The IBA Rules on the Taking of Evidence in International Arbitration : A Guide 9781139613064, 9781107032170

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T h e I B A Ru l e s o n t h e Ta k i n g o f E v i d e n c e i n I n t e r n ati o n a l A rbitrati o n

The IBA Rules are the most common feature of international arbitration around the world, yet so far little work has been done exploring the Rules themselves. In this practical guide, Peter Ashford combines a detailed discussion of the Rules and the commentary from the Drafting Committee with a tabular view of the interaction between the Rules and those of the main arbitration institutions. Written by a respected and experi­ enced  arbitration practitioner, the guide conveniently brings into one place materials that will assist in the practical applica­ tion of the IBA Rules. This contribution to an under-covered area of international arbitration provides an invaluable hand­ book for arbitration practitioners in law firms, chambers, and general or in-house counsel in large corporations. Peter Ashford is an international arbitration partner at Fox Williams LLP.

T h e I B A Ru l e s o n t h e Ta k i n g o f E v i d e n c e i n I n t e r n ati o n a l A rbitrati o n A Guide Peter Ashford

CAMBR ID G E UNIVERS IT Y PRESS Cambridge, New York, Melbourne, Madrid, Cape Town, Singapore, São Paulo, Delhi, Mexico City Cambridge University Press The Edinburgh Building, Cambridge CB2 8RU, UK Published in the United States of America by Cambridge University Press, New York www.cambridge.org Information on this title: www.cambridge.org/9781107032170 © Peter Ashford 2013 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2013 Printed and bound in the United Kingdom by the MPG Books Group A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Ashford, Peter. The IBA Rules on the Taking of Evidence in International Arbitration : a guide / Peter Ashford. pages  cm. Includes bibliographical references and index. IS BN 978-1-107-03217-0 (hardback) 1.  International Bar Association. IBA Rules on the Taking of Evidence in International Arbitration.  2.  International commercial arbitration.  3. Evidence (Law)  I.  Title. K2400.A984 2013 347′.09–dc23 2012029775 IS BN 978-1-107-03217-0 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of urls for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

Contents

Preface Table of cases

page vii ix

About the Arbitration Committee

1

Foreword

2

Commentary on the revised text of the 2010 IBA Rules

4

Preamble

8

Definitions

24

Article 1: Scope of Application

27

Article 2: Consultation on Evidentiary Issues

31

Article 3: Documents

41

Article 4:  Witnesses of Fact

89

Article 5:  Party-Appointed Experts

105

Article 6:  Tribunal-Appointed Experts

121

Article 7:  Inspection

128

Article 8: Evidentiary Hearing

130

Article 9:  Admissibility and Assessment of Evidence

141

Appendix: Interaction of IBA Rules with Major Institutional Rules Index

168 177

v

Preface

The IBA Rules on the Taking of Evidence in International Arbitration (referred to in this book simply as the Rules) are one of the few rocks on the tumultuous seas that are international arbitration. They are near universally adopted by arbitral tribunals either to guide their thinking or more formally to govern the process. Where institutional rules have gaps on procedure they are filled by the Rules. First introduced in 1983 as the IBA Supplementary Rules Governing the Presentation and Reception of Evidence in International Commercial Arbitration; amended in 1999 and re-named the IBA Rules on the Taking of Evidence in International Commercial Arbitration they were re-named IBA Rules on the Taking of Evidence in International Arbitration (dropping the word ‘Commercial’ to reflect the increasing use in investment treaty arbitral references) in 2010. They manage to steer a path between common and civil law standards and expectations. Some may criticise them for not going far enough but it is, frankly, an impossible task to get global accept­ ance of a single standard and, even were it possible, it would remove the flexibility for parties to craft a procedure that served the interests of the parties and the particular dispute that they have. The Guide is written unashamedly from an English perspective as those are the laws that I have been trained in and use on a regular basis. Foreign (to England) sources are incorporated where possible. The scheme of the book is, broadly, to reproduce the Rules Article by Article (printed in bold font), the relevant commentary to the Article (printed in italics) and then a commentary comprising par­ ticular words and phrases and a discussion. Footnotes to the Commentaries retain the original numbering as they had in the original continuous document. vii

viii

Preface

My thanks go to my partners and colleagues for their indulgence in affording me the time to write this book and for their help and support. My thanks, in particular, go to my secretary, Susan Crowe, for making sense of my scribblings. My thanks also to Ronnie King at Ashurst, Iain Maxwell at Herbert Smith and Andrew Foyle of One Essex Court for taking the time to discuss a few of the more signifi­ cant Rule changes with me. All errors and views expressed, however, remain mine alone. The IBA Rules on the Taking of Evidence in International Arbitration (2010) and the IBA Committee Commentary are repro­ duced by kind permission of the International Bar Association. I have stated the law to be as I understand it to be as at 31 December 2011. Subsequent changes have been introduced where possible. Finally, the task of writing a book is impossible without the love and support of those closest to you. No public tribute could do jus­ tice to that. This book is accordingly dedicated to my wife, Sue and our (now adult) children Amy, Hannah and Kate.

Table of cases

Aita v. Ojjeh Cour d’appel, Paris, 18 February 1986, 1986 REV. ARB. 583 87 Akzo Nobel [2008] 4 C.M.L.R. 3 [2010] 5 C.M.L.R. 19 148, 155 Alfred Crompton Amusement Machines v. Customs and Excise [1972] 2 QB 102 154 Ali Shipping Corp v. Shipyard Trogir [1999] 1 WLR 314 85 Associated Electric & Gas Insurance Services v. European Reinsurance Company of Zurich [2003] 1 WLR 1041 85 Baker v. Campbell (1983) 153 CLR 52 151 Balabel v. Air India [1988] Ch 317 150, 154 Berkley Community Villages v. Pullen [2007] EWHC 1130 (Ch) 23 Bulgarian Foreign Trade Bank v. A.I. Trade Finance Swedish Supreme Court, 27 October 2000, Case No T 1881/99 84 Bullis v. Nichols, 2005 WL 1838634 (W.D. Wash. Aug. 1, 2005) 65 Bunbury v. Bunbury (1839) 2 Beav 173 157 Byers v. Illinois State Police 53 Fed. R. Serve. 3d 740 (N. D. Ill. 2002) 63 Campagnie Honeywell Bull SA v. Computación Bull de Venezuela Cour d’Appel (Paris) 21 June 1990, 1991 Rev. Arb. 96, 100 77 Caratube International Oil Co. Republic of Kazakhstan 78 Carter v. Boehm (1766) 3 Burr 1905 22 Central Estates (Belgravia) Ltd v. Woolgar [1972] 1 Q.B.48 23 Commonwealth of Australia v. Cockatoo Dockyard Pty Ltd, [1995] 36 NSWLR 662 86 ix

x

Table of cases

Compagnie Financière du Pacifique v. Peruvian Guano Co (1882) 11 QBD 55 71 Consolidated Aluminum Corp v. Alcoa Inc 2006 WL 2583308 73 Dashwood v. Magniac [1891] 3 Ch 306 111 Department of Economic Policy and Development of the City of Moscow v. Bankers Trust [2004] 4 All ER 746 86 Digicel v. Cable & Wireless [2008] EWHC 2522 (Ch) 63, 67 Dolling Baker v. Merrett [1990] 1 WLR 1205 84 Dugdale v. Kraft Foods [1976] 1 WLR 1288 110 Esso Australia Resources v. Plowman [1995] 183 CLR 10 83, 86 Field v. Leeds City Council (2000) 32 HLR 619 114 Flexsys Americas LP v. Kumho Tire USA Inc, 2006 WL 3526794 (N.D. Ohio Dec. 6, 2006). 67 Fox v. Wellfair [1981] 2 Lloyd’s Rep 514 110 Glidepath BV v. John Thompson, [2005] 2 Lloyd’s Rep 549 85 Goodyear Tire & Rubber Co v. Chiles Power Supply Inc 332 F 3rd 976 159 Grant v. Southwestern and County Properties Ltd [1975] Ch 185 63 Greenough v. Gaskell (1833) 1 My & K 98 149, 152 Hassneh Insurance Co of Israel v. Mew [1993] 2 Lloyd’s Rep 243 85 In re Philip Servs. Corp Sec. Litigation, 2005 U.S. Dist LEXIS 22998 (S.D.N.Y. Oct. 7, 2005) 157 In re Rivastigmine Patent Litigation, 237 F.R.D. 69, 74 (S.D.N.Y. 2006) 157 Interfoto Picture Library v. Stileeto Visual Programmes [1989] 1 QB 433 22 International Business Machines and others v. Phoenix International Computers Limited [1995] FSR 184 157 Johnstone v. Cheape (1817) 5 Dow. 247 110 Jones v. Smith [1999] 1 SCR 455 151 Kennedy v. Wallace [2004] FCAFC 337 153 Kirin – Amgen Inc v. Hoechst Marion Roussel Limited [2004] UKHL 46 111 Lawrence v. Campbell (1859) 4 Drew 485 157 Liverpool Roman Catholic Archdiocesan Trustees v. Goldberg Times 9 March 2001 113

Table of cases

xi

London & Leeds Estates v. Paribas (No 2) [1995] 1 EGLR 102 86 Marlton v. Tectronix UK Holdings [2003] EWHC 383 65 Mediterranean and Eastern Export v. Fortress Fabrics [1948] 2 All ER 186 110 Michael Wilson v. Emmott [2008] 1 Lloyd’s Rep 616 84, 85 New Victoria Hospital v. Ryan [1993] ICR 201 152 Paragon Finance v. Plender [2005] 1 WLR 3412 23 R (Factortame Limited) v. Transport Secretary (No 8) [2003] QB 381 113 R (on the application of Prudential Plc) v. Special Commissioner of Income Tax [2010] EWCA Civ 1094 153 Re Duncan [1968] P 306 156 Renfield Corp v. E Remy Martin, 98 F.R.D. 442, 444 (D. Del. 1982) 157 RFCC v. Morocco, ICSID Case No ARB/00/6 116 Russell v. Russell (1880) 14 Ch D 471 83 Rutherfords v. Blanks No 04–95–00770-CV, 1996 Tex. App. LEXIS 2578 (Texas Ct. App. June 28, 1996) 84 Science Research Council v. Nasse [1980] AC 1028 165 Sedgwick Group v. Johns-Manville Fibreboard Corp [1985] 1 WLR 331 68 Telekom Malaysia v. Ghana 116 The Eastern Saga [1984] 2 Lloyd’s Rep 373 83 Three Rivers District Council v. Governor and Company of the Bank of England (No 6) [2005] 1 AC 610 149, 150 Top Shop Estates v. C Danino [1985] 1 EGLR 9 111 Tournier v. National Provincial and Union Bank of England [1924] 1 KB 461 (CA) 85 United States v. Kovel 296 F.2d 918 (2nd Cir. 1961) 153 United States v. Panhandle Eastern Gen 118 F.R.D. 346 (D. Del. 1988) 83 United States v. United Shoe Mach. Corp, 89 F. Supp. 357, 359 (D. Mass. 1950) 150 Upjohn Co v. United States 449 U.S. 383 151 Urbaser v. Argentina 116

xii

Table of cases

Vance v. Air Marshall McCormack [2004] ACTSC 78, [2005] ACTCA 35 Wakefield v. Outhwaite [1990] 2 Lloyd’s Rep 157 Waugh v. British Railways Board [1980] AC 521 W.E. Aubuchon Co Inc v. Benefirst LLC, 245 F.R.D. 38 at 42 (D. Mass. 2007) Wilden Pump Engineering Co v. Fusfield [1985] FSR 159 Wilson v. Rastall (1792) 4 Durn & E 753 Zubulake v. UBS Warburg 217 F.R.D. 309 (S.D.N.Y. 2003), 229 F.R.D. 422 (S.D.N.Y. 2004), 220 F.R.D. 212 (S.D.N.Y. 2003) 216 F.R.D. 280 (S.D.N.Y. 2003)

152, 154 69 149 65 156 152

65, 67

About the Arbitration Committee

Established as the Committee in the International Bar Association’s Legal Practice Division, which focuses on the laws, practice and procedures relating to the arbitration of transnational disputes, the Arbitration Committee currently has over 2,300 members from over 90 countries, and membership is increasing steadily. Through its publications and conferences, the Committee seeks to share information about international arbitration, promote its use and improve its effectiveness. The Committee maintains standing subcommittees and, as appropriate, establishes task forces to address specific issues. At the time of issuance of these revised Rules, the Committee has four subcommittees, namely the Rules of Evidence Subcommittee, the Investment Treaty Arbitration Subcommittee, the Conflicts of Interest Subcommittee, and the Recognition and Enforcement of Arbitral Awards Subcommittee; and two task forces: the Task Force on Attorney Ethics in Arbitration and the Task Force on Arbitration Agreements.

Author’s note: taken from the original version of the Rules.

1

Foreword

These IBA Rules on the Taking of Evidence in International Arbitration (‘IBA Rules of Evidence’) are a revised version of the IBA Rules on the Taking of Evidence in International Commercial Arbitration, prepared by a Working Party of the Arbitration Committee whose members are listed on pages i and ii. The IBA issued these Rules as a resource to parties and to arbitrators to provide an efficient, economical and fair process for the taking of evidence in international arbitration. The Rules provide mechanisms for the presentation of documents, witnesses of fact and expert witnesses, inspections, as well as the conduct of evidentiary hearings. The Rules are designed to be used in conjunction with, and adopted together with, institutional, ad hoc or other rules or procedures governing international arbitrations. The IBA Rules of Evidence reflect procedures in use in many different legal systems, and they may be particularly useful when the parties come from different legal cultures. Since their issuance in 1999, the IBA Rules on the Taking of Evidence in International Commercial Arbitration have gained wide acceptance within the international arbitral community. In 2008, a review process was initiated at the insistence of Sally Harpole and Pierre Bienvenu, the then Co-Chairs of the Arbitration Committee. The revised version of the IBA Rules of Evidence was developed by the members of the IBA Rules of Evidence Review Subcommittee, assisted by members of the 1999 Working Party. These revised Rules replace the IBA Rules on the Taking of Evidence in International Commercial Arbitration, which themselves replaced the IBA Author’s note: taken from the original version of the Rules.

2

Foreword

3

Supplementary Rules Governing the Presentation and Reception of Evidence in International Commercial Arbitration, issued in 1983. If parties wish to adopt the IBA Rules of Evidence in their arbitration clause, it is recommended that they add the following language to the clause, selecting one of the alternatives therein provided: [In addition to the institutional, ad hoc or other rules chosen by the parties,] [t]he parties agree that the arbitration shall be conducted according to the IBA Rules of Evidence as current on the date of [this agreement/the commencement of the arbitration].

In addition, parties and Arbitral Tribunals may adopt the IBA Rules of Evidence, in whole or in part, at the commencement of the arbitration, or at any time thereafter. They may also vary them or use them as guidelines in developing their own procedures. The IBA Rules of Evidence were adopted by resolution of the IBA Council on 29 May 2010. The IBA Rules of Evidence are available in English, and translations in other languages are planned. Copies of the IBA Rules of Evidence may be ordered from the IBA, and the Rules are available to download at http://tinyurl.com/ iba-Arbitration-Guidelines. Guid o S Tawil Jud it h Gil l , Q C Co-Chairs, Arbitration Committee 29 May 2010

Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration 1999 IBA Working Party1 and 2010 IBA Rules of Evidence Review Subcommittee2 In every arbitration, a key issue the parties and their counsel – as well as the arbitral tribunal – must face is the determination of the procedures for that arbitration. The principal institutional and ad hoc rules provide the framework for the arbitration and add detailed This article is a revised and expanded version of the commentary to the previous text of the IBA Rules, “Commentary on the New IBA Rules of Evidence in International Commercial Arbitration”, published in 2 B.L.I., pp. 16–36 (2000). The IBA Rules on the Taking of Evidence in International Commercial Arbitration were drafted by a Working Party appointed by the Committee on Arbitration and ADR of the International Bar Association (Committee D). The Working Party was led by Giovanni Ughi of Italy, and its members were Hans Bagner, Sweden; John Beechey, England; Jacques Buhart, France; Peter Caldwell, Hong Kong; Bernardo M. Cremades, Spain; Otto De Witt Wijnen, The Netherlands; Emmanuel Gaillard, France; Paul A. Gelinas, France; Pierre A. Karrer, Switzerland; Wolfgang Kühn, Germany (former Chair of Committee D); Jan Paulsson, France; Hilmar Raeschke-Kessler, Germany; David W. Rivkin, United States (Chairman of Committee D); Hans van Houtte, Belgium; and Johnny Veeder, England. 2 On 29 May 2010, the IBA Council approved the revised version of the IBA Rules on the Taking of Evidence in International Arbitration. In 2008, the Arbitration Committee of the International Bar Association tasked the IBA Rules of Evidence Review Subcommittee with the review of the 1999 IBA Rules. The Subcommittee was led by Richard Kreindler of United States/Germany, and its members were David Arias, Spain; C. Mark Baker, United States; Pierre Bienvenu, Canada (former co-chair of the Arbitration Committee); Antonias Dimolitsa, Greece; Paul Friedland, United States; Nicolás Gamboa, Colombia; Judith Gill, Q.C., United Kingdom (co-chair of the Arbitration Committee); Peter Heckel, Germany; Stephen Jagusch, New Zealand; Xiang Ji, China; Kap-You (Kevin) Kim, Korea; Amy Cohen Kläsener, Review Subcommittee Secretary, United States/Germany; Toby T. Landau, Q.C., United Kingdom; Alexis Mourre, France; Hilmar Raeschke-Kessler, Germany; David W. Rivkin, (former chair of the Arbitration Committee and of the Legal Practice Division), United States; Georg von Segesser, Switzerland; Essam al Tamimi, United Arab Emirates; Guido S. Tawil, Argentina (co-chair of the Arbitration Committee); Hiroyuki Tezuka, Japan; Ariel Ye, China. 1

4

Revised text of the 2010 IBA Rules

5

provisions concerning matters such as initial statements of the case, appointment of arbitrators and challenges, and the nature of the award and costs – but they are purposely silent about how evidence should be gathered and presented in any arbitration pursuant to those rules. Quite properly, the principal institutional and ad hoc rules do not require that every arbitration be conducted in the same manner and so allow parties flexibility in devising the procedures best suited for each arbitration. Party autonomy and flexibility are among the significant advantages of international arbitration. However, in many cases this intentional gap in the rules can cause problems if the parties have conflicting views as to how the case should proceed. This is particularly so when the parties come from different legal backgrounds and cultures. Problems can also occur when one or both of the parties are inexperienced in international arbitration. Some three decades ago, the International Bar Association (IBA) set out to assist parties by providing a mechanism to fill in the gap. The IBA is uniquely suited to provide such guidance, as its Arbitration Committee now has more than 2,500 arbitration practitioners from 90 countries around the world. In 1983, the IBA adopted the Supplementary Rules Governing the Presentation of Evidence in International Commercial Arbitration (the ‘1983 Rules’). The 1983 Rules were generally well received and were frequently discussed at arbitration conferences as an example of the harmonisation procedures that can occur in international arbitrations. By 1999, the nature of international arbitration had changed significantly. New procedures had developed; different norms as to appropriate procedures had taken root; and the scope of international arbitration had grown considerably, as many regions of the world formerly inhospitable to international arbitration embraced it. As a result, the 1983 Rules needed to be updated and revised, and in 1997 Committee D of the IBA (now called the ‘Arbitration Committee’) formed a new Working Party, chaired by Giovanni Ughi of Italy, to do this. The Working Party consisted of 16 members (see note at start of commentary). It held many meetings and discussed the Rules at public meetings of the IBA in Delhi in November 1997 and in Vancouver in September 1998. Drafts were also circulated for

6

Revised text of the 2010 IBA Rules

public comment to Committee D members and others, and were discussed at numerous arbitration conferences. The Working Party considered comments received throughout this process in drafting the final IBA Rules on the Taking of Evidence in International Commercial Arbitration, which were adopted by the IBA Council on 1 June 1999 (also referred to herein as the ‘previous text of the IBA Rules’). The IBA Rules on the Taking of Evidence in International Commercial Arbitration were well received as a useful harmonisation of the procedures commonly used in international arbitration and were widely used in international arbitrations. In 2008, the IBA’s Arbitration Committee (formerly called ‘Committee D’) established the IBA Rules of Evidence Review Subcommittee and tasked it to review and, as needed, update the 1999 IBA Rules on the Taking of Evidence in International Commercial Arbitration. It held many meetings and discussed the Rules at open fora of the IBA in Buenos Aires in October 2008, in Dubai in February 2009, and in Madrid in October 2009. It conducted an online survey of Arbitration Committee members and others in 2008. In early 2010, the Arbitration Committee circulated a draft for public comment. The contemplated revisions were discussed at numerous arbitration conferences, and the comments received were duly considered throughout this process. The revised IBA Rules on the Taking of Evidence in International Arbitration were adopted by the IBA Council on 29 May 2010 (referred to herein as the ‘IBA Rules of Evidence’ or the ‘revised IBA Rules of Evidence’). The resulting text of the 2010 revised IBA Rules of Evidence reflects the Arbitration Committee’s wish to change and update only as necessary to reflect new developments and best practices in international arbitration since 1999. Users of the IBA Rules of Evidence will recognise the same structure, mechanisms and successful balance in the 2010 revised text of the IBA Rules of Evidence. The word ‘commercial’ was deleted from the title of the Rules to acknowledge the fact that the IBA Rules of Evidence may be and are used both in commercial and investment arbitration. The IBA Rules of Evidence contain procedures initially developed in civil law systems, in common law systems and even in international arbitration processes themselves. Designed to assist parties

Revised text of the 2010 IBA Rules

7

in determining what procedures to use in their particular case, they present some (but not all) of the methods for conducting international arbitration proceedings. Parties and arbitral tribunals may adopt the IBA Rules of Evidence in whole or in part – at the time of drafting the arbitration clause in a contract or once an arbitration commences – or they may use them as guidelines. Parties are free to adapt them to the particular circumstances of each matter. This article describes the essential provisions of the IBA Rules, as revised in 2010, and provides some background on their drafting and the revision process. The Working Party and IBA Rules of Evidence Subcommittee hope this commentary will be helpful to parties in determining whether or not to use the IBA Rules of Evidence and how best to apply them in their particular arbitration. The IBA Rules of Evidence and translations of the Rules into various languages are available for download at www.ibanet.org.

Preamble

1 These IBA Rules on the Taking of Evidence in International Arbitration are intended to provide an efficient, economical and fair process for the taking of evidence in international arbitrations, particularly those between Parties from different legal traditions. They are designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration. 2 Parties and Arbitral Tribunals may adopt the IBA Rules of Evidence, in whole or in part, to govern arbitration proceedings, or they may vary them or use them as guidelines in developing their own procedures. The Rules are not intended to limit the flexibility that is inherent in, and an advantage of, international arbitration, and Parties and Arbitral Tribunals are free to adapt them to the particular circumstances of each arbitration. 3 The taking of evidence shall be conducted on the principles that each Party shall act in good faith and be entitled to know, reasonably in advance of any Evidentiary Hearing or any fact or merits determination, the evidence on which the other Parties rely. IBA Commi tt ee Commenta ry It was considered important to identify certain general principles which governed the IBA Rules of Evidence, so that parties and arbitral tribunals could best understand how to apply them. The Preamble is also important in illustrating both what the IBA Rules of Evidence hope to accomplish and what they do not intend to do. 8

IBA Committee Commentary

9

i. The Preamble notes that the IBA Rules of Evidence are ‘designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration’. The IBA Rules of Evidence are not intended to provide a complete mechanism for the conduct of an international arbitration (whether commercial or investment). Parties must still select a set of institutional or ad hoc rules, such as those of the ICC, AAA, LCIA, UNCITRAL or ICSID, or design their own rules, to establish the overall procedural framework for their arbitration. The IBA Rules of Evidence fill in gaps intentionally left in those procedural framework rules with respect to the taking of evidence. ii. As the very first sentence of the Preamble notes, the IBA Rules of Evidence are intended to provide an ‘efficient, economical and fair process’ for the taking of evidence in international arbitration. This principle informs all of the IBA Rules of Evidence. The Working Party considered that as international arbitration grows more complex and the size of cases increases, it is important for parties and arbitral tribunals to find methods to resolve their disputes in the most effective and least costly manner. The Review Subcommittee revised this sentence to include expressly the principle of fairness. This change goes hand in hand with the revision to paragraph 3 of the Preamble, which now includes a requirement that each Party shall act ‘in good faith’ in the taking of evidence pursuant to the IBA Rules. At the discretion of the arbitral tribunal, violation of the good faith requirement can result in the consequences set forth in Articles 9.5, 9.6 and 9.7. iii. It was recognised that there is not a single best way to conduct all international arbitrations, and that the flexibility inherent in international arbitration procedures is an advantage. Therefore, it was considered important to note specifically, in paragraph 2 of the Preamble, that the IBA Rules of Evidence are not intended to limit this flexibility. Indeed, as noted in that paragraph, the IBA Rules of Evidence should be used by parties and arbitral tribunals in the manner that best suits them. iv. The Preamble notes the overriding principle of the IBA Rules of Evidence that the taking of evidence shall be conducted on the principle that each party shall be ‘entitled to know, reasonably in advance of any Evidentiary Hearing or any fact or merits determination, the

10

Preamble evidence on which the other Parties rely’. This principle infuses all of the provisions of the IBA Rules of Evidence. Accordingly, the provisions for the exchange of documentary evidence, witness statements, and expert reports, among others, provide each party and the arbitral tribunal with significant information about each side’s evidence. Parti cul a r Words a nd Phr a s e s

an efficient, economical and fair process different legal traditions

may adopt … in whole or in part … to govern arbitration proceedings … may vary them … use … as guidelines … not intended to limit the flexibility … inherent in, and an advantage of, international arbitration … free to adapt …

These aims are sensible and pragmatic and they deserve universal acceptance. As the foreword to the IBA Rules states: ‘The IBA Rules of Evidence reflect proced­ ures in use in many different legal systems, and they may be particularly useful when the parties come from different legal cultures.’ The Rules seek to balance different traditions and in particular those of the common law and civil law. This makes clear the flexibility of the Rules. They are only occasionally expressly adopted in an arbitration agreement and are more often included by agreement of the parties after a dispute has arisen. The IBA rules can be adopted to govern the reference or be merely guidance (persuasive or otherwise) and can be adopted in whole, part and with or without variations.

Discussion good faith

entitled to know, reasonably in advance … the evidence on which the other Parties rely

11

This is a new concept in the IBA Rules and perhaps the one that will generate the most controversy. It is discussed in more detail below. This a key feature of fairness. Ambush is inimical to fairness. What is reasonably in advance will depend on the circumstances.

Di sc uss i on [P-1]  At the outset it must be emphasised that the Rules seek to balance different legal traditions. As a consequence they will always be vulnerable to attack as being incomplete, vague or favouring common law or civil law traditions. This is inevitable and should not be seen as a weakness in the Rules. [P-2]  According to the Commentary to the Rules, the preamble was intended to identify ‘certain general principles’ which governed the Rules in order to help parties and arbitral tribunals understand how to apply them. Preambles 1 and 2 speak of ‘intentions’  – the purpose of the IBA Rules. This recitation of purposes can become relevant as an interpretive tool whenever questions regarding the meaning or application of the IBA Rules arise: In the event of any dispute regarding the meaning of the IBA Rules of Evidence, the Arbitral Tribunal shall interpret them according to their purpose and in the manner most appropriate for the particular arbitration. (Article 1.4 of the IBA Rules)

[P-3]  Preamble 1 provides for an ‘efficient, economical and fair process’. These words will underpin any area of ambiguity in the Rules or doubt in the mind of an arbitral tribunal. If, for example, a tribunal was in two minds whether to order disclosure under Article 3, the answer to the question whether to do so would be efficient, economical and fair will no doubt assist the tribunal. Significantly, the Rules are specifically intended to supplement institutional rules.

12

Preamble

Most institutional rules do not get into anything like the detail that the IBA Rules do but equally the Rules do not address many of the other issues (for example, memorials and awards) that institutional rules do address. [P-4]  Preamble 2 recognises that the IBA Rules may be incorpor­ ated by express agreement (either in the arbitration agreement or subsequently) or adopted as guidance. The Rules are not intended to be a rigid framework, rather they are to provide support for the inherent flexibility of the arbitral process. [P-5]  Similarly, preamble 3 provides two principles for the conduct of the taking of evidence, including that ‘each Party shall act in good faith’. Pursuant to Article 1.5, whenever the Rules are silent, the general principles of the Rules are to be consulted to fill any gap: Insofar as the IBA Rules of Evidence and the General Rules are silent on any matter concerning the taking of evidence and the Parties have not agreed otherwise, the Arbitral Tribunal shall conduct the taking of evidence as it deems appropriate, in accordance with the general principles of the IBA Rules of Evidence.

[P-6]  Thus, Article 1 appears to invite invocation of principle of good faith whenever the Rules do not specifically prescribe another standard for party behaviour. If so, parties and tribunals are now in possession of a powerful tool with which to insist that proceedings be conducted in a civil, honest, compliant and forthright manner. The good faith principle and the Article 3 strictures of ‘documents relevant to the case’ and ‘material to its outcome’ are the backbone of the Rules. [P-7]  By way of example, Article 3.13 imposes certain confidentiality obligations with respect to documents submitted or produced in an arbitration, but leaves an exception in cases in which: [D]isclosure may be required of a Party to fulfil a legal duty, protect or pursue a legal right, or enforce or challenge an award in bona fide legal proceedings.

Even without the word ‘bona fide’, the duty of good faith in preamble 3 could be implied to circumscribe this exception to exclude bad-faith acts that have the primary purpose of disclosure rather than the protection or pursuit of a legal right, challenge of an award based on reasonable grounds or similar.

Discussion

13

[P-8]  Paragraph 3 of the preamble states that the taking of evidence shall be conducted on the principles that each party shall act in good faith. Although many commentators consider good faith to be an implicit duty in arbitration, the Rules did not contain an express requirement of good faith until the 2010 revisions. The inclusion of an express duty of good faith in the Rules is especially noteworthy as neither the UNCITRAL Model Law nor most of the sets of well-known institutional arbitral rules include an express obligation to arbitrate in good faith. Two notable exceptions are Article 15.6 of the Swiss Rules, providing that ‘[a]ll participants in the proceedings shall act in accordance with the requirements of good faith’, and, to a lesser degree, Rule 34(3) ICSID Arbitration Rules, providing that ‘[t] he parties shall cooperate with the Tribunal in the production of the evidence’. The duty to arbitrate in good faith is generally considered to be derived from the contractual obligation to arbitrate. [P-9]  Whether or not these changes are viewed as introducing a new duty or merely codifying existing duties or best practices, they will increase the emphasis that is put on good faith in the coming years. The consensus among practitioners is that the IBA have merely reflected and codified good practice. It does not appear that there was any particular evil that the amendment was aimed at. [P-10]  Whilst there is, therefore, no express reference to a duty of good faith, any doubt that such a duty arises is removed by the new provision at Article 9.7. This provides that if the arbitral tribunal determines that a party has failed to conduct itself in good faith in the taking of evidence, the arbitral tribunal may, in addition to any other measures available under the Rules, take such failure into account in the allocation of the costs of the arbitration. Despite the slight variation in wording, (‘act’ in preamble 3 and ‘conduct itself ’ in Article 9.7), both fairly plainly refer to the same thing. Article 9.7 appears to elevate the duty of good faith from an aspiration to a concrete obligation, the failure to comply with which, can be visited by sanctions. Although Article 9.7 does not necessarily attribute powers to the arbitral tribunal that it did not have already, it may be expected to increase the frequency with which parties request costs on this basis. Interestingly, Article 9.7 is not restricted to the costs of the taking of evidence itself (the purview of the Rules), but potentially

14

Preamble

encompasses the entire costs of the arbitration. As always, however, the Rules are limited in their effect by the so-called ‘General Rules’ or any mandatory applicable law (Article 1.1). [P-11]  The type of conduct that will amount to a breach of this duty to act in good faith is not clear. That will be a matter for arbitral tribunals to consider on a case by case basis. It is inevitable that different standards will be applied by different tribunals and perhaps by tribunal members from different cultural backgrounds. Although most legal systems impose and enforce obligations to act in good faith, good faith is also a notoriously difficult concept to define. Indeed, the case law and commentary on good faith is often voluminous, even in civil-law countries. Good faith is difficult to define in the abstract and is highly fact-dependent in its application. [P-12]  At least initially, this new provision will not therefore provide parties with any certainty as to what conduct will be considered to be inappropriate. Indeed, this uncertainty might well be considered a negative feature of the new Rules, particularly in light of the express link between the duty to act in good faith and the later allocation of costs. [P-13]  Using the tribunal’s discretion on the allocation of costs to encourage good behaviour during the course of the arbitration is a mechanism that other arbitral bodies have also introduced. For example, in its Guidelines for Arbitrators Concerning Exchanges of Information,4 the ICDR guideline 8(b) provides that in the event any party fails to comply with an order for information exchange, the tribunal may draw adverse inferences and may take such failure into account in allocating costs. [P-14]  Similarly, in the Techniques for Controlling Time and Costs in Arbitration5 the ICC Commission states at para. 85 that, ‘the allocation of costs can provide a useful tool to encourage efficient behaviour and discourage unreasonable behaviour’. That report goes on to give examples of unreasonable behaviour, including, in the context

Available at http://www.adr.org/si.asp?id=5288.   Available at http://www.iccwbo.org/uploadedFiles/TimeCost_E.pdf.

4 5

Discussion

15

of the taking of evidence, excessive document requests and excessive cross-examination. [P-15]  Article 9.7 envisages that, following a determination that a party has failed to conduct itself in good faith in the taking of evidence, the tribunal may take this into account not only in the allocation of costs arising out of the taking of evidence, but also in the allocation of the costs of the arbitration generally. This might appear to be an example of the Rules extending their reach beyond matters relating to the taking of evidence. However, in practice, it is appropriate that in order to achieve a fair result and penalise bad conduct in a proportionate way, arbitral tribunals should have discretion over the costs of the entire arbitration (such discretion is likely to exist in any event under the general rules which govern the arbitration). [P-16]  A tool that the new Rules do not make use of expressly is the making of interim costs orders. Requiring the parties to pay as they go has been shown in commercial litigation to have a dramatic effect in discouraging unmeritorious interim applications. Such interim orders are particularly well suited to discouraging excessive document production requests. The use of such orders in arbitration is, however, complicated by the fact that they are likely to require the making of interim awards. [P-17]  It appears that under most circumstances the duty to act or conduct oneself in good faith in the taking of evidence should not be interpreted to impose positive duties beyond those expressly imposed by the Rules. By way of example, the duty of good faith would not be interpreted to require voluntary submission of documents that would be adverse to the party’s case assuming that there was otherwise no duty to do so pursuant to Article 3.1 (i.e. because the submitting party did not choose to rely on such documents) or pursuant to Article 3.3 (because the documents had not been properly requested). Similarly, the duty of good faith would appear not to give rise to an affirmative duty to preserve evidence or prevent destruction of potentially relevant (as opposed to known relevant) and material evidence once a dispute appears likely since the Rules do not impose such an express duty. Of course, should the parties or the arbitral tribunal agree on data preservation measures

16

Preamble

in the context of an Article 2 consultation, the duty of good faith would then appear to require good faith compliance with such measures. [P-18]  Any attempt to define the duty, certainly includes the negative duty to abstain from any bad faith failure to comply with express obligations under the Rules. Under this approach, the bad faith violation of each positive obligation could amount to a corresponding lack of good faith. The duty of good faith is also susceptible to a more expansive interpretation that would prohibit any bad faith acts that undermine the system and purpose of the IBA Rules to provide an, ‘efficient, economical and fair process for the taking of evidence’ (preamble 1). [P-19]  Examples for bad-faith violations related to Article 3 could, depending on the circumstances of the particular case, include the following violations of express obligations under the IBA Rules: •  Article 3.1: Failing to produce all documents on which a party relies with the intention of ambushing or surprising parties or witnesses with documents in violation of the second principle enshrined in preamble 3.6 •  Article 3.3: Submitting requests to produce that are intentionally burdensome, excessive, irrelevant or immaterial. Although such requests may be objected to on formal or substantive grounds pursuant to Articles 3.3 and 9.2, the duty of good faith could also be relevant, for example, if the decision-making process triggered by bad faith requests itself amounted to a bad faith attempt to burden the other parties or delay the proceedings. •  Article 3.4: Producing documents in a manner intended to burden the receiving party unduly, e.g. by ‘burying’ responsive documents under reams of unimportant or unresponsive documents. •  Article 3.5: Raising objections to requests to produce without a reasonable and good-faith basis or with the intention of delaying or disrupting the taking of evidence.

6

Although note that the Rules themselves contemplate additional documents with witness statements (Article 4.5(b)).

