Remote Arbitrations Post- Pandemic: An Indian Perspective

Suhita Mukhopadhyay
CS, LLB
Partner, Intellex Legaal Sollutions LLP
New Delhi (NCR)

Abstract:

The deadly Covid-19 Pandemic has brought forth several challenges brought to the fore that has
affected many spheres of our lives and distinct sectors are being faced with novel issues that are
motivating industry participants to adopt creative solutions. Arbitral Industry is no exception. The
pandemic has forced the sector to reconceive its path, as conducting an in-person arbitration is
no longer feasible. With the onset of the pandemic, technology for arbitration was propelled to the
forefront. Referred to as virtual or remote arbitration, it is a tool that simplifies, through
automation, processes. Given the cross-border nature of international arbitration proceedings,
the digital setup has been crucial in keeping arbitration going.

This article aims to discuss the inherent issues underlying virtual arbitrations vis-à-vis the
existing enabling legal provisions in India in relation to virtual arbitrations and attempts to
assess integration capabilities of Indian arbitration mechanism with technology. The core
theme of this article is not to be merely fixated on the pandemic but an appraisal of the essence
of arbitration in times of ‘crisis.’

Introduction-Rebooting of Arbitration World

Coronavirus has harnessed the potential of under-utilized tools and alternative work models
long resisted by the Indian legal industry. Traditional ways of working have been altered and
accepted at an astounding speed and with ease. Thus Courts had resorted to the Virtual Courts
System . Arbitration, as an alternate dispute resolution mechanism has revolutionised the
dynamics of commercial dispute resolution and is preferred by parties due to several significant
factors, such as the flexibility to determine procedures, fixed time-limits, cost efficiency,
confidentiality, among other factors. As Covid-19 has disrupted the normal court functioning
parties who were previously not amenable to arbitration are now mutually agreeing to resolve
their disputes by way of mediation / arbitration.
Covid-19 and the resultant social-distancing measures has pushed the disputing parties involved
in arbitrations to implement and conduct proceedings remotely. In recent times, questions have
arisen as to whether or not virtual or remote hearing is here to stay. Indeed, at the outset of
the pandemic, arbitration practitioners around the globe may have been sceptical as to how parties
would proceed with arbitration in a virtual mode. The pandemic was the ‘tipping point’ which
made many, who were not in favour of virtual hearings or on the fence, accept that
technology and law together could work wonders if used correctly. Technology has played a rather
central role in the evolution of arbitration and dispute resolution. the extensive use of electronic
communication for the transmittal of documents, electronic hearing applications or video
conferencing is commonplace today.

Virtual Hearing Protocols, Tools and Guides

The pandemic was also a time for contemplation; in part due to work-from-home arrangements
which spurred creativity and innovation. People got together and suggested protocols,
guides and notes for the conduct of virtual or remote hearings. A survey on the preferred video
conferencing technology for hearings identified the following five most preferred platforms:
Zoom, followed by Microsoft Teams, Cisco Web Ex, Go To Meeting and Blue Jeans. These
are ‘plug and play’ platforms, and are very helpful because they are very easy to use without
the need to know anything about computer engineering and coding to operate. They are
designed to be ‘fuss free’. Protocols have been adapted for this new online platform. In some
instances, counsels for the parties may insist on a 360-degrees ‘room sweep’ to ensure that
witnesses are alone or not receiving any help hidden
out of the camera's view. The counsel will then attempt to ‘sterilize’ the room by scrutinising
everything in the office (e.g., documents on the work desk or the texts written on the whiteboard
in the office). Such pre-hearing steps can consume time and be intrusive towards witnesses.
Yet, some counsels appear to consider this step crucial in virtual arbitration.

