Abstract

Before the COVID-19 pandemic, filing and other arbitration-related procedures were highly detrimental to the environment given the excessive use of paper, transportation to the venue of the hearing, and other related reasons. However, the COVID-19 pandemic provided an opportunity to switch to greener, and sustainable arbitration wherein certain procedural aspects went virtual, thereby reducing the detriment to the environment. Thus, in this blog post, the author shall discuss the potential sustainable changes in the procedural aspects of arbitration and the pressing need for the arbitration community to consider them in the long run.

Introduction

The COVID-19 pandemic has impacted a plethora of industries worldwide, and the legal sector has not been able to escape it either. Just as online classes and meetings, online hearings have also found their way. The change from physical to virtual meetings has not been easy at all, and we are still in the process of adapting to the “new normal.” However, we cannot miss the silver lining of environmental sustainability achieved in due course. This is due to various substitutes such as e-filing instead of paper filing or even virtual hearing instead of physical hearing, which reduces carbon footprint. The arbitration community has also adopted this inevitable change while contributing their bit towards the environment. Practicing environmental laws is not the only way legal professionals can contribute to environmental conservation; embracing sustainable methods in our daily practice can help us go a long way on the path of sustainability.

Environmental Impact of Arbitration

International Arbitration — specifically the Construction and Energy sectors— has significantly addressed sustainability and Climate Change issues. Cross-border disputes relating to Climate Change, which is, in fact, a major global matter, involves parties from various industries — like banking and insurance, manufacturers, and States [1]. Since these issues mainly arise due to concerns regarding the detriment caused to the environment, one must not ignore the impact caused due to the arbitral process, which is employed to resolve these disputes. The very same method which attempts to address environmental concerns is contributing to the deterioration of the environment.

The general belief is that “paper” is part and parcel of a lawyers’ journey right from the time of law school due to the usage of textbooks, exam papers, and other related material. This damage only worsens with time after the start of full-fledged legal practice as fully qualified lawyers. Humongous amounts of paper are used for legal documentation, including pleading, petitions, affidavits, and other relevant documents from the beginning of the proceedings until the judgment is delivered, which at times runs into hundreds and thousands of pages.

The Steering Committee, backed by Dechert LLP, which comprises members from the arbitration community across the globe, conducted a study primarily based on reasonable assumptions to determine the impact of International Arbitration on the environment [2]. The study focused on a medium-sized international arbitration with an estimated US $30-50 million value. The Committee considered only documents printed and submitted to the Arbitral Tribunal, excluding any other printed material like drafts generated otherwise.

The results were highly alarming as the total carbon footprint amounted to 418,531.02 kg CO₂e. This is believed to be equivalent to four times the number of trees in Hyde Park in London or all the trees in Central Park in New York and would require almost 20,000 trees to remedy this impact caused by one medium-sized International Arbitration. Thus, if one International Arbitration is capable of having such a catastrophic impact on the environment, the effect of multiple International Arbitrations that take place daily would be terrifying [3].

The Green Pledge

A well-known International Arbitrator and the face behind the Green Pledge, Lucy Greenwood, revolutionized the Arbitration Community by creating an epoch of sustainability in arbitration [4]. Recognizing and lauding her efforts, the Global Arbitration Review (GAR) bestowed on her the GAR Award for Best Development in 2020. Another massive reward for Ms. Greenwood would be seeing her idea materialize, as today, the Green Pledge has been signed by numerous arbitration practitioners, institutions, and law firms across the world and continues to receive global appreciation.

The Green Pledge provides basic guidelines on the conduct of arbitration proceedings in an environmentally sustainable manner. These guidelines are easy to adopt and suggest several simple alterations like the e-filing of documents. There is a specific emphasis on virtual instead of physical hearings and meetings through videoconferencing, which has become a widespread way of conducting hearings due to the COVID-19 pandemic. The idea is to reduce carbon emissions through vehicular pollution and air travel, especially in International Arbitration. The guidelines question the necessity of traveling unless it is inevitable.

Another crucial aspect is the switch towards electronic documentation and correspondence through e-mails instead of traditional printed documents. This is advantageous in two ways: firstly, it avoids the use of paper, and secondly, it reduces the carbon footprint by preventing correspondence through couriers and postal mail services, which again requires vehicular or air transport. However, with regards to e-mails, caution must be exercised as carbon footprint is still generated. E-mails can be substituted by uploading documents through links, thereby reducing the carbon footprint. It is also noteworthy to mention that minimal efforts like using recyclable coffee cups or cutlery, chlorine-free paper, or energy-efficient bulbs in the office can go a long way.