Discussion

17

•  Article 3.12(a): Any kind of tampering with documents submitted or produced, including by manipulating electronic versions of documents (cutting or pasting), abridging, redacting or excerpting from documents, with the intent of misleading the arbitral tribunal or the other parties. •  Article 3.12(b): Submitting data in a form other than the agreed or default form with the intent to hide information, prevent electronic searching or otherwise burden the other party. •  Article 3.12(d): Submitting translations that are substantively misleading or disguising the fact that a document has been translated at all (i.e. by failing to mark it as a translation or failing to submit the original) with the intent of hiding information or misleading the arbitral tribunal or the other parties. •  Article 3.13: Disclosing otherwise confidential materials with the intent of pressuring or harming another participant in the arbitration, including by causing negative publicity; invoking an exception to confidentiality contained in Article 3.13 without a ­reasonable or good-faith basis. [P-20]  On the basis that Preamble 3 also prohibits bad faith acts that undermine the exchange of documents as foreseen by Article 3 (implicit violations of good faith), such indirect means could include intentionally destroying documents that are responsive to a valid Article 3.3 request for documents. On this level, the duty of good faith could also be interpreted to imply a duty to conduct a reasonably diligent search for documents as to which the party makes no timely objection or whose production has been ordered by the arbitral tribunal. Although more closely connected with Article 9.2(g), the duty of good faith under Preamble 3 should likely also be viewed as preventing the submission of evidence knowingly obtained by improper means. [P-21]  A lack of good faith could arise in the violation of the express obligations under Article 4.1 by failing to identify all witnesses on whose testimony a party intends to rely with the intent to ambush or surprise the other parties. [P-22]  On the basis that Preamble 3 also prohibits bad faith acts that undermine the provision of witness testimony as foreseen by

18

Preamble

Articles  4 and 8 (implicit violations of good faith), such indirect means could include unduly influencing the testimony of a witness of fact. Article 4.3 clarifies that it, ‘shall not be improper … to discuss their prospective testimony with them’. Although susceptible to varying interpretations, bad faith may be viewed as coming into play where a party pays inappropriately high compensation to witnesses in exchange for testimony, adduces or condones perjured evidence or other false testimony or ‘coaches’ the witness. [P-23]  Although the Rules do not provide detailed requirements for witness statements, the wording of Article 4.4 could be interpreted to imply that counsel has a duty to abstain from replacing the witness’s testimony with what is in effect a further party submission (‘Witness Statements by each witness’ (emphasis added)). If so, drafting witness statements so as to hide the substance of a witness’s testimony and surprise the other party with additional witness testimony could amount to a bad-faith violation as well as of Article 4.4. However, in the absence of any concrete guidelines, it does not appear that the duty of good faith would prevent counsel from drafting the witness statement in whole or in part. Other checks are in place that may prevent abuses in this area, namely Articles 4.5(d) and (e), requiring the witness to affirm the truth of the witness statement and sign it, and Article 8.3(b), which foresees cross-examination during the hearing. [P-24]  Examples of express bad-faith violations related to Article 5, might mirror those described above for witnesses of fact, including a bad faith failure to identify party-appointed experts pursuant to Article 5.1. The revised Article 5.1(a) might also be interpreted to obligate parties to provide proper disclosure of any present or past relationships between the expert and the party or its legal advisors to the extent it is aware of such relationships and the expert has failed to disclose them. [P-25]  The Rules also foresee increased co-operation among the parties in the taking of evidence. This raises the question of whether the duty of good faith should be interpreted to define or prescribe a particular level of co-operation. One interpretation is that the increased co-operation requirements in the Rules should be regarded as being separate and apart from the duty of good faith on the notion

Discussion

19

that co-operation appears to be largely optional under the Rules, whereas good faith is binding. [P-26]  Pursuant to Article 2.1: ‘The Arbitral Tribunal shall consult the Parties at the earliest appropriate time in the proceedings and invite them to consult each other with a view to agreeing on an efficient, economical and fair process for the taking of evidence.’ The word ‘invite’ tends to suggest that the co-operation is voluntary and may under certain circumstances be refused. Similarly, the consultation is to be undertaken ‘with a view to agreeing’ on a particular procedure, not under the stricture that such agreement shall come about. The Rules also foresee increased co-operation in the exchange of documents. Article 3.4 now provides that the initial exchange of documents will take place among the parties, with copies of those documents being sent to the arbitral tribunal only at its request. Additionally, the new Article 3.6 provides the arbitral tribunal the option to, ‘invite the relevant Parties to consult with each other with a view to resolving the objection’. [P-27]  Thus, Article 2.1 appears to give rise, at least in the abstract, neither to a concrete obligation to co-operate nor to an obligation to agree. If the duty of good faith deemed not to expand the substantive scope of a party’s duties under the Rules, it would not give rise to an obligation to co-operate under Article 2.1 either. The notion that good faith requires co-operation appears to be even weaker with respect to Article 3 co-operation. Whereas the tribunal ‘shall’ invite the parties to consult with each other early in the proceedings pursuant to Article 2.2, the consultation in Article 3.6 is at the option of the arbitral tribunal. Again, where there would appear to be no obligation to co-operate, arguably, no bad faith violation of that obligation should arise. [P-28]  There is greater debate as to whether the duty of good faith extends to the acts of counsel. By its terms, preamble 3 applies to the acts of parties: ‘each Party shall act in good faith’ (emphasis added). However, nearly everything that counsel does during an arbitration is done as the duly appointed agent and representative of a party. Thus, to the extent Preamble 3 prescribes that parties act in good faith, it

20

Preamble

would appear to apply equally to counsel in its representation of parties. [P-29]  The duty of good faith as set out in preamble 3 may provide something of a backstop in terms of attorney ethics. However, if the duty of good faith is deemed to apply to counsel, it would likely not cover bad faith acts that are not related to the taking of evidence, such as certain delaying tactics, and thus cannot effectively address all instances of questionable attorney ethics in international arbitration. Sometimes it may be difficult to distinguish whether the bad faith act relates to the taking of evidence or not. A party or counsel acting on that party’s behalf may violate the duty of good faith if it pleads facts that are inconsistent with the facts contained in non-disclosed documents, but, it is suggested, provided that the pleaded case can be advanced on reasonable grounds (perhaps on the basis of other documents or testimony) and the arbitral tribunal and other parties is not misled, doing so could be in good faith. [P-30]  One of the reasons that bad faith tactics are potentially more problematic in international arbitration than in litigation is the lack of internationally applicable rules of conduct and any responsible body to enforce them. This applies equally to parties and counsel although there are some pronouncements on standards, most notably the IBA’s International Code of Conduct7 and the Code of Conduct for European Lawyers prepared by the Council of the Bars and Law Societies of Europe (CCBE Code).8 Even where the ethical or professional rules of one jurisdiction apply to an attorney’s acts extraterritorially, the transnational nature of international arbitration and the lack of power of the arbitral tribunal to sanction attorney misconduct can open the door to potential abuses. It must be stressed however that most commentators do not perceive that there was any particular evil or wrong doing that the new duty was aimed at. To a large degree Available at www.ibanet.org/Document/Default.aspx?DocumentUid=A9AB05AA-8B69–4BF2B52C-97E1CF774A1B. 8 Available at http://www.ccbe.eu/fileadmin/user_upload/NTCdocument/EN_Code_of_conductp1_1306748215.pdf. 7

Discussion

21

it was seeking to codify existing good practice and the introduction of the duty should not be seen as making any wholesale change. [P-31]  It may be relatively easy to recognise bad faith – the same cannot necessarily be said of the absence of good faith. It has been suggested that the duty of good faith might conflict with overriding duties to clients. It must be accepted that the duty to the client can be overridden in certain circumstances, for example, giving the Court authorities or precedent that is unhelpful to the case advanced by that lawyer. Express obligations are found in many jurisdictions and the IBA’s International Code of Ethics (1988) provides: ‘Lawyers shall never knowingly give to the Court incorrect information or advice which is to their knowledge contrary to the law.’9 It follows that in some circumstances the duty of good faith will outweigh duties to the client. Keeping secret a document that destroys your case can nevertheless still be acting in good faith provided that it is not kept secret contrary to an express order of disclosure made by the arbitral tribunal and provided that a positive case is not advanced contrary to known evidence to the contrary. It is accepted that that answer might be answered differently, say in relation to disclosing a document, by a U.S. lawyer used to disclosing everything and a lawyer from a civil law country used to disclosing nothing. Similarly the duty of good faith does not extend to a witness telling the truth, the whole truth and nothing but the truth if simply giving certain evidence that is most helpful does not positively mislead the arbitral tribunal. After all, the proceedings are adversarial and the witness can be cross-examined to elicit the ‘whole truth’. Cross-examination itself does not necessarily aim to get at the truth, rather it is often aimed to get the answer that you want. There will be the legitimate skills of the cross-examiner which may confuse the witness but again provided the result is not to mislead it will often be acceptable. [P-32]  The concept of good faith is not unknown to the common law. Contracts of insurance are regarded as of the ‘utmost good faith’ and partnership agreements are likewise viewed as contracts of good faith.   Rule 6.

9

22

Preamble

[P-33]  In the context of an insurance contract Lord Mansfield CJ said as long ago as 1766: The governing principle is applicable to all contracts and dealings. Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary. But either party may be innocently silent, as to grounds open to both, to exercise their judgment upon.10

[P-34]  Nevertheless, in English law, unlike many civil systems, there is no principle of good faith of general application. As Bingham LJ said: In many civil law systems, and perhaps in most legal systems outside the common law world, the law of obligations recognises and enforces an overriding principle that in making and carrying out contracts parties should act in good faith. This does not simply mean that they should not deceive each other, a principle which any legal system must recognise; its effect is perhaps most aptly conveyed by such metaphorical colloquialisms as ‘playing fair’; ‘coming clean’ or putting one’s cards face upwards on the table’. It is in essence a principle of fair open dealing …11

[P-35]  However, the ‘good faith’ in the Rules must mean something more than ‘fair open dealing’. The Rules already had the obligation in the preamble that the parties were entitled to know, reasonably in advance, the evidence that the other party intended to rely upon. The wording makes it clear that these are two distinct concepts at play. [P-36]  Good faith is recognised in the U.S. where the Restatement (Second) of Contracts requires that ‘every contract imposes on each party a duty of good faith and fair dealing in its performance and enforcement’. Even in the civil law jurisdictions of Western Europe there are very considerable differences in the significance of ‘good faith’ and the uses to which the doctrine is put within each legal system. In some systems good faith has provided a basis for pre-contractual grounds for relief or compensation (notably as regards duties of disclosure and information and breaking off from negotiations); the addition of ‘supplementary’ obligations to those expressly provided for by contract or legislation; the control of unfair contracts; the toughening of sanctions for deliberate breaches of contract; the control of the exercise of a party’s   Carter v Boehm (1766) 3 Burr 1905, 1910.   Interfoto Picture Library v Stileeto Visual Programmes [1989] 1 QB 433, 439.

10 11

Discussion

23

contractual rights; and relief on account of supervening circumstances or the substantively unfair nature of the contract as a whole. [P-37]  Accepting that ‘good faith’ must mean something, what lessons can be derived from English case law as to the meaning of the phrase? In one case it was interpreted as the ‘observance of reasonable commercial standards of fair dealing’12; in another that a contractual right could only be exercised for a ‘genuine commercial reason’13 and, finally, that it must be exercised ‘honestly’ with no ‘ulterior motive’.14 [P-38]  Of all the interpretations of ‘good faith’ it is suggested that the ‘observance of reasonable commercial standards of fair dealing’ may be a useful yardstick against which conduct can be measured – such an interpretation would fit into the preamble and would not do any violence to the language. More importantly it would remove some of the more emotive challenges to the phrase. For example, it is suggested that it is consistent with that interpretation of the duty not to be under an obligation to volunteer information or documents that detract from your own case and to otherwise advance the case in the interests of the client provided that nobody is misled either positively or by silence.   Berkley Community Villages v Pullen [2007] EWHC 1130 (Ch).   Paragon Finance v Plender [2005] 1 WLR 3412. 14   Central Estates (Belgravia) Ltd. v Woolgar [1972] 1 Q.B. 48.

12

13

Definitions

In the IBA Rules of Evidence: ‘Arbitral Tribunal’ ‘Claimant’

‘Document’

‘Evidentiary Hearing’

‘Expert Report’ ‘General Rules’

means a sole arbitrator or a panel of arbitrators; means the Party or Parties who commenced the arbitration and any Party who, through joinder or otherwise, becomes aligned with such Party or Parties; means a writing, communication, picture, drawing, program or data of any kind, whether recorded or maintained on paper or by electronic, audio, visual or any other means; means any hearing, whether or not held on consecutive days, at which the Arbitral Tribunal, whether in person, by teleconference, videoconference or other method, receives oral or other evidence; means a written statement by a Tribunal-Appointed Expert or a Party-Appointed Expert; mean the institutional, ad hoc or other rules that apply to the conduct of the arbitration; 24

IBA Committee Commentary ‘IBA Rules of Evidence’ or ‘Rules’ ‘Party’ ‘Party-Appointed Expert’

‘Request to Produce’ ‘Respondent’

‘Tribunal-Appointed Expert’

‘Witness Statement’

25

means these IBA Rules on the Taking of Evidence in International Arbitration, as they may be revised or amended from time to time; means a party to the arbitration; means a person or organisation appointed by a Party in order to report on specific issues determined by the Party; means a written request by a Party that another Party produce Documents; means the Party or Parties against whom the Claimant made its claim, and any Party who, through joinder or otherwise, becomes aligned with such Party or Parties, and includes a Respondent making a counterclaim; means a person or organisation appointed by the Arbitral Tribunal in order to report to it on specific issues determined by the Arbitral Tribunal; and means a written statement of testimony by a witness of fact.

IB A Commi tt ee Commenta ry The Definitions section of the IBA Rules of Evidence (no longer a numbered Article) sets forth basic definitions to be applied in the IBA Rules of Evidence. The definitions are generally straightforward, with commonly understood meanings. The definitions themselves do not provide any substantive rules of conduct or evidence. One definition that is not so commonly used is that for “General Rules”. This term refers in the IBA Rules of Evidence to the institutional or ad

26

Definitions

hoc rules according to which the parties are conducting their arbitration, such as those of the ICC, AAA, LCIA, UNCITRAL and ICSID. The term is used in Articles 1.3 and 1.5, which discuss among other things conflicts between the IBA Rules of Evidence and other rules that govern the arbitration proceeding. The definition of “Document” in the previous text of the IBA Rules was broad enough to include most forms of electronic evidence. The Review Subcommittee introduced minor changes intended to ensure that all forms of evidence, including electronic evidence, are subject to the IBA Rules and may be requested, subject to (i) the requirements of Article 3.3, including satisfaction of the relevance and materiality standard, and (ii) the reasons for objection set forth in Article 9.

Arti cl e 1

Scope of Application

1 Whenever the Parties have agreed or the Arbitral Tribunal has determined to apply the IBA Rules of Evidence, the Rules shall govern the taking of evidence, except to the extent that any specific provision of them may be found to be in conflict with any mandatory provision of law determined to be applicable to the case by the Parties or by the Arbitral Tribunal. 2 Where the Parties have agreed to apply the IBA Rules of Evidence, they shall be deemed to have agreed, in the absence of a contrary indication, to the version as current on the date of such agreement. 3 In case of conflict between any provisions of the IBA Rules of Evidence and the General Rules, the Arbitral Tribunal shall apply the IBA Rules of Evidence in the manner that it determines best in order to accomplish the purposes of both the General Rules and the IBA Rules of Evidence, unless the Parties agree to the contrary. 4 In the event of any dispute regarding the meaning of the IBA Rules of Evidence, the Arbitral Tribunal shall interpret them according to their purpose and in the manner most appropriate for the particular arbitration. 5 Insofar as the IBA Rules of Evidence and the General Rules are silent on any matter concerning the taking of evidence and the Parties have not agreed otherwise, the Arbitral Tribunal shall conduct the taking of evidence as it deems appropriate, in accordance with the general principles of the IBA Rules of Evidence. 27

28

Article 1: Scope of Application IBA Commi t tee Commenta ry

International arbitrations are subject to general rules establishing the procedural framework for the arbitration and to mandatory law relating to arbitration procedure at the seat of the arbitration. Therefore, while the IBA Rules of Evidence have been drafted to conform with the principal institutional and ad hoc rules generally used by parties, conflicts may nevertheless arise with the other set of rules chosen by the parties (the “General Rules” in the parlance of the IBA Rules of Evidence) or any mandatory legal provisions. Article 1 (formerly Article 2) sets forth several basic principles as to how arbitral tribunals should apply the IBA Rules of Evidence in the event of a conflict with any of these other provisions: 1 In a conflict between the IBA Rules of Evidence and mandatory legal provisions, the mandatory legal provisions shall govern. 2 In a conflict between the IBA Rules of Evidence and the General Rules (i.e., the institutional or ad hoc rules chosen by the parties), the parties have a right, in keeping with the principle of party autonomy which is central to any international arbitration, to resolve this conflict in the manner they choose, as long as both parties agree. In the absence of such agreement, the arbitral tribunal shall try to harmonise the two sets of rules to the greatest extent possible. 3 If a conflict exists regarding the meaning of the IBA Rules of Evidence, or if both the IBA Rules of Evidence and the General Rules are silent on a particular issue, then the IBA Rules of Evidence instruct the arbitral tribunal to apply the general principles of the IBA Rules of Evidence, such as those set forth in the Preamble, to the greatest extent possible. As mentioned above, the IBA Rules may be used in commercial or investment arbitration. However, the IBA Rules do not contain any specialised rules for investment arbitrations such as rules pertaining to the participation of amici curiae. Article 1.2 provides that parties who have agreed to the application of the IBA Rules prior to 29 May 2010, the date of adoption of the 2010 revisions, shall be deemed to have agreed to the previous version of the IBA Rules in the absence of a contrary indication. As the IBA Rules could be potentially subject to further updates, parties wishing to apply the version of the IBA Rules current at the time of the arbitration should consider including this in the arbitration clause (see suggested arbitration clause in the Foreword to the IBA Rules).

Discussion

29

Parti cul ar Words and Phra s e s Whenever the Parties may agree to adopt the Rules but Parties have agreed more often they will agree that the Rules shall serve to guide the deliberations of the Tribunal. It is rare that the Tribunal will determine to the Arbitral apply the full rigour of the Rules without Tribunal has Party agreement. As above, more often determined the Tribunal will encourage the Parties to adopt the Rules as guidance. Purposes / The Article refers to both concepts. Logically Principles they ought to mean something different. The Commentary refers to ‘principles’. Whilst ‘purposes’ might be appropriate when referring to General Rules in Article 1.3, in Article 1.4 the use of ‘principles’ would have been more consistent. Di scussi on [1-1]  Article 1.1 recognises that the Rules are rarely expressly incorporated into an arbitration agreement and, therefore, for the Rules to apply at all, they have to be adopted. Plainly they will have, strictly, no application unless and until they have been adopted. Even then arbitral tribunals may be guided by the Rules, reflecting, as they do, international norms. [1-2]  Article 1.1 further recognises that the Rules cannot override mandatory provisions affecting the arbitration. These mandatory rules will usually be the substantive law of the agreement and the laws of the seat. Thus if the laws of the seat prevent any disclosure other than of voluntarily produced documents (i.e. there are no powers of compulsion to produce documents) Article 3 will be largely redundant. [1-3]  Having provided in Preamble 1 that the Rules are to “supplement” institutional rules, Article 1.3 provides that insofar as there is conflict between the Rules and “General Rules” (as defined in the Definitions: in effect, institutional rules) the Rules are applied so as

30

Article 1: Scope of Application

to accord with the purpose of both the General Rules and the Rules. The Rules and the Commentary are silent on any irreconcilable differ­ence. If the Rules are adopted for guidance rather than as binding it follows that binding General Rules should take precedence. If both the General Rules and the Rules are binding resort should first be had to the principles of the Rules (efficiency, economy and fairness) and if there is still a difference it might be thought that the General Rules ought logically to take precedence but there is a logical argument that the Rules (usually adopted after the General Rules) have the effect of amending the Rules insofar as they are inconsistent. In practical terms these issues are unlikely to arise due to the different emphasis of institutional rules and the Rules. [1-4]  Article 1.4 provides that the Rules should be interpreted with their purpose which are those matters set out in the preamble namely (a) so as to give an efficient, economical and fair process, (b) permitting flexibility, (c) in good faith, and (d) the parties knowing reasonably in advance the evidence relied upon by other parties. [1-5]  Articles 1.4 and 1.5 confirm the wide discretion afforded to the arbitral tribunal, subject to party agreement to the contrary, to apply the Rules in the manner considered appropriate to the particular issues and case before it. This wide discretion makes hard and fast rules and guidance difficult but equally allows a creative response to be moulded for each circumstance. These provisions are consistent with the Kompetenz  – Kompetenz principle. That principle is reflected in the ICC Rules (see in particular Article 22.2 that prohibits an arbitral tribunal adopting procedures contrary to the agreement of the parties). It is perhaps noteworthy that this same wide discretion is not found in the LCIA Rules (see in particular Article 14.1 that encourages parties to agree on procedural matters consistent with the arbitral tribunal’s duties to adopt suitable procedures i.e. if the parties agreed a procedure that the tribunal considered unsuitable it would appear that the tribunal would be obliged to adopt a procedure it considered consistent with its duties irrespective of party agreement to the contrary). Even less respect is given to party autonomy under the AAA Rules where Article 16 has no mention of party agreement.

Arti cl e 2

Consultation on Evidentiary Issues

1 The Arbitral Tribunal shall consult the Parties at the earliest appropriate time in the proceedings and invite them to consult each other with a view to agreeing on an efficient, economical and fair process for the taking of evidence. 2 The consultation on evidentiary issues may address the scope, timing and manner of the taking of evidence, including: (a) the preparation and submission of Witness Statements and Expert Reports; (b) the taking of oral testimony at any Evidentiary Hearing; (c) the requirements, procedure and format applicable to the production of Documents; (d) the level of confidentiality protection to be afforded to evidence in the arbitration; and (e) the promotion of efficiency, economy and conservation of resources in connection with the taking of evidence. 3 The Arbitral Tribunal is encouraged to identify to the Parties, as soon as it considers it to be appropriate, any issues: (a) that the Arbitral Tribunal may regard as relevant to the case and material to its outcome; and/or (b) for which a preliminary determination may be appropriate. IB A Commi t tee Commentary The 2010 revisions include the addition of a new Article 2. The Subcommittee carefully considered whether and how the IBA Rules should be adapted or expanded in response to the increased size and complexity of arbitrations and the evidentiary issues associated with them. 31

32

Article 2: Consultation on Evidentiary Issues

After review of various sets of domestic and international arbitration rules and procedures, the Subcommittee agreed on a “meet and consult” approach. Article 2.1 provides for a mandatory consultation between the arbitral tribunal and the parties “at the earliest appropriate time in the proceedings”. Under normal circumstances, this consultation would coincide with a procedural conference or exchange of views early in the proceedings. Early timing allows the participants to organise the taking of evidence in an efficient, economical and fair manner. Where the evidentiary issues are not considered to be sufficiently clear at an early stage in the arbitration, the arbitral tribunal might postpone such conference or exchange. The issues which may be appropriate for discussion at the Article 2.1 consultation include, but are not limited to, those enumerated in Article 2.2. While Article 2 provides a framework for discussing evidentiary issues, it is not intended to prescribe how evidence should be taken in any particular arbitration. For example, in any given arbitration the arbitral tribunal and the parties may determine not to require disclosure of electronic evidence. On the other hand, if they determine that taking evidence in electronic form would be conducive to the efficient, economical and fair taking of evidence, it may be advisable to discuss the related details at an early stage, such as the form of production (Article 3.12(b)) and the formulating of requests to produce by identifying specific files, search terms, individuals or other means for searching for documents in an efficient and economical manner (Article 3.3(a)(ii)). Article 2.2(e) encourages discussion of means to save time and costs in the arbitration. It also refers to the conservation of resources in connection of the taking of evidence, which could include, by way of example, the economic and environmental costs of travel or document reproduction (including by submitting documents using web-based platforms such as NetCase, the platform of the ICC). Article 2.3 (formerly paragraph 3 of the Preamble) encourages arbitral tribunals to identify to the parties, as early as possible, the issues that they may regard as relevant to the case and material to its outcome. That paragraph also notes that a preliminary determination of certain issues may be appropriate. While the Working Party did not want to encourage litigation-style motion practice, the Working Party recognised that in some cases certain issues may resolve all or part of a case. In such circumstances, the IBA Rules of Evidence make clear that the arbitral tribunal has the authority to address such matters first, so as to avoid potentially unnecessary work.

Particular Words and Phrases

33

Parti cul ar Words and Phra s e s earliest appropriate time

The consultation by the tribunal with the parties should be no later than at the first procedural meeting and should ideally be in the run-up to such meeting. The ‘invitation’ that the tribunal is mandated to extend (see below) should, ideally, be before the consultation that the tribunal will have with the parties and to that extent the apparent order of events in Article 2(1) should be reversed with the tribunal inviting the parties to consult and then, ideally, consulting with the parties on what the parties have agreed or on those areas that they have agreed and not agreed. invite them to con- Consistent with the rights of autonomy sult each other that the parties have, they should properly consult with each other over procedural matters. The true extent of that autonomy may well be more limited than perhaps thought – see the discussion below. The difficulty with consultation is that it occurs at a time when the parties are at ‘daggers drawn’. The ‘invitation’ needs to be clear and to make it clear that absent a reasonable agreement by the parties, meeting the availability and aims of the tribunal, the tribunal will impose directions upon the parties. efficient, economical These words, perhaps unnecessarily, echo and fair process the words of the preamble but their importance is such that repetition can be forgiven.

34

Article 2: Consultation on Evidentiary Issues Di scussi on

[2-1]  Article 2 is a new and important addition to the Rules. This article proposes, indeed requires, early case-management consultation to agree how evidence should be taken in an efficient, economical and fair manner. This change (to a mandatory consultation) is also reflected in the new ICC Rules where Article 24 provides that an arbitral tribunal “shall” convene a conference to consult with the parties on procedural matters when drawing up Terms of Reference or as soon as possible thereafter. This presents an opportunity for the parties, their counsel and the arbitral tribunal to meet. It is hoped that the opportunity will be firmly grasped and a real dialogue take place both before and during the meeting. It presents a real opportunity for the parties to craft a procedure that is fit for the particular purpose of a particular dispute. Agreement and efficiency are to be regarded as the essential aspects of the consultation. Parties and the arbitral tribunal should not let counsel suggest ‘standard’ timetabling directions. They should be challenged and made to justify any step that does not have the appearance of promoting efficiency, economy and fairness. Arbitral tribunals should strongly encourage senior representatives of parties to attend so that there can be no doubt that the parties themselves favour a procedure that might be slower or more expensive than it might be. The Article strikes a neat balance between the immediate and directional involvement of civil law tribunals and the party-autonomy of common law adversarial systems. [2-2]  The consultation envisaged by the Article is between the arbitral tribunal on the one hand and the parties on the other but importantly it anticipates that the parties will be invited or encouraged to discuss and agree matters between themselves. This is consistent with the Kompetenz – Kompetenz doctrine of party autonomy. If the parties agree upon a manner or method of taking evidence the arbitral tribunal are likely to agree and make a procedural order in the terms of the parties’ agreement but there is no guarantee (under the Rules) that will be the case. Under the UNCITRAL Model Law (Article 19(1)) and new ICC Rules (Article 22) party autonomy is regarded as sacrosanct but the same is not the case under the LCIA Rules (Article

Discussion

35

14) nor the AAA Rules (Article 16). The remainder of this discussion assumes any institutional rule is not inconsistent with the Rules. [2-3]  Article 2 directs specific attention to a number of matters that the arbitral tribunal and the parties might consider. In each case the consultation is directed to the scope or extent (necessarily including whether such a step is, on the particular facts of the case, appropriate at all), timing (both in sequence i.e. what is consecutive to what and interval i.e. what time is required after one step before the next) and manner (i.e. how compliance is to be achieved). As discussed above any concept of a “standard” direction should be banished for it is only by crafting a bespoke procedure that it can be both fit for purpose and achieve the aim of saving time and cost. [2-4]  In practical terms the consultation by the arbitral tribunal is likely to be both before and at the first procedural meeting. The arbitral tribunal is likely, in fixing the meeting, to invite the parties to consult and to submit draft agreed orders to the tribunal. [2-5]  The first item specifically contemplated is witness statements. By listing the “preparation and submission of witness statements” as an issue for consultation, the Rules appear to assume that such statements are an “efficient, economical and fair” tool and the presence of Article 4 (and specifically Article 4.4) reinforces the point. In any event witness statements have become standard practice and they generally establish a sound platform for an efficient witness-examination process, particularly by replacing the examination-in-chief, enabling the scope and extent of the cross-examination to be pre-planned and defined by the opposing counsel such that there can be a smooth flow of the evidence and without the need for frequent adjournments for cross-examination or rebuttal. However, the admission of written witness statements has a number of consequences, including intensive contacts between counsel and the witness and the necessity of granting the opposite party the opportunity to cross-examine the witness. These are features that may not be appropriate or useful in every case. For example, where parties and counsel involved are exclusively from civil-law jurisdictions, they may prefer not producing written statements and having the questioning of the witnesses

36

Article 2: Consultation on Evidentiary Issues

done primarily by the arbitrators. Depending on the subject matter of the oral testimony and other circumstances, this may in a particular case constitute a more efficient, economical and fair approach. [2-6]  It should be noted that the suggestion in Article 2 to consult on the preparation and submission of witness statements by no means precludes the option of proceeding without such statements. Indeed, the Rules provide in Article 4.4 that the arbitral tribunal “may order” each party to submit within a specified time witness statements by each witness on whose testimony it intends to rely, thus acknowledging that ‘one size might not fit all’. [2-7]  Where written statements are to be submitted, the case-management consultations should address the question of whether the witness statements should be submitted together with the parties’ memorials on the merits or only after the exchange of memor­ ials has been completed. Civil-law lawyers often prefer the first option while common-law lawyers favour the second. The advantage of the first option is that the witness statements are, or at least should be, generally closely related to that party’s memorial, supporting or proving the contentions of fact made in the memorial. In addition, such a structure also avoids additional procedural steps after the exchange of the memorials and can lead to an abridged timetable. It does, however, front-load costs by requiring a lot of costs to be incurred at an early stage. Those costs themselves can become a barrier to settlement and be contrary to the stipulation of saving time and cost. [2-8]  The advantage of the serving statements after memorials (assuming the memorials themselves are sequential) is that the statements can address only that which is contested and can focus on the areas of real contention. If memorials are exchanged simultaneously an interval before witness statements are exchanged can be an opportunity for settlement and to informally or formally resolve any issues as to exactly what case a party is advancing. Furthermore, the statements (and any rebuttal statements) are submitted or exchanged simultaneously and thus neither party has ‘the last word’. [2-9]  However, witness statements submitted after the exchange of memorials can go far beyond what was stated in the memorials, and seek to serve as a further full pleading, or are used as such when they are accompanied by evidentiary documents not yet on the record.

Discussion

37

Such situations may then trigger additional pre-hearing submissions by the parties which can disrupt the procedural timetable. [2-10]  Much the same considerations apply to expert evidence in terms of timing (with or after memorials) and sequence. It is generally accepted that expert’s reports should be submitted after all of the factual evidence has been submitted. This need not necessarily be so but if the facts are likely to have any bearing on the expert opinion it is essential that the expert can consider the possible range of factual findings that the tribunal might make and either express a range of opinion or series of alternatives depending on what factual findings might be made. [2-11]  The taking of oral testimony at an evidential hearing will be dictated principally by whether witness statements have been directed. If so, there may be an additional direction that the statements stand as the evidence in chief and in effect the witness is called and tendered for cross-examination (and then re-examined). If there are no witness statements the witnesses will have to give evidence in chief and then be cross-examined. If the parties and / or counsel have a civil law bias the tribunal may be expected to question the witnesses but this is becoming increasingly rare. [2-12]  The real issue for the taking of oral evidence is likely to be the division of time at the evidentiary hearing. Normally there is consensus that the time should be split equally but that need not be the case especially if one party carries a heavy burden of proof. The split can be relatively informal and be reckoned in portions of days or there can be a more chess-clock approach with precise division. [2-13]  It is generally recognised that witness statements are prepared with the assistance of counsel for the party that wishes to present the witness. There is a continuing debate regarding how far the contact and co-operation between counsel and witness may go. This is less so with respect to the drafting of the written statements as such, but more so as regarding the subsequent oral testimony. See the discussion under Article 4. [2-14]  Issues of document production and confidentiality are discussed under Articles 3 and 9 respectively but it might well be appropriate to direct that contested document requests are dealt with by

38

Article 2: Consultation on Evidentiary Issues

Redfern schedule1, rather than let requests get out of hand and only later try to bring the discipline of a Redfern schedule to the process. [2-15]  The ‘promotion of efficiency, economy and conservation of resources’ is something that ought to challenge an arbitral tribunal. Arbitral tribunals will have relatively limited knowledge of the facts and issues at this early stage of the proceedings. The parties will be far better informed and may well have agreed directions (or at least counsel for the parties may have done so). Tribunals would be well advised to encourage the attendance of the parties themselves (and at a suitably senior decision-making level), should politely and firmly challenge any procedure that seems to them to be unnecessary or excessive and counsel should be asked to give costs budgets for particular stages and to budget alternatives. The parties themselves might not have been given the option of some alternatives and a procedure should only be adopted and ordered when the full implications of the time and cost consequences are appreciated. [2-16]  One matter that might be discussed under Article 2.2(e) is to create an “arbitration hold”. The provision encourages parties to consult with each other as early as possible regarding document production, emphasising the promotion of efficiency, economy, and resource conservation. Because the destruction of documents in the absence of an “arbitration hold” would likely contravene these principles, the provision may serve as a basis to provide for such a hold. In light of decisions in the U.S., U.K. and other jurisdictions defining the requirements for a litigation hold, arbitrators may increasingly expect practitioners to apply the concept in arbitral disputes. Differences in culture and the legal backgrounds of the parties will necessarily result in different perceptions of what should be preserved and tribunals are likely to have to allow for these differences before considering any stipulation, still less any sanction. [2-17]  Parties (and counsel) are likely to have widely varying expect­ ations regarding preservation. It is obviously easier to meet demanding standards for preservation where there is a culture of document retention. U.S. companies, or those with significant U.S. operations, accustomed to frequent litigation will be well aware of the reasonable   See the discussion at [3–2].

1

Discussion

39

expectation standard and will generally have comprehensive document retention policies. This issue does not only affect companies that operate exclusively in countries lacking a document retention tradition. Even large multinationals may find themselves in difficult situations due to inconsistent policies. For example, in Zubulake2, the court showed no sympathy for UBS’ argument that some of the missing backup tapes were deleted after a month because they were held by an employee in the Hong Kong office, which had a different preservation policy. [2-18]  Though in Zubulake the court failed to accept UBS’ invocation of cultural differences, such an approach may well find favour with international tribunals. International arbitrators dealing with international parties are far more likely to consider the parties’ expect­ations based on their cultural differences than would a domestic judge addressing a largely domestic dispute. [2-19]  Again due to the relatively limited information available to the arbitral tribunal it may have limited scope for suggesting or directing issues or matters that might be decided in advance of others: bifurcation. However the practice of arbitral tribunals not having evidentiary hearings beyond a maximum of two weeks may prompt a tribunal to itself consider bifurcation. [2-20]  The traditional split of liability followed by quantum will no doubt feature in the considerations of most tribunals: clearly if liability is not found there is no reason to explore quantum and hence costs that might otherwise have been incurred can be saved. Similarly if liability is found on some, but not all, issues. If, however, liability is found on all issues it may enable the parties to compromise quantum rendering the second stage unnecessary – but if both liability and quantum are fully contested, bifurcation can lead to greater costs than dealing with everything on one occasion. [2-21]  Certainly in ICC arbitrations and in most others as well, the first procedural meeting will be at a stage when there is a Request for Arbitration and an Answer and before memorials. Tribunals might, in all but the most complex cases, be well advised to avoid memorials   See the discussion at [3–20].

2

40

Article 2: Consultation on Evidentiary Issues

and direct the parties to draw up a list of issues. Memorials can be a very expensive option and lead to unwieldy documents. A list of issues can bring a very disciplined approach. In a simple case there might be a simple list. In more complex cases there might be a consolidated responsive memorial (i.e. in a single document the Claimant sets out his claim AND the Respondent responds) and the parties record the issue between them in light of the rival contentions. This is a variation of a Redfern schedule but applied to memorials. It is a very useful tool to focus attention on what is truly important. [2-22]  Arbitral tribunals might also find it of assistance to address issues at this early stage that might otherwise become issues later. One such issue is the privilege standard to be applied. Before any party has a particular issue to defend or attack it might be easier to achieve consensus. Equally, achieving consensus on what does not amount to good faith (without being prescriptive) might assist later. Similar issues might be addressed in the same way all with a view to ensuring that the parties fully understand what is expected of them and their counsel so that time and cost are not expended other than in the proper pursuit of the arbitral reference. [2-23]  The encouragement to the tribunal in Article 2.3 permits a civil law style assumption of early intervention whilst preserving party-autonomy. By referring to “any issue” it necessarily includes issues of both fact and law.

Arti cl e 3

Documents

1 Within the time ordered by the Arbitral Tribunal, each Party shall submit to the Arbitral Tribunal and to the other Parties all Documents available to it on which it relies, including public Documents and those in the public domain, except for any Documents that have already been submitted by another Party. 2 Within the time ordered by the Arbitral Tribunal, any Party may submit to the Arbitral Tribunal and to the other Parties a Request to Produce. 3 A Request to Produce shall contain: (a) (i) a description of each requested Document sufficient to identify it, or (ii) a description in sufficient detail (including subject matter) of a narrow and specific requested category of Documents that are reasonably believed to exist; in the case of Documents maintained in electronic form, the requesting Party may, or the Arbitral Tribunal may order that it shall be required to, identify specific files, search terms, individuals or other means of searching for such Documents in an efficient and economical manner; (b) a statement as to how the Documents requested are relevant to the case and material to its outcome; and (c) (i) a statement that the Documents requested are not in the possession, custody or control of the requesting Party or a statement of the reasons why it would be unreasonably burdensome for the requesting Party to produce such Documents, and 41

42

Article 3: Documents

(ii) a statement of the reasons why the requesting Party assumes the Documents requested are in the possession, custody or control of another Party. 4 Within the time ordered by the Arbitral Tribunal, the Party to whom the Request to Produce is addressed shall produce to the other Parties and, if the Arbitral Tribunal so orders, to it, all the Documents requested in its possession, custody or control as to which it makes no objection. 5 If the Party to whom the Request to Produce is addressed has an objection to some or all of the Documents requested, it shall state the objection in writing to the Arbitral Tribunal and the other Parties within the time ordered by the Arbitral Tribunal. The reasons for such objection shall be any of those set forth in Article 9.2 or a failure to satisfy any of the requirements of Article 3.3. 6 Upon receipt of any such objection, the Arbitral Tribunal may invite the relevant Parties to consult with each other with a view to resolving the objection. 7 Either Party may, within the time ordered by the Arbitral Tribunal, request the Arbitral Tribunal to rule on the objection. The Arbitral Tribunal shall then, in consultation with the Parties and in timely fashion, consider the Request to Produce and the objection. The Arbitral Tribunal may order the Party to whom such Request is addressed to produce any requested Document in its possession, custody or control as to which the Arbitral Tribunal determines that (i) the issues that the requesting Party wishes to prove are relevant to the case and material to its outcome; (ii) none of the reasons for objection set forth in Article 9.2 applies; and (iii) the requirements of Article 3.3 have been satisfied. Any such Document shall be produced to the other Parties and, if the Arbitral Tribunal so orders, to it. 8 In exceptional circumstances, if the propriety of an objection can be determined only by review of the Document, the Arbitral Tribunal may determine that it should not review the Document. In that event, the Arbitral Tribunal may, after consultation with the Parties, appoint an independent and impartial expert, bound to confidentiality, to review any

Article 3: Documents

43

such Document and to report on the objection. To the extent that the objection is upheld by the Arbitral Tribunal, the expert shall not disclose to the Arbitral Tribunal and to the other Parties the contents of the Document reviewed. 9 If a Party wishes to obtain the production of Documents from a person or organisation who is not a Party to the arbitration and from whom the Party cannot obtain the Documents on its own, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available to obtain the requested Documents, or seek leave from the Arbitral Tribunal to take such steps itself. The Party shall submit such request to the Arbitral Tribunal and to the other Parties in writing, and the request shall contain the particulars set forth in Article 3.3, as applicable. The Arbitral Tribunal shall decide on this request and shall take, authorize the requesting Party to take, or order any other Party to take, such steps as the Arbitral Tribunal considers appropriate if, in its discretion, it determines that (i) the Documents would be relevant to the case and material to its outcome, (ii) the requirements of Article 3.3, as applicable, have been satisfied and (iii) none of the reasons for objection set forth in Article 9.2 applies. 10 At any time before the arbitration is concluded, the Arbitral Tribunal may (i) request any Party to produce Documents, (ii) request any Party to use its best efforts to take or (iii) itself take, any step that it considers appropriate to obtain Documents from any person or organisation. A Party to whom such a request for Documents is addressed may object to the request for any of the reasons set forth in Article 9.2. In such cases, Article 3.4 to Article 3.8 shall apply correspondingly. 11 Within the time ordered by the Arbitral Tribunal, the Parties may submit to the Arbitral Tribunal and to the other Parties any additional Documents on which they intend to rely or which they believe have become relevant to the case and material to its outcome as a consequence of the issues raised in Documents, Witness Statements or Expert Reports submitted or produced, or in other submissions of the Parties.