The Arbitration world has been largely reactive to the pandemic with finding
solutions and options, rather than taking a stand about preference for policy choices that will
set to govern the industry in times to come. Also, there are other variable factors to be
considered in deciding the type of hearings, such as the value of the dispute, case
complexity, and geo cultural elements of the parties. However many would agree on at least is
that the pandemic has triggered an awakening to the idea that there are alternatives, largely
using digital technology, to conduct arbitration, resulting in time and costs savings.
Reluctance towards Virtual Arbitral Hearings
The pandemic is unprecedented and the parties may have no choice but to proceed with virtual
hearings. But from a survey, it would appear that arbitral practitioners would prefer returning
to normalcy with in-person interaction, or a hybrid, instead of purely a remote set-up. The three
most expressed views from surveys conducted were that a) counsel and clients have restrictive
opportunities to confer during the hearing sessions, b) challenges of time zone, and c) the
difficulty in controlling the witnesses and assessing their credibility.

Difficulties of Virtual Arbitration and Potential Remedies

a) Difficulty in accommodating multiple time zones:

Remedy: Time zone difference results in largely causing inconvenience to one's
natural sleep-wake cycle only rather than potential breach of natural justice. It is
possible for parties sitting in Europe and Asia to compromise on suitable timing
that can accommodate each other.

b) Difficulty in controlling witnesses in cross-examination as well as the inability

to assess their credibility
Remedy: It is possible to cross-examine witnesses virtually although in-person
cross-examination is much preferred as a matter of long-standing practice only.

c) Difficulty for counsels and parties to confer during the hearing if they are
located in different physical locations and time zones.
Remedy: It is indeed a challenge when counsels and parties could not confer
during the hearing. However, this is a weak argument for a party to reject virtual
hearing.
d) Technical malfunction and unreliable technology
Remedy: Virtual conferencing platforms have improved tremendously in recent
times

e) Difficulty in ‘reading’ the arbitrators and other remote participants

Remedy: Does not constitute a breach of due process as the parties' case does
not hinge on the body language of the arbitrator during the oral hearing alone

f) Confidentiality and cyber security concerns

Remedy: Security of virtual hearing platforms has improved tremendously to
ensure adequate security.
Response by the International Arbitral Community on Virtual Hearings
Internationally renowned firm, White & Case, in association with Queen Mary University of
London and School of International Arbitration conducted a survey. It stated that the use of virtual
hearings has been brought upon as a result of Covid-19 pandemic. It has allowed for people to
evaluate the alternatives available to in-person hearings. Arbitral bodies all over the world were
conscious of the challenges posed to the conduct of arbitration due to the pandemic. The ICC
Arbitration quite promptly issued a document titled ‘Guidance Note on Possible Measures Aimed
at Mitigating the Effects of the COVID-19 Pandemic’ (“ICC Note”) on 9 April 2020. It sought to
provide guidance to parties, counsels and arbitral tribunals involved in ICC arbitrations on possible
measures that they may consider. In summary, the ICC Note recalls the existing procedural
framework available to the parties and the greater need to implement case management techniques
during the pandemic to ensure the fairness and efficiency of ICC arbitrations. The ICC Note also
provides guidance on the organisation of virtual hearings, including a useful checklist for remote
hearing protocols.

Concerns in E-Arbitration Processes

As arbitration advances towards a contact-free approach, new challenges arise. it is noteworthy

that several international protocols and guidelines including rules of well-known arbitration
institutions have devised methods to address these concerns.

a) Security and privacy concerns

One of the core reasons why parties choose to resolve their disputes through arbitrations as
opposed to through court proceedings is the promise of confidentiality. It provides parties a private
forum to resolve disputes au contraire court proceedings. However, the promise of confidentiality
is marred by despicable attempts of cyber criminals trying to break the sanctity of the
forum. Arbitrators may or may not have access to sophisticated IT support. As a cache of sensitive
data, arbitral institutions are thus highly exposed to cybersecurity risks. In July 2015, the website
of the Permanent Court of Arbitration in Hague was hacked during a hearing of a sensitive
maritime border dispute between China and the Philippines. Despite the risks involved, many
arbitration institutions continue to rely upon relatively insecure storage and communication
systems. Moreover, institutional rules tend to be silent on cybersecurity and allow communications
and transfer of data between the parties and the tribunal by any unencrypted electronic means.
The virtual form of arbitration should not just retain confidentiality feature but also allow for
the implementation of dynamic and robust measures capable of adapting to increasing
challenges of cyber security and data privacy.