By adopting the nine guidelines, one essentially pledges to:

• “Creating a workspace with a reduced environmental footprint, including by looking for opportunities to reduce energy consumption and waste;
• Corresponding electronically, unless hard copy correspondence is expressly needed in the circumstances, while also being mindful that e-mail has a carbon footprint;
• Encouraging the use of videoconferencing facilities as an alternative to travel (including for the purposes of conducting fact-finding or interviews with witnesses);
• Avoiding printing, requesting the use of electronic rather than hard copies of documents and promoting the use of electronic bundles at hearings;
• Using, where possible, suppliers and service providers who are committed to reducing their environmental footprint (including for the purposes of arranging an arbitration hearing);
• Considering and/or suggesting, where appropriate, that witnesses or experts give evidence through video conferencing facilities, rather than attend hearings in person;
• Avoiding unnecessary travel and using video conferencing facilities as an alternative;
• Considering and questioning the need to fly at all times and offsetting carbon emissions for any arbitration-related travel.” [5]

The Green Protocol

While the Guidelines in the Green Pledge give a fundamental overview of adopting sustainable measures, forming the cardinal principles, the Green Protocol provides a detailed insight of the methods to be implemented by Parties, arbitrators, institutions, and law firms throughout the arbitral process. On Earth Day, April 22, 2021, the Green Protocol was published by the Working Committee formed in 2020 [6]. The Working Committee comprises arbitration practitioners from various international law firms and arbitral institutions like the New York International Arbitration Centre (NYIAC), Hong Kong International Arbitration Centre (HKIAC), and the International Chamber of Commerce (ICC) UK Energy & Environment Committee.

The Protocol sets out the following Green Protocols:

• “The Green Protocol for Arbitral Proceedings and the Model Green Procedural Order;
• The Green Protocol for Law Firms, Chambers and Legal Service Providers Working in Arbitration;
• The Green Protocol for Arbitrators;
• The Green Protocol for Arbitral Institutions;
• The Green Protocol for Arbitration Conferences;
• The Green Protocol for Arbitration Hearing Venues.”

The Protocol begins with the “Framework,” which serves as a guide while adopting the Protocols and is therefore recommended to be read along with each Protocol.

Firstly, the Framework helps select the relevant Protocol, depending on the user being an arbitrator, law firm, institution, or even venues conducting conferences and hearings. This ensures that no Party involved in the arbitration struggles in their attempt to make the process as sustainable as possible.

Secondly, the Framework lists specific sustainable measures that mainly focus on the following three principles – clean energy, the avoidance or reduction of travel, and the avoidance or reduction of waste. These are the same three principle areas which the Campaign for Greener Arbitration emphasizes.

After the sustainable measures are identified, thirdly, the next step is to choose the best suitable measures for a particular arbitration. The primary reason being the varied nature of every arbitration concerning several factors like party autonomy, jurisdiction, issue in dispute, geographical location and the available infrastructure, administration costs, value of the arbitration, confidentiality, cybersecurity, and other related factors. In no circumstances should there be any impact on the arbitral process or any compromise regarding diversity in appointments of counsel and arbitrators. Otherwise, it will be simply unreasonable to allow the process of arbitration to be frustrated while trying to make it environment friendly, as the goal will always be the resolution of disputes by the passing of an enforceable award. Thus, one needs to strike a balance with regards to all these relevant factors on the one hand and to achieve sustainability on the other.

Positive Steps Undertaken Towards Ensuring Sustainability in Arbitration

The Green Pledge has been signed not only by individual signatories but also by organizations globally. Many law firms are committed to reducing their carbon footprint as a part of endeavors towards Corporate Social Responsibility (CSR). It is reassuring to know that law firms are competing not just on a commercial platform regarding growing their business in the legal market internationally, but the competitive spirit also extends to the sustainability of the environment.