44

Article 3: Documents

12 With respect to the form of submission or production of Documents: (a) copies of Documents shall conform to the originals and, at the request of the Arbitral Tribunal, any original shall be presented for inspection; (b) Documents that a Party maintains in electronic form shall be submitted or produced in the form most convenient or economical to it that is reasonably usable by the recipients, unless the Parties agree otherwise or, in the absence of such agreement, the Arbitral Tribunal decides otherwise; (c) a Party is not obligated to produce multiple copies of Documents which are essentially identical unless the Arbitral Tribunal decides otherwise; and (d) translations of Documents shall be submitted together with the originals and marked as translations with the original language identified. 13 Any Document submitted or produced by a Party or non-Party in the arbitration and not otherwise in the public domain shall be kept confidential by the Arbitral Tribunal and the other Parties, and shall be used only in connection with the arbitration. This requirement shall apply except and to the extent that disclosure may be required of a Party to fulfil a legal duty, protect or pursue a legal right, or enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority. The Arbitral Tribunal may issue orders to set forth the terms of this confidentiality. This requirement shall be without prejudice to all other obligations of confidentiality in the arbitration. 14 If the arbitration is organised into separate issues or phases (such as jurisdiction, preliminary determinations, liability or damages), the Arbitral Tribunal may, after consultation with the Parties, schedule the submission of Documents and Requests to Produce separately for each issue or phase. IBA Commi t tee Commenta ry Article 3 deals with documents that the parties wish to introduce as evidence into the arbitral proceedings. Article 3 refers to three groups of

IBA Committee Commentary

45

documents: (1) documents that are at the party’s own disposal; (2) documents that the party wants to use as evidence for its submissions but cannot produce on its own, because they are either in the possession of the other party in the arbitral proceedings or in the possession of a third party outside of the arbitration; and (3) documents that neither party has introduced or wants to introduce as evidence into the arbitral proceedings, but which are seen as relevant and material by the arbitral tribunal. In addition, Article 3 contains several general principles for the treatment of documents as evidence by the parties and by the arbitral tribunal. Production of Documents Available to One Party The IBA Rules of Evidence begin with the principle that each party shall introduce those documents available to it and on which it wants to rely as evidence.3 This provision reflects the principle, generally accepted in both civil law and common law countries, that parties have a burden to come forward with the evidence that supports their case. Article 3.1 contains the phrase “within the time ordered by the arbitral tribunal”. This phrase is repeated throughout the IBA Rules of Evidence when a submission is to be made or an action to be taken by the parties. The Working Party believed that the best course is to maintain maximum schedule flexibility for the parties and arbitral tribunals. Therefore, throughout the IBA Rules of Evidence, as here, time frames are left to be determined by the arbitral tribunal in each case, presumably in consultation with the parties. For example, with respect to the initial production of documents on which each party intends to rely, the specific time when such documents are to be submitted may vary depending upon how well framed are the issues in the initial pleadings. Time frames will also, of course, vary depending upon the complexity of the matter, the resources and locations of the parties and the particular circumstances of each case. Following such an initial production of documents on which each party intends to rely, later submissions in the case, such as witness statements See UNCITRAL Model Law, Article 23; HKIAC Rules, Article 23.2; ICC Rules, Article 20(2); ICDR Arbitration Rules, Article 19.2; ICSID Arbitration Rules, Rule 33; LCIA Rules, Article 15.6; SCC Arbitration Rules, Article 26(2); WIPO Arbitration Rules, Articles 35–36.

3

46

Article 3: Documents

or expert reports, may make it necessary for parties to submit additional documents to rebut statements contained in such submissions. Article 3.11 (formerly Article 3.10) provides for such a second round of submission of documents within each party’s possession. Again, the arbitral tribunal is to determine when such a second round of production may take place. Documents in the Possession of an Opposing Party The issue of whether and under what conditions one party should be able to request production of documents from another party occupied much of the Working Party’s discussions in 1999. The vigour with which this issue was debated demonstrated that the question of document production was the key area in which practitioners from common law countries and civil law countries differ. The debate produced a balanced approach that became a central aspect of the IBA Rules of Evidence and has become widely accepted by both common law and civil law practitioners. The current revision of the IBA Rules of Evidence preserves this balance. Principles The Working Party was able to reach agreement on certain principles governing document production because practices in international arbitration can be, and have been, harmonised to a large extent. The Working Party was guided by several principles: 1 Expansive American or English-style discovery is generally inappropriate in international arbitration. Rather, requests for documents to be produced should be carefully tailored to issues that are relevant and material to the determination of the case. 2 At the same time, however, it was believed that there is a general consensus, even among practitioners from civil law countries, that some level of document production is appropriate in international arbitration. According to some of the most frequently used general rules, arbitral tribunals are to establish the facts of the case “by all appropriate means”.4 This includes the competence of the arbitral tribunal to order   E.g., ICC Rules, Article 20(1); LCIA Rules, Article 22.1(c).

4

IBA Committee Commentary

47

one party to introduce certain documents, including internal documents, into the arbitral proceedings upon request of the other party. Even in some civil law countries, a State court is entitled to order the production of internal documents, either upon request of one party or because it sees the need for these documents itself. 3 The revised text of the IBA Rules provides that requests to produce are to be directed both to the arbitral tribunal and to the other parties. In the first instance, a party is to produce all documents requested in its possession, custody or control as to which it makes no objection (Article 3.4). However, the decision on the scope of document production  – whether or not a party must introduce internal documents into the arbitral proceedings against its will – shall lie solely with the arbitral tribunal. Therefore, only the arbitral tribunal has the competence to make a decision on the request if the receiving party refuses to produce the requested documents voluntarily. 4 The scope of the permissible document request is also limited by certain objections described in Article 9.2 (see the discussion of these objections below) or the failure to satisfy the requirements set forth in Article 3.3. A party may raise any of the reasons for objection in opposing the document request. If it does so, the arbitral tribunal may first invite the relevant parties to consult with each other with a view to resolving the objection (Article 3.6). 5 If the objection is not resolved by means of such consultation, either party may request the arbitral tribunal to make a decision as to whether or not any of these objections apply as well as a decision on the propriety of the request for production itself (Article 3.7, formerly Article 3.6). The arbitral tribunal shall order the production if it is convinced, first, that the issues that the requesting party wishes to prove are relevant to the case and material to its outcome; second, that none of the reasons for objection set forth in Article 9.2 applies; and, third, that the requirements of Article 3.3 have been satisfied. The rules set forth in Articles 3.2–3.8 follow from the principles described above. These rules concerning requests for production of documents from other parties represent a balanced compromise between the broader view generally taken in common law countries and the more narrow view generally held in civil law countries. The IBA Rules of Evidence may be particularly useful, therefore, when an arbitration involves parties coming from these different legal backgrounds. A Continental

48

Article 3: Documents European party may, for example, find that these Rules are useful in seeking to restrict an overly broad request from a common law party, while a common lawyer may be able to use the IBA Rules of Evidence to obtain documents from a Continental European party that the latter may not otherwise wish to provide. Procedures

Usually following the initial submission of documents on which each party intends to rely pursuant to Article 3.1, any party may submit a request to produce documents to the arbitral tribunal and the other parties. This request must be submitted within the time ordered by the arbitral tribunal, as provided in Article 3.2. Article 3.3 provides certain requirements regarding the content of a request to produce, which are generally designed to have the request specifically describe the documents being sought. Article 3.3 is designed to prevent a broad “fishing expedition”, while at the same time permitting parties to request documents that can be identified with reasonable specificity and which can be shown to be relevant to the case and material to its outcome. This specificity of the information required by Article 3.3 is also designed to help the receiving party decide whether it wants to comply with the request voluntarily (as provided in Article 3.4), or if it wants to raise objections (Article 3.5). The specificity of the request is also designed to make it possible for the arbitral tribunal to decide, if there is an objection to the request to produce, whether or not to grant the request pursuant to the standards set forth in Article 3.7. The request to produce must (i) identify the document or documents sought, described in sufficient detail; (ii) state why the documents requested are relevant to the case and material to its outcome; and (iii) state that the documents requested are not in the possession of the requesting party (with one exception) and the reasons why that party assumes the documents requested to be in the possession of the other party. In a compromise between the common law and civil law systems, the request to produce can identify documents either by describing an individual document (Article 3.3(a)(i)) or by describing “in sufficient detail (including subject-matter) … a narrow and specific requested category of Documents that are reasonably believed to exist” (Article

IBA Committee Commentary

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3.3(a)(ii)). The description of an individual document is reasonably straightforward. The IBA Rules of Evidence simply require that the description be “sufficient to identify” the document. Permitting parties to ask for documents by category, however, prompted more discussion. The Working Party and the Subcommittee did not want to open the door to “fishing expeditions”. However, it was understood that some documents would be relevant and material and properly produced to the other side, but that they may not be capable of specific identification. Indeed, all members of the Working Party and of the Subcommittee, from common law and civil law countries alike, recognised that arbitrators would generally accept such requests if they were carefully tailored to produce relevant and material documents. For example, if an arbitration involves the termination by one party of a joint venture agreement, the other party may know that the notice of the termination was given on a certain date, that the Board of the other party must have made the decision to terminate at a meeting shortly before that notice, that certain documents must have been prepared for the Board’s consideration of that decision and that minutes must have been taken concerning the decision. The requesting party cannot identify the dates or the authors of such documents, but nevertheless can identify with some particularity the nature of the documents sought and the general time frame in which they would have been prepared. Such a request may qualify as a “narrow and specific category of Documents”, as permitted under Article 3.3(a)(ii). As documents in electronic form have become more important in international commerce and hence in dispute resolution, and since their production may be burdensome to the requesting party, the Subcommittee introduced in Article 3.3(a)(ii) the means for parties to identify more precisely a narrow and specific requested category of documents maintained in electronic form. Either at a party’s own behest or upon order of the arbitral tribunal, electronic documents may additionally be identified by file name, specified search terms, individuals (for example, specific custodians or authors) or other means of searching for such documents in an efficient and economic manner (Article 3.3(a)(ii)). The revised Rules are neutral regarding whether electronic documents should be produced in any given arbitration; they simply provide a framework for doing so where the parties agree or the arbitral tribunal orders production of such documents.

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As noted above, the provisions of Articles 3.3(b) and (c) also serve as checks on the scope of any request to produce. The content of the requested document needs to relate to issues in the case, and the relationship between the documents and the issues must be set forth with sufficient specificity so that the arbitral tribunal can understand the purpose for which the requesting party needs the requested documents. By requiring the requesting party to state that the documents sought are not in its own possession, the IBA Rules of Evidence seek to prevent unnecessary harassment of the opposing party by the requesting party. Article 3.3(c)(i) of the revised IBA Rules recognises one exception to this principle. In the age of electronic documents, it will become increasingly less likely that a particular document has been entirely deleted from a party’s records, as it may continue to exist electronically, such as on back-up tapes or in electronic archives. Where a document is no longer easily accessible, for example because it is not in a server’s active data, it may be less burdensome and costly for another party to produce it. Under the previous text of the IBA Rules, documents produced pursuant to a request to produce were to be sent not only to the other parties in the arbitration but also to the arbitral tribunal. The rationale had been that because any documents produced would automatically become a part of the record, the self-interest of parties should cause them thereby to limit the scope of their request. This rule was revised in 2010 in light of the observation that it is often not efficient for arbitrators to review all of the documents at the stage of their production. Accordingly, the default has been changed such that documents are to be produced to the other parties and only to the arbitral tribunal if it so requests. The specificity required in the request to produce makes it likely that such a request will be made only after the issues have become sufficiently clear in the case. The precise timing of such a request will be determined by the arbitral tribunal. It will naturally depend upon the specificity of the initial pleadings and any Terms of Reference or other documents identifying the issues. A party seeking to oppose entirely or to limit a request to produce must raise its objections in writing within the time ordered by the arbitral tribunal. As noted, the reasons for objection shall be those set forth in Article 9.2 of the IBA Rules of Evidence (discussed below) or a failure to satisfy any of the requirements of Article 3.3. If a party raises such objections, the arbitral tribunal must decide on the propriety of the request

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to produce. The revised text of the IBA Rules provides that the arbitral tribunal may, before making such decision, give the parties an opportunity to consult with each other with a view to resolving the objection themselves (Article 3.6). Party-to-party consultation may in some circumstances be the more effective means of resolving objections, including those based on insufficient descriptions and other deficiencies in the form of the request to produce. If the arbitral tribunal deems such consultation to be unnecessary or if it takes place but objections remain following it, the arbitral tribunal shall consult the parties regarding the request to produce and the objections, and shall “in timely fashion” decide whether to accept some or all of the objections. The arbitral tribunal may order production of the documents sought in the request to produce only if it is convinced that (i) “the issues that the requesting party wishes to prove are relevant to the case and material to its outcome”, (ii) “none of the reasons for objection set forth in Article 9.2 applies” and (iii) “the requirements of Article 3.3 have been satisfied”. This third requirement was added in the 2010 revision. Occasionally, an objection – such as on the grounds of privilege, commercial confidentiality or special political or institutional sensitivity (see Article 9.2(b), (e) and (f )) – may require the arbitral tribunal first to review the document itself without review by the requesting party. It is generally preferable that the arbitral tribunal not review any such documents itself because (i) if after reviewing the document the arbitral tribunal upholds the objection, it could not eliminate its knowledge of the document once it had been reviewed, or (ii) there may be confidentiality concerns. For such cases, Article 3.8 (formerly Article 3.7) provides that in such “exceptional circumstances”, when the arbitral tribunal determines that it should not review the document, it may appoint an independent and impartial expert, who is bound to confidentiality, to review any such document and report on the objection. In other circumstances, such as where time and cost factors are considered to be compelling, the arbitral tribunal may, nonetheless, decide to review the document itself. The expert, who need not necessarily be appointed pursuant to the terms of Article 6 of the IBA Rules of Evidence, would provide a report on the objection, but the arbitral tribunal is to make the final ruling as to its validity. If the objection is upheld, then the document is to be returned by the expert to the producing party, and it does not become a part of the arbitral proceedings. If, on the other hand, the objection is denied, then the

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requested party should produce the document to the other parties pursuant to the request to produce. In either event, the expert would, of course, also keep confidential the information learned in reviewing the document. Requests to Produce by the Arbitral Tribunal The IBA Rules of Evidence also permit the arbitral tribunal to seek certain documents that it considers to be relevant to the case and material to its outcome or to allow or request parties to use their best efforts to obtain them. First, a party may request production of documents from a person or organisation that is not a party to the arbitration. Some arbitration laws permit arbitral tribunals to take or to apply for certain steps, such as a subpoena, to obtain documents from non-parties. Therefore, Article 3.9 (formerly Article 3.8) permits parties to ask an arbitral tribunal “to take whatever steps are legally available to obtain the requested Documents, or seek leave from the arbitral tribunal to take such steps itself ”, as long as the arbitral tribunal determines that such documents would be “relevant to the case and material to its outcome”, the requirements of Article 3.3 have been satisfied and none of the reasons for objection set forth in Article 9.2 applies. In addition, since the arbitral tribunal may be required under certain arbitral rules to establish the facts of the case by all appropriate means,5 it should be entitled to order a party to produce documents so far not introduced as evidence into the proceedings (see Article 3.10, formerly Article 3.9) or to request any party to use its best efforts to take, or itself take, any step that it considers appropriate to obtain documents from any person or organisation. Ultimate oversight and control over this process should remain with the arbitral tribunal. However, there may be circumstances under which a party is better positioned to undertake such steps, including, for example, due to presence in the country in question. A party receiving such a request from an arbitral tribunal, however, has the same right to raise objections, pursuant to Article 9.2, as if the documents had been sought in a request to produce by another party. If such objections are raised, the arbitral tribunal makes a decision based upon the considerations described above.   ICC Rules, Article 20(1); LCIA Rules, Article 22.1(c).

5

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53

General Issues Regarding Documents Copies The IBA Rules of Evidence permit the production and submission into evidence of copies of documents, rather than originals. Of course, the copies must fully conform to the originals (Article 3.12 (a), formerly Article 3.11). The arbitral tribunal may request the production of an original document at any time, so that if a party believes that the copy does not fully conform to the original document, it may ask the arbitral tribunal to require the production of that original. As electronic transmission and storage of documents often leads to the existence of multiple copies of the same document, the revised text of the IBA Rules of Evidence provides that a party is not obligated to produce multiple copies of documents that are “essentially identical” unless the arbitral tribunal decides otherwise (Article 3.12 (c)). In some cases, multiple copies may be individually relevant to the dispute. In other cases, the production of multiple copies of the same document may unduly increase the cost of reviewing the documents for the other party and even be at odds with the parties’ obligation to conduct themselves in good faith in the taking of evidence (Preamble 3). Form of production for electronic documents The cost of the taking of evidence in electronic form can vary widely depending on the form in which documents are to be submitted. Thus, absent agreement by the parties or determination by the arbitral tribunal to another form, the revised text of the IBA Rules of Evidence provides that the default form of production for electronic documents shall be the form most convenient or economical to the producing party that is reasonably usable by the recipient (Article 3.12(b)). This format will generally not be the native format with full metadata, as submission in this format can be unduly expensive and inconvenient. Where electronic disclosure is likely to play a role in an arbitration, the question of the form of production should be addressed early in the Article 2.1 consultation (see Article 2.2(c)). Translations Article 3.12(d) requires that if translations of documents are to be submitted, they are to be submitted together with the originals, marked as

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translations and identify the original language. The IBA Rules do not govern whether translations are required in particular arbitral proceedings, whether particular documents may be translated in part only, the resolution of disputes regarding translations or the timing of submission of translations. Confidentiality Both the Working Party and the Subcommittee discussed at length what confidentiality ought to be accorded to documents produced pursuant to the IBA Rules of Evidence. The issue of the extent of confidentiality that should attach to arbitration proceedings continues to be a controversial topic, in particular with respect to intellectual property and investment treaty-based arbitrations. The Working Party decided in 1999 that the IBA Rules of Evidence should not seek to change the evolving standards with respect to confidentiality and distinguished between documents submitted by a party in support of its own case and documents produced pursuant to a request to produce or other procedural order of the arbitral tribunal. When reconsidering the issue, the Subcommittee decided to expand Article 3.13 (formerly Article 3.12) to cover the former category as well as documents submitted by non-parties. Article 3.13 now provides that any document submitted or produced by either parties or non-parties in the arbitration is to be kept confidential by the arbitral tribunal and by the other parties. Such a document may be used only in connection with the arbitration. This requirement does not apply to documents that are already in the public domain or are made public by the parties prior to production in the arbitration. Of course, parties remain free to make their own documents public at any time. The IBA Rules of Evidence take no position with respect to the confidentiality of non documentary evidence such as oral testimony (although a transcript recording oral testimony would be subject to confidentiality protection as a document submitted or produced by a non party). Furthermore, the “General Rules” applicable to the arbitration may also impose requirements relevant to confidentiality, or the parties or the arbitral tribunal may agree or determine additional rules relating to confidentiality (see Article 9.4, which applies to all types of evidence). For this reason, the IBA Rules state simply, “this requirement shall be without

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prejudice to all other obligations of confidentiality in the arbitration”. Therefore, parties must look to the institutional or ad hoc rules pursuant to which they are conducting the arbitration, or to the parties’ agreement or the legal regime governing the arbitration, to determine what level of confidentiality would apply to such documents. Finally, the revised IBA Rules of Evidence also include certain exceptions to this obligation, namely where disclosure is required of a party to fulfil a legal duty, protect or pursue a legal right or enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority. To prevent inadvertent disclosure of documents, tribunals and parties are well-advised to discuss procedures for consideration of confidentiality in any consultation under Article 2.1 (e.g., proper retention or deletion of evidence following conclusion of arbitral proceedings and any challenge or enforcement proceedings). Inferences Article 9.5 (formerly Article 9.4) of the IBA Rules of Evidence provides that if a party fails to comply with a procedural order of an arbitral tribunal concerning the production of documents, then the arbitral tribunal may infer from this failure to comply that the content of the document would be adverse to the interests of that party. This inference also applies when an opposing party does not make a proper objection to a request to produce within the time-limit set by the arbitral tribunal, but nevertheless fails to produce requested documents. As an additional deterrent, new Article 9.7 provides that in assigning costs, the arbitral tribunal may also consider the failure of a party to conduct itself in good faith in the taking of evidence. Such failure may include a failure to comply with orders to produce. Stages New Article 3.14 provides that the taking of documentary evidence may also be scheduled in phases. This procedure was already contemplated by the previous text of the IBA Rules with reference to witness testimony (Article 4.4), and has now been expanded to encompass documentary evidence as well. This mechanism can be an important means to manage time and control costs in particular circumstances and may be proposed by the parties or introduced by the tribunal of its own accord.

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may

There can be no doubt that “may” (littered throughout the Article) is of fundamental importance. It makes it clear that these are not strict rules and procedures. There are at least two reasons for this lack of specific guidance. Firstly, both arbitrators and practitioners enjoy the flexibility of international arbitration. Arbitral discretion and the absence of rigid rules of the kind seen in formal litigation remains a major attraction of the process over that provided by national courts. Secondly, parties (and counsel) to international arbitral proceedings are frequently from countries having very different legal traditions. For example, many countries and parties have no tradition of document retention. To such participants from such countries the thought that there could be a duty to preserve all relevant evidence would be as unthinkable to them as it would be routine to others. The heavy discretion afforded to Tribunals reflects the need to cater for different cultures and practices and any rules that sought to be prescriptive would be unlikely to receive the universal acceptance that the IBA Rules have. This flexibility however creates uncertainty of how parties should approach the issue from the outset. At least two issues make preparation difficult. First, the broad discretion of individual arbitrators that in different combinations will constitute a Tribunal means that decisions do not offer much in the way of being able to predict how a new matter might be approached. Secondly, and perhaps more importantly, the decisions on such issues are matters of procedure and rarely reported.

Particular Words and Phrases relevant to the case and material to its outcome on which it relies

possession, custody or control

objection

57

There can be no doubt that these words are key to the Rules. They are mentioned no less than eight times: Articles 2.3(a); 3.3(b); 3.7; 3.9(i); 3.11; 4.9; 8.5 and 9.2(a). Unless and until there are Requests to Produce the record will consist of documents that a party relies upon. Clearly each party will wish to rely upon the documents necessary to prove its case but the point is often overlooked and insufficient evidence is produced to discharge the burden that the party carries. Equally, it is vital to note that there is no obligation to disclose or give discovery generally. The only obligation is to produce what you intend to rely upon – that is unless and until there is a Request. These words equate (in part) to the discovery obligations in England pre-1999. Under that jurisprudence ‘possession’ was physical possession that entailed rights over the document and was distinguished from mere custody or holding and ‘custody’ included documents held by e.g. a director or employee of a company. The additional word in England pre-1999 was ‘power’ that included documents not in a party’s possession or custody but which it had the right to obtain from a person who has them. Post-1999 the single word ‘control’ has been used in England. That word is now defined as physical possession, the right to possession and the right to inspect or take copies. The words are clearly intended to have a wide meaning and there seems to be no reason why every description of holding or right should not be included in the definition. Articles 3.4 and 3.5 make clear the value of, and need for, an objection. Without that documents requested must be produced. With objection the obligation will be whatever the arbitral tribunal orders.

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[3-1]  The length of Article 3 and of the IBA Commentary is no mistake: Article 3 is the heart of the Rules. [3-2]  The essence of Article 3.1 can be found expressly or implicitly in the main institutional rules, e.g. ICC Rules Article 25.1 and 25.2, LCIA Rules Article 15.6. The presumption that a party will produce all documents that it intends to rely upon is inconsistent with any request for disclosure of documents prior to the submission of the substantive memorials or pleadings (e.g. statement of claim or defence). This is for two main reasons: firstly, arbitral tribunals generally allow for the voluntary production of documents relied upon before ordering disclosure to avoid contested applications for what might be produced voluntarily in any event, and secondly, as requests for disclosure must be “narrow and specific”, the main issues in the case have to be clearly understood before a request for production can be assessed in light of the Article 3.3 criteria. Furthermore, it should be noted that under Article 3.1 a party is only required to produce those documents on which it “relies”, therefore any failure to voluntarily (e.g. without an order from the tribunal) disclose evidence adverse to a party’s position is not a violation of the Rules. [3-3]  In most civil law jurisdictions evidence is submitted with the claim and such proceedings usually do not have the pre-trial stages of disclosure and witness statements. The obligation to produce documents at an early stage can be seen to have some familiarity with civil law roots. [3-4]  Under the Article 3.2, a request is to be submitted to the other parties to the arbitration in addition to the arbitral tribunal. The submission to the other parties makes express what was the practice in any event. Whilst the 1999 Rules provided only that a party could submit a Request to Produce to the arbitral tribunal it was invariably the case that the other party would be copied in, at the very least. Indeed more often the Request would only go to the other party and the arbitral tribunal would only be involved if and to the extent that the parties could not agree. Many arbitral tribunals will direct that Requests should move between the parties through the completion of a Redfern1 schedule and See generally Redfern & Hunter: Law and Practice of International Commercial Arbitration 4th Edition ¶6–77. A Redfern schedule is a variation of a Scott schedule which is a device

1

Discussion

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only then be submitted to the arbitral tribunal who will gain little by seeing the Redfern schedule moving between the parties. The completed schedule should then form the basis of the determination by the arbitral tribunal of those issues that cannot be resolved by the parties. [3-5]  Plainly, it would be contrary to natural justice for one party to submit a Request to the arbitral tribunal and for the tribunal to adjudicate upon it without giving the other party an opportunity to respond. [3-6]  Article 3.3 is central to the taking of documentary evidence in international arbitration as it, in effect, limits the extent of disclosure and frames the requirements for a potentially successful Request. It is worth noting that the only documents that will be produced and on the record will be those that any of the parties wishes to rely upon and those that a party is compelled to produce under a Request to Produce compliant with Article 3.3. There is no general obligation to give discovery still less extensive discovery as recognised in the U.S. Courts where discovery encompasses not only document production but also depositions, interrogatories, admissions and the like. [3-7]  None of the institutional rules provide for compulsory discovery in general terms – most simply provide that the Tribunal can direct parties to produce documents e.g. UNCITRAL Rules Article 24(3). Even the U.S. dominated rules e.g. the AAA Commercial Arbitration Rules Rule 21 and the AAA-ICDR Article 19(3), provide for the Tribunal to direct the production of documents. The ICDR Guidelines for Arbitrators also provide for the exchange of documents relied upon and the ability to request additional documents but those requests will have to be justified on the grounds of time and expense. used in England for a variety of reasons but principally to record rival contentions on technical or detailed issues in tabular form. It is much used in building cases for defects with columns for the rival contentions and a final column for the judge to record his conclusions. A Redfern schedule is described by its inventor as having 4 columns: the document(s) requested; the justification for the request; the responding party’s reasons for refusal and a blank column for the Tribunal. Perhaps a modern variation might have a column for the requesting party to list each relevant part of Article 3.3 and a corresponding column for the objecting party and finally a column for the Tribunal to record its determination. In complex matters rebuttal or rejoinder columns can be added. The principles behind the Redfern schedule should be flexible so as to permit it to be amended for the facts of a particular case.

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[3-8]  Article 3.3 is more broadly framed than previously, introducing specific provisions for electronic documents and that a party may not seek a document from another party if the document is in its own custody, possession or control. [3-9]  It has never been the intention of the IBA to create an Anglo-American style system of document production for international arbitration. “Discovery” in the Anglo-American sense can be thorough, costly and time-consuming, and has at its core the purpose of affording a party an opportunity to establish its case by all parties having the obligation, to a greater or lesser extent, of producing documents that both support and undermine that party’s case, and to do so under compulsion. This sort of discovery process is generally not suited or compatible unless the parties have agreed upon it, and Article 3.3 should not be interpreted as contemplating such a procedure. It is important to note that in some instances the parties might well agree on a process of discovery (or more properly ‘disclosure’) especially where there are allegations of dishonesty, fraud, appropriation or secret profits. In such circumstances the party accused of fraud etc. will be likely to have documents that it does not rely upon yet might be highly material. Similarly, if a party is accused of unlawfully infringing intellectual property rights they are likely, if the claim is made out, to have to pay notional royalties or account for the profits earned. In such a case the infringer alone will have the documents to prove the extent of the wrongdoing. They are unlikely to produce such documents as documents upon which they rely and the innocent party may not be able to define them with sufficient particularity to make the Request ‘narrow and specific’. [3-10]  The view of those from a civil law background might well take the view that ‘narrow and specific’ is directed at the production of an individual contract or letter, such as a letter mentioned in another letter already produced. That would, however, be too restrictive an approach: it is now plain that it is quite proper for Requests to be directed at categories of documents. Practitioners will, however, be aware that the most common reason for disallowing Requests is the lack of ‘specificity’ and hence to have a good chance of obtaining an order from an arbitral tribunal a category must be as specific as possible.

Discussion

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[3-11]  The Rules have had added several provisions addressing so-called “e-disclosure” (the disclosure of electronic evidence), specifically in relation to Article 3, the revised Article 3.3(a)(ii), which outlines the requirements for a Request to Produce, allows a party requesting the production of electronic documents to “identify specific files, search terms, individuals or other means of searching for such documents in an efficient and economical manner.” Article 3.12(b), a new provision, provides that electronic documents “shall be submitted or produced in the form most convenient or economical to [the producing party] that is reasonably usable by the recipients….” [3-12]  It is important to see these changes in context. In addition to the changes to Article 3, four other provisions introduced impact on electronic-document production: Articles 2, 9.2, 9.3, and 9.7. Article 2, “Consultation on evidentiary issues”, encourages the parties and the tribunal to hold a procedural conference in order to agree, at the outset, on how to manage the evidentiary aspects of the proceeding. Of particular relevance to electronic documents, the parties should seek to agree on how the evidence will be produced (c), the level of confidentiality (d), and the retention policy that should apply once the arbitral proceedings are initiated (e). Article 9.2 provides the tribunal with various reasons to exclude documents from production, thus limiting the volume of documents to be produced. These reasons include: burden (9.2(c)), loss or destruction of the document (9.2(d)), and considerations of procedural economy, proportionality, fairness, or equality (9.2(g)). Similarly, Articles 9.3 on privilege, and 9.7 on good faith provide further potential limitations on the volume of documents produced that are maintained in electronic format. [3-13]  Two fundamental points can be made. Firstly, despite the new medium, the provisions make clear that practitioners should not expect U.S.-style e-discovery. Article 3.3(a) comes after provisions that stress the requirement of specificity in production requests. This ensures that even with electronic documents, requesting parties will be unable to ignore the overriding limitation to specific documents. [3-14]  Secondly, it is worth noting that the producing party may produce electronic documents in any reasonably usable form. While production of documents in their native format generally results in a

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more economical and fair way to manage document production, the Rules chose not to recommend a particular approach in this respect and have left it for the tribunal to decide, on a case by case basis, what the economical and fair format would be. [3-15]  The Rules are now consistent with other recent publications. For example, the ICC has a task force dedicated to the production of electronic documents and in May 2008 the ICDR introduced Guidelines for Arbitrators Concerning Exchanges of Information in which it devotes several provisions to documents maintained in electronic form. The principles developed in the Rules are consistent with the overall approach near universally adopted to limit the extent of document production. Article 3(a) of the ICDR Guidelines, limits the scope of production to those documents “reasonably believed to exist” and which are “relevant and material to the outcome of the case”. The article also addresses requests for electronic documents: “Requests for documents maintained in electronic form should be narrowly focused and structured to make searching for them as economical as possible. The tribunal may direct testing or other means of focusing and limiting any search.”

[3-16]  The specific reference in the Rules to e-disclosure is, perhaps, inevitable. Whilst it has been arguable that no changes were required to address the growing preponderance of electronic material, it was well recognised that as the vast majority of documents are now held electronically rather than in paper form, change was inevitable. Electronic documents include emails, word processing files, databases, web pages, and text or sms messages. The tendency to copy many recipients to an email message, for example, considerably increases the volume of electronic documents and the ability to store them relatively cheaply and easily without physical storage space results in many more documents being kept than might have been the case with paper copies. In equivalent paper storage the volumes are nearly beyond comprehension.2 The ease of use and the extent of the use of electronic communication distinguishes it from The most basic measurement of computer data is a “byte.” A byte is made up of 8 bits. A bit is a binary digit: “0” or “1.” A byte typically represents a number or letter. 1,024 bytes equal a “kilobyte;” 1,048,576 bytes equal a “megabyte” (something like 500 typewritten pages); 1,073,741,824 bytes equal a “gigabyte” (something like 500,000 typewritten pages)

2

Discussion

63

paper documents. Much electronic communication is a substitute for face-to-face meetings or telephone calls. It can often be very informal and hence of quite different “look-and-feel” to traditional paper documents. Finally, there is permanence to electronic communication that does not exist in face-to-face meetings or telephone calls. The issues that this raises are not, however, new. The English High Court recognised that electronic documents would be within the scope of discovery in 1975.3 The U.S. Federal Rules of Civil Procedure have included electronic documents since 1993. [3-17]  Lessons as to how arbitral tribunals might deal with the new e-disclosure powers can be derived from the attitude of the courts in common law countries that have now grappled with these issues for some years. That is not to say that the decisions of common law courts should be adopted wholesale – rather the decisions can be useful guidance and parts of the learning can be adopted. [3-18]  The attitude of the courts in respect to the fundamental difference between paper and electronic documents was illustrated in Byers v. Illinois State Police:4 “Computer files, including e-mails, are discoverable … However, the court is not persuaded by the plaintiffs’ attempt to equate traditional paper-based discovery with the discovery of e-mail files … Chief among these differences is the sheer volume of electronic information. E-mails have replaced other forms of communication besides just paper-based communication. Many informal messages that were previously relayed by telephone or at the water cooler are now sent by e-mail. Additionally, computers have the ability to capture several copies (or drafts) of the same e-mail, thus multiplying the volume of documents. All of these e-mails must be scanned for both relevance and privilege. Also, unlike paper-based discovery, archived e-mails typically lack a coherent filing system. Moreover, data archival systems commonly store information on magnetic tapes which have become obsolete. Thus, parties incur additional costs in translating the data from the tapes into useable form.” and 1,099,511,627,776 bytes equal a “terabyte” (something like 500 billion typewritten pages). A CD-ROM with 650 MB capacity could hold 325,000 typewritten pages and a modern laptop with 200GB capacity 100 million pages. In considering e-disclosure these volumes of data should be kept in mind. 3 Grant v. Southwestern and County Properties Ltd [1975] Ch 185. 4 53 Fed. R. Serve. 3d 740 (N. D. Ill. 2002). This was cited with approval in the English case of Digicel v. Cable & Wireless [2008] EWHC 2522 (Ch).