b) Cost :

There are additional costs for virtual arbitrations which are in addition to the costs which are
ordinarily incurred by parties in an in-person arbitration. Virtual arbitrations will compel
additional costs towards using appropriate technology such as internet (with adequate
bandwidth), virtual data-room, video-conferencing platforms / VCoIP facility, transcription,
translation, appropriate hardware (like screens, headphones, wide angle and high quality
cameras) etc. While one can always use the freely available platforms and data-rooms, it may
be more prudent to rely on custom built platforms for arbitration which take greater caution
when it comes to data security including privacy of the proceedings.

c) Use of Information Technology in Arbitrations

While in-person hearings constitute the general rule under normal circumstances, the same is
currently unfeasible due to Covid-19. Consequently, the courts and other judicial / quasi-judicial
forums in India are increasingly using and relying on various video-conferencing platforms to
dispose of pending cases. The primary obstacle to a full tech-transition is the lack of familiarity of
the parties. Varying internet speed of different parties or devices may also pose a significant
obstacle to conducting smooth and uninterrupted virtual arbitrations.

d) Shift from paper to paperless

In the usual course of arbitration in India, the general propensity of the participants is to rely on
physical documents commencing from filing to referring to documents at the time of hearing. This
dependence on paper has given rise to a mental block among participants (including legal
practitioners) against using and referring electronic copies of the relevant documents.
Consequently, a sudden shift from paper to paperless is bound to be a hardship for a less
accustomed participant. Virtual arbitration calls for not just electronic serving / filing of documents
such as notice invoking arbitration, statement of claim, statement of defence and rejoinder but also
referring to electronic copies of the documents during a virtual hearing of the arbitration
proceeding.
 e) Admissibility and veracity of virtual evidence

The definition of “evidence” under the Indian law includes all statements made by a
witness in court and documents, including e-documents (they are legally recognised as
records produced in court. The Supreme Court has held that evidence recorded in
videoconferencing “would be as per procedure established by law” and therefore, would
be well within the periphery of due process of law. In fact, very recently, the Delhi High
Court asked appearing counsel to submit video recordings along with concise documents
containing their arguments to adjudicate upon a matter virtually.

So long as the accused and/or his pleader are present while the evidence is recorded by
videoconferencing, the evidence is said to be taken in the “presence” of the accused and
will be admissible. If the videoconference is set up in the presence of the Judge himself,
the requirements of recording evidence under Sections 274 and 275 of the Code of
Criminal Procedure, 1973 will be fulfilled too. The natural corollary, ergo, is to apply
these ratio decidendi to virtual arbitrations as well, as they are ejusdem generis to court
proceedings. Commissions issued by the courts under CrPC have been permitted to
record evidence of unavailable witnesses, through video conferencing. Similarly, the
court may issue commissions under the Arbitration Act to provide electronic evidence to
the Tribunal and penalties/disadvantages may be imposed on the persons failing to
attend them.

f) Other key factors

Covid-19 has increased the frequency of virtual arbitrations when compared to pre-Covid-19
times. However, there are several other factors which the parties must keep in mind to
determine the ease of application and success of conducting the arbitration virtually. Few such
factors are:

1. Complexity of the dispute: In-person arbitration may still be preferred for disputes
involving complicated issues of law and facts with larger stakes.

2. Mutual consent for virtual conferencing: Conflict between the disputing parties on
whether to conduct the arbitration virtually or in-person is likely to increase in absence
of a prior agreement. In any case the arbitral tribunal is empowered to decide this
 conflict. However, the party against virtual arbitration may assail the arbitral award
raising due process concerns.

