Using technology in international arbitration

By Andrew Stephenson and Simon Chapple.

Key Points:
Arbitration is a flexible and creative forum allowing innovative case management, but you must take care in setting up new processes to achieve the best outcomes.

Email and the internet are revolutionising the way in which business is done. In a similar way, technology is having a growing impact on dispute resolution by opening up possibilities for increased cost effectiveness, efficiency and accessibility. Internet and computer-based technology can improve many of the most intractably difficult aspects of disputes such as managing documents, gathering evidence, analysis of evidence and giving of statements. In doing so, technology can give parties real savings in the conduct of cases.

In recent years, the courts in some countries have taken steps to harness technology. However, the process is one of incremental, piecemeal change. The courts, as part of the public system of justice, can only respond to change slowly, often because court rules and procedural traditions are not easily displaced. For this reason, arbitration (particularly international arbitration) offers the best forum for parties to take real and often innovative steps to harness the advantages of technology.

Arbitration is a flexible and creative forum that can utilise more simply and easily the benefits of dynamic and rapidly evolving technology. Because the procedural rules for the conduct of the arbitration are decided between the parties (or by the arbitrator), the parties can choose the appropriate technology and decide where and how it can best be used. Some of the key advantages relate to management of documents and hearings. We discuss some of these below.

Document transfer

At the simplest level, email is a tool that allows parties to transfer documents easily and efficiently. A more sophisticated and powerful method is to use one of a number of web-based software packages that have been developed to facilitate efficient document management. Generally these packages have two features:

• Parties can upload documents (such as submissions and evidence) on a secure website which can then be accessed by others, subject to any restrictions that may have been set up for certain users or documents. All relevant participants are then notified as soon as new information is available.
• Procedural and contextual information can be attached to the document. This includes information such as when the document was disclosed, what statements refer to the document and if any submissions relate to the document

Used in this way, technology can eliminate the cost of storage and filing, courier costs and photocopying costs.

A virtual document room may also be established that provides secure access to documents at anytime and anywhere. One distinct feature is “access tracking” which shows when a person had access to a specific document. Providing parties and arbitrators with access to a “virtual document room” significantly reduces the time and cost of reviewing evidence and other documents.

Document analysis

When technology is used to control the submission of documents, the documents will necessarily be in electronic form. Electronic documents can be organised into easily searchable categories, much like an electronic version of a filing cabinet. If a party needs to find a particular document, or a particular clause in a document, where previously they would have to physically search through hundreds of documents, it is possible to run a keyword search and quickly find the relevant information. These processes can also be used to track references to specific documents in submissions and during hearings.

Electronic hearings

Video conferencing technology allows parties from different ends of the world to meet virtually and discuss issues “face to face” in real time. Of course, present technology is no substitute for a physical hearing, but it has tremendous value in bringing participants together to discuss procedural issues (eg. at a pre-hearing conference) without the cost of the two parties having to meet physically, thereby reducing unnecessary travelling time and associated costs.

Similarly, text-based interactive software which allows parties to communicate in real-time chat rooms, is perfectly suited to a documents-only arbitration when the arbitrator seeks clarification of an issue.

Technology may even facilitate some disputes being resolved by arbitrations conducted entirely online. As technology brings people across the world closer, there will be a greater number of smaller scale, cross-border business transactions. For these transactions, particularly those relating to intellectual property and electronic commerce, cost-effectiveness may dictate greater use of online arbitration such as already exists for domain name dispute resolution. Under these arbitrations (often under WIPO rules), all matters are dealt with electronically and “virtually”. This is one answer for small businesses and individual consumers involved in international transactions who cannot afford armies of advisers but still require binding enforceable results.

Completely electronic arbitration?

In the future it is likely that all aspects of the arbitral process will become electronic, including use of electronic arbitration agreements, electronic appointment of arbitrators and electronic awards. Presently, these aspects are controversial, in part because they contravene the “writing” requirements of many international conventions, including the New York Convention. However, the structure of arbitral conventions will change over time, making such developments inevitable. The recent enhancement to the Spanish Arbitration Act which explicitly recognises electronic arbitration agreements is an example of this.

Practical issues

Parties and clients would be prudent to approach innovation with a cautious, but open mind.

Technology can provide a new method for managing cases, particularly those that involve large volumes of information. It can cut costs in absolute terms, particularly in relation to hearings, and significantly decrease time spent physically managing or analysing paper. However, it is something very much in its infancy. Parties may spend money putting such systems in place, particularly as some of the technology is still evolving. Front-loaded costs can be high and ease of manipulation can lead to information overload. However, as long as arbitrators ensure that online databases and web-based submission of documents improve the arbitration process, significant savings in cost-effectiveness (ie. real cost) can be achieved.

It is important to make sure that any technology used complies with the rules of procedure. If the rules do not accommodate the desired technology, all parties need to agree to the alteration of the process. It may also be useful to consider using web-based technology that is supported by the particular institution, for example, NETCASE in an ICC arbitration. Similarly, technology makes information more accessible and improves communication between the parties. However, if parties do not have equal access to new technology, questions of fairness and due process can arise. Furthermore, it is not unusual for each party to store their documents in a format that is completely unreadable to the other party. It is essential for the parties to decide on a standard electronic protocol for the submission of documents and other procedural steps taken in the arbitration.

Concerns about security go hand in hand with any discussion of the advantages of transferring and storing information online. The first concern is that web technology is seen as inherently insecure. However, arbitration websites can utilise passwords to restrict unauthorised use, encrypt messages to ensure they cannot be read by anyone but the authorised receiver and implement firewalls to restrict access to the site.

The second concern is that in many cases, a third party will be contracted to provide the electronic platform for the submission of documents. This is not a significant issue because an admini-strator is no more likely to view confidential information than a firm contracted to print documents for a traditional arbitration or court case.

The future

It is impossible to imagine what kind of technology will be at our fingertips in the future, but international arbitration is perfectly placed to take full advant-age of it. Arbitration is flexible and creative enough to keep up with the pace of technological development.

The immediate future of technology depends upon its acceptance by those involved in disputes. The technology is available. All that needs to be done is for the parties to agree to use it.

For further information, please contact Andrew Stephenson.