Search
Whilst the Danish courts have now reopened, the outbreak of COVID-19 continues to have consequences for court and arbitration cases in Denmark. Companies and individuals may face difficulties in having disputes settled by traditional means in the near and perhaps longer term calling for alternative routes for dispute resolution in the wake of COVID-19. This newsletter explores the status of the Danish courts, the arbitration institutes and virtual means available, and the prospect of mediation as an alternative dispute resolution mechanism.
Following the partial reopening of Danish public institutions from 15 April, the Danish courts on 24 April 2020 announced the plan for the reopening of the courts.[1]
Oral hearings are resumed while observing all relevant health guidelines. The resumption of oral hearings will happen with regard to the essentiality of the cases and the court’s capacity to conduct hearings while limiting the spread of the coronavirus.
All civil cases can be heard, but the courts do not expect to have their usual capacity to conduct all cases. The Danish Court Administration recommends that civil cases are prioritized on the basis of the age, character and significance of the case, but the individual courts will prioritize which cases will be heard. Following guidelines have been issued for the prioritisation:
The Danish Court Administration has, together with the Danish Patient Safety Authority and the Danish Working Environment Authority, drafted guidelines for individuals visiting the courts.[2] These guidelines overall entail that
As we are seeing new developments on a regular basis, we recommend that parties to court proceedings and their advisers stay updated at minretssag.dk and at the website of the courts, namely domstol.dk.
Pending arbitration cases also continue to be effected by COVID-19 and arbitration institutes around the world are now generally organising their work in consideration of authorities’ instructions.
As a part of their handling of the COVID-19 outbreak, arbitration institutes have been sending out updates that address how the outbreak affects their daily operation and casework.
The Danish Building and Construction Arbitration Board (Voldgiftsnævnet for Byggeri og Anlæg) has on 28 April 2020 issued guidelines for oral hearings during COVID-19.[3] The Board will resume oral hearings from 27 April 2020 if the hearings can be conducted safely. The Board will, if possible 3 weeks prior to the hearing, schedule a conference call or a written hearing to plan the oral hearing.
During oral hearings, participants must keep 2 meters between them at all times, and the number of participants in each room will be limited according to size, all rooms maximised to 10 participants. Each participant is required to use the hand sanitizer made available before entering the room. Advisers are encouraged to help ensure that the number of participants is limited as much as possible. In case of hearings at a different venue, the Board will ensure the same level of safety.
General case handling will continue because a large part of the work at the Board can be handled digitally and from home. The Board will continuously update the guidelines according to any regulations from the authorities.
The Danish Institute of Arbitration (DIA) has also decided to gradually reassume oral hearings from 20 April 2020.[4] Hearings will be conducted in accordance with the relevant safety guidelines, including limiting the number of participants. As for casework, the DIA will handle pending cases and answer inquiries by telephone and email in the usual manner. The DIA will maintain deliberations with the parties in pending cases to consider the need for oral hearings and to discuss the course of the case.
The Secretariat of the ICC International Court of Arbitration (ICC) has on 9 April 2020 published a guidance note as to the ICC’s operations in consideration of COVID-19.[5] The Court remains open and continues to progress pending arbitrations and new cases to ensure fair and efficient resolution of disputes. The secretariat encourages all tribunals to consider any possible procedural options and to communicate pro-actively with the parties to consider any measures that may mitigate the procedural disruptions caused by COVID-19.
As a general matter, the Secretariat maintains that all communications with the Secretariat be conducted by email, including new requests for arbitration.[6] As for correspondence in pending proceedings, the Secretariat still advises that anyone sending correspondence (including awards and ADR decisions) by courier or post to the Secretariat should promptly inform the relevant case management team ahead of dispatch. The Secretariat further encourages that the parties agree to electronic notification of awards.
The Secretariat also advises that the tribunals and the parties consider whether convening at a physical location is necessary, and if not seek to agree on a virtual hearing.
Notably, it is the Secretariat’s assessment that ICC rules allow the tribunal to proceed with a virtual hearing without party agreement or over party objection. If a hearing is held virtually, the tribunal and the parties must confer on a cyber-protocol to comply with data privacy regulations. The secretariat can assist with support and assistance with virtual hearings.
In dealing with the COVID-19 outbreak, the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) has announced that the SCC Platform – a secure digital platform for communication and file sharing between the SCC, parties and the tribunal – remains fully operational and can even be used for cases initiated prior to the use of the platform.[7] SCC has also made the platform available free of charge to any ad hoc tribunal in arbitrations registered by December 31 2020.
The SCC will be working remotely as a measure to adapt to the outbreak.[8] As for arbitral tribunals in SCC arbitrations, they are encouraged to use alternative means such as audio- and visual meeting facilities going forward. The SCC expects that tribunals will be managing proceedings in accordance with timetables previously established. Online hearings remain a topic for discussion in the Swedish arbitral community most recently through webinars held by the SCC.
In a service update on 18 March 2020, the London Court of International Arbitration (LCIA) announced a number of precautionary measures in order to maintain its service, while safeguarding the safety of its staff.[9]
Regarding new and pending cases, the LCIA generally advises that all communication, including requests for arbitration, will be handled digitally through its online filing system or by email.