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[3-19]  For any newcomer to the field of e-disclosure the considerable work in this area undertaken by the Sedona conference needs to be foremost in the list of literature. The Sedona Principles and Glossary are invaluable to a better understanding of the issues.5 [3-20]  Practice will inevitably vary with experience of e-disclosure and hence it may be expected that arbitral tribunals will have differing attitudes and practices before a common approach is arrived at. The U.S. system has been codified in the Federal Rules of Civil Procedure 2007. It directs that the topic be addressed early in the case, another concept adopted by the IBA. Specifically, parties must disclose the electronic documents they have and where they are stored,6 and they must confer and discuss how to deal with electronic documents and their preservation.7 Similar provisions are to be found in the English rules of procedure albeit expressed in different language. The Practice Direction 31B to Part 31 of the Civil Procedure has a paragraph that re-emphasises the wide definition of document and has a “meet and confer” type provision8 and that the parties should cooperate as to the format of production. [3-21] In the U.S. Federal Rules of Civil Procedure, the (sensible) distinction is drawn between “reasonably accessible” and “not reasonably accessible” documents. The primary obligation is to produce from reasonably accessible documents. A party does not have to produce from documents that are not “reasonably accessible because of undue burden or cost.”9 The undue burden or cost can be “trumped” by “good cause” but then that can be subject to conditions the most usual of which is that the requesting rather than the producing party The documents are available at http://www.thesedonaconference.org. Rule 26(a)(1)(B). Rule 26(f )(3): if documents are destroyed there may be sanctions for doing so although Rule 37(f ) creates a relief against sanctions where destruction is a “result of the routine, good-faith operation of an electronic information system.” The key issues are likely to be when the duty to preserve arose (which could, of course, be well before a reference is commenced) and the extent of that duty (which will in turn depend on what is known of the dispute, who the relevant custodians might be and what data might be relevant). The Sedona Principles acknowledge that a perfect system of preservation may be impossible. Reasonable, good faith efforts should be sufficient in the vast majority of cases. 8 The parties should discuss issues of preserving and searching for electronic data before the first case management conference / procedural meeting: see Article 2.1. 9 Rule 26(b)(2)(B). 5

6 7

Discussion

65

bears the cost of production.10 It is another instance of balancing need and cost and there can be no definitive answer that it will always be appropriate to act in one way or another.11 [3-22]  The leading case in the area of accessibility in the U.S. is Zubulake v. UBS Warburg.12 Zubulake identified five categories of data accessibility and, hence, the burden of production.13 The Sedona principles likewise distinguish between accessible and inaccessible data. In assessing the balance between need and cost, the Advisory Committee Notes on the Federal Rules lists seven helpful factors to bear in mind: (1) The specificity of the discovery request; (2) The quantity of information available from other more readily accessible sources; (3) The failure to produce relevant information that seems likely to have existed but is no longer available either at all or on readily accessible sources; (4) The likelihood of finding relevant material that cannot be obtained from other readily accessible sources; (5) The perceived importance and usefulness of the information sought; (6) The importance of the issues at stake in the litigation; and (7) The parties’ resources. Although doing so does not relieve the producing party from considering the material for relevance and privilege which may well be a considerable burden in itself. 11 For examples of courts on both sides of the Atlantic grappling with these issues, see, e.g., the U.S. court case Bullis v. Nichols, 2005 WL 1838634 (W.D. Wash. Aug. 1, 2005) (in which the court refused to order the production of email on the basis that it would entail the production of 166,000 emails); and the English case, Marlton v. Tectronix UK Holdings [2003] EWHC 383 (in which the court held that what might be reasonable in one case might not be in another). 12 The various rounds of the litigation being reported at 217 F.R.D. 309 (S.D.N.Y. 2003), 229 F.R.D. 422 (S.D.N.Y. 2004), 220 F.R.D. 212 (S.D.N.Y. 2003) 216 F.R.D. 280 (S.D.N.Y. 2003). 13 Those categories include: (1) active, online data accessed on a day-to-day basis; (2) “near-line” data stored on optical or magnetic disks capable of being accessed automatically or by computerised means; (3) “offline storage archives” such as those included in category (2) above but where manual intervention is required to access the data; (4) “back-up tapes” which, because they mirror the computer structure, are unlikely to be organised for ease of searching, and; (5) “erased, fragmented or damaged data” that can only be retrieved by significant processing. Generally, the first three categories of data are considered “accessible” and the last two categories are considered “inaccessible” (W.E. Aubuchon Co Inc v Benefirst LLC, 245 F.R.D. 38 at 42 (D. Mass. 2007)). 10

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[3-23]  These are sensible guidelines and, suitably adapted, should be considered for adoption by arbitral tribunals facing these issues. Again the English Civil Procedure Rules have a balancing exercise in assessing what is a reasonable search. The non-exhaustive list of matters that may be relevant as to the extent of a reasonable search are:14 (1) The number of documents involved. (2) The nature and complexity of the proceedings. (3) The ease and expense of retrieval of any particular document. This includes: (a) The accessibility of Electronic Documents … (b) The location of relevant Electronic Documents … (c) The likelihood of locating relevant data. (d) The cost of recovering any Electronic Documents. (e) The cost of disclosing and providing inspection of any relevant Electronic Documents. (f ) The likelihood that Electronic Documents will be materially altered in the course of recovery, disclosure or inspection. (4) the availability of documents or contents of documents from other sources; and (5) The significance of any document which is likely to be located during the search. [3-24]  The enormous bulk of the electronic material that is likely to be disclosed and the limitations of the human eye  – especially that of the weary paralegal late at night – to pick up every privileged document results in a significant risk that a privileged item may slip through undetected. In consequence the U.S. Federal Rules of Civil Procedure has special rules15 to claw-back privileged material that has been inadvertently disclosed in the process of e-discovery. [3-25]  At a practical level, the vast bulk of data that may need to be considered can be significantly reduced by running the ­population through a filter of “keyword searches”16 and CPR 31B PD 21.  15  Rule 26(b)(5)(B). Keyword searches are expressly recognised in the Practice Direction to the English Civil Procedure Rules Part 31 – Practice Direction 31B (paragraph 9(3)(b)): “The parties and their legal representatives must also … discuss the disclosure of Electronic Documents … The discussions should include … the tools and techniques … to reduce the burden and cost

14

16

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de-duplication.17 With the huge volumes of data now stored as email, it is often an unreasonably onerous task to manually review each document. In consequence, the discovery review is commonly limited by keyword searches. This filters out those documents not having one or more of the keywords present by allowing, through the filter, those that have one or more of the keywords. This can be an invaluable aid to a sensible, cost-effective, and proportionate approach to disclosure and is expressly acknowledged by the Rules in Article 3.3(a)(ii). However, running keyword searches over a large database can still be expensive and consequently it is advisable to agree on keyword lists as much as possible, or at least be able to demonstrate that a fair and reasonable approach has been taken to performing the search. It is also important to consider, and if necessary to agree, on whether the search will extend to metadata and/or deleted items (or other categories of non-active data), since these sources of information can often be extremely revealing. Digicel v. Cable & Wireless18 is an example of the court grappling with keyword searches. [3-26]  If there are serious issues but the burden and cost appear high, the arbitral tribunal may wish to consider a partial disclosure. An example of this is illustrated in Zubulake v. UBS Warburg,19 a case involving an issue over the restoration of seventy-seven back-up tapes. The court ordered a sample of five tapes to be restored to assess the evidential value of the material and the cost of doing so. Similarly, in Flexsys Americas LP v. Kumho Tire USA Inc,20 the court was faced with the issue of whether the plaintiff should produce documents relating to one custodian or from every employee. The court ordered production from ten custodians of the defendant’s choice. In Digicel v. Cable & Wireless,21 the court ordered the restoration of back-up of disclosure … including … the use of agreed Keyword Searches …”. Keyword Searches are defined as meaning “a software-aided search for words across the text of an Electronic Document.” 17 Some studies show that effective filtering techniques by custodian, time and date, file size, keywords and de-duplication can reduce the number of documents to be reviewed by up to 75%. 18 [2008] EWHC 2522 (Ch). 19 216 F.R.D. 280 (S.D.N.Y. 2003). 20 1:05-CV-156, 2006 WL 3526794 (N.D. Ohio Dec. 6, 2006). 21 Supra, n.18.

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tapes sufficient to search the email accounts of seven individuals and, because of the difficulty of identifying the accounts, the parties were directed to “meet and confer” and, thereafter, the lawyer for the party responsible for the restoration was to report progress every 10 days or so to the other lawyer. [3-27]  The ‘narrow and specific’ requirement is one that continues to exercise practitioners and arbitral tribunals alike. [3-28]  In practice arbitral tribunals apply a fairly strict view of identifying a category and many requests were denied for lack of specificity. The requesting party may wish to have disclosure of documents it has difficulty in specifying with any accuracy. This is the more so where it relates to actions in which the requesting party was not involved. The party against whom the discovery is sought may wish to know precisely what it should search for and to have considerable specificity so as to limit the scope of what has to be given. The typical request for “all documents being, evidencing, relating to, touching upon or concerning” an issue, without limitation in subject matter, time and interlocutors, is difficult to search for and produce. It is unlikely to find favour with any tribunal. There is a fine but important distinction between an incoherent and non-specific categorisation and a detailed narrow and specific description. Albeit in another context, Lord Fraser in Sedgwick Group v. Johns-Manville Fibreboard Corp.22 said that the words “separately described” were intended to rule out a compendious description of several documents provided that the exact document in each case is clearly indicated: “Monthly bank statements for the year 1984 relating to his current account” with a named bank would satisfy the requirements of specificity, provided that the evidence showed that regular monthly statements had existed during the year and were likely to be still in his possession. But a general request for “all bank statements for 1984” would in my view refer to a class of documents and would not be admissible.

[3-29]  This case concerned a specific restriction for a specific statute but the degree of specificity required for a witness to bring documents under a subpoena has been described as intending to avoid a   [1985] 1 WLR 331, 338.

22

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situation where “a defendant calls for disclosure of numerous substantial files with the intention of going through all of them in the hope of procuring a benefit which is speculative at best and based on … assumption …”23 These are the extreme of calls for specificity and are designed to protect the innocent witness and illustrate that wide categories or classes can be unreasonable. A slightly different test is likely to be applied to disclosure but the sentiment of limiting wide categories or classes in favour of specificity remains. Tribunals will be vigilant to ensure that requests are not so voluminous, broad or repetitive as to place an unreasonable burden on the requested party. [3-30]  Good practice dictates that a category or class is limited, if at all possible, by time period, author, recipient, subject matter, location, and nature of document. For example, a request for “all documents being, evidencing, relating to, touching upon, or concerning communications between A and B” is likely to be perceived as too wide whereas “all emails and letters between A (acting by its employees C, D or E) to B (acting by its employees F, G or H) in the period from J to K relating to L, together with any documents attached or enclosed, located in the paper files in the offices at M, or on the computer servers at M, and containing one or more of the following words N, P or Q” is plainly going to have far greater prospects of success before an arbitral tribunal but even that does not guarantee success for it may still be refused for lack of specificity. [3-31]  The Rules make an additional provision for identifying a category of electronic documents – these must be identified by specific search files, search terms, individuals or otherwise enabling searching in an efficient and economical manner. This is, as explained below, a reflection of best practice as distilled from the Courts of the U.S. and U.K. It is this amendment that appears to create a difference in approach between documents held in paper and those held electronically. For example, a requesting party may want the minutes of a meeting or series of meetings at which decisions were taken. If suitable search terms can be identified the drafting of the rule appears to indicate that the request might be sympathetically received but experience shows that requests for paper documents in   Wakefield v. Outhwaite [1990] 2 Lloyds Rep 157, 164.

23

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such circumstances are often refused for lack of specificity. Arbitral tribunals will have to exercise caution not to be carried away by the new Rules and construe the ambit of e-disclosure as any wider than that for paper disclosure. The two limbs of Article 3.3(a)(ii)24 should be construed ejusdem generis. [3-32]  In any event it is useful to consider the ‘narrow and specific’ standard as one necessitating that a request is limited in both time and subject matter because this provides quantifiable guidelines. [3-33]  A well-framed request should seek the disclosure of documents that relate to specific issues in the arbitration (and preferably cross-referenced to specific paragraphs in the memorials), not a general contention or broad description of a claim. Furthermore, a request should further define the category of documents by providing a time frame which is tied to the relevant chronology of the case. [3-34]  The “narrow and specific” formula is a key standard which differentiates document production in international arbitration from the practices found in the domestic legal systems of both civil law and common law countries. [3-35]  The revision has reformulated the relevance and materiality requirement. In the previous version of the rule was that documents should only be produced if they were “relevant and material to the case”. Now, however, Article 3.3(b) requires that the document(s) be “relevant to the case and material to its outcome”. This change, while subtle, provides a clarification of this threshold standard. [3-36]  In England the high-watermark of relevance and materiality was expressed as a document which it was reasonable to suppose “contains information which may enable the party (applying for discovery) Article 3(3)(a)(ii) provides: “A Request to Produce shall contain: …(ii) a description in sufficient detail (including subject matter) of a narrow and specific requested category of Documents that are reasonably believed to exist; in the case of Documents maintained in electronic form, the requesting Party may, or the Arbitral Tribunal may order that it shall be required to, identify specific files, search terms, individuals or other means of searching for such Documents in an efficient and economical manner”. A production request must always be narrow and specific. For e-disclosure search parameters may assist in determining whether a request is narrow and specific.

24

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either to advance his own case or to damage that of his adversary, [or] if it … may fairly lead him to a train of inquiry which may have either of these two consequences”.25 This is plainly too wide and will not be the test that any arbitral tribunal would be likely to adopt. It is no longer the test in the U.K. having been replaced by a standard that requires disclosure of documents relied upon, which adversely affect either his own or another party’s case or support another party’s case: Civil Procedure Rules 31.6. In the U.S. the Federal Rules of Evidence define “relevant evidence” as “having a tendency to make a fact more or less probable than it would be without the evidence” when the fact is “of consequence in determining the action”. [3-37]  To the contrary a party seeking to obtain document disclosure must demonstrate to the satisfaction of the arbitral tribunal that the requested documents are, in effect, necessary for it to discharge the burden of proof that it has. This means that the arbitral tribunal must engage in a prima facie analysis of the request and determine whether the documents which are sought are sufficiently connected to a relevant contention. It is for this reason that referring the request back to the memorials and the matters that have to be proved is likely to be essential. [3-38]  Materiality is distinguished from relevance. This distinction makes it clear that whilst a document might be relevant not all relevant documents are required for the record and might bear upon the final award. If there are already nine documents going to a particular point a tenth may be relevant but not material to the outcome (as there are already nine similar documents). Accordingly, a request for the tenth may be denied. It follows from the assessment of materiality that the arbitral tribunal will have to have a good understanding of the record as it stands so as to know whether any additional document of a particular type might assist and also the state of the rival contentions and perhaps even a preliminary view as to what shape its award might take. [3-39]  To reach this advanced stage, the reference itself has to be reasonably advanced and the arbitral tribunal may well need to be assisted by detailed submissions from the parties.   Compagnie Financière du Pacifique v Peruvian Guano Co (1882) 11 QBD 55, 62–3.

25

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[3-40]  On many occasions the arbitral tribunal may have to have faith that that which they are told by the parties’ counsel is true. Here the overriding duties and principles of good faith come into play. A party may say, through counsel, that it has searched and cannot find a document or class of documents. Absent very good reason such explanations will be accepted at face value. The good faith of counsel is invariably assumed and that of the parties taken as read although evidence can be adduced to the contrary. However, if a party asserts that a document that exists is neither relevant nor material, that is not likely to be accepted at face value. Relevance and materiality are matters for the arbitral tribunal (as reflected in Article 9.2(a)) and not for the parties. [3-41]  Arbitral tribunals faced with contested issues of relevance and materiality may decide that the submissions of the parties are sufficient to enable it to rule on objections. If they remain troubled they can view the documents themselves to determine relevance and materiality. In the event that the arbitral tribunal viewing the documents might embarrass them later (by being able to put the documents out of their minds if they ruled that they were either not relevant or not material – this risk is usually either illusory or very modest on issues of relevance and materiality, in contrast to say, privilege) an expert can be appointed under Article 3.8 to view the documents and report. This option can also be used if the volume is exceptional but the risk of the tribunal effectively delegating their function needs to be guarded against. [3-42]  A Request must demonstrate that the document(s) sought are not in the “possession, custody or control” of the requesting party. There is, however, an exception to this in Article 3.3(c)(i). This states that where it is shown that it would be “unreasonably burdensome” for the requesting party to produce the requested document(s) itself, the arbitral tribunal may order the other party to disclose it/them. What “burdensome” means in this context is likely to be largely fact based. When considering the burden of production arbitral tribunals are likely to have in mind the potential use of the documents, the relevance and materiality, the costs of production, the reasonableness of each party’s position and the likely probative value. More specifically the arbitral tribunal might well find the Zubulake guidance

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(discussed above in relation to electronic documents but, it is suggested, of general application) useful. [3-43]  As has been seen above backup tapes are generally considered to be inaccessible.26 It may, on occasion be necessary to consider decisions on backup tapes in the context of litigation holds. In general, litigation holds do not apply to inaccessible backup tapes (Consolidated Aluminum Corp v Alcoa Inc27). However, the Alcoa decision noted that “accessible” backup tapes should be included in any hold, indicating that not all backup tapes are considered inaccessible. The issue then becomes how to distinguish between accessible and inaccessible backup tapes. The court in Zubulake IV considered whether the party actively and frequently used the tapes, noting that tapes are likely subject to a litigation hold if they are actively used for information retrieval. [3-44]  Of course, it is not enough for a party to merely state that its backup tapes are inaccessible. A party’s claim that information is not reasonably accessible may be challenged. On such a challenge the party from whom the document is sought has the burden of showing that the information is not reasonably accessible because of undue burden or cost. If that can be shown, the burden may then shift to the requesting party to show good cause for the disclosure (see by analogy the Federal Rules of Civil Procedure r.26(b)(2) Advisory Committee’s Note (2006)). [3-45]  The notion that a requesting party can force the production of inaccessible backup tapes through a showing of good cause is unlikely to persuade many arbitral tribunals. For example, in December 2008, the International Institute for Conflict Prevention and Resolution (“IICPR”) issued its Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration. The Protocol states: Requests for back-up tapes, or fragmented or deleted files should only be granted if the requesting party can demonstrate a reasonable likelihood that files were deliberately destroyed or altered by a party in anticipation of litigation or arbitration and outside of that party’s document retention policies operated in good faith.   See footnote 13.   2006 WL 2583308 (citing Zubulake IV, 220 F.R.D. at 218).

26 27

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[3-46]  Needless to say, there is a tremendous contrast between this Protocol and the FRCP advisory committee notes. The former ­imagines production of backup tapes only in the case of the bad faith, while the latter envisages production if the requesting party can show a likelihood of obtaining useful information not easily available from other sources. [3-47]  There is little doubt that although not expressly addressing backup tapes, the Rules would be construed as supporting, at its highest, the former approach to inaccessible materials. Article 3.3(c) (i) requires production requests to contain a statement that the documents requested are either not in the possession, custody, or control of the requesting party, or that it would be unreasonably burdensome for the requesting party to produce them. If a party can request production of documents in its own possession to avoid unreasonable burden, then surely a producing party could argue that it need not produce inaccessible backup tapes where doing so would impose an unreasonable burden on it. Further, Article 9.2(d) allows the arbitral tribunal to exclude from production any document which is likely to have been lost or destroyed. This would be likely to include electronic data that has been erased, fragmented, or damaged data which can only be accessed after significant processing. If so, arbitral tribunals could use the provision to exclude data on backup tapes that could, with effort, be accessed. [3-48]  It is likely that, consistent with the overall aims of the Rules, requests for difficult to produce electronic documents, will be refused. Firstly, there is strong resistance to U.S.-style discovery that might permit such applications. A firm rejection of such applications would be consistent with this approach. Secondly, from an economy of cost perspective, such requests should be refused for the costs of retrieval can be enormous. [3-49]  Article 3.4 contains small, but significant modifications, relating primarily to procedural economy: a party who is requested to produce documents shall send those documents to the arbitral tribunal only if so ordered by the tribunal. Most tribunals will not want the documents until the final evidential hearing when they will be produced in bundles for that purpose. These may or may not include

Discussion

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all of the documents that have been produced whether voluntarily or under order from the arbitral tribunal. This is consistent with the aim of creating a procedure which requires the arbitral tribunal’s involvement in document production issues only when necessary. [3-50]  Article 3.4 also makes it clear that any production is to be “to the other parties” to reflect multiparty arbitrations. The production of documents must be made to all parties to a reference, irrespective of which party actually made the request and to which party it was directed. In multiparty arbitrations it would be wrong for an arbitral tribunal to order a party to disclose to one of the parties, and not the other. The Rules presume that once production is made (either by compulsion or voluntarily) it is to all parties in the reference. In all but the most exceptional case this will be the practice – it is possible that in a case of high sensitivity or confidentiality Article 9.4 might be used to restrict the circulation of a document and this could exclude a party who has no legitimate reason to see that document. [3-51]  Pursuant to Article 3.5, a party may object to the production of documents for: (a) any of the reasons set out in Article 9.2; and (b) if the request does not satisfy any of the requirements of Article 3.3. [3-52]  The Article also continues the theme of objections, like Requests, not being made to the tribunal alone but being made to both the Requesting Party and the arbitral tribunal. In fact, most arbitral tribunals would expect a degree of dialogue between the parties before the tribunal itself was involved. [3-53]  Article 9.2 is addressed under the discussion of Article 9. Objections within Article 3.3 are the most common objection and usually centre around the breadth and lack of specificity of the Request. The use of a Redfern schedule promotes a sensible discipline for the Request and takes away a lot of the potential for objection if used correctly. Article 9.5 emphasises the need to make objection – a failure to object and a subsequent failure to produce without a satisfactory explanation can result in an adverse inference.

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[3-54]  Under Article 3.6, an arbitral tribunal that has received an objection to a Request can invite the parties to consult with each other with a view to resolving the objection. The ‘meet and confer’ possibility is an echo of Article 2.1 and this novel approach ought to see issues either resolved or narrowed. Part of the ‘conferring’ process is likely to be by completing the relevant parts of a Redfern schedule. To the extent that the parties do not make and respond to requests in a Redfern schedule format the arbitral tribunal may well direct them to do so. [3-55]  The stricture of meeting can avoid much controversy and permit reasonable compromises to be reached. If a physical face-toface meeting is not possible a telephone conference will usually be a good substitute. [3-56]  A party who refuses to co-operate in such a process can expect both the displeasure of the arbitral tribunal and a costs sanction. [3-57]  It is plain from Article 3.7 that the arbitral tribunal becomes involved if, and only if, the Request has been made and objection made. The arbitral tribunal might have directed a ‘meet and confer’ under Article 3.6 and, if so, the involvement of the arbitral tribunal under Article 3.7 assume that that has not resolved the issue. This would be a laudable step towards saving cost. [3-58]  Article 3.7 then repeats the Article 3.3 words relating to relevance and materiality. These are discussed above. [3-59]  Article 3.8 allows for the arbitral tribunal to appoint an expert to review sensitive documents for which an objection to production has been made. This is likely to be more common in investor-state disputes where sensitive government documents might be in issue. [3-60]  The only criteria which Article 3.8 imposes when selecting an expert is that the candidate be “independent”, “impartial”, and bound to confidentiality. However an arbitral tribunal would be well advised to follow the standards in Article 6.2 for the appointment of a tribunal-appointed expert for doing so will address the express requirements of independence and impartiality. [3-61]  Some arbitral tribunals have, in the past, appointed the secretary to the tribunal to perform this function, but doing so must

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be approached with (considerable) caution. Both the ICC note on Secretaries28 and the UNCITRAL Notes on Organising Arbitral Proceedings stress the administrative role of secretaries. Reporting in an expert or quasi-expert role would be likely to be seen as extending beyond the bounds of administration. Such an involvement may put the award at risk of challenge29. It will usually be preferable to have a truly independent expert especially if the documents are in a language not familiar to the arbitral tribunal or if they have a high technical content. Similarly if the objection requires a knowledge of the laws of the seat for example on admissibility. [3-62]  Article 3.8 does not describe the procedure which experts are to follow in the performance of their functions. However, by the time an expert is appointed it is likely that there will have been an extensive exchange of views or submissions (usually by a Redfern schedule) and the arbitral tribunal have consulted with the parties when selecting the expert and it is highly likely that the procedure in Article 6 will be replicated such that the instructions or ‘terms of reference’ are drawn up in consultation with the parties. Such an expert may call for further submissions unless the submissions already made (whether by a Redfern schedule or otherwise) are sufficient. Plainly, the arbitral tribunal must not delegate its decision-making obligation and the expert so-appointed will (indeed must) merely report his findings to the arbitral tribunal who may accept or reject the recommendations and observations of the expert. [3-63]  Article 3.9 addresses situations where a party wishes to rely upon a document held by a non-party and assumes that polite requests have not succeeded. It allows a party to request the arbitral tribunal to take steps which ‘are legally available’ to it to obtain disclosure from the non-party. This will usually involve invoking the jurisdiction of the courts of the seat. [3-64]  The changes to Article 3.9 are two-fold. Firstly, the final sentence makes direct reference to the general provisions (Articles 3.3 and 9.2) so that they apply equally to a request to a non-party. Note from the Secretariat of the ICC Court Concerning the Appointment of Administrative Secretaries by Arbitral Tribunals 6(2) ICC Int’l Court of Arbn. Bull. 77(1995). 29 Campagnie Honeywell Bull SA v Computación Bull de Venezuela Cour d’Appel (Paris) 21 June 1990, 1991 Rev. Arb. 96, 100. 28

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Secondly, a party taking steps to obtain documents from a non-party through its own efforts should now ‘seek leave’ from the arbitral tribunal before doing so. A party that unilaterally approaches (without prior permission) a state court for assistance would breach the provisions of Article 3.9. [3-65]  Arbitral tribunals will interpret Article 3.9 as a measure of last resort, and will consider a request by a party for assistance in approaching a local court only after it is satisfied that there are gaps in the evidentiary record that need to be filled in order to do justice as between the parties. However, Article 3.9 gives limited authority to an arbitral tribunal, as it simply refers back to whatever legal rights the tribunal might have: clearly the IBA Rules are no place to seek to impart legal rights. It is substantive law, such as Article 27 of the UNCITRAL Model Law, that provides the substantive right. The key question is whether the laws of the seat provide for a court to assist an arbitral tribunal in obtaining disclosure from a non-party. National courts have reached opposite conclusions applying their own national laws. [3-66]  It is clear that the arbitral tribunal does not have to take action itself and that it may authorise, or indeed order, a party to take steps itself. [3-67]  This may impact the rights granted to litigants by laws such as title 28 s.1782 of the United States Code (“s.1782”), which allow participants in foreign legal process to directly petition a Federal District Court for assistance in obtaining discovery. [3-68]  It is outside the scope of this work to comment extensively on s.1782, however, in the ICSID case, Caratube International Oil Co v. Republic of Kazakhstan, the investor party (Caratube) began a parallel s.1782 application to obtain further evidence. The arbitral tribunal was not consulted before the application was made and was ignorant of it until it received the state party’s request for an order requiring the investor party to desist from its application. The arbitral tribunal declined to do so, but noted that: [W]hilst the Tribunal might have been minded to find that its prior consent should have been sought by Claimant before the presentation of its Section 1782

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petition, the Tribunal concludes that it is not necessary for it to order Claimant to cease and desist from the US action.

[3-69]  The Caratube application was considered by the U.S. District Court for the District of Columbia. In its decision denying the application, the District Court noted that Caratube’s unilateral petition had “side-stepped” the arbitral tribunal’s authority, thus undermining “the tribunal’s control over the discovery process”. In a footnote to the decision, the Court further interpreted the equivalent rule in the 1999 version: Although Caratube does not make this argument in its briefs, it previously contended in a letter to the Tribunal that the IBA Rules anticipate that parties may seek unilateral discovery via section 1782 petition. Specifically it noted that [the] IBA Rule … applies only to discovery from entities ‘from whom the party cannot obtain documents on its own,’ and asserted that this text anticipates that parties may file section 1782 petitions to obtain such discovery. The Court disagrees: the better reading, given the context of this rule, is that the sentence refers to efforts to obtain documents without legal process.

[3-70]  This view is plainly correct. The arbitral tribunal retains control of the evidentiary process. If parties are permitted to unilaterally take action before state courts it will inevitably impact on the timetable of the reference and potentially any evidentiary hearing and this is consistent with the Commentary stating: “Ultimate oversight and control over this process should remain with the arbitral tribunal.” Whilst it must be acknowledged that Article 3.9 does not expressly prohibit parties from approaching a local court for assistance unilaterally, the language plainly supports the Caratube court’s interpretation. As Article 3.9 states that a party may, “seek leave from the Arbitral Tribunal to take such steps itself ”, or “[t]he Arbitral Tribunal shall decide on this request and … authorise the requesting Party to take … such steps”, the new rule presumes that attempts by a party to gain evidence through the courts (e.g. s.1782) fall under the authority of the tribunal. [3-71]  An arbitral tribunal faced with a unilateral and unauthorised application to a state court could direct a cease and desist order as the Caratube tribunal plainly contemplated. Alternatively, it could refuse to admit the evidence under Article 9.2(g): “considerations of procedural economy, proportionality, fairness or equality of the Parties

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that the Arbitral Tribunal determines to be compelling” or otherwise. In particular the arbitral tribunal will no doubt have in mind procedural economy and fairness to the opposing party. Nevertheless, even in such a situation the arbitral tribunal would also consider the potential probative value of the evidence and whether the fairness dictated it be admitted and whether any other safeguards or equivalent disclosure in return could be ordered before ruling to exclude it. [3-72]  Article 3.10 establishes the arbitral tribunal’s authority to: (1) order a party to produce documents; (2) take steps deemed appropriate to obtain documents from persons or organisations that are not party to the proceedings; or (3) order one of the parties to the proceeding to use best efforts to take such measures on its own. [3-73]  Arbitral tribunals are often permitted under the national laws of a seat to petition the local courts for assistance in the taking of evidence. This is more so in civil law countries than common law. The assistance may not always extend to document production. The arbitral tribunal may also request a party to use its best efforts (including ancillary legal processes) to obtain documents. An arbitral tribunal would only direct a request to a party if it was satisfied both that the relevant procedure was available to it and that the party could satisfactorily make such an application. Furthermore, it would have to be satisfied that doing so was necessary for the fair and economical disposal of the arbitral reference and would not unduly delay a final award. [3-74]  A possible interpretation of this article would be that Article 3.10 (ii) allows an arbitral tribunal to request a party to use best efforts to obtain documents that are in the possession of related entities. Arbitral tribunals have held in the past that parties may be legitimately expected to produce documents held by companies with which they maintain a significant relationship. How close that “relationship” needs to be is not defined but arbitral tribunals have held that it would include any affiliation through which a party could be reasonably expected to exert or have influence with another entity. Parties that contend that a document is outside of their control because it is in the possession of a parent or subsidiary company may be requested to make “best efforts” to obtain and produce the

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document in accordance with Article 3.10. Failure to use “best efforts” may lead the arbitral tribunal to draw a negative inference. [3-75]  Article 3.11 permits parties to submit additional documents to rebuttal to documents, witness statements or expert reports produced by another party. This must be done within a time period permitted by the arbitral tribunal so as to avoid ambush at an evidential hearing. This is essential for due process considerations. The disjunctive “or” permits parties to simply change their mind as well as introduce objectively justified material. The Article is sufficiently widely drawn to permit any development to justify additional documents. [3-76]  Article 3.12 sets the basic requirement for the form in which documents are to be produced or submitted, namely that copies of documents must conform to the originals, and be available for inspection at the request of the arbitral tribunal. The general presumption is generally that a copy does conform to an original unless it has been shown that there are serious questions as to its accuracy. In that event the burden usually shifts back to the producing party to show that it is an accurate copy and should be admitted to the record. A failure to do so will usually be met with the evidence being excluded. [3-77]  Sensibly, multiple copies of essentially identical documents should not be submitted notwithstanding that each copy might technically be a separate document. Care needs to be taken when a copy document might be annotated with subsequent notes or when circulation copies of the same document might prove that a particular individual saw a particular document but these are fairly rare in practice. Equally, it is sensible that translations of documents are submitted with their originals. [3-78]  Article 3.12 is, however, likely to raise issues for electronic documents: in particular that the submission or production must be in the form most convenient or economical and reasonably usable by the recipients. [3-79]  The Advisory Committee Notes to the Federal Rules of Civil Procedure 2007 encourage the parties to address the form of any production of electronic documents. Electronic documents can be

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printed and reproduced in paper or supplied electronically. If the latter it can be produced in native format (being the manner in which it was originally stored) or in a “PDF”30 or “TIFF”31 image. Both have advantages. Native format generally carries with it metadata. This is, in essence, information about information. It can provide a great deal of information about a document. As the guide to U.S. Federal Judges describes it: Metadata, which most computer users will never see, provide information about an electronic file, such as the date it was created, its author, when and by whom it was edited, what edits were made, and in the case of an email, the history of its transmission.32

[3-80]  For this reason, a producing party will often be reticent to produce in native format. Production in PDF or TIFF is generally accepted albeit that that may not be compliant with Article 3.12. A PDF or TIFF gives the advantage of being susceptible to Bates Numbering33 and it may have some metadata attached to the file. It will not permit the image to be manipulated. [3-81]  The Guidance to Arbitrators published by the ICDR concerning Exchanges of Information permits the producing party to produce electronic documents in the form “most convenient and economical for it … unless there is a compelling need for access to the documents in a different form”. That formulation has been adopted by the Rules and is sensible. [3-82]  Article 3.13 lays down confidentiality obligations incumbent upon all parties. Unlike the previous rule, Article 3.13 provides an exception to the confidentially rule concerning documents that exist in the public domain. In addition, Article 3.13 authorises disclosure of documents submitted or produced in a reference to the extent that a party may be required to fulfil a legal duty, protect or pursue a legal right, or enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority. Portable Document Format.  31  Tagged Image File Format. Managing Discovery of Electronic Information: A Pocket Guide for Judges (2007), available at http://www.uscourts.gov/rules/eldscpkt.pdf. 33 Bates Numbering is a system of numbering or coding documents as they are scanned. 30 32

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[3-83] The basic thrust of Article 3.13 is strengthened by an expansion of the confidentiality protection in relation to documents produced pursuant to document requests (as before), documents submitted by a party in support of its own case and documents introduced by third parties (which are new). Whether a legal proceeding is bona fide will be difficult to assess and surely it will be for the court to address those issues rather than an arbitral tribunal that may well, by that stage, be functus officio. [3-84]  Of course, arbitration is inherently confidential in most jurisdictions, notably Hong Kong, England, France, and Switzerland. As the court said in Russell v. Russell:34 As a rule, persons enter into these contracts with the express view of keeping their quarrels from the public eyes, and of avoiding that discussion in public, which must be a painful one, and which might be an injury even to a successful party to the litigation, and most surely would be to the unsuccessful.

[3-85]  In other jurisdictions, there remain exceptions to the general theme of confidentiality, for example in Australia, U.S. and Sweden. The Australian decision of Esso Australia Resources v. Plowman35 is, perhaps, the most significant as it rejects an implied confidentiality but accepts the possibility of an express confidentiality. It accepts that arbitration is private in the sense that the public is not admitted to the proceedings, and that documents produced under compulsion are subject to a duty to be used solely for the purposes of the arbitration,36 but all other aspects of confidentiality were rejected.37 This was a significant decision from Australia’s highest court. It is, however, not alone in common law jurisdictions. In United States v. Panhandle Eastern Gen,38 a U.S. Federal District Court held that confidentiality does not necessarily attach to documents obtained in arbitration; on (1880) 14 Ch D 471, 474.  35  [1995] 183 CLR 10. See also The Eastern Saga [1984] 2 Lloyd’s Rep 373, 379: “The concept of private arbitrations derives simply from the fact that the parties have agreed to submit to arbitration particular disputes between them and only between them. It is implicit in this that strangers shall be excluded from the hearing and conduct of the arbitration and that neither the tribunal nor any of the parties can insist that the dispute shall be heard or determined concurrently with or even in consonance with any other dispute, however convenient that course may be to the party seeking it and however closely associated with each other the disputes in question may be.” 37 Institutional rules recognise the same privacy: LCIA §19.4; ICC §26.3; WIPO §53(c); UNCITRAL §25.4. 38 118 F.R.D. 346 (D. Del. 1988). 34

36

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the facts the defendant was not entitled to withhold documents generated in a Swiss ICC arbitration. There is, however, some contrary authority in the U.S. from the Texas Court of Appeals in Rutherfords v. Blanks39 concerning the confidentiality of the arbitral tribunal’s deliberations. [3-86]  In England, the thinking behind the implied obligation of confidentiality is influenced by the corresponding court rule that a party may only use a document disclosed for the purposes of the proceedings in which it has been disclosed.40 As it is a matter of the implied agreement of the parties, it must logically follow that disputes as to any limits of the obligation are a matter for the arbitral tribunal rather than national courts provided, of course, that the tribunal remains constituted.41 [3-87]  The Australian Court’s reasoning was followed in the Swedish case of Bulgarian Foreign Trade Bank v. A.I. Trade Finance42 in which a party’s right to disclose information about the arbitration was recognised and there was held to be a distinction between a mutual understanding of confidentiality and a legal duty of confidentiality: The real meaning of [the secrecy associated with arbitration proceedings], as compared with judicial proceedings, is instead that the proceedings are obviously not public, i.e., that the public does not have a right of insight by being present at the hearing or having access to documents … a party in arbitration proceedings cannot be deemed to be bound by a duty of confidentiality unless the parties have concluded a separate agreement …

[3-88]  On the contrary, English law is tolerably clear that arbitration is inherently confidential. Indeed, this is one of the reasons for the popularity of English law in arbitration agreements. As the English Court of Appeal described it in Dolling–Baker v. Merrett:43 As between parties to an arbitration, although the proceedings are consensual and may thus be regarded as wholly voluntary, their very nature is such that No. 04–95–00770-CV, 1996 Tex. App. LEXIS 2578 (Texas Ct. App. June 28, 1996). The current rule is Civil Procedure Rule 31.22. 41 Michael Wilson v. Emmott, [2008] 1 Lloyd’s Rep 616. 42 Swedish Supreme Court, 27 October 2000, Case No T 1881/99 reproduced in 2 Stockholm Arbitration Report 137 (2000). 43 [1990] 1 WLR 1205, 1213. 39

40

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there must … be some implied obligation on both parties not to disclose or use for any other purpose any documents prepared for and used in the arbitration, or disclosed or used in the arbitration, or transcripts or notes of the evidence in the arbitration or the award – and indeed not to disclose in any other way what evidence had been given by any witness in the arbitration – save with the consent of the other party, or pursuant to an order or leave of the court.

[3-89]  These very limited exceptions to the rule were reaffirmed in Ali Shipping Corp v. Shipyard Trogir44 as being: i) consent; ii) order, or leave, of the court, and additionally; iii) necessity to protect legitimate interests of the arbitrating party vis-à-vis a third party.45 These exceptions were accepted and acknowledged in Michael Wilson v. Emmott46 (and extending it to the public interest or interests of justice) and largely mirrors the duties in a banker–customer relationship: Tournier v. National Provincial and Union Bank of England.47 [3-90]  The confidentiality extends to preventing strangers from inspecting the court file to discover the contents of confidential arbitration documents unless there are overriding “interests of justice” that require disclosure.48 This body of English case law has been considered of doubtful assistance where there was an express provision of confidentiality as, in that event, it was that provision that took precedence over any implied duty.49 The Privy Council in Associated Electric went further, however, and doubted the approach taken. It said the approach ran the risk of confusing privacy and confidentiality and failed to distinguish between the different types of confidentiality that might attach to different documents: Commercial arbitrations are essentially private proceedings and unlike litigation in public courts do not place anything in the public domain. This may mean that the implied restrictions on the use of material obtained in arbitration proceedings may have a greater impact than those applying in litigation. But when it comes to the award, the same logic cannot be applied. An award may [1999] 1 WLR 314 (it arises as a matter of law); id. at 326. This may include the establishment or protection of an arbitrating party’s rights against a third party or defending a claim by a third party: Hassneh Insurance Co of Israel v. Mew [1993] 2 Lloyd’s Rep 243. 46 [2008] 1 Lloyd’s Rep 616.  47  [1924] 1 KB 461 (CA). 48 Glidepath BV v. John Thompson, [2005] 2 Lloyd’s Rep 549. 49 Associated Electric & Gas Insurance Services v. European Reinsurance Company of Zurich, [2003] 1 WLR 1041. 44 45

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have to be referred to for accounting purposes or for the purpose of legal proceedings … Generalisations and the formulation of detailed implied terms are not appropriate …50

[3-91]  This oblique reference to a greater and public interest was also considered in London & Leeds Estates v. Paribas (No 2).51 These authorities are, of course, helpful guidance but of limited application given that institutional rules generally provide for the award to be confidential.52 [3-92]  The public interest exception was recognised in Esso Australia Resources v. Plowman.53 Some of the judges in Esso also drew on the banker–customer exception to like effect, and another Australian court held that an arbitrator had no power to prevent the government from disclosing material to state agencies provided that doing so was in the public interest.54 [3-93]  The confidentiality (or at least potential confidentiality) of arbitration was recognised to extend to subsequent court proceedings in Department of Economic Policy and Development of the City of Moscow v. Bankers Trust.55 The court stated: The courts when called upon to exercise the supervisory role assigned to them under Arbitration Act 1996 are acting as a branch of the state, not as a mere extension of the consensual arbitral process. Nevertheless, they are acting in the public interest to facilitate the fairness and well-being of a consensual method of dispute resolution, and both the rule committee and the courts can still take into account the parties’ expectations regarding privacy and confidentiality when agreeing to arbitrate.

