IBA Rules on the Taking of Evidence in International Arbitration

Discovery (and e-discovery) in modern litigation can be a very expensive endeavour. In the case of Digicel (St. Lucia) Ltd & Ors v Cable & Wireless Plc & Ors [2008] EWHC 2522 (Ch), the initial exercise undertaken by the defendants’ solicitors as part of the discovery exercise cost the defendants some £2 million in fees together with disbursements of about £175,000 (see paragraph [25]). Furthermore, parties have been penalised by the courts for failure to properly engage in the discovery exercise. In West African Gas Pipeline Company Ltd v Willbros Global Holdings Inc [2012] EWHC 396 (TCC), the plaintiff was ordered to pay the defendant £135,000 in “wasted costs” as a result of a failed discovery exercise in which best practices were not followed.

What can parties do to better manage the discovery process, particularly in the context of international arbitration?

Discovery in international arbitration

Litigating parties are automatically subject to the procedural rules of the court in which the dispute is before. This is not the case for international arbitration. The hallmark of international arbitration is the primacy to party autonomy and the speedy, efficacious resolution of disputes without being bound by the domestic procedural rules of court of any particular party.

National arbitration legislations leave the conduct of the arbitration and its procedure to the parties and the tribunal. These statutes do not address the finer details of how the arbitration itself is to be conducted.

Complications often arise because parties to an international arbitration tend to be of different nationalities and used to different systems of law. One of the starkest examples is the different attitudes to discovery adopted by the Common Law system and the Civil Law system. Discovery is the process in which parties in a dispute are duty bound to produce documents to the other party. Critically, under the Common Law system, such documents to be produced to the other party include those that are adverse to their claim or defence, even where such documents are confidential and commercially sensitive.  In contrast, no such obligation exists under the Civil Law system.

But even amongst Common Law systems, the extent of these discovery obligations can vary from the comprehensive but onerous demands of US style discovery to the post reform discovery rules in the UK and Singapore which stress that documents that need to be adduced must be material and not simply relevant to the dispute. In Dante Yap Go v Bank Austria Creditanstalt AG, [2007] SGHC 69, the Singapore High Court held that “the discovery regime erects two principal barriers that must be satisfied before discovery is ordered. First, the documents must be relevant; and second, even if relevance is proven, discovery must be necessary either for disposing fairly of the cause or matter or for saving costs” (see paragraph [17]).

As a result, in an arbitration where one party is from a Common Law jurisdiction and another from the a Civil Law jurisdiction and where the tribunal is derived from a mix of Common Law and Civil Law countries, there may be marked divergence in the sort of discovery/disclosure obligations expected by the parties involved in the absence of any commonly accepted guideline or rules.

History and Scope of the IBA Rules

In this respect, the most common set of guidelines that are adopted in international arbitration is the IBA Rules on the Taking of Evidence in International Arbitration 2010 (the “IBA Rules“). First established in 1983 and having undergone subsequent revisions in 1999 and 2010, it has grown to become the de facto set of rules/guidelines that experienced tribunals and practitioners adopt when approaching the issue of document production in international arbitration.

The IBA Rules are “designed to supplement the legal provisions and the institutional, ad hoc or other rules that apply to the conduct of the arbitration” (see Preamble 1 to the IBA Rules). As noted by the Commentary on the revised text of the 2010 IBA Rules on the Taking of Evidence in International Arbitration (the “Commentary“), the IBA Rules “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“.

However, with due consideration to party autonomy and the flexibility that is inherent in that doctrine, the IBA Rules can be adopted by parties or the tribunal, in whole or in part, or may even be used as non-binding guidelines. Preamble 2 states “[t]he 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“.

Evidence is key in any hearing, whether it is before a court or an arbitral tribunal. The IBA Rules adopt the principle 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” (see Preamble 3).

In recognition of the above, the IBA Rules stipulate that the arbitral tribunal is to “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” (see Article 2(1)). Helpfully, the IBA Rules give examples of the sort of evidence and issues that would need addressing. These include:

  1. the preparation and submission of Witness Statements and Expert Reports;
  2. the taking of oral testimony at any Evidentiary Hearing;
  3. the requirements, procedure and format applicable to the production of Documents;
  4. the level of confidentiality protection to be afforded to evidence in the arbitration; and
  5. the promotion of efficiency, economy and conservation of resources in connection with the taking of evidence.

Document Production under the IBA Rules

Perhaps the key aspect of the IBA Rules and the article that receives the most attention is Article 3 dealing with production of documents by parties to the arbitration. It seeks to strike a balance between the common law and civil law approach and arises out of a vigorous debate at the Working Party’s discussions in 1999. It was recognised that “[e]xpansive 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“. At the same time, there was a consensus amongst civil law practitioners that some level of document production is appropriate in international arbitration.

The usual disclosure process may be summarised as follows.

First, each party produces those documents which it relies upon or intends to rely on in assistance of its case. This reflects the principle, which is thought to be accepted in both common law and civil law jurisdictions that parties have a burden to come forward with evidence in support of their respective case (see page 6 of the Commentary).

Subsequently, parties seeking documents from the other side will submit a Request to Produce. Part of this Request includes an explanation in the form of a statement as to how the documents requested are “relevant to the case and material to its outcome” (see Article 3.3(b)). The request can either be for a specific document (see Article 3.3(a)(i)) or a  “narrow and specific” category of documents  (see Article 3.3(a)(i)).

Next, if the other party objects and refuses to produce any document or class of document (as the case may be), then it shall do so in writing to the arbitral tribunal. The basis of its objections can either be for reasons set out in Article 9.2 (see below), or a failure on the part of the requesting party to satisfy any of the requirements in Article 3.3 (see above).

The arbitral tribunal, at the request of either party, will then rule on these objections. If the tribunal orders a party to produce certain documents despite an objection, then it would be because (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 apply; and (iii)the requirements of Article 3.3 have been satisfied (see Article 3.7).   

The proper objections set out at Article 9.2 are:

  1. lack of sufficient relevance to the case or materiality to its outcome;

  2. legal impediment or privilege under the legal or ethical rules determined by the Arbitral Tribunal to be applicable;

  3. unreasonable burden to produce the requested evidence;

  4. loss or destruction of the Document that has been shown with reasonable likelihood to have occurred;

  5. grounds of commercial or technical confidentiality that the Arbitral Tribunal determines to be compelling;

  6. 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

  7. considerations of procedural economy, proportionality, fairness or equality of the Parties that the Arbitral Tribunal determines to be compelling.

Articles 9.5 to 9.7 deal with the effect of a failure on the part of a party without satisfactory explanation to adduce documents or witnesses despite failing to object or an order by the tribunal or just a general failure to act in good faith. Possible sanctions include the entitlement of the arbitral tribunal to draw adverse inferences or even cost sanctions.

Conclusion

The IBA Rules have been widely applied in international arbitration and it is easy to understand why they will continue to be popular with arbitral tribunals and arbitration practitioners: they uphold the notion of party autonomy and flexibility and also strike a balance between the common law and civil law system in aid of a speedy resolution of disputes.

Look out for a forthcoming post on a case study of a Singapore international arbitration matter in which a party refused to disclose documents on the basis of confidentiality. In that post, we examine the response of the other party and how the tribunal and the Singapore court approached that issue.

About Shaun Lee

International Dispute Resolution and Arbitration lawyer. Fellow of the Chartered Institute of Arbitration. Panel of Arbitrators and Panelist for Domain Name Dispute Resolution at the KLRCA.
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6 Responses to IBA Rules on the Taking of Evidence in International Arbitration

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