New Changes in International Arbitration under the Outbreak of COVID-19

Impact of the COVID-19 on international arbitration cases:

With the global outbreak of the COVID-19 getting worse, the World Health Organization officially declared the COVID-19 a global pandemic on March 11, 2020, which has been apparently causing difficulties to the International Arbitration ranging from Asia, including China, Europe to the USA. 

Given that the majority of arbitration practitioners started to take into account the safeness of arbitration venues, many international arbitral hearings have been deferred or the venues were redetermined. The arbitrators are cautious regarding the reception of parties coming from affected areas.

The pandemic has brought significant changes to the methods of hearing as evidenced by the increasing number of online dispute resolution (ODR). There might even be advanced artificial intelligence and other new technologies which will be introduced into international arbitration in the future.

Meanwhile the pandemic is affecting the creation, collection and transmission of evidence in international arbitration. The parties are prone to search, review and draft the documents in electronic way. Unless otherwise specified, arbitrators who require to submit written documentations have gradually given way to those willing and able to handle electronically.

New measures of major international arbitration institutions under the outbreak:

As the outbreak has affected the normal operation of enterprises, supply and prices in almost all the markets around the world are expected to show significant fluctuations, while many energy and construction projects have been halted. It is foreseeable that demands for arbitration will increase dramatically. In view of the present situation, some major international arbitration institutions arocss the world have undertaken some new measures to confront it.

Several countries, including London, Singapore, and the United States, have required their citizens or permanent residents who have recently traveled to certain countries and regions to self-isloate for 14 days, at the same time, foreign citizens who have recently traveled to countries and regions with serious epidemics are refused to enter the country. As a result, major extraterritorial arbitration institutions, including the London Court of International Arbitration (LCIA), the Singapore International Arbitration Centre (SIAC) and the American Association for International Arbitration (AAIA), have postponed particular arbitral hearings during the epidemic period or have started online hearings.

Since the epidemic situation in Mainland China has been effectively controlled in March, the precautionary measures in February, such as the postponement of the hearing date, have been gradually abolished this month. And arbitration institutions including the Beijing International Arbitration Center (BAC) and the Shanghai International Arbitration Center (SHIAC) have gradually resumed normal arbitration works.

Options for International Mediation Mechanisms during the COVID-19 Pandemic

On March 12, Qatar ratified the UN Convention on International Settlement Agreements Resulting from Mediation (the "Convention") and became the third state to ratify after Singapore and Fiji. Meanwhile, pursuant to Article 14 of the Convention,  it shall come into force six months after being ratified by a third country. Therefore, the effective date of the said Convention is  confirmed to be September 12, 2020. After the Convention becomes effective, a mediation agreement reached by  recognized mediation procedures shall be legally enforceable  as an arbitral award, and shall be legally binding among the Contracting States of the Convention.

There are two main categories of mediation practice in Singapore: court-based mediation and private mediation. The court-based mediation institutions has three types, which are Singapore Primary Dispute Resolution Centre, Small Claims Chambers and Family Resolution Chambers, and the State Courts Centre for Dispute Resolution. Those institutions have been implementing electronic mediation system since 2000. While private mediations in Singapore are mainly carried out before Mediation Center of Singapore (SMC), International Mediation Center of Singapore (SIMC) and Singapore Financial Disputes Resolution Centre (Financial Disputes Centre), etc., SMC and SIMC are the designated mediation institutions under the Singapore Mediation Act.

Mediation institutions in Singapore have developed from merely court-based to independent non-profit corporations, while mediation fees went from free to professional charges on particular disputes. These processes are also part of the history of how Singapore has become international centre for dispute resolution in the Asia-Pacific region.

Compared with Singapore's practice in international mediation, China's international mediation system has been developing as well and has efficiently resolved many trade disputes among commercial enterprises during the outbreak. For example, the Mediation Centre of the China Council for the Promotion of International Trade has specially developed an online mediation system to facilitate enterprises. There is no time limit for online consultation and mediation application. The expert mediation services during the epidemic period is free of charge. Such measures can assist enterprises resolving disputes faster. During the specific dispute resolution process, time will be largely saved through avoiding complicated and arduous legal process. At the local level, the "Benchmark Chambers International & Benchmark International Mediation Center", which was established in October 2019, promoted "contactless mediation" during the epidemic period through "online mediation" and "online judicial confirmation" and handled various domestic and foreign-related commercial disputes efficiently.

The International Center for Settlement of Investment Disputes (ICSID) 

Generally Promotes Electronic Submission of Documents

The ICSID recently announced that it encourages electronic filing starting from March 16, 2020.

Unless otherwise specified or agreed: 1. ICSID requires only an electronic copy of a request for arbitration, request for mediation, an annulment application and other applications. 2. ICSID encourages parties to submit all written submissions (Memorial, Counter-memorial, Reply, Rejoinder etc.) and any supporting documentation, including written statements, witness statements and expert reports, electronically. Arbitrators, conciliators and ad-hoc Committee members are also encouraged to use electronic copies of case-related documents.

ICSID adopting such measures is make to electronic filing its default procedure. ICSID explains that pending cases which already registered shall also submit electronically since March 16, 2020.

International Center for Settlement of Investment Disputes (ICSID) 

Rejected Lidercón S.L.’s Arbitration Request.

On March 6, 2020, the ICSID arbitral tribunal rendered an award which rejected a Spanish investor’s claims against the Government of Peru. The claimant requested the Government of Peru to pay damages in excess of USD 120 million for transactions involving vehicle inspection services provided in Lima, the capital of Peru. According to a ICSID news release (the full version of the Award has not been published), the Spanish company Lidercón S.L. and the Government of Peru entered into a contract for the construction and operation of vehicle inspection centres in 2004. However those inspection centres were nationalised under a new law enacted by the Peruvian government in 2008. Lidercón S.L. perceived that the value of their investment collapsed and thus filed an investment arbitration request in accordance with the Bilateral Investment Treaty between Spain and Peru signed in 1994. According to the Award, the arbitral tribunal failed to find any evidence proving the violation of the treaty and therefore rejected Lidercón S.L.’s request. The tribunal awarded that the Spanish company pay Peruvian government USD 4 million for counsel’s fee.