[3-94]  The court distinguished between matters requiring permission to appeal, such as appeals on points of law where the public interest may outweigh the parties’ desire for continuing privacy, and other arbitration claims where the starting point is reversed. The particular issue in Bankers Trust was the publication of the judgment. The Court of Appeal upheld the judge’s decision not to permit 53 54 55 50 52

Id. at 1050.  51  [1995] 1 EGLR 102. LCIA §30.1; ICC §34.2; WIPO §75, and: UNCITRAL §32.5. Op. cit. Commonwealth of Australia v. Cockatoo Dockyard Pty Ltd, [1995] 36 NSWLR 662. [2004] 4 All ER 746.

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publication but did allow a summary. The general rule remains that the arbitral proceedings are themselves private but where appeals to the national courts are concerned, there is a necessary (but limited) relaxation of that principle. [3-95]  French case law also recognises the confidentiality of arbitration. The most often cited example is Aita v. Ojjeh56 wherein the very bringing of a challenge to the court was held to violate the confidentiality. Similarly, the New Zealand Arbitration Act 1996 (§14) expressly incorporates a wide confidentiality provision. [3-96]  Although there are differing views on the confidentiality of arbitration, most institutional rules that address it, respect the confidentiality,57 even the Australian decision recognises the inherent confidentiality of all documents produced under compulsion within the arbitration. Nevertheless, it remains a wise precaution to stipulate an express confidentiality provision, especially for documents produced. This should be done either in the terms of reference or the first procedural order. The difficulty with the Rules is that more often than not the arbitral tribunal will not direct that they apply but rather the principles and contents will be adopted as guidance or some such similar formulation. That leaves confidentiality too vague and hence the recommendation to formally stipulate. [3-97]  Whether or not the confidentiality is expressed or implied, it remains a fact of life that policing confidentiality is extremely difficult. Any threatened or actual breach of the confidentiality is best countered promptly with an application for an injunction to restrain the threatened breach (or any further breach) and an allied claim for damages. An extreme example, especially if a breach by the arbitral tribunal itself, may merit irregularity in the award itself. [3-98]  Article 3.14 is a new addition allowing arbitral tribunals to direct that documentary production correspond to the various stages Cour d’appel, Paris, 18 February 1986, 1986 REV. ARB. 583. LCIA §30.1 (“… the parties undertake … to keep confidential … all materials in the proceedings …”); Swiss Rules §43.1 (“… the parties undertake … to keep confidential … all materials submitted by another party …”); WIPO§74(a) (“ … any documentary or other evidence … shall be treated as confidential …”) but the ICC Rules and UNCITRAL are silent.

56 57

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of the reference. This will be particularly suited to the typical bifurcated reference when issues of liability and quantum are decided separately. The cost of document production on quantum can be saved if the arbitral tribunal does not find liability established. [3-99]  Other examples might be preliminary issues on jurisdiction. Document production may be resisted in such situations by the party who denies the arbitral tribunal’s jurisdiction on the basis that the tribunal has no jurisdiction over it – still less any jurisdiction to disclose documents. The short answer to this most complex of issues is that if there is no dispute that the parties are parties to an agreement to arbitrate then the arbitral tribunal has jurisdiction on issues of jurisdiction and hence the powers necessary (such as document production) to properly adjudicate on such issues. Furthermore, Article 13 of the UNCITRAL Model Law clearly envisages that an arbitral tribunal has jurisdiction for it provides that the tribunal must give effect to pre-arbitration conditions thereby implying that it has at least procedural powers in relation to the dispute. [3-100]  If, however, there is a denial of a valid arbitration agreement (for example, the signature of one party is a forgery) then there cannot be a submission to have the validity or otherwise of the signature resolved by an arbitral tribunal and hence any tribunal cannot have ancillary powers such as document production (national courts must determine the validity of the signature in such cases and, if valid, the reference to arbitration can continue and, if not valid, any dispute must be resolved by the national courts).

Arti cl e 4

Witnesses of Fact

1 Within the time ordered by the Arbitral Tribunal, each Party shall identify the witnesses on whose testimony it intends to rely and the subject matter of that testimony. 2 Any person may present evidence as a witness, including a Party or a Party’s officer, employee or other representative. 3 It shall not be improper for a Party, its officers, employees, legal advisors or other representatives to interview its witnesses or potential witnesses and to discuss their prospective testimony with them. 4 The Arbitral Tribunal may order each Party to submit within a specified time to the Arbitral Tribunal and to the other Parties Witness Statements by each witness on whose testimony it intends to rely, except for those witnesses whose testimony is sought pursuant to Articles 4.9 or 4.10. If Evidentiary Hearings are organised into separate issues or phases (such as jurisdiction, preliminary determinations, liability or damages), the Arbitral Tribunal or the Parties by agreement may schedule the submission of Witness Statements separately for each issue or phase. 5 Each Witness Statement shall contain: (a) the full name and address of the witness, a statement regarding his or her present and past relationship (if any) with any of the Parties, and a description of his or her background, qualifications, training and experience, if such a description may be relevant to the dispute or to the contents of the statement; (b) a full and detailed description of the facts, and the source of the witness’s information as to those facts, sufficient to 89

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Article 4: Witnesses of Fact serve as that witness’s evidence in the matter in dispute. Documents on which the witness relies that have not already been submitted shall be provided; (c) a statement as to the language in which the Witness Statement was originally prepared and the language in which the witness anticipates giving testimony at the Evidentiary Hearing; (d) an affirmation of the truth of the Witness Statement; and (e) the signature of the witness and its date and place.

6 If Witness Statements are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Witness Statements, including statements from persons not previously named as witnesses, so long as any such revisions or additions respond only to matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration. 7 If a witness whose appearance has been requested pursuant to Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary Hearing, the Arbitral Tribunal shall disregard any Witness Statement related to that Evidentiary Hearing by that witness unless, in exceptional circumstances, the Arbitral Tribunal decides otherwise. 8 If the appearance of a witness has not been requested pursuant to Article 8.1, none of the other Parties shall be deemed to have agreed to the correctness of the content of the Witness Statement. 9 If a Party wishes to present evidence from a person who will not appear voluntarily at its request, the Party may, within the time ordered by the Arbitral Tribunal, ask it to take whatever steps are legally available to obtain the testimony of that person, or seek leave from the Arbitral Tribunal to take such steps itself. In the case of a request to the Arbitral Tribunal, the Party shall identify the intended witness, shall describe the subjects on which the witness’s testimony is sought and shall state why such subjects are relevant to the case and material to its outcome. The Arbitral Tribunal

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shall decide on this request and shall take, authorize the requesting Party to take or order any other Party to take, such steps as the Arbitral Tribunal considers appropriate of that witness would be relevant to the case and material to its outcome. 10 At any time before the arbitration is concluded, the Arbitral Tribunal may order any Party to provide for, or to use its best efforts to provide for, the appearance for testimony at an Evidentiary Hearing of any person, including one whose testimony has not yet been offered. A Party to whom such a request is addressed may object for any of the reasons set forth in Article 9.2. IB A Commi t tee Commentary In arbitration, the facts of the case are often established through witnesses, who testify about events of which they have personal knowledge. This personal knowledge distinguishes the witnesses of fact from experts, who provide opinions based on their expertise in a particular field. Witnesses of fact are addressed in Article 4 of the IBA Rules of Evidence; experts are addressed in Articles 5 and 6. While witness testimony is less frequently used as evidence in civil law courts, where documentary evidence is preponderant, than in common law courts, arbitration proceedings in both the civil law and common law traditions often rely on witnesses. In the common law tradition, witnesses are questioned by the parties. In the civil law tradition, they are questioned by the court; parties may at most suggest to the court questions to be asked. In transnational arbitrations, the arbitral tribunal and the parties need to establish how to handle witnesses of fact. Arbitration rules and statutes are usually silent on witness testimony. The IBA Rules of Evidence thus fill in a substantial gap: Article 8 of the IBA Rules of Evidence, discussed later, addresses how witnesses are examined at the hearing; Article 4, to be discussed here, organises the stages before this hearing. Information on Witnesses Article 4.1 requires each party to identify the witnesses on whose testimony it intends to rely, as well as the subject matter of that testimony.

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As a result of this requirement, which is common practice and explicitly confirmed in various sets of arbitration rules,6 the opposing party cannot be surprised by unannounced witnesses or facts and can select its own evidence in response well in advance of the hearing. The revised text of the IBA Rules of Evidence requires that each witness statement contain a statement as to the language in which it was originally prepared and the language in which the witness anticipates giving testimony at the evidentiary hearing (Article 4.5(c)). If no witness statement is prepared for a witness, each party should inform the arbitral tribunal and the other parties in the event the witness intends to testify in a language other than the language of the arbitration proceedings. If the witness cannot present evidence in the language of the arbitration proceedings, translation has to be provided. The 1983 IBA Rules imposed a fixed time period for submitting this information on witnesses if parties did not agree or if the tribunal did not impose another time frame.7 The UNCITRAL and ICDR Arbitration Rules require that the information must be given at least some time before the hearing.8 The IBA Rules of Evidence leave it entirely to the tribunal to impose the time within which the information must be given. Affiliated Persons as Witnesses Differences exist among legal systems as to whether an executive employee, agent or other person affiliated with one of the parties in dispute can be heard as a witness. This status as a witness may have important consequences. For instance, in some legal systems, a party may be a witness in its own case, whereas in others only third parties may testify as witnesses. In such systems, a party providing information would not be considered a “witness”, and the information would not be provided under oath or a similar commitment to tell the truth. See, e.g., HKIAC Rules, Article 23.5; ICDR Arbitration Rules, Article 20.2; LCIA Rules, Article 20.1; SCC Arbitration Rules, Article 28(1); UNCITRAL Arbitration Rules, Article 25.2; WIPO Arbitration Rules, Article 54. 7 1983 IBA Rules, Article 5: “Within 60 days of the delivery of the last introductory submission made by the defendant or by the date agreed between the parties or determined by the arbitration …”. 8 See, e.g., HKIAC Rules, Article 23.5; ICDR Arbitration Rules, Article 20.2 – at least 15 days; UNCITRAL Arbitration Rules, Article 25.2. 6

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Article 4.2 of the IBA Rules of Evidence, however, provides that the party’s officers, employees and other representatives may be witnesses for the purpose of the IBA Rules of Evidence. Therefore, under Article 8.4, the arbitral tribunal may ask a party witness to affirm, “in a manner determined by the Arbitral Tribunal to be appropriate”, some commitment to tell the truth. The arbitral tribunal may also consider the identity of a witness, and his or her affiliation with any party, as one of many factors that may or may not affect the weight to be given to such evidence (see Article 9.1). Preliminary Contacts Between Party and Witness Another important difference between legal systems is the extent to which parties may have contacts with the witnesses they offer.9 In some systems, parties may discuss with their own witnesses the facts on which they will submit testimony. The degree of “witness preparation” may vary from a general overview of the issues at stake to an extensive rehearsal of the witness answers to questions expected to be asked. On the other hand, in some systems it may be impermissible for a lawyer to discuss the case with a witness prior to his testimony in court. In transnational arbitration, it is now generally well established “that a party and its counsel are, as a general rule, permitted to contact a potential witness on its behalf and question him or her about the facts of the dispute”.10 However, attorneys from certain civil law countries may deem it a violation of their ethical rules to contact witnesses. Consequently, LCIA Article 20.6 allows such contracts “subject to the mandatory provisions of any applicable law”. Reflecting the generally accepted practice, the IBA Rules of Evidence, in Article 4.3, confirm that it is not “improper” for a party or its lawyers to interview its own witnesses. The revised text of the IBA Rules further clarifies that such an interview need not remain general, but may indeed relate to the subject-matter of the prospective testimony. At the same time, of course, the arbitral tribunal may consider the scope of any such interview in assessing the weight it accords the witness’s testimony (see Article 9.1). Of course, the drafting of a witness UNCITRAL Notes on Organising Arbitral Proceedings, para 67. M. Schneider, “Witnesses in International Arbitration”, ASA Bulletin, 1993, 302, at 306.

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statement presupposes contact between the witness and the party that is presenting him or her. Witness Statements Pursuant to the IBA Rules of Evidence, the arbitral tribunal may order the parties to submit to the arbitral tribunal and the other parties a written “witness statement” (see Article 4.4). The arbitral tribunal, in consultation with the parties, should determine whether or not to require such witness statements, depending on the circumstances of each case. If witness statements are used, the evidence that a witness plans to give orally at the hearing is known in advance. The other party can thereby better prepare its own examination of the witness and select the issues and witnesses it will present. The tribunal is also in a better position to appreciate the testimony and put its own questions to these witnesses. Witness statements may in this way contribute to a shortening of the length of oral hearings. For instance, they may be considered as the “evidence in chief ” (“direct evidence”), so that extensive explanation by the witness becomes superfluous and examination by the other party can start almost immediately. In order to save on hearing time and expense, witnesses need not appear unless their presence is requested by a party or the arbitral tribunal (Article 8.1). Often the arbitral tribunal and the parties may agree that a witness whose statement is either not contested or not considered material by the opposing party need not be present at the oral hearing.11 Article 4.5 of the IBA Rules of Evidence specifies that a witness statement shall contain: •  The name and address of a witness; any present and past relationship with any of the parties; his or her background and qualifications; •  a full and detailed description of the facts and the source of the witness’s information, as well as any documents on which the witness relies that have not already been submitted; •  a statement as to the language in which the witness statement was The possibility that uncontested witnesses can limit their testimony to the written statement and do not have to attend the oral evidentiary hearing is provided for in ICDR Arbitration Rules, Article 20.5; LCIA Rules, Article 20.3; SCC Rules, Article 28(3); WIPO Arbitration Rules, Article 54(d).

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originally prepared and the language in which the witness anticipates giving testimony at the evidentiary hearing; and •  an affirmation of the truth of the statement confirmed by the witness’s signature. The IBA Rules of Evidence do not require that the statement be made under oath. Arbitration practice and legal systems differ too much on this point. In many civil law systems, sworn declarations can be made only before the state court authorities, or a notaire, which makes sworn affidavits too cumbersome. Consequently, sworn affidavits cannot be the required form for witness statements in transnational arbitration proceedings.12 The IBA Rules of Evidence simply require a witness of fact to affirm that he or she commits to tell the truth (Article 8.4). This wording was revised in 2010 for purposes of greater clarity and precision. Article 4.4 of the IBA Rules of Evidence leaves it to the arbitral tribunal to specify when the written statements have to be submitted. There is a basic choice to be made in this respect: the parties may exchange their statements simultaneously or consecutively. The second round of witness statements should address only information contained in witness statements, expert reports or submissions submitted by another party in the first round or otherwise not previously presented in the arbitration (see Article 4.6). Appearance of Witnesses for Testimony in an Evidentiary Hearing Revised Article 8.1 requires each party to inform the arbitral tribunal and the other parties of the witnesses whose appearance at the hearing it requests. This aligns the IBA Rules to current best practice, according to which witnesses appear only if cross-examination has been requested or the party presenting the testimony wishes to do so by means of live testimony rather than written statements alone. Any witness whose appearance has been so requested by any party, or from whom the arbitral tribunal wishes to hear, shall attend the hearing. If a witness whose appearance has been requested fails to attend without a valid reason, the arbitral tribunal shall disregard the witness Under LCIA Rules, Article 20.3, and WIPO Arbitration Rules, Article 54(d), the parties for instance, have the choice between mere signed statements or sworn affidavits, unless the tribunal has ordered otherwise.

12

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Article 4: Witnesses of Fact

statement unless exceptional circumstances justify this failure to attend (Article 4.7).13 If the parties and the arbitral tribunal agree that a fact witness need not appear, the progress of the arbitration may be enhanced. Article 4.8 states that such an agreement does not reflect agreement on the content of the witness statement. Article 5.6 contains a similar rule for expert reports. The revised text of the IBA Rules of Evidence provides that a witness’ “appearance” shall be in person, unless the arbitral tribunal allows the use of videoconference or similar technology (Article 8.1). An application for permission for a particular witness to appear by videoconference should state the reasons why that particular witness is unable to appear in person and propose a protocol. The tribunal’s decision should depend, among other things, on the sufficiency of the reasons given and the ability of the proposed protocol to maintain equality and fairness among the parties and approximate live testimony. The technology used should ensure sufficient quality of transmission and include a fall-back plan should the quality become insufficient. The ability to share exhibits between the witness and the hearing room is desirable. Additionally, the protocol should ensure that the witness testifies under the same conditions as he or she would have in the hearing, i.e. without conferring with anyone else during testimony or referring to any documents to which the other participants do not have access. Recalcitrant Witnesses If a witness whose testimony is requested by a party refuses to cooperate, that party may ask the arbitral tribunal to take whatever steps are available to obtain that testimony, or seek leave from the arbitral tribunal to take such steps itself (see the discussion of Article 3.9 above relating to document production from third parties). The arbitral tribunal, however, may exercise its discretion to refuse this request if it considers the potential testimony of the witness not to be relevant to the case or material to its outcome (see Article 4.9). See also LCIA Rules, Article 20.4, and WIPO Arbitration Rules, Article 54(d).

13

Particular Words and Phrases

97

Under most arbitration laws, either the arbitral tribunal or a party with the approval of the arbitral tribunal may ask the State courts to compel the witness to appear or to examine the witness itself.14 As a general rule, it shall be the State courts at the seat of arbitration which may help the arbitral tribunal to obtain testimony from a recalcitrant witness. In transnational proceedings, however, witnesses often are not domiciled in the country where the arbitration has its seat. The arbitral tribunal may then have to request help from foreign courts, directly or indirectly. The power of an arbitral tribunal in such circumstances is, of course, limited to “whatever steps are legally available” to it (see Article 4.9). In some cases, however, the tribunal may elect instead to authorise a party to take such steps and approach the foreign courts itself. Proceeding in this manner might be more practical or efficient if, for instance, the party requesting the evidence was located in that country, spoke the local language or already had local legal counsel. Witnesses Requested by Tribunal Witnesses of fact are the responsibility of the parties. The parties have to select the witnesses they will present and the issues on which they will testify. However, the revised text of the IBA Rules provides that the arbitral tribunal may request the appearance of a particular witness even if neither party requests that witness’s appearance (Article 8.1). As a general matter, the arbitral tribunal may order any party to provide for, or to use its best efforts to provide for, the appearance for testimony of any person, including one whose testimony has not yet been offered (Article 4.10). However, a party also has the right to object to any such request addressed to it for the reasons set forth in Article 9.2. Parti cul ar Words and Phra s e s Rely

Once again, see Article 3, a party must identify the witnesses that it intends to rely upon – this should be sufficient evidence to prove its case.

  See, e.g., UNCITRAL Arbitration Model Law, Article 27.

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Article 4: Witnesses of Fact Di scussi on

[4-1]  The “burden of proof ” is the duty which a party has to either establish a case or establish the facts on a particular issue. The “persuasive burden” is also referred to as the “legal burden”; the “probative burden”; the “ultimate burden”; the “burden of proof on the pleadings” or the “risk on non-persuasion”. However termed, it is the obligation to prove a fact in issue to the required standard of proof. The “evidential burden” obliges a party to adduce sufficient evidence to, for example, rebut a presumption that may arise from statute or otherwise. In the majority of cases the party with the persuasive burden will also have the evidential burden. The persuasive burden will not move or shift whereas some commentators refer to the evidential burden shifting. [4-2]  The persuasive burden lies upon the party who substantially asserts the affirmative of the issue in question. If, when all of the evidence is adduced, the party who has the burden has not discharged it, the issue must be decided against him. In deciding who asserts the affirmative it is the substance rather than the grammatical form that is conclusive. [4-3]  To discharge the burden of proof parties will adduce evidence. This will be both documentary evidence and testimony. Article 4.1 provides that a party wishing to call testimony must identify the witness and the subject matter of the testimony. A failure to call testimony may be fatal in failing to discharge the burden of proof. For this reason most references will have testimony of some sort. Consistent with the third Preamble “know[ing], reasonably in advance … the evidence on which the other Parties rely” the subject matter of the testimony must be disclosed. A vague description of the subject may not meet the requirements of the Preamble and, as provided in Article 4.4, it is now near universal to have witness statements so as to meet the requirement of the Preamble. [4-4]  Article 2.2 provides for early case management consultations on “the preparation … of Witness Statements” and “the taking of oral testimony at any Evidentiary Hearing”. These two issues plainly go hand-in-hand. Although the preliminary case management stage may be premature to discuss all of the issues, what can be discussed

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is whether the parties wish to present oral testimony at all, and if so, how many witnesses approximately may have to be heard and whether cross-examination or questioning by the arbitrators is preferred. The last two questions may be relevant to get an idea of the number of hearing days likely to be needed, which in turn allows specific hearing dates to be selected for a time when, hopefully, the agendas of all involved are not yet fully booked. [4-5]  On the other hand, it is usually too early in initial case management consultations to attempt to determine all of the details of anticipated oral testimony. Preferably such details are discussed and determined once the case has unfolded, i.e. after completion of the exchange of memorials, and after the parties have identified the witnesses that they wish to have at the hearing. It may be necessary to hold a separate pre-hearing conference after these preliminary procedural steps have completed but sufficiently before the evidentiary hearing. For example, a telephone conference at this stage can make for an efficient evidentiary hearing. [4-6]  In some civil law countries the evidence of an employee is inadmissible. Article 4.2 reflects the common law position of employees and like individuals being able to give evidence. Indeed in many situations the key witnesses of fact will be employees. [4-7]  Article 4.3 of the Rules provides that it is not improper to interview witnesses. This is now the common way that statements are produced: the witness will be interviewed by the lawyer or counsel who will, on the basis of that interview, draft a statement for the witness. The Rule supplements that by making it clear that it is not improper to “discuss their prospective testimony with them.” In practice this will be part of the interview and drafting process. This is welcome clarification due to the widely different approaches across common law and civil law professions. In some civil law jurisdictions it would be a breach of ethical and professional rules to even speak to a witness but, for example, in the U.S., it would be negligent not to do soi. The Comments and Illustrations section of Restatement of the Law, Law Governing Lawyers s.116 provides: “A lawyer may suggest [to the witness] choice of words that might be employed to make the witness’s meaning clear.”

i

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[4-8]  To “discuss” is a broad concept. It would probably encompass preparing a witness statement in the manner outlined above (certainly permissible under, for example, English rules), but not ‘coaching’, which is not permissible. Ultimately each lawyer will be governed by his own ethical and professional rules. That will not create a completely level playing field where counsel are in different jurisdictions but the new provision will assist in levelling the playing field and the issue being raised may enable greater clarification by the arbitral tribunal at an early stage – typically the Article 2 consultation. [4-9]  The ability to order statements going to bifurcated issues is plainly sensible. In the most common situation of bifurcated issues of liability and quantum, statements solely as to liability would often be ordered only to be followed by statements on quantum if liability is established. This opens the possibility of saving both time and cost. [4-10]  Article 4.5 sets out the formalities of the statement. Most of what the Article contains is obvious good sense and calls for little comment. The significant part of the Article is 4(5)(b). There is little guidance as to how the facts should be presented but the following may assist: •  The statement should have the heading of the reference as for the written pleadings or memorials. •  The name and address of the witness should be given. It is quite permissible to use the business address of the witness where he is giving evidence in the capacity as an officer or employee of a company including a party. If a witness has, for example, retired and does not wish to give his home address a practical solution is to say “of London, England and for the purposes of this reference care of [address of counsel for the party calling that witness].” At some stage, the arbitral tribunal may have to be invited to rule on whether the address should be disclosed. Provided some reasonable grounds are made out  – e.g., fear of reprisal – the arbitral tribunal is likely to accept a non-specific address. •  The statement should be drafted in the first person singular: “I am the managing director of the claimant …” “On [date] I met Mr B of the respondent and we discussed …”.

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•  Documents should be referred to where they support the evidence being given. Usually the documents should be bundled and either attached or served separately but with the statement or otherwise referred to. The bundle should have page numbers so that the witness can refer at the beginning to the bundle: “Served with this statement is a bundle of documents that I refer to and marked “A”. References to pages are to pages of this bundle.” In the main text of the statement, the witness might refer to the bundle in this way: “On [date] I met Mr B of the respondent and we discussed … my note of that meeting is at pages [x] to [y].” •  The status of the witness should be given and his relationship to any party. Where relevant, his experience and qualifications should be given: “I am the managing director of the Claimant and have held that position since [date]. Prior to that, I was the finance director and held that position since [date]. In [year], I graduated from [name] university with a degree in [subject] and I qualified as a chartered accountant in [year]. I worked in private practice for [name of accountancy firm] for [x] years before moving to industry. My full c.v. is at pages [x] to [y].” •  The statement(s) should prove those facts that have been pleaded in the written pleadings and it is helpful (at least internally) for counsel to mark-up a copy of the written pleadings with which witness can prove the facts relied upon. If there is an omission it is better to spot it when preparing the statements than when challenged by the arbitral tribunal. •  The evidence should distinguish between evidence from the witness’ own knowledge and which derive from information and belief and, if the latter, the source of the information or the basis for the belief should be given. Generally, it is permissible for everything to be assumed to be from the witness’ own knowledge unless the contrary is said and indeed this may be the proper inference from the words used but it is common practice to use a paragraph declaring that: “The contents of this my statement are within my own knowledge save where I indicate that they are either matters where my information is derived from another source – when I indicate the source of the information – or are matters I believe to be true – when I give the basis for my belief.” .

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•  If it is apparent from the memorials (or witness statement that can be responded to by a statement in reply) that an event is denied, additional detail may lend credibility to the witness’ account: “On [date] I met Mr B of the respondent and we discussed …I note that it is denied that we met on that day. I recall the meeting clearly as it had been raining heavily that day and my shoes were very wet and Mr B and I joked about the weather. Mr B was good enough to lend me an umbrella for my return journey. A meteorological report for [place] on [date] is at page [X] and my letter to Mr B returning the umbrella and the waybill for the return of the umbrella to Mr B is at pages [Y] and [Z].” •  The statement generally should be in chronological order but if there are various issues, it can be effective to deal with each issue in turn and, within each section, to deal with matters chronologically. •  It is quite acceptable to explain why a witness would not have done what is alleged even though it is not a fact as such: “The Respondent contends that I agreed that it could deliver the kitchen [product] late. Not only is it common sense that I would not have done so but I have fitted out many hotels and am very aware that a properly functioning kitchen is essential to the successful opening of an hotel. If the Respondent did not deliver the kitchen [product] on the contractual date and instead delivered on the later date, as it contends I agreed, it would have been impossible to open on the date we had publicised and for which we had taken substantial bookings. Being aware of those matters I simply would not have agreed to the later date. In any event the late delivery of the kitchen [product] did cause the late opening that is the subject of this claim.” •  There is no need to include legal arguments or law unless it helps the narrative in which case it should be referred to only in passing and usually on the basis of advice: “The refusal to deliver the kitchen [product] was, I am advised, a repudiatory breach of contract that was accepted by my letter of [date].” The advice itself should not be produced or referred to in any greater detail as they may amount to a waiver of privilege to material beyond the advice itself. An exception to this rule is where foreign law is sought to be proven – although proof of foreign law is regarded in some jurisdictions as a

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question of fact, it should not be grouped with factual statements as it is proved by legal opinion. [4-11]  Responsive witness statements are provided for by Article 4.6. Consistent with the general aim of notifying evidence in advance the ability to respond is welcome but care needs to be taken to ensure that it is not open to abuse. The ability to respond to other factual or expert evidence and even submissions (perhaps including the submission that the party has failed to discharge the burden of proof ) must be controlled and arbitral tribunals will wish to exercise the control afforded by Article 4.6 to stipulate whether, and if so when, responsive statements are permitted. Equally, a party served with a statement needs to ensure that it has a reasonable opportunity to respond and, in accordance with the preamble, knows the evidence relied upon suitably in advance. [4-12]  A statement without the witness appearing to be cross-examined is of limited weight and Article 4.7 provides that save where there is a valid reason for non-attendance or in exceptional circumstances, the statement will be disregarded. By analogy with Article 9.2 valid reasons may include an unreasonable burden for the witness to appear (such as extensive or difficult travel); poor health or political difficulty in travelling. It is to be noted that Article 8 permits ‘attendance’ by videoconferencing or similar technology. [4-13]  Article 4.8 codifies the long-standing practice of the status of a witness statement where the maker is not required to be cross-examined. The practice has been that parties do not cross-examine every witness if the need to do so is merely to put the opponent’s case to him. The limited time available makes this time indulgent and unnecessary. The new rule confirms that by not cross-examining a witness there is no deemed agreement to the correctness of the statement. [4-14]  This innocuous provision may hide a trap for the unwary. The convention was and remains fine. The problem may arise where the Rules are not adopted in a reference for that may be construed as

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a positive opt out of the Rule and hence there would be a need to put the case to the opponent’s witness. To avoid embarrassment where the Rules are not, but could have been, adopted it will be wise to get an express stipulation to the same effect as the new rule. [4-15]  Article 4.9 is the corresponding provision to Article 3.9 and reference should be made to the commentary on that provision. [4-16]  Article 4.10 is the corresponding provision to Article 3.10 and reference should be made to the commentary on that provision.

Arti cl e 5

Party-Appointed Experts

1 A Party may rely on a Party-Appointed Expert as a means of evidence on specific issues. Within the time ordered by the Arbitral Tribunal, (i) each Party shall identify any Party-Appointed Expert on whose testimony it intends to rely and the subject-matter of such testimony; and (ii) the Party-Appointed Expert shall submit an Expert Report. 2 The Expert Report shall contain: (a) the full name and address of the Party-Appointed Expert, a statement regarding his or her present and past relationship (if any) with any of the Parties, their legal advisors and the Arbitral Tribunal, and a description of his or her background, qualifications, training and experience; (b) a description of the instructions pursuant to which he or she is providing his or her opinions and conclusions; (c) a statement of his or her independence from the Parties, their legal advisors and the Arbitral Tribunal; (d) a statement of the facts on which he or she is basing his or her expert opinions and conclusions; (e) his or her expert opinions and conclusions, including a description of the methods, evidence and information used in arriving at the conclusions. Documents on which the Party-Appointed Expert relies that have not already been submitted shall be provided; (f ) if the Expert Report has been translated, a statement as to the language in which it was originally prepared, and the language in which the Party-Appointed Expert anticipates giving testimony at the Evidentiary Hearing; 105

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(g) an affirmation of his or her genuine belief in the opinions expressed in the Expert Report; (h) the signature of the Party-Appointed Expert and its date and place; and (i) if the Expert Report has been signed by more than one person, an attribution of the entirety or specific parts of the Expert Report to each author. 3 If Expert Reports are submitted, any Party may, within the time ordered by the Arbitral Tribunal, submit to the Arbitral Tribunal and to the other Parties revised or additional Expert Reports, including reports or statements from persons not previously identified as Party-Appointed Experts, so long as any such revisions or additions respond only to matters contained in another Party’s Witness Statements, Expert Reports or other submissions that have not been previously presented in the arbitration. 4 The Arbitral Tribunal in its discretion may order that any Party-Appointed Experts who will submit or who have submitted Expert Reports on the same or related issues meet and confer on such issues. At such meeting, the Party-Appointed Experts shall attempt to reach agreement on the issues within the scope of their Expert Reports, and they shall record in writing any such issues on which they reach agreement, any remaining areas of disagreement and the reasons therefore. 5 If a Party-Appointed Expert whose appearance has been requested pursuant to Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary Hearing, the Arbitral Tribunal shall disregard any Expert Report by that Party-Appointed Expert related to that Evidentiary Hearing unless, in exceptional circumstances, the Arbitral Tribunal decides otherwise. 6 If the appearance of a Party-Appointed Expert has not been requested pursuant to Article 8.1, none of the other Parties shall be deemed to have agreed to the correctness of the content of the Expert Report.

IBA Committee Commentary

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IB A Commi t tee Commentary Modern arbitration rules specifically refer to party-appointed experts.14 In particular, most of these rules codify the well-established notion that a party can present its own expert witnesses to testify on the points at issue. Early Disclosure of Expert Evidence In accordance with the last paragraph of the Preamble and Article 5.1, a party intending to rely on expert testimony must so notify the other party. As with other provisions of the IBA Rules of Evidence, the arbitral tribunal shall determine when such notification and the submission of expert reports shall occur (see Article 5.1). In scheduling the reports, the arbitral tribunal should consider the interaction of this provision with other submissions made by the parties, such as the supplemental witness statements provided for in Article 4.6. Content of the Expert Report Article 5.2 sets forth the requirements for expert reports. Most importantly, the expert report must describe “the methods, evidence and information used in arriving at the conclusions” (see Article 5.2(e)). This information is required in order to place the other party in a position meaningfully to evaluate the expert report. If the expert has relied on any documents not already submitted in the arbitration, these must be provided as well (Article 5.2(e)). Article 5.2(g) commits the expert to his or her report. The wording of this subsection differs slightly from the wording found in Article 4.5(d) addressing fact witnesses, as the contents of the expert report will contain opinions and expert views. Nevertheless, the expert should be prepared to take responsibility for the contents of his or her report. Article 5.2(a) requires disclosure with respect to any and all relationships the expert may have with the parties, their legal advisors and the arbitral tribunal. Article 5.2(c) then requires a statement of the expert’s See, e.g., HKIAC Rules, Article 23.5; 1998 ICC Rules, Article 20(3); 1997 ICDR Rules, Article 22(4); 1998 LCIA Rules, Article 21(2); SCC Rules, Article 28; 1994 WIPO Rules, Article 55(c); UNCITRAL Rules, Article 27(4)

14

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“independence”. While the former requirement requires disclosure, satisfaction of the latter requirement requires the expert to evaluate any such relationships and attest that he or she is “independent”, for example in the sense that he or she has no financial interest in the outcome or otherwise has relationships that would prevent the expert from providing his or her honest and frank opinion. Receiving payment for services as an expert does not preclude “independence”. Article 5.2(c) is intended to emphasise the duty of each party appointed expert to evaluate the case in an independent and neutral fashion rather than to exclude experts with some connection to the participants or the subject-matter of the case. Article 5.2(i) requires that where multiple persons sign an expert report, as is sometimes the case when an organisation is hired as an expert, the report must indicate whether the report is attributable as a whole to a single author or, if not, which specific parts thereof may be attributed to each co-author. This requirement is intended to aid parties in determining which experts they wish to attend the evidentiary hearing (Article 8.1) as well as in preparing for questioning one or more of the co-authors. Pursuant to Article 8.3, parties may submit a second round of rebuttal expert reports. However, these rebuttal reports are limited to responses to matters contained in another party’s witness statements, expert reports or other submissions that have not been previously presented in the arbitration. Considerations of efficiency and good faith weigh in favour of giving a party a single opportunity to present its arguments and allowing additional opportunities only when it was not possible to make those arguments at the time. This procedure helps to prevent parties from attempting to surprise other parties with evidence or to derail the procedural timetable late in the proceedings. Pre-hearing Conference among Experts Article 5.4 permits the arbitral tribunal to order the party-appointed experts to meet and to discuss the issues considered or to be considered in their expert reports either in advance of their preparation or in advance of the hearing. Article 8.3(f ) provides for conferencing of experts or fact witnesses during an evidentiary hearing. If they can reach agreement on any issues, they shall record that agreement in writing as well as any remaining areas of disagreement and the reasons therefor.

IBA Committee Commentary

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The practices suggested here, when deemed appropriate by the arbitral tribunal, can make the proceeding more economical. Experts from the same discipline, who are likely to know each other, can identify relatively quickly the reasons for their diverging conclusions and work towards finding areas of agreement. The revised Rules provide additionally for consultation before the reports are drafted, which may be an effective means to produce reports that identify the areas where the experts agree and are narrowly focused on the remaining areas of disagreement. Where the experts succeed in reaching agreement on their findings, the parties and the arbitral tribunal will likely accept those findings, so that the hearing may focus on the truly disputed aspects of the case. Appearance of Experts at Evidentiary Hearings Article 8.1 of the revised IBA Rules foresees the same mechanism for determining whether experts or fact witnesses must appear for testimony at an evidentiary hearing, namely on the request of any party or the arbitral tribunal. As with fact witnesses, the expert report of a non-appearing party-appointed expert may nevertheless be accepted “in exceptional circumstances” if the arbitral tribunal so determines (see Article 5.5), and agreement not to require attendance of an expert witness at hearing does not reflect agreement on the content of the expert report (see Article 5.6). Finally, it is worth noting that the IBA Rules of Evidence do not address how to deal with the testimony of an expert called upon to testify when such expert had previously been appointed by a national court in connection with the same issues. European parties frequently apply to their local courts, immediately upon the occurrence of an injury and long before arbitration is commenced, for the appointment of an expert to determine the cause of the damage and possible remedies or to preserve evidence. It is often difficult for an Anglo-American lawyer to be convinced that such a judicially appointed expert is by definition independent, as such an appointment has first been sought by the other party. In such circumstances, an arbitral tribunal will therefore have to determine how such an expert should be considered – as a party-appointed expert, a tribunal-appointed expert, or otherwise – and to issue directions with respect to the production in evidence of his or her report or with respect to his or her appearance at an evidentiary hearing.

