In its landmark decision under docket no. 18 ONc 3/20s[1], published on 28 September 2020, the Austrian Supreme Court (Oberster Gerichtshof “OGH“) established two important principles for arbitral tribunals seated in Austria:
- The conduct of hearings via videoconference – despite a party’s express objection – lies within the arbitral tribunal’s discretion and does not meet the high threshold of arbitrator challenges. (RS0133230)[2]
- A negative, non-verbal reaction (here: “eye rolling”) of an arbitrator to a verbal pleading of a party does not justify the conclusion that the arbitrator is biased. (RS0133231)[3]
Factual background
The arbitration proceedings at issue had been pending before the Vienna International Arbitral Centre (“VIAC“) since August 2017. The arbitral tribunal consisted of three arbitrators. On 15 January 2020, following a request by the claimants, the arbitral tribunal postponed a hearing originally scheduled for March to 15 April 2020, with a starting time at 10:00 a.m. Vienna time. On 19 March 2020, a conference call was held to discuss the impact of COVID-19-related travel restrictions on an in-person hearing in April.
In a submission dated 2 April 2020, the respondents argued against a hearing via video-conference and requested an in-person hearing at a later date. However, on 8 April 2020, i.e. seven days before the hearing, the arbitral tribunal dismissed the request and ordered that the hearing would be held via video-conference, but changed the starting time to 3:00 p.m. Vienna time. This change was necessary, because the respondents’ counsel and one of their witnesses were seated in Los Angeles, California. Thus, the virtual hearing started at 3:00 p.m. in Vienna and at 6:00 a.m. in Los Angeles. Thereby, the arbitral tribunal tried to choose a suitable time for all participants. For its decision, the arbitral tribunal relied on the specified procedural rules, which expressly provided for the examination of witnesses by electronic means of communication and on the discretion given by the Vienna Rules.
After the hearing was held via video-conference, the respondents filed a challenge against the entire arbitral tribunal and alternatively against one of the arbitrators to the VIAC Board. The respondents raised the following allegations:
- Unfair conduct of proceedings, violation of due process and unequal treatment of the parties in connection with the virtual hearing on 15 April 2020, the dismissal of the respondents’ request for postponement, which was served to the parties only three business days before the hearing and the early starting time for respondents’ counsel;
- Conduct of the hearing by means of a video-conference despite the respondents’ express rejection and disregarding appropriate measures against influencing witnesses.
- Facial expressions of an arbitrator during the oral pleading of respondents’ counsel at the virtual hearing (“eye rolling”).
The VIAC dismissed the challenge. In the further course, the respondents filed the same challenge of the entire arbitral tribunal and alternatively of one arbitrator with the OGH pursuant to Section 589 para 3 of the Austrian Code of Civil Procedure. The respondents tried to remove the entire arbitral tribunal, alternatively one arbitrator and repeated the following arguments:
- The early starting time constituted a major disadvantage to respondents’ counsel seated in Los Angeles. Additionally, the arbitral tribunal dismissed the respondents’ request for postponement just before the Easter weekend and did not give the respondents sufficient time to prepare.
- The conduct of the hearing via video-conference, particularly against the respondents’ objection, did not comply with the principles of a fair trial and therefore violated Art 6 ECHR. Moreover, during a virtual hearing, it can neither be monitored which documents witnesses will use, nor whether they will be influenced by third parties, e.g. by other people in the room or via text messages.
- “Eye-rolling” by one arbitrator during the pleadings of the respondents was not only inappropriate, but actually revealed the bias of said arbitrator. According to the respondents, such behaviour constituted a violation of the principle of a fair trial.
Decision
The OGH rejected the respondents’ challenge on the following grounds:
The arbitral tribunal enjoys broad discretionary power how to manage arbitral proceedings
Referring to the first argument, the OGH noted that parties are to be treated fairly, whereby formal equality must be ensured. However, fair and equal treatment, according to the OGH, does not mean that both parties were actually equally involved in the proceedings, but only that the parties had a fair opportunity to do so. According to Article 28 Vienna Rules, the arbitral tribunal may conduct proceedings at its own discretion. The OGH further stated that the parties had known about the hearing date already for months, i.e. since 15 January 2020 and had sufficient time to prepare.
