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18 Jun 2010

IBA revises rules for the taking of evidence in international arbitration

by Björn Gehle, Mark Gillard

The revised IBA rules on the taking of evidence in international arbitration demonstrate the flexibility in evidentiary procedure available to parties in international arbitration.

The taking of evidence in court proceedings, including strict rules for the form of affidavits and the examination of witnesses, often appears to non-lawyers to be unnecessarily formal and rigid. International arbitration has long offered alternatives to those who wish to avoid this rigidity and adopt a more flexible responsive process for the resolution of disputes. This is very much the case in respect of rules for the taking of evidence.

Unlike parties to court proceedings, to whom court rules for the taking of evidence apply compulsorily, parties to an international arbitration are free to agree on the evidentiary procedure for the arbitration. While most arbitration laws and rules only deal with rather basic aspects of the evidence process, it is usually up to the arbitrator(s) and the parties to agree on the particular procedure for the evidentiary stages of the arbitration.

Considering that the parties to an international arbitration often come from different legal traditions, some with very different evidentiary practices, it is useful for parties to have a tried and tested set of rules relating to evidence for them to adopt, with the flexibility to adapt those rules to the particular proceedings where appropriate.

The importance of having a common set of evidentiary rules becomes even more obvious in situations where the parties are from fundamentally different legal systems, for example the civil law system as opposed to the common law system. While a party from the common law system will naturally ask for discovery or disclosure of documents, the party from the civil law jurisdiction will likely oppose this on the basis that the concept of discovery does not exist in many civil law countries.

The IBA Rules on the Taking of Evidence in International Arbitration

Probably the most commonly used rules for the taking of evidence in international arbitration are the IBA Rules on the Taking of Evidence in International Commercial Arbitration which have been widely adopted since their publication in 1999.

On 29 May 2010, the IBA adopted the new and revised IBA Rules on the Taking of Evidence in International Arbitration. The revised Rules are the product of a two-year process that included public consultation and input from the arbitration community around the globe. As one of the IBA sub-committee members noted, "both parties and arbitrators will clearly recognize the 1999 IBA Rules, and at the same time find in the revised IBA Rules additional up-to-date tools to address such new or increasing challenges as electronic document disclosure, abuse of the evidentiary process, and competing standards of legal privilege".

The revised Rules are largely similar to the 1999 Rules but contain some important changes, most notably providing for consultation between the parties as to the means of taking evidence and in relation to the treatment of electronic documents. These changes, which are discussed briefly below, demonstrate the flexibility in evidentiary procedure available to parties in international arbitration.

Consultation between Arbitral Tribunal and parties to the arbitration

Article 2 of the revised Rules provides for consultation between the Arbitral Tribunal and the parties to the arbitration at the earliest appropriate time "with a view to agreeing on an efficient, economical and fair process for the taking of evidence". The consultation is envisaged to cover the full range of evidentiary issues including:

  • the preparation and submission of witness statements and expert reports;
  • the taking of any oral testimony;
  • the requirements, procedure and format for the production of documents;
  • the level of confidentiality afforded to evidence in the arbitration; and
  • the promotion of "efficiency, economy and conservation of resources in connection with the taking of evidence".

The procedure for the taking of evidence in international arbitration is not only more flexible than litigation, but the revised Rules expressly envisage the involvement of the parties in designing the processes by which evidence will be obtained and put before the Arbitral Tribunal.

This consultation procedure will be advantageous in allowing parties to make a realistic, commercial assessment at the commencement of proceedings of an appropriate procedure, taking into account the value of the dispute and the nature of evidence available (for example, whether the evidence is mainly electronic accounting records or includes a large number of hard-copy documents).

E-disclosure

These days many business records are kept primarily, if not exclusively, in electronic form. It is essential for the efficient and cost-effective resolution of a dispute to provide an efficient means for the collection and assessment of electronic documents. The revised Rules contain a number of provisions which recognise and address the ever increasing influence of electronic documents in dispute resolution.

The 1999 version of Rules permitted a party to issue a "Request to Produce" to the other party so as to require the other party to produce certain documents. This provision has been retained in Article 3 of the revised Rules. However, to assist parties with the efficient and cost-effective location of relevant electronic documents, a party making a Request to Produce under the revised Rules may identify specific files, search terms, individuals or other means of searching for electronic documents in an efficient and economic manner. If the party making a Request to Produce does not specify such files or search terms, then the Arbitral Tribunal may order it to do so. This requirement should assist in ensuring that the time parties to an international arbitration spend searching for documents is minimised and that searches will be focused on finding relevant documents.

Other provisions of the revised Rules are likewise designed to assist with minimising the burden of document production and will be particularly applicable to electronic documents. For example, Article 3.12(b) permits a party to produce electronic documents "in the form most convenient or economical to it [provided] that [form] is reasonably usable by recipients".

To avoid the production of multiple identical copies of electronic documents such as several copies of the same email, Article 3.12(c) provides that a party is not obliged to produce multiple copies of essentially identical documents unless the Arbitral Tribunal requires it.

Article 3.14 provides that if the arbitration is organised into separate issues or phases, then the Arbitral Tribunal may schedule the submission of documents and Requests to Produce separately for each issue or phase. Therefore, if the dispute is to settle or be otherwise resolved following one phase (for example, establishing liability of a defendant), then the time and cost of document production for the other phases (such as quantifying damages) could be spared. This may not be the case in court proceedings where discovery of documents relating to all issues in dispute may be completed before any of those issues are considered by the court.

Other changes to the IBA Rules

Other notable updates and revisions include:

  • the extension of confidentiality with regard to documents produced pursuant to document requests, documents submitted by a party in support of its own case and documents introduced by a third party;
  • greater clarity in respect of the content of expert reports, in particular the requirement to disclose the instructions given to the expert and a statement of his or her independence from the parties, their legal advisers and the tribunal;
  • witnesses only have to appear for oral testimony if their appearance has been requested by a party or the tribunal. The revised Rules also provide for the use of videoconference or similar technology;
  • more specific guidance regarding issues of legal impediment or privilege, including the need to maintain fairness and equality, particularly if the parties are subject to different legal or ethical rules;
  • incorporation of an express requirement that the parties conduct themselves in good faith in taking evidence, coupled with the tribunal's being empowered to consider lack of good faith in the awarding of costs.
  • the deletion of the word "commercial" from the title, in recognition of the potential equal application to "non-commercial" arbitrations such as investment treaty-based disputes.

Conclusion

The revised Rules will apply to all arbitrations in which the parties agreed after 29 May 2010 to apply the IBA Rules, irrespective of whether as part of a new arbitration agreement or for pending or future cases.

Parties should be encouraged by the level of flexibility but also certainty for the evidence process which is afforded by the revised Rules. This will hopefully encourage arbitrators, counsel and parties to move away from simply adopting similar evidentiary procedures to those they are used to using in the courts.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.