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Documents only Arbitration

Documents only Arbitration

The flexible nature of arbitration means that it is well-placed to adjust, not just to short-term disruption, but also to any broader changes in working practice that might arise as people across the world become accustomed to, and comfortable with, remote-working. In arbitral proceedings speed is of the essence for the claimant, it is difficult then to justify so-called fast track arbitration, or that there could be accelerated arbitration, slow, and possibly also very slow proceedings.

Flexibility in procedure is a hallmark of arbitration. Arbitration allows parties to choose the most suitable procedure to achieve an expeditious and cost-effective resolution of their disputes. One of the major advantages of Arbitration as an ADR is its procedural flexibility.

The flexible nature of arbitration means that it is well-placed to adjust, to not just short-term disputes, but also to long-term broader changes. It allows the parties to choose a procedure which is most suitable to their circumstances in order to achieve the most quick and cost-effective resolution to their disputes. One of the many procedures of Arbitration is the Documents-only Arbitration, which generally applies to straightforward, mid-to-low value disputes.

Generally, high-value and complex disputes require a fairly standard arbitration procedure – this usually involves three arbitrators, two rounds of pleadings, document production, examination of witnesses, an oral hearing and post-hearing submissions. However, low-value or less complex disputes may not necessarily warrant the standard procedural steps. Depending on the value and complexity of a dispute, it may be appropriate to choose from different procedural innovations to significantly reduce time and costs.

The disruption caused by the COVID-19 pandemic has left companies across the world scrambling to maintain a sense of continuity, as their executives, employees and advisers adjust to life under government-imposed 'social-distancing' measures. For many, 'business as usual' includes ensuring that commercial disputes are resolved quickly if not more quickly than usual, so that they can remain focussed on their business.

This is the first in a series of articles exploring different procedures that parties may adopt in order to allow arbitrations to proceed, both in the short-term, in a world where people cannot travel, and the long-term, in a world where they may choose not to for other reasons. This article considers arbitrations conducted on a 'documents-only' basis, and sets out some issues to bear in mind when considering such an approach.

View of Indian Law

The Act always contemplated a scenario where parties could opt for a documents only arbitration, where it was not mandatory to have oral hearings. With the growing trend of emergency and expedited arbitrations, in the 2015 amendments to the Indian Arbitration Act, Section 29B was inserted, which introduced fast track arbitration. Under the fast track provision, the parties can before the constitution of the arbitral tribunal, agree in writing to conduct the arbitration under a fast track procedure.

This mechanism allows the parties to make a request for an oral hearing which will be permitted if the arbitral tribunal considers it necessary, otherwise the arbitral tribunal shall decide based on written pleadings, documents, and submissions filed by the parties without any oral hearing.

The award in fast track procedure must be made within six months from the date the arbitral tribunal enters reference. Since the adoption of the expedited procedure is solely based on the consent of the parties as opposed to the institution rules, we have not seen much such arbitration. But given the current circumstances with a national lock-down continuing, for a large number of relatively simple disputes (i.e. not complex/data heavy), it is worth a try to convince the opponent to agree on the fast track mechanism provided under the Indian Arbitration Act. These are only indicative solutions which will allow parties to resolve their disputes quickly. One needs to be mindful this may not work for high-value complex disputes where evaluation of evidence is critical.

Documents-only Arbitration procedures arise, most frequently, as a result of the parties' arbitration agreement and/or the incorporation of specific rules providing for such a procedure.

These include industry-specific arbitration rules designed for a particular sector, such as commodity, domain name and/or intellectual property rights disputes, small-claims schemes for consumer disputes, among others. In addition, in large and complex arbitrations which require the resolution of multiple issues, discrete issues may be dealt with by way of documents alone. Although arbitrators have a very broad discretion to give directions for a procedure which best suits the particular circumstances of a case, they may not be able to impose documents-only procedures on the parties.

This is because most national laws and arbitration rules specifically provide that each party has the right to request a hearing, unless they had waived that right. Accordingly, if the arbitrators consider that a dispute or certain issues within a dispute are suitable for resolution on documents alone, rather than imposing it on the parties, it is good practice to invite the parties to agree to proceed on that basis. This Guideline examines the matters that arbitrators need to take into account when considering whether to give directions for documents-only procedures and summarises the various steps they should follow in the conduct of such procedures.

One example of an innovation that is gaining traction for straightforward, mid-to-low value disputes is documents-only arbitration. In a documents-only arbitration, the parties agree for the dispute to be determined without an oral hearing. Accordingly, a tribunal (which may consist of a sole arbitrator) reviews the written documents submitted by the parties, but it does not receive oral pleadings or testimony at an evidentiary hearing before making the award.

Written documents may include pleadings, evidence, and statements of witnesses. A documents-only arbitration may be especially useful in cases where there is no need to cross-examine any witnesses. Proceeding without an oral hearing enables a tribunal to render its award within a shorter time-frame and eliminates the high costs typically associated with a hearing, including travel costs for the tribunal, lawyers and witnesses. Documents-only arbitrations also generally enhance efficiency and convenience given that travel is not required and email is the primary means of communication.

Though as far as the speed in the certain Arbitration is concerned, speed should depend on the circumstances and on the diligence of the arbitrators, rather than on the proceedings' rapidity being granted or refused depending on the type of dispute, such as the amount in dispute or the subject matter. However, speed, important as it is, cannot solve by itself all the difficulties that are met with in arbitral proceedings, such as the costs of the proceedings.