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[5-1]  Article 5.1, in line with modern institutional rules, expressly sets out the right of a party to rely on a party-appointed expert as a means of adducing evidence on matters of opinion rather than fact and to do so by submitting an expert report. It appears from the drafting of Article 5.1 that the identification of the expert and the service of his report will take place simultaneously but in practice the other party will often know the identity before the service of the report and, indeed, the arbitral tribunal may direct that the name be disclosed in advance of the service of the report. [5-2]  Members of the arbitral tribunal are often selected because of their own specialist knowledge and this may or may not preclude the need for expert evidence.1 If the members of the arbitral tribunal are competent to do so they may determine issues that would otherwise be the subject of expert evidence. Particular care, however, should be taken where, in a three-arbitrator tribunal, one party appointed member has the expertise, as issues of due process may arise and where it can be shown that expert evidence was necessary to properly canvass an issue, an award may be set aside if expert evidence was refused and reliance placed on the technical knowledge of one member of the arbitral tribunal.2 Where expert evidence is adduced, it is quite proper for an arbitral tribunal to reject it and rely on its own skill and experience,3 – it is quite proper for them to employ such knowledge in reaching a decision. However, the arbitral tribunal should not adopt a theory of its own without putting it to the parties for comment for while they are: …entitled to use their knowledge and experience to fill gaps in the evidence about matters which will be obvious to them but which might be obscure to a layman … they ought to draw to the attention of the witnesses the experience which seems to them to suggest that the evidence given is wrong, and ought not to prefer their own knowledge or experience without giving the witness an opportunity to deal with it.4

Mediterranean and Eastern Export v. Fortress Fabrics [1948] 2 All ER 186. Johnstone v. Cheape (1817) 5 Dow. 247. 3 Fox v. Wellfair [1981] 2 Lloyd’s Rep 514. 4 Dugdale v. Kraft Foods [1976] 1 WLR 1288, at 1294–1295. 1

2

Discussion

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[5-3]  The main benefit of expertise on the arbitral tribunal should be to enable it to understand and weigh the merits of the expert evidence adduced by the parties and not to supply it themselves.5 Occasionally, the subject matter of a dispute may be so highly technical and experts can be called not so much as to give an opinion on the “how” or “why” but as an aid to understanding the issue6 or the meaning of a term in a contract7 that may have a technical meaning and, in doing so, an arbitral tribunal can determine whether to ascribe a technical or everyday meaning to a word. [5-4]  Article 5.2 substantially expands the required disclosure content of an expert report but, as the Commentary points out the most important injunction is that the expert sets out his “opinions and conclusions”: Article 5.2(e). [5-5]  Perhaps the most significant change in the Rule is the broadening of the disclosure requirements in relation to the expert’s past and present relationship with participants in the arbitration. Article 5.2(a) extends the previous requirement to disclose past or present connections with the parties to the arbitration to include connections with either party’s legal advisors and members of the arbitral tribunal. The change appears to be directed to increasing the independence of the party-appointed expert, in particular with regard to the parties’ counsel but if that was the only aim it is redundant having regard to Article 5.2(c). For further discussion see the discussion on Article 5.2(c) below. [5-6]  A similar aim is evident from the newly-introduced Article 5.2(b), which provides that a report shall describe the instructions pursuant to which the expert is providing his opinion. This seeks to minimise the risk of a party predetermining and/or influencing the conclusions of the expert, e.g. by unduly limiting the scope of the report or asking that he make certain assumptions. Indeed, Article 5 of the Chartered Institute of Arbitrators’ Protocol for the Top Shop Estates v. C Danino [1985] 1 EGLR 9, at 11. See, e.g., Kirin – Amgen Inc v. Hoechst Marion Roussel Limited [2004] UKHL 46 (wherein the judges in the House of Lords hearing the appeal were given a series of seminars on DNA technology). 7 Dashwood v. Magniac [1891] 3 Ch 306. 5

6

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Article 5: Party-Appointed Experts

Use of Party-Appointed Expert Witnesses in International Arbitration, (which was expressly designed to be used in conjunction with the 1999 IBA Rules), goes further and makes clear that the instructions to the expert are not privileged from disclosure, but that the arbitral tribunal will not order their disclosure or permit cross-examination of the expert on the instructions without good cause. [5-7]  Article 5.2 imposes a raft of new disclosure requirements on party-appointed experts and require this information to be included in the expert report. Article 5.2(c) also provides for an important change by requiring an expert report to expressly state the expert’s independence from the parties, their legal advisors and the arbitral tribunal. There is greater clarity in relation to the contents of expert reports, in particular the requirement to describe the instructions given to the expert and a statement of his or her independence from the parties, legal advisers and the arbitral tribunal. This change concerning independence may turn out to be the most far-reaching of the changes introduced by the revisions. Previously an expert was obliged to state his relationship (if any) with any of the parties. The Rules now provide that the expert’s report shall contain a statement of independence from the parties, their legal advisors and the arbitral tribunal. This raises many issues. Whilst one can readily understand the intention to strengthen the apparent independence of experts from the parties’ lawyers and the tribunal members, it might be suggested that these relationships are of limited importance, whilst the potential disadvantages of the new requirements may be significant. [5-8]  In opting to focus more strongly on the independence of the expert rather than his or her impartiality, the IBA subcommittee has preferred the (possible) outward manifestation of partiality over tests which focus on the, arguably more relevant, but less tangible state of mind of the expert. Whilst that is a legitimate approach (indeed one taken by some institutional rules and arbitration laws), the disclosure of connections in this way is a rather blunt instrument, as it is the nature and quality of those connections which is really of importance. There is, of course, an inherent tension between the concept of independence and a relationship of retainer, such as the relationship between a party and the expert it appoints and pays. Moreover, it is at least questionable whether relationships between legal advisor and

Discussion

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expert are material in the context of the fundamentally more important question of the impartiality of the expert. [5-9]  One particular concern is whether the new disclosure requirements will lead to challenges being made to experts appointed by the other party, or possibly even to arbitrators, on the basis that they have previously worked on a number of occasions with an expert, or an expert has appeared before them on a number of occasions. Whilst the better view is that the purpose of disclosure of such relationships is to enable the arbitral tribunal to take these matters into account for the purpose of determining the weight to give to (rather than the admissibility of ) an expert’s evidence, the disclosure requirements give credence to the suggestion that such matters may properly form the basis for a challenge. [5-10]  The danger will be felt most in those highly specialised areas where there are very few experts; it is rather odd to think that a lawyer should have to pause before re-instructing an expert whose work they consider to be of high quality because of a fear that time may be lost in the arbitration due to a challenge to the expert based upon that previous relationship. Whilst a situation in which challenges to experts become routine is (hopefully) unlikely to materialise, the fact is that the Rules create the basis for such challenges and do not make clear what consequence the disclosure should bring about. Ultimately, it will be up to counsel to use the Rules appropriately and for arbitral tribunals to use common sense in their application – they should not become a charter for attacking experts’ credentials routinely and thereby wasting time and costs in an arbitration, when the express purpose of the Rules would discourage such challenges. Any challenge is likely to be either when a report is served or when the expert is called to give evidence. However, it is clear, at least in England, that the fact of a close personal friendship or professional acquaintance does not, of itself, prohibit an expert from giving evidence.8 Clearly, however, it may go to the weight that an arbitral tribunal puts on that evidence. Equally, again at least in England, an Liverpool Roman Catholic Archdiocesan Trustees v. Goldberg Times 9 March 2001. The subsequent decision of the trial judge to exclude the evidence reported at [2001] 1 WLR 2337 was disapproved by the Court of Appeal in R (Factortame Limited) v. Transport Secretary (No. 8) [2003] QB 381.

8

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employee can, in theory, give expert evidence but again the weight attributed to the evidence may be (considerably) less.9 [5-11]  It is suggested that more focus on ensuring that expert reports represent the complete opinion of those providing them and that they draw to the arbitral tribunal’s attention points which detract from or contradict that opinion, might be a preferable means of addressing the real issue. In another respect the CIArb Protocol goes materially further than the new Article 5.2(b) in that it requires disclosure of not simply the instructions, but also of the basis of remuneration of the expert. Whilst such a provision might go too far for some (and was presumably why it was not adopted by the IBA Rule Committee), the relevance of this information is plain; the remuneration of an expert witness in a manner which is based on the outcome of the case is inconsistent with the independence and impartiality emphasised by the IBA Rules. [5-12]  Further, at a purely practical level an expert might be engaged before the arbitral tribunal is appointed and hence independence might be affected by matters outside the control of the expert. The IBA Guidelines on Conflicts of Interest in International Arbitration (“the Guidelines”) have at their heart the obligation that an arbitrator is impartial and independent of the parties at the time of the appointment and throughout the proceedings. It is to be assumed that the IBA Rules and the Guidelines have a common view of independence as they are both issued under the auspices of the IBA. It is generally assumed that independence is a situation of fact and impartiality is a state of mind. It follows from this that those aspects of the Guidelines that cover factual situations might also cover experts, for example, the Orange List covers matters where justifiable doubts as to independence might be raised. One of the practical examples given for the Orange List in the Guidelines is paragraph 3.1.3: the situation where an arbitrator has been appointed on two or more occasions in the past three years by one of the parties. If that test were applied to an expert it would cover appointments not only by a party but also by a party’s legal advisor. This addresses the possibility of the “hired gun” who regularly gives expert testimony for a party   Field v. Leeds City Council (2000) 32 HLR 619.

9

Discussion

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or on the instructions of a particular counsel. Experts, parties and counsel need to be ready to address these issues at an early stage so as to ensure that time and costs are not wasted by challenges to expert testimony at, or close to, an evidential hearing. [5-13]  Article 5.2(e) requires a description of the methods, evidence and information used by the expert in arriving at the conclusions and that all documents on which the expert relies that have not already been submitted shall be provided to the parties and the arbitrators. This latter amendment ensures that parties and the arbitrators alike have the required information to understand and evaluate the expert’s findings. [5-14]  Newly-introduced Article 5.2(f ) provides that if an expert report has been translated, it shall contain a statement as to the language in which it was originally prepared and the language in which the expert anticipates giving testimony at the evidentiary hearing. [5-15]  Article 5.2(g) reflects current practice to provide that experts are no longer required to affirm the “truth” of the report, but (more appropriately) his or her “genuine belief ” in the opinions expressed in the expert report. This is an important revision to the 1999 Rules requirement for an affirmation as to the “truth” of the report, which was always inappropriate for an expert witness. Whilst witnesses of fact give evidence of fact from their own knowledge, and therefore an affirmation of the truth of that evidence is appropriate, for expert witnesses what is important is that the opinions they state represent their genuine professional views and have not been unduly influenced by the party instructing them. What matters is not that the report is “true”, but that it represents the true opinions of its author, preferably uninfluenced by the position of the party appointing him or her. The revised wording captures at least the first part of this, the latter being addressed by the disclosures etc. discussed above. [5-16]  It is often advisable as a matter of tactics for an expert to identify and rebut matters which might be thought to undermine or contradict his opinions. The formal requirement to state a genuine belief, however, serves to reinforce in the expert’s mind the importance of their independence and impartiality, as well as giving the arbitral tribunal increased confidence that it is being presented with the whole picture. It might be added that this approach is also in accordance

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with one of the fundamental tenets of the Rules – the requirement to act in good faith in relation to the taking of evidence. [5-17]  Whilst it is a generally welcome advance, the new requirement under Article 5.2(g) may exacerbate existing tensions for those arbitrators who also appear as expert witnesses: where an expert has expressed his views on a particular issue and affirmed that this is his genuine opinion, he may open himself up to challenge when appointed as an arbitrator in a case raising that very issue. It is not hard to see how it might be argued that there were justifiable doubts as to the impartiality of such an arbitrator, particular if the issue in question is a critical one in the arbitration. Although the IBA Guidelines on Conflicts of Interest do not address this position directly, there is a provision on previously expressed opinions by an arbitrator in an article or public lecture: if they are specific to the case in question they are such as to potentially give rise to justifiable doubts (orange list); if they are just general thoughts they are not sufficient to give rise to justifiable doubts (green list). [5-18]  This issue is likely to be particularly acute in the investment treaty arbitration context, where it is increasingly common to have expert evidence on matters of international law and where awards are commonly published. There may be fine line distinctions to be drawn between generally expressed views on tenets of international law (see the position of Professor McLachlan in the recent Urbaser v Argentina decision) and the advocacy of a specific position in relation to a previously decided case (compare the position of Professor Gaillard in Telekom Malaysia v Ghana and RFCC v Morocco, admittedly as counsel rather than expert, though query whether this does not in fact ameliorate the position), but the new wording in the Rules does not improve the position of such individuals. [5-19]  The newly-introduced Article 5.3 provides for the parties’ opportunity to respond to the report of the expert by submitting revised or additional expert reports, including reports or statements from persons not previously identified as party-appointed experts. This opportunity for rebuttal reports could be open to abuse and arbitral tribunals should be astute when framing orders to be clear as to what exactly is permitted.

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[5-20]  For the mechanics of the experts reporting to the arbitral tribunal there is a change in Article 5.4. The change reflects the practice in the CIArb Protocol for the Use of Party-Appointed Expert Witnesses in International Arbitration. The arbitral tribunal can direct the experts to ‘meet and confer’ but now both before as well as after reports. Meeting before reports can avoid a lot of material that becomes common ground and permits a more open discussion than after reports have been exchanged and positions taken, and can be extremely useful. Regrettably, it is not directed often enough and positions become entrenched in reports and positions are pursued when perhaps they need not be. Notwithstanding the strictures of independence experts have been paid by a party to produce a report and once it is printed and exchanged a party can feel a justified sense of grievance if the expert resiles from its contents having met the other expert(s). Nevertheless, meetings pre-reports remain uncommon and time will tell whether arbitral tribunals use this new power. [5-21]  The product of the ‘meet and confer’ is a note or joint ­statement of any agreement experts of the same discipline have been able to reach and also a record of the remaining areas of disagreement and the reasons for such disagreement. The purpose of this change is, on the one hand, to minimise time at the evidential hearing on matters that are agreed and to focus on what is truly in issue. [5-22]  It is perhaps a logical extension of the ‘meet and confer’ and the joint statement that the experts should give evidence, in effect, simultaneously. Article 8.3(f ) foresees the possibility that the arbitral tribunal, upon request of one of the parties or on its own motion, may arrange the testimony in such a manner that expert witnesses may be questioned at the same time and in confrontation with each other (“witness conferencing”). This provision may increase efficiency of expert evidence by facilitating co-operation and consensus development between the experts. [5-23]  One perhaps notable omission from the Rules is an unambiguous statement that expert witnesses owe an overriding duty to the arbitral tribunal. The CIArb Protocol addresses this as follow: An expert’s duty, in giving evidence in the Arbitration, is to assist the Arbitral Tribunal to decide the issues in respect of which expert evidence is adduced.

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The point is that experts should understand at all times that if a conflict arises between their duty to assist the arbitral tribunal and their client’s interests, the former should prevail. Such a provision would also appear to accord with the newly introduced (Preamble para.3) principle of good faith in the taking of evidence.

[5-24] The form of the certificate in an expert’s report is not stipulated but drawing together all of the above it is clear that the model declaration in the CIArb Protocol that provides: (a)  I understand that my duty in giving evidence in this arbitration is to assist the arbitral tribunal decide the issues in respect of which expert evidence is adduced. I have complied with, and will continue to comply with, that duty; (b) I confirm that this is my own, impartial, objective, unbiased opinion which has not been influenced by the pressures of the dispute resolution process or by any party to the arbitration; (c) I confirm that all matters upon which I have expressed an opinion are within my area of expertise; (d) I confirm that I have referred to all matters which I regard as relevant to the opinions I have expressed and have drawn to the attention of the arbitral tribunal all matters, of which I am aware, which might adversely effect my opinion; (e) I confirm that, at the time of providing this written opinion, I consider it to be complete and accurate and constitute my true, professional opinion; (f ) I confirm that if, subsequently, I consider this opinion requires any correction, modification or qualification I will notify the parties to this arbitration and the arbitral tribunal forthwith; can be further built upon. [5-25]  It is suggested that the following might meet all requirements: (a) I confirm that I fully understand my overriding duty to the arbitral tribunal and that I must help the arbitral tribunal on matters within my expertise. I believe that I have complied, and confirm that I will continue to comply, with this duty. (b) I confirm that I have made clear which facts and matters referred to in this report are within my own knowledge and which are not.

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Those that are within my own knowledge I confirm to be true, fair and accurate. The opinions I have expressed represent my true and complete professional opinions on the matters to which they refer. (c) I have endeavoured to include in my report those matters of which I have knowledge or of which I have been made aware that might adversely affect the validity of my opinion or otherwise be material to it. I have clearly stated any qualifications to my opinion. (d) I have indicated the sources of all information I have used. (e) I have not without forming an independent view included or excluded anything which has been suggested to me by others (in particular, my instructing lawyers or the party by whom I am retained). (f ) I will notify those instructing me immediately and confirm in writing if for any reason my existing report requires correction or qualification. (g) I confirm that: other than as disclosed below, I do not have any conflict of interest of any kind in acting in this matter; I do not consider that any interest which I have disclosed affects my suitability to act as an expert witness on any issue on which I have to give evidence; I will notify my instructing lawyers immediately if, between the date of this report and the date of the hearing of my evidence, there is any change in circumstances which affects my declarations above. (h) [I confirm that I have not worked previously for either of the parties involved in this matter or as the case may be]. I have taken instruction from [lawyers] on a matter which [concluded over [x] years ago]. I have had no previous relationship with any of the members of the arbitral tribunal. (i) I understand that: my report, subject to any corrections before swearing or otherwise confirming as to its correctness, will form the evidence to be given under whether under oath, affirmation or otherwise; and I may be cross-examined on my report by a cross-examiner assisted by an expert and/or by the arbitral tribunal. (j) I confirm that I have not entered into any arrangement where the amount or payment of my fees is in any way dependent on the outcome of the case. [5-26]  There is an issue as to whether the IBA Rules might have gone further in addressing the process by which expert evidence is taken. One such provision might have been to require at a meeting of

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experts in each discipline before they prepare their reports to provide that they agree the issues on which they will opine. This would be designed to avoid the sadly not infrequent situation in which an arbitral tribunal is faced with two expert reports in the same discipline but which do not cover the same issues. Notably, the CIArb Protocol contains such a mechanism in its Article 4(6). [5-27]  Another area where further prescription might have been of assistance is in relation to restricting the burgeoning scope of expert evidence in international arbitrations. Expert evidence is becoming something of a panacea – rather than expert opinion on a technical (non-legal) matter, it is increasingly deployed alongside publications and case reports as an additional source of “independent” support for an argument. This is particularly the case with investment-treaty arbitrations where it is not uncommon to have multiple eminent professors of international law providing expert opinions as to the proper interpretation of a principle or provision of international law. Whilst lawyers almost innately draw comfort from the presence of some kind of (seemingly) independent support for the view they are articulating, whether in the form of previous decisions (common law) or commentary on the applicable Code (civil law), it has to be questioned whether expert reports are replacing what should be simply a matter of submissions. Arbitral tribunals may well wish to carefully consider the need for expert evidence and, consistent with the preamble, to question whether granting permission for expert evidence will make the reference more efficient, economical and fair.

Arti cl e 6

Tribunal-Appointed Experts

1 The Arbitral Tribunal, after consulting with the Parties, may appoint one or more independent Tribunal-Appointed Experts to report to it on specific issues designated by the Arbitral Tribunal. The Arbitral Tribunal shall establish the terms of reference for any Tribunal-Appointed Expert Report after consulting with the Parties. A copy of the final terms of reference shall be sent by the Arbitral Tribunal to the Parties. 2 The Tribunal-Appointed Expert shall, before accepting appointment, submit to the Arbitral Tribunal and to the Parties a description of his or her qualifications and a statement of his or her independence from the Parties, their legal advisors and the Arbitral Tribunal. Within the time ordered by the Arbitral Tribunal, the Parties shall inform the Arbitral Tribunal whether they have any objections as to the Tribunal-Appointed Expert’s qualifications and independence. The Arbitral Tribunal shall decide promptly whether to accept any such objection. After the appointment of a Tribunal-Appointed Expert, a Party may object to the expert’s qualifications or independence only if the objection is for reasons of which the Party becomes aware after the appointment has been made. The Arbitral Tribunal shall decide promptly what, if any, action to take. 3 Subject to the provisions of Article 9.2, the Tribunal-Appointed Expert may request a Party to provide any information or to provide access to any Documents, goods, samples, property, machinery, systems, processes or site for inspection, to the extent relevant to the case and material to its outcome. The authority of a Tribunal-Appointed Expert to request such information 121

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or access shall be the same as the authority of the Arbitral Tribunal. The Parties and their representatives shall have the right to receive any such information and to attend any such inspection. Any disagreement between a Tribunal-Appointed Expert and a Party as to the relevance, materiality or appropriateness of such a request shall be decided by the Arbitral Tribunal, in the manner provided in Articles 3.5 through 3.8. The Tribunal-Appointed Expert shall record in the Expert Report any non-compliance by a Party with an appropriate request or decision by the Arbitral Tribunal and shall describe its effects on the determination of the specific issue. 4 The Tribunal-Appointed Expert shall report in writing to the Arbitral Tribunal in an Expert Report. The Expert Report shall contain: (a) the full name and address of the Tribunal-Appointed Expert, and a description of his or her background, qualifications, training and experience; (b) a statement of the facts on which he or she is basing his or her expert opinions and conclusions; (c) his or her expert opinions and conclusions, including a description of the methods, evidence and information used in arriving at the conclusions. Documents on which the Tribunal-Appointed Expert relies that have not already been submitted shall be provided; (d) if the Expert Report has been translated, a statement as to the language in which it was originally prepared, and the language in which the Tribunal-Appointed Expert anticipates giving testimony at the Evidentiary Hearing; (e) an affirmation of his or her genuine belief in the opinions expressed in the Expert Report; (f ) the signature of the Tribunal-Appointed Expert and its date and place; and (g) if the Expert Report has been signed by more than one person, an attribution of the entirety or specific parts of the Expert Report to each author. 5 The Arbitral Tribunal shall send a copy of such Expert Report to the Parties. The Parties may examine any information, Documents, goods, samples, property, machinery, systems,

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processes or site for inspection that the Tribunal-Appointed Expert has examined and any correspondence between the Arbitral Tribunal and the Tribunal-Appointed Expert. Within the time ordered by the Arbitral Tribunal, any Party shall have the opportunity to respond to the Expert Report in a submission by the Party or through a Witness Statement or an Expert Report by a Party-Appointed Expert. The Arbitral Tribunal shall send the submission, Witness Statement or Expert Report to the Tribunal-Appointed Expert and to the other Parties. 6 At the request of a Party or of the Arbitral Tribunal, the Tribunal-Appointed Expert shall be present at an Evidentiary Hearing. The Arbitral Tribunal may question the Tribunal-Appointed Expert, and he or she may be questioned by the Parties or by any Party-Appointed Expert on issues raised in his or her Expert Report, the Parties’ submissions or Witness Statement or the Expert Reports made by the Party-Appointed Experts pursuant to Article 6.5. 7 Any Expert Report made by a Tribunal-Appointed Expert and its conclusions shall be assessed by the Arbitral Tribunal with due regard to all circumstances of the case. 8 The fees and expenses of a Tribunal-Appointed Expert, to be funded in a manner determined by the Arbitral Tribunal, shall form part of the costs of the arbitration. IB A Commi t tee Commentary Article 6 regulates the appointment of independent experts by the arbitral tribunal. A general principle underlying Article 6 is the substantial involvement of the parties in the process, even though the expert is being appointed by the arbitral tribunal itself. Article 6.1 makes clear that the arbitral tribunal is to consult with the parties before appointing such an expert and also with respect to the terms of reference for such an expert. The parties also have an opportunity, pursuant to Article 6.2, to identify any potential conflicts of interest and to state any objections (e.g., lack of independence, insufficient qualification, lack of availability, cost) on such basis. Most importantly, parties have an opportunity to be involved in the information-gathering process by the tribunal-appointed expert and to

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respond to any report by that expert. However, to avoid delays, Article 6.2 now provides that later objections may be made only if they relate to reasons of which the party becomes aware after the appointment has been made. Article 6.3 provides the parties and their representatives with the right to receive any information obtained by the tribunal-appointed expert and to attend any inspection conducted by the expert. Article 6.4 sets forth the required contents of the expert report. These requirements are the same as those in Article 5.2 with the exception of the statement of independence required of party appointed experts (which the tribunal-appointed expert had already submitted before accepting the appointment (Article 6.2)). Article 6.5 permits the parties to examine any documents that the tribunal-appointed expert has examined and any correspondence between the arbitral tribunal and the tribunal-appointed expert. That Article also provides any party with the opportunity to respond to a report by a tribunal-appointed expert, within the time ordered by the arbitral tribunal. The Working Party and the Subcommittee believed strongly that parties should know what the arbitral tribunal is being told by a tribunal-appointed expert and should have an opportunity to rebut his or her conclusions. A party may respond either by making its own submission or by submitting a witness statement or an expert report by its party-appointed expert. The tribunal-appointed expert shall be present at an evidentiary hearing and available for questioning at that hearing, so long as any party or the arbitral tribunal requests such presence. Article 6.6 permits the parties or their party-appointed experts to question the tribunal-appointed expert at the hearing. However, the scope of this questioning is limited to the issues covered in his or her expert report and the responses provided pursuant to Article 6.5: namely, a party’s submission, witness statement or an expert report by a party-appointed expert that is provided in response to the tribunal-appointed expert’s report. This provision is included to assure that the tribunal-appointed expert knows in advance the subjects on which he or she might be questioned, in order to prepare his or her responses. The Working Party wanted to avoid situations where issues were raised involving the tribunal-appointed expert’s report for the first time at the hearing, which would inevitably require an adjournment for the party-appointed expert to consider that issue before the hearing could resume.

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Article 6.3 makes certain that the tribunal-appointed expert shall have access to whatever information he or she needs to respond to the issues posed in his or her terms of reference. The tribunal-appointed expert may request the party to provide any relevant and material information, which includes relevant documents, goods, samples, property, machinery, systems, processes or access to a site for inspection. Parties have the right to object to such requests, based upon the provisions of Article 9.2. If such an objection is raised, the arbitral tribunal shall make a determination as to the materiality and the appropriateness of the tribunal-appointed expert’s request in the manner provided in Articles 3.5–3.8, which concern requests to produce. Finally, in Article 6.7, the IBA Rules of Evidence make clear that it is the arbitral tribunal, not the tribunal-appointed expert, who is to determine the issues in the case. That Article provides that a tribunalappointed expert’s report “and its conclusions shall be assessed by the Arbitral Tribunal with due regard to all circumstances of the case”. Di scussi on [6-1]  Article 6.1 preserves the right of the arbitral tribunal to appoint an expert to report to it on specific issues. This power is normally mutually exclusive to the ability of parties to rely on party-appointed experts. If the parties have appointed experts it is for the arbitral tribunal to assess that evidence and, to the extent that it differs, to determine which evidence they prefer. To permit both party-appointed and tribunal-appointed experts is, in effect, to have the tribunal-appointed expert as the determinator of the issues of expert opinion rather than the arbitral tribunal itself. As the premise underlying Article 5 is that the parties have the right to rely upon party-appointed experts it would not be unusual, especially in a low value case, to record that the parties do not intend to use that right before appointing a tribunal-appointed expert whereupon that expert will be the only expert (at least on a particular issue) that the arbitral tribunal will have to assess. Otherwise the parties can subsequently get their own party-appointed expert to address the opinion of the tribunal-appointed expert (or can address it by submissions or witnesses of fact – Article 6.5). Even then an arbitral tribunal will have to ensure that it does not substitute the opinion of the expert for its own.

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[6-2]  Article 6.2, requires a tribunal-appointed expert to submit to the parties and to the arbitral tribunal a description of his or her qualifications and a statement of his or her independence from the parties, their legal advisors and the arbitral tribunal before accepting the appointment. [6-3]  Upon being provided with such detailed information, the arbitral tribunal is able to make an informed decision whether they intend to appoint the expert, and in addition, to hear from the parties whether they have any objections as to the expert’s qualifications; independence; availability and cost. To avoid tactical challenges the parties’ right to object to the expert’s qualifications or independence can only be made before his or her appointment. After appointment challenges can only be made on facts of which they have become aware after the appointment has been made. The provision limits the parties’ ability to derail or delay the proceedings. Article 6.2 adds the requirement that the tribunal-appointed expert must provide a description of his or her qualifications and also a statement of independence from the legal advisors (in addition to the existing statement in relation to the parties and the arbitral tribunal members). There is an unexplained dichotomy here between the ‘statement of independence’ required of tribunal-appointed experts and the ‘statement of relationships’ to be provided by party-appointed experts. [6-4]  The tribunal-appointed expert has a broad right to inspect or examine anything relevant to the case: Article 6.3. The slightly confusing part of Article 6.3 is that the tribunal-appointed expert has the same authority as the arbitral tribunal to obtain information or access but that in the event of disagreement as to the relevance, materiality or appropriateness of such a request it is to be decided by the arbitral tribunal. If the original request was made with the authority of the arbitral tribunal it seems unlikely that the arbitral tribunal will subsequently determine that a party’s objection on the grounds of relevance, materiality or appropriateness will be upheld but it seems at least theoretically possible that a party might make a well-founded objection which the arbitral tribunal is called upon to determine. Cases where the arbitral tribunal refuses a request for information or access by a tribunal-appointed expert will be rare.

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[6-5]  Article 6.4 sets out detailed requirements for the content of the report of a tribunal-appointed expert. These requirements mirror the requirements for the report of a party-appointed expert set out in Article 5.2. The only differences are that (i) Article 5.2(b) requires a description of the parties’ instructions, whereas the very nature of an arbitral tribunal appointment is that both the parties and the arbitral tribunal are aware of the instructions as Article 6.1 provides that “The Arbitral Tribunal shall establish the terms of reference for any Tribunal-Appointed Expert Report after consulting with the Parties… . A copy of the final terms of reference shall be sent … to the Parties.” By establishing the terms of reference in consultation, the instruction or terms of reference are known by all and the requirement of Article 5.2(c) is not required as it is already reflected in Article 6.2. By aligning the requirements for party-appointed and tribunal-appointed experts, it is acknowledged that both types of expert, at least in principle, are subject to the same standards. [6-6]  Article 6.5 provides a clear check on the otherwise near immutable authority of the tribunal-appointed expert. The right of the parties to rebut his report whether by submission, factual or expert evidence is key to his opinion not being accepted without more by the arbitral tribunal. Arbitral tribunals will, however, have to have this potential very much in mind when considering whether to appoint a tribunal-appointed expert. If it is near inevitable that the parties seek to rebut the tribunal-appointed expert it must be questioned whether the process will save time and cost. It may be quicker and cheaper to not have a tribunal-appointed expert and simply allow the parties to have party-appointed experts. [6-7]  A minor revision sees the expansion in Article 6.6 of the range of documents on which a tribunal-appointed expert can be cross-examined by the parties or the arbitral tribunal: previously it was not expressly stated that the tribunal-appointed expert could be cross-examined on his own report (which is the most obvious area of cross-examination). The further inclusion that the tribunalappointed expert might be cross-examined on the witness statements of the parties is unlikely to be significant.

Arti cl e 7

Inspection

Subject to the provisions of Article 9.2, the Arbitral Tribunal may, at the request of a Party or on its own motion, inspect or require the inspection by a Tribunal-Appointed Expert or a Party-Appointed Expert of any site, property, machinery or any other goods, samples, systems, processes or Documents, as it deems appropriate. The Arbitral Tribunal shall, in consultation with the Parties, determine the timing and arrangement for the inspection. The Parties and their representatives shall have the right to attend any such inspection. IBA Commi t tee Commenta ry Article 7 is a simple provision, making possible inspections of relevant site, property, machinery or any other goods, samples, systems, processes or documents that may help the decision-making process, wherever they may be located. Such inspections most frequently occur in construction arbitrations, in which the arbitral tribunal visits the construction site in dispute. Di scussi on [7-1]  The Article 9.2 proviso operates to exclude matters from evidence (i.e. in this context refuse to inspect or require an expert to inspect) on the grounds of relevance, legal impediment or privilege, unreasonable burden, loss or destruction (of what would otherwise have been inspected), compelling confidentiality, compelling and special political or institutional sensitivity, and compelling 128

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considerations of procedural economy, proportionality, fairness or equality. [7-2]  Inspections can be extremely valuable. The Committee comment that the provision is often used in construction and this can be especially useful in quality issues. Trade or commodity arbitrations can also use inspection but the nature of trade may dictate that the arbitral tribunal would have to be promptly appointed otherwise the subject-matter may have been traded-on or deteriorated (e.g. perishable goods). For example, the quality of, say, fruit will necessitate an immediate inspection and this may not be possible in institutional references where considerable time can elapse before an arbitral tribunal is appointed.

Arti cl e 8

Evidentiary Hearing

1 Within the time ordered by the Arbitral Tribunal, each Party shall inform the Arbitral Tribunal and the other Parties of the witnesses whose appearance it requests. Each witness (which term includes, for the purposes of this Article, witnesses of fact and any experts) shall, subject to Article 8.2, appear for testimony at the Evidentiary Hearing if such person’s appearance has been requested by any Party or by the Arbitral Tribunal. Each witness shall appear in person unless the Arbitral Tribunal allows the use of videoconference or similar technology with respect to a particular witness. 2 The Arbitral Tribunal shall at all times have complete control over the Evidentiary Hearing. The Arbitral Tribunal may limit or exclude any question to, answer by or appearance of a witness, if it considers such question, answer or appearance to be irrelevant, immaterial, unreasonably burdensome, duplicative or otherwise covered by a reason for objection set forth in Article 9.2. Questions to a witness during direct and re-direct testimony may not be unreasonably leading. 3 With respect to oral testimony at an Evidentiary Hearing: (a) the Claimant shall ordinarily first present the testimony of its witnesses, followed by the Respondent presenting the testimony of its witnesses; (b) following direct testimony, any other Party may question such witness, in an order to be determined by the Arbitral Tribunal. The Party who initially presented the witness shall subsequently have the opportunity to ask addi­ tional questions on the matters raised in the other Parties’ questioning; 130

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(c) thereafter, the Claimant shall ordinarily first present the testimony of its Party-Appointed Experts, followed by the Respondent presenting the testimony of its Party-Appointed Experts. The Party who initially presented the Party-Appointed Expert shall subsequently have the opportunity to ask additional questions on the matters raised in the other Parties’ questioning; (d) the Arbitral Tribunal may question a Tribunal-Appointed Expert, and he or she may be questioned by the Parties or by any Party-Appointed Expert, on issues raised in the Tribunal-Appointed Expert Report, in the Parties’ submissions or in the Expert Reports made by the Party-Appointed Experts; (e) if the arbitration is organised into separate issues or phases (such as jurisdiction, preliminary determinations, liability and damages), the Parties may agree or the Arbitral Tribunal may order the scheduling of testimony separately for each issue or phase; (f ) the Arbitral Tribunal, upon request of a Party or on its own motion, may vary this order of proceeding, including the arrangement of testimony by particular issues or in such a manner that witnesses be questioned at the same time and in confrontation with each other (witness conferencing); (g) the Arbitral Tribunal may ask questions to a witness at any time. 4 A witness of fact providing testimony shall first affirm, in a manner determined appropriate by the Arbitral Tribunal, that he or she commits to tell the truth or, in the case of an expert witness, his or her genuine belief in the opinions to be expressed at the Evidentiary Hearing. If the witness has submitted a Witness Statement or an Expert Report, the witness shall confirm it. The Parties may agree or the Arbitral Tribunal may order that the Witness Statement or Expert Report shall serve as that witness’s direct testimony. 5 Subject to the provisions of Article 9.2, the Arbitral Tribunal may request any person to give oral or written evidence on any issue that the Arbitral Tribunal considers to be relevant to the case and material to its outcome. Any witness called and

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questioned by the Arbitral Tribunal may also be questioned by the Parties. IBA Commi t tee Commenta ry Article 8 deals with the evidentiary hearing, a term defined in the Definitions section. The evidentiary hearing may be held in person, by teleconference or other method, and it involves the presentation of oral or other evidence to the arbitral tribunal. In most international arbitrations, this hearing is preceded by substantial preparation, on the principle that each party shall be entitled to know reasonably in advance the evidence on which the other parties rely (see Preamble, paragraph 3). There may have been a Terms of Reference or other type of preliminary or preparatory hearing.16 There will have been an exchange of extensive written submissions containing allegations of fact and often discussions of law. Documents will have been submitted (see above, Article 3). Witnesses of fact may have submitted written witness statements (see above, Article 4). Party-appointed experts or tribunal-appointed experts may have submitted written expert reports (see above, Articles 5 and 6). The parties must have adequate notice of the evidentiary hearing.17 As a result of all this preparation, by the time the evidentiary hearing is conducted the various participants in the arbitral process are likely to know each other better, and they will also know the case better than at the outset of the arbitration. Article 8 of the IBA Rules of Evidence is the most general of all the provisions. The Article provides a general framework for the procedure to be followed at the evidentiary hearing. This is necessary because the variety of procedures and order to be followed at an evidentiary hearing is enormous. Ordinarily, parties and the arbitral tribunal will be able to devise the procedures best suited to the circumstances of the case. While some of the special features described in Article 8 will be seen in

See, ICC Rules, Article 18; ICSID Arbitration Rules, Rule 21; UNCITRAL Notes on Organising Arbitral Proceedings, paragraph 17; WIPO Arbitration Rules, Article 47. 17 See, e.g., HKIAC Rules, Article 23.3; ICC Rules, Article 21(1); ICDR Arbitration Rules, Article 20.1 (30 days); LCIA Arbitration Rules, Article 19.2; SCC Arbitration Rules, Article 27.2; UNCITRAL Arbitration Rules, Article 25(1); WIPO Arbitration Rules, Article 53(b). The 15 days in Article 25 of the UNCITRAL Arbitration Rules are usually too short. 16

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many evidentiary hearings, an evidentiary hearing incorporating them all should be rare. Managing the Hearing Article 8.2 makes clear that the power to manage the evidentiary hearing rests with the arbitral tribunal, not the parties, an idea which originally came from civil law procedure but which has been widely adopted.18 The arbitral tribunal may limit or exclude questioning, or even the appearance of a witness, if it is irrelevant, immaterial, unreasonably burdensome, duplicative or otherwise covered by a reason for objection set forth in Article 9.2. While some counsel are accustomed to raising objections, the arbitral tribunal may also apply these standards on their own. This Article also finds objectionable unreasonably leading questions, which may render direct and re-direct testimony worthless. These provisions are all designed to give the arbitral tribunal the ability to focus the hearing on issues material to the outcome of the case and thereby make hearings more efficient. Order of Witnesses Articles 8.3 (a), (b) and (c) set out the basic order of witnesses followed in many cases: claimant’s witnesses, followed by respondent’s witnesses, and experts. For each witness, testimony is first presented by the party offering that witness, followed by examination by the opposing party and then an opportunity for re-examination by the presenting party. Usually, any re-examination is limited to new matters raised in the previous oral testimony. Many arbitral tribunals ask their questions only towards the end, except for questions designed to help the process along or to make a witness feel comfortable. However, arbitral tribunals, particularly in more complex cases, are increasingly adapting these procedures to provide for better examination of the issues in dispute. Article 8.3(g) confirms the arbitral tribunal’s ability to pose questions at any time. Arbitral tribunals often hear oral See, e.g., ICC Rules, Article 21(3); ICDR Arbitration Rules, Article 16.1; LCIA Arbitration Rules, Article 14.2 (to the extent no party agreement to the contrary); SCC Rules, Article 19; UNCITRAL Arbitration Rules, Article 15.1.

