Pandemic accelerates ‘explosion in arbitration’

Advantages of arbitration are virtual proceedings, customized timeframes, a paperless process using electronic document filing, remedies that can be specified by the parties and confidentiality and flexibility in the proceeding

Are we tired of the novel coronavirus’s effects on business and the practice of law yet? Although the answer is likely yes, the pandemic has had its upsides, including a move to more efficient technology in the courts and to more arbitration.

“I have seen in my own practice somewhat of an explosion in arbitration,” says Junior Sirivar, a partner and  co-chairman of McCarthy Tétrault LLP’s international arbitration group, based in Toronto.

Delays in the courts have made commercial parties more amenable to agreeing to arbitration, which can proceed on an expedited schedule.

“If you want a hearing in a commercial context quickly, the courts will be a tough place to be,” Sirivar adds. Assuming that the coronavirus pandemic environment lasts another year, at least, “if you just consider the backlog that the courts have to deal with — leaving aside the family cases, the criminal cases, the normal civil list — if you’re lucky, you’ll be able to get trial dates in three to four years.”

The advantages of arbitration are virtual proceedings, which arbitrators have been using for more than a decade, customized timeframes for the parties, a paperless process in which all documents can be filed electronically, remedies that can be specified by the parties and confidentiality and flexibility in the proceeding. Parties also have the option of moving an entire dispute, or just part of it, from court to arbitration.

“We would encourage business leaders to consider arbitration, either for ongoing disputes or for potential future disputes, because it is so much more flexible [and] it can be tailored a lot more,” says Iris Antonios, a partner at Blake Cassels & Graydon LLP in Toronto with a commercial litigation and arbitration practice.

Arbitrations that were already in process at the beginning of the pandemic faced “maybe a little less hiccups at the outset” because arbitration tends to have fewer “procedural layers,” for example, in communicating with tribunals or filing documents and already had the capabilities for moving to virtual platforms.

Confidentiality in proceedings is one significant advantage in arbitration, as courtroom proceedings are in the public sphere. “Where parties want to maintain confidentiality, arbitration is the better route,” she says.

The arbitration process can be virtual from beginning to end, with an arbitrator or arbitration panel that can be adapted to the time demands of the parties, says Marc-André Boutin, a partner and commercial litigator in Davies Ward Phillips & Vineberg LLP in Montreal. And it is easier to proceed paperless in an arbitration, “from A to Z,” although the courts are now adapting to the current pandemic situation, he adds.

“A big takeaway from the pandemic for litigators is that, provided that all attendees,” including lawyers and arbitrators, have the proper gear, “virtual hearings can work.”

The old notion that a hearing or examination needs to be in person to be fully effective is gone, Boutin says. At his own firm, boardrooms were set up with podiums, professional-grade cameras and lighting during the early stages of the pandemic, when it was becoming clear that COVID-19 restrictions were going to last a few months, “so we can do [arbitration hearings] from the office.”

Sirivar finds that cross-examining witnesses via meeting platforms such as Zoom can be even more effective than in-person cross-examinations.

“You can see the beads of sweat on their forehead!” he notes. Changes in facial reactions are more visible on screens, since lawyers can’t get as close to witnesses in person.

Virtual meetings also make it easier to stay on the same page — literally — as a judge. “If I have a document to hand in in court, I’m never really sure the judge is on the same page I am. If I’m doing submissions on Zoom, I can force them to look at pages I want them to because we’re sharing a screen,” Sirivar says.

Arbitral institutions have also begun to develop virtual hearing protocols, says Antonios. And over the course of the pandemic, many have developed templates for proceedings and have virtual hearing platforms. “It’s now something that’s part of the shelf of resources among arbitral institutions.”

Not every dispute can go to arbitration, and arbitrators need to be paid. But for bigger players who may appear before the commercial list, “even though you pay for an adjudicator, the overall cost is less because there are less procedural fights,” says Sirivar. Going through discovery, where thousands of documents may be produced and reviewed — and not all are needed — can be an expensive process. Arbitration removes that, he says. “There’s usually an overall cost that’s less, or the same, but spent over a shorter period of time. Those cases will lead the docket.”

For litigators appearing in court, “the courts have implemented creative measures, moving to electronic filing, virtual hearings” and the like, says Antonios. While arbitration procedures were already “more inherently flexible . . . I think the courts are to be commended for also adapting to the situation.”

Although some courts have allowed for e-filing and made modifications in courthouses to allow for physical distancing, “things are not back to normal,” says Boutin, and won’t likely be for some time. The pandemic has created backlogs and delays, virtual hearings have not been adopted across the board and courts in most provinces had suspended litigation with multiple parties.

“Arbitration can help the courts with their backlog, but only to a point,” he says, as more and more cases are brought to court each year. “You would need a lot more arbitration to make a dent in that.”

This backlog won’t likely be cleared if parties don’t agree to having some disputes dealt with by way of private arbitration, says Sirivar. “Commercial cases . . . will be the most ripe for private arbitration. That’ll be what I think has an impact on reducing the backlog.”

Does this mean a continuing increase in arbitration post-pandemic?

“I think so,” says Boutin. “I think it will take some time to manage the backlog; courts are adapting and will come with upgraded . . . paperless processes. But it will take time; the pandemic seems to be far from over.”

As litigators discover that virtual hearings can work well, it may push more parties toward arbitration, including internationally, he adds. The courts will remain the best forum for resolving disputes in certain circumstances, including very large litigation requiring an appeals process at the end of the first instance, “which you don’t have in an arbitration process. . . . But for other kinds of commercial litigation, I think it shines a bright light on some of the attractive features of arbitration,” including being able to tailor the arbitration schedule to the urgency of a case by engaging arbitrators available to do it in a suitable timeframe.

“A lot of litigators are realizing that not only can we work from home but we can do trials and discoveries,” says Sirivar, who predicts that the majority of discoveries in future will be conducted via Zoom and the like, as will case conferences.

“There’ll be no more chambers attendances where you go and wait two hours to be heard for five minutes,” he says. “The courts will do that online . . . because it’s more efficient; they can have one judge deal with way more. And the cost to litigants is less because their lawyer dockets for five minutes, as opposed to an hour because they walked up the court, waited in a waiting room, spoke to the matter for 15 minutes and then walked back.”

Now, Sirivar says, the docket for that file will be seven minutes, from the time the lawyer is let into a Zoom room for a case conference that starts at 9:10 and ends by 9:17. “I think that’ll stay in terms of arbitration.”

Arbitration facilities such as Arbitration Place are able to conduct hearings in virtual rooms, he adds, with an arbitrator controlling and moving back and forth between rooms as if they were live rooms.

“I think mediations will go online or be virtual,” he adds. “I think trials in the civil list will probably still be live, [but] I think that there will be very little that’s actually live and in person, which means that you can do a lot more volume, and the borders will continue to disappear.”

Ontario is becoming recognized as an international centre of arbitration, in part as Europeans find Americans too discovery focused and so would prefer their proceedings to be “in Toronto or Vancouver rather than New York or Chicago,” he says. “Canadian jurisdictions . . . will attract a lot more arbitration than historically was the case,” and, people will be less inclined to travel internationally during the pandemic.

This “will bring dispute resolution into the 21st century in a way that should have happened years ago,” Sirivar says.

“Ten years from now, looking back, you’ll say the pandemic, like most major events, resulted in a complete overhaul of how people have their legal matters adjudicated, at least in a litigation context. And I think that’s probably a good thing.” 

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