Global trends in online construction dispute hearings

At the same time, many practitioners will also be familiar with the significant advantages, and occasional disadvantages, that online hearings – known variously as ‘virtual hearings’, ‘remote hearings’ or even ‘Zoom hearings’ – can present. With the sustained worldwide popularity of virtual forums in global dispute resolution circles, it is unlikely that the industry will ever revert back to the mainly ‘in-person’ hearings of the past.

Litigation moves online

In the UK, online hearings in the court system have proven so invaluable in recent years that the High Court has mandated them as the default position for all hearings under half a day. The Court will only consider holding an in-person hearing if there is a particular reason why one would be more appropriate. The approach in relation to longer hearings and trials will be a matter for decision by a judge on the facts of each case and parties are now asked by the Listing Office to express a preference supported by reasons. Practitioners must also give careful thought at the outset of a case as to how they wish their matters to be heard by the Court. 

Similarly, domestic courts in China are also making efforts to promote online hearings. In February 2020, the Supreme People’s Court issued a notice stipulating that “due to the epidemic, the trial may be changed to online after obtaining the consent of the parties”. Article 2 of this Notice also demanded people’s courts at all levels to promote online litigation. Then, in August 2021, the Supreme People’s Court published the People's Court Online Litigation Rules, which promote and regulate online litigation activities to ensure fair and efficient trial of cases.

China has also set up courts which exclusively conduct online hearings.

On 18 August 2017, China’s first cyberspace court was established in Hangzhou, Zhejiang, conducting hearings online supported by a bespoke infrastructure platform. It has been reported that the cyberspace court’s online platform has helped reduce the average court session to 25 minutes and the average length of a case to 32 days. In September 2018, another two cyberspace courts were established respectively in Beijing and Guangzhou. The Supreme Court issued the Provisions on Several Issues Concerning the Trial of Cases by Internet Courts, giving guidance and regulations on related issues.

In the Middle East, between 2020 and 2021, courts in the United Arab Emirates (UAE) moved all sessions to remote services and significant changes were made to the Law on Evidence in Civil and Commercial Transactions, including adding remote communication technologies and permission to use e-signatures. In a similar vein, the offshore Dubai International Financial Centre (DIFC) Courts have dramatically increased their remote hearing and digital capabilities, with all of their hearings having taken place remotely through digital platforms in 2021. Likewise, the Abu Dhabi Global Market (ADGM) Courts have implemented a set of protocols for an entirely digital suite of services for parties wishing to host their arbitrations remotely.

The trend in arbitration

The use of online hearings in arbitration has also increased dramatically in recent years with many arbitral institutions now offering virtual hearing facilities and including helpful provisions in their arbitration rules. In the UK, the LCIA reacted quickly to the pandemic by issuing revised arbitration and mediation rules in October 2020 with expanded provisions allowing virtual hearings, confirming the primacy of electronic communication in the proceedings as well as allowing the electronic signature of awards. In particular, the tribunal is empowered to issue procedural orders aimed at expediting proceedings by “employing technology to enhance the efficiency and expeditious conduct of the arbitration” including any hearing.

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Broadly speaking, arbitration institutions in China require written consent from both parties to conduct an online hearing. In April 2020, the China International Economic and Trade Arbitration Commission (CIETAC) issued the Guidelines on Proceeding with Arbitration Actively and Properly during the COVID-19 Pandemic (Trial). The guidelines provide that “when deciding to hold an online hearing, the tribunal shall solicit the opinions of the parties and take into account their views”. In May 2020, the Beijing International Arbitration Center (BAC) issued its own version of the Guidelines on Online Hearings (Trial). A similar approach is found in Article 2 of those guidelines. The latest arbitration rules published by BAC in 2022 divide the mode of a hearing into an in-person hearing and a virtual hearing and allow tribunals to determine which mode should be adopted depending on the specific circumstances of a case.

CIETAC, the Guangzhou Arbitration Commission (GZAC) and the Shenzhen Court of International Arbitration (SCIA) have taken further steps to support online hearings. CIETAC has set up the Online Dispute Resolution Center of the Arbitration Commission, specialising in resolving disputes such as online domain names and e-commerce through entirely online dispute resolution processes. SCIA also has a set of Online Arbitration Rules, which stipulate that “the tribunal may hold online hearings when it deems necessary”. GZAC is on its way to build an Online Dispute Resolution (ODR) platform and the China Maritime Arbitration Commission has now released its Regulations for Online Video Hearings of China Maritime Arbitration Commission (Trial).