This also applies to awards in pending cases. Arbitrators are thus requested to deliver their awards by email,[10] as the LCIA will, except in exceptional cases, transmit awards to parties electronically, with originals and certified copies to follow, once the LCIA office has re-opened. The LCIA has not yet announced any end date for the new measures taken, but the LCIA will continue to provide regular updates through its website.[11]
Arbitration institutes are accordingly doing their best to remain operational by working remotely but whilst large parts of the general casework can be maintained, the COVID-19 outbreak will continue to have ramifications for oral hearings.
Most of the rules of the major arbitration institutes leave open the opportunity of conducting oral hearings by video or by other means of technology. For instance, both Article 14 of the LCIA Arbitration Rules 2014 and Article 22 of the ICC Arbitration Rules 2017 allow the tribunal to adopt procedures appropriate for the arbitration. Owing to the outbreak, the use of telephone or video conferencing for hearings will often be appropriate.
However, the use of technology to conduct oral hearings does not come without difficulties. In addition to practical issues such as ensuring the right sound quality and sufficiently strong internet connections, the live effect of witness examination is generally diminished if conducted online and one may not know if a witness is being coached off-screen.
We generally find that it is difficult for parties to agree to virtual hearings. Nevertheless, we expect a change in attitude given the current situation and we are largely seeing parties and advisers who are willing to engage in discussion regarding how to make accommodations owing to COVID-19. In addition, we experience arbitral tribunals making directions that parties should prepare for online oral hearings if the current situation does not change going into the autumn/winter.
We generally expect that tribunals will seek to confer with parties as well as facilitate party agreement in order to safeguard the fundamental arbitration rights of equal treatment and of having an opportunity to present one’s case. It remains to be seen whether and on what grounds oral hearings may be held online against the wish of one party.
As apparent from the above, the COVID-19 outbreak is creating many challenges for dispute resolution in general, and it will inevitably continue to do so for some time. Not only are current cases being postponed, but depending on the duration and the extent of the current partial lockdown, the pile of backlogged cases may in turn lead to increased processing times for court and arbitration cases. For this reason and as a consequence of the many business disruptions caused by COVID-19, an increased demand for alternative dispute resolution methods such as mediation and other non-traditional methods may emerge. Both the Confederation of Danish Industry and the Institute of Mediation in Denmark are of the opinion that there will be an increased demand for ADR in the wake of COVID-19.[12]
Mediation is one method of alternative dispute resolution (ADR) available to parties who wish to settle their disputes outside of the court and arbitration. Arbitration can also be considered as a form of ADR but unlike arbitration, mediation does not involve decision-making by a neutral third party, rather the process is facilitated by a neutral.
Essentially, mediation is a procedure by which a neutral third party, the meditator, assists the disputing parties to reach a settlement. Unlike the court and arbitration, mediation is based on the voluntary participation of the parties and thus encourages the parties – ideally – to reach a mutually satisfactory settlement.
The mediator plays a central role in settling the dispute by facilitating an environment in which the parties can reach a settlement, e.g. by facilitating communications between the parties, by defining the core risks of the dispute on both sides, by suggesting ways of resolving the dispute, and ultimately assisting the parties with the drafting of the settlement. In our experience, whilst many commercial contracts provide for negotiation and escalation clauses, once disputes arise, negotiations are often obstructed by the parties’ positioning. In this respect, a mediator can often play a key role in breaking the commercial deadlock.
What distinguishes mediation from court and arbitration cases is that a party to a mediation cannot be forced to accept an unsatisfactory outcome. Unlike an arbitrator or a judge, the mediator has no judicial authority, and the mediation process is typically not bound by stringent regulation. The parties involved in a mediation thus have a larger degree of flexibility, which can serve as an advantage.
The costs associated with mediation are often much lower than the price of an average court case. According to the Danish Institute of Mediation, the costs of an average mediation are 50% less than the costs of an average court case. In addition, mediation is generally a quicker way of settling a dispute. The duration of a mediation is typically three to four months, on average, whereas a court case can take up to 16 months and often much longer.
The Danish Institute of Mediation is now offering online mediations, in which they will provide virtual assistance. The Institute’s online administrative services will also be provided for free in the coming time.[13] Accordingly, there are opportunities to consider and explore this form of ADR.
The mediation process in Denmark is regulated by the general principles of contract law as there is no act on mediation in Denmark, though the need for one has been raised a number of times during the last couple of years. On this basis, there are a number of options available to enforce mediation settlements in Denmark. In many situations, the parties voluntarily abide by the agreed terms of their mediation settlement agreement, but there have been situations when the parties fail to do so. In these instances it is crucial to have an enforcement mechanism in place. For the time being the two options available in Denmark are:
Internationally, mediation is perceived as an important means of resolving commercial disputes. However, the lack of an international mechanism for enforcing mediated settlement agreements has often been cited as a shortcoming.
The United Nations Convention on International Settlement Agreements resulting from Mediation, also known as the “Singapore Convention on Mediation” (the “Convention”), was adopted in December 2018 and deals with this enforcement issue. The Convention applies to international settlement agreements resulting from mediation and it ensures a harmonised legal framework for the enforcement of such agreements. Thus far, over 50 countries have signed the Convention and it enters into force on 12 September 2020 after Qatar, as the third country to do so, ratified the Convention on 12 March 2020. Denmark is not yet a signatory to the Convention, and for the time being, the Convention has limited significance from a Danish perspective.
Gorrissen Federspiel would be pleased to assist your company in respect of any considerations or questions you may have regarding court proceedings, arbitration, mediation or other alternative dispute resolution methods.
[6] New requests for arbitration can be filed at this address: arb@iccwbo.org
[10] I.e. to casework@lcia.org