While some very large disputes may be indifferent to costs, when it comes to middle-size or small disputes costs become a delicate issue, since frequently they are out of proportion to the amount in dispute. In such situations, reducing the number of the arbitrators from three to one may be the solution.

Despite this possibility the tendency of many arbitration rules is to provide for three arbitrators. Some arbitration rules are very explicit about the number, such as the rules of the German Institution of Arbitration which provide.

Procedure for the same
As the name suggests, documents-only arbitrations are those in which tribunals base their determinations entirely on written submissions and documentary evidence, with no opportunity to hear from counsel or take evidence from witnesses at oral hearings. In this kind of Arbitration, the parties agree for the dispute to be resolved without an oral hearing. Written documents include pleadings, evidence, and statements of witnesses.

This kind of Arbitration may be useful in cases where there is no need for cross-examination of witnesses. Documents-only Arbitration is also a cost efficient form of arbitration, since a proceeding without an oral hearing eliminates the costs such as travel costs, lawyers, witnesses, etc. It enables the tribunal to render the award in a shorter time-frame and hence it is not time-consuming.

It generally enhances the efficiency of the tribunal because email becomes the primary means of communication when travel is not required. For a case to proceed on documents-only basis, it is essential for all the parties to the dispute to agree to the same since party autonomy is a significant ingredient of arbitration.

However, when this approach is being adopted, there are certain points to consider. This method may not always be possible as a matter of law and it may not be suitable for all cases (for acting as a counsel and sitting on the arbitral tribunal at the same time may not be applicable to many cases).
It must be mentioned that any decision to proceed on this basis should be made as early as possible so that parties can prepare their respective submissions and approach to the proceedings accordingly.

This also has converse effects for if one party makes objections early on, then the proceedings will appear to favor the material approach of one party over another. Considering the above mentioned issues, it may not be possible for all disputes to be determined on a documents-only basis. However, in the current scenario, where COVID-19 has disrupted the daily lives of the people and where companies are struggling to adjust with the new rules of social-distancing, this method seems highly recommended as well as applicable.

Parties faced with low-to-mid value disputes should consider whether the benefits of a documents-only arbitration outweigh the perceived benefits of an oral hearing. It provides parties with an innovative tool to manage time and costs while maintaining their right to be heard in a neutral forum. Given that remote working is (for now) the “new normal”, the call for documents-only arbitrations may well increase.

Issues to Consider
If we only consider and focus on adopting a Document only Arbitration approach following things should be borne in mind:
  • A documents-only approach may not always be possible as a matter of law. Counsel and arbitrators should, as a first step, assess the extent to which mandatory provisions of the lex arbitri may prevent arbitration from being determined on a documents-only basis.

  • A documents-only approach will not be suitable for all cases. In our experience, acting both as counsel and sitting on arbitral tribunals, the documents-only approach appears less suitable in cases where
    1. Determination of the central issues in dispute is likely to be require the assessment of or an adjudication of oral evidence (for example, of competing recollections of conversations alleged to amount to an oral contract),
    2. Highly detailed and technical expert evidence is required to 'educate the tribunal', and
    3. There is limited contemporaneous written evidence. In such cases, the lack of a hearing at which evidence can be tested, either through cross-examination by counsel or by questioning from the arbitrator, can cause difficulties for tribunals in assessing and giving weight to conflicting evidence.

  • Any decision to proceed on a documents-only basis should be made as early as possible, ideally as part of the first procedural order so that parties can prepare their submissions and approach to the proceedings accordingly.

  • That said, should developments in the case allow it (for example, if compelling evidence comes to light), it may be possible to switch to a documents-only approach mid-way through the proceedings. In such cases, the benefits of the documents-only approach mean that serious consideration should be given to changing approach.

  • Conversely, difficulties may arise where a decision to proceed on a documents-only basis is made at an early stage, only for one party to raise objections should it become apparent that the approach materially favours one party over the other.

  • Who should make the decision to proceed on documents-only basis? The arbitral rules of most of the major arbitration institutions require the parties' consent for an arbitration to be dealt with on a documents-only basis, although in some cases (such as the HKIAC rules) tribunals themselves have discretion to order the approach. There are clear benefits to tribunals in ensuring that any decision to proceed on a documents-only basis is taken with the consent of the parties, as otherwise the tribunal leaves itself open to a potential challenge to the enforceability of its award. However, institutions and parties could do more to empower tribunals to order a documents only procedure, or at least recommend it to the parties.

  • Who should propose proceeding on a documents-only basis? Even where a case may be suitable for assessment on a documents-only basis, there may not be sufficient trust between the parties to allow either party to feel comfortable making such a proposal. As such, tribunals should be proactive in taking the lead in identifying suitable cases and making proposals to the parties. Some institutions do encourage tribunals to consider this approach but to date; it is an option that is rarely explored.

Circumstances arising on different fields with issues

It will not appropriate or even possible for all disputes to be determined on an entirely documents-only basis. However, given that remote working is (for now) the “new normal” and as parties become more cognisant of the environmental impact of international travel, the call for documents-only arbitrations may well increase.

This will require a change of attitude on the part of parties and tribunals. Parties will have to become more flexible in their attitudes towards non-traditional arbitrations, whilst tribunals should be more proactive in identifying cases that are suitable for determination on a documents-only basis and more robust in adopting such measures.

Other institutions may now follow the example of the HKIAC, in order to offer more options to parties in the current environment, and amend their rules to give tribunals discretion to decide whether to proceed on a documents-only basis. Doing so could allow for international arbitrations to be dealt with more speedily and at a reduced cost, but for some institutions, it will be quite a cultural shift.

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