ICC report on leveraging technology in international arbitration

On 18 February 2022, the ICC launched its new commission report, titled: Leveraging Technology for Fair, Effective and Efficient International Arbitration Proceedings. The conclusions and recommendations are based on the responses of over 500 members of the arbitration community, surveyed for their views and experiences using legal technology tools and solutions. The scope of the report was: (i) identify the prevalent technologies being utilised in support of the arbitral process, (ii) provide insight into the features and functionality that may enhance the arbitral process, and (iii) discuss useful procedural practices and pitfalls to be avoided.

Numerous global trends are driving the uptake of legal technology, such as pandemic restrictions, environmental concerns and issues of cybersecurity and data privacy. The report aims to provide guidance in response to evolving standards and norms in international arbitration, caused by this accelerating digitalisation of the legal industry and its clients. It is now explicit in the ethical codes of some jurisdictions and arbitration bodies that tribunals and arbitrators have a responsibility to possess basic technological competence, which includes staying abreast of developments. General duties of competence, confidentiality and compliant processing of data might also reasonably imply a requirement to be technologically literate.

The report emphasises however the need of the tribunal to balance its responsibility to conduct disputes with efficiency and integrity, against the fundamental principles of fairness and equality. Certain parties with fewer resources, or parties based in emerging market regions, may suffer from inadequate internet infrastructure, technical ability and access to technology. These factors may thereby create a ‘digital divide’ and inequality of arms in disputes. This can be remedied by the tribunal providing directions for the conduct of the dispute, for instance through the use of hybrid hearings or through compromise solutions around the allocation of costs. The report aims, in part, to increase awareness of technologies and practices to help level the technological playing field. To this end the report contains details around more commonly known practices not covered in this article, such as emails and flash drives.

The relevance and applicability of technology in arbitration is a vast topic and the report’s coverage is broad. It seeks to distil the major issues and points parties to more in-depth resources, and it is in this sense a useful resource for both sophisticated and less sophisticated parties. Numerous procedural practices are suggested, and appended to the report are practical aids, including sample procedural language, various organisational checklists for virtual hearings, and a checklist of considerations when choosing online case management platforms.

Below is a summary of the key practical points in the report on prevalent technologies, takeaways and findings from the survey.

Prevalent technologies

File Transfer Protocols

Secure file transfer sites, often referred to as FTPs, allow for the secure sharing of voluminous files in a more efficient way than the conventional email attachments. Where files are stored or shared via an FTP, parties should consider the following:

1. Is the server located somewhere that might trigger issues of data handling for the purpose of data protection laws such as the GDPR?
2. Is the data stored on the server encrypted?
3. Is access to the data sufficiently secured, e.g., by multi-factor authentications?

Parties are encouraged to utilise enterprise level FTPs specifically designed for legal or other commercial purposes. Some parties may however opt for free consumer-oriented services such as DropBox, Google Drive etc. The report warns that when using such consumer services, parties must also consider:

1. What rights, including access to information, does the service provider have under the terms of use for the platform?
2. How secure are the files?
3. Once uploaded, are duplicates produced and are parties able to properly track, delete or remove access to the files?
4. Is the use of these services permitted by the arbitral rules in question?

Note that the report also covers the use of physical data carriers such as flash drives and hard disks, however, explains this method of sharing data is on the decline and rarely preferable to FTPs for security and convenience reasons.

Online case management platforms

These platforms build on the functionality of FTPs by including additional features to support and enhance workflow. These additional features can include:

• the capability to host evidentiary hearings;
• the ability to imbed hyperlinks to exhibits;
• annotation and search functionalities;
• automated upload and download notifications by e-mail;
• sophisticated administration of users’ rights;
• sub-spaces only accessible to defined categories of users;
• 24/7 technical support; and
• accessible meta-data for tracking originals and versions.

These platforms are growing in popularity and the report suggests may be mandated down the line. The ICC is expecting to launch phase 1 of its own secure digital platform by June 2022. The report provides a checklist of considerations for parties wishing to utilise such third-party platforms and references the Protocol for Online Case Management in International Arbitration, co-authored by members of CMS as part of the Working Group on LegalTech Adoption in International Arbitration. For further details of this Protocol please see here.

Issues flagged for particular attention include:

1. Standardisation between parties of uploads to the platform, including file types and naming conventions. This will improve accessibility and searchability of the contents on the platform.
2. Control over the access to the platform should ideally not be in the hands of one party, to prevent gamesmanship.
3. Data integrity when using a joint set of data may be improved by procedural orders regarding how to treat the information on the platform or report suspected manipulations. Most platforms will however provide certain protections to maintain the integrity of the information.

Artificial intelligence

AI is now used in e-disclosure technology. There are however no specific rules or guidance on the use of predictive coding and no requirement for parties to disclose their use of it. Parties may therefore consider addressing this at the stage procedural directions are being agreed, if they wish to have an input into its implementation by the other party.

