). Under the SIAC Rules 2016, the arbitral tribunal shall conduct arbitration in appropriate and reasonable manners, upon the consultation with the parties, to ensure a fair, expeditious, and economical final award.13 Furthermore, the SIAC Rules 2016 also mandate that promptly upon the establishment of the arbitral tribunal, the arbitral tribunal shall immediately convene an initial meeting with the parties, whether in in-person or “any other” manner, to discuss on which hearing procedures are more appropriate and efficient for the settlement of such disputes.14 However, at the time, the SIAC Rules 2016 had not explicitly stipulated online hearings terms.

    In 2023, SIAC launched the SIAC Rules Draft as well as announcing a public consultation term on the SIAC Rules Draft. [15]15 Article 39.2 of the SIAC Rules Draft authorizes the parties to determine the format of the proceedings (namely, in-person, hybrid, via videoconference, teleconference, or other electronic communication format) and the arbitral tribunal, after considering the views of the parties, shall determine the date, time, format of the hearings and shall send notice on such matters to the parties.

  3. Evidence, Documents, Witnesses, Experts and Awards.
    The SIAC Rules Draft introduces a brand new feature, SIAC Gateway, which is a case management system administered by SIAC and can be accessed by the parties. SIAC Gateway might be inspired by progenitorial case management systems administered by the fellow international arbitration institutions, namely, the SCC Platform of the Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”) launched in 201916, or the ICC Case Connect of ICC launched in 202217. To operate SIAC Gateway, SIAC has partnered with Opus 218, one of the world’s leading providers of integrated software and services for the global legal disputes market.

    Upon notification on the commencement of arbitration, the secretariat of SIAC shall order the parties to upload all written communication, including but not limited to, notification, communication, correspondence, proposal, witness statement, expert reports, exhibits as well as other documents which are made, filed or exchange within the arbitration hearings onto SIAC Gateway.19

    Each party may request that the witness(es) is present to provide testimony verbally, whether in-person, via videoconference, or via any other electronic communication forms.20 However, such matters shall be subject to the provision that the arbitral tribunal has authority to order, reject to allow or limit the presence of the witness(es) to provide verbal testimony at the hearings.21

    Upon the request of the parties or the order of the arbitral tribunal, the expert(s) appointed by the arbitral tribunal, after the submission of the expert(s) report in writing, shall provide testimony verbally before the arbitral tribunal in person, via videoconference, or any other electronic communication.22

    Notwithstanding, arbitral awards shall be made in writing by arbitrator(s). The arbitral tribunal may also set out, upon the consideration of the view of the parties as well as conduct consultation with the secretariat, on whether such arbitral awards shall be executed in counterparts with wet inks or electronically.23

  4. Arbitration Cost
    Arbitration cost including the online arbitration hearings set out by the secretariat of SIAC pursuant to the Schedule Fees and Practice Notes. Arbitration cost comprises (i) fees and expenses of arbitral tribunal, (ii) administrative fees and expenses of SIAC, (iii) fees and expenses of emergency arbitrator (if only use emergency arbitration procedures), (iv) fees and expenses of tribunal secretary, (v) fees for each expert appointed by the tribunal and each assistance which is reasonably requested by the tribunal, and (vi) submission fees (the “SIAC Arbitration Cost”). where for the fees of tribunal and SIAC component, the fees will be subject to the amount of the dispute.24 Subsequently, for submission fees, such fees are subject to the nationality of the parties.25
  5. Items the Parties Shall Consider on Costs in Online Arbitration Hearings
    As explained in the previous section, arbitration costs in an arbitration institution, SIAC, are determined proportionally based on the amount of the dispute, not based on the method or format of the hearings chosen by the parties. Thus, the SIAC Arbitration Cost for in-person and online arbitration hearings are the same.

    However, there are other items shall be taken into consideration of the parties on fees in online arbitration hearings, as follows:

    • Travel and accommodation costs of the parties, arbitrator(s), witness(es), and expert(s). Online arbitration hearings are considered to reduce travel and accommodation costs, in particular, in international arbitration, where the parties, arbitrator(s), witness(es), and expert(s) are required to perform long-distance travel to reach the venue of the hearing.26
    • Fees for platform services used to conduct online arbitration hearings, either videoconference, teleconference, and any other electronic communication platform services.
    • Other supporting costs, namely, interpreter and translator fees.

