Encouraging Procedural Innovation in the Early Stages of Arbitral Proceedings

What are your thoughts on the trend to encourage procedural innovation? What do you think is driving that trend?  

This is a unique moment in time for procedural innovation, both because the technological capabilities have grown but also because our mindset has changed during the COVID-19 pandemic. There is a new awareness on a fundamental level that things don’t need to be the way they’ve always been, and we can still be OK and even thrive.

To give you an example, most of us consider oral hearings to be the cornerstone of arbitration – that one moment in time when everything comes together, the parties are heard, and the justice is about to be done. Until recently, we had a strong view on what oral hearings must look like. And suddenly, in the pandemic, we found a way to do it differently. It wasn’t ideal, but it did teach us that we can adapt. So, if we can find the courage to rethink a fundamental postulate of international arbitration, why not other arbitration features too? What else can be done more efficiently? 

What are some of the examples of procedural innovation that you have seen in practice? 

I have seen many different innovative tools. While varied, they seem to generally share two features: 1) they seek to promote more interaction between the tribunal and the parties during the pendency of arbitration, and, 2) they seek to utilize technology or procedural nimbleness to lower the cost and increase the speed of arbitration. 

The tools that I have seen include: 

• midstream tribunal questions as a procedural step between the first and the second round of written submissions, where the tribunal sends questions to the parties based on the first submissions, and therefore focuses counsel’s attention on key issues for the next submission; 
• midstream conferences or Kaplan openings, which also take place between the two rounds of written submissions and serve the same purpose as the midstream tribunal questions, although they include an actual meeting between the tribunal and the parties, usually virtually, so they tend to be more expensive and are, in my view, often less efficient; 
• short but more frequent procedural Zoom calls, where the tribunals can address any complaints, confirm with the parties if the procedural rules and timetable as established still make sense, and monitor compliance with any orders. When I discussed these tools with colleagues, some of them expressed concern that more interaction means more opportunity for abuse and guerilla tactics. But in my experience, as long as you have an experienced tribunal with a no-nonsense approach, more interaction is a good thing. It can promote integrity and reality-checking, rather than abusive tactics; 
• issue separation and sequencing that goes beyond the traditional jurisdiction vs merits and quantum bifurcation, but builds on a decision tree that is established earlier in the process and therefore allows the tribunal to decide the biggest part of the case early on, instead of deciding all the issues together as if they have the same value or consequence. I have seen this tool used effectively in situations where the parties are considering settlement; 
• modern quantum bifurcation where the tribunals after hearing the merits (but before the issuance of the award) would issue an instruction to the quantum experts as to the valuation data and any relevant commercial assumptions, which would then ensure that the resulting opinions are not 'ships passing in the night' but comparable to each other; and 
• technology-driven procedural innovation, such as virtual site visits, 3D project presentations, pre-recorded opening statements, metadata and file integrity analysis to confirm authenticity of audios and videos (including to check for ‘deep fake’ manipulations). 

Generally, all these tools seek to make arbitration faster and cheaper. 

How do you as arbitrator encourage procedural innovation? 

A critical juncture in any arbitration proceeding is the first discussion between the tribunal and the parties, and the resulting Procedural Order No. 1 (PO1). That’s where the tribunal gets a first chance to hear the parties and that should be when the advantage of arbitration – its flexibility –  comes to light. 

I ask the parties what they want and whether they want to include any procedural steps to promote efficiency, such as issue separation or sequencing, tribunal questions, a midstream conference, quantum instructions or similar. Only after hearing the parties’ initial reaction do I prepare a draft PO1 which we then discuss at the procedural hearing.

It is remarkable that in the majority of my cases in the past few years, the parties (I dare say, enthusiastically) always proposed and consented to include in the PO1s tribunal questions or midstream conferences to help direct the second round submissions and prevent any surprises at the hearing. This has been very effective in practice – In addition to helping the advocates do their job in a more focused and cost-effective manner, it also signaled to the parties that the tribunal is with them in the process.  

Do you think there is a special role for the new(er) generation of arbitrators in driving the procedural innovation? 

Absolutely! Being in the ‘younger’ generation typically means that you are not yet one of the ‘usual suspects’ for appointments, so there is a reason why you would want to try and distinguish yourself by your thoughtfulness, client-focus and quality. Those are great reasons to work harder and do better than those who have already achieved what you are trying to achieve.  However, there is one problem with this proposition, which is that ‘younger’ generation often feels a stronger need to prove that they know enough or are experienced enough. And ironically enough, the way to prove that you are experienced is to repeat the process you have seen before exactly as you have seen it, because ‘you know how it’s done’. So from that perspective, we sometimes need to look up to the top senior practitioners for encouragement that it is OK to go an extra mile and perhaps be innovative, if that means serving our client’s needs better. 

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