Machine learning AI is also utilised in automatic translation services, which, as with FTPs, exist as both free online services and enterprise grade services. The report again warns about the suitability of free services in arbitrations, owing to their potentially inaccurate translations and user agreements, that can provide developers access to any content uploaded, thereby compromising confidentiality and security of that content.

The report refers readers to the ICC Commission Report on ‘Managing E-Document Production’ (2012) for an in-depth discussion on machine learning artificial intelligence.

Key takeaways

Cybersecurity and data privacy

The report stresses on the importance of effectively managing cybersecurity risks and the effective handling of data. Arbitral proceedings can be prime targets for cybersecurity attacks given the prominent nature of certain parties, such as governments, large multinationals and public figures, and the matters under contention. It is essential to the integrity and public trust of the arbitral process that appropriate consideration is given to mitigating risks of external malicious attacks and human error. Importantly, the responsibility for such precautions falls to all involved in the arbitral process, as cybersecurity is only as effective as its weakest link. The report provides sample language for tribunals to use in drawing these issues to the attention of parties at the first CMC and refers to the detailed guidance given in the ICCA-NYC Bar-CPR Cybersecurity Protocol for International Arbitration and guidance on data protection issues in the ICCA-IBA Roadmap to Data Protection in International Arbitration.

Costs

Tribunals must also take care to weigh the costs and benefits of utilising certain technologies on a case-by-case basis. The licensing costs of certain platforms may not be proportionate to the nature, value or complexity of the dispute and the benefit derived may not be equally shared or accessible by the parties. Therefore, if technology was utilised ineffectively, was not necessary or if the technology forms a regular part of a party’s infrastructure, it may be inappropriate to allow for the recovery of the related costs. These considerations should be made early so the proceedings can commence with consensus, with costs borne appropriately throughout.

Applicable arbitration rules and mandatory law

Parties to an ICC arbitration are encouraged to correspond entirely through electronic communications. This includes correspondence with the tribunal and the arbitral institution. Furthermore, tribunals are free to hold virtual or hybrid hearings, and exchange the following electronically:

• pleadings, exhibits and other documents disclosed
• hearing briefs, witness statements, and other written submissions
• orders, awards, and other decisions

The report warns however that certain jurisdictions may not hold as valid certain notifications, the service of documents or proceedings, records of originals or signatures, where they are wholly or in part electronic. Despite respondents to questionnaires reporting limited concerns, parties should proceed with caution and check the laws or rules in the jurisdictions relevant to the dispute, or potentially face recognition and enforcement issues.

Virtual hearings

ICC supports the use of virtual hearings and refers to its own resource, the Checklist for a Protocol on Virtual Hearings and Suggested Clauses for Cyber-Protocols and Procedural Orders Dealing with the Organisation of Virtual Hearings. The report also appends a number of checklists relating to various aspects of virtual hearings, including choosing the appropriate providers and what technical testing it is sensible to conduct in preparation. There is again however a warning around the validity of virtual hearings in specific jurisdictions.

While there are obvious benefits to virtual hearings, in terms of access to witnesses, reducing costs and improving efficiency, objections raised in recent ICC cases are highlighted for deliberations on whether to conduct virtual or hybrid hearings, flagging in particular:

• the potential violation of due process rights, including the right to present one’s case
• technological limitations due to the participation from different locations and countries, (e.g., internet access and slow speed of the connection for witnesses who may live in remote areas) and older participants potentially being less technically savvy
• confidentiality and time zone issues, limiting appropriate time slots
• additional costs involved
• difficulties in displaying or following evidence
• difficulties relating to witness preparation
• ‘screen fatigue’ requiring shortened hearing days

Survey results

Appended to the report are key findings from the survey on the use of IT in international arbitration, with some of the more interesting results set out below:

General views on the use of IT over the past three years:

• 93% of respondents agreed that technology has improved the efficiency and cost‑effectiveness of the process
• 74% disagreed that technology has created or exacerbated concerns about fairness and/ or equal treatment of the parties; yet respondents were nearly evenly split as to whether technology has levelled the playing field between the parties, with 51% agreeing that it has and 49% disagreeing.

Pre-pandemic experience with IT solutions:

• Only 2% of respondents always used online case management platforms or virtual data rooms for the exchange of all or most communications and submissions, but 68% often or sometimes did so.

Expectations regarding post-pandemic use of IT solutions

• 95% of respondents believe that during the initial case management conference, tribunals should routinely discuss with the parties how IT may be used to increase the efficiency of, or otherwise enhance, the arbitral proceedings.

Experience with virtual meetings

• 88% agreed that it should be the norm post-pandemic to conduct case management and other procedural conferences as virtual meetings.

Experience with virtual hearings during the pandemic

• 79% were either highly likely (51%) or somewhat likely (28%) to recommend to others that a neutral third party service provider be engaged to host and facilitate a virtual hearing, as opposed to the hearing being hosted by an arbitrator or tribunal secretary, whereas 14% reported no experience with third party service providers and only 7% reported that they were not at all likely to make such a recommendation.

The authors thank Alex Hamilton, Trainee Solicitor at CMS, for this contribution to this publication.