3. Lack of enabling laws: The current legal framework of India does not in particular
focus on promoting virtual arbitrations. However, the existing laws otherwise don’t
restrict it too, which are set out below in detail.

4. Validity of e-awards: While some countries have laws requiring the award to be in a
specific form, others may require the award to be simply in writing. Flexible laws
leaving space for parties and tribunals to decide on the form of the award would prove
helpful.

5. E-discovery of documents: Compared to an in-person hearing during normal times,

the scope of discovery of documents may be limited on account of Covid-19. The
arbitral tribunal will be required to determine the feasibility and acceptability of the
request for discovery. Accordingly, care and caution will need to be taken by the arbitral
tribunal at the time of allowing or disallowing the request for discovery, so that the
same may also balance the rights of the parties to present their case with full
opportunity.

E-Arbitration Procedure

The epidemic has made it simpler for legal professionals to investigate widely the use of
technology in the adjudication of disputes, namely the use of electronic arbitrators, often known
as e-arbitrators. This is feasible by providing the dispute specifics, the whole facts of the case,
and uploading evidence papers and images to support claims. In this case, the e-arbitrator sits
in the shadows, goes through the materials offered, and invites parties to reply using the
information provided.

• If a dispute has arisen after digitally entering into an agreement in an electronic manner,
it should be communicated by electronic means such as email, etc., as in conventional
processes.
• Notices should be placed in a secure disc so that both parties can access them if they
are unable to resolve disputes.
• An electronic notice of intent to arbitrate should be sent.
• Following the establishment of an E tribunal and the commencement of E arbitration,
the proceedings should be performed through videoconferencing and documented.
 • Electronic versions of the statement of claims and defences, as well as supporting
documents, should be provided.
• Cross examination, whenever necessary, should take place via video links.
• The decision should be made electronically, and a copy should be distributed to the
parties in sealed envelopes signed by the authorities for execution.

E-Arbitrations: Legal position in India

Arbitration and Conciliation Act, 1996

The Arbitration & Conciliation Act, 1996 (“Act”) is silent on whether arbitration proceedings can
be conducted through video conferencing and other electronic means. Section 24 (Hearings and
written proceedings) of the Act entitles the parties to have oral hearings or waive this right if they
so deem fit; and empowers the arbitral tribunal to decide on the need for oral hearings, in case
there is a lack of agreement between the disputing parties. The Act does not define ‘oral hearings’
but under Section 18 (Equal treatment of parties) provides the essential crux of due process: (a)
treatment of parties with equality; and (b) full opportunity to be given to each party to present its
case. Accordingly, as long as the tools (i.e. electronic means) employed to conduct ‘oral hearings’
satisfy the test of Section 18 of the Act, the virtual proceedings should remain valid, thus restricting
a party’s ability to challenge such proceedings or the arbitral award solely because the oral hearing
was conducted virtually.

Evidence taken over videoconferencing also suffices the requirements under Section 273 of the
Code of Criminal Procedure, 1973 as the witness is perfectly visible. Electronic discovery of
documents is permissible under Section 24 and the scope of the discovery can be limited to
what is strictly necessary. This is useful when conducting virtual arbitrations and is a widely
accepted practice.

Section 19 of the Arbitration and Conciliation Act, 1996 which explicitly states that the Arbitral
Tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act,
1872 for the procedure to be followed in the arbitral proceedings. It has been left to the parties
or the Arbitral Tribunal to decide on the procedure in the conduct of arbitral proceedings.
Though the Arbitration and Conciliation Act, 1996 is silent on the expressed consent of the
term ‘virtual hearings’ but the interpretation that it is an implied consent can be drawn very
evidently as Section 19 clearly broadens the scope of authority that empowers the Arbitral
Tribunal to decide on its own.

