ICCA General Report on the Right to a Physical Hearing in International Arbitration
Introduction
On 4 September 2020, a research project “Does a Right to a Physical Hearing Exist in International Arbitration?” was launched by an International Council for Commercial Arbitration (“ICCA”) taskforce. Due to the Covid-19 pandemic, many arbitration hearings were held online. Many institutional rules have allowed hearings to be held online.[1] Some of the rules, such as the IBA Taking of Evidence in International Arbitration 2020 have defined “remote hearings.”[2] However, many legal questions have arisen related to remote hearings. As a response to this, and particularly addressing the question of whether a right to a physical hearing in international arbitration exists, a report was published following the publication of the survey (“General Report”).[3] The General Report was released on 19 May 2022, which covers responses received from 78 New York Convention jurisdictions.[4]
The General Report describes the background and methodology of the survey, provides high-level conclusions drawn from the survey results, and offers some concluding remarks.[5] The General Report deals with questions as to whether the lex arbitri expressly or impliedly provided for a right to a physical hearing in arbitration, the rules related to civil procedure and whether those rules may apply to arbitration, whether the parties may waive (for example by adopting institutional arbitration rules that allow remote hearings) their right to a physical hearing, the arbitral tribunals’ power to decide to hold a remote hearing even if the parties had agreed to a physical hearing, and questions related to setting aside of awards based on a breach of such right.
The findings of the General Report have been summarized below.
The first part of the conclusions relates to the parties’ right to a physical hearing (whether expressly or by way of inference) in the lex arbitri. The General Report states that “none of the surveyed jurisdictions’ laws governing arbitration proceedings contains an express provision granting parties to an arbitration the right to a physical hearing.” As to the question related to the possibility of exclusion of the right to a physical hearing, the General Report states that the majority of the national reports concluded (albeit on different grounds) that the right to a physical hearing should be considered as excluded.[6] In any event, according to most of the national reports, the format of hearings falls within the scope of arbitral tribunals’ discretion, and thus parties do not have a right to a physical hearing in international arbitration.[7] The only limitation related to the tribunal’s jurisdiction is matters related to due process, which may be a ground for non-enforcement of an award under Article V(1)(b) of the New York Convention. Article V(1)(b) states that recognition or enforcement of the award may be refused if the award debtor was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.
There are only a few jurisdictions where the national reports concluded that the existence of a right to a physical hearing could be inferred by way of the interpretation of the lex arbitri. These jurisdictions are Ecuador, Tunisia, Venezuela, Vietnam, Zimbabwe and Sweden.[8] Although the majority view in Sweden is that a remote hearing complies with Swedish law, the issue is currently pending before the Svea Court of Appeal.
The General Report states that there are jurisdictions where this right remains unsettled, these being the People’s Republic of China, Bahrain, Denmark, Germany and Norway – all of which have arbitration laws based on the UNCITRAL Model Law. The wording of Article 24(1) of the UNCITRAL Model Law, which has raised debate in many jurisdictions reads as follows:
“Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. However, unless the parties have agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.”
This debate has mainly concerned “whether the parties’ right to request an oral hearing translates into the right to request a physical hearing”.[9]
The General Report also deals with perhaps one of the most important issues relating to the enforcement of arbitral awards, which is whether a potential breach of the parties’ right to a physical hearing should result in the award being set aside or if the enforcement of such an award should be rejected by courts. The General Report sets out that a group of jurisdictions interpret Article V(1)(b) as a safeguard of the forum’s due process standards. In this respect, there are different views as to the courts’ interpretation of Article V(1)(b) of the New York Convention and the standards the courts may apply.
The final question the General Report addresses the following question: if a right to a physical hearing existed at the seat, would its violation amount per se to a ground for refusal? In this vein, the General Report states that considering Article V(1)(d)[10], there were a variety of nuances as to whether the violation of a procedural rule of the law of the seat would amount per se to a ground for refusal.
The General Report confirms that the risk of an award being set aside based on solely the tribunal’s decision to proceed with a remote hearing (rather than a physical hearing) is very low and there is no reported case where such an award was set-aside or the tribunal was disqualified.[11] According to the General Report, for the enforcement of the award to be rejected or the award to be set aside, there ought to be other grounds, such as a party being unable to present its case or being subjected to unequal treatment. The General Report states that courts have rejected claims based on technological imperfections, time zone differences and possibilities for abusive behavior. Although this observation is related to cases in litigation, it may be applicable to arbitration, as well.
Conclusion
During the past two years, the issue of whether the parties’ have a right to a physical hearing in international arbitration has been considered by tribunals and parties. Dealing with this issue extensively, the General Report includes a comparative survey covering responses received from 78 New York Convention jurisdictions. These national reports are also published individually.[12]
Although certain issues remain to be debated and the parties’ right to a physical hearing will be tested in a post-pandemic world (ie when the parties have a real choice between physical and remote hearings) as acknowledged in the General Report[13], the General Report as it is, is a helpful guide which addresses an issue that has been the subject matter debates and thus is a valuable resource for parties, arbitrators and academics.
- Also referred to as “virtual” or “non-physical” hearings. General Report, p. 2.
- Balıkçı Sezen, Melissa: “IBA Rules on Taking of Evidence in International Arbitration”, Erdem & Erdem Newsletter, March 2021, https://www.erdem-erdem.av.tr/en/insights/iba-rules-on-taking-of-evidence-in-international-arbitration-2020
- Co-edited by Giacomo Rojas Elgueta, James Hosking and Yasmine Lahlou, available at: https://www.arbitration-icca.org/right-to-a-physical-hearing-international-arbitration
- https://www.arbitration-icca.org/right-to-a-physical-hearing-general-report
- General Report, p. 2 and https://www.arbitration-icca.org/right-to-a-physical-hearing-international-arbitration
- General Report, p. 8.
- General Report, p. 10.
- General Report, p. 11. In Venezuela such right was found to be limited to the first procedural hearing and in Sweden this reflects a minority view.
- General Report p. 14.
- Article V(1)(d) of the New York Convention reads as follows: the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.
- General Report, p. 39.
- https://www.arbitration-icca.org/right-to-a-physical-hearing-international-arbitration
- General Report, p. 39.
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