Arbitration and Carbon Footprint: Moving Towards the Greener Side

INTRODUCTION

In the past decade, arbitration has gained preference over traditional litigation, especially in the arena of commercial dispute resolution, for all the good reasons- it provides speedy redressal, is cost effective, prioritizes party autonomy and decreases case load of the judiciary. When seen in this light, arbitration appears to be the Champion, the Hero, of dispute resolution. However, nothing comes without a cost, and in this case, the cost is incurred by the world at large in terms of carbon footprint.

NEED FOR GREENER ARBITRATION

As per recent estimates, for offsetting the carbon footprint of a mid-sized international arbitration seated in London, 20,000 trees must be planted, which, to put things into perspective, is four times the total number of trees in Hyde Park! The major activities which contribute towards the carbon footprint generated in the process of arbitration are air travels by clients, counsels and witnesses; the paper used in each stage of the arbitral proceeding; and energy consumed by the arbitrators, counsels and clients.

CAMPAIGN FOR GREENER ARBITRATION: THE GREEN PLEDGE

The Campaign is essentially an initiative by a group of arbitrators to reduce and address the carbon footprint caused due to international arbitration and mediation proceedings. The Campaign started as the “Green Pledge” with the aim to reduce the carbon footprint of the arbitral community. The Pledge is based on the individual and collective commitment of the arbitrators, clients and counsels of a proceeding to reduce the environmental impact of arbitration. For achieving its objectives, the Pledge lists down nine-micro level changes. It encourages the stakeholders to make are reduce unnecessary travelling, use of electronic means instead of indulging in paperwork, videoconferencing with witnesses among other steps that help the proceedings to be greener and more mindful of the effect it has on the environment.

Additionally, the Steering Committee of the Campaign has noted through an environment impact assessment of the arbitration proceedings that the mere reduction in flight travel undertaken for each stage of every arbitration can lead to not only the reduction of emissions by a quarter but also in the costs by half. The Committee clearly noted that the two major changes required to make in the current way of proceedings is the reduction in amount of travel and eliminating the high level of paper work which can easily be replaced by electronic media.

SILVER LINING OF THE PANDEMIC

The Covid-19 pandemic as made it clear that arbitration can be conducted effectively and efficiently without most of the performing most of the carbon footprint generating activities. The pandemic has revolutionized every arena of the legal industry, and arbitration is no exception. The silver lining of the Covid-19 pandemic is essentially that it has necessitated mankind to distinguish necessities from luxury. It has forced innovation and problem-solving. A year ago, in most of the countries, there sure was chatter about digitizing the legal and law enforcement processes but little to no progress was made in that regard. But today, virtual proceedings have started becoming a norm. This shift is evident in the recent rules framed by international arbitral bodies such as ICC and LCIA.

The ICC Arbitration Rules, 2021

The International Chamber of Commerce (ICC) proposed new rules in December, 2020, to codify certain arbitral practices, which were especially necessitated by the Covid-19 pandemic. These Rules came into force on 1st January, 2021. Among other substantive and procedural changes, the ICC formally recognized the need for greener arbitration. The newly amended Article 26.1 now empowers the arbitral tribunal to decide, after due consultation with the parties and taking into consideration the facts and circumstances of each case, the modus operandi of a hearing. It can decide to conduct the hearing through video-conferencing, telephone or other suitable medium of communication. Thus, physical hearings are not the norm anymore. This, in turn, means that a major chunk of the carbon footprint generated in the arbitral process by air travel, will be reduced to a large extent.

Further, as per the amended Article 3.1, there is no obligation on the parties to supply sufficient copies of pleading, annexed documents and other written communications to each party, arbitrator and the Secretariat. Now, the parties are only under an obligation to send the aforesaid documents to the mentioned stakeholders. The rules do not specify the format of these documents or the number of copies to be sent. Additionally, Article 4.4 now does not require the claimant to submit hard copies of documents mentioned in Article 3.1 together with its Request for Arbitration. This will reduce the paper usage in the arbitration process drastically as the parties are no longer under a presumed obligation to send hard copies of the relevant documents.

Furthermore, earlier in 2020, owing to the pandemic, the ICC made electronic filing mandatory for new arbitration and other ADR requests. It also strongly advised to channel all communications with the Secretariat via e-mail.

LCIA Arbitration Rules, 2020

The amended Article 4.1 of the London Court of International Arbitration (LCIA) Rules, 2020, makes electronic filing of arbitration requests, and the response thereto, a mandate. Article 4.2 provides that all communications pertaining to the arbitral proceedings have to be communicated electronically. For submitting the request or response or communicating in any other form prior written approval from the Registrar, LCIA Court, is necessary. Further, Article 14.6 empowers the Arbitral Tribunal to “employ technology to enhance the efficiency and expeditious conduct of the arbitration (including any hearing)”. Further, Article 16.3 also makes it abundantly clear that in-person hearings are not compulsory by using the phrase “if any hearing is to be held in person”.

Indian Council of Arbitration

The Indian Council of Arbitration (ICA) also published a notice whereby it mandated the use of information technology and video conferencing to conduct arbitration proceeding during the subsistence of the Covid-19 pandemic. It also necessitated all the communication and filing to be done via email during the lockdown period. However, the parties were also requested to send hardcopies of the documents after the lockdown ended. The ICA, hence, did take a step in the right direction, albeit temporarily. But considering the shift of other international organizations to electronic means, it is only a matter of time when ICA, too, implements rules similar to those of the ICC and the LCIA.

CONCLUSION

The initial days of the Pandemic, conspiracy theorists, environmentalists and scientists all believed that the Pandemic was a wake-up call for us to realize our exploitation of the Planet. It is without doubt, that in the initial days of the Pandemic, everything had come to a brief halt before we as a civilization came up with alternatives and the innovative use of technology, now collectively being referred to as the “new normal” which includes less travel, use of electronic medium and less social gatherings. These new conventions also find their way into the Arbitration proceedings across the world, leading to not only a forced compliance of the Green Pledge but also helping us realize that the process of Arbitration and Mediation is an extremely flexible process and can bear and adapt to slight changes that could only add on to the efficiency of the whole process. The time spent on travelling and sending hard copies to stakeholders is reduced substantially by the use of electronic means which has substantially reduced the carbon footprint.

Further, considering the Indian jurisprudence and the importance the Indian Judiciary has given to the preservation of the environment as well as the constant attempt of the Judiciary to meet up to the standards set for arbitration by international organizations or institutions, it is not far away when we try and adopt the Green Pledge in our domestic legal system. The pandemic has laid down a path and an effective system for us to go greener and it is upon us as a legal community to follow it.