18

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argument by counsel for the parties, which may be a part of, or may be separate from, the evidentiary hearing. Therefore, Article 8.3(f ) confirms the discretion of arbitral tribunals to vary this order of proceeding in the manner best suited for the circumstances of that case. For example, the provision allows the arrangement of testimony by particular issues or that witnesses be questioned at the same time and in confrontation with each other about particular issues (witness conferencing). Such techniques may enable arbitral tribunals better to understand the contradictions in testimony and to be able to determine the weight and credibility to be given to the testimony. Ultimately, the IBA Rules of Evidence leave it to the arbitral tribunal and the parties to determine how best to proceed. The IBA Rules of Evidence do not address whether witnesses who have not yet testified may be in the hearing room or whether witnesses who have testified may remain. This is left for the arbitral tribunal to decide, because it depends on the circumstances of the case, the nature of the dispute and the persons involved. The affirmation by a witness that he or she commits to telling the truth, as described in Article 8.4, is widely observed. Often, the arbitral tribunal will also simply admonish the witness to tell the truth, and sometimes it will additionally advise the witness of criminal sanctions applying at the seat of the arbitration or at the physical place of the hearing. Arbitral tribunals, at least in some countries, rarely swear in the witness themselves. Where witnesses and experts have provided written witness statements or expert reports, they are first confirmed at the beginning of the testimony. The third sentence of Article 8.4 states the rule applied in many arbitrations where witness statements are used, that such statements may serve in lieu of the witness’s direct testimony. Having the witness statement stand entirely in lieu of direct testimony provides an incentive for witness statements to be comprehensive. Nothing in the IBA Rules of Evidence, however, prevents an arbitral tribunal from hearing witnesses in another manner, such as the traditional method in certain civil law countries where witnesses are initially questioned by the arbitral tribunal, followed by questioning by the parties. This is a technique which presupposes a thorough knowledge of the case and a full study of the law by the arbitral tribunal.

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Tribunal Witnesses Inquisitorial powers of the arbitral tribunal follow from the lex arbitri of the seat of the arbitration.19 Inquisitorial powers may also follow from the arbitration rules agreed by the parties.20 The IBA Rules of Evidence do not provide for similarly sweeping inquisitorial powers of the arbitral tribunal, but Article 8.5 covers the main case where inquisitorial powers may be exercised: the hearing of a key witness who typically had an earlier association with both parties but whom the parties for some reason failed to persuade to appear, perhaps because they no longer have close ties with the witness. Such a tribunal witness will often be questioned in the inquisitorial fashion described above. To proceed in this fashion is not mandated, but is contemplated by the second sentence of Article 8.5. At the close of an evidentiary hearing, the parties are sometimes invited to comment on the assessment of the evidence and on the law. Such comments may also be made in post-hearing briefs or at a separate “final” or “pleading” hearing, or in both. The IBA Rules of Evidence do not address this phase of the proceeding. Parti cul ar Words and Phra s e s Shall appear for testimony

Tribunal shall at all times have complete control over the Evidentiary Hearing

This makes clear that the witnesses are normally expected to attend and be cross-examined (especially in light of Article 8.3(b)). Such a provision will be familiar to many and has connections to Article 24 UNCITRAL Model Law and many national laws e.g. s.33 Arbitration Act 1996.

See, e.g., Article 34, subs. 2 lit. g, English Arbitration Act 1996; Article 184 Swiss Private international Law Act. 20 See, e.g., ICC Rules, Article 20; LCIA Rules, Article 22.1(c). 19

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[8-1]  One of the first items to be discussed at the pre-hearing conference is the identification of the witnesses who will appear at the evidentiary hearing. The Rules now include a new provision in Article 8.1 stating that: “Within the time ordered by the Arbitral Tribunal, each party shall inform the Arbitral Tribunal and the other Parties of the witnesses whose appearance it requests.”

The rule further adds that if a witness’ appearance “has been requested by any party or by the Arbitral Tribunal”, the respective witness “shall, subject to Article 8(2), appear for testimony at the Evidentiary Hearing”. Under Article 8.2 the arbitral tribunal has the authority to exclude the appearance of a witness if it is considered, “irrelevant, immaterial, unreasonably burdensome, duplicative or otherwise covered by a reason for objection set forth in Article 9.2”. The latter provision refers, inter alia, to confidentiality and privilege, special political or institutional sensitivity, proportionality, fairness or equality of the parties. [8-2]  Article 8.1 provides for witnesses to appear to give oral testimony at a hearing only if their appearance has been requested by any party or by the arbitral tribunal. This provision is to be seen in the context of Articles 4.6 and 5.5 that provide that the evidence of a factual or expert witness whose attendance has been requested yet fails to attend, shall be disregarded (save in exceptional circumstances). Conversely, the evidence of a factual or expert witness whose attendance is not requested is not deemed to be correct: Articles 4.7 and 5.6. [8-3]  This appears to provide an answer to an issue that sometimes gives rise to controversy, namely whether, in proceedings in which witness statements have been submitted, a party can effectively prevent the appearance of a witness presented by the opposite party by simply waiving the cross-examination of that witness. Since Article 8.1 provides that each party can request a witness to appear, the party that initially presented a given witness should be able to call him or her to testify at the evidentiary hearing even if the other party has waived cross-examination of that witness. Indeed, the party calling a witness may have a strong interest in the personal appearance of its witnesses in the hopes that words spoken live to the tribunal will make a more

Discussion

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forceful impression than words written in a witness statement prepared under circumstances out of the tribunal’s control. [8-4]  Article 8.3(b) and the last sentence of Article 8.2, are premised on some sort of direct examination, thus reinforcing the right of the party that presents a witness to have him or her appear for direct examination. [8-5]  Although witnesses of fact are in large part the responsibility of the parties, the Rules continue to provide that the arbitral tribunal may, on its own initiative, order the parties to ensure the appearance for testimony “of any person, including one whose testimony has not yet been offered”. Such power is rarely used by arbitral tribunals, but its mere existence may help prevent conspicuous gaps in the witnesses presented by a party. [8-6]  The use of modern technology, such as video conferencing, is also permitted under the Rules. The starting point, however, is that attendance in person is mandatory (“shall” in the final sentence of Article 8.1) and a reasoned case would have to be made to depart from that norm. [8-7]  The normal order of witnesses, and the evidence in chief, cross-examination and re-examination, as provided for in Article 8.3 will be of no surprise to most lawyers. The Rules carefully avoid the term “cross-examination”, but that is, in essence, what they provide for. Cross-examination is followed by re-direct examination, which the Rules describe as the opportunity of the party who initially presented the witness “to ask additional questions on the matters raised in the other party’s questioning”. That order may be displaced if the Respondent bears the substantive burden of proof, for example, if the Claimant’s case is for a declaration that the Respondent termin­ ated the contract wrongfully. However, many arbitrators consider this traditional rule a fall-back proposal only. In many cases it may make much more sense to arrange oral testimony by particular issues such as, the background of the contract, negotiations, the performance (or lack of performance) of the contract and facts relevant to the calculation of damages. This can also be done by witness conferencing (see below). The advantage is that hearing the evidence on particular issues may facilitate the comparison between the evidence of the witnesses and, linked with it, the assessment of their credibility.

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A further practical benefit is that the transcript of the evidence will be easier to review. The drawback is that a witness might have to give disjointed evidence if one witness gives evidence on all issues. Hence, grouping the witnesses by issue only makes sense where there are different witnesses on different issues, meaning that the witnesses have to appear only once when testifying on that issue. In contrast, where there is a majority of “general” witnesses whose testimony is offered on all or many of the relevant issues, an appearance by issues may not be feasible because it would require witnesses to appear repeatedly and possibly at very different times during a long hearing. [8-8]  The use of hot-tubbing (correctly called “witness conferencing”) is acknowledged in Article 8.3(f ) and would appear to extend to both expert witnesses and factual witnesses. It is an increasingly common and effective way for arbitral tribunals to deal with evidence and has much to commend it as a way of efficiently and economically hearing contested evidence. To date it has been mainly used for experts but on specific issues it may have considerable application for witnesses of fact. [8-9]  Article 8.3(g) provides that the arbitral tribunal may ask questions of a witness at any time. Those from a civil law background may see the questioning of the witnesses to be something to be undertaken by the arbitrators, following the approach usually taken by civil-law courts. Article 8.3(g) has the flexibility for that if that is what the parties and the arbitral tribunal desire but the Rules are premised on questioning by the parties. [8-10]  Article 8.4 provides for witnesses of fact to affirm, in a manner determined by the Arbitral Tribunal, to tell the truth or, in the case of an expert witness, a genuine belief in the opinions to be expressed. See the points discussed under Articles 4 and 5 respectively for the form of confirmation in the statement / report respectively. [8-11]  The provision that statements / reports stand as evidence in chief is usually adopted and serves to save time and cost at the Evidentiary Hearing although witnesses are usually allowed a few ‘warm-up’ questions. This can be useful to settle a nervous witness but also can be used to (a) bring out key evidence and allow the Tribunal to assess the demeanour of a witness if, for example,

Discussion

139

honesty or credibility are seriously in issue and (b) address matters raised in the evidence adduced by the opponent either where rebuttal statements are not used or where, if used, there is something in the opponent’s rebuttal statement that needs to be addressed. [8-12]  There are those (especially from civil law backgrounds) who question the wisdom of the examination of witnesses in this way contending that it is contrary to the Preamble aims of promoting efficiency and economy. Whatever strength those criticisms have it seems that the Rules endorse the examination in the conventional common law way and it will be rare where this process is not followed. [8-13]  A point not addressed by the Rules but usually discussed and determined at the pre-hearing conference, is how much time each party shall have for direct examination, if any, cross-examination and re-examination. Different approaches can be taken: a separate time budget allocated to each witness, or each group of witnesses; testimony a particular issue, or an overall time budget allocated to each party, which it then can use according to its discretion. The latter method, which requires monitoring of the time spent for examination by the parties and the tribunal, is commonly referred to as “chess clock” arbitration. On the basis that most time is taken up by cross-examination the most common division of time is to allow parity of time for the witnesses of each party on a fairly rough and ready basis: say, the same number of days of sessions for each party. When discussing time budgets, the impact of witnesses testifying in their native language and thus needing translation into the language of the proceedings must be taken into consideration. In that context it may be relevant whether sequential or simultaneous translation of the testimony is provided for. [8-14]  Article 5.2(c) provides that the written witness statement shall disclose the language in which the statement was originally prepared as well as the language in which the witness anticipates giving testimony at the evidentiary hearing. Witnesses will invariably prefer to give evidence in their native language rather than the language of the proceedings. It appears that parties sometimes expect an advantage if a witness who is perfectly able to testify in the language of the

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proceeding has additional thinking time when the question, asked to him in the language of the proceedings, is first translated into his native language. If the statement of a witness is silent on the language in which oral evidence is to be given, the witness may be reasonably requested to testify in the language of the proceedings. [8-15]  If the testimony is to be translated, it is to be agreed who organises the translator, what qualification he or she should have, the statement of independence he or she should submit and which documents should be provided to the translator in advance to familiarise him or her with the names and terms of the case. [8-16]  Counsel will present a witness with documents during examination and in particular cross-examination not least in order to lead the arbitral tribunal through the key exhibits supporting their case. To do so effectively the parties will have to have agreed a common bundle of documents. [8-17]  The Rules do not say whether witnesses who have not yet testified may be in the hearing room or whether witnesses who have testified may remain. This is a matter that should also be determined at the pre-hearing conference. Often, the parties agree to treat witnesses who at the same time serve as party representatives differently from other witnesses. Party representatives may be present during all of the testimonies; other witnesses only after they have testified. [8-18]  The Rules are also silent on the taking of a transcript. The most common approach is to have the testimonies transcribed verbatim by a professional reporter, arranged for either by the tribunal or the parties directly. However, there are other options as well: the testimonies may simply be recorded with the parties subsequently generating transcripts of the recording (or parts thereof ); the secretary of the arbitral tribunal present at the hearing may keep summary minutes; or, less often, the chairman may dictate a summary of each witness’ answer on the spot and later provide the parties with a transcript of his dictated minutes. The purpose is to find a procedure that is best suited to the particular case having regard to the required quality of the record and time and cost efficiency.

Arti cl e 9

Admissibility and Assessment of Evidence

1 The Arbitral Tribunal shall determine the admissibility, relevance, materiality and weight of evidence. 2 The Arbitral Tribunal shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, statement, oral testimony or inspection for any of the following reasons: (a) lack of sufficient relevance to the case or materiality to its outcome; (b) legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable; (c) unreasonable burden to produce the requested evidence; (d) loss or destruction of the Document that has been shown with reasonable likelihood to have occurred; (e) grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling; (f ) grounds of special political or institutional sensitivity (including evidence that has been classified as secret by a government or a public international institution) that the Arbitral Tribunal determines to be compelling; or (g) considerations of procedural economy, proportionality, fairness or equality of the Parties that the Arbitral Tribunal determines to be compelling. 3 In considering issues of legal impediment or privilege under Article 9.2(b), and insofar as permitted by any mandatory legal or ethical rules that are determined by it to be applicable, the Arbitral Tribunal may take into account: 141

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(a) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of providing or obtaining legal advice; (b) any need to protect the confidentiality of a Document created or statement or oral communication made in connection with and for the purpose of settlement negotiations; (c) the expectations of the Parties and their advisors at the time the legal impediment or privilege is said to have arisen; (d) any possible waiver of any applicable legal impediment or privilege by virtue of consent, earlier disclosure, affirmative use of the Document, statement, oral communication or advice contained therein, or otherwise; and (e) the need to maintain fairness and equality as between the Parties, particularly if they are subject to different legal or ethical rules. 4 The Arbitral Tribunal may, where appropriate, make necessary arrangements to permit evidence to be presented or considered subject to suitable confidentiality protection. 5 If a Party fails without satisfactory explanation to produce any Document requested in a Request to Produce to which it has not objected in due time or fails to produce any Document ordered to be produced by the Arbitral Tribunal, the Arbitral Tribunal may infer that such document would be adverse to the interests of that Party. 6 If a Party fails without satisfactory explanation to make available any other relevant evidence, including testimony, sought by one Party to which the Party to whom the request was addressed has not objected in due time or fails to make available any evidence, including testimony, ordered by the Arbitral Tribunal to be produced, the Arbitral Tribunal may infer that such evidence would be adverse to the interests of that Party. 7 If the Arbitral Tribunal determines that a Party has failed to conduct itself in good faith in the taking of evidence, the Arbitral Tribunal may, in addition to any other measures available under these Rules, take such failure into account in its

IBA Committee Commentary

143

assignment of the costs of the arbitration, including costs arising out of or in connection with the taking of evidence. IB A Commi t tee Commentary Articles 1–8 of the IBA Rules of Evidence provide the mechanisms for the gathering and presentation of evidence to the arbitral tribunal. Article 9 provides the principles by which the arbitral tribunal should determine what evidence it should properly consider and how it should assess the evidence that is properly before it. Article 9.1 states the general principle, also found in many institutional and ad hoc arbitration rules, that the arbitral tribunal shall determine the admissibility, relevance, materiality and weight of evidence. Obviously, the arbitral tribunal shall exercise its discretion in making such determinations, which are central to its role. Article 9.2 provides the limitations on admissible evidence, whether oral or written. These limitations also apply to the production of documents pursuant to Article 3 and inspections pursuant to Article 7. These limitations are important, for they preserve the lines of distinction between the rights of the parties and the authority of the arbitral tribunal. While the provision states that the arbitral tribunal “shall” exclude evidence meeting one of the specified exceptions, the arbitral tribunal obviously retains its discretion to determine whether one of the specified criteria has been met. Article 9.2(a) states the simple proposition that the arbitral tribunal shall exclude evidence that is not sufficiently relevant to the case or material to its outcome. Article 9.2(b) provides protection for documents and other evidence that may be covered by certain privileges, under the appropriate applicable law, such as the attorney-client privilege, professional secrecy or the without prejudice privilege. The Working Party felt that it was important that such privileges be recognised in international arbitration. The Subcommittee provided additional non-binding guidance on determining the applicable privileges in Article 9.3. Although the standard to be applied is left to the discretion of the arbitral tribunal, it is desirable that the tribunal take account of the elements set forth in Article 9.3, in particular if the parties are subject to different legal or ethical rules. Article 9.3(a) seeks to encompass both the common law

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understanding of attorney-client privilege and the civil law understanding of the duty of professional secrecy. Article 9.3(b) expresses a generalised understanding of the so-called “without prejudice” or “settlement” privilege, which is recognised in certain jurisdictions and relates to the contents of settlement negotiations. Article 9.3(c) expresses the guiding principle that expectations of the parties and their advisors at the time the legal impediment or privilege is said to have arisen should be taken into consideration. Often, these expectations will be formed by the approach to privilege prevailing in the home jurisdiction of such persons. Article 9.3(d) encapsulates an important exception to privilege in many countries, namely waiver. Finally, Article 9.3(e) emphasises the need to maintain fairness and equality among the parties. The need to protect fairness and equality among the parties may arise when the approach to privilege prevailing in the parties’ home jurisdictions differs. For example, one jurisdiction may recognize the settlement privilege, whereas another may not, or one jurisdiction may extend the attorney-client privilege to in-house counsel, whereas another may not. In such cases, applying different rules to the parties could create unfairness by shielding the documents of one party from production but not those of the other. Article 9.2(c) permits the arbitral tribunal to exclude from production or from evidence any documents or evidence which would be an unreasonable burden to produce. This unreasonable burden can take many forms, and the nature of the burden is purposely left to the discretion of the arbitral tribunal. For example, it may involve the production of documents pursuant to a request to produce which, although properly identified pursuant to Article 3.3(a)(i) and relevant to the case and material to its outcome, would because of their sheer quantity create an unreasonable burden on the receiving party to produce. Similarly, Article 9.2(c) could cover a situation where a certain document exists and may even be considered to be within the “possession, custody or control” of another party (see Article 3.3(c)(ii)), but which nevertheless could be unreasonably difficult for the party to obtain. Article 9.2(d) is also straightforward, as a document that has been lost or destroyed cannot reasonably be produced. As it may be impossible to prove a negative (loss of the document), Article 9.2(d) provides that such loss shall be shown with a reasonable likelihood to have occurred.

IBA Committee Commentary

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Articles 9.2(e) and (f ) involve special and related concerns. Article 3 reflects the belief that some internal documents are properly subject to production in international arbitration, even documents that may not be producible in a state court in certain jurisdictions. However, the IBA Rules also recognise that some documents may be subject to such commercial or technical confidentiality concerns that they should not be required to be produced or introduced into evidence. When an early draft of the IBA Rules of Evidence referred only to such confidentiality, certain international political organisations pointed out that “commercial and technical confidentiality” might not include confidentiality within such organisations. Therefore, Article 9.2(f ) was added to put such special political or institutional sensitivity on an equal footing with commercial or technical confidentiality. In the case of both provisions, the arbitral tribunal retains the discretion to determine whether the considerations of confidentiality or sensitivity are sufficient to warrant the exclusion from evidence or production of those documents or other evidence. As noted in the IBA Rules, the arbitral tribunal must find the concerns to be “compelling” in order to exclude the evidence. Article 9.4 also makes clear that the arbitral tribunal may make certain arrangements, such as entering a confidentiality agreement or order, to permit evidence to be considered subject to suitable confidentiality protection. Article 9.2(g) is a catch-all provision, intended to assure procedural economy, proportionality, fairness and equality in the case. For example, documents that might be considered to be privileged within one national legal system may not be considered to be privileged within another. If this situation were to create an unfairness, the arbitral tribunal may exclude production of the technically non-privileged documents pursuant to this provision. In general, it is hoped that this provision will help ensure that the arbitral tribunal provides the parties with a fair, as well as an effective and efficient, hearing. Finally, as noted above in the discussion of Article 3, Articles 9.5 and 9.6 create inferences where a party has failed to produce a document or make available other evidence required by the arbitral tribunal. The arbitral tribunal may then conclude that such document or evidence would be adverse to the interests of that party. New Article 9.7 specifically grants the arbitral tribunal the discretion to sanction parties for breaches

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of good faith (see Preamble paragraph 3) by way of the apportionment of costs or any other means available under the IBA Rules. Parti cul ar Words and Phr a s e s Admissibility, relevance, materiality and weight

Compelling

These are matters that may well trouble the arbitral tribunal. The relevance and materiality are cross-references to Article 3.3(b) and Article 3.7. They are addressed again in Article 9.2(a). Grounds 2(e), (f ) and (g) require the arbitral tribunal to be satisfied to a compelling standard. On an ordinary dictionary meaning the arbitral tribunal must accordingly find the grounds overwhelming or irresistible. Di scussi on

[9-1]  As the Commentary makes clear Articles 1–8 provide the machinery for the submission of evidence to the arbitral tribunal. Article 9 provides the principles by which the arbitral tribunal should determine what evidence it should properly consider and how it should assess the evidence that is properly before it. Although framed in mandatory terms (“shall determine”) the Commentary makes it clear that it does not oblige the arbitral tribunal to do anything specific, rather, it provides that the arbitral tribunal has a discretion (e.g. to determine that a piece of evidence is inadmissible) and that insofar as that discretion is to be operated, it is by the arbitral tribunal and not by the parties or their counsel. [9-2]  Article 9.2 is framed in similar mandatory terms but again it provides a discretion for the arbitral tribunal to exercise to exclude evidence on one or more of the grounds (a) – (g). The ability to exclude evidence is deliberate. If the ability had been to include evidence that was relevant or material it would put a large burden on the arbitral tribunal to assess each piece of evidence for potential inclusion. Accordingly, the presumption is that evidence is admissible unless excluded.

Discussion

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[9-3]  In tackling the issue of privileges a delicate balance had to be struck. The Rules had to be specific enough to provide arbitral tribunals with more practical and workable guidance as to how to handle privilege issues. At the same time, however, the new provision had to be generic enough to avoid the impression of over-emphasising the issue of privilege and any interference with the complex conflict of laws problems related to privileges as well as any conflict with the mandatory, public-policy nature of domestic privilege rules. Such a conflict would have been inconsistent with the soft-law nature of the Rules, which constitute a restatement of best practice standards but cannot and do not intend to override applicable domestic law of a mandatory nature. That essential principle is manifested in Article 1.1. [9-4]  The basic and very general rule related to privilege provides that an arbitral tribunal shall, at the request of a party or on its own motion, exclude from evidence or production any document, statement, oral testimony or inspection due to a legal impediment or privilege under the legal or ethical rules determined by the arbitral tribunal to be applicable. That rule reflects the understanding that arbitral tribunals cannot ignore privilege issues and should accede to an appropriate privilege objection raised by one party (provided it is done in good faith in light of the Preamble 3). Article 9.2(b) refrains from providing a specific conflict rule. At the same time, the rule is not specific enough to provide international arbitrators with concrete guidance as to the practical handling of privilege issues. [9-5]  In accordance with its soft-law nature and in line with the basic rule laid down in Article 1.1, the introductory sentence of Article 9.3 makes it clear that an arbitral tribunal may take the list into account only if and insofar as this is permitted by any mandatory legal or ethical rules which are determined by it to be applicable, irrespective of whether these rules are considered to be of a procedural or substantive nature. This wording is identical with Article 9.2(b) and, again, avoids a decision as to which conflict rules are applicable. This is not surprising given that it is generally acknowledged that there are no established choice of law rules that govern the determination of the law applicable to privileges. The situation resembles that of determining the law applicable to professional ethics of lawyers

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acting in different jurisdictions. The problems related to this area have been characterised as “the last unresolved mysteries of professional ethics”. [9-6]  The list in Article 9.3 contains five specific issues which an arbitral tribunal may take into account when faced with a privilege issue under Article 9.2(b). [9-7]  Article 9.3(a) provides that the arbitral tribunal may take into account the need to protect the confidentiality of a document created or statement or oral communication made in connection with and for the purpose of providing or obtaining legal advice. The lawyerclient privilege to which this provision refers relates to communications made between a lawyer and his or her client in the provision of legal advice – it is generally accepted today in many jurisdictions all over the world. It is an essential characteristic of the lawyer-client privilege that it covers all those communications which originate in a confidence that they will not be disclosed. As the Court of First Instance of the EC stated in the Akzo Nobel judgment: “[T]he principle of the protection of the confidentiality of written communications between lawyer and client is an essential corollary to the effective exercise of the rights of the defence … … [the lawyer-client privilege] meets the need to ensure that every person must be able, without constraint, to consult a lawyer whose profession entails the giving of independent legal advice to all those in need of it … That principle is thus closely linked to the concept of the lawyer’s role as collaborating in the administration of justice by the courts.”1

[9-8]  Again the approach of the Courts may assist arbitral tribunals grappling with these new provisions. [9-9]  Legal professional privilege (or attorney-client privilege and the work-product doctrine in the U.S.) is a rule that entitles a party, during the course of legal proceedings, to withhold from its opponent and from the court (or arbitral tribunal), evidence in whatever form, that is within the scope of the privilege. [9-10]  Legal professional privilege itself is divided into two ­branches – “legal advice privilege” (broadly equivalent to attorney-client privilege)   [2010] 5 C.M.L.R. 19.

1

Discussion

149

and “litigation privilege” (broadly equivalent to work-product doctrine). Broadly, the legal advice privilege covers confidential communications between a lawyer and his client made for the purpose of giving or receiving legal advice. On the other hand, the litigation privilege covers confidential communications made between a lawyer and a client or a third party for the dominant2 purpose (or perhaps more simply “made in the relevant legal context”3) of being used in connection with actual or pending litigation. It can readily be seen that advice sought in connection with litigation may be covered by both advice privilege and litigation privilege. [9-11]  Although a privileged communication can be withheld from opponents and from the court in proceedings before English courts, or before arbitral tribunals where English law is applied, it does not follow that it will be accorded the same treatment in proceedings before a foreign court or a tribunal applying foreign law. Of course, there may well be similar, if not identical, rules applicable in a foreign court, particularly in Commonwealth and other countries whose legal system is common law based. However, wherever legal advice is given in circumstances where it might be relevant to potential proceedings before an arbitral tribunal with a foreign seat, the client would be well advised to seek the guidance of a lawyer in the appropriate jurisdiction as to how that arbitral tribunal might approach questions of legal professional privilege. [9-12]  The approach of an arbitral tribunal applying English law is that all communications falling within the scope of legal professional privilege will be protected irrespective of how a foreign court would treat them. Whilst litigation privilege has been recognised for many centuries, legal advice privilege is relatively modern and was first recognised by Lord Brougham in Greenough v. Gaskell.4 Lord Brougham described legal advice privilege as resting on principles founded on: “ … a regard to the interest of justice which cannot be upheld and to the administration of justice which cannot go on without the aid of men skilled in jurisprudence, Waugh v. British Railways Board [1980] AC 521. Three Rivers District Council v. Governor and Company of the Bank of England (No. 6) [2005] 1 AC 610. 4 (1833) 1 My & K 98, 103. 2 3

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in the practice of the court and in those matters which form the subject of all judicial proceedings. If the privilege did not exist at all everyone would be thrown upon his own resources: deprived of all professional assistance a man would not venture to consult any skilful person or would only dare to tell his counsel half his case.”

This general principle of privilege is extremely widely recognised; there can be no legal system in the civilised world jurisdiction that does not recognise and enforce it. [9-13]  The latest and most definitive English view has come from the House of Lords in Three Rivers District Council v. Governor and Company of the Bank of England (No. 6).5 It is clear from this decision that the modern approach to privilege still rests on matters of principle such that lawyer-client communications are treated differently from other confidential communications, for example, doctor-patient or priest-penitent communications. In these other areas, there is a balance to be struck between the public and private interest in preserving confidences and the administration of justice requiring disclosure of confidential material. But in relation to lawyer and client, no such balancing act applies, since the policy decision is that privilege should provide confidentiality. [9-14]  The extent of the legal advice privilege was considered in Balabel v. Air India.6 Taylor LJ said that: “Legal advice is not confined to telling the client the law; it must include advice as to what should prudently and sensibly be done in the relevant legal context” and “to extend privilege without limit to all solicitor and client communications upon matters within the ordinary business of a solicitor and referable to that relationship [would be] too wide.”

This passage, approved by the House of Lords in Three Rivers, makes it clear that not all communications between solicitor and client are subject to legal advice privilege. The U.S. also recognises that not all advice from a lawyer is legal advice and that legal advice is an essential element of the attorney-client privilege.7 [9-15]  The House of Lords in Three Rivers explained how judges would approach marginal cases when deciding whether or not a communication attracted legal advice privilege: Op. cit.  6  [1988] Ch 317, 330 – 1. United States v. United Shoe Mach. Corp., 89 F. Supp. 357, 359 (D. Mass. 1950).

5

7

Discussion

151

The judge called upon to make the decision should ask whether the advice relates to the rights, liabilities, obligations or remedies of the client either under private law or under public law. If it does not, then, in my opinion, legal advice privilege would not apply. If it does so relate then, in my opinion, the judge should ask himself whether the communication falls within the policy underlying the justification for legal advice privilege in our law. Is the occasion on which the communication takes place and is the purpose for which it takes place such as to make it reasonable to expect the privilege to apply? The criteria must, in my opinion, be an objective one.8

[9-16]  The English approach to the legal advice privilege is recognised in many other common law jurisdictions. In Upjohn Co v. United States,9 Justice Rehnquist in the Supreme Court said that the purpose of legal professional privilege was: “to encourage full and frank communication between attorneys and their clients and thereby promote broader public interests in the observance of law and administration of justice.” He further stated that “[t]he privilege recognises that sound legal advice or advocacy serves public ends and that such advice or advocacy depends upon the lawyer’s being fully informed by the client.”

Similar doctrines exist in Canada.10 [9-17]  In leading cases in Australia and New Zealand, the justification for a rule affording particular protection to confidential communications between lawyers and clients has been expressed on a broader policy basis than merely to ensure candour. In Baker v. Campbell,11 it was said that: “The client’s legal privilege is essential for the orderly and dignified conduct of individual affairs in a social atmosphere which is being poisoned by official and unofficial eavesdropping and other invasions of privacy” and Wilson J said “In fostering the confidential relationship in which legal advice is given and received, common law is serving the ends of justice because it is facilitating the orderly arrangement of the client’s affairs as a member of the community.”

[9-18]  The Guidance to Arbitrators published by the ICDR concerning Exchanges of Information states that: The tribunal should respect applicable rules of privilege or professional ethics and other legal impediments. When the parties, their counsel or their documents   [2005] 1 AC 610, 651.  9  449 U.S. 383, 389 (1981). Jones v. Smith [1999] 1 SCR 455.  11  (1983) 153 CLR 52.

 8 10

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would be subject under applicable law to different rules, the tribunal should to the extent possible apply the same rule to both sides, giving preference to the rule that provides the highest level of protection.

[9-19]  English law has long made it clear that the privilege is only available to communications with a lawyer who is properly qualified. As early as 1792, it was said in Wilson v. Rastall,12 that: “[t]he privilege is confined to the cases of Counsel, solicitor and attorney … I take the distinction to be now well settled, but the privilege extends to those three enumerated cases at all times, but that it is confined to these cases only.”

[9-20]  Similarly, Lord Brougham in Greenough v. Gaskall referred to “men skilled in jurisprudence” and to “professional assistance”.13 More recently, in New Victoria Hospital v. Ryan,14 it was said: But there is a more fundamental reason for not affording privilege to these documents. That is because, in our opinion, the privilege should be strictly confined to legal advisors such as solicitors and Counsel, who are professionally qualified, who are members of professional bodies, who are subject to the rules and etiquette of their professions, and who owe a duty to the court. This is a clearly defined and easily identifiable qualification for the attachment of privilege. To extend the privilege to unqualified advisors such as personnel consultants is in our opinion unnecessary and undesirable.

[9-21]  The requirement of professional status was echoed by the Court of Appeal in the Australian case of Vance v. Air Marshall McCormack in his capacity as Chief of Air Force15 in which the court found: Admission to practice of itself carries with it an obligation to conform to the powers of the court to remove or suspend a legal practitioner for conduct that the court considers justifies such determination … The person whose name is on the roll of barristers, solicitors … is entitled to practise as a barrister and solicitor in any Territory unless suspended or disentitled by court order. The court has power to order that any person on the roll not be entitled to practise if that person is guilty of misconduct. The person remains bound to uphold the standards of conduct and to observe the duties undertaken upon admission to the roll of practitioners. The holding of a practising certificate reinforces that regime and makes it more immediately applicable but the underlying obligations subsist, even if a current practising certificate is not held.

(1792) 4 Durn & E 753.  [1993] ICR 201, 203–4. 

12

14

  (1833) 1 My & K at 103.   [2004] ACTSC 78.

13 15

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[9-22]  If there was any dispute left on the point it has been laid to rest, at least in England, by the recent Court of Appeal decision in R. (on the application of Prudential Plc) v. Special Commissioner of Income Tax16 where the Court held that legal professional privilege applied, at common law, only as regards advice by members of the legal professions of England and Wales, and by extension foreign legal professions, and could not be extended to someone who was not a lawyer, even if the advice they were giving was legal advice which they were competent to give. [9-23]  It is thus clear that it is the admission to a professional body with a right to practice as a professional within a system of discipline and ethics that is the hallmark of the lawyer who may invoke the privilege with regard to communications. Communications with other persons who give legal advice and/or are named as legal advisers, but who do not fall within the control of a professional body, are highly unlikely to be protected by privilege. [9-24]  If necessary, the court can embark on an enquiry to ascertain whether such disciplinary and ethical strictures exist and bind the foreign lawyer. As was said in Kennedy v. Wallace:17 If an advisor is a lawyer admitted to practise in the foreign country, as was agreed here, it seems to me unnecessary to require evidence about legal and ethical practices and controls by foreign courts … The position may be different if the circumstances otherwise raise questions as to the position of the lawyer. There may be a question whether the advisor is a lawyer at all, properly understood.

[9-25]  It is clear, therefore, that where there is an undisputed admission to practice as a professional in a foreign jurisdiction, the court will generally accept, without further enquiry, that the appropriate system of discipline and ethics applies. However, where questions are raised or the advisor is not a professional admitted in the relevant jurisdiction to practice, the court may need to undertake a factual enquiry to assess the true position. [9-26]  In the U.S., it appears that similar principles are applied. In United States v. Kovel,18 it was held that the privilege attaches to [2010] EWCA Civ 1094 (an appeal to the Supreme Court is listed for November 2012). [2004] FCAFC 337.  18  296 F.2d 918 (2nd Cir. 1961).

16 17

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communications with a non-lawyer provided they were made with a view to legal advice. This would apply to non-lawyer employees of the lawyer (in Kovel it was an accountant) including clerks as well as anyone engaged at the behest of the lawyer such as an interpreter or doctor but does not apply to those advising outside of the umbrella of an admitted lawyer. [9-27]  It is equally important to recognise that the privilege will not attach to the communications of an in-house lawyer, just as a lawyer in private practice, who is not giving advice in the “relevant legal context”. Taylor LJ commented in Balabel v. Air India that the privilege did not apply to an in-house lawyer’s communications when he was performing a wholly executive function. Similarly, Lord Denning said in Alfred Crompton: It does sometimes happen that such a legal advisor does work for his employer in another capacity, perhaps of an executive nature. Their communications in that capacity would not be the subject of legal professional privilege. So the legal advisor must be scrupulous to make that distinction. Being a servant or agent too, he may be under more pressure from his client. So he must be careful to resist it. He must be as independent in the doing of right as any other legal advisor.19

[9-28]  The Court of Appeal of Australia in Vance made a similar comment: It seems to us that, where client legal privilege is claimed over documents produced by an in-house lawyer … the question is whether the document would meet the statutory test of being a confidential document, that is to say, was it prepared in such circumstances that the person who prepared it was under an expressed or implied obligation not to disclose its contents, whether or not the obligation arises under law … Where the lawyer is employed real questions as to the nature of their role and duty may arise.20

[9-29]  There are, however, important differences in the application of the attorney-client privilege to in-house counsel in different jurisdictions. As has been seen above in the U.S. and in England, the lawyer-client privilege applies to in-house counsel, provided the relevant communication relates to legal advice and not to general business matters. In Europe, the legal situation is diverse. In Switzerland, France, Sweden, and Italy, the attorney-client privilege is available [1972] 2 QB, at 129. 

19

  [2005] ACTCA 35, at para. 24.

20

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only to outside counsel. Because of the employment relationship with their company, in-house counsel are not considered sufficiently independent to merit protection of professional secrecy. This view has been confirmed by the Court of First Instance of the EC in the Akzo Nobel judgment: “[I]t must be pointed out that in its judgment in AM & S, the Court of Justice expressly held that the protection accorded to [the attorney-client privilege] under Community law … only applies to the extent that the lawyer is independent, that is to say, not bound to his client by a relationship of employment (paragraphs 21, 22 and 27 of the judgment). The requirement as to the position and status as an independent lawyer, which must be met by the legal adviser from whom the written communications which may be protected emanate, is based on a concept of the lawyer’s role as collaborating in the administration of justice by the courts and as being required to provide, in full independence, and in the overriding interests of the administration of justice, such legal assistance as the client needs (AM & S, paragraph 24). It follows that the Court expressly excluded communications with in-house lawyers, that is, legal advisers bound to their clients by a relationship of employment, from protection under [the attorney-client privilege] … The Court therefore concludes that, contrary to what the applicants and certain interveners submit, the Court in its judgment in AM & S defined the concept of independent lawyer in negative terms in that it stipulated that such a lawyer should not be bound to his client by a relationship of employment, rather than positively, on the basis of membership of a Bar or Law Society or being subject to professional discipline and ethics. The Court thus laid down the test of legal advice provided ‘in full independence’ (AM & S, paragraph 24), which it identifies as that provided by a lawyer who, structurally, hierarchically and functionally, is a third party in relation to the undertaking receiving that advice.”21

[9-30]  There are European jurisdictions such as Belgium, Denmark, or Spain, where the privilege extends to both outside and in-house counsel. In Germany, the legal situation is not settled. The prevailing view is that in-house counsel who are admitted to the Bar and who may act as practising attorneys for clients other than their company (“Syndikusanwälte”) may invoke the lawyer-client privilege at least insofar as the legal work for their employer is concerned. The difference between the prevailing view in German and Swiss law is caused by the fact that in Germany, in-house counsel can be admitted to   [2008] 4 C.M.L.R. 3 at ¶¶ 166–9

21

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the Bar while in Switzerland, lawyers with the status of employee are not considered independent and are usually not registered with the cantonal Bar. The same is true with respect to French in-house counsel. However, the German Federal Supreme Court has ruled that to regard in-house counsel as practicing attorneys would mean that, “independence would no longer be an essential element of the profession of attorneys”. It is argued that, based on this view, any professional activity of in-house counsel which relates to their position as employees of their company must be regarded as falling outside the scope of work of independent attorneys. Therefore, according to this view, German in-house counsel may not rely on the attorney-client privilege. [9-31]  The concept of legal rather than business advice is fairly universally recognised and certainly applies in England, the U.S., most common law jurisdictions, and some civil law jurisdictions such as Switzerland. [9-32]  There are limited statutory exceptions in England that permit other professions to claim privilege, for example, trade mark agents and patent attorneys under sections 280 and 284 of the Copyright, Designs and Patents Act 1998. These statutory provisions set out the limited exceptions to the general principle that, for the purposes of a privilege to arise, the communication must be with a qualified lawyer. For example, it is clear that, beyond the statutory concessions, patent attorneys have no privilege.22 Similarly, civil law jurisdictions tend to require a professional qualification before the privilege can be invoked. [9-33]  However, it does not matter whether the lawyer is qualified in England or some other foreign jurisdiction. As was held in Re Duncan,23 “The basis of the privilege is just as apt to cover foreign legal advisors as English lawyers, provided only that the relationship of lawyer and client subsists between them.”