Conclusion

The COVID-19 pandemic has changed the way humans live including to the extent of arbitration hearings. Online arbitration hearings have been introduced as a solution to the pandemic situation. A few years after the pandemic, an arbitration institution, SIAC, has attempted to accommodate rules and procedures on online arbitration hearings through the SIAC Rules Draft, including arbitration costs and the latest feature thereof, SIAC Gateway, a case management system administered by the SIAC. Although there are no differences in arbitration costs between online and in-person, online arbitration hearings might be a solution for both parties to reduce their expenses, in particular, of travel expenses to the seat of arbitration.

Dodi Roikardi

Sources

  1. Aram Aghababyan and others, “Global Impact of the Pandemic on Arbitration: Enforcement and Other Implications”, Kluwer Arbitration, 19 August 2020, available at https://arbitrationblog.kluwerarbitration.com/2020/08/19/global-impact-of-the-pandemic-on-arbitration-enforcement-and-other-implications/, accessed on 5 February 2024.
  2. Russell Thirgood, “Remote Hearings: Storm Clouds and Silver Linings”, International Bar Association (IBA), 27 September 2022, available at https://www.ibanet.org/clint-september-2022-feature-5, accessed on 5 February 2024.
  3. Ibid.
  4. Ulrich G. Schroeter, “Ad Hoc or Institutional Arbitration – A Clear-Cut Distinction? A Closer Look at Borderline Cases”, Contemporary Asia Arbitration Journal (2017), page 143.
  5. Zisha Rizvi, “The Shift Towards Institutional Arbitration: Critically Examining the Arbitration (Amendment) Act 2019”, 1 March 2020, page 9.
  6. Hong Kong International Arbitration Centre (HKIAC), https://www.hkiac.org/arbitration/what-is-arbitration, accessed on 5 February 2024.
  7. William Hartnett, QC and Michael Schafler, “Ad Hoc v. Institutional Arbitration – Advantages and Disadvantages”, ADR Institute of Canada, September 2017, available at https://adric.ca/wp-content/uploads/2017/09/Hartnett-and-Shafler.pdf, accessed on 2 February 2024.
  8. Ibid.
  9. Ibid.
  10. Ibid.
  11. Namrata Shah and Niyati Gandhi, “Arbitration: One Size Does Not Fit All: Necessity of Developing Institutional Arbitration in Developing Countries”, Journal of International Commercial Law and Technology Vol. 6, Issue 4 (2011), page 236.
  12. SIAC, “SIAC Guide – Taking Your Arbitration Remote”, SIAC Secretariat, August 2020, available at https://siac.org.sg/wp-content/uploads/2022/07/SIAC-Guides-Taking-Your-Arbitration-Remote-August-2020.pdf, accessed on 24 January 2024.
  13. Article 19 paragraph (1) of the SIAC Rules 2016.
  14. Article 19 paragraph (3) of the SIAC Rules 2016.
  15. SIAC, “SIAC Announces Public Consutation on the Draft 7th Edition of the SIAC Rules”, 22 August 2023, available at https://siac.org.sg/wp-content/uploads/2023/08/Press-Release-SIAC-Announces-Public-Consultation-on-the-Draft-7th-Edition-of-the-SIAC-Rules.pdf, accessed on 24 January 2024.
  16. SCC Arbitration Institute, https://sccarbitrationinstitute.se/en/case-management accessed on 23 February 2024.
  17. ICC, “ICC launches ICC Case Connect: Secure online case management made easy”, 12 October 2022, available at https://iccwbo.org/news-publications/news/icc-launches-icc-case-connect-secure-online-case-management-made-easy/ accessed on 23 February 2024.
  18. Opus 2, https://insight.opus2.com/siac-reveals-digital-solution-powered-by-opus-2, accessed on 23 February 2024.
  19. Article 4.2 in conjunction with Article 2.1 of the SIAC Rules Draft.
  20. Article 40.4 of the SIAC Rules Draft.
  21. Article 40.2 of the SIAC Rules Draft.
  22. Article 41.6 of the SIAC Rules Draft.
  23. Articles 52.1 and 52.2 of the SIAC Rules Draft.
  24. Articles 57.2 and 57.3 of the SIAC Rules Draft.
  25. SIAC, https://siac.org.sg/siac-schedule-of-fees, accessed on 5 February 2024.
  26. Joseph R Profaizer and others, “Costs”, The Guide to Damages in International Arbitration – Fifth Edition, 19 December 2022, available at https://globalarbitrationreview.com/guide/the-guide-damages-in-international-arbitration/5th-edition/article/costs, accessed on 6 February 2024.
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