The Hon’ble Supreme Court of India has released guidelines with respect to the usage of video-
conferencing for court functioning ("SC Guidelines”). The guidelines also relied upon the
judgment in the case of State of Maharashtra v. Praful Desai (supra) to include electronic
evidences within the term ‘evidence’. Further, all high courts across India have been
consistently using various e-platforms such as Zoom, Whatsapp, Cisco Webex, Vidyo and
Skype amongst others to hear pending urgent cases. In light of the above, it is befitting that
arbitrations are also conducted virtually in a manner which is compliant with the tenets of due
process. However, the tribunal should be mindful of certain concerns such as inequal access to
technology (especially in a country like India) and travel restrictions (on account of Covid-19)
in order to determine the viability of conducting virtual proceedings

Information Technology Act, 2000

Virtual arbitrations entail deliberations, arguments, submissions, evidence, notices, hearings

and orders all in electronic form. This raises concerns towards recognition, legitimacy and
validity of such proceedings, documents and orders/awards. The Information Technology Act,
2000 (“IT Act”) under Section 4 (Legal recognition of electronic records) and Section 5 (Legal
recognition of electronic signatures) read with Section 65B (Admissibility of Electronic
Records) of the Indian Evidence Act, 1872 provides the necessary legal recognition to such
electronic records and proceedings.

While application of Sections 4 and 5 of the IT Act is straightforward with respect to pleadings
(such as claim statement, defence statement, rejoinders etc.), concerns do arise in the case of
affidavits. Presently, India does not permit e-notaries and lacks facilities for the same.
Consequently, the affidavits accompanying the pleadings cannot be notarised remotely. This
might prove to be a major hurdle in transitioning towards a fully electronic proceeding unless
notaries are permitted to electronically notarise documents.
Indian Stamp Act and Registration Act

Section 35 of Indian Stamp Act, 1899 provides that an unstamped or insufficiently stamped
document (such as an arbitral award) is inadmissible before a court of law. In India before a
domestic award can be executed and implemented it must be duly stamped with adequate value
in accordance with the applicable laws The defect of insufficient stamp/un-stamped arbitral
awards can be cured upon payment of the necessary stamp duty along with the penalty amount.

The amount of stamp duty required to be paid varies from state to state depending on where
the award is passed. In order to facilitate swift execution of electronically passed arbitral
awards the Stockholding Corporation of India Limited (SHCIL) has been set up to provide e-
stamp services which permits online payment of stamp duty for certain states. Certain states
have developed their own infrastructure, for instance, Maharashtra has developed its own e-
stamping facility i.e. Electronic Secure Bank and Treasury Receipt (e-SBTR).

Section 17 of the Registration Act, 1908 also mandates registration of an arbitral award if such
award has bearing on the ownership status of an immoveable property. Presently none of the
States in India provide for electronic registration of arbitral awards. In light of Covid-19 such
initiatives towards easing procedures for registration and stamping will go a long way in truly
promoting virtual arbitrations.

Confidentiality

As already discussed above, confidentiality and data privacy remain a major concern for parties
in a virtual arbitration. The newly inserted Section 42A (Confidentiality of information) of the
Act mandates the arbitrator, the arbitral institution and the parties to maintain confidentiality
of the proceedings excluding the arbitral award which may be disclosed for implementation
and enforcement.

Section 42A is a non-obstante clause thus making it a mandatory/non-derogable provision.

However, given the prevalence of pre-arbitration confidentiality agreements inter-se the parties
and presence of party autonomy and flexibility in arbitration process, it is likely that courts
might interpret this provision as merely directory in nature. As a result it may be difficult to
conclude that a breach of Section 42A would form a valid ground for an application to set-
aside the arbitral award under Section 34(2)(a)(v) (Application for setting aside arbitral award)
of the Act.
Data privacy

Arbitration as a process involves sharing, processing, exchanging and transferring of personal

data with respect to the parties involved including that of the witnesses, experts and other
relevant persons. As a result, the arbitral tribunal must advise caution when collecting and
processing personal data as part of the arbitration process.

