Conflict Prevention and Resolution: Managing Risk and Disputes in the “New Normal”
On September 23rd, 2020, the International Institute for Conflict Prevention and Resolution (CPR) Canada conference presented two panels on Business Dispute Management, as part of the inaugural Canadian Arbitration Week. The first of these panels is summarized below.
Moderated by Rachel Howie (Dentons), the first panel was composed of Christina Doria (Baker & McKenzie), Jennifer Glasser (White & Case), Daniel Urbas (Urbas Arbitral), and Robert Wisner (McMillan). Panel members were asked to provide their perspectives on the way disputes are addressed, as well as lessons learned from arbitrating virtually.
Following introductions, Robert Wisner discussed the topic of managing disputes in the current economic environment. Wisner divided recent commercial disputes into two categories: (1) disputes that are directly related to COVID-19, and (2) disputes with underlying economic issues not directly related to COVID-19. The first category largely involves force majeure clauses and business interruption insurance. The latter category turns on Material Adverse event Clauses (MAC), which are common in M&A contracts and other long-term contractual relationships. Daniel Urbas mentioned that these disputes are often governed by multi-tiered dispute resolution clauses, and different jurisdictions have taken inconsistent approaches towards interpreting these clauses. Jennifer Glasser added that, as a result of these uncertainties, there has been an increase in client requests for contingency planning at the pre-dispute phase.
The first question for the panel was whether a tribunal can order a virtual hearing over the objections of one or both parties. Glasser explained that the answer will depend on the arbitration agreement involved, as well as the applicable institutional rules and local laws. If the tribunal does not have the authority to impose a virtual hearing, parties can challenge the award on the basis that they were not afforded an opportunity to present their case. Glasser stated that arbitration agreements rarely mandate in-person hearings, and most institutions’ procedural rules provide tribunals with discretionary power to conduct proceedings in a cost-effective and efficient manner. As such, most procedural rules do not constrain how hearings are held, so long as the hearing satisfies the parties’ right to be heard. With respect to local laws, Glasser noted that in cases where a virtual hearing is ordered over the objection of one of the parties, the objecting party may seek to overturn the award in a jurisdiction that is unfriendly to remote hearings. Given that most jurisdictions across the world are currently allowing remote hearings, this risk is likely minimal. However, should consult the local law prior to insisting on a virtual hearing over the objection of the opposing party. For parties who prefer in-person hearings, Glasser encourages counsel to creatively bifurcate issues, so that arbitration is commenced and some issues are expeditiously dealt with, until all parties can meet safely for an in-person hearing.
Next, the panel discussed possible risks associated with virtual hearings. According to Christina Doria, the first risk associated with virtual hearings is that the parties are not given due process which, if proven, would prevent the award from being enforced. The second possible risk is unethical conduct by counsel, particularly relating to witness testimony. There is a growing concern that witnesses may be conferring with counsel throughout the hearing. To mitigate this risk, counsel should educate witnesses about the procedural rules and emphasize the seriousness of the testimony. The third major concern with virtual hearings is preserving confidentiality, which can be addressed by adopting model procedural orders, such as those provided by CPR. These procedural orders deal with factors including platform selection, cybersecurity protocols, preparation for the virtual hearing, time zone accommodations, and contingency planning for accidental ex parte hearings resulting from technical issues. Daniel Urbas added that beyond the parties’ agreement to proceed virtually, counsel must also consider the skill sets and technical infrastructure of the parties, tribunal members, witnesses, and representatives prior to requiring them to engage with a specific technology. For example, counsel can ensure an equal level of virtual engagement at the proceeding by rehearsing virtual hearings.
Following the panel discussion, CPR provided a presentation on some of its newest developments. CPR’s new fast-track administered arbitration rules: allow parties to expressly contract for a time limit for the tribunal to deliver its awards, to control the scope of evidence-gathering, to set a financial threshold for fast-track procedures, to agree to remote hearings, and to require arbitrators to affirm their availability and willingness to apply the rules. Additionally, and Protocol for Concurrent Mediation-Arbitration allows parties to settle the dispute through mediation during the pendency of an arbitration. Lastly, CPR provides special services pertaining to deal facilitation, mock arbitrations, mini trials, early neutral evaluation, and dispute resolution boards.
This CPR presentation concluded the first half of the conference. While the first panel addressed the terms of the hearing itself, the second panel of the session focused on the legal tools available in enforcing the award