As for arbitration in the Middle East, arbitrations seated in the UAE and the wider region are now regularly conducted virtually. The UAE Federal Arbitration Law not only recognises arbitration agreements that have been concluded over e-mail as a valid form of agreement, but also allows tribunals to conduct hearings without physical in-person attendance, and permits remote examination of witnesses and the electronic signature of awards. Similarly, the offshore ADGM Arbitration Regulations include provisions facilitating online arbitration hearings. They allow tribunals to consider the use of technology in various facets of the arbitration, such as the use of online case management platforms, in the interest of conducting proceedings as efficiently as possible.

As well as provision in the laws of the seats of the UAE, institutions such as the Dubai International Arbitration Centre (DIAC) have updated their rules to include provisions supporting online hearing protocols. From commencing arbitration, all the way to the final award, the 2022 DIAC Rules incorporate various provisions that facilitate online hearings. Notably, the 2022 Rules allow tribunals the discretion to conduct completely virtual hearings or hold them by telephone, in addition to in person hearings. The final award can now also be signed electronically, in alignment with the UAE Federal Arbitration Law. However, the Middle East has not yet seen the same growth of ‘whole-service’ online dispute resolution platforms, such as those now operating in China, where the entire dispute resolution process is managed and takes place on a virtual platform.

The advantages and disadvantages of online hearings

While the adoption of online hearing practices was necessitated by the unanticipated onset of the pandemic, the use of virtual hearing practices has a number of benefits. Online hearings are better for the environment if arbitrators, counsel, parties and experts can remain in their home jurisdiction and not travel for the proceedings. The carbon footprint of such travel should not be underestimated and many companies have signed up to the Greener Arbitration Protocol. The Protocol is part of the Campaign for Greener Arbitrations, aimed at reducing the carbon footprint produced by international arbitrations through encouraging the elimination of, or reduction in the usage of, long-haul flights and hard-copy filings, and using sustainable forms of energy.

Virtual proceedings can save time and cost with less of both being expended on travel and in-person logistics. Speed and efficiency of the dispute resolution process offered by online hearings can be particularly advantageous for cross-border disputes with parties based all over the world. Holding hearings virtually also avoids any dispute between the parties as to the most “neutral” venue at which the hearing should take place and will allay the concerns over travel to the home jurisdiction of a counterparty in particularly acrimonious disputes.

At the same time, however, tribunals must balance a party’s right to be heard with due process considerations – ensuring equality between the parties and not risking the enforceability of awards. In some jurisdictions, consent to online proceedings must be clearly obtained. Further, if parties do not meet face to face for a hearing, the last opportunity to reach amicable settlement might be lost. There can be no impromptu meetings outside the hearing room leading to settlement discussions.

Technological hurdles may also disrupt proceedings, with connectivity problems interrupting critical moments during, for example, the giving of evidence. The experience may also feel less “real” which may affect the way in which factual and expert witnesses give evidence and respond to cross-examination, which is perhaps of a greater concern for common law jurisdictions.

Managing risk

As with any dispute resolution process, it is important that the procedure is agreed in advance and is recorded in writing. For arbitration proceedings, this will begin with a carefully drafted dispute resolution provision, the incorporation of a modern set of institutional rules and attention to the appropriate seat, taking account of any nuances in the local laws of that seat. It is important that all parties have, in some form, consented to an online hearing to guard against the risk of procedural challenges. As well as ensuring that the provisions in the relevant institutional rules and the laws at the seat are followed, it is prudent to agree the hearing procedure in advance in a document such as Terms of Reference, which is signed by all parties.

In litigation, recording the procedure in writing is also critical. Parties should seek to agree directions and make recommendations to the judge in charge to issue an appropriate order, but must be ready to explain in full the rationale behind the recommendations made. This is key in the Technology and Construction Court in the UK for example, where judges will not necessarily adopt directions simply because they are agreed by the parties.

On balance, not all disputes will be best settled by an online hearing but the growth in dispute resolution technology and awareness of the environmental impact of in-person hearings has undoubtedly contributed to maintaining the popularity of online hearings on a global level, notwithstanding the fact that in most parts of the world, parties now have a choice. Given the clear advantages – in most cases – of online hearings from an economic and environmental perspective, the likelihood is that this popularity will continue for the foreseeable future.

Co-written by Kevin Zhou and Melissa McLaren of Pinsent Masons.