  Wilden Pump Engineering Co v. Fusfield [1985] FSR 159. [1968] P 306, 311.

22 23

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[9-34]  In reaching this conclusion, the court drew upon Lawrence v. Campbell24 in which it was said: “A question has been raised as to whether the privilege in the present case is an English or a Scots privilege; but sitting in an English court, I can only apply the English rule as to privilege, but I think that the English rule as to privilege applies to a Scots solicitor and law agent practicing in London, and therefore the letters in question are privileged from production.”

Similarly, in Bunbury v. Bunbury25 it was held that a case prepared for submission to a lawyer in Holland for his opinion was privileged. [9-35]  The same conclusion was reached in the English case International Business Machines and others v. Phoenix International Computers Limited26 when he said, “The nationality of the foreign lawyer is as irrelevant as his address for this purpose.” The same appears to be the case in the U.S.27 [9-36]  In the U.S. each state has different rules on attorney-client privilege. Rule 501 of the Federal Rules of Evidence provides that the Federal Court will apply federal law if the claim is based on federal law, and state law if the claim is based on state law. Federal courts will apply the law of the state in which the document is “domiciled”, which will normally result in the document being domiciled in the state to which it has the most significant relationship or the state that has the greatest interest in the document in issue. This will usually result in the applicable state law being either the law of the state where the communication took place or where the attorney-client relationship was centred. Both tests may render the same result. [9-37]  While there is agreement in principle on the benefits and intrinsic value of such a privilege, there are fundamental differences with respect to the nature, quality and scope of privileges. In common-law jurisdictions, the justification for the attorney-client privilege focuses on the client who needs to be protected from the (1859) 4 Drew 485, 491.  25  (1839) 2 Beav 173.  26  [1995] FSR 184, 199. In re Rivastigmine Patent Litigation, 237 F.R.D. 69, 74 (S.D.N.Y. 2006). The U.S. privilege law applies “if a communication with a foreign patent agent involves a U.S. patent application” but foreign privilege law applies if the communication involves a foreign patent application. See also In re Philip Servs. Corp Sec. Litigation, 2005 U.S. Dist LEXIS 22998 (S.D.N.Y. Oct. 7, 2005) and Renfield Corp v. E Remy Martin, 98 F.R.D. 442, 444 (D. Del. 1982).

24

27

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comprehensive discovery rights which exist there. In civil-law jurisdictions, the attorney-client privilege stems from the secrecy obligation of the attorney who is subject to criminal sanctions if he violates his professional duty of confidentiality. The focus is thus not on the client but on the integrity of the legal profession. [9-38]  Article 9.3(b) provides that the arbitral tribunal, in considering a privilege issue, may take into account the need to protect the confidentiality of a document created or statement or oral communication made in connection with and for the purpose of settlement negotiations. That provision acknowledges that there is a transnational privilege principle with respect to written or oral statements made in good faith by the parties during previous settlement negotiations between them. This privilege relates to both settlement negotiations in ADR proceedings such as mediation and to settlement talks of the parties without the presence of a third, neutral party. [9-39]  There is a unanimous view today in international ADR and arbitration practice that a general mediation privilege exists which renders all evidence, whether written or oral, stemming from mediation, conciliation and similar ADR processes between the parties, inadmissible as evidence in any subsequent arbitration proceedings. The privilege follows from the notion of confidentiality which constitutes a central pillar of international ADR processes. Almost all institutional mediation rules contain similar, detailed provisions on confidentiality and privilege: Article 7.2 of the ICC ADR Rules, as well as the UNCITRAL Model Law on International Commercial Conciliation, the EU Directive on certain aspects of mediation in civil and commercial matters, and the US Uniform Mediation Act. Under English law, any written or oral communication made for the purpose of “a genuine attempt to compromise a dispute between the parties” is subject to the “without prejudice” privilege. [9-40]  The underlying rationale of the mediation privilege is derived from the special nature and character of these negotiations conducted in good faith between the parties. Such policy considerations apply irrespective of whether one is dealing with formalised ADR proceedings, or with private, informal settlement negotiations conducted between the parties without the presence of a third,

Discussion

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neutral party. The U.S. Court of Appeals for the Sixth Circuit has stated that: “In order for settlement talks to be effective, parties must feel uninhibited in their communications. Parties are unlikely to propose the types of compromise that most effectively lead to settlement unless they are confident that their proposed solutions cannot be used on cross-examination … Parties must be able to abandon their adversarial tendencies to some degree. They must be able to make hypothetical concessions, offer creative quid pro quos, and generally make statements that would otherwise belie their litigation efforts. Without a privilege, parties would more often forego negotiations for the relative formality of trial. Then, the entire negotiation process collapses upon itself, and the judicial efficiency it fosters is lost.”28

[9-41]  The broad language used in Article 9.3(b) (“in connection with and for the purpose of ”) takes account of the fact that the settlement privilege relates not only to oral or written statements submitted to the other side during the negotiations but also to internal documents prepared specifically for these negotiations. Given that the purpose of the privilege is to protect the parties and to ensure efficient settlement talks between them, it can make no difference whether such “views” or “suggestions” are formulated by the parties or their experts prior to the settlement negotiations in order to be presented in these settlement talks or whether these pre-formulated views, suggestions or proposals are actually read or otherwise presented or communicated to the other side during these negotiations. [9-42]  It goes without saying that a party’s right to rely on the protection offered by Article 9.3(b) is subject to its duty to act in good faith. That duty is now manifested in Preamble 3. Therefore, a party cannot invoke the settlement privilege if it has introduced a statement or document during settlement negotiations solely for the sake of being able to shield this information from the other side based on the settlement privilege in a subsequent arbitration. [9-43]  Article 9.3(c) provides that the arbitral tribunal, in dealing with a privilege issue, may take into account the expectations of the parties and their advisors at the time the privilege is said to have Goodyear Tire & Rubber Co v. Chiles Power Supply Inc 332 F 3rd 976 @ 981 (6th Cir. 2003).

28

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arisen. This provision results from the fact that the need to safeguard the parties’ legitimate expectations as to the application of a certain privilege standard is particularly strong in this field of law. [9-44]  A “trial by ambush”, i.e. unfair surprises of parties who have relied on the protection standard of a certain evidentiary privilege, must be avoided, not least in light of Preamble 3. This rule may also have an influence on the arbitral tribunal’s choice of law decision with respect to the privilege issue. It would certainly be highly unsatisfactory and not in line with the legitimate expectations of the parties if the law of the seat of the arbitration would be applied to the issue of evidentiary privileges when the relevant communication took place or the relevant documents were exchanged in another jurisdiction or even on another continent, years before the seat was chosen (for mere purposes of convenience) or the arbitration was commenced. [9-45]  Article 9.3(d) provides that the arbitral tribunal may take into account any possible waiver of any applicable legal privilege by virtue of consent, earlier disclosure, affirmative use of the document, statement, oral communication or advice contained therein, or otherwise. In this context, the determination of the applicable law to the privilege issue is of paramount importance. It is this law which determines the admissibility, scope, and requirements of a waiver of the protection granted by a specific privilege rule. The intrinsic ­difference in the justification of privileges in common and in civil law has important repercussions on the issue of waiver. Thus, while in Germany or Switzerland it is the attorney and not the party who may invoke the privilege (“professional secrecy”), the privilege belongs to the party under U.S. and English law. Consequently, protection under the privilege may be waived by a party under U.S. and English law, but not under Swiss or German law. In any event, the mere fact that the parties have agreed to arbitrate their disputes cannot be regarded as a waiver of applicable privilege law. [9-46]  Among the new challenges posed by electronic-document production and its larger volume of potentially relevant documents is the inadvertent disclosure of privileged materials, and the resulting possibility of privilege waiver. Article 9.3(d) recognises the possibility of such waiver, permitting the arbitral tribunal to take into account

Discussion

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the earlier disclosure of documents in determining whether a party has waived applicable privilege. However, the Rules do not provide standards for evaluating privilege waiver. In contrast, U.S. law has well-developed standards, varying by jurisdiction, regarding whether and to what extent a privilege waiver will result from inadvertent disclosure. [9-47]  U.S. courts have generally taken three approaches to privilege waiver via inadvertent disclosure. First, a strict approach, where any disclosure of confidential information, whether merely negligent or intentional, waives the lawyer-client privilege. Secondly, a lenient approach, where inadvertent disclosure never constitutes a waiver of the attorney-client privilege. Thirdly, a case-by-case fact-specific approach. Not surprisingly, given the flexibility it affords arbitral tribunals in crafting relief, it is this case-by-case approach which is most often employed by tribunals. The following factors may assist in determining the approach to inadvertent waiver: (1) the reasonableness of the precautions taken to prevent inadvertent disclosure in view of the extent of the document production; (2) the number of inadvertent disclosures; (3) the extent of the disclosure; (4) any delay and measures taken to rectify the disclosure; and (5) whether the overriding interests of justice would or would not be served by relieving the party of its error. [9-48]  Article 9.3(e) states that the arbitral tribunal may take into account the need to maintain fairness and equality as between the parties, particularly if they are subject to different legal or ethical rules. The same also derives from Preamble 1. This provision relates to fundamental procedural guarantees which every arbitral tribunal needs to take into account and preserve in order to avoid the setting aside of the award at the place of arbitration or the refusal of enforcement under the New York Convention. A general rule dealing with the maintenance of fairness and equality of the parties as a guiding principle for the tribunal’s determination of the question whether certain evidence shall be excluded was already and will continue to be contained in Article 9.2(g). [9-49]  However, Article 9.3(e) is more specific in two respects. First, it is not a general rule but relates specifically to the privilege

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issues referred to in Article 9.2(b). Secondly, it establishes a direct nexus between the need to maintain fairness and equality as between the parties and the parties being subject to different privilege rules. In fact, it is due to the inherent differences in the treatment of privileges in domestic laws that the risk of unequal and unfair treatment of parties with different legal backgrounds arises. [9-50]  A party may be treated unequally and unfairly when the arbitral tribunal applies different privilege standards to the parties resulting in different standards of privilege protection for either side. There are at least 6 different laws that might arguably be relevant in determining whether a document is privileged: •  The law applicable to the substantive agreement which is the subject of the arbitration; •  The law of the seat; •  The law of the arbitration agreement; •  The law applying to the lawyer–client relationship; •  The law of the place where the lawyer gave the advice or practiced; and •  The law of the place where the advice was received. [9-51]  English law favours the law of the seat and that would also appear to be the result of English conflicts of laws rules for the law of the seat governs the matters such as evidence. [9-52]  One jurisdiction that is not often considered in this debate is the law of the jurisdiction in which enforcement is to be effected. Under Article V(2)(b) of the New York Convention enforcement can be refused if the enforcement would be contrary to the public policy of the laws of the enforcing country. It is not beyond peradventure that an award might be made largely based on a document that would be privileged under the laws of the enforcing country but was not so privileged under the laws the arbitral tribunal chose to apply. This may then make the award unenforceable in a particular country. It follows that arbitral tribunals might well be urged not only to consider the laws in 9-50 above but also those of a potential enforcement destination. [9-53]  Applying the centre-of-gravity test, which constitutes a generally-accepted transnational conflict rule, an arbitral tribunal

Discussion

163

might, absent a choice of law by the parties, apply the law of the jurisdiction with which the events or the communication which form the subject of the evidence issue before it are most closely connected. This law can and will in many cases be different from the law applicable to the substance of the dispute and the law applicable to the arbitral procedure. It is the law of the jurisdiction where the party has its place of business at the moment the relevant communication took place and where most of the attorney-client contact occurred which will be applied in most of these cases. [9-54]  The 1970 Hague Convention on the Taking of Evidence is perhaps the beginning of the “most favoured nation rule” (MFN) when it provides in Article 11: “In the execution of a Letter of Request the person concerned may refuse to give evidence in so far as he has a privilege or duty to refuse to give the evidence – a) under the law of State of Execution; or b) under the law of the State of origin, and the privilege or duty has been specified in the Letter, or, at the instance of the requested authority, has been otherwise confirmed to that authority by the requesting authority. A Contracting State may declare that, in addition, it will respect privileges and duties existing under the laws of States other than the State of origin and the State of execution, to the extent specified in that declaration.”

[9-55]  More recently Article 14.1 of EC Regulation 1206/2001 has pursued much the same thinking on the refusal to execute a request: “A request for the hearing of a person shall not be executed when the person concerned claims the right to refuse to give evidence or to be prohibited from giving evidence, (a) under the law of the Member State of the requested court; or (b) under the law of the Member State of the requesting court, and such right has been specified in the request, or, if need be, at the instance of the requested court, has been confirmed by the requesting court.”

[9-56]  The principle of equal treatment of the parties has been recognised as fundamental in arbitration. It should logically be applied to issues of privilege and underpins the MFN principle. One party cannot claim a privilege and argue that the other party has no right to the very same privilege. [9-57]  The consensus of the best way to maintain fairness and equality as between the parties as required by Article 9.3(e) is to apply a

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MFN rule and to apply to all parties only the privilege law of that party that accords the broadest protection to privileged information. Based on conflict-of-laws considerations this means that a party is entitled to rely on the protection standard of its home jurisdiction as long as this standard is also granted to the other side and the privilege is not invoked mala fide. Such an approach does justice to the reliance interests of the parties listed as another guiding principle in Article 9.3(c) because they can be confident that they will never be required to produce information that is considered privileged under their own laws. Also, such approach avoids any conflict with public policy, since granting more protection than is required by the applicable legal standards will not be regarded as a violation of the ordre public in cases where the relevant privilege provision forms part of it. [9-58]  An arbitral tribunal faced with the question of whether the lawyer-client privilege should be applied to in-house counsel would thus exclude from evidence the communication in the possession of the U.S. in-house counsel applying the broader concept of the U.S. attorney-client privilege. At the same time, however, it would extend this privilege to any communication in the possession of the European in-house counsel which the U.S. party wants to have disclosed. [9-59]  Article 9.3 might be thought of as being less innovative and less forward-looking than many other new provisions. Arbitral tribunals that are faced with privilege issues in the future no longer have to enter into a time-consuming review of applicable laws. Instead, they can consult the checklist contained in the new Article 9.3. At the same time, the new provision leaves enough room for a flexible approach and does not interfere with the substance of domestic privilege rules or with the complex conflict of laws issues which prevail in the area of privileges. [9-60]  Article 9.2(c) reflects the discussion of burden in Article 3, especially Article 3.3(c). See the discussion at 3–10; 3–19; 3–20; 3–24; 3–27; 3–39; 3–41 and 3–44. [9-61]  Article 9.2(d) deals with the eminently sensible concept that an arbitral tribunal is not going to compel someone to do something they plainly cannot do, such as produce something that appears to be lost or destroyed.

Discussion

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[9-62]  It is generally not sufficient to reason to refuse to disclose a document that it is confidential. This is acknowledged by Article 9.2(e) which permits the exclusion of a document where the confidentiality is compelling. Implicitly, ordinary confidentiality would be insufficient. There is support for this view in English law. [9-63]  In Science Research Council v Nasse29 it was said: “There is no principle in English law by which documents are excluded from discovery by reason of confidentiality alone. But there is no reason why, in the exercise of its discretion to order discovery, the tribunal should not have regard to the fact that documents are confidential, and that to order disclosure would involve a breach of confidence … the tribunal may have regard to the sensitivity of particular types of confidential information, to the extent to which the interests of third parties … may be affected by disclosure, to the interest … in preserving the confidentiality of personal reports, and to the wider interest which may be seen to exist in preserving confidentiality …”

[9-64]  Various techniques have been developed to ensure that confidentiality can be protected as far as possible. These include (a) redaction or blanking out especially sensitive parts of a document and (b) restricting the class of persons who can see the document or class of document – this is typically to the lawyers instructed. In appropriate cases such orders will no doubt feature in the arsenal of a tribunal. [9-65]  Article 9.4 addresses documents which, when created, were confidential. This will include trade secrets and know-how. It can be contrasted with Article 3.13 that imposes a duty of confidence on material provided under and pursuant to the reference. The philosophy underlying Article 3.13 is that there is to a degree an element of compulsion to produce documents to another party and the price for being able to compel production is to keep the material so obtained confidential. It does not matter whether the documents themselves are confidential, in the trade secret sense, but clearly if they are truly confidential the need to retain confidentiality is enhanced. [9-66]  Although arbitration is inherently confidential (at least under most laws) there will still be documents of such sensitivity that they cannot see the light of day. This is more likely in treaty arbitrations rather than pure commercial claims. For these, albeit   [1980] AC 1028, 1065.

29

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rare, occasions Article 9.2(f ) protects such material if the arbitral tribunal finds the reasoning compelling. The arbitral tribunal is not obliged to respect a government or institutional classification made out merely because it is so certified. It could permit introduction with Article 9.4 safeguards. [9-67]  Although last in a list Article 9.2(g) may be found to be the most often cited either alone or supportive of other reasons. Preamble 1 provides for an efficient, economical and fair process and it is not surprising that the arbitral tribunal can reject evidence that might otherwise be adduced (or sought to be adduced) on much the same grounds. Perhaps one of the more surprising features is that the Preamble words were not replicated  – instead “efficiency” has been exchanged for “proportionality” and “equality”. The guidance note adds little as it expresses the hope that the words will enable an “effective” hearing. It perhaps matters little: a proportionate response will invariably not involve excessive burden and hence be within Article 9.2(c) in any event. Equality is a fundamental tenet of arbitration procedure and will be universally accepted. [9-68]  Article 9.5 provides that the arbitral tribunal may draw an adverse inference if a party (a) fails to object to a request to produce a document and (b) fails to produce the document without satisfactory explanation. This emphasises the need to make an objection under Article 3.5. [9-69]  The adverse inference could be of serious consequence. The impact will depend on the nature of the document sought. It could range from a note of a meeting, the failure to produce could amount to an acceptance of the other party’s account of the events at that meeting, to the sales generated from infringing intellectual property rights when generous assumptions might be made as to the extent of the sales. [9-70]  Article 9.6 is an identical provision to Article 9.5 save that it relates to witness statements (and presumably expert testimony) rather than documents. There is no direct equivalent to Article 3.5 but Article 4.9 has parallels, the important distinction being that Article 4.9 relies on the party wishing to adduce the factual evidence

Discussion

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as opposed to having another party call that witness such that he may be cross-examined which would be analogy to Article 3.5. [9-71]  Article 9.7 draws heavily on the duty of good faith discussed under the Preamble. The ability to take conduct into account in assigning costs is welcomed. An otherwise successful party might have advanced an exaggerated claim otherwise than in good faith might well be penalised in costs. Conversely, a successful party who had proposed alternative ways of settlement, such as mediation, might recover a generous allocation of costs but had they refused might recover less had they acted otherwise than in good faith in doing so. Equally, the jurisdiction is opened up not only by the substantive disposition but also by particular steps and actions. For example, plainly excessive requests for documents under Article 3 may result in a costs sanction. Just as the scope for innovative and obstructive conduct has yet to find any boundaries so too has the wide discretion on costs.

Appendi x

Interaction of IBA Rules with Major Institutional Rules

168

LCIA Rules Tribunal powers: Unless parties otherwise agree, the tribunal can order parties to make any property (under its control and relating to the subject matter of the arbitration) available for inspection (Article 22.1(d)). Unless parties otherwise agree, the tribunal can order any party to produce to the tribunal and other parties any documents in their possession, custody or power which the tribunal considers relevant (Article 22.1(e)).

ICC Rules (2012)

ICDR Rules

SCC Rules

UNCITRAL Rules (2010)

IBA Rules

The tribunal will act fairly and impartially and ensure that each party has a reasonable opportunity to present its case (Article 22.4). The tribunal (and the parties) must also make every effort to conduct the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute (Article 22.1). The tribunal has wide ranging powers to ensure effective case management (Article 22.2, Schedule 4). The tribunal will establish the facts of the case by all appropriate means within as short a time as possible (Article 25.1).

The tribunal can conduct proceedings in a manner considered appropriate provided due process is respected (Article 16.1). The tribunal is tasked to conduct proceedings with a view to expediting resolution of the dispute (Article 16.2).

The tribunal may conduct the arbitration in such manner as it considers appropriate (Article 19.1). The tribunal will conduct the arbitration in an impartial, practical and expeditious manner, giving parties an equal and reasonable opportunity to present its case (Article 19.2). The tribunal will establish a provisional timetable for the conduct of the arbitration (Article 23). At the request of the party, the tribunal may order a party to produce any relevant documents or evidence (Article 26.3).

The tribunal may conduct the arbitration as it considers appropriate, provided parties are treated equally and have full opportunity to present their case. The tribunal will conduct the proceedings so as to avoid unnecessary delay and expense (Article 17.1).

The rules are intended to provide an efficient, economical and fair process (Preamble 1). The taking of evidence shall be on the basis that each party shall act in good faith and be entitled to know reasonably in advance the evidence to be relied upon by the other parties (Preamble 3).

LCIA Rules

ICC Rules (2012)

ICDR Rules The tribunal can direct the order of proof, exclude irrelevant evidence and direct parties to focus on particular issues (Article 16.3). The tribunal may order parties to produce documents, exhibits or other evidence at any time (Article 19.2).

The tribunal may summon any party to provide additional evidence (Article 25.5).

SCC Rules

UNCITRAL Rules (2010)

IBA Rules

The tribunal The tribunal shall will establish consult the a provisional parties to agree timetable of an efficient, the arbitration economical and (Article 17.2). fair process for The tribunal evidence (Article decides if 2.1). further written The tribunal shall statements are determine required from requests to the parties produce (Article 24). documents that The tribunal may are objected to require the (Article 3.7). production of documents at any time (Article 27.3).

Rules of evidence: Unless parties otherThere are no prescribed rules of wise agree, the evidence in the ICC rules. tribunal will decide if strict rules of evidence should apply (Article 22.1(f )).

Hearings: The tribunal may hold hearings at any convenient geographical place in its discretion (Article 16.2). Parties have a right to be heard orally unless they have agreed on a document-only arbitration (Article 19.1).

Unless otherwise agreed by the parties, the tribunal may conduct hearings at any location it considers appropriate (Article 18.2) and may decide the dispute on the basis of documents only unless the parties request a hearing (Article 25.6). The tribunal may proceed with hearings in the absence of the parties provided they have been duly summoned (Article 26.2).

Each party has the burden The tribunal will The tribunal will The tribunal shall of proving facts relied determine the determine the determine the on to support its claim accessibility, admissibility, admissibility, or defence (Article 19.1). relevance, relevance, relevance, The tribunal will materiality and materiality materiality determine admissibility, weight of evidence and weight of and weight of relevance, materiality (Article 26.1). evidence (Article evidence (Article and weight of evidence 27.4). 9.1). (Article 20.6). Unless parties agree otherwise in writing, the ICDR Guidelines for Arbitrators Concerning Exchanges of Information apply to all ICDR arbitrations commenced after 31 May 2008. Hearings are private unless otherwise agreed by the parties (Article 20.4). A record of the hearing will be arranged at the request of the tribunal or by agreement of the parties (Article 20.3).

A hearing will be held if requested by a party or if deemed appropriate by the tribunal (Article 27.1). The tribunal will, in consultation with the parties, determine the date, time and location of any hearing (Article 27.2).

Document-only The tribunal shall arbitration have complete is within the control over discretion of the the evidentiary tribunal unless a hearing (Article party requests a 8.2). hearing (Article 17.3).

LCIA Rules The tribunal may, in advance of the hearing, submit a list of questions for the parties to answer (Article 19.3). All hearings will be private unless otherwise agreed (Article 19.4). The tribunal can set time limits for hearings (Article 19.5). The tribunal may hold hearings at any convenient place at its discretion (Article 16.2).

ICC Rules (2012)

ICDR Rules

SCC Rules

UNCITRAL Rules (2010)

IBA Rules

Hearings will be private Unless otherwise Each witness unless otherwise agreed agreed by (both factual by the parties (Article the parties, and expert) 27.3). the tribunal shall appear for The tribunal may, after may meet at testimony at consultation with parties, any location the evidential conduct hearings at any it considers hearing unless place it considers approappropriate for a not required by priate (Article 20.2). hearing (Article all other parties The tribunal may proceed if 18.2). (Article 8.1). a party fails to appear at a Hearings will be Witnesses (both fachearing without showing held in camera tual and expert) good cause (Article 30.2). unless parties shall appear agree otherwise at the hearing (Article 28.3). if required by Witnesses may another party. be examined The tribunal may through means allow videoconof telecommuference (Article nication that 8.1). do not require their physical presence at the hearing (Article 28.4).

The tribunal may proceed if a party fails to appear at a hearing without sufficient cause (Article 30.2).

Save in exceptional circumstances the tribunal shall disregard any statement of a witness (factual or expert), required to attend, who does not attend (Articles 4.7 and 5.5).

Witnesses: The tribunal may The tribunal may decide to hear wit- Witness eviWitness evidence may be On a party’s Parties shall identify determine time, nesses (Article 25.3). dence may be submitted in the form request, the trithe witnesses manner and form presented in the of written statements bunal will hold they intend to of witness evidence form of written (Article 28.2). hearings for the rely upon and (Article 20.2). statements Any witness or expert, on presentation the subject matTestimony can be pre(Article 20.5) whose testimony a party of witness and ter of that tessented in written seeks to rely, will attend a expert evidence. timony (Article form, as a signed hearing for examination, In the absence 4.1). statement or sworn unless otherwise agreed of a request, the Any person may be affidavit (Article (Article 28.3). tribunal will a witness (Article 20.3). decide whether 4.2). to hold such It is not improper hearings or to interview whether the proa witness and ceedings will be discuss testimony document only (Article 4.3). (Article 17.3).

LCIA Rules

ICC Rules (2012)

ICDR Rules

SCC Rules

IBA Rules

Unless otherwise The tribunal may directed by the order parties to tribunal, witness submit statestatements may ments by each be presented in witness on whose writing. A party testimony it may appear intends to rely as a witness (Article 4.4). (Article 27.2). Witnesses may be heard under the conditions and examined in the manner set by the tribunal (Article 28.2).

Parties may request witness attendance for oral questioning. Where a witness fails to attend, the tribunal may decide on the weight to be given to the written testimony or may exclude that evidence (Article 20.4). Subject to mandatory laws, it is not improper for witnesses to be interviewed by a party or its legal representatives (Article 20.6). Experts: Unless otherwise The tribunal may, having consulted agreed by the with the parties, appoint experts parties, the tribunal (Article 25.4). can appoint experts (Article 21.1(a)).

UNCITRAL Rules (2010)

The tribunal may appoint experts (Article 22.1).

After consultation with the parties, the tribunal may appoint experts (Article 29.1).

The tribunal may appoint experts (Article 29.1).

Parties may rely on partyappointed experts (Article 5.1).

Parties can be required to give tribunalParties have the opportunity to appointed experts question tribunal-appointed any relevant experts at a hearing (Article 25.4). information or access to documents or other property (Article 21.2(b)).

Parties have an opportunity to comment in writing on tribunalappointed experts’ reports (Article 22.3). Parties have an opportunity to question tribunalappointed experts at a hearing (Article 22.4).

The tribunal will send copies Experts are Tribunal may of the expert report to required to appoint experts the parties and parties provide parties (Article 6.1). will have an opportunity with a statement Experts are to submit written of independence required to state comments on the report and impartiality. independence (Article 29.2). Parties may from parties, Parties will be given an object to counsel and opportunity to examine the expert’s tribunal (Articles experts at a hearing qualifications, 5.2(c) and 6.2). (Article 29.3). independence or impartiality (Article 29.2). Parties are required to give experts any relevant information or produce for inspection any relevant documents or goods (Article 29.3). Parties may review the expert’s report and can question the expert at a hearing (Article 29.5).

LCIA Rules

ICC Rules (2012)

Confidentiality: The tribunal may make orders Unless parties concerning the confidentiality of agree otherwise, the arbitration proceedings or of parties will keep any other matters in connection confidential all awards and with the arbitration and may materials produced take measures for protecting for the arbitration trade secrets and confidential which are not in information (Article 22.3). the public domain (Article 30.1).

ICDR Rules

SCC Rules

UNCITRAL Rules (2010)

IBA Rules

Unless otherwise agreed An award may be Unless otherwise The tribunal will by the parties, the made public agreed by consult with the arbitration and the award with the consent the parties or parties as to the will be confidential of all parties or required by law, level of confi(Article 46). where disclosure confidential dentiality to be is required by information afforded to the a legal duty, to disclosed during evidence (Article protect or purproceedings 2.2(d)). sue a legal right Documents are cannot be or in relation to divulged by the to be kept legal proceedtribunal (Article confidential and 34). ings (Article used only in 34.5). connection with the arbitration (Article 3.13). Documents of compelling confidentiality can be excluded (Article 9.2(e)). Tribunal can make provisions for evidence to be subject to confidentiality provisions (Article 9.4).

Index

admission to practice, 153 affliliated persons as witnesses, 92 appearance of experts at evidentiary hearings, 109 appearance of witnesses for testimony in an evidentiary hearing, 95 arbitral, 39 arbitral tribunal adopt suitable procedures, 30 ambiguity, 11 appointing an expert, see experts conflict of privileges, 147 consult, 19 consultation by, 35 definition, 24 disclosure orders, 21 discretion to exclude evidence, 146, 148 evidence, see evidence evidentiary hearing, see evidentiary hearing expertise, 111 experts, see experts faith in counsel, 72 knowledge, 38 legal advisors, 112 materiality, 72 matters to consider, 35 members, 110 obtaining documents, 80–81 power to order, 80 powers, 13 privileges, 149 procedural orders, 34 production of documents, 58 relevance, 72 requests to, 58–59, 75–76, 77, 79 sanctions, 20 success, 69

witness orders, 36 witnesses, 137 Arbitration Committee about, 1 Conflicts of Interest Subcomittee, 1 Investment Treaty Arbitration Subcomittee, 1 Recognition and Enforcement of Arbitral Awards Subcommittee, 1 Rules of Evidence Subcommittee, 1 Task Force on Arbitration Agreements, 1 Task Force on Attorney Ethics in Arbitration, 1 arbitration hold, 38 Article 1 scope of application, see scope of application Article 2 consultation of evidentiary issues, see consultation Article 3 documents, see documents Article 4 witnesses, see witnesses Article 5 party-appointed experts, see experts Article 6 tribunal-appointed experts, see experts Article 7 inspection, see inspection Article 8 evidentiary hearing, see evidentiary hearing Article 9 evidence, see evidence claimant definition, 24

177

178 confidentiality, 54–55 consultation, 32 agreement, 34–35 balance, 34 case management, 34, 36 cultural differences, and, 39 document preservation, 39 document production, 38 early intervention, 40 efficiency, 34 expert evidence, 37 matters to consider, 35 particular words and phrases, 33 party autonomy, 35 procedural conference, 61 procedures, 35 understanding, 40 witness statements, 35–37 content of expert report, 107 co-operation, 18–19, 37, 117 good faith and, 19 copies of documents, 53 costs, 13, 36, 39 budgets, 38 compromise, 39 conduct, and, 13, 14, 167 interim costs orders, 15 production of documents, 72 production, of, 64 retrieval of, 74 sanctions, 76 definitions, 25 disclosure, 63, 65, 68, 71, 72, 82 arbitral tribunal, and, 63, 64–65, 68, 71, 72, 75, 113 costs of, see costs electronic documents, 64, 66, see also disclosure materiality, 70–71, 76 narrow and specific standard, 68, 70 partial, 67 reasonable search, 66, 67 relevance, 70–71, 72, 76 request process, 76 requests, 68–70, 73, 75, 77–78 documents, 41–44 accessibility, 65–68, 73–74 Arbitral tribunal, and, see Arbitral tribunal bad faith, examples of, 16 confidentiality, 12, 83–87 contested, 38

Index definition, 24, 26 evidence, taking of, 13–14, 15–16 experts, 76, 147 good faith, 12–16 jurisdiction, 88 narrow and specific standard, 41, 58, 60 particular words and phrases, 56 production, 58, 60, 61, 62, 75, 76, 79–80, 83, 88, 162–163 relevance, 12 Request to Produce, 58–59 early disclosure of expert evidence, 107 economy, 2, 8, 10–11, 16, 19, 29–30, 31–32, 34, 35–36, 38, 53, 60–62, 69, 74, 79, 80, 81–82, 109, 120, 129, 139, 141, 145, 166, 169, 170 efficiency, 2, 8, 10–12, 14, 16, 19, 29–30, 31–32, 34–36, 38, 50, 61, 69, 99, 108, 117, 120, 133, 139, 140, 145, 159, 166, 169, 170 electronic documents, 50, 53, 60, 61–62, 63–64, 69, 73, 74, 81, 160 amount, 66, 67 difference to paper, 63–64 e-disclosure, 61, 62, 63–65, 70 production, 61, 62, 82 types, 62 volume, 62 evidence admissibility and assessment of, 141–143 adverse inferences, 166 arbitral tribunal, 79, 80 confidentiality, 165–166 entitled to know, 22 exclusion, 146–148, 165 good faith, 15–16 good faith, and, 14, 16, 167 particular words and phrases, 146 rejection, 166 submission of, 146 taking of, 20 witness, 167 evidentiary hearing, 2, 37, 39, 79, 92, 94, 99, 108–109, 115, 117, 124, 130, 132, 134, 135, 139, 171 definition, 24 identification of witnesses, 136 particular words and phrases. 135 witnesses, 136

Index expert evidence consultation, see consultation expert report definition, 24 experts appointing an expert, 126 arbitral tribunal, and, 76, 110–111 authority, 127 challenging, 113–114, 116, 126 description of qualifications, 126 disclosure of, 110, 111–114, 115 documents, 127 duty, 118 instructing, 115 instructions, 112 party-appointed, 105, 106 questioned, 117 reports, 114, 115–116, 117–118, 120, 127 request for information, 126 scope, 120 statement of independence, 126 tribunal-appointed, 121 tribunal assessment, 125 fairness, 9, 11, 30, 32, 34, 61, 79, 80, 86, 129, 136, 141–142, 144, 145, 161–162, 163 flexibility, 5 form of production for electronic documents, 53 general principles entitled to know evidence, 22 good faith, see good faith incorporation, 12 intention of rules, 9, 12 overriding principle, 10 particular words and phrases, 10 principles, 12 principles in, 30 General Rules, 12, 14, 24–25, 27–30, 54 definition, 24, 26 good faith, 8, 9, 11, 12–20, 21–23, 30, 40, 53, 55, 61, 64, 72, 73, 108, 116, 118, 142, 146, 147, 158, 159, 167, 169 certainty, and, 14 co-operation, and, 19 counsel, 20 difficulty, and, 14 documents, and, 12 duty to clients, and, 21 emphasis on, 13 insurance, 21 interpretation, 23

179 lack of responsible body to enforce rules, 20 legal systems, in, 23 no principle of general application, 22 witnesses, and, 17–18

Hague Convention on the Taking of Evidence, 163 IBA Rules of Evidence balance, 11 definition, 25 updating of, 6–7 IBA Rules on the Taking of Evidence in International Arbitration, see IBA Rules of Evidence ICC Rules, 169 ICDR Guidelines for Arbitrators, 59 ICDR Rules, 169 inferences, 55 information of witnesses, 91 inspection exclusion of evidence, 129 trade, 129 utility, 129 international arbitration nature of, 5 International Bar Association, viii, 1, 4, 5 LCIA Rules, 30, 34, 45, 46, 52, 58, 92, 94, 95, 96, 107, 135, 169 managing the hearing, 133 memorial, 12, 36–37, 39–40, 58, 70, 71, 99, 100, 102 order of witnesses, 133 party definition, 25 party-appointed experts, see experts definition, 25 party autonomy, 5, 30 Preamble, see general principles pre-hearing conference among experts, 108 preliminary contacts between party and witness, 93 principles, 46 privileges, 147 communication, 149, 152 disclosures, 160–161 equal treatment, 163–164 evidentiary, 160 jurisdiction, 162–163, 164

180 privileges (cont.) legal advice, 148–158, 164 legal professional, 148–149 litigation, 149 mediation, 158–159 other professions, 156 scope, 148 procedures, 48–51 ad hoc rules, 4, 5 conflicting views, 5 consultation, see consultation deterimination of, 4 institutional rules, 4, 5 recalcitrant witnesses, 96 Redfern schedule, 38, 40, 58, 59, 75–76, 77 Request for Arbitration, 39 requests to produce, 52 definition, 25 respondent definition, 25 SCC Rules, 169 scope of application, 28 adopting, 29 discretion, 30 general rules, and, 30 mandatory rules, and, 29 particular words and phrases, 29 Preamble, and, 30 stages, 55 translations, 54 tribunal witnesses, 135

Index tribunal-appointed experts, see experts definition, 25 UNCITRAL Rules, 9, 13, 26, 34, 45, 59, 77, 78, 83, 86, 87, 88, 92, 93, 97, 103–105, 107, 132, 133, 135, 158, 169 witness statement expert definition, 25 witness statements, 94 witnesses, 89, 91 appearance, 137 burden, 97–98 conferencing, 117, 134, 138 consultation, see consultation cross-examination, 137 documents, 140 employees, 99 evidence-in-chief, 138–139 evidentiary hearing, 136 genuine belief, 138 good faith, and, 17, 18 hearings, 99 interviews, 99, 100–104 language, 140 order, 138 particular words and phrases. 97 place, 140 questioning, 138 requested by tribunal, 97 statements, 18, 99, 100–104, 136 time allowed, 139 transcript, 140