Moreover, the OGH stressed that a party cannot assume that a request for postponement will be granted. Rather, it must take into account that the hearing will take place as planned. An arbitral tribunal’s refusal to postpone a hearing does not violate the principle of a fair trial in general, but has to be assessed for each case individually. In the case at hand, the respondents had no sufficient arguments for a postponement. The OGH also declared that the early starting time for respondents’ counsel did not violate the respondents’ due process rights. Considering the different time zones, it is logical that the hearing must take place at an unusual time either for the participants based in the USA or the ones from Europe. Considering that the parties agreed on the VIAC as the arbitral institution, the OGH found good reasons for the arbitral tribunal’s decision to start the hearing at 3 p.m. in Austria. By choosing the VIAC, the respondents also indirectly agreed on potential disadvantages based on the geographical distance. The OGH also mentioned that respondents’ counsel would have suffered a much greater interference to its daily routine if it actually had to travel to Vienna.
The arbitral tribunal enjoys broad discretionary power how to conduct hearings and how to monitor witnesses
With regard to the second argument, the OGH noted that video-conferences are an accepted and widespread tool to conduct both arbitral and state proceedings, particularly during a pandemic. Thus, holding a virtual hearing via video-conference against the objection of one party does not violate Art 6 ECHR. According to the OGH, Art 6 ECHR also includes the right to justice, which is closely linked to the right to effective legal protection. It must therefore be ensured that parties can effectively enforce their rights. Consequently, the OGH concluded that a virtual hearing held via video-conference could save costs and time, thus promoting law enforcement while at the same time ensuring a fair trial. Particularly in the event of an impending standstill of the administration of justice in the course of a pandemic, video-conference technology offers a possibility, covered by the rule of law, to harmoniously combine the parties’ right to effective law enforcement and the right to be heard.
Concerning the potential influence of witnesses, the OGH further stated that such an abuse cannot be completely eliminated, even for in-person hearings: On the contrary, virtual hearings via video-conference actually offer various monitoring options. For example, witnesses can be observed from close up and the hearing can be recorded. The OGH also suggested that if there is a risk of chat messages on the witness’ screen, the witness can be asked to look directly into the camera. The witness could also use the camera to show the entire room and / or keep their hands visible at all times in order to rule out interferences by third parties. In conclusion, the OGH confirmed that the conduct of hearings via video-conference, even against one party’s objection, is not sufficient to challenge an arbitrator, let alone the full arbitral tribunal. In addition, it does not violate the principles of a fair trial.
(Negative) non-verbal expressions do not suffice to challenge an arbitrator
With regard to the third argument, the OGH clarified that “eye rolling” – even if interpreted it as a negative reaction to an oral pleading – does not amount to a conflict of interest of an arbitrator.
Conclusion
The OGH held that there were no grounds for the challenge of an arbitrator or the full arbitral tribunal. Particularly, an arbitral tribunal’s decision to conduct a hearing via video-conference against one party’s objection and potential negative consequences for the participants due to different time zones do not violate Art 6 ECHR. The OGH – pursuant to its jurisprudence – also made clear that the combination of multiple reasons could not justify a successful challenge of an arbitrator, if each individual reason on its own is not sufficient for a challenge.
[1]https://www.ris.bka.gv.at/Dokumente/Justiz/JJT_20200723_OGH0002_018ONC00003_20S0000_000/JJT_20200723_OGH0002_018ONC00003_20S0000_000.pdf.
[2]https://www.ris.bka.gv.at/Dokumente/Justiz/JJR_20200723_OGH0002_018ONC00003_20S0000_001/JJR_20200723_OGH0002_018ONC00003_20S0000_001.pdf.
[3]https://www.ris.bka.gv.at/Dokumente/Justiz/JJR_20200723_OGH0002_018ONC00003_20S0000_002/JJR_20200723_OGH0002_018ONC00003_20S0000_002.pdf.