In India, data privacy is governed by the IT Act (in particular Section 43A (Compensation for
failure to protect data) and Section 72A (Punishment for disclosure of information in breach of
lawful contract)) and the Information Technology (Reasonable Security Practices and
Procedures and Sensitive Personal Data or Information) Rules, 2011 (“SPDI Rules”).

The SPDI Rules provides that the data may be disclosed (without prior consent) if such
disclosure is necessary to ensure compliance of a legal obligation. Accordingly, it may be
argued that arbitration being a legal proceeding mandates disclosure of required information
including personal and sensitive personal data.

The Personal Data Protection Bill, 2019 (“PDP Bill”) which is currently pending before the
parliament lays down several compliances with respect to collection, processing, storage and
transferring of personal data. Section 36 (Exemption of certain provisions for certain processing
of personal data) of the PDP Bill exempts compliance with its provisions in certain cases, few
being: (a) if disclosure of personal data is necessary for enforcing any legal right or claim or
obtaining any legal advice from an advocate in any impending legal proceeding; and (b) if
processing the personal data is necessitated by any court or tribunal in India for the exercise of any
judicial function. Accordingly, it appears that arbitration proceedings may be exempt from the
compliances laid down under the PDP Bill.

Irrespective of the above, Section 4 (Prohibition of processing of personal data) and Section 24
(Security safeguards) of the PDP Bill will continue to apply to arbitrations. Section 4 of the
PDP Bill mandates that personal data shall not be processed unless it is for a specific, clear and
lawful purpose. Section 24 of the PDP Bill 8provides that a data processor (such as arbitral
institution, video- conferencing platforms, documents sharing software and/or the tribunal)
must implement necessary security safeguards, including:

1. de-identification and encryption methods;

2. steps necessary to protect the integrity of personal data; and

 3. steps necessary to prevent misuse, unauthorised access to, modification, disclosure or
destruction of personal data.

Conclusion
Let us take a step back from the immediate crisis and propose an analytical framework for remote
hearings in arbitration. In the context of the current pandemic and beyond, the parties, counsel,
and arbitrators have well understood that that Remote Arbitrations can be successfully conducted
if it is well planned and organised keeping in mind the risk of potential challenges of awards based
on remote hearings and looking in particular at alleged breaches of the parties’ right to be heard
and treated equally. Things will eventually come to normalcy but some changes will outlive the
current pandemic wherein it would not be wrong to assert that COVID-19 may have a broader
impact on the approach of resolving disputes by arbitration.

E-governance initiatives in India, recognising the lacuna of accessibility of internet services and
technologies, creation of more common service centres (CSS) and legal aid cells around the
country and promotion of institutionalisation of arbitration can plug these administrative loopholes
and allow virtual arbitrations to flourish in India. With the progress of technology in the increasing
e-commerce era, e-arbitration is the future; however, it can only be successful if there are laws,
digital security, digitization of courts, online paperless judiciary, and codal provisions in place in
India that are followed; otherwise, there will be an increase in disputes and the basic purpose of
arbitration will be thwarted, and consumers will suffer. The turbulence caused by COVID-19 has
provided a unique opportunity that can boost the future of arbitration like never before.

Reference:

1. Virtual Hearings in Arbitration: A Mirage or a Reality?

https://www.scconline.com/blog/post/2021/10/28/virtual-hearings-in-arbitration/

2. Virtual Arbitrations and the New Normal

https://www.khaitanco.com/sites/default/files/2020-12/Virtual-arbitrations-and-the-new-
normal.pdf

3. White & Case, 2021 International Arbitration Survey: Adapting Arbitration to a Changing
World, accessed at
 <http://www.arbitration.qmul.ac.uk/media/arbitration/docs/LON0320037-QMUL-
International-Arbitration-Survey-2021_19_WEB.pdf>.

4. Covid-19 pandemic : indications for future of arbitration https://blog.ipleaders.in/covid-

19-pandemic-indications-for-future-of-arbitration/