In review of the 2020 statistics from various arbitral institutions, the clear message is that international businesses have had a taste of virtual arbitrations and they like it. Record-breaking caseloads (and amounts in controversy) have been seen across most of the arbitration institutions, and anecdotally, practitioners indicate they have seen the greatest number of cases they have had in years, if not ever.
We fully expect the trend to continue among those in the international arbitration industry towards more remote and virtual options for handling disputes. And why not? Arbitration is the perfect mechanism for businesses to adopt the best practices for use of technology, because it originates from the parties’ freedom to contract. Parties can tailor the clauses to the clients’ preferences, including those for cost reduction, travel and safety considerations, and the need for efficient resolution.
As an example, the ICC reported 946 new arbitration cases in 2020, the highest since 2016. The ICC updated their Rules of Arbitration to allow for more flexibility with virtual hearings and addressed the parties and tribunals on the conduct expected in arbitration. The ICC set clear considerations for determining whether to proceed with a virtual hearing, which reaffirmed the broad discretionary power of arbitral tribunals and allowed for greater flexibility for the parties in their dispute procedures. The ICC was already pursuing initiatives to become the leader in the Belt and Road disputes, as well as establishing themselves as the predominate institution for disputes involving Indian parties—these efforts were made even more effective by the ability to use virtual options for the parties’ dispute resolution.
Likewise, the Hong Kong International Arbitration Center (HKIAC) reported in its case statistics that its arbitration caseload totaled 318 new cases in 2020, up from 308 in 2019 and the highest number in a decade. The total amount in dispute in 2020 was HKD 68.8 billion (approximately USD $8.8 billion), the highest amount since HKIAC began to publish such information. When asked what they attributed the record-breaking numbers to, the HKIAC indicated it acted early in 2020 to implement measures to prioritize health and safety and to ensure service continuity during COVID-19. These measures included allowing their staff to operate remotely, offering numerous virtual hearing services and options, and of course, taking precautionary measures for guests and staff.
The HKIAC also issued innovative guidelines for conducting virtual hearings, staying on top of the data security and ethical concerns parties expressed. Parties reported having great success with HKIAC virtual hearings, and the statistics demonstrate increasing confidence in the ability to present cases and have them resolved in a virtual environment. In 2020, 80 out of 117 HKIAC hearings were fully or partially held as virtual hearings.
Likewise, the China International Economic and Trade Arbitration Commission (CIETAC) also saw growth in its caseload in 2020. A total of 3615 ongoing cases were registered, representing an 8.5% growth. CIETAC reported it handled disputes amounting in total to ¥112.130 billion (approximately USD $17.3 billion). Also important was growth on the number of “international” cases, where at least one party was foreign. In 2020, 739 cases were “foreign-related cases,” compared to 617 in 2019. Also, 67 of these foreign-related cases were ones in which both parties were “foreign,” which was a record high for CIETAC. CIETAC also established new virtual hearing centers and handled 819 virtual hearings-an increase of 628 cases heard virtually.
As an interesting note, the AAA’s International Center for Dispute Resolution (ICDR) reported a significant rise in emergency hearings in 2020. They also saw roughly 50% increase in aviation related claims, which all make sense in light of the pandemic issues and the disputes involving the reduction in air travel, as well as enforcement/application of force majeure clauses.
What emerges from the statistics is that global businesses turned to arbitration to have their disputes resolved, perhaps because the court systems were unable to move forward with civil cases in light of the pandemic crisis and local laws requiring public gatherings to be restricted. The international arbitration community responded swiftly with alternative options for handling disputes through virtual means, and the arbitrators and practitioners pivoted to the new environment quickly and effectively. Once businesses saw their disputes could be resolved through virtual means, saving time and money, they appear to have adopted virtual methods as their preferred dispute resolution modality. Thus, going forward, the more virtual options and flexibility we can offer to our clients in international arbitration, the better we can serve them.