To encourage and reward these efforts, the Global Arbitration Review (GAR) introduced the Campaign for Greener Arbitration Award for Sustainable Behavior in 2021 [7]. Freshfields, being one of the first signatories of The Green Pledge, with a humongous practice in International Arbitration, has been the awardee in the maiden year. Freshfields has performed way better than the targets which it set for itself in 2016 and has aimed higher targets, especially by focusing on using 100% renewable electricity by 2030 in all their offices [8]. Herbert Smith Freehills, another well-renowned name in International Arbitration, has shown substantial commitment towards reducing their carbon emissions [9]. Herbert Smith’s London, Belfast, Brussels, and Madrid offices make 100% use of renewable energy, and globally, the firm has managed to cut down up to 80% single-use plastic [10].

Arbitral institutions have also made a remarkable contribution in mitigating and addressing environmental issues through institutional rules and guidelines. While some of the procedures are mandatory, some give the Parties freedom to adopt sustainable measures while respecting party autonomy. Article 26 of the ICC Rules, 2021 provides the Tribunal with the power to conduct remote hearings through videoconferencing, telephone, or other appropriate means of communication after consulting the Parties [11]. Article 4 of the LCIA Rules, 2020 has mandated electronic communications to submit arbitration requests instead of written communication. While explicitly stating that to make itself more environmentally compliant, the International Centre for Settlement of Investment Disputes (ICSID) has made electronic filings its default procedure [12].

From a domestic standpoint, the Supreme Court of India, in its Circular dated March 5, 2020, has notified that superior quality A4 size paper having not less than 75 GSM with printing on both sides of the paper should be used for filing pleading, petitions, affidavits, and other documents. The Registry has also been directed to substitute the practice of communication through hard copies to Advocates-on-Record by e-mails and SMS alerts [13]. This decision is taken keeping in mind the hardships and confusion faced by lawyers and Parties, and mainly to reduce paper consumption. Following the footsteps of the Apex Court, several High Courts across India have adopted similar practices, [14] with the Bombay High Court being the recent one issuing a Circular dated July 14, 2021. Thus, we comprehend that various Indian Courts and Tribunals have invested commendable efforts towards securing the environment.

Issues Faced due to Adoption of Sustainable Methods in Arbitration

Sustainable measures play a significant role in addressing the environmental and climate change concerns associated with the arbitral process, all of them based on modern technology. While there has been a considerable shift towards virtual hearings, electronic documentation, and renewable energy sources, one cannot simply turn a blind eye to the difficulties faced in implementing these measures.

Online hearings demand better security and confidentiality than traditional physical hearings due to threats of cyber attacks. This is the reason why the issue of cybersecurity has received much attention in the arbitration community lately. To redress this conundrum, the ICC Guidance Note, The HKIAC Guidelines, and the Seoul Protocol provide guidance regarding encryption, recordings, video conferencing software, backup systems for hearings, and video conferencing quality and standards [15].

Availability of high-grade Information and Communications Technology (ICT) is a prerequisite to ensure that the arbitration progresses smoothly. Lack of faster and secure internet facilities, high-quality screens, and audio quality are responsible for causing disruptions in the arbitral proceedings. Further, energy-efficient infrastructure at offices and venues of hearings may lead to added expenses. While the costs are curtailed on the one hand due to reduced flight travel and hotel bookings, on the other hand, they may go on the rise by investing in the latest ICT. However, this investment would be worthwhile only if the uses are long-term and, most importantly, it must be proportionate with the value of the arbitration. In other words, the cost-effective principle of arbitration should never be undermined.

While we go virtual with arbitral proceedings, it is crucial for arbitration practitioners to adapt to these technological reforms. Adequate training with regards to the use of online platforms and IT support is equally important. Although it may not be possible for everyone to become tech-savvy, efforts should be focused on equipping oneself with basic knowledge of online systems and software used as this will facilitate better conduct of the hearings and conferences without any major hassles. The American Bar Association (ABA) has published its Online Practice Tools, which provides guidance regarding the use of virtual platforms and technology and focuses on the basics of online mediation and online dispute resolution [16]. Further, Financial Industry Regulatory Authority (FINRA), which provides a forum to resolve disputes among investors, securities firms, and individual brokers in the United States, has also launched various training programs like setting up a friendly and appropriate environment for virtual hearings, Zoom (virtual hearing platform) basics, and host responsibilities for arbitrators [17].

Conclusion

As the world today struggles to end the climate change crisis and other environmental issues, it is heartening to know that the arbitration community contributes its significant bit. As lawyers, we bear a higher onus on ourselves towards the environment. Since some of us advocate environmental laws and advise clients on environmental regulations and compliances, we have an inherent duty to self-regulate in the first place. The fact that the Arbitration Community has realized the impact on the environment because of the Arbitrations, is itself a significant achievement. However, no transformation is straightforward and may not receive the necessary support initially, as there may be a reluctance amongst Parties and arbitration practitioners to adapt to these alterations. Although sustainability in International Arbitration is a relatively new trend and has received a boost due to the COVID-19 pandemic, there is ample scope for development. The combined efforts and cooperation at the individual and collective level of the arbitration practitioners, Parties, third Party funders involved in the arbitration, arbitral institutions, and law firms globally can assist in making International Arbitration genuinely sustainable. Thus, in the future, one can only be hopeful that the idea of environmental sustainability becomes one of the core assets of arbitration.

About the Author

Ms. Saudamini Amare is an LL.M. Graduate (Comparative and International Dispute Resolution) from the Queen Mary University of London.

Editorial Team

Preferred Method of Citation

Saudamini Amare, “The Switch to Sustainable and Greener Arbitration: How the “New Normal” Revolutionizes Procedural Aspects in Arbitration” (IJPIEL, 27 July, 2021).

<https://ijpiel.com/index.php/2021/07/27/the-switch-to-sustainable-and-greener-arbitration-how-the-new-normal-revolutionizes-procedural-aspects-in-arbitration/>

Endnotes

[1] Lucy Greenwood, The Canary Is Dead: Arbitration and Climate Change, 38(3) J. OF INT’L ARBITRATION 309, 309-326 (2021).

[2] Lucy Greenwood & Kabir A.N. Duggal, The Green Pledge: No Talk, More Action, KLUWER ARBITRATION BLOG (Jul. 20, 2021), http://arbitrationblog.kluwerarbitration.com/2020/03/20/the-green-pledge-no-talk-more-action/.

[3] Id.

[4] The Green Pledge, CAMPAIGN FOR GREENER ARBITRATIONS, https://www.greenerarbitrations.com/greenpledge.

[5] Id.

[6] The Green Protocols, CAMPAIGN FOR GREENER ARBITRATIONS, https://www.greenerarbitrations.com/green-protocols.

[7] GAR Awards 2021 – the Green award, GLOBAL ARBITRATION REVIEW (May 11, 2021), https://globalarbitrationreview.com/gar-awards-2021-the-green-award.

[8] Environment: Protecting what’s precious, FRESHFIELDS, https://www.freshfields.us/about-us/responsible-business/environment/?_ga=2.242839435.804638023.1626971175-526081785.1625912083.

[9] Sustainability, HERBERT SMITH FREEHILLS, https://www.herbertsmithfreehills.com/pro-bono-and-citizenship/sustainability.

[10] Id.

[11] 2021 ICC Arbitration Rules, INTERNATIONAL CHAMBER OF COMMERCE, https://iccwbo.org/dispute-resolution-services/arbitration/rules-of-arbitration/.

[12] Maria Fanou& Norah Gallagher, Is International Arbitration Going Green? Findings from the 2021 Queen Mary University|W&C International Arbitration Survey, KLUWER ARBITRATION BLOG (Jun. 25, 2021), http://arbitrationblog.kluwerarbitration.com/2021/06/25/is-international-arbitration-going-green-findings-from-the-2021-queen-mary-universitywc-international-arbitration-survey/.

[13] SUPREME COURT OF INDIA, https://main.sci.gov.in/pdf/Circular_filing.pdf.

[14] DELHI HIGH COURT, https://delhihighcourt.nic.in/pdf/PRACTICE_DIRECTIONS.pdf.

[15] Sang Jin Lee & Michael van Muelken, Virtual Hearing Guidelines: A Comparative Analysis and Direction for the Future, KLUWER ARBITRATION BLOG (Jul. 19, 2021), http://arbitrationblog.kluwerarbitration.com/2021/06/23/virtual-hearing-guidelines-a-comparative-analysis-and-direction-for-the-future/.

[16] Online Practice Tools, AMERICAN BAR ASSOCIATION, https://www.americanbar.org/groups/dispute_resolution/resources/resources-for-mediating-online/.

[17] Arbitrator Training Videos for Virtual Hearings, FINRA https://www.finra.org/arbitration-mediation/case-guidance-resources/virtual-hearings-videos.