CHALLENGES IN VIRTUAL ARBITRATION : THE NEW NORMAL IN THE TIMES OF THE PANDEMIC

This article has been authored by Indranil Chakravorty who is a fourth-year law student studying at the National University of Study and Research in Law, Ranchi.

Introduction

Arbitration has evolved as one of the premier dispute resolution methods in India. The parties involved in arbitration are governed by the Arbitration & Conciliation Act, 2019. Before the advent of the global pandemic COVID-19, the virtual pronouncements or awards had not been thoroughly explored and an offline medium was often preferred. One of the major concerns as per virtual arbitration was its negligible mention in the International Arbitration Centre Alliance (hereinafter referred as “IACA”) 2019 prima facie. However, as the time passed there has been a fair acknowledgement of all the provisions which may have possible application in cases of virtual arbitration as well.

Some of the major existing challenges remain such as the incapacity of a party to present its claim and the threat of unequal treatment on the part of the arbitrators. The violations are sufficient for the parties to challenge the concerned award solely on these basis. The vitality of the interpretation of ‘public policy’ by the higher courts can be observed in various recent judgements which have been restrictive in nature. This goes in the favour of the parties involved in virtual arbitration as they can always invoke the public policy clause against the unequal treatment. One cannot predict the sustenance of challenges on the ground that virtual hearings categorically violate public policy.

Complexity Of The Videoconferencing Platform

Complications involved in the usage of technology in virtual arbitrations cannot be categorised as a cakewalk for maximum population of India. The concern enhances, as it is quite clear that there is no running away from the technological process as it present in every stage of the virtual process i.e., production of evidence, testimony & arguments. It is highly impractical to assume that most of the lawyers or arbitrators involved are thorough with all the technologies involved in it. In some countries, particularly in United Kingdom it was conveniently observed that the lawyers and parties to arbitration have all the necessary skill and resources for the virtual medium. However, this cannot be classified as pragmatic approach in India owing to the low technological access and awareness.

In furtherance to this, it is possible that unequal access to technology may pose an impediment to ensuring equality and fairness in arbitration proceedings. Certain objections like internet connection, camera quality, etc. have been furnished for a couple of decades now. The above-mentioned concerns are substantive in nature since the audio or visual quality can go against any party. This would truly act as a death knell to the aspect of equality in such proceedings. The Tribunal in such cases needs to closely examine the situation as there are high chances that the parties are unable to participate effectively owing to some genuine absence of technological resources. The Tribunals may also need to opt out of the idea of virtual hearings in totality where such under-privileged parties are involved.

Impediments in presentation of Claim

One of the serious impediments of virtual hearings is the procedures which relate to discovery, witness testimony and oral arguments. There is dire need of shortening these procedures to the extent of necessity. In such cases a reference needs to be made to the in-hand arbitration agreement. It has been reiterated in the matter of Sukhbir Singh v. Hindustan Petroleum Corp, that the tribunal does have the power to manage proceedings as per it deems fit. The parties have to necessarily make compliance with such orders and instructions of the tribunal without fail. It is the duty of the tribunal to ensure that equal opportunity is presented to both the parties and there is no inequality owing to any procedural issue.

The tribunal has no power to exclude any party without its consent. One of the primary conditions which clearly indicate the violation of the right to be heard are firstly, that there is a considerable amount presentation of information by one party and the other is somewhat deprived from it as it did not have sufficient access. In these matters the arbitrators are required to either halt the proceedings temporarily or provide time to the party which lacks resources so that there is fairness in the proceedings.

The issue of cross-examination & witness examination is an area which has to undergo several modifications owing to the change in medium of proceedings. There is a pertinent need of the Tribunal to have access to all kinds of hearing, negotiations, deliberations etc. especially over cross examination of witnesses. Besides, in virtual proceedings the scope of witness coaching or other malpractices decreases owing to the one on one interaction of such witness and the Tribunal. This is due to the reason that The counsel & witness situated in different places. However, technological advancements in the direction of preserving the integrity of witnesses is the need of the hour. In addition to this most of the times the witnesses are not well-versed with the virtual proceedings and due to the physical absence of the counsel it becomes very complicated for them to carry on with the procedure.

The Issue of Data Protection

Data in the modern times has turned into one of the most vital elements requiring the protection of the law. The protection of such confidential data is of utmost significance for the arbitrators and parties which can be observed as per Section 42A of the Arbitration & Conciliation Act 2019. Data protection can be under threat when there is such voluminous exchange and storage of data. The processing of data which includes collection, disclosure or retrieval, has to be subjected to proper shielding from violations or leaks. In India, the Personal Data Protection Bill, 2019 has laid down the pathway for a strong and robust data protection regime which is extremely relevant with a view of virtual arbitration in India. The Justice B.N. Krishna Report on Data Protection lays special emphasis on the effect of data protection principles on various modes of dispute resolution in India. Hence, special care needs to be taken for securing the data which is exchanged in the process.

The issue of storage is also an area of concern as per data protection. The duration of the data being stored should always be limited to fulfilment of the purpose and not any longer. The erasing of any concerned data from the central database once the proceedings terminates is essential as after that it may be subjected to misuse. The transparency of the data stored and exchanged is of significance so that there is no discrepancy between the parties or a third-party for that matter. Its application in the virtual arbitration can also observed as per Section 42 A of the Arbitration & Conciliation Act, 2019.

Conclusion

The legislators and arbitrators need to include some more measures with a view of ensuring data protection and removing all the above mentioned impediments at various stages of the virtual proceedings owing to the growing popularity of virtual arbitration. The challenges to virtual arbitration are grave in nature and cannot be overlooked at any cost. The transition from offline to virtual mode of proceedings maybe categorised as a temporary resort but the tribunal or even the parties should take every possible measure to ensure smooth and fair conduction